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Jinpan International Reports Second Quarter 2014 Financial Results

* Second quarter revenue increased 12.0% year-over-year to $65.7 million

CARLSTADT, N.J., Aug. 12, 2014 /PRNewswire/ -- Jinpan International Limited (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, 2014. 

Second Quarter 2014 Results

Net sales for the second quarter were $65.7 million, a 12.0% increase from $58.7 million in the same period last year.  Sales growth was driven by an increase in sales of VPI transformers to one of our OEM customers and a substantial increase in the sales of switchgears and unit substations to our customers in China.   

In the second quarter, China sales increased 10.2% year-over-year to $55.8 million, or 84.9% of net sales, compared to $50.6 million, or 86.3% of net sales, in the same period last year. Sales outside of China for the quarter increased 23.2% year-over-year to $9.9 million, or 15.1% of net sales, compared to $8.0 million, or 13.7% of net sales for the same period last year. 

Sales to OEM customers increased 5.0% year-over-year to $11.8 million, or 17.9% of net sales, compared to $11.2 million, or 19.1% of net sales in the same period last year.

Gross profit in the second quarter increased 7.9% year over year to $22.0 million from $20.4 million in the same period last year.  Second quarter 2014 gross profit margin was 33.5%, compared to 34.8% in the prior year period. Gross margin for the quarter was within our expectations.  The decrease from the same period last year was due to an increased mix of sales of switchgear and unit substation products which typically carry a lower margin, but offer higher unit pricing and present substantially larger addressable markets to Jinpan. 

Selling and administrative expenses in the second quarter were $15.6 million, or 23.7% of net sales, compared to $15.0 million, or 25.5% of net sales in the same period last year.  Selling and administrative expenses increased slightly from the same period last year due to higher sales volume, increased costs associated with the establishment of the Guilin plant, and increased research and development expenses.

Operating income for the second quarter increased 18.9% to $6.4 million, or 9.8% of net sales, from $5.4 million, or 9.2% of net sales, in the same period last year.

Net income for the second quarter increased 20.6% to $5.3 million, or $0.32 per diluted share, compared to $4.4 million, or $0.26 per diluted share, in the same period last year.  Second quarter net income, as a percentage of net sales, was 8.0% compared to 7.5% 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 reflected a continuation of the positive trends we have seen in previous quarters.  Our team continued the strong execution of our strategic plan and produced encouraging results.  Our expanded production capacity and productivity improvements drove double-digit revenue growth for the fourth consecutive quarter, with quarterly operating margins approaching double-digits. 

"We made excellent progress with our product diversification strategy.  Sales of switchgear and unit substations increased 86% year-over-year and constituted 18% of our total sales.  These products provide Jinpan with access to substantially larger addressable markets relative to our core dry-type transformer market. 

"Sales to our OEM customers continued to increase and diversify.  During the quarter, we supplied dry type transformers to our OEM customers for wide range of applications.  Our strategy remains focused on expanding our business with the six OEM customers with whom we have qualified.

"Within China, we generated double-digit sales growth, despite mixed end markets.  We remain well-positioned within key market segments, benefitting from strong growth in renewable energy and rail transportation and stable demand from the industrial sector, which offset weakness within the residential construction markets.  We believe our product quality, manufacturing capacity, and cost structure enable us to compete in a slower-growth environment and capture market share over time.  At the end of June, our backlog equaled $119 million, up 0.8% from the first quarter of 2014."

Balance Sheet

As of June 30, 2014, the Company had $18.8 million in cash and cash equivalents, restricted cash, and short term investments, compared to $30.8 million as of December 31, 2013. The Company's accounts receivable on June 30, 2014 totaled $150.9 million, compared to $144.6 million as of December 31, 2013.   Total bank loans outstanding at June 30, 2014 were $41.7 million, compared to $43.1 million at December 31, 2013. 

Financial Outlook

The Company reiterates its guidance for the full year 2014, projecting revenue and earnings growth of approximately 10% to 15% compared to 2013.  Net sales are expected to be in the range of $248 million to $260 million and net income is expected to be in the range of $18.2 million to $19.1 million, or $1.09 to $1.14 per share.

Conference Call Information

Jinpan's management will host a conference call and webcast on Tuesday, August 12, 2014, at 8:30 a.m. Eastern Time.  Listeners may access the call by dialing 1-888-791-4321 (toll free) or 1-913-312-0951 (international).  A webcast will also be available via http://public.viavid.com, with event ID: 110498.  A replay of the call will be available through August 19, 2014, by dialing 1-877-870-5517, access code 9776188. 

