Jinpan International Reports First Quarter 2011 Financial Results

CARLSTADT, N.J., May 16, 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 first quarter ended March 31, 2011.  

Net sales for the first quarter were $29.9 million, a 52.6% increase from $19.6 million in the same period last year.  The increase in sales was the result of higher volume transformer and switchgear sales in the Company's domestic business.  In the first quarter, domestic sales accounted for $27.8 million, or 93.0% of net sales, compared to $17.3 million, or 88.3% of net sales in the same period last year. Net sales outside of China were $2.1 million, or 7.0% of net sales, compared to $2.3 million, or 11.7 % of net sales in the same period last year.  

Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $25.0 million, or 83.6% of net sales in the first quarter, while wind energy products represented $4.9 million, or 16.4% of net sales in the first quarter.

Gross profit in the first quarter increased 51.4% year over year to $10.9 million from $7.2 million.  First quarter 2011 gross profit margin was 36.7% compared to 36.5% in the prior year period primarily due to a similar balance of domestic and international sales orders from the first quarter of 2010.

Sales, general and administrative expenses in the first quarter were $7.8 million, or 26.1% of net sales, compared to $6.4 million, or 32.7% of net sales in the same period last year.  This percentage decrease was primarily a result of higher sales in the first quarter 2011 compared to the same period last year.  Operating income increased 321.1% to $3.2 million, or 11.0% of net sales, from $0.8 million, or 3.9% of net sales in the same period last year.

Net income for the first quarter increased 139.4% to $2.7 million, or $0.17 per diluted share, from $1.1 million, or $0.07 per diluted share, in the same period last year.  First quarter net income as a percentage of net sales was 9.2%, compared to 5.8% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "We experienced very solid growth in the first quarter, boosted by strong transformer sales in our domestic operations. This was fueled by a 57% increase in switchgear sales and 50% increase in transformer sales.  Our marketing efforts over the past year led to increased sales of switchgear products.  With the addition of a new line of gas insulated switchgears to our product portfolio, we are optimistic that switchgear sales will continue to grow."

"Our international sales were stable in the first quarter led by orders from the U.S. and Europe.  We anticipate stronger international sales from each region in the second quarter as demand for wind transformers continue to grow."  

"Our land acquisition and planned manufacturing and R&D facility we announced in April marks the start of our further expansion to meet the steady demand for our cast resin transformer products, high and low voltage switchgears, and transformer substations in the years ahead.  We remain focused on meeting the growing demand for power generation equipment and believe that Jinpan is well positioned to capitalize on growth opportunities in China and abroad."

Balance Sheet

As of March 31, 2011, the Company had $25.2 million in cash and cash equivalents, compared to $27.5 million at December 31, 2010.  Inventory increased to $38.6 million as of March 31, 2011, from $29.5 million on December 31, 2010, due to anticipated order demand.  Accounts receivable on March 31, 2011 totaled $77.5 million, compared to $76.0 million on December 31, 2010. Prepaid expenses increased to $33.4 million in the first quarter 2011 from $29.0 million in the fourth quarter 2010 primarily due to the a land purchase announced which was recorded as a prepaid expense but will shift to a fixed asset balance sheet line item once the Company completes the land registration process.  Notes payable in the 2011 first quarter decreased to $24.1 million compared to $27.1 million at the end of December 31, 2010.  Total bank loans outstanding at March 31, 2011 increase to $15.7 million as compared to $13.7 million at December 31, 2010.

Financial Outlook

As of April 30, 2011, the Company had a backlog of approximately $79 million, a 31% increase from $60 million as of December 31, 2010.  

For the full year 2011, the Company reiterates its full year guidance of net sales growth of 20-25% to $173-$180 million, gross profit margin of 36%-38%, net income growth of approximately 43-50% to $19.0-$20.0 million.  

Conference Call Information

Jinpan's management will host an earnings conference call on May 16, 2011 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing # 1-719-325-4853.  A webcast will also be available via www.viavid.net.  A replay of the call will be available through May 30, 2011.  Listeners may access the replay by dialing # 1-858-384-5517, access code: 8100672.

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, 2009 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 on Following Page)

SOURCE Jinpan International Ltd