Jinpan International Reports Third Quarter 2013 Financial Results
* Third quarter revenue increased 16.8% year-over-year to a record $68.7 million
* Operating margin was 11.2% in the third quarter, up from 8.1% in last year's third quarter
* Third quarter net income increased 78.7% year-over-year to $7.0 million, or $0.42 per share
* Raising Fiscal 2013 earnings outlook; net income expected to be in the range of $16.0 million to $16.5 million, or $0.96 to $0.99 per share
CARLSTADT, N.J., Nov. 13, 2013 /PRNewswire/ -- Jinpan International Ltd. (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the third quarter ending September 30, 2013.
Third Quarter 2013 Results
Net sales for the third quarter were $68.7 million, a 16.8% increase from $58.8 million in the same period last year. The increase was driven by robust growth in the Chinese market and a strong recovery in international sales. In the third quarter, China sales increased 14% year-over-year to $58.6 million, or 85.3% of net sales, compared to $51.6 million, or 87.8% of net sales in the same period last year. Net sales outside of China for the quarter increased 40% year-over-year to $10.1 million, or 14.7% of net sales, compared to $7.2 million, or 12.2% of net sales for the same period last year.
The sales of cast resin and VPI transformers (excluding those for wind power applications), switchgears and unit substations increased 14% year-over-year to $62.8 million, or 91.4% of net sales in the third quarter, while wind energy products (cast resin transformers and VPI reactors for wind power applications) represented $5.9 million, or 8.6% of net sales during this quarter.
Gross profit in the third quarter increased 21.8% year over year to $23.9 million from $19.6 million in the same period last year. Third quarter 2013 gross profit margin was 34.8%, compared to 33.3% in the prior year period, and 34.8% in the second quarter of 2013. Gross margin in the third quarter increased compared to the same period last year due to a stabilized pricing environment, favorable raw material costs, and an increased mix of international sales, which typically carry higher margins.
Selling and administrative expenses in the third quarter were $16.2 million, or 23.6% of net sales, compared to $14.8 million, or 25.2% 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 expenses associated with the newly operational Guilin facility.
Operating income for the third quarter increased 60.9% to $7.7 million, or 11.2% of net sales, from $4.8 million, or 8.1% of net sales, in the same period last year.
Net income for the third quarter increased 78.7% to $7.0 million, or $0.42 per diluted share, compared to $3.9 million, or $0.23 per diluted share, in the same period last year. Third quarter net income, as a percentage of net sales, was 10.1% compared to 6.6% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our operating and financial results for the third quarter, during which we generated a record level of revenue and achieved double-digit operating margins. We continue to focus on the disciplined execution of our growth strategy as we ramp up our Guilin facility, develop new products, expand our international OEM business, and increase our penetration of the domestic market.
"Production of cast resin transformers and switchgear at our new facility in Guilin is ramping up nicely. We are well on track to achieve our cast resin transformer production target of 2 million to 3 million KVA from the Guilin facility during 2013. This additional capacity enabled us to achieve a historical high in revenue during the quarter. We will continue to expand production from Guilin in a measured manner over the next several quarters and anticipate steady margin expansion as capacity utilization increases.
"Our international OEM business continued its positive momentum during the third quarter, driven primarily by shipments to our largest OEM customer. We anticipate continued demand within the wind power sector well into 2014, but expect order volume could be lumpy. We made progress with our efforts to qualify with additional OEMs and remain focused on building on these partnerships to expand global reach.
"Within China, the economy is transitioning to a slower pace of growth and the government's infrastructure investments are measured and targeted. We believe Jinpan is aligned with sectors that are poised to experience growth over the next several years, including subway projects and solar power generation projects. We are confident that our brand recognition, scale, and cost structure position us to compete favorably within the domestic market.
"At the end of September, our backlog equaled $105 million, up 1% from the prior year period and down 27.6% from the second quarter of 2013. Product shipments for several large projects were accelerated into the third quarter, which generated record revenue while also reducing our backlog. We anticipate backlog will recover over the coming quarters."
Balance Sheet
As of September 30, 2013, the Company had $18.3 million in cash, cash equivalents, and short term investments, compared to $29.6 million as of December 31, 2012. The Company's accounts receivable on September 30, 2013 totaled $151.1 million, compared to $124.6 million as of December 31, 2012. Total bank loans outstanding at September 30, 2013 were $47.9 million, compared to $44.0 million at December 31, 2012.
