Jinpan International Reports First Quarter 2008 Financial Results
- 1Q08 Sales Increases 47% to $23.8 Million Compared to 1Q07 -
- 1Q08 Net Income Increases 50% to $2.4 Million -
ENGLEWOOD CLIFFS, N.J., May 28 /PRNewswire-FirstCall/ -- Jinpan International Ltd (Amex: JST), a leading designer, manufacturer, and distributor of cast resin transformers for voltage distribution equipment, today announced consolidated financial results for the first quarter ended March 31, 2008. Total sales for the first quarter were USD $23.8 million, a 46.6% increase over the same period last year. The increase in revenues was primarily a result of increased sales volumes of the Company's cast resin transformers, in both China and abroad. Gross profit in the first quarter was $7.4 million, a 57% increase over the same period last year. First quarter gross margin increased 200 basis points to 31.3% compared to 29.3% in the same period last year. Gross margin benefitted primarily from lower overall raw material costs compared to the same period last year as well as from increased shipments of transformers that were developed using lower cost materials. Selling and administrative expenses in the first quarter of 2008 were $4.4 million, or 18.8% of sales, versus $3.0 million, or 18.2% of sales, in the same period last year. Selling and administrative expenses increased primarily due to increased costs related to opening of the Company's new manufacturing facility in Wuhan, and its additional initial administrative start-up costs. Operating income in 2008 increased to $3.0 million, or 12.6% of sales, compared to $1.8, or 11.1% of sales in the same period last year. Net income for the first quarter of 2008 increased 50% to $2.4 million, or $0.30 per diluted share, versus $1.6 million, or $0.20 per diluted share, in the same period last year. First quarter net income as a percentage of revenue increased 20 basis points to 10.1% from 9.9% in the same period last year. Mr. Zhiyuan Li, Chief Executive Officer of Jinpan commented, "We are pleased with our first quarter performance in what is traditionally the slowest period of the year for our business. Over three quarters of our revenue in the first quarter was derived from cast resin transformer sales and we continued to experience growing demand from both our domestic and international base of customers. While domestic demand remains strong, we continue to make inroads into new international markets, although that remains less than 10% of revenue at present. Power generation and industrial cast resin transformers comprised the majority of our transformers sales in the first quarter. Accounts receivable for the first quarter of 2008 increased approximately 10% to $47.2 million from December 31, 2007. Product shipments during the first two months of the first quarter were delayed due to the Chinese New Year holiday and severe winter snowstorms, which resulted in an increased number of product shipments in March. Accounts receivable is expected to trend lower in the Company's second quarter. In support of our growth and new facility, inventories increased 29% to $33.3 million at the end of March 31, 2008. The Company expects its inventories at the end of the first quarter to meet increased product order demand for the second and third quarter periods, which are historically higher revenue quarters for the Company compared to the first quarter. 2008 Financial Outlook The Company reiterates its 2008 outlook as previously disclosed, including expected 2008 revenue of approximately $155 million, which is a 30% increase over 2007 sales of $119.6 million and expected 2008 net income of approximately $21.4 million, or approximately $2.64 per diluted share, which is a 30% increase compared to 2007 net income of $16.5 million, or $2.04 per diluted share. Seasonally, the fourth quarter is expected to be the strongest quarter for the Company followed by Q3, Q2 and Q1. Mr. Li continued, "We have finalized the construction of our cast resin transformer manufacturing facility in Wuhan and are currently at the stage of installing machinery and equipment. We have administered technical training to approximately 70 employees at our new Wuhan facility and are on plan to have this facility up and running in mid-June. Once operational, we believe this new facility can gradually expand our manufacturing capacity from current levels and we expect to reduce our transportation costs as the location of this facility is more centralized to our growing base of domestic customers. Overall demand for our products in 2008 remains strong among our existing base of customers and we are seeing new customers migrate to our transformers due to the quality, efficiency, customization and competitive pricing of our products. Within China, we expect to see the greatest demand coming from our power generation and industrial transformers. In our international business, we are experiencing healthy demand for wind power transformers, which we expect will drive most of our international growth in 2008. We believe international sales will comprise approximately 10% of our total sales in 2008. As part of our efforts to maximize growth, our focus on R&D is important to ensure that our products maintain the quality and efficiency that so many of our customers expect from our brand. We continue to explore new ways to maximize the performance of our existing products and develop new areas of growth, such as our wind power-related products to further drive sales and increase our market share. We are off to an encouraging start this year and look forward to strong Sales and net income results in our business." About Jinpan International Ltd Jinpan International Ltd. (AMEX: JST) designs, manufactures, and distributes cast resin transformers for voltage distribution equipment in China and other various countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations in lower, more usable voltages. The Company has obtained ISO9001 and ISO1401 certification of its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Englewood Cliffs, New Jersey. Safe Harbor Provision Forward Looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations and involve known and unknown risks, uncertainties or other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, the following:
