Trio-Tech International: Form 10-Q for the period ended Dec 31, 2024

Overview

The following should be read in conjunction with the condensed consolidated financial statements and notes in Item I above and with the audited consolidated financial statements and notes, the information under the headings “Management’s discussion and analysis of financial condition and results of operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“Fiscal 2024”).

Trio-Tech International (“TTI”) was incorporated in 1958 under the laws of the State of California. As used herein, the term “Trio-Tech” or “Company” or “we” or “us” or “Registrant” includes Trio-Tech International and its subsidiaries unless the context otherwise indicates. Our mailing address and executive offices are located at Block 1008 Toa Payoh North, Unit 03-09 Singapore 318996, and our telephone number is (65) 6265 3300.

The Company has traditionally been a provider of reliability test equipment and services to the semiconductor and other industries. Our customers rely on us to verify that their semiconductor components meet or exceed the rigorous reliability standards demanded for automotive electronics, industrial electronics, computing and data storage, consumer electronics, and communication markets. We act as a global one-stop solution for our customers by designing and building reliability test solutions and offering comprehensive testing services. The Company also develops and manufactures an extensive range of equipment used in the manufacturing processes of semiconductors and various other industries.

In the first quarter of Fiscal 2025, we made changes in our business strategy in an effort to better align with our focus areas and to streamline operations. While the semiconductor industry is and will remain a major market for the Company, an important component of our strategy is to reduce our historic concentration on this industry. As a result, we have decided to organize our operating businesses based on the markets that we serve. Beginning in Fiscal 2025, we report our financial performance based on our new segments, Semiconductor Back-end Solutions and Industrial Electronics.

“Semiconductor Back-end Solutions” (“SBS”) segment comprises of our core semiconductor back-end manufacturing and testing operations that serve the semiconductor industry. Our value-added distribution business, along with our services and equipment manufacturing operations that serve various industries will be reported together in our “Industrial Electronics” (“IE”) segment. A mapping of our previous presentation and the revised segments is presented below:

• Manufacturing – Manufacturing of equipment that solely serves the back-end processes of the semiconductor industry is presented under the SBS segment, and manufacturing of equipment that serves various industries is presented under the IE segment.
• Testing Services – Testing services are presented under the SBS segment
• Distribution – Value-added distribution of burn-in test related equipment is presented under the SBS segment, and value-added distribution of other electronic products are presented under the IE segment.
• Real estate – Real-estate segment relates to real estate investments made in ChongQing, China. When identifying reportable segments, management evaluates the contribution of each segment to our overall business strategy and whether the segment reported provides meaningful information to users about the Company’s performance and prospects. Revenue from the real-estate segment has been below 1% of total revenue in the past five fiscal years due to the negative real-estate environment in China. Effective in Fiscal 2025, management therefore concluded that the real-estate segment is not integral to the Company’s operations and does not intend to allocate any additional resources to this segment. As a result, this segment will cease to be a reportable segment in Fiscal 2025, and therefore will be presented under the Others segment.

The types of products and services provided by each segment are summarized below:

Semiconductor Back-end Solutions

The SBS segment of the Company designs and manufactures an extensive range of burn-in and reliability test equipment used in the “back-end” manufacturing processes of semiconductors. Our equipment includes burn-in systems, burn-in boards and related equipment that is used in the testing of structural integrity of integrated circuits. We also act as an extended development team of Integrated Device Manufacturers (“IDMs”) and Fabless semiconductor companies in the testing process with our expert technical skills, especially in the New Product Introduction (“NPI”) process.

The Company also provides comprehensive electrical, environmental, and burn-in testing services to semiconductor manufacturers in our testing laboratories in Asia. Our customers include both manufacturers and end users of semiconductor and electronic components who look to us when they decide to outsource their testing process. We also support the asset-light strategy of our customers by setting up test facilities and providing component level, package level and system level testing services with expert technology that improves the productivity of our customers. The independent tests are performed to industry and customer specific standards.