Financial Outlook
The company is adjusting its guidance for full year fiscal 2013, projecting net sales of $219 million to $222 million and net income in the range of $16.0 million to $16.5 million, or $0.96 to $0.99 per share, which represents earnings growth of approximately 14% to 17% compared to 2012.
Conference Call Information
Jinpan's management will host a conference call and webcast on Thursday, November 14, 2013 at 8:30 a.m. Eastern Time. Listeners may access the call by dialing 1-888-596-2572 (toll free) or 1-913-312-0961 (international). A webcast will also be available via http://public.viavid.com, with event ID: 106714. A replay of the call will be available through November 28, 2013 by dialing 1-877-870-5176, access code 1018691.
ABOUT JINPAN INTERNATIONAL
Jinpan International Ltd. (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's manufacturing facilities in China comprise the largest cast resin transformer production capacity in that country. 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, 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.
FINANCIAL STATEMENTS FOLLOW:
| Jinpan International Limited and Subsidiaries |
|||||||||
| Three months ended |
Nine months ended |
||||||||
| Sept 30 |
Sept 30 |
||||||||
| 2013 |
2012 |
2013 |
2012 |
||||||
| (In thousands, except number of shares and per share data) |
US$ |
US$ |
US$ |
US$ |
|||||
| Net Sales |
68,743 |
58,832 |
162,579 |
157,115 |
|||||
| Cost of Goods Sold |
(44,853) |
(39,225) |
(106,572) |
(104,635) |
|||||
| Gross Profit |
23,890 |
19,607 |
56,007 |
52,480 |
|||||
| Operating Expenses |
|||||||||
| Selling and Administrative |
(16,187) |
(14,819) |
(41,541) |
(39,922) |
|||||
| Operating Income |
7,703 |
4,788 |
14,466 |
12,558 |
|||||
| Interest Expenses |
(579) |
(355) |
(1,341) |
(1,441) |
|||||
| Other Income |
1,209 |
357 |
1,856 |
936 |
|||||
| Income before Income Taxes |
8,333 |
4,790 |
14,981 |
12,053 |
|||||
| Income Taxes |
(1,357) |
(886) |
(2,482) |
(1,827) |
|||||
| Net Income after Taxes |
6,976 |
3,904 |
12,499 |
10,226 |
|||||
| Other Comprehensive Income (loss) |
|||||||||
| Foreign Currency Translation Adjustment |
(12) |
2 |
(13) |
(53) |
|||||
| Total Comprehensive Income |
6,964 |
3,906 |
12,486 |
10,173 |
|||||
| Earnings per Share |
|||||||||
| -Basic |
US$ 0.43 |
US$ 0.24 |
US$ 0.77 |
US$ 0.63 |
|||||
| -Diluted |
US$ 0.42 |
US$ 0.23 |
US$ 0.75 |
US$ 0.61 |
|||||
| Weighted Average Number of Shares |
|||||||||
| -Basic |
16,216,704 |
16,168,251 |
16,216,704 |
16,168,251 |
|||||
| -Diluted |
16,609,978 |
16,709,705 |
16,603,938 |
16,718,793 |
|||||
| Jinpan International Limited and Subsidiaries |
|||
| (Unaudited) |
(Audited) |
||
| September 30, 2013 |
December 31, 2012 |
||
| (In thousands, except number of shares and per share data) |
|||
| Assets |
|||
| Current assets: |
|||
| Cash and cash equivalents |
12,232 |
18,510 |
|
| Restricted cash |
929 |
824 |
|
| Short-term investment |
6,018 |
11,137 |
|
| Notes receivable |
8,216 |
15,720 |
|
| Accounts receivable, net |
151,121 |
124,608 |
|
| Inventories, net |
44,410 |
29,565 |
|
| Prepaid expenses |
8,321 |
2,528 |
|
| Land use right |
367 |
366 |
|
| Deferred tax assets |
1,952 |
1,339 |
|
| Other receivables |
7,412 |
5,900 |
|
| Total current assets |
240,978 |
210,497 |
|
| Property, plant and equipment, net |
69,836 |
41,361 |
|
| Construction-in-progress |
6,019 |
29,196 |
|
| Land use right |
14,817 |
14,760 |
|
| Goodwill |
13,703 |
13,403 |
|
| Other assets |
123 |
32 |
|
| Deferred tax assets |
34 |
34 |
|
| Total assets |
345,510 |
309,283 |
|
| Liabilities and shareholders' equity |
|||
| Current liabilities: |
|||
| Short-term bank loans |
15,382 |
17,644 |
|
