Jinpan International Reports First Quarter 2009 Financial Results

- 1Q09 Net Sales Increases 36.1% to $ 32.4 Million Compared to 1Q08 -

- 1Q09 Gross Margin Increases 483 Basis Points to 36.2% Compared to 1Q08 -

- 1Q09 Net Income increases 94.9% to $ 4.7 Million Compared to 1Q08 -

- 1Q09 Diluted EPS Increases 93.3% to $0.58 Compared to 1Q08 -

- Company Reiterates Comfort with FY09 Financial Forecast -

ENGLEWOOD CLIFFS, N.J., May 15 /PRNewswire-FirstCall/ -- Jinpan International Ltd (Nasdaq: 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, 2009.

Net sales for the first quarter were $32.4 million, a 36.1% increase from $23.8 million over the same period last year. Growth in net sales was fueled by both a sizeable increase of international orders, which include wind energy products and non-wind related cast resin transformers as well as from increased domestic cast resin sales orders. In the first quarter, net sales outside of China increased 485% to $8.0 million, or 25% of net sales, compared to $1.65 million, or 6.9% of net sales in the same period last year. First quarter domestic sales increased 10.2% to $24.4 million from $22.2 million in the prior year period.

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $25.9 million, or 80% of net sales in the first quarter, while wind energy products represented $6.5 million, or 20% of net sales in the first quarter.

Gross margin in the first quarter was $11.7 million, a 56% increase from $7.5 million, in the same period last year. First quarter gross margin increased to 36.2% compared to 31.3% in the same period last year. The Company benefited from a lower cost of sales on an absolute basis due to lower raw material prices compared to the same period last year.

Selling, general and administrative expenses in the first quarter were $6.2 million, or 19.2% of net sales, versus $4.5 million, or 18.8% of net sales in the same period last year. Selling, general, and administrative expenses increased primarily due to additional overhead costs at the Company's Wuhan and Shanghai facilities, which were not operating during the same period last year.

Operating income increased to $5.5 million, or 16.9% of net sales, an 83.5% increase compared to $3.0 million, or 12.6% of net sales in the same period last year.

Net income for the first quarter was $4.7 million, or $0.58 per diluted share, increased 94.9% compared with $2.4 million or $0.30 per diluted share, in the same period last year. First quarter net income as a percentage of net sales was 14.4% as compared to 10.1% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan commented, "We are off to a good start in what is traditionally one of our slower quarters of the year. We are pleased to see a substantial increase in orders from our international business segment in the first quarter. Our international customers are placing orders for cast resin transformers for wind power applications as well as transformers for more traditional power generation applications used in urban (trains & subways, hospitals, airports, office buildings), industrial (factories), and commercial developments (processing plants, data centers). We expect a steady rise in international demand in 2009 as we continue to garner attention and receive orders from some of the largest, most prominent electrical equipment OEMs in the industry. We expect international sales to account for a greater portion of our total sales in 2009 than 2008. We are pleased to see that a substantial portion of China's $585 billion economic stimulus plan will be allocated to the infrastructure development projects. We believe that we are well positioned to benefit from the stimulus package

As such, we are taking the necessary steps to ensure we have an appropriate level of capacity to meet demand over the next several quarters and well into the future. Our newest operational facility in Wuhan, which currently manufactures our standard cast resin transformers will be outfitted to maximize capacity by the end of 2009 while our Shanghai manufacturing facility is also expected to be completed in the third quarter of 2009. Once completed, this facility will house all of our wind related products.

We are making steady progress in our business. We believe that we are well positioned to capitalize on current challenging market conditions, penetrate new markets, and expand our market share in the electrical equipment market. We have a strong balance sheet, a healthy cash position, manageable debt and the right strategic plan to sustain ably manage our business for growth this year and beyond. We look forward to capitalizing on our opportunities and enhancing value for our shareholders," concluded Mr. Li.

Financial Outlook

For the full year 2009, the Company currently anticipates net sales of approximately $176 million to $182 million, a 14% to 18% increase over 2008 sales of $154 million. The Company anticipates net income of approximately $22.5 million to $23.3 million, a 14% to 18% increase over 2008 net income of $19.8 million. The Company anticipates diluted earnings per share for 2009 to be $2.75 to $2.85 per share.

Conference Call Information

Jinpan's management will host an earnings conference call today, May 15, 2009 at 8:30 a.m. U.S. Eastern Standard Time. Listeners may access the call by dialing #1-913-981-5567. A webcast will also be available via the Company's website at http://www.jstusa.net or at www.viavid.net. A replay of the call will be available through May 29, 2009. Listeners may access the replay by dialing #1-719-457-0820, access code: 7695004.

About Jinpan International Ltd

Jinpan International Ltd. (Nasdaq: JST) designs, manufactures and distributes cast resin transformers for voltage distribution equipment in China and other countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations at lower, more usable voltage levels. 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

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, and 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 our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 20-F for the period ended December 31, 2007 and our subsequent reports on Form 6-K.

Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

    Jinpan International Limited and Subsidiaries
    Consolidated Statements of Income (unaudited)

                                                    Three
                                                    months
                                                    ended
                                                  March 31

                                               2009       2008
      (In thousands, except per share data)    US$        US$


     Net sales                               32,387     23,798
     Cost of Goods Sold                     (20,672)   (16,339)
     Gross Margin                            11,715      7,459

     Operating Expenses
       Selling and administrative            (6,230)    (4,470)
     Operating income                         5,485      2,989

     Interest Expenses                         (105)      (179)
     Other Income                                51        183
     Income before income taxes               5,431      2,993

     Income taxes                              (753)      (593)
     Net income after taxes                   4,678      2,400

     Earnings per share

       -Basic                               US$0.58    US$0.30

       -Diluted                             US$0.58    US$0.30

     Weighted average number of
      shares

       -Basic                             7,998,325  7,984,147

       -Diluted                           8,017,528  8,117,923


    Jinpan International Limited and Subsidiaries
    Consolidated Balance Sheets (unaudited)


                                                       March 31, December 31,
                                                          2009       2008
                                                           US$       US$
    Assets

     Current assets:

       Cash and cash equivalents                          14,922     16,739
       Accounts receivable, net                           61,276     58,793
       Inventories                                        30,042     31,868
       Prepaid expenses                                    7,001      4,713
       Other receivables                                   5,224      7,317

     Total current assets                                118,465    119,430

     Property, plant and equipment, net                   18,430     18,213

     Construction in progress                              6,326      6,055

    Land use right                                         6,080      6,098
    Intangible asset-Goodwill                             12,328     12,348
    Deferred tax assets                                      293        301

    Total assets                                         161,922    162,445

    Liabilities and Shareholders' Equity

    Current liabilities:

      Short term bank loans                               11,158     11,726
      Accounts payable                                    11,051     11,300
      Income tax                                           2,835      3,671
      Advance from customers                               8,128      7,828
      Other Payable                                       17,933     20,733

    Total current liabilities                             51,105     55,258

    Shareholders' equity:

       Common stock, US$0.009 par value:
         Authorized shares - 20,000,000
         Issued and outstanding shares - 8,209,684 in
          2009 and 8,189,684 in 2008                          74         73
       Common Stock, Warrants                                854        854
       Convertible preferred stock, US$0.009 par
        value:
         Authorized shares - 1,000,000
         Issued and outstanding shares - 3,044 in 2008
          and 2009                                             -          -
       Additional paid-in capital                         34,164     34,035
       Reserves                                            3,906      3,906
       Retained earnings                                  64,004     60,296
       Accumulated other comprehensive income              8,604      8,812
                                                         111,606    107,976
       Less: Treasure shares at cost, common
        stock-206,470 in 2009 and 206,470 in 2008           (789)      (789)
     Total shareholders' equity                          110,817    107,187

     Total liabilities and shareholders' equity          161,922    162,445



    Jinpan International Limited and Subsidiaries
    Consolidated Statements of Cash Flows (Unaudited)


                                                              Three months
                                                             ended March 31,

                                                             2009      2008
                                                              US$       US$
     Operating activities
       Net income                                           4,678     2,400
       Adjustments to reconcile net income to
         net cash provided by/(used in) operating
          activities:
         Depreciation                                         874       360
         Provision for Doubtful Debt                           (4)        -
         Loss/(Gain) on disposal of fixed assets                -         -
         Deferred Income Tax                                    7        20
         Stock-based compensation cost                        102
       Changes in operating assets and liabilities
         Accounts receivable                               (2,576)   (2,391)
         Notes receivable                                   1,551        (7)
         Inventories                                        1,776    (6,351)
         Prepaid expenses                                  (2,298)    1,430
         Other receivables                                    532       172
         Accounts payable                                    (231)     (597)
         Income tax                                          (831)     (104)
         Advance from customers                               313       891
         Other liabilities                                 (2,769)     (336)
    Net cash provided by/(used in) operating
      activities                                            1,124    (4,513)
     Investing activities
       Purchases of property, plant and equipment          (1,113)     (258)
       Proceeds from sales of property, plant and
        equipment                                               -         -
       Payment for construction in progress                  (280)     (726)
           Purchase of available-for -sales securities          -    (1,956)
    Net cash provided by (used in) investing
      activities                                           (1,393)   (2,940)
     Financing activities
       Proceeds from bank loan                              2,380     4,434
       Repayment of bank loan                              (2,929)   (2,281)
       Proceeds from exercise of stock options                 27         -
       Decrease in Minority Interest                            -         -
       Acquired minority interest                               -         -
       Dividends paid                                        (970)     (967)
    Net cash provided by/(used in) financing
      activities                                           (1,492)    1,186
     Effect of exchange rate changes on cash                  (56)      139
    Net increase/(decrease) in cash and cash
      equivalents                                          (1,817)   (6,128)
     Cash and cash equivalents at beginning of
      year                                                 16,739    17,122
    Cash and cash equivalents at end of year               14,922    10,994

    Interest paid                                             112       292
    Income taxes paid                                       1,522       686


SOURCE Jinpan International Ltd



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