Trio-Tech International(TRT) - 2025 Q4 - Annual Report

PART I ITEM 1 – BUSINESS Trio-Tech International operates in semiconductor back-end solutions and industrial electronics, diversifying in Fiscal 2025 and ceasing real estate reporting - Trio-Tech International was incorporated in 1958 and operates in two segments: Semiconductor Back-end Solutions (SBS) and Industrial Electronics (IE)[15][18] - The company's strategy includes reducing its historic concentration on the semiconductor industry by expanding into new markets and diversifying its business lines[19][21] - Effective Fiscal 2025, the real estate segment is no longer reportable due to its revenue being below 1% of total revenue and management's decision not to allocate additional resources[25] Customer Concentration (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 | Fiscal 2024 | | :-------------------------------- | :---------- | :---------- | | Combined sales to 3 largest customers | 47.0% | 49.5% | | Sales from one major customer | 20.7% | 20.6% | | Trade receivables from 3 largest customers | 56.3% | 57.0% | | Trade receivables from one major customer | 22.0% | 20.8% | Backlog as of June 30 (in thousands) | Segment | 2025 ($) | 2024 ($) | | :-------------------------- | :---- | :----- | | Semiconductor Back-end Solutions | $6,695 | $9,865 | | Industrial Electronics | $4,335 | $4,489 | | Total | $11,030 | $14,354 | General Overview Trio-Tech International, incorporated in 1958 and headquartered in Singapore, provides global semiconductor reliability test equipment and services across two segments - Trio-Tech International, a California corporation, was incorporated in 1958 and is headquartered in Singapore[15] - The company provides reliability test equipment and services to the semiconductor and other industries, acting as a global one-stop solution[17] - During Fiscal 2025, the company operated in two segments: Semiconductor Back-end Solutions and Industrial Electronics, with operations in the U.S., Singapore, Malaysia, Thailand, and China[18][19] Overall Business Strategies The company aims to diversify beyond the semiconductor industry by expanding market share, geographic reach, new products, and strategic relationships - The core business is in the semiconductor industry, but the company is actively expanding into other areas to reduce risks associated with sole industry and customer concentration[21] - Strategic goals include capturing additional market share in primary markets, expanding geographic reach, developing new products for new markets, and pursuing complementary strategic relationships through acquisitions or joint ventures[23] Business Segments Effective Fiscal 2025, the company reports financial performance under new segments: Semiconductor Back-end Solutions (SBS) and Industrial Electronics (IE), with the real estate segment now reported under 'Others' - Beginning in Fiscal 2025, financial performance is reported based on new segments: Semiconductor Back-end Solutions (SBS) and Industrial Electronics (IE), following a business strategy realignment[24] - The SBS segment focuses on designing, manufacturing, and providing testing services for burn-in and reliability test equipment in the semiconductor back-end processes[26] - The IE segment includes design, manufacture, and distribution of test, process, and other equipment for various consumer and industrial markets, along with value-added distribution of electronic components[27] - The real estate segment, previously reported, ceased to be a reportable segment in Fiscal 2025 due to its immaterial contribution and will be presented under 'Others'[25] Product Research and Development Research and development expenses decreased slightly in Fiscal 2025, focusing on improving product design and process technology in the U.S. and Singapore Research and Development Expense (in thousands) | Year | Expense ($) | | :-------- | :------ | | Fiscal 2025 | $384 | | Fiscal 2024 | $392 | - R&D activities are focused on improving product design and process technology, conducted in the U.S. and Singapore[28] Marketing, Distribution and Services The company markets its products and services globally through direct sales, independent sales representatives, and its own marketing team - The company markets its products and services globally through direct sales, 5 independent sales representatives in the U.S., 22 in foreign countries, and its own marketing team[29] Customer Concentration Customer concentration remains high, with the top three customers accounting for 47% of sales and 56.3% of trade receivables in Fiscal 2025, primarily from non-U.S. customers Customer Concentration (Fiscal 2025 vs. 2024) | Metric | Fiscal 2025 | Fiscal 2024 | | :-------------------------------- | :---------- | :---------- | | Combined sales to 3 largest customers | 47.0% | 49.5% | | Sales from one major customer | 20.7% | 20.6% | | Trade receivables from 3 largest customers | 56.3% | 57.0% | | Trade receivables from one major customer | 22.0% | 20.8% | - The majority of sales and services in Fiscal 2025 and 2024 were provided to customers outside the U.S.[30] Backlog Total backlog decreased to $11.03 million in Fiscal 2025 from $14.354 million in Fiscal 2024, with no significant cancellations anticipated Backlog as of June 30 (in thousands) | Segment | 2025 ($) | 2024 ($) | | :-------------------------- | :---- | :----- | | Semiconductor Back-end Solutions | $6,695 | $9,865 | | Industrial Electronics | $4,335 | $4,489 | | Total | $11,030 | $14,354 | - The company does not anticipate significant cancellations or renegotiations of sales, with purchase orders generally requiring delivery within 12 months[32] Materials and Supplies The company sources parts and components from external vendors for assembly in its global facilities, believing no single supplier loss would materially affect operations - All parts and certain components are purchased from outside vendors for assembly in U.S., China, and Singapore facilities[33] - The company believes the loss of any single supplier would not materially adversely affect operations due to the availability of parts from various sources[33] Competition Competition in the SBS segment is intense, driven by product performance and service, while the IE segment differentiates through integrated value-added services - Competition in the SBS segment is intense, with key factors including product performance, reliability, service, technical support, and price[35][36] - The IE segment differentiates itself through an integrated approach combining standard product offerings with value-added services like customization and technical support[38] Patents The company did not register any U.S. patents in Fiscal 2025 or 2024, but acknowledges potential material impact from intellectual property litigation - The company did not register any patents in the U.S. during Fiscal 2025 and 2024[39] - While the company believes it does not infringe on others' intellectual property, litigation costs or damages from potential claims could materially affect its business[40] Employees Total full-time employees decreased to 614 in Fiscal 2025 from 673 in Fiscal 2024, with the majority based in Asia and no union representation Employee Count as of June 30 | Category | 2025 | 2024 | | :--------- | :--- | :--- | | Full-time employees | 614 | 673 | | Part-time employees | 4 | 3 | | U.S. full-time | 5 | 6 | | Asia full-time | 609 | 667 | | SBS segment | 559 | 621 | | IE segment | 31 | 23 | | General admin/others | 24 | 29 | - None of the company's employees are represented by a labor union[41][42] ITEM 1A – RISK FACTORS As a smaller reporting company, Trio-Tech International is not required to provide the detailed risk factor information typically found in this item - The company is exempt from providing detailed risk factor disclosures as it qualifies as a smaller reporting company[43](index=43