Jinpan International Reports First Quarter 2013 Financial Results

CARLSTADT, N.J., May 15, 2013 /PRNewswire/ -- Jinpan International Ltd. (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today announced the unaudited consolidated financial results for the first quarter of 2013 ending March 31, 2013. 

First Quarter 2013 Results

Net sales for the first quarter were $35.2 million, a 17.8% decrease from $42.8 million in the same period last year.  The decrease in sales was primarily the result of lower levels of international sales compared to the prior year period, which experienced higher than average sales activity.  In the first quarter, domestic China sales accounted for $32.2 million, or 91.5% of net sales, compared to $33.8 million, or 79.0% of net sales in the same period last year. Net sales outside of China for the quarter were $3.0 million, or 8.5% of net sales compared to $9.0 million, or 21.0% of net sales for the same period last year.

The sales of cast resin transformers (excluding those for wind power applications), switchgears and unit substations represented $33.2 million, or 94.3% of net sales in the first quarter, while wind energy products (cast resin transformers and VPI products for wind power applications) represented $2.0 million, or 5.7% of net sales during this quarter.

Gross profit in the first quarter decreased 25.7% year over year to $11.7 million from $15.8 million in the same period last year.  First quarter 2013 gross profit margin was 33.3%, compared to 36.9% in the prior year period, and 30.5% in the fourth quarter of 2012. Gross margin in the first quarter decreased compared to the same period last year mainly due to a decrease in international sales, which usually represent sales of higher margin products.  Gross margin in the first quarter increased over that of the fourth quarter of 2012 reflects the stabilizing of transformer prices in China.

Selling and administrative expenses in the first quarter were $10.4 million, or 29.5% of net sales, compared to $10.9 million, or 25.5% of net sales in the same period last year, and $14.0 million, or 26.2% in the fourth quarter of 2012.  While 2013 first quarter selling and administrative expenses declined year over year, as a percent of revenue, expenses were higher due to a higher percentage of contribution from domestic China sales which typically incur greater selling expenses per dollar of revenue compared to export sales.  

Operating income for the first quarter decreased to $1.3 million, or 3.8% of net sales from $4.8 million, or 11.3% of net sales, in the same period last year.

Other income for the first quarter of 2013 was $0.4 million compared to $0.2 million in the same quarter of 2012.

Net income for the first quarter was $1.1 million, or $0.07 per diluted share, compared to $4.0 million, or $0.24 per diluted share, in the same period last year.  First quarter net income, as a percentage of net sales, was 3.2% compared to 9.3% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "Despite lower sales in the first quarter compared to the prior year period, we expect steady growth in customer order activity as we progress through 2013. On the domestic front, sales orders for traditional cast resin transformers held steady and product pricing was stable, resulting in an improvement in gross margin compared to gross margin in the fourth quarter of 2012.  Internationally, we expect our order flow to gain momentum going forward as one of our major OEM customers has completed their change in design technology for their wind energy transformers and resumes more regular order activity.  We are generating orders from three major OEM's this year ensuring greater stability for this segment of our business and continue to pursue other high profile international OEM customer opportunities.

"We commenced production at our new Guilin transformer manufacturing facility at the end of the first quarter and aim to ramp up production and maximize performance from this facility in the quarters ahead.  At the end of April, our backlog rose to $142 million, up 27% over the prior year period and up 3% since the end of December 2012.

"China recently completed its leadership transition at the national level.  Proactive fiscal policy is stimulating domestic demand for electrical distribution equipment from manufacturers. Our customers in China, the majority of which are state-owned enterprises and regional governments, are expected to gradually increase spending on infrastructure development. We expect stronger performance in the second half of 2013 as the level of infrastructure development picks up in China. We also expect to increase international sales as we ship more products to our OEM customers.  We are well positioned to capitalize on opportunities in China and in other strategic markets around the world."

Balance Sheet

As of March 31, 2013, the Company had $26.3 million in cash and cash equivalents, compared to $18.5 million as of December 31, 2012. The Company's accounts receivable on March 31, 2013 totaled $124.9 million, compared to $124.6 million as of December 31, 2012.  Notes payable in the first quarter of 2013 decreased to $4.9 million compared to $6.0 million on December 31, 2012.  Total bank loans outstanding at March 31, 2013 were $45.0 million, compared to $44.0 million at December 31, 2012.

Financial Outlook

For the full year 2013, the Company reiterates projected net sales of $231-$241 million, an increase of 10% to 15% over 2012 and net income of $14.0-$14.5 million, which represents an increase of 0% to 3% compared to 2012.  Projected net profit growth in 2013 is expected to trend lower than revenue growth primarily due to the fixed costs associated with the Company's newly built Guilin facility.

Conference Call Information

Jinpan's management will host an earnings conference call on May 15th, 2013 at 8:30 a.m. U.S. Eastern Time.  Listeners may access the call by dialing #1-913-312-0971.  A webcast will also be available via http://public.viavid.com, with event ID: 104646.  A replay of the call will be available through May 29th, 2013.  Listeners may access the replay by dialing #1-858-384-5517, access code: 2671109.

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. Its principal executive offices are located in Hainan, China and its United States office 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, 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.

SOURCE Jinpan International Ltd.

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