Industrial Electronics

The IE segment of the Company includes the design, manufacture and distribution of an extensive range of test, process and other equipment used in the manufacturing processes of customers in various industries in the consumer and industrial market. Our equipment includes environmental chambers, leak detectors, autoclaves, centrifuges, dynamic testers, HAST testers, temperature-controlled chucks, and more. This segment also provides preventive maintenance, calibration services, repair services and upgrading and refurbishment services for temperature, humidity and pressurization equipment.

In addition to marketing our proprietary products, we distribute mechanical, electrical and electronic products made by manufacturers around the world. The products include environmental chambers, mechanical shock and vibration testers, specialized equipment for aerospace applications and more. We also distribute a wide range of components such as connectors, sockets, cables, LCD displays and touch screen panels. We act as value-added resellers by enhancing the value of the distributed products by customizing each to the needs of our customers through our expert engineering and integration services. We also support our customers as their extended research and development arm in product design, leveraging the expert skills of our component engineers and design engineers.

- 27 -

Critical Accounting Estimates & Policies

The preparation of our Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in applying our accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates. We discuss the development and selection of the critical accounting estimates with the Audit Committee of our Board of Directors on a quarterly basis, and the Audit Committee has reviewed our related disclosure in this Quarterly Report on Form 10-Q.

There have been no material changes in our critical accounting estimates and policies since our Annual Report on Form 10-K for Fiscal 2024. Refer to Note 1 “Basis of Presentation and Summary of Significant Accounting Policies” to our Condensed Consolidated Financial Statements for additional details. In addition, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2024 for a complete description of our critical accounting policies and estimates.

SecondQuarter Fiscal Year 2025 Highlights

• Total revenue decreased by $3,583, or 29.4%, to $8,619 in the second quarter of Fiscal 2025, compared to $12,202 for the same period in Fiscal 2024.
• SBS segment revenue decreased by $2,087, or 26.4% to $5,809 for the second quarter of Fiscal 2025, compared to $7,896 for the same period in Fiscal 2024.
• IE segment revenue decreased by $1,499, or 34.9%, to $2,801 for the second quarter of Fiscal 2025, compared to $4,300 for the same period in Fiscal 2024.
• The overall gross profit margin increased by 2.3% to 25.7% for the second quarter of Fiscal 2025, from 23.4% for the same period in Fiscal 2024.
• General and administrative expense increased by $148, or 8.1%, to $1,965 for the second quarter of Fiscal 2025, from $1,817 for the same period in Fiscal 2024.
• Selling expense decreased by $72, or 29.0%, to $176 for the second quarter of Fiscal 2025, from $248 for the same period in Fiscal 2024.
• Loss from operations was $3 for the second quarter of Fiscal 2025, reflecting a decline of $680 as compared to income from operations of $677 for the same period in Fiscal 2024.
• Other income increased by $768 to $686 for the second quarter of Fiscal 2025, as compared to other expense of $82 for the same period in Fiscal 2024.
• Income tax expense was $139 in the second quarter of Fiscal 2025, an increase of $44 as compared to $95 for the same period in Fiscal 2024.
• During the second quarter of Fiscal 2025, income from continuing operations before non-controlling interest, net of tax was $536, as compared to income from continuing operations before non-controlling interest of $482 for the same period in Fiscal 2024.
• Net income attributable to non-controlling interest for the second quarter of Fiscal 2025 was $22, an increase of $43 as compared to net loss of $21 for the same period in Fiscal 2024.
• Basic earnings per share for the second quarter of Fiscal 2025 was $0.12, as compared to earnings per share of $0.12 for the same period in Fiscal 2024.
• Diluted earnings per share for the second quarter of Fiscal 2025 was $0.12, as compared to earnings per share of $0.12 for the same period in Fiscal 2024.
• Total assets decreased by $2,740 to $39,800 as of December 31, 2024, compared to $42,540 as of June 30, 2024.
• Total liabilities decreased by $3,391 to $7,571 as of December 31, 2024, compared to $10,962 as of June 30, 2024.