ABOUT JINPAN INTERNATIONAL

Jinpan International Limited (NASDAQ: 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 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, 2013 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 Six Month Periods Ended June 30, 2014




Three months ended

Six months ended



June 30

June 30









2014

2013

2014

2013

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


US$

US$

US$

US$







Net sales


65,712

58,664

107,028

93,836

Cost of Goods Sold


(43,697)

(38,266)

(72,223)

(61,718)

Gross Margin


22,015

20,398

34,805

32,118







Operating Expenses






Selling and administrative


(15,579)

(14,983)

(26,430)

(25,354)

Operating income


6,436

5,415

8,375

6,764







Interest Expenses


(611)

(494)

(1,219)

(762)

Other Income


532

274

963

646

Income before income taxes


6,357

5,195

8,119

6,648







Income taxes


(1,073)

(815)

(1,318)

(1,125)

Net income after taxes


5,284

4,380

6,801

5,523







Other comprehensive income (loss)






   Foreign currency translation adjustment


(4)

3

12

(1)

Total comprehensive income


5,280

4,383

6,813

5,522







Earnings per share






-Basic


US$0.33

US$ 0.27

US$0.42

US$ 0.34







-Diluted


US$0.32

US$ 0.26

US$0.41

US$ 0.33







Weighted average number of shares






-Basic


16,231,769

16,195,466

16,231,769

16,195,466







-Diluted


16,637,117

16,653,563

16,645,156

16,654,661

 

 

Jinpan International Limited and Subsidiaries

Consolidated Balance Sheet



(Unaudited)


(Audited)


June 30, 2014


December 31, 2013

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




Assets




Current assets:




     Cash and cash equivalents

13,245


24,582

     Restricted cash

862


1,316

     Short-term investment

4,713


4,920

     Notes receivable

11,918


15,802

     Accounts receivable, net

150,947


144,606

     Inventories, net

41,737


33,614

     Prepaid expenses

6,868


4,204

     Land use right

377


377

     Deferred tax assets

2,464


2,119

     Other receivables

8,101


6,891

     Total current assets

241,232


238,431





Property, plant and equipment, net

75,314


75,601

Construction-in-progress

1,647


3,787

Land use right

14,584


14,840

Goodwill

13,692


13,818

Other assets

84


90

Deferred tax assets

34


34

Total assets

346,587


346,601





Liabilities and shareholders' equity




Current liabilities:




     Short-term bank loans

9,263


11,101

     Accounts payable

28,920


27,013

     Notes Payable

10,917


10,498

     Income tax payable

1,618


2,516

     Advances from customers

13,037


14,207

     Other liabilities

27,825


30,339

     Total current liabilities

91,580


95,674

 

Commitments and contingencies




Long term liability:




     Deferred Income

4,737


4,785

     Long Term bank loans

32,409


31,998

Total Liabilities

128,726


132,457





Shareholders' equity:




Convertible preferred stock, US$0.0045 par value:




      Authorized shares - 2,000,000




      Issued and outstanding shares – none in 2014 and 2013



-

Common stock, US$0.0045 par value:




Authorized shares – 40,000,000




Issued and outstanding shares –16,418,456 in 2014 and 2013

74


74

Common stock-warrants

-


-

Additional paid-in capital

37,855


37,693

Reserves

13,099


12,849

Retained earnings

142,124


136,874

Accumulated other comprehensive income

24,977


26,937


218,129


214,427

Less: Treasury shares at cost,




Common stock –135,488 in 2014 and 138,306 in 2013

(268)


(283)

Total shareholders' equity

217,861


214,144

Total liabilities and shareholders' equity

346,587


346,601

 

 

Jinpan International Limited and Subsidiaries

Consolidated Statement of Cash Flows

For the Six Months Ended June 30, 2014 (Unaudited)



For the Six Months Ended


June 30


2014

2013

(In thousands)

US$

US$




Operating Activities



      Net Income

6,801

5,523

      Adjustments to reconcile net income to



           Net Cash provided by (used in ) operating activities:



           Depreciation

3,185

2,944

           Amortization of prepaid lease

118

185

           Deferred Income Tax

(366)

(391)

           Provision for doubtful debts

2,164

1,868

           Loss/(gain) on disposal of fixed assets

-

-

           Stock-based compensation Cost

162

59

      Changes in operating assets and liabilities



           Restricted Cash

444

263

           Accounts Receivable

(9,854)

(18,690)

           Notes Receivable

3,757

6,851

           Inventories

(8,467)

(11,618)

           Prepaid Expenses

(2,714)

(4,967)

           Other Receivable

(1,274)

(1,498)

           Accounts Payable

2,162

8,029

           Notes Payable

517

(819)

           Income Tax

(878)

227

           Advance From customers

(1,046)

1,340

           Other liabilities

(2,258)

(39)

Net Cash provided by ( used in ) operating activities

(7,547)

(10,733)

 

Investing activities



     Purchases of property, plant and equipment

(998)

(4,731)

     Proceeds from sales of property, plant and equipment

-

-

     Payment for construction in progress

(473)

(3,228)

     Sell of short term investment

25,470

11,232

     Increase in short term investment

(25,307)

(1,926)

     Receipt of government grant for new plant construction

-

1,038

Net Cash provided by ( used in ) investing activities

(1,308)

2,385

 

Financing activities



     Proceeds from bank loan

9,845

16,307

     Repayment of bank loan

(10,885)

(11,702)

     Proceeds from exercised stock option

16

181

     Dividend paid

(1,303)

(973)

Net Cash provided by ( used in ) financing activities

(2,327)

3,813

 

Effect of exchange rate changes on cash

(155)

248

Net increase/(decrease) in cash and cash equivalents

(11,337)

(4,287)

Cash and Cash equivalents at beginning of year

24,582

18,510

Cash and Cash equivalents at end of year

13,245

14,223




Interest paid

876

1,274

Income Tax paid

2,561

1,260

 

SOURCE Jinpan International Limited

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