Jinpan International Reports Second Quarter 2013 Financial Results

CARLSTADT, N.J., Aug. 14, 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 second quarter ending June 30, 2013. 

Second Quarter 2013 Results

Net sales for the second quarter were $58.7 million, a 5.6% increase from $55.5 million in the same period last year.  The increase was driven by strong growth in international sales and modest growth in the Chinese market.  In the second quarter, China sales accounted for $52.6 million, or 89.6% of net sales, compared to $51.2 million, or 92.3% of net sales in the same period last year.  Net sales outside of China for the quarter were $6.1 million, or 10.4% of net sales compared to $4.3 million, or 7.7% 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 represented $53.3 million, or 90.8% of net sales in the second quarter, while wind energy products (cast resin transformers and VPI reactors for wind power applications) represented $5.4 million, or 9.2% of net sales during this quarter.

Gross profit in the second quarter increased 19.2% year over year to $20.4 million from $17.1 million in the same period last year.  Second quarter 2013 gross profit margin was 34.8%, compared to 30.8% in the prior year period, and 33.3% in the first quarter of 2013.  Gross margin in the second 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 second quarter were $15.0 million, or 25.5% of net sales, compared to $14.2 million, or 25.6% of net sales in the same period last year.  Selling and administrative expenses increased from the same period last year due to higher sales and increased expenses associated with the newly operational Guilin facility. 

Operating income for the second quarter increased 85.3% to $5.4 million, or 9.2% of net sales, from $2.9 million, or 5.3% of net sales, in the same period last year.

Net income for the second quarter increased 85.8% to $4.4 million, or $0.26 per diluted share, compared to $2.4 million, or $0.14 per diluted share, in the same period last year.  Second quarter net income, as a percentage of net sales, was 7.5% compared to 4.2% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our second quarter results, which reflect a return to revenue and earnings growth as we are seeing contribution from the strategies we have implemented and investments we have made over the past several years.  With this major investment phase largely complete, we now intensify our 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.  At the end of June, our backlog increased to $145 million, up 26% from the prior year period and up 2% from the first quarter of 2013. 

"The ramp-up of our Guilin facility is progressing as planned and we made our first shipments of cast resin transformers from this facility during the second quarter.  Jinpan's total production capacity for cast resin transformers is now 17 million KVA, which we believe positions us as the largest manufacturer of cast resin transformers in China.  We plan to expand production from this facility in a measured and efficient manner over the next several quarters. 

"Jinpan had several positive developments with its OEM business.  As expected, during the second quarter we resumed volume shipments to our largest OEM customer, supplying a newly designed cast resin transformer for its next generation wind turbine platform.  Wind energy sales more than doubled from the first quarter of 2013 and we anticipate continued growth through the end of the year. We continued shipments to our two other OEM customers.  We are also pleased to report that we have successfully passed qualification with a Europe-based wind turbine manufacturer and have received initial orders.  Finally, we made progress with qualification with two additional OEMs.

"Within the Chinese market, the government continues to invest in infrastructure; however, the spending is more targeted and measured than in previous years.  We believe our technical capabilities and the scale and improved efficiency of our Guilin facility position us to capture market share and drive productivity within this slower-growth environment." 

Balance Sheet

As of June 30, 2013, the Company had $14.2 million in cash and cash equivalents, compared to $18.5 million as of December 31, 2012.  The Company's accounts receivable on June 30, 2013 totaled $143.7 million, compared to $124.6 million as of December 31, 2012.  Total bank loans outstanding at June 30, 2013 were $49.4 million, compared to $44.0 million at December 31, 2012. 

Financial Outlook

The Company reiterates its guidance for 2013, projecting net sales of $231 million to $241 million, an increase of 10% to 15% over 2012, and net income of $14.0 million to $14.5 million, or $0.84 to $0.87 per share, which represents an increase of 0% to 3% compared to 2012.

Conference Call Information

Jinpan's management will hold a conference call on Wednesday, August 14, 2013 at 8:30 a.m. Eastern Time.  Listeners may access the call by dialing 1-888-727-7615 (toll free) or 1-913-312-0655 (international).  A webcast will also be available via http://public.viavid.com, with event ID: 105623.  A replay of the call will be available through August 28, 2013 by dialing 1-877-870-5176, access code 8399159.

ABOUT JINPAN INTERNATIONAL

Jinpan International Ltd. (NASDAQ: JST) designs, manufactures, and markets equipment for the distribution of electricity, including cast resin transformers, VPI transformers and reactors, switchgears, and unit substations.  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 Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey.

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.

SOURCE Jinpan International Ltd.