Trio-Tech International(TRT) - 2024 Q2 - Quarterly Report

Financial Performance - Revenue for the three months ended December 31, 2023, was $12,202,000, a slight decrease of 1.5% compared to $12,390,000 for the same period in 2022[12] - Net income attributable to Trio-Tech International common shareholders for the six months ended December 31, 2023, was $737,000, down from $1,389,000 in the same period of 2022, reflecting a decline of 47%[12] - Comprehensive income attributable to Trio-Tech International common shareholders for the six months ended December 31, 2023, was $1,742,000, compared to $1,686,000 in the same period of 2022, showing an increase of 3.3%[15] - Net income for the six months ended December 31, 2023, was $693, a decrease of 55.1% compared to $1,543 for the same period in 2022[20] - For the six months ended December 31, 2023, total company net revenue was $22,168 million, down from $24,329 million in the same period of 2022, representing a decline of approximately 8.9%[68] - The company recorded an operating income of $676 million for the six months ended December 31, 2023, down from $2,136 million in the same period of 2022, a decrease of approximately 68.4%[68] Assets and Liabilities - Total assets increased to $46,598,000 as of December 31, 2023, up from $42,186,000 on June 30, 2023, representing a growth of 10.7%[10] - Total current liabilities increased to $12,875,000 as of December 31, 2023, from $9,326,000 on June 30, 2023, marking a rise of 38.5%[10] - Total equity increased to $31,528,000 as of December 31, 2023, from $29,571,000 on June 30, 2023, reflecting a growth of 6.6%[11] - Total cash, cash equivalents, and restricted cash at the end of the period was $13,506, an increase of 52.5% from $8,868 at the end of December 2022[21] - The company’s total liabilities decreased by $1,136 in cash flow from investing activities for the six months ended December 31, 2023, compared to a cash outflow of $3,428 in the same period of 2022[20] Revenue by Segment - The manufacturing segment reported net revenue of $7,675 million for the six months ended December 31, 2023, compared to $8,629 million in 2022, a decrease of 11.1%[68] - The testing services segment generated net revenue of $9,810 million for the six months ended December 31, 2023, down from $12,012 million in 2022, reflecting a decline of 18.3%[68] - The distribution segment achieved net revenue of $4,670 million for the six months ended December 31, 2023, an increase of 27.1% compared to $3,676 million in 2022[68] Expenses and Income - Operating expenses for the three months ended December 31, 2023, were $2,177,000, a decrease of 3.9% compared to $2,266,000 for the same period in 2022[12] - Interest expense increased by $12, or 120.0%, to $22 for the three months ended December 31, 2023, due to utilization of credit facilities[171] - General and administrative expenses decreased by $102, or 5.3%, to $1,817 for the three months ended December 31, 2023[168] - Selling expenses increased by $55, or 28.5%, to $248 for the three months ended December 31, 2023, primarily due to increased commission costs[169] Cash Flow and Investments - Cash provided by operating activities for the six months ended December 31, 2023, was $1,276, down from $3,779 in the prior year, representing a decline of 66.2%[20] - The company recognized stock option expenses of $90 for the six months ended December 31, 2023, compared to $54 in the same period of 2022, marking a 66.7% increase[20] - The company’s cash paid for interest during the period was $21, down from $53 in the same period last year, indicating a decrease of 60.4%[20] Government Grants and Tax - In the three months ended December 31, 2023, the Company received government grants amounting to $4, a decrease from $21 in the same period of 2022[73] - For the six months ended December 31, 2023, the Company received total government grants of $77, compared to $42 in the same period of 2022, with $57 from the U.S. government related to Employee Retention Credit[74] - The Company's income tax expense was $95 for the three months ended December 31, 2023, down from $241 in the same period of 2022, reflecting a decrease in the effective tax rate from 29.5% to 16.5%[77] Stock Options and Compensation - In the first two quarters of Fiscal 2024, 48,000 stock options were granted under the 2017 Employee Plan, with 63,875 stock options exercised, resulting in a stock-based compensation expense of $90[103] - As of December 31, 2023, there were 197,000 outstanding stock options under the 2017 Employee Plan, with a weighted-average exercise price of $5.48 and a weighted average remaining contractual term of 3.51 years[106] - The total vested stock options under the 2017 Employee Plan as of December 31, 2023, covered 88,250 shares with a weighted-average exercise price of $5.59[105] Market and Business Strategy - Management is evaluating the potential divestiture of one or more business segments, including the testing segment, to focus on areas with anticipated revenue growth opportunities[71] - The company is exploring new markets and products while upgrading burn-in technology and improving testing methods for higher technology chips[156]