Jinpan International Reports First Quarter 2011 Financial Results

May 16, 2011, 07:30 ET from Jinpan International Ltd

CARLSTADT, N.J., May 16, 2011 /PRNewswire/ -- Jinpan International Ltd (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers for voltage distribution equipment, today announced unaudited consolidated financial results for the first quarter ended March 31, 2011.  

Net sales for the first quarter were $29.9 million, a 52.6% increase from $19.6 million in the same period last year.  The increase in sales was the result of higher volume transformer and switchgear sales in the Company's domestic business.  In the first quarter, domestic sales accounted for $27.8 million, or 93.0% of net sales, compared to $17.3 million, or 88.3% of net sales in the same period last year. Net sales outside of China were $2.1 million, or 7.0% of net sales, compared to $2.3 million, or 11.7 % of net sales in the same period last year.  

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $25.0 million, or 83.6% of net sales in the first quarter, while wind energy products represented $4.9 million, or 16.4% of net sales in the first quarter.

Gross profit in the first quarter increased 51.4% year over year to $10.9 million from $7.2 million.  First quarter 2011 gross profit margin was 36.7% compared to 36.5% in the prior year period primarily due to a similar balance of domestic and international sales orders from the first quarter of 2010.

Sales, general and administrative expenses in the first quarter were $7.8 million, or 26.1% of net sales, compared to $6.4 million, or 32.7% of net sales in the same period last year.  This percentage decrease was primarily a result of higher sales in the first quarter 2011 compared to the same period last year.  Operating income increased 321.1% to $3.2 million, or 11.0% of net sales, from $0.8 million, or 3.9% of net sales in the same period last year.

Net income for the first quarter increased 139.4% to $2.7 million, or $0.17 per diluted share, from $1.1 million, or $0.07 per diluted share, in the same period last year.  First quarter net income as a percentage of net sales was 9.2%, compared to 5.8% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "We experienced very solid growth in the first quarter, boosted by strong transformer sales in our domestic operations. This was fueled by a 57% increase in switchgear sales and 50% increase in transformer sales.  Our marketing efforts over the past year led to increased sales of switchgear products.  With the addition of a new line of gas insulated switchgears to our product portfolio, we are optimistic that switchgear sales will continue to grow."

"Our international sales were stable in the first quarter led by orders from the U.S. and Europe.  We anticipate stronger international sales from each region in the second quarter as demand for wind transformers continue to grow."  

"Our land acquisition and planned manufacturing and R&D facility we announced in April marks the start of our further expansion to meet the steady demand for our cast resin transformer products, high and low voltage switchgears, and transformer substations in the years ahead.  We remain focused on meeting the growing demand for power generation equipment and believe that Jinpan is well positioned to capitalize on growth opportunities in China and abroad."

Balance Sheet

As of March 31, 2011, the Company had $25.2 million in cash and cash equivalents, compared to $27.5 million at December 31, 2010.  Inventory increased to $38.6 million as of March 31, 2011, from $29.5 million on December 31, 2010, due to anticipated order demand.  Accounts receivable on March 31, 2011 totaled $77.5 million, compared to $76.0 million on December 31, 2010. Prepaid expenses increased to $33.4 million in the first quarter 2011 from $29.0 million in the fourth quarter 2010 primarily due to the a land purchase announced which was recorded as a prepaid expense but will shift to a fixed asset balance sheet line item once the Company completes the land registration process.  Notes payable in the 2011 first quarter decreased to $24.1 million compared to $27.1 million at the end of December 31, 2010.  Total bank loans outstanding at March 31, 2011 increase to $15.7 million as compared to $13.7 million at December 31, 2010.

Financial Outlook

As of April 30, 2011, the Company had a backlog of approximately $79 million, a 31% increase from $60 million as of December 31, 2010.  

For the full year 2011, the Company reiterates its full year guidance of net sales growth of 20-25% to $173-$180 million, gross profit margin of 36%-38%, net income growth of approximately 43-50% to $19.0-$20.0 million.  

Conference Call Information

Jinpan's management will host an earnings conference call on May 16, 2011 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing # 1-719-325-4853.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through May 30, 2011.  Listeners may access the replay by dialing # 1-858-384-5517, access code: 8100672.

About Jinpan International Ltd

Jinpan International Ltd. (Nasdaq: JST) designs, manufactures, and markets cast resin transformers for power distribution and wind energy products. 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 ISO14001 certifications for its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Carlstadt, 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 are 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, 2009 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.

