Trio-Tech International — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Total revenue increased 33% sequentially to $19.9 million and 29% year-over-year compared to $15.5 million in the first quarter of fiscal 2026.
• Gross profit rose 59% to $4.1 million, with consolidated gross margin expanding to 20.6% from 16.7% in the prior-year quarter.
• Operating income reached $1.3 million, a significant improvement from $46,000 in the prior-year quarter, driven by a 13% increase in operating expenses to $2.9 million.
• Net income attributable to common shareholders was $846,000, compared to $77,000 in the prior-year quarter.
• Diluted earnings per share (EPS) were $0.07, up from $0.01 in the prior-year quarter; basic EPS were $0.08.
• Net cash used in operating activities was $3.3 million, reversing from $0.9 million provided in the prior-year quarter, due to increased investment in receivables and inventories.
• Cash, cash equivalents, short-term deposits, and restricted term deposits totaled $25.6 million at September 30, 2026, down from $28.5 million at June 30, 2026.
• Working capital increased to $33.3 million from $32.2 million at June 30, 2026.
• Shareholders' equity was $46.3 million, with $22.8 million in net unrestricted cash and a $5 million untapped line of credit.

Guidance and Future Outlook:

• Management expects testing volumes at the expanded Malaysia facility to increase sequentially in the second quarter of fiscal 2027.
• The Semiconductor Back-End Solutions (SBS) segment had a combined backlog of $28.1 million (including $10.3 million in soft backlog) as of September 30, 2026, up from $24.2 million at June 30, 2026.
• The Industrial Electronics (IE) segment reported a hard backlog of approximately $5.7 million.
• Component shortages are expected to persist through the end of the second quarter of fiscal 2027, potentially affecting order fulfillment timing.
• SBS gross margin is expected to moderate from the first-quarter level as AI-related testing services account for a larger share of revenue.
• Working capital requirements are expected to remain elevated in the second quarter to support inventory purchases and advance payments for backlog fulfillment.
• Distribution backlog growth in the IE segment supports expectations for year-over-year revenue growth in that business line.

Business Segments and Product Lines:

• SBS revenue grew 39% year-over-year to $15.9 million, driven by a 227% increase in burn-in board sales and an approximate 18% increase in testing services revenue.
• SBS gross margin improved to 21.5% from 14.9% in the prior-year quarter.
• Industrial Electronics revenue remained flat at $4.0 million year-over-year.
• IE aerospace-related product sales increased 63%, offsetting a 10% decline in distribution sales caused by component shortages and longer supplier lead times.
• IE gross margin decreased to 17.5% from 21.8% in the prior-year quarter due to product mix changes.
• The Malaysia facility expansion began initial operations in September 2026, providing additional capacity for AI, data center, and EV automotive applications.

Market and Competitive Landscape:

• Strong demand is observed for AI GPU burn-in boards and testing services for EV, data center, and AI-related semiconductor applications.
• The company operates in the semiconductor back-end solutions and value-added industrial electronic products and services markets.
• Component shortages and supplier delays remain a market-wide challenge affecting shipment timing.

Risks and Challenges:

• Persistent component shortages and supply availability issues may impact order fulfillment timing through the second quarter of fiscal 2027.
• Soft backlog represents management estimates of customer demand and does not constitute firm commitments.
• Future profitability depends on product mix, capacity utilization, and the conversion of backlog to revenue.
• Risks include changes in semiconductor and industrial demand, customer order timing, foreign currency movements, tariffs, trade restrictions, and regulatory conditions affecting the AI industry.

Management Commentary and Tone:

• Chairman and CEO S.W. Yong highlighted a "substantial improvement in profitability" driven by higher sales and margins in the SBS business.
• Management expressed confidence in the expanding pipeline of opportunities across AI, data center, and EV automotive applications.
• The tone emphasized the company's ability to convert higher revenue into improved operating profitability and its strong balance sheet providing flexibility for growth and capital returns.
• Management noted a focus on fulfilling customer programs and managing working capital required to support growth.

Other Key Points:

• The Board of Directors approved an additional $1.0 million under the existing share repurchase program and extended the program for 24 months on November 9, 2026.
• During the first quarter of fiscal 2027, the company purchased 10,327 shares; subsequent to quarter-end, it purchased an additional 112,869 shares, totaling 123,196 shares for approximately $696,000.
• The company effected a two-for-one forward stock split on January 5, 2026, with all share and per-share amounts retrospectively adjusted.
• Total other expense was $58,000, compared to total other income of $181,000 in the prior-year quarter.
• The company operates facilities in the United States, Singapore, Malaysia, Thailand, and China.