- 28 -

Results of Operations and Business Outlook

The following table sets forth our revenue components for both three and six months ended December 31, 2024 and 2023.

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue for the three and six months ended December 31, 2024 was $8,619 and $18,418, respectively, a decrease of $3,583 and $3,750, respectively, when compared to the revenue of $12,202 and $22,168 for the same period of Fiscal 2024. As a percentage, revenue decreased by 29.4% and 16.9% for the three and six months ended December 31, 2024, when compared to revenue for the same period of Fiscal 2024.

Revenue within our two current segments for the three and six months ended December 31, 2024, is discussed below.

Semiconductor Back-end Solutions (SBS)

Revenue in the SBS segment as a percentage of total revenue was 67.4% and 68.9% for the three and six months ended December 31, 2024, an increase of 2.7% and 0.9% of total revenue when compared to 64.7% and 68.0% in the same period of Fiscal 2024. Total SBS revenue decreased by $2,087 to $5,809 from $7,896 and decreased by $2,384 to $12,688 from $15,072 for the three and six months ended December 31, 2024, respectively.

SBS revenue experienced a decline across all SBS operations except Malaysia operation. The demand reduced for both testing services and product sales. The semiconductor market downturn impacted the segment's overall performance. The demand for these services is heavily influenced by the broader semiconductor industry outlook, as well as market trends and customer forecasts. Given the inherent challenges in accurately predicting market fluctuations, it remains difficult to anticipate shifts in demand with precision. However, the company is in a strong position to take advantage of any recovery in the industry and is looking into new ways to expand its services, which should help drive growth in the future.

Industrial Electronics (IE)

Revenue in the IE segment as a percentage of total revenue was 32.5% and 31.0% for the three and six months ended December 31, 2024, representing a decrease of 2.7% and 1.0% compared to 35.2% and 32.0% in the same period of Fiscal 2024. Total IE revenue decreased by $1,499 from $4,300 to $2,801 and decreased by $1,368 from $7,083 to $5,715 for the three and six months ended December 31, 2024, respectively, compared to the same period of Fiscal 2024

IE revenue experienced a decline due to a decrease in demand for electronic components. The demand for the IE segment is primarily driven by a combination of factors, including fluctuations in customer product demand, evolving market conditions, and the capital expenditure budgets and forecasts of our customers. However, our strength as value-added reseller enables us to respond quickly when industry changes. Over the longer term, management believes this strategy positions us well to sustain growth and enhance market resilience.

- 29 -

Uncertainties and Remedies

There are several influencing factors which create uncertainties when forecasting performance, such as the changing nature of technology, specific customer requirements, decline in demand for certain types of burn-in devices or equipment, decline in demand for testing services and fabrication services, and other factors. One factor that influences uncertainty is the highly competitive nature of the semiconductor industry. Additionally, certain customers are unable to provide a forecast of the products required in the upcoming weeks, rendering it, difficult to plan adequate resources needed to meet these customers’ requirements because of short lead time and last-minute order confirmation. This will normally result in a lower margin for these products as it is often more expensive to purchase materials in a short time frame. However, the Company has taken certain actions and formulated certain plans to deal with and to help mitigate these unpredictable factors. For example, to meet manufacturing customers’ demands upon short notice, the Company maintains higher inventories but continues to work closely with its customers to avoid stockpiling. We believe that we have improved customer service through our efforts to keep our staff up to date on the newest technology and stressing the importance of understanding and meeting the stringent requirements of our customers. Finally, the Company is exploring new markets and products, looking for new customers, and upgrading and improving burn-in technology while at the same time searching for improved testing methods for higher technology chips.