| Accounts payable |
32,620 |
25,029 |
|
| Notes Payable |
8,689 |
6,008 |
|
| Income tax payable |
2,962 |
1,880 |
|
| Advances from customers |
14,352 |
13,624 |
|
| Other liabilities |
26,265 |
22,844 |
|
| Total current liabilities |
100,270 |
87,029 |
|
| Commitments and contingencies |
|||
| Long term liability: |
|||
| Deferred Income |
4,048 |
3,080 |
|
| Long Term bank loans |
32,554 |
26,315 |
|
| 136,872 |
116,424 |
||
| Total Liabilities |
|||
| Shareholders' equity: |
|||
| Convertible preferred stock, US$0.0045 par value: |
|||
| Authorized shares - 2,000,000 |
|||
| Issued and outstanding shares – none in 2012 and 2011 |
- |
- |
|
| Common stock, US$0.0045 par value: |
|||
| Authorized shares – 40,000,000 |
|||
| Issued and outstanding shares –16,415,456 in 2013 and 16,395,456 in 2012 |
74 |
74 |
|
| Common stock-warrants |
- |
- |
|
| Additional paid-in capital |
37,552 |
37,374 |
|
| Reserves |
12,023 |
12,023 |
|
| Retained earnings |
134,102 |
123,065 |
|
| Accumulated other comprehensive income |
25,203 |
20,781 |
|
| 208,954 |
193,317 |
||
| Less: Treasury shares at cost, |
|||
| Common stock –135,306 in 2013 and 215,306 in 2012 |
(316) |
(458) |
|
| Total shareholders' equity |
208,638 |
192,859 |
|
| Total liabilities and shareholders' equity |
345,510 |
309,283 |
|
| Jinpan International Limited and Subsidiaries |
|||
| For the Nine Months Ended |
|||
| September 30, |
|||
| 2013 |
2012 |
||
| (In thousands) |
US$ |
US$ |
|
| Operating Activities |
|||
| Net Income |
12,499 |
10,226 |
|
| Adjustments to reconcile net income to |
|||
| Net Cash provided by (used in ) operating activities: |
|||
| Depreciation |
4,759 |
3,822 |
|
| Amortization of prepaid lease |
278 |
273 |
|
| Deferred Income Tax |
(576) |
(255) |
|
| Provision for doubtful debts |
3,306 |
1,604 |
|
| Loss/(gain) on disposal of fixed assets |
- |
(4) |
|
| Stock-based compensation Cost |
105 |
211 |
|
| Changes in operating assets and liabilities |
|||
| Restricted Cash |
(86) |
(534) |
|
| Accounts Receivable |
(26,769) |
(24,325) |
|
| Notes Receivable |
7,770 |
8,811 |
|
| Inventories |
(14,027) |
(536) |
|
| Prepaid Expenses |
(2,030) |
1,885 |
|
| Other Receivable |
(1,455) |
(3,994) |
|
| Accounts Payable |
6,953 |
4,223 |
|
| Notes Payable |
2,519 |
(3,292) |
|
| Income Tax |
1,029 |
(328) |
|
| Advance From customers |
418 |
3,310 |
|
| Other liabilities |
2,903 |
(58) |
|
| Net Cash provided by ( used in ) operating activities |
(2,404) |
1,039 |
|
| Investing activities |
|||
| Purchases of property, plant and equipment |
(5,492) |
(6,270) |
|
| Proceeds from sales of property, plant and equipment |
- |
28 |
|
| Payment for construction in progress |
(6,590) |
(14,619) |
|
| Sell of short term investment |
42,159 |
- |
|
| Increase in short term investment |
(36,851) |
- |
|
| Receipt of government grant for new plant construction |
885 |
2,859 |
|
| Net Cash provided by ( used in ) investing activities |
(5,889) |
(18,002) |
|
| Financing activities |
|||
| Proceeds from bank loan |
23,633 |
46,890 |
|
| Repayment of bank loan |
(20,673) |
(35,881) |
|
| Proceeds from exercised stock option |
215 |
22 |
|
| Dividend paid |
(1,461) |
(2,264) |
|
| Net Cash provided by ( used in ) financing activities |
1,714 |
8,767 |
|
| Effect of exchange rate changes on cash |
301 |
(67) |
|
| Net increase/(decrease) in cash and cash equivalents |
(6,278) |
(8,263) |
|
| Cash and Cash equivalents at beginning of year |
18,510 |
24,218 |
|
| Cash and Cash equivalents at end of year |
12,232 |
15,955 |
|
| Interest paid |
1,849 |
1,418 |
|
| Income Tax paid |
1,587 |
2,397 |
|
SOURCE Jinpan International Ltd.
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