Jinpan International Reports Fourth Quarter and Full Year 2011 Financial Results

CARLSTADT, N.J., March 8, 2012 /PRNewswire/ -- Jinpan International Ltd (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers for voltage distribution equipment, today announced the unaudited consolidated financial results for the fourth quarter and full year ended December 31, 2011.

Fourth Quarter 2011 Results

Net sales for the fourth quarter were $64.1 million, a 49.4% increase from $42.9 million in the same period last year.  The increase in sales was primarily the result of higher transformer sales both in the Company's domestic business and increased international sales.  In the fourth quarter, domestic sales accounted for $59.8 million, or 93.3% of net sales, compared to $40.0 million, which also represented 93.3% of net sales in the same period last year.  Net sales outside of China for the quarter were $4.3 million, compared to $2.9 million for the same period last year.  The quarterly figures for both years represented 6.7 % of net sales.

The sales of cast resin transformers (excluding those for wind power applications), switchgears and unit substations represented $57.1 million, or 89.1% of net sales in the fourth quarter, while wind energy products represented $7.0 million, or 10.9% of net sales during this quarter.

Gross profit in the fourth quarter increased 32.9% year over year to $22.2 million from $16.7 million.  Fourth quarter 2011 gross profit margin was 34.6%, compared to 38.9% in the prior year period, and 37.4% in the 2011 third quarter.  During the fourth quarter, the Company completed a one-time sale of approximately $2.0 million worth of silicon steel to a customer, which to some extent negatively impacted gross profit margin.  Excluding this sale, gross margin for the fourth quarter would have increased to 35.7%.  Selling and administrative expenses in the fourth quarter were $16.2 million, or 25.3% of net sales, compared to $11.2 million, or 26.0% of net sales in the same period last year.   Selling expenses increased in the fourth quarter as a result of increased sales.  Administrative expenses increased due to higher Research and Development expenses and staff salaries related to the Company's expanded manufacturing initiatives.

Operating income for the fourth quarter increased 7.3% to $5.9 million, or 9.2% of net sales, from $5.5 million, or 12.8% of net sales, in the same period last year.  Net income for this quarter decreased 8.5% to $5.4 million, or $0.33 per diluted share, from $5.9 million, or $0.36 per diluted share, in the same period last year.  Fourth quarter net income as a percentage of net sales was 8.4% compared to 13.7% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented: "Overall, we experienced strong results in the fourth quarter 2011 and were pleased to finish the 2011 fiscal year with record revenue and net profit.  Our growth was fueled by solid demand in both our domestic and international operations.  We continue to make progress improving our competitive position for cast resin transformer products in the Chinese market.  Over the past several years, we have made a conscious effort to enhance our operations in the areas of product engineering, marketing, R&D and business development to increase market share against our domestic competitors.  These initiatives are paying off today with strong domestic customer orders which we believe will continue through 2012.  In our international business, orders primarily for wind related transformers grew quite favorably.  We currently work with three (3) major international OEM's and continue to cultivate new customer opportunities."

"As our capacity utilization remains at elevated levels and customer demand for our products increases, we continue to expand our manufacturing capabilities.  We have expanded our Haikou facility, which increased our total manufacturing capacity by 25% in 2012.  Additionally, we remain on target with regard to the development of the first phase of our integrated cast resin and transformer manufacturing plant located in Guilin which will add additional manufacturing capacity at the end of this year."

Results for the Full Fiscal Year 2011

For the full year, total sales increased 52.2% to $218.9 million from $143.8 million in the prior year.

Gross profit in 2011 increased 43.9% year-over-year to $80.3 million from $55.8 million and gross profit margin decreased by 2.1% year over year to 36.7% from 38.8%.

Selling and administrative expenses in 2011 were $54.3 million or 24.8% of net sales, compared to $40.7 million, or 28.3% of net sales, in the prior year.

Operating profit in 2011 increased 71.1% to $26.0 million, or 11.9% of net sales, compared to $15.2 million, or 10.6% of net sales, in the prior year.

Net income in 2011 increased 78.4% to $23.9 million, or $1.45 per diluted share, compared to $13.4 million, or $0.81 per diluted share, in the prior year.

Balance Sheet

As of December 31, 2011, the Company had $24.2 million in cash and cash equivalents, compared to $27.5 million at December 31, 2010.  The Company's accounts receivable on December 31, 2011 totaled $110.4 million, compared to $75.7 million at December 31, 2010.  Notes payable in the 2011 fourth quarter decreased to $13.6 million compared to $27.1 million at the end of December 31, 2010.  Total bank loans outstanding at December 31, 2011 increase to $23.0 million as compared to $13.7 million at December 31, 2010.

Financial Outlook

For the full year 2012, the Company currently anticipates net sales growth of 20-25% to $262-$273 million, gross profit margin of 33%-35%, and net income growth of approximately 17-22% to $27.8-$29.0 million.

"We believe 2012 will be another exciting year for Jinpan.  As we look at our market opportunities this year, we intend to actively pursue the large market opportunity for standardized cast resin transformers in China where we have less than 10% of the total market share.  We also intend to further expand our position in the international market.  Domestic sales are expected to represent approximately 88% of total revenue while international revenue is expected to represent 12% of total revenue in 2012.  As of the end of February 2012, our backlog grew to $112 million, which is a 10% increase from the end of December 2011.  With our expanding manufacturing capacity, leading research, design and engineering capabilities and appropriate development strategies, we believe Jinpan remains poised to deliver sustainable, long-term growth," concluded Mr. Li.

Conference Call Information

Jinpan's management will host an earnings conference call on March 8, 2012 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing #1-913-312-0961.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through March 22nd, 2012.  Listeners may access the replay by dialing #1-858-384-5517, access code: 1715634.

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 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.

(Financial Statements Follow)

SOURCE Jinpan International Ltd