(Financial Statements on Following Page)

Jinpan International Limited and Subsidiaries

Consolidated Statements of Income (unaudited)

Three

Months

ended

March 31

2011

2010

(In thousands, except per share data)

US$

US$

Net sales

29,882

19,582

Cost of Goods Sold

(18,925)

(12,432)

Gross Margin

10,957

7,150

Operating Expenses

  Selling and administrative

(7,782)

(6,396)

Operating income

3,175

754

Interest Expenses

(175)

(42)

Other Income

283

592

Income before income taxes

3,283

1,304

Income taxes

(542)

(159)

Net income after taxes

2,741

1,145

Earnings per share

  -Basic

US$0.17

US$0.07

  -Diluted

US$0.17

US$0.07

Weighted average number of shares

  -Basic

16,163,696

16,155,696

  -Diluted

16,427,141

16,566,947

Jinpan International Limited and Subsidiaries

Consolidated Balance Sheets (unaudited)

March 31,

December 31,

2011

2010

US$

US$

Assets

Current assets:

Cash and cash equivalents

25,214

27,527

Restricted Cash

1,051

1,079

Accounts receivable, net

77,542

75,658

Inventories

38,568

29,532

Prepaid expenses

33,423

28,939

Other receivables

13,997

9,833

Total current assets

189,795

172,568

Property, plant and equipment, net

32,378

32,138

Construction in progress

2,122

1,861

Land use right

6,359

6,374

Intangible asset-Goodwill

12,849

12,721

Other assets

69

69

Deferred tax assets

886

858

Total assets

244,458

226,589

Liabilities and Shareholders' Equity

Current liabilities:

Short term bank loans

14,136

12,080

Accounts payable

17,640

13,269

Notes Payable

24,091

27,111

Income tax

1,819

1,659

Advance from customers

7,918

5,319

Other Payable

22,615

14,061

Total current liabilities

88,219

73,499

Long Term Loan

1,585

1,597

Shareholders' equity:

Common stock, US$0.0045 par value:

Authorized shares - 40,000,000

Issued and outstanding shares - 16,395,456 in 2011 and 2010

74

74

Common Stock, Warrants

854

854

Convertible preferred stock, US$0.0045 par value:

Authorized shares – 2,000,000

Issued and outstanding shares – none in 20011 and 2010

-

-

Additional paid-in capital

35,800

35,738

Reserves

9,514

9,514

Retained earnings

94,370

92,834

Accumulated other comprehensive income

14,521

12,958

155,133

151,972

 Less: Treasure shares at cost, common stock-227,036 in 2011 and  2010

(479)

(479)

Total shareholders' equity

154,654

151,493

Total liabilities and shareholders' equity

244,458

226,589

Jinpan International Limited and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Three months ended March 31,

2011

2010

US$

US$

Operating activities

Net income

2,741

1,145

Adjustments to reconcile net income to

net cash provided by/(used in) operating activities:

Depreciation

1,025

794

Provision for Doubtful Debt

(99)

(117)

Deferred Income Tax

(20)

21

Stock-based compensation cost

61

53

Changes in operating assets and liabilities

Restricted Cash

39

-

Accounts receivable

(1,014)

4,319

Notes receivable

(3,471)

3,544

Inventories

(8,694)

(3,391)

Prepaid expenses

(4,170)

(2,447)

Other receivables

(572)

(520)

Accounts payable

4,216

1,365

Notes Payable

(3,278)

-

Income tax

142

(231)

Advance from customers

2,532

1,151

Other liabilities

8,324

(3,425)

Net cash provided by/(used in) operating activities

(2,238)

2,261

Investing activities

Purchases of property, plant and equipment

(941)

(236)

Payment for construction in progress

(240)

(422)

Long Term Prepaid Lease

80

(423)

    Investment in Beijing Jinpan Huineng Electronics Co

-

(44)

Net cash provided by (used in) investing activities

(1,101)

(1,125)

Financing activities

Proceeds from bank loan

1,925

-

Repayment of bank loan

(28)

(12)

Proceeds from exercise of stock options

-

-

Dividends paid

(1,132)

(1,131)

Net cash provided by/(used in) financing activities

765

(1,143)

Effect of exchange rate changes on cash

261

4

Net increase/(decrease) in cash and cash equivalents

(2,313)

(3)

Cash and cash equivalents at beginning of year

27,527

25,749

Cash and cash equivalents at end of year

25,214

25,746

Interest paid

199

42

Income taxes paid

419

474

SOURCE Jinpan International Ltd