Jinpan International Reports Third Quarter 2013 Financial Results

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Jinpan International Reports Third Quarter 2013 Financial Results

CARLSTADT, N.J., Nov. 13, 2013 /PRNewswire/ Jinpan International Ltd. (JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the third quarter ending September 30, 2013.

Third Quarter 2013 Results

Net sales for the third quarter were $68.7 million, a 16.8% increase from $58.8 million in the same period last year. The increase was driven by robust growth in the Chinese market and a strong recovery in international sales. In the third quarter, China sales increased 14% year-over-year to $58.6 million, or 85.3% of net sales, compared to $51.6 million, or 87.8% of net sales in the same period last year. Net sales outside of China for the quarter increased 40% year-over-year to $10.1 million, or 14.7% of net sales, compared to $7.2 million, or 12.2% 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 increased 14% year-over-year to $62.8 million, or 91.4% of net sales in the third quarter, while wind energy products (cast resin transformers and VPI reactors for wind power applications) represented $5.9 million, or 8.6% of net sales during this quarter.

Gross profit in the third quarter increased 21.8% year over year to $23.9 million from $19.6 million in the same period last year. Third quarter 2013 gross profit margin was 34.8%, compared to 33.3% in the prior year period, and 34.8% in the second quarter of 2013. Gross margin in the third 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 third quarter were $16.2 million, or 23.6% of net sales, compared to $14.8 million, or 25.2% of net sales in the same period last year. Selling and administrative expenses increased from the same period last year due to higher sales volume and increased expenses associated with the newly operational Guilin facility.

Operating income for the third quarter increased 60.9% to $7.7 million, or 11.2% of net sales, from $4.8 million, or 8.1% of net sales, in the same period last year.

Net income for the third quarter increased 78.7% to $7.0 million, or $0.42 per diluted share, compared to $3.9 million, or $0.23 per diluted share, in the same period last year. Third quarter net income, as a percentage of net sales, was 10.1% compared to 6.6% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our operating and financial results for the third quarter, during which we generated a record level of revenue and achieved double-digit operating margins. We continue to 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.

"Production of cast resin transformers and switchgear at our new facility in Guilin is ramping up nicely. We are well on track to achieve our cast resin transformer production target of 2 million to 3 million KVA from the Guilin facility during 2013. This additional capacity enabled us to achieve a historical high in revenue during the quarter. We will continue to expand production from Guilin in a measurEd Manner over the next several quarters and anticipate steady margin expansion as capacity utilization increases.

"Our international OEM business continued its positive momentum during the third quarter, driven primarily by shipments to our largest OEM customer. We anticipate continued demand within the wind power sector well into 2014, but expect order volume could be lumpy. We made progress with our efforts to qualify with additional OEMs and remain focused on building on these partnerships to expand global reach.

"Within China, the economy is transitioning to a slower pace of growth and the government's infrastructure investments are measured and targeted. We believe Jinpan is aligned with sectors that are poised to experience growth over the next several years, including subway projects and solar power generation projects. We are confident that our brand recognition, scale, and cost structure position us to compete favorably within the domestic market.

"At the end of September, our backlog equaled $105 million, up 1% from the prior year period and down 27.6% from the second quarter of 2013. Product shipments for several large projects were accelerated into the third quarter, which generated record revenue while also reducing our backlog. We anticipate backlog will recover over the coming quarters."

Balance Sheet

As of September 30, 2013, the Company had $18.3 million in cash, cash equivalents, and short term investments, compared to $29.6 million as of December 31, 2012. The Company's accounts receivable on September 30, 2013 totaled $151.1 million, compared to $124.6 million as of December 31, 2012. Total bank loans outstanding at September 30, 2013 were $47.9 million, compared to $44.0 million at December 31, 2012.

Financial Outlook

The company is adjusting its guidance for full year fiscal 2013, projecting net sales of $219 million to $222 million and net income in the range of $16.0 million to $16.5 million, or $0.96 to $0.99 per share, which represents earnings growth of approximately 14% to 17% compared to 2012.

Conference Call Information

Jinpan's management will host a conference call and webcast on Thursday, November 14, 2013 at 8:30 a.m. Eastern Time. Listeners may access the call by dialing 1-888-596-2572(toll free) or 1-913-312-0961 (international). A webcast will also be available via http://public.viavid.com, with event ID: 106714. A replay of the call will be available through November 28, 2013 by dialing 1-877-870-5176, access code 1018691.

ABOUT JINPAN INTERNATIONAL

Jinpan International Ltd. (JST) designs, manufactures, and markets electrical control and distribution equipment used in demanding industrial applications, utility projects, renewable energy installations, and infrastructure projects. Major products include cast resin transformers, VPI transformers and reactors, switchgears, and unit substations. Jinpan serves a wide range of customers in China and reaches international markets as a qualified supplier to leading global industrial electrical equipment manufacturers. Jinpan's four manufacturing facilities in China are located in the cities of Haikou, Wuhan, Shanghai and Guilin. The Company's manufacturing facilities in China comprise the largest cast resin transformer production capacity in that country. The Company was founded in 1993. Its principal executive offices are located in Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey. For more information, visit www.jinpaninternational.com.

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.

