JINPAN INTERNATIONAL LIMITED CARLSTADT, N.J., Nov. 11, 2015 /PRNewswire/ -- Jinpan International Limited. (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, 2015. This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.3613 to US$1.00, the rate published by China administration of foreign exchange on September 30, 2015.
Third Quarter 2015 Results
Net sales for the third quarter were RMB462.6 million (US$72.7 million), a 22.3% increase from RMB 378.3 million (US$59.5 million) in the same period last year. The increase was driven by continued strength in sales of switchgear and unit substations, an increase in sales to the Company's newest OEM customer, and moderate growth in sales of transformers.
In the third quarter, China sales increased 16.7% year-over-year to RMB391.3 million (US$61.5 million), or 84.6% of net sales, compared to RMB335.3 million (US$52.7 million), or 88.6% of net sales in the same period last year. Net sales outside of China for the third quarter increased 65.9% year-over-year to RMB 71.3 million (US$11.2 million), or 15.4% of net sales, compared to RMB43.0 million (US$6.8 million), or 11.4% of net sales, for the same period last year.
Sales of cast resin transformers increased 4.8% year-over-year to RMB245.2 million (US$38.5 million), or 53.0% of net sales, compared to RMB233.9 million (US$36.8 million) or 61.8% of net sales, for the same period last year. Sales of our integrated products, including switchgear and unit substations, increased 99.2% year-over-year to RMB134.6 million (US$21.2 million), or 29.1% of sales, compared to RMB67.6 million (US$10.6 million), or 17.9% of net sales, for the same period last year.
Sales to OEM customers increased 64% year-over-year to RMB94.4 million (US$14.8 million), or 20.4% of net sales, compared to RMB 57.5 million (US$ 9.0 million), or 15.2% of net sales in the same period last year.
Gross profit in the third quarter increased 9.2% year over year to RMB135.3 million (US$21.3 million) from RMB123.9 million (US$19.5 million) in the same period last year. Third quarter 2015 gross profit margin was 29.2%, compared to 32.8% in the prior year period. Gross margin in the third quarter decreased compared to the same period last year primarily due to increased materials prices and an increased mix of sales of switchgear and unit substations, which carry lower gross margins.
Selling and administrative expenses in the third quarter were RMB111.5 million (US$17.5 million), or 24.1% of net sales, compared to RMB92.2 million (US$14.5 million), or 24.4% of net sales, in the same period last year. Selling and administrative expenses increased from the same period last year due to increase in bad debt reservation and increased in research and development expense.
Operating income for the third quarter decreased 25% to RMB23.8 million (US$3.7 million), or 5.1% of net sales, from RMB31.7 million (US$5.0 million), or 8.4% of net sales, in the same period last year.
Net income for the third quarter decreased 25% to RMB19.6 million (US$3.1 million), or RMB1.21 (US$0.19) per diluted share, compared to RMB26.1 million (US$4.1 million), or RMB1.61 (US$0.25) per diluted share, in the same period last year. Third quarter net income, as a percentage of net sales, was 4.2% compared to 6.9% in the same period last year.
Mr. Zhiyuan Li, Chairman of the Board, Chief Executive Officer and President of the Company, stated, "Our third quarter sales of RMB 462.6 million (US$72.7 million) exceeded our expectations. The strong sales performance reflects the results of our concerted effort to increase sales volume to offset margin pressure within the industry. This strategy is enabled by the increased production capacity and competitive cost structure of our Guilin production facility."
"During the third quarter we experienced the same positive dynamics that we have seen over the past several quarters. Our product sales continued to diversify, driven by a strong increase in sales of switchgear and unit substations. Sales to our OEM customers increased as our newest OEM, a leading global wind turbine manufacturer, ramped up shipments during the quarter."
"While our gross margins improved from the second quarter, we continued to experience margin pressure due to rising competition and product mix. We remained focused on managing our working capital and our days sales outstanding."
"We operate in a cyclical industry closely tied to China's economic environment, which is experiencing decelerating growth. We are focused on navigating the current industry down-cycle through disciplined execution and fiscal conservatism, with a vision to enter the recovery period in a more dominant competitive position within the market."
"At the end of October 2015, our backlog equaled RMB888 million (US$140 million), up 10.2% from the end of September last year and down 5.2% from the second quarter of 2015."
