Jinpan International Reports Second Quarter 2012 Financial Results

CARLSTADT, N.J., Aug. 14, 2012 /PRNewswire/ -- Jinpan International Ltd. (NASDAQ: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today announced the unaudited consolidated financial results for the second quarter ended June 30, 2012. 

Second Quarter 2012 Results

Net sales for the second quarter were $55.5 million, a 4.7% decrease from $58.3 million in the same period last year.  The decrease in sales was primarily the result of decreased international sales.  In the second quarter, domestic sales accounted for $51.2 million, or 92.3% of net sales, compared to $46.1 million, which also represented 79.1% of net sales in the same period last year. Net sales outside of China for the quarter were $4.3 million, or 7.7% of net sales compared to $12.2 million, or 20.9% of net sales for the same period last year.

The sales of cast resin transformers (excluding those for wind power applications), switchgears and unit substations represented $48.6 million, or 87.6% of net sales in the second quarter, while wind energy products (cast resin transformers and VPI products for wind power applications) represented $6.9 million, or 12.4% of net sales during this quarter.

Gross profit in the second quarter decreased 23.0% year over year to $17.1 million from $22.2 million in the same period last year.  Second quarter 2012 gross profit margin was 30.8%, compared to 38.1% in the prior year period, and 36.9% in the 2012 first quarter. Gross margin decreased in the second quarter due to lower product prices, resulting from a competitive pricing environment, and a higher ratio of standard to customized products sold. 

Selling and administrative expenses in the second quarter were $14.2 million, or 25.6% of net sales, compared to $13.8 million, or 23.7% of net sales in the same period last year.   Selling expenses increased in the second quarter due to higher commissions resulting from increased sales in China. Compared with international sales, the Company pays more commission per dollar of sales in China, because it employs a direct market strategy in China whereas international sales are comprised mostly of large orders from several OEMs. Administrative expenses also increased due to increased salary expenses resulting from the Company's implementation of its expansion plans.

Operating income for the second quarter decreased 65.4% to $2.9 million, or 5.3% of net sales, from $8.4 million, or 14.5% of net sales, in the same period last year. Net income for the second quarter decreased 67.6% to $2.4 million, or $0.14 per diluted share, from $7.3 million, or $0.44 per diluted share, in the same period last year.  Second quarter net income as a percentage of net sales was 4.2% compared to 12.5% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "Our results were generally in line with our preliminary results announced in the first half of July. As reported earlier, our business in the second quarter was negatively impacted by a change in the design of wind power products by our primary OEM customer, resulting in decreased international sales.  We were also impacted by weaker than expected domestic orders in China due to a softer economic environment."

"In our international business, we continue to work closely with our major OEM customer on new product specifications and design so they can be integrated into the new wind power cast resin transformer products we will manufacture for this customer.  We expect a portion of our export sales shortfall to be offset by increased orders from our two other OEM customers in the second half of the year resulting in international sales to be equal or slightly less than last year." 

"In our domestic business, despite the softer economic environment, we continue to manufacture our cast resin transformer products for many sizeable infrastructure projects and continue to receive a steady flow of new orders.  At the end of July, we had a backlog of approximately $115 million, of which we expect approximately 70% to 80% of this backlog to be shipped in 2012, setting us up for an improved second half.  While we are adjusting our full year forecast to reflect reduced domestic order activity in July, we remain confident in our long term growth trajectory and will continue towards the goal of developing Jinpan into a leading, world class cast resin transformer manufacturer." 

Balance Sheet

As of June 30, 2012, the Company had $26.0 million in cash and cash equivalents, compared to $24.2 million at December 31, 2011. The Company's accounts receivable on June 30, 2012 totaled $121.7 million, compared to $110.4 million at December 31, 2011.  Notes payable in the 2012 second quarter decreased to $6.0 million compared to $13.6 million on December 31, 2011.  Total bank loans outstanding at June 30, 2012 increased to $45.3 million as compared to $23.0 million at December 31, 2011. During the second quarter, the Company increased $7.9 million long term loan that related to the construction of its Guilin manufacturing facility.

Financial Outlook

For the full year 2012, the Company currently anticipates net sales of $208-$219 million, a decrease of 0% to 5% compared to 2011, net income of $15.5-$16.5 million, a decrease of 30% to 35% compared to 2011, and gross profit margin of approximately 33% to 34% of net sales.

Conference Call Information

Jinpan's management will host an earnings conference call on August 14th, 2012 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing #1-913-312-1396.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through August 28th, 2012.  Listeners may access the replay by dialing #1-858-384-5517, access code: 2445315.

