Jinpan International Reports Second Quarter 2013 Financial Results * Second quarter revenue increased 5.6% year-over-year to $58.7 million

* Operating margin was 9.2% in the second quarter, up from 5.3% in last year's second quarter

* Second quarter net income increased 85.8% year-over-year to $4.4 million, or $0.26 per share

* Fiscal 2013 outlook reaffirmed; Sales expected to be in the range of $231 million to $241 million with net income in the range of $14.0 million to $14.5 million, or $0.84 to $0.87 per share

CARLSTADT, N.J., Aug. 14, 2013 /PRNewswire/ -- Jinpan International Ltd. (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the second quarter ending June 30, 2013. 

Second Quarter 2013 Results

Net sales for the second quarter were $58.7 million, a 5.6% increase from $55.5 million in the same period last year.  The increase was driven by strong growth in international sales and modest growth in the Chinese market.  In the second quarter, China sales accounted for $52.6 million, or 89.6% of net sales, compared to $51.2 million, or 92.3% of net sales in the same period last year.  Net sales outside of China for the quarter were $6.1 million, or 10.4% of net sales compared to $4.3 million, or 7.7% of net sales for the same period last year.

The sales of cast resin and VPI transformers (excluding those for wind power applications), switchgears and unit substations represented $53.3 million, or 90.8% of net sales in the second quarter, while wind energy products (cast resin transformers and VPI reactors for wind power applications) represented $5.4 million, or 9.2% of net sales during this quarter.

Gross profit in the second quarter increased 19.2% year over year to $20.4 million from $17.1 million in the same period last year.  Second quarter 2013 gross profit margin was 34.8%, compared to 30.8% in the prior year period, and 33.3% in the first quarter of 2013.  Gross margin in the second quarter increased compared to the same period last year due to a stabilized pricing environment, favorable raw material costs, and an increased mix of international sales, which typically carry higher margins.

Selling and administrative expenses in the second quarter were $15.0 million, or 25.5% of net sales, compared to $14.2 million, or 25.6% of net sales in the same period last year.  Selling and administrative expenses increased from the same period last year due to higher sales and increased expenses associated with the newly operational Guilin facility. 

Operating income for the second quarter increased 85.3% to $5.4 million, or 9.2% of net sales, from $2.9 million, or 5.3% of net sales, in the same period last year.

Net income for the second quarter increased 85.8% to $4.4 million, or $0.26 per diluted share, compared to $2.4 million, or $0.14 per diluted share, in the same period last year.  Second quarter net income, as a percentage of net sales, was 7.5% compared to 4.2% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our second quarter results, which reflect a return to revenue and earnings growth as we are seeing contribution from the strategies we have implemented and investments we have made over the past several years.  With this major investment phase largely complete, we now intensify our focus on the disciplined execution of our growth strategy as we ramp up our Guilin facility, develop new products, expand our international OEM business, and increase our penetration of the domestic market.  At the end of June, our backlog increased to $145 million, up 26% from the prior year period and up 2% from the first quarter of 2013. 

"The ramp-up of our Guilin facility is progressing as planned and we made our first shipments of cast resin transformers from this facility during the second quarter.  Jinpan's total production capacity for cast resin transformers is now 17 million KVA, which we believe positions us as the largest manufacturer of cast resin transformers in China.  We plan to expand production from this facility in a measured and efficient manner over the next several quarters. 

"Jinpan had several positive developments with its OEM business.  As expected, during the second quarter we resumed volume shipments to our largest OEM customer, supplying a newly designed cast resin transformer for its next generation wind turbine platform.  Wind energy sales more than doubled from the first quarter of 2013 and we anticipate continued growth through the end of the year. We continued shipments to our two other OEM customers.  We are also pleased to report that we have successfully passed qualification with a Europe-based wind turbine manufacturer and have received initial orders.  Finally, we made progress with qualification with two additional OEMs.

"Within the Chinese market, the government continues to invest in infrastructure; however, the spending is more targeted and measured than in previous years.  We believe our technical capabilities and the scale and improved efficiency of our Guilin facility position us to capture market share and drive productivity within this slower-growth environment." 

Balance Sheet

As of June 30, 2013, the Company had $14.2 million in cash and cash equivalents, compared to $18.5 million as of December 31, 2012.  The Company's accounts receivable on June 30, 2013 totaled $143.7 million, compared to $124.6 million as of December 31, 2012.  Total bank loans outstanding at June 30, 2013 were $49.4 million, compared to $44.0 million at December 31, 2012. 

Financial Outlook

The Company reiterates its guidance for 2013, projecting net sales of $231 million to $241 million, an increase of 10% to 15% over 2012, and net income of $14.0 million to $14.5 million, or $0.84 to $0.87 per share, which represents an increase of 0% to 3% compared to 2012.

Conference Call Information

Jinpan's management will hold a conference call on Wednesday, August 14, 2013 at 8:30 a.m. Eastern Time.  Listeners may access the call by dialing 1-888-727-7615 (toll free) or 1-913-312-0655 (international).  A webcast will also be available via http://public.viavid.com, with event ID: 105623.  A replay of the call will be available through August 28, 2013 by dialing 1-877-870-5176, access code 8399159.

ABOUT JINPAN INTERNATIONAL

Jinpan International Ltd. (NASDAQ: JST) designs, manufactures, and markets equipment for the distribution of electricity, including cast resin transformers, VPI transformers and reactors, switchgears, and unit substations.  Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations in lower, more usable voltages.  Its principal executive offices are located in Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey.