The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expense in its subsidiaries. Strengthening of the United States dollar (“U.S. Dollar”) relative to foreign currencies adversely affects the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products. Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers could be materially adversely affected by foreign currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, or at all, which would adversely affect the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. Dollar, while generally beneficial to the Company’s foreign currency denominated sales and earnings, could cause the Company to reduce international pricing, thereby limiting the benefit. Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.

We may experience supply shortages as well as inflationary cost pressures in at least the near term. Risks and uncertainties related to supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin. We continue to monitor and evaluate the business impact to react proactively.

On August 9, 2022, the CHIPS and Science Act of 2022 (“CHIPS Act”) was enacted in the U.S. The CHIPS Act will provide financial incentives to the semiconductor industry which are primarily directed at manufacturing activities within the U.S. We continue to evaluate the business impact and potential opportunities related to the CHIPS Act. As of date, we do not see any direct effect of the CHIPS Act on the Company in the foreseeable future.

- 30 -

Comparison of the Three Months Ended December 31, 2024, and December 31, 2023

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended December 31, 2024 and 2023 respectively:

(Unaudited)

(Unaudited)

Overall Gross Margin

Overall gross margin as a percentage of revenue increased by 2.3% to 25.7% for the three months ended December 31, 2024, from 23.4% for the same period of Fiscal 2024. Gross profits decreased by $636 to $2,218 for the three months ended December 31, 2024, from $2,854 for the same period in Fiscal 2024.

Gross profit margin as a percentage of revenue in the SBS segment increased by 4.9% to 30.0% for the three months ended December 31, 2024, as compared to 25.1% for the same period in Fiscal 2024. The increase in gross profit was primarily driven by lower costs, resulting from reduced depreciation charges, as certain assets in the China operations were fully depreciated by the end of the second quarter of the previous fiscal year. In absolute dollar amounts, gross profit in the SBS segment for the three months ended December 31, 2024, was $1,742, a decrease of $240, compared to $1,982 in the same period in Fiscal 2024. The decrease in the absolute dollar of gross profit margin is attributed to the decrease in revenue.

Gross profit margin as a percentage of revenue in the IE segment decreased by 3.3% to 17.3% for the three months ended December 31, 2024, from 20.6% for the same period in Fiscal 2024. In absolute dollar amounts, gross profit in the IE segment for the three months ended December 31, 2024, was $485, indicating a decrease of $400, compared to $885 in the same period in Fiscal 2024. The decline is primarily attributable to lower demand for electronic components, coupled with an unfavorable product mix in equipment sales. In the IE segment, a portion of the cost of sales consists of fixed costs, which, when spread over lower revenue, leads to a decrease in the gross profit margin.

Operating Expense

Operating expense for the three months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

- 31 -

General and administrative expense increased by $148, or 8.1%, from $1,817 to $1,965 for the three months ended December 31, 2024, compared to the same period in Fiscal 2024. The increase in general and administrative expense was primarily due to increase in manpower cost to cater to the Malaysia and Singapore business expansion and an increase in allowance for expected credit losses compared to same period of Fiscal 2024.

Selling expense decreased by $72, or 29.0%, from $248 to $176 for the three months ended December 31, 2024, compared to the same period in Fiscal 2024. The reduction in selling expenses was mainly due to a decline in commissions paid to agents, along with lower business travel costs.

(Loss) / Income from Operations

Loss from operations was $3 for the three months ended December 31, 2024, a decrease of $680, compared to income of $677 from operations for the same period in Fiscal 2024. The decline was mainly due to the reduced revenue arising from weaker demand in our core markets, reflecting broader industry trends. Management remains committed over cost control initiatives, including tighter non-discretionary spending, to ensure the company is well-positioned to capitalize on future growth opportunities once the market stabilizes.

Interest Expense

Interest expense for the three months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

Interest expense was $13 for the three months ended December 31, 2024, a decrease of $9, or 40.9%, compared to $22 for the same period of Fiscal 2024 due to lower utilization of credit facilities. As of December 31, 2024, the Company had an unused line of credit of $5,719 as compared to $5,256 as at December 31, 2023.