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 United States office 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, 2011 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)
For the Three and Six Month Periods Ended June 30, 2012


Three

months

ended

June 30

Three

months

ended

June 30

Six

months

ended

June 30

Six

months

ended

June 30



2012

2011

2012

2011

(In thousands, except per share data)


US$

US$

US$

US$







Net sales


55,529

58,270

98,283

88,153

Cost of Goods Sold


(38,418)

(36,040)

(65,410)

(54,965)

Gross Margin


17,111

22,230

32,873

33,188







Operating Expenses






Selling and administrative


(14,188)

(13,785)

(25,103)

(21,567)

Operating income


2,923

8,445

7,770

11,621







Interest Expenses


(627)

(272)

(1,086)

(447)

Other Income


364

228

579

510

Income before income taxes


2,660

8,401

7,263

11,684







Income taxes


(302)

(1,125)

(941)

(1,667)

Net income


2,358

7,276

6,322

10,017







Earnings per share












-Basic


US$0.15

US$0.45

US$0.39

US$0.62







-Diluted


US$0.14

US$0.44

US$0.39

US$0.61







Weighted average number of shares












-Basic


16,164,487

16,253,494

16,164,487

16,253,494







-Diluted


16,522,898

16,469,879

16,400,668

16,525,324













 

Jinpan International Limited and Subsidiaries
Consolidated Balance Sheets                                                                                                                    



Unaudited


Audited




June 30,


December 31,




2012


2011




US$


US$


Assets












Current assets:












Cash and cash equivalents


26,005


24,218


Restricted cash


19


322


Notes receivable

Accounts receivable, net


11,147

121,716


19,114

110,382


Inventories


44,910


36,675


Prepaid expenses


10,183


13,251


Other receivables


6,354


3,878








Total current assets


220,334


207,840








Property, plant and equipment, net


40,123


37,102








Construction in progress


6,173


2,406








Land use right


15,282


15,523


Intangible asset-Goodwill


13,320


13,371


Other assets


81


76


Deferred tax assets


1,153


1,044








Total assets


296,466


277,362








Liabilities and Shareholders' Equity












Current liabilities:












Short term bank loans


35,853


21,426


Accounts payable


24,252


22,833


Notes Payable


5,956


13,611


Tax Payable


1,516


2,335


Advance from customers


14,399


12,642


Other Payable


16,956


22,072








Total current liabilities


98,932


94,919








Long TermLoan


9,423


1,550


Deferred Income


2,643




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


Convertible preferred stock, US$0.0045 par value:






Authorized shares – 2,000,000






Issued and outstanding shares –none in 2012

and 2011


-


-


Additional paid-in capital


37,079


36,114


Reserves


12,023


12,023


Retained earnings


117,106


111,915


Accumulated other comprehensive income


19,644


20,392




185,926


181,372


  Less: Treasury shares at cost, common stock-215,306 in 2012 and  227,306 in 2011


(458)


(479)


Total shareholders' equity


185,468


180,893








Total liabilities and shareholders' equity


296,466


277,362


 

Jinpan International Limited and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2012 (Unaudited)


Six months ended June 30

Six months ended June 30


2012

2011

Operating activities



Net income

6,322

10,017

Adjustments to reconcile net income to



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



Depreciation

2,080

2,067

Provision for Doubtful Debt

973

163

Loss/(Gain) on disposal of fixed assets

(4)

-

Deferred Income Tax

(114)

55

     Deferred Income

2,649

-

     Stock-based compensation cost

111

123

Changes in operating assets and liabilities



Restricted cash

301

(384)

Accounts receivable

(12,747)

(18,809)

Notes receivable

7,910

(7,117)

Inventories

(8,390)

(10,681)

Prepaid expenses

3,024

(1,181)

Other receivables

(2,501)

(300)

Accounts payable

1,509

8,030

Notes Payable

(7,618)

(27,424)

Income tax

(812)

229

Advance from customers

1,808

4,888

Other liabilities

(5,105)

5,819

Net cash provided by/(used in) operating activities

(10,604)

(34,505)

Investing activities



Purchases of property, plant and equipment

(5,272)

(2,440)

Proceeds from sales of property, plant and equipment

29

-

Payment for construction in progress

(3,783)

-

     Long Term Prepaid Lease

182

161

Net cash provided by (used in) investing activities

(8,844)

(2,279)

Financing activities



Proceeds from bank loan

37,412

18,815

Repayment of bank loan

(14,982)

(2,003)

Proceeds from exercise of stock options

21

-

Dividends paid

(1,129)

(1,139)

Net cash provided by/(used in) financing activities

21,322

15,673

Effect of exchange rate changes on cash

(87)

388

Net increase/(decrease) in cash and cash equivalents

1,787

(20,723)

Cash and cash equivalents at beginning of year

24,218

27,527

Cash and cash equivalents at end of the period

26,005

6,804




Interest paid

1,087

478

Income taxes paid

1,959

1,196

SOURCE Jinpan International Ltd.




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