Safe Harbor Regarding Forward Looking Statements

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, 2012 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 Comprehensive Income (unaudited)
For the Three and Six Month Periods Ended June 30, 2013




Three months ended

Six months ended



June 30

June 30









2013

2012

2013

2012

(In thousands, except number of shares and per
share data)


US$

US$

US$

US$







Net sales


58,664

55,529

93,836

98,283

Cost of Goods Sold


(38,266)

(38,418)

(61,718)

(65,410)

Gross Margin


20,398

17,111

32,118

32,873




-



Operating Expenses






Selling and administrative


(14,983)

(14,188)

(25,354)

(25,103)

Operating income


5,415

2,923

6,764

7,770







Interest Expenses


(494)

(627)

(762)

(1,086)

Other Income


274

364

646

579

Income before income taxes


5,195

2,660

6,648

7,263







Income taxes


(815)

(302)

(1,125)

(941)

Net income after taxes


4,380

2,358

5,523

6,322







Other comprehensive income (loss)






Foreign currency translation adjustment


3

16

(1)

(55)

Total comprehensive income


4,383

2,374

5,522

6,267







Earnings per share






-Basic


US$ 0.27

US$ 0.15

US$ 0.34

US$ 0.39







-Diluted


US$ 0.26

US$ 0.14

US$ 0.33

US$ 0.39







Weighted average number of shares






-Basic


16,195,466

16,164,487

16,195,466

16,164,487







-Diluted


16,653,563

16,522,898

16,654,661

16,400,668

 

 


Jinpan International Limited and Subsidiaries
Consolidated Balance Sheets



(Unaudited)


(Audited)


June 30,


December 31,


2013


2012

(In thousands, except number of shares and per share data)

US$


US$





Assets




Current assets:




Cash and cash equivalents

14,223


18,510

Restricted cash

573


824

Short-term investment

1,942


11,137

Notes receivable

9,082


15,720

Accounts receivable, net

143,730


124,608

Inventories, net

41,794


29,565

Prepaid expenses

8,583


2,528

Land use right

367


366

Deferred tax assets

1,757


1,339

Other receivables

7,419


5,900

Total current assets

229,470


210,497





Property, plant and equipment, net

60,784


41,361

Construction-in-progress

15,050


29,196

 

Land use right

 

14,835


 

14,760

 

Goodwill

13,635


13,403

Other assets

126


32

Deferred tax assets

34


34





Total assets

333,934


309,283





 

Liabilities and shareholders' equity








Current liabilities:








Short-term bank loans

17,598


17,644

Accounts payable

33,561


25,029

Notes Payable

5,285


6,008

Income tax payable

2,142


1,880

 

Advances from customers

15,212


13,624

Other liabilities

23,166


22,844

Total current liabilities

96,964


87,029





     Deferred Income

4,184


3,080

     Long Term bank loans

31,767


26,315

Total Liabilities

132,915


116,424





Shareholders' equity:




Convertible preferred stock, US$0.0045 par value:




      Authorized shares - 2,000,000




      Issued and outstanding shares – none in 2013 and  2012

-


-

 

Common stock, US$0.0045 par value:




Authorized shares – 40,000,000




Issued and outstanding shares –16,415,456 in 2013 and 16,395,456 in 2012

74


74

 

Common stock-warrants

-


-

Additional paid-in capital

37,506


37,374

Reserves

12,023


12,023

Retained earnings

127,615


123,065

Accumulated other comprehensive income

24,151


20,781


201,369


193,317

Less: Treasury shares at cost,

Common stock –154,306 in 2013 and 215,306 in  2012

(350)


(458)

Total shareholders' equity

201,019


192,859





Total liabilities and shareholders' equity

333,934


309,283


 

 

 

Jinpan International Limited and Subsidiaries
Consolidated Statement of Cash Flows
For the Six Months Ended June 30, 2013 (Unaudited)




For the Six Months Ended


June 30


2013


2012

(In thousands)

US$


US$





Operating Activities




      Net Income

5,523


6,322

      Adjustments to reconcile net income to




           Net Cash provided by (used in) operating activities:




           Depreciation

2,944


2,080

           Amortization of prepaid lease

185


182

           Deferred Income Tax

(391)


(114)

           Provision for doubtful debts

1,868


973

           Loss/(gain) on disposal of fixed assets

-


(4)

           Stock-based compensation Cost

59


111

      Changes in operating assets and liabilities




           Restricted Cash

263


301

           Accounts Receivable

(18,690)


(12,747)

           Notes Receivable

6,851


7,910

           Inventories

(11,618)


(8,390)

           Prepaid Expenses

(4,967)


3,024

           Other Receivable

(1,498)


(2,501)

           Accounts Payable

8,029


1,509

           Notes Payable

(819)


(7,618)

           Income Tax

227


(812)

           Advance From customers

1,340


1,808

           Other liabilities

(39)


(5,105)

Net Cash provided by (used in) operating activities

(10,733)


(13,071)

Investing activities




     Purchases of property, plant and equipment

(4,731)


(5,272)

     Proceeds from sales of property, plant and equipment

-


29

     Payment for construction in progress

(3,228)


(3,783)

     Sell of short term investment

11,232


-

     Increase in short term investment

(1,926)


-

     Receipt of government grant for new plant construction

1,038


2,649

Net Cash provided by (used in) investing activities

2,385


(6,377)

Financing activities




     Proceeds from bank loan

16,307


37,412

     Repayment of bank loan

(11,702)


(14,982)

     Proceeds from exercised stock option

181


21

     Dividend paid

(973)


(1,129)

Net Cash provided by (used in) financing activities

3,813


21,322

Effect of exchange rate changes on cash

248


(87)

Net increase/(decrease) in cash and cash equivalents

(4,287)


1,787

Cash and Cash equivalents at beginning of year

18,510


24,218

Cash and Cash equivalents at end of year

14,223


26,005





Interest paid

1,274


1,087

Income Tax paid

1,260


1,959

 

 

 

SOURCE Jinpan International Ltd.




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