Other Income / (Expense)

Other Income / (Expense) for the three months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

Other income increased by $768 to $686 for the three months ended December 31, 2024 as compared to other expense of $82 for the same period in Fiscal 2024. The increase was primarily driven by a favorable foreign currency movement, resulting in an exchange gain for the three months ended December 31, 2024, compared to an exchange loss for the same period in Fiscal 2024.

Government Grant

(Unaudited)

(Unaudited)

In the three months ended December 31, 2024, the Company received government grants amounting to $5 related to capital expenditure subsidy received from the China government.

During the same period in Fiscal 2024, the Company received government grants amounting to $4, related to capital expenditure subsidy received from the China government.

- 32 -

Income Tax Expense

The Company's income tax expense was $139 and $95 for the three months ended December 31, 2024, and 2023, respectively. Income tax expense increased due to lower deferred tax assets in our Singapore operation, driven by lower provisions, which reduced the deductible temporary differences. This was partially offset by lower GILTI tax due to lower chargeable income derived from controlled foreign corporation.

Non-controlling Interest

As of December 31, 2024, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd., and 52% interest in PT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd and 51% interest in Trio-tech JiangSu Co. Ltd. The share of non-controlling interest in the net income from the subsidiaries for the three months ended December 31, 2024 was $22 compared to the share of loss from the non-controlling interest of $21 for the same period of Fiscal 2024. The increase in the net income shared by non-controlling interest in the subsidiaries was attributable to the increase in net income generated by the Company’s Malaysia and China operations.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income attributable to Company’s common shareholders was $507 for the three months ended December 31, 2024, compared to a net income of $507 for the same period in Fiscal 2024.

Earnings per Share

Basic earnings per share from continuing operations were $0.12 for three months ended December 31, 2024 as compared to basic earnings per share of $0.12 for the same period of Fiscal 2024. Basic earnings per share from discontinued operations were $nil for three months ended December 31, 2024 and December 31, 2023 respectively.

Diluted earnings per share from continuing operations were $0.12 for three months ended December 31, 2024 as compared to diluted earnings per share of $0.12 for the same period of Fiscal 2024. Diluted earnings per share from discontinued operations were $nil for three months ended December 31, 2024 and December 31, 2023.

- 33 -

Segment Information

The revenue, gross margin, and income / (loss) from operations for each segment during the second quarter of Fiscal 2025 and Fiscal 2024 are presented below. As the revenue and gross margin for each segment were discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

Semiconductor Back-end Solutions (SBS)

The revenue, gross margin and income from operations for the SBS segment for the three months ended December 31, 2024 and 2023 were as follows:

(Unaudited)

(Unaudited)

Income from operations from the SBS segment was $97 compared to income from operations of $342 in the same period in Fiscal 2024. The decrease in income from operations was due to a decrease in revenue and gross profit in absolute dollar amounts. Operating expense remained fairly consistent at $1,645 and $1,640 for the three months ended December 31, 2024 and 2023, respectively.

Industrial Electronics (IE)

The revenue, gross margin, and (loss) / income from operations for the IE segment for the three months ended December 31, 2024 and 2023 were as follows:

(Unaudited)

(Unaudited)

Loss from operations in the IE segment for the three months ended December 31, 2024, was $23, a decline of $317 from income from operations of $294 in the same period in Fiscal 2024. The decline was mainly attributable to a decrease in revenue and gross profit in absolute dollar amounts. Operating expense was $508 and $591 for the three months ended December 31, 2024 and 2023, respectively. The decrease in operating expenses was mainly contributed to lower selling expense and corporate overhead incurred for the period.