Balance Sheet
As of September 30, 2015, the Company had RMB219.9 million (US$34.6 million) in cash and cash equivalents, restricted cash, and short term investments, compared to RMB168.5 million (US$27.5 million) as of December 31, 2014. The Company's net accounts receivable on September 30, 2015 totaled RMB1.09 billion (US$171.4 million), compared to RMB858.0 million (US$140.2 million) as of December 31, 2014. Total bank loans outstanding at September 30, 2015 were RMB185.9 million (US$29.2 million), compared to RMB160.6 million (US$26.2 million) at December 31, 2014.
Financial Outlook
For the full year 2015, the Company projects revenue growth of approximately 15-20% compared to 2014. Net sales are expected to be approximately RMB1.70 billion to RMB1.76 billion (US$267 million to US$277 million). Net income is expected to be in a range of approximately RMB89 million to RMB92.2 million (US$14 million to US$14.5 million). Earnings per share are expected to be RMB5.48 to RMB5.68 (US$0.86 to US$0.89) per share. This earnings guidance excludes expenses associated with the proposed going private transaction.
Recent Developments
On September 15, 2015, the Company announced that its Board of Directors has received a preliminary, non-binding proposal letter dated September 15, 2015 from Li Zhiyuan, the Company's Chairman of the Board of Directors, President and Chief Executive Officer and Forebright Smart Connection Technology Limited (collectively, with Mr. Li, the "Buyer Parties"), to acquire all of the outstanding common shares of the Company not currently owned by the Buyer Parties in a going private transaction for $4.50 per common share, subject to certain conditions (the "Proposal").
The Company's Board of Directors formed a committee of independent directors (the "Special Committee") on September 29, 2015 to evaluate the Proposal. The Special Committee has retained a legal counsel and a financial advisor. The Board of Directors cautions the Company's shareholders and others considering trading in its securities that no decisions have been made by the Special Committee with respect to the Company's response to the proposal. No assurance can be given that the Proposal, or any other transaction, will be consummated. The Company does not intend to disclose developments regarding these matters unless and until its Board of Directors determines there is a need to update the market.
Conference Call Information
Jinpan's management will host a conference call and webcast at 4:30 p.m. ET on Wednesday, November 11, 2015. The conference call can be accessed by dialing 1-888-576-4398 (toll free) or 1-719-325-2215 (international). A webcast will also be available via http://public.viavid.com, with event ID: 117040. A replay of the call will be available through November 18, 2015, by dialing 1-877-870-5176, access code 242815.
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'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, 2014 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
Consolidated Statements of Comprehensive Income
For the Three Months Ended September 30, 2015
Three months ended
September 30,
2015 2015 2014
---- ---- ----
US$ RMB RMB
In thousands, except
per share data (unaudited) (unaudited) (unaudited)
Net Sales 72,723 462,613 378,260
Cost of Goods Sold (51,453) (327,310) (254,313)
------- -------- --------
Gross Profit 21,270 135,303 123,947
Selling and
Administrative
Expenses (17,525) (111,480) (92,202)
------- -------- -------
Operating income 3,745 23,823 31,745
Interest Expense (393) (2,498) (3,715)
Other Income 238 1,517 4,029
--- ----- -----
Income Before Income
Taxes 3,590 22,842 32,059
Income Taxes (507) (3,228) (5,913)
Net Income After
Taxes 3,083 19,614 26,146
===== ====== ======
Other Comprehensive Income (Loss)
Foreign Currency
Translation
Adjustment 110 703 (40)
--- --- ---
Total Comprehensive
Income 3,193 20,317 26,106
===== ====== ======
Earnings per Share
Basic US$0.19 RMB 1.21 RMB 1.61
======= ======== ========
Diluted US$0.19 RMB 1.21 RMB 1.61
======= ======== ========
Weighted Average Number of Shares
Basic 16,232,381 16,232,381 16,232,178
========== ========== ==========
Diluted 16,232,381 16,232,381 16,251,287
========== ========== ==========