FINANCIAL STATEMENTS FOLLOW:


Jinpan International Limited and Subsidiaries
Consolidated Statements of Comprehensive Income (unaudited)
For the Three and Nine Month Periods Ended September 30, 2013







Three months ended

Nine months ended



Sept 30

Sept 30









2013

2012

2013

2012

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


US$

US$

US$

US$







Net Sales


68,743

58,832

162,579

157,115

Cost of Goods Sold


(44,853)

(39,225)

(106,572)

(104,635)

Gross Profit


23,890

19,607

56,007

52,480







Operating Expenses






Selling and Administrative


(16,187)

(14,819)

(41,541)

(39,922)

Operating Income


7,703

4,788

14,466

12,558







Interest Expenses


(579)

(355)

(1,341)

(1,441)

Other Income


1,209

357

1,856

936

Income before Income Taxes


8,333

4,790

14,981

12,053







Income Taxes


(1,357)

(886)

(2,482)

(1,827)

Net Income after Taxes


6,976

3,904

12,499

10,226







Other Comprehensive Income (loss)






Foreign Currency Translation Adjustment


(12)

2

(13)

(53)

Total Comprehensive Income


6,964

3,906

12,486

10,173







Earnings per Share












-Basic


US$ 0.43

US$ 0.24

US$ 0.77

US$ 0.63







-Diluted


US$ 0.42

US$ 0.23

US$ 0.75

US$ 0.61







Weighted Average Number of Shares












-Basic


16,216,704

16,168,251

16,216,704

16,168,251







-Diluted


16,609,978

16,709,705

16,603,938

16,718,793












Jinpan International Limited and Subsidiaries
Consolidated Balance Sheet






(Unaudited)


(Audited)


September 30, 2013


December 31, 2012

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




Assets




Current assets:




Cash and cash equivalents

12,232


18,510

Restricted cash

929


824

Short-term investment

6,018


11,137

Notes receivable

8,216


15,720

Accounts receivable, net

151,121


124,608

Inventories, net

44,410


29,565

Prepaid expenses

8,321


2,528

Land use right

367


366

Deferred tax assets

1,952


1,339

Other receivables

7,412


5,900

Total current assets

240,978


210,497





Property, plant and equipment, net

69,836


41,361

Construction-in-progress

6,019


29,196

Land use right

14,817


14,760

Goodwill

13,703


13,403

Other assets

123


32

Deferred tax assets

34


34





Total assets

345,510


309,283





Liabilities and shareholders' equity








Current liabilities:




Short-term bank loans

15,382


17,644

Accounts payable

32,620


25,029

Notes Payable

8,689


6,008

Income tax payable

2,962


1,880

Advances from customers

14,352


13,624

Other liabilities

26,265


22,844

Total current liabilities

100,270


87,029

Commitments and contingencies




Long term liability:




Deferred Income

4,048


3,080

Long Term bank loans

32,554


26,315


136,872


116,424

Total Liabilities




Shareholders' equity:




Convertible preferred stock, US$0.0045 par value:




Authorized shares - 2,000,000




Issued and outstanding shares none in 2012 and2011

-


-

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

37,552


37,374

Reserves

12,023


12,023

Retained earnings

134,102


123,065

Accumulated other comprehensive income

25,203


20,781


208,954


193,317

Less: Treasury shares at cost,




Common stock 135,306 in 2013 and 215,306 in 2012

(316)


(458)

Total shareholders' equity

208,638


192,859





Total liabilities and shareholders' equity

345,510


309,283










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




For the Nine Months Ended


September 30,


2013


2012

(In thousands)

US$


US$





Operating Activities




Net Income

12,499


10,226

Adjustments to reconcile net income to




Net Cash provided by (used in ) operating activities:




Depreciation

4,759


3,822

Amortization of prepaid lease

278


273

Deferred Income Tax

(576)


(255)

Provision for doubtful debts

3,306


1,604

Loss/(gain) on disposal of fixed assets

-


(4)

Stock-based compensation Cost

105


211

Changes in operating assets and liabilities




Restricted Cash

(86)


(534)

Accounts Receivable

(26,769)


(24,325)

Notes Receivable

7,770


8,811

Inventories

(14,027)


(536)

Prepaid Expenses

(2,030)


1,885

Other Receivable

(1,455)


(3,994)

Accounts Payable

6,953


4,223

Notes Payable

2,519


(3,292)

Income Tax

1,029


(328)

Advance From customers

418


3,310

Other liabilities

2,903


(58)

Net Cash provided by ( used in ) operating activities

(2,404)


1,039

Investing activities




Purchases of property, plant and equipment

(5,492)


(6,270)

Proceeds from sales of property, plant and equipment

-


28

Payment for construction in progress

(6,590)


(14,619)

Sell of short term investment

42,159


-

Increase in short term investment

(36,851)


-

Receipt of government grant for new plant construction

885


2,859

Net Cash provided by ( used in ) investing activities

(5,889)


(18,002)

Financing activities




Proceeds from bank loan

23,633


46,890

Repayment of bank loan

(20,673)


(35,881)

Proceeds from exercised stock option

215


22

Dividend paid

(1,461)


(2,264)

Net Cash provided by ( used in ) financing activities

1,714


8,767

Effect of exchange rate changes on cash

301


(67)

Net increase/(decrease) in cash and cash equivalents

(6,278)


(8,263)

Cash and Cash equivalents at beginning of year

18,510


24,218

Cash and Cash equivalents at end of year

12,232


15,955





Interest paid

1,849


1,418

Income Tax paid

1,587


2,397

SOURCE Jinpan International Ltd.




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