- 34 -

Comparison of the Six Months Ended December 31, 2024, and December 31, 2023

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the six months ended December 31, 2024 and 2023 respectively:

Overall Gross Margin

Overall gross margin as a percentage of revenue increased marginally by 0.4% to 24.6% for the six months ended December 31, 2024, from 24.2% for the same period of Fiscal 2024. Gross profits decreased by $834 to $4,540 for the six months ended December 31, 2024, from $5,374 for the same period in Fiscal 2024.

Gross profit margin as a percentage of revenue in the SBS segment increased by 2.3% to 27.9% for the six months ended December 31, 2024, as compared to 25.6% for the same period in Fiscal 2024. The Company managed to achieve a modest improvement in gross profit margin despite the decline in revenue in the SBS segment, driven by lower cost of sales which helped mitigate the impact of revenue decline in SBS segment. The lower cost of sales was due to reduced depreciation charges, as some of the assets in China operations were fully depreciated as at the end of second quarter of Fiscal 2024. In absolute dollar amounts, gross profit in the SBS segment for the six months ended December 31, 2024, was $3,536, a decrease of $326, compared to $3,862 in the same period in Fiscal 2024. The decrease in absolute dollar of gross profit is attributed to the decline in revenue.

Gross profit margin as a percentage of revenue in the IE segment decreased by 3.8% to 17.9% for the six months ended December 31, 2024, compared to 21.7% in the same period in Fiscal 2024. In absolute dollar amounts, gross profit in the IE segment for the six months ended December 31, 2024, was $1,024, indicating a decrease of $511, compared to $1,535 in the same period in Fiscal 2024. The decline is primarily attributable to lower demand for electronic component sales, coupled with an unfavorable product mix of equipment sales. In the IE segment, a portion of the cost of sales consists of fixed costs, which, when spread over lower revenue leads to a decrease in the gross profit margin.

Operating Expense

Operating expense for the six months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

- 35 -

General and administrative expense decreased marginally by $46, or 1.2%, from $3,975 to $3,929 for the six months ended December 31, 2024, compared to the same period in Fiscal 2024.

Selling expense decreased by $109, or 25.1%, from $435 to $326 for the six months ended December 31, 2024, compared to the same period in Fiscal 2024. The decrease in selling expenses was mainly due to lower commission costs, driven by a decline in commissionable revenue, as well as a decrease in business travel expenses.

Income from Operations

Income from operations was $130 for the six months ended December 31, 2024, a decrease of $546, compared to income of $676 from operations for the same period in Fiscal 2024. The decrease was mainly due to lower revenue and gross profit in absolute dollars amount across all business segments.

Interest Expense

Interest expense for the six months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

Interest expense was $26 for the six months ended December 31, 2024, a decrease of $20, or 43.5%, compared to $46 for the same period of Fiscal 2024 due to lower utilization of credit facilities.

Other Income

Other Income for the six months ended December 31, 2024 and 2023 was as follows:

(Unaudited)

(Unaudited)

Other income increased by $207 from $114 to $321 for the six months ended December 31, 2024 compared to the same period in Fiscal 2024. The increase is primarily due to a favorable foreign currency effect for the six months ended December 31, 2024 compared to an unfavorable foreign currency impact during the same period in Fiscal 2024.

Government Grant

(Unaudited)

(Unaudited)

In the six months ended December 31, 2024, the Company received government grants amounting to $71, $62 of which was an incentive from the Singapore government for local resident recruitment, and $9 related to capital expenditure subsidy received from the China government.

During the same period in Fiscal 2024, the Company received government grants amounting to $77, $16 of which was financial assistance received from the Singapore government for local resident recruitment, and $57 from the U.S. government related to Employee Retention Credit (“ERC”).

- 36 -

Income Tax Expense

The Company's income tax expense was $190 and $132 for the six months ended December 31, 2024, and 2023, respectively. Income tax expense increased due to lower deferred tax assets in our Singapore operation, driven by lower provisions, which reduced the deductible temporary differences. This was partially offset by lower GILTI tax due to lower chargeable income derived from controlled foreign corporation.