-- our ability to successfully implement our business strategy; -- the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less expensive products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better financing; -- the effects of rapid technological changes and vigorous competition in the markets in which we operate; -- uncertainties about the future growth in electricity consumption and infrastructure development in the markets in which we operate; -- uncertainties about the degree of growth in the number of consumers in the markets in which we operate using mobile personal communications services and the growth in the population in those areas; -- other factors or trends affecting the industry generally and our financial condition in particular; -- the effects of the higher degree of regulation in the markets in which we operate; -- general economic and political conditions in the countries in which we operate or other countries which have an impact on our business activities or investments; -- the monetary and interest rate policies of the countries in which we operate; -- changes in competition and the pricing environments in the countries in which we operate; -- exchange rates; and -- other factors listed from time to time in the our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 20-F for the period ended December 31, 2006 and our subsequent reports on Form 6-K. Jinpan International Limited and Subsidiaries Consolidated Statements of Income (unaudited) For the Three Month Periods Ended March 31, 2008 Three Three months months ended ended March 31 March 31 2008 2007 (In thousands, except per share data) US$ US$ Net sales 23,798 16,233 Cost of Goods Sold (16,339) (11,483) Gross Margin 7,459 4,750 Operating Expenses Selling and administrative (4,470) (2,955) Operating income 2,989 1,795 Interest Expenses (179) (58) Other Income 183 188 Income before income taxes 2,993 1,925 Income taxes (593) (325) Net income after taxes 2,400 1,600 Earnings per share -Basic US$0.30 US$0.20 -Diluted US$0.30 US$0.20 Weighted average number of shares -Basic 7,984,147 7,963,147 -Diluted 8,117,923 8,117,923 Jinpan International Limited and Subsidiaries Consolidated Balance Sheets (unaudited) As of March 31, 2008 March 31 Dec. 31 2008 2007 US$ US$ Assets Current assets: Cash and cash equivalents 10,994 17,122 Investment available for sales 2,197 194 Accounts receivable, net 47,200 43,026 Inventories 33,259 25,743 Prepaid expenses 6,804 7,943 Other receivables 2,921 2,969 Total current assets 103,375 96,997 Property, plant and equipment, net 9,290 9,031 Construction in progress 3,746 2,888 Intangible asset-Goodwill 12,014 11,549 Deferred tax assets 819 807 Total assets 129,244 121,272 Liabilities and Shareholders' Equity Current liabilities: Short term bank loans 12,468 9,874 Accounts payable 6,020 6,372 Income tax 2,342 2,353 Advance from customers 5,734 4,638 Other Payable 15,565 15,292 Total current liabilities 42,129 38,529 Shareholders' equity: Common stock, US$0.009 par value: Authorized shares - 20,000,000 Issued and outstanding shares - 8,186,617 in 2008 and 8,186,617 in 2007 73 73 Common Stock, Warrants 854 854 Convertible preferred stock, US$0.009 par value: Authorized shares - 1,000,000 Issued and outstanding shares - 6,111 in 2007 and 2006 1 1 Additional paid-in capital 33,938 33,938 Reserves 3,905 3,905 Retained earnings 41,017 39,659 Accumulated other comprehensive income 8,116 5,102 87,904 83,532 Less: Treasure shares at cost, common stock-206,470 in 2008 and 206,470 in 2007 (789) (789) Total shareholders' equity 87,115 82,743 Total liabilities and shareholders' equity 129,244 121,272 Jinpan International Limited and Subsidiaries Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2008(Unaudited) Three Three months months ended ended March 31 March 31 2008 2007 Operating activities Net income 2,400 1,600 Adjustments to reconcile net income to net cash provided by/(used in) operating activities: Depreciation 360 160 Provision for Doubtful Debt - (62) Loss/(Gain) on disposal of fixed assets - - Deferred Income Tax 20 (10) Changes in operating assets and liabilities Accounts receivable (2,391) (264) Notes receivable (7) (924) Inventories (6,351) (2,635) Prepaid expenses 1,430 (3,843) Other receivables 172 138 Accounts payable (597) (880) Note Payable - (528) Income tax (104) 324 Advance from customers 891 1,006 Other liabilities (336) 168 Net cash provided by/(used in) operating activities (4,513) (5,750) Investing activities Purchases of property, plant and equipment (258) (231) Proceeds from sales of property, plant and equipment - - Payment for construction in progress (726) (1,046) Purchase of available-for-sales securities (1,956) - Acquired minority interest - (11,000) Net cash provided by (used in) investing activities (2,940) (12,277) Financing activities Proceeds from bank loan 4,434 2,100 Repayment of bank loan (2,281) (1,132) Proceeds from exercise of stock options - - Decrease in Minority Interest - (1,067) Dividends paid (967) (964) Net cash provided by/(used in) financing activities 1,186 (1,063) Effect of exchange rate changes on cash 139 151 Net increase/(decrease) in cash and cash equivalents (6,128) (18,939) Cash and cash equivalents at beginning of year 17,122 34,115 Cash and cash equivalents at end of year 10,994 15,176 Interest paid 292 271 Income taxes paid 686 -
SOURCE Jinpan International Ltd
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