Jinpan International Reports Second Quarter 2011 Financial Results

CARLSTADT, N.J., Aug. 8, 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 second quarter ended June 30, 2011.  

Net sales for the second quarter were $58.3 million, a 58.6% increase from $36.8 million in the same period last year.  The increase in second quarter sales was the result of higher volume transformer sales in China and strong international wind transformers sales compared to the prior year period.  In the second quarter, domestic sales accounted for $46.1 million, or 79.1% of net sales, compared to $30.5 million, or 82.9% of net sales in the same period last year. Net sales outside of China were $12.2 million, or 20.9% of net sales, compared to $6.3 million, or 17.1 % of net sales in the same period last year.  

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $44.3 million, or 76% of net sales in the second quarter, while wind energy products represented $14 million, or 24% of net sales in the second quarter.

Gross profit in the 2011 second quarter increased 38.8% to $22.2 million from $16.0 million.  Second quarter 2011 gross profit margin was 38.1% compared to 43.6% in the prior year period primarily. The 2010 second quarter period was the final quarter before the Company lowered prices of its cash resin transformers.  The Company reaffirms its full year gross margin range of 36-38%.

Selling and administrative expenses in the second quarter were $13.8 million, or 23.7% of net sales, compared to $11.5 million, or 31.3% of net sales in the same period last year.  This percentage decrease was primarily due to the strong increase in net sales.  Operating income increased 86.7% to $8.4 million, or 14.5% of net sales, from $4.5 million, or 12.2% of net sales in the same period last year.

Net income for the second quarter increased to $7.3 million, or $0.44 per diluted share, from $2.0 million, or $0.12 per diluted share, in the same period last year.  In the 2010 second quarter, Jinpan incurred a $2.5 million dividend tax that did not recur in its second quarter of 2011.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "The second quarter was a very strong period for Jinpan as we experienced healthy demand in both our domestic and international operations.  Our domestic business was driven by large product orders for high end, customized cast resin transformers.  Some of our largest orders in the quarter were utilized for train & subway systems and polysilicon manufacturing plants.  We were also very pleased with the performance of our international segment which was up substantially over the prior quarter and prior year second quarter period.  The majority of our international sales orders in the second quarter came from the U.S."  

Our backlog continues to grow and now stands at record highs based on sustained domestic and international product demand.  We are pleased to raise our full year revenue and net profit forecast based on strong demand levels.  We believe we have increased our domestic market share of high end, customized products in China and continue to execute on our expansion initiatives which can contribute to our growth in the years ahead."

Balance Sheet

As of June 30, 2011, the Company had $8.3 million in cash, cash equivalents and restricted cash compared to $28.6 million at December 31, 2010.  Inventory increased to $41.0 million as of June 30, 2011, from $29.5 million on December 31, 2010, due to anticipated order demand.  Accounts receivable on June 30, 2011 totaled $96.3 million, compared to $75.7 million on December 31, 2010. Total bank loans outstanding at June 30, 2011 increase to $31.0 million as compared to $13.7 million at December 31, 2010.

Financial Outlook

As of July 1st, 2011, the Company had a backlog of approximately $91 million, compared to $79 million as of April 30, 2011 and $60 million as of December 31, 2010.  

Based on its current outlook, the Company has raised its 2011 full year guidance to net sales growth of 28-32% to $184-$190 million and net income growth to approximately 53-57% to $20.5-$21.0 million.  The Company maintains its gross profit margin estimate of 36-38% and believes that approximately 12-14% of full year sales will be derived from its international sales unit.

Conference Call Information

Jinpan's management will host an earnings conference call on August 8, 2011 at 4:30 p.m. U.S. Eastern Time.  Listeners may access the call by dialing # 1-719-325-4886.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through August 15, 2011.  Listeners may access the replay by dialing # 1-858-384-5517, access code: 4052330.

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, 2010 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.

SOURCE Jinpan International