Non-controlling Interest

As of December 31, 2024, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd., and 52% interest in PT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd and 51% interest in Trio-tech JiangSu Co. Ltd. The share of non-controlling interest in the net income from the subsidiaries for the six months ended December 31, 2024 was $35 compared to the share of loss from the non-controlling interest of $44 for the same period of Fiscal 2024. The increase in the net income shared by non-controlling interest in the subsidiaries was attributable to the increase in net income generated by the Company’s Malaysia and China operations.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income attributable to Company’s common shareholders was $271 for the six months ended December 31, 2024, a decrease of $466, compared to the net income of $737 for the same period in Fiscal 2024.

Earnings per Share

Basic earnings per share from continuing operations was $0.06 for six months ended December 31, 2024 as compared to basic earnings per share of $0.18 for the same period of Fiscal 2024. Basic earnings per share from discontinued operations were $nil for six months ended December 31, 2024 and December 31, 2023 respectively.

Diluted earnings per share from continuing operations were $0.06 for six months ended December 31, 2024 as compared to diluted earnings per share of $0.17 for the same period of Fiscal 2024. Diluted earnings per share from discontinued operations were $nil for six months ended December 31, 2024 and December 31, 2023.

- 37 -

Segment Information

The revenue, gross margin, and income from operations for each segment for the six months ended December 31, 2024 and 2023 are presented below. As the revenue and gross margin for each segment were discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

Semiconductor Back-end Solutions (SBS)

The revenue, gross margin and income from operations for the SBS segment for the six months ended December 31, 2024 and 2023 were as follows:

(Unaudited)

(Unaudited)

Income from operations from the SBS segment was $274 compared to income from operations of $302 in the same period in Fiscal 2024. The decrease in income from operations was mainly due to a decrease in revenue in absolute dollar amounts. Operating expense was $3,262 and $3,560 for the six months ended December 31, 2024 and 2023, respectively. The decrease in operating expense was mainly due to a gain from disposal of fixed asset, lower performance-based remunerations and also lower selling expenses for the six months ended December 31, 2024 compared to the same period in Fiscal 2024

- 38 -

Industrial Electronics (IE)

The revenue, gross margin, and (loss) / income from operations for the IE segment for the six months ended December 31, 2024 and 2023 were as follows:

(Unaudited)

(Unaudited)

Loss from operations in the IE segment for the six months ended December 31, 2024, was $30, a decline of $514 as compared to income from operations of $484 in the same period in Fiscal 2024. The decline was mainly attributable to a decrease in gross profit in absolute dollar amounts. Operating expense was $1,054 and $1,051 for the six months ended December 31, 2024 and 2023, respectively.

- 39 -

Financial Condition

During the six months ended December 31, 2024, total assets decreased by $2,740 to $39,800 compared to $42,540 as of June 30, 2024. The decrease was primarily due to a decrease in trade accounts receivable, inventories, operating lease right-of-use assets and property, plant and equipment, which was partially offset by an increase in cash and cash equivalents and other receivables.

Cash and cash equivalents were $10,323 at December 31, 2024, reflecting an increase of $288 from $10,035 at June 30, 2024. The increase in cash and cash equivalents was offset by a $275 decrease in short-term deposits, which declined from $6,497 as of June 30, 2024, to $6,222 as of December 31, 2024, due to the maturity of deposits that were not reinvested and instead used for operating purposes.

The trade accounts receivable balance as of December 31, 2024 decreased by $780 to $9,881, from $10,661 at June 30, 2024, primarily due to the decrease in revenue between June 30, 2024 and December 31, 2024. The number of days’ sales outstanding in accounts receivables for the group was 101 days and 90 days for the second quarter of Fiscal 2025 and the end of Fiscal 2024, respectively.

Other receivables at December 31, 2024, were $961, an increase of $420, compared to $541 at June 30, 2024. The increase was mainly due to advance payments to creditors made by Singapore operations, which the sales are expected to be realized in the coming fiscal quarters.

