Jinpan International Reports First Quarter 2014 Financial Results

CARLSTADT, N.J., May 14, 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 first quarter ending March 31, 2014. 

First Quarter 2014 Results

Net sales for the first quarter were $41.3 million, a 17.5% increase from $35.2 million in the same period last year.  Sales growth was driven by steady demand in the Chinese market, increased sales of switchgears and unit substations, and expanded sales to OEM customers. 

In the first quarter, China sales increased 15% year-over-year to $37.1 million, or 89.8% of net sales, compared to $32.2 million, or 91.6% of net sales in the same period last year. Net sales outside of China for the quarter increased 40% year-over-year to $4.2 million, or 10.2% of net sales, compared to $3.0 million, or 8.5% of net sales for the same period last year. 

Sales to OEM customers increased 36.6% year-over-year to $6.5 million, or 15.8% of net sales, compared to $4.8 million, or 13.6% of net sales in the same period last year.

Gross profit in the first quarter increased 17.1% year over year to $12.8 million from $10.9 million in the same period last year.  First quarter 2014 gross profit margin was 31.0%, compared to 31.0% in the prior year period. Gross margin in the first quarter was stable compared with the same period last year as slightly improved pricing and lower production costs were offset by an increased mix of lower margin products.

Selling and administrative expenses in the first quarter were $10.9 million, or 26.3% of net sales, compared to $9.6 million, or 27.2% 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 costs associated with the establishment of the Guilin plant.

Operating income for the first quarter increased 43.9% to $1.9 million, or 4.7% of net sales, from $1.3 million, or 3.8% of net sales, in the same period last year.

Net income for the first quarter increased 32.8% to $1.5 million, or $0.09 per diluted share, compared to $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 3.7% compared to 3.2% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our strong start to 2014, which builds on the positive momentum from last year.  We posted double-digit sales growth for the third consecutive quarter.  Our Guilin facility has enabled us to enhance our position in the cast resin transformer market and to further penetrate new and larger markets for switchgears and unit substations. 

Demand for our products remains healthy, driving a strong increase in orders during the first quarter of 2014, which led to a recovery in our backlog.  We remain focused on serving our core markets, with railroad, subway, wind power, and utility-scale solar continuing to drive robust growth. Our switchgear and unit substation products are gaining traction, as we seek to penetrate these markets in China. Finally, having qualified with six international OEM customers, we have shifted our focus from expanding our OEM customer base to deepening our relationships with these customers to increase our sales.

At the end of March, our backlog equaled $118 million, down 16.9% from the prior year period and up 18.0% from the fourth quarter of 2013.  Our year-over-year backlog decline reflects the increased production of standardized cast resin transformers from our Guilin facility, which has accelerated our average cycle time and enabled us to convert orders into revenue more quickly.  We expect our backlog will gradually increase as our business expands."

Balance Sheet

As of March 31, 2014, the Company had $18.6 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 March 31, 2014 totaled $140.5 million, compared to $144.6 million as of December 31, 2013.  Total bank loans outstanding at March 31, 2014 were $43.2 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 Thursday, May 15, 2014, at 8:30 a.m. Eastern Time.  Listeners may access the call by dialing 1-888-264-8904 (toll free) or 1-913-312-0686 (international).  A webcast will also be available via http://public.viavid.com, with event ID: 108983.  A replay of the call will be available through May 22, 2014, by dialing 1-877-870-5176, access code 2035761. 

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:

SOURCE Jinpan International Limited