Inventories at December 31, 2024, were $1,957, a decrease of $1,205, compared to $3,162 at June 30, 2024. The decrease in inventories was primarily due to the fulfilment of orders in our Singapore operations, coupled with a reduction in purchase volumes in response to a slower customer demand.

Prepaid expense was $548 as at December 31, 2024 compared to $536 at June 30, 2024. This mainly relates to the prepayment for insurance, rental and software license fee.

Investment properties’ net in China was $372 at December 31, 2024 and $407 at June 30, 2024. The decrease was primarily due to the depreciation charged and foreign currency exchange movement between June 30, 2024 and December 31, 2024.

Property, plant and equipment decreased by $343 from $5,937 at June 30, 2024, to $5,594 at December 31, 2024, mainly due to depreciation charged for the period.

Other assets decreased by $103 to $129 at December 31, 2024 compared to $232 at June 30, 2024. Other assets mainly comprise of rental and utilities deposits.

Accounts payable decreased by $1,371 to $1,804 at December 31, 2024, compared to $3,175 at June 30, 2024 which is consistent with the decline in inventory.

Accrued expense decreased by $939 to $2,695 at December 31, 2024, as compared to $3,634 at June 30, 2024. The decrease in accrued expense was mainly due to payments made out of provisions and a decrease in accrued purchases.

Contract liabilities decreased by $33 to $721 at December 31, 2024 as compared to $754 at June 30, 2024 .

- 40 -

Bank loans payable decreased by $92 to $782 as of December 31, 2024, as compared to $874 as of June 30, 2024. The decrease was mainly due to the repayment made coupled with foreign currency exchange movement between June 30, 2024 and December 31, 2024 .

Finance leases decreased by $37 to $54 at December 31, 2024, as compared to $91 at June 30, 2024. This was due to the repayments of leases in our Singapore and Malaysia operations.

Operating lease right-of-use assets and the corresponding lease liability decreased by $690 to $1,197 at December 31, 2024, as compared to $1,887 at June 30, 2024. This was due to operating lease expense charged for the period and also partially driven by a shift in our business model in one of our China operations, resulting in a decrease in operating lease right-of-use assets and the corresponding lease liabilities due to the reduced need for space.

Other non-current liabilities increased to $30 as at December 31, 2024, as compared to $27 at June 30, 2024.

Liquidity Comparison

Net cash provided by operating activities decreased by $1,113 to an inflow of $254 for the six months ended December 31, 2024, from an inflow of $1,367 for the same period in Fiscal 2024. The decrease in net cash provided by operating activities was primarily due to higher payments to trade creditors by $5,430 and lower depreciation of $1,362 for the six months ended December 31, 2024 as compared to the six months ended December 31, 2023. These are partially offset by higher cash inflow for trade receivables and inventories for the six months ended December 31, 2024 with a difference of $3,297 and $2,469 respectively, compared to the same period in Fiscal 2024

Net cash provided by investing activities decreased by $896 to $240 for the six months ended December 31, 2024 compared with the same period in Fiscal 2024. This was primarily due to a net withdrawal from unrestricted term deposits which matured for the six months ended December 31, 2023, and were held for working capital purposes.

Net cash used in financing activities for the six months ended December 31, 2024, was $183, representing a decrease of $463, compared to cash inflow of $280 during the six months ended December 31, 2023. The changes in cashflow from financing activities was mainly due to cash inflow from the stock option exercise and net proceeds from lines of credit for the six months ended December 31, 2023. which were not present during the six months ended December 31, 2024

The Company filed a shelf registration statement with the Securities and Exchange Commission, pursuant to which we may raise capital of $10,000,000 of any combination of securities (common stock, warrants, debt securities or units) for expansion of the Company’s testing capacity and working capital purposes if necessary.

An evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2024, the end of the period covered by this Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective at a reasonable level.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 41 -

TRIO-TECH INTERNATIONAL