Jinpan International Limited and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Nine Months Ended September 30, 2015
Nine months ended
September 30,
2015 2015 2014
---- ---- ----
US$ RMB RMB
In thousands, except
per share data (unaudited) (unaudited) (unaudited)
Net Sales 204,890 1,303,365 1,033,783
Cost of Goods Sold (149,009) (947,888) (696,666)
-------- -------- --------
Gross Profit 55,881 355,477 337,117
Selling and
Administrative
Expenses (44,387) (282,358) (254,079)
------- -------- --------
Operating income 11,494 73,119 83,038
Interest Expense (1,167) (7,422) (11,181)
Other Income 1,287 8,184 9,929
----- ----- -----
Income Before Income
Taxes 11,614 73,881 81,786
Income Taxes (1,674) (10,650) (13,985)
Net Income After
Taxes 9,940 63,231 67,801
===== ====== ======
Other Comprehensive Income (Loss)
Foreign Currency
Translation
Adjustment 109 692 32
--- --- ---
Total Comprehensive
Income 10,049 63,923 67,833
====== ====== ======
Earnings per Share
Basic US$0.61 RMB 3.90 RMB 4.18
======= ======== ========
Diluted US$0.61 RMB 3.90 RMB 4.17
======= ======== ========
Weighted Average Number of Shares
Basic 16,232,381 16,232,381 16,232,178
========== ========== ==========
Diluted 16,232,381 16,232,381 16,261,519
========== ========== ==========
Jinpan International Limited and Subsidiaries Consolidated Balance Sheet
(Unaudited) (Unaudited) (Audited)
September 30, 2015 September 30, 2015 December 31, 2014
------------------ ------------------ -----------------
In thousands, except per share data $US RMB RMB
Assets
Current Assets
Cash and bank 9,050 57,572 80,826
Restricted Cash 4,761 30,288 7,210
Short Term Investment 20,751 132,000 80,500
Notes receivable 10,648 67,738 70,718
Accounts receivable, net 171,444 1,090,605 858,037
Inventories 63,372 403,130 305,967
Prepayments 16,520 105,087 127,619
Deferred Tax Assets 3,358 21,362 15,388
Other receivables 9,132 58,089 42,229
----- ------ ------
309,036 1,965,871 1,588,494
Fixed Assets
Property, plant and equipment, net 66,931 425,767 452,660
Construction in progress 1,096 6,972 16,481
Intangible Assets 13,243 84,245 84,245
Prepaid leases 14,018 89,175 90,902
Other assets 24 153 649
TOTAL ASSETS 404,348 2,572,183 2,233,431
======= ========= =========
Current Liabilities
Short term loans 3,985- 25,351 -
Accounts payable 44,989 286,189 228,633
Notes Payable 42,842 272,534 89,733
Advances from customers 22,964 146,079 131,946
Other payables 28,821 183,337 192,687
Taxes payable 2,191 13,939 12,389
----- ------ ------
Total current liabilities 145,792 927,429 655,388
Long Term Loans 25,243 160,578 160,553
Deferred Income 5,564 35,397 30,377
----- ------ ------
Total Liabilities 176,599 1,123,404 846,318
Shareholders' Equity
Convertible preferred stock, US$0.0045 par value: - - -
Authorized shares - 2,000,000
Issued and outstanding shares - none in 2015 & 2014
Common stock, US$0.0045 par value: 95 606 606
Authorized shares - 40,000,000
Issued and outstanding shares - 16,418,456 in 2015 and 2014
Additional paid-in capital 47,026 299,148 298,418
Reserves 14,775 93,985 93,985
Retained earnings 166,837 1,061,297 1,001,054
Accumulated other comprehensive income (496) (3,155) (3,848)
---- ------ ------
228,237 1.451,881 1,390,215
Less: Treasury shares at cost
Common stock - 135,488 in 2015 and 2014 (488) (3,102) (3,102)
---- ------ ------
Total Shareholders' Equity 227,749 1,448,779 1,387,113
Total Liabilities and Shareholders' Equity 404,348 2,572,183 2,233,431
======= ========= =========
Jinpan International Limited and Subsidiaries
Consolidated Statement of Cash Flows
For the Nine Months Ended September 30, 2015
Nine Months Ended September 30
2015 2015 2014
---- ---- ----
US$ RMB RMB
(Unaudited) (Unaudited) (Unaudited)
In thousands
Operating Activities
Net Income 9,940 63,231 67,801
Adjustments to reconcile net income to
Net Cash provided by (used in) operating activities:
Depreciation 6,000 38,168 32,465
Amortization of prepaid lease 271 1,727 1,299
Deferred Income Tax (882) (5,611) (1,940)
Provision for doubtful debts 4,323 27,499 10,974
Stock-based compensation Cost 115 730 1,864
Changes in operating assets and liabilities
Restricted Cash (3,628) (23,077) 966
Accounts Receivable (40,883) (260,067) (36,774)
Notes Receivable 468 2,979 24,786
Inventories (14,041) (89,321) (93,991)
Prepaid Expenses 3,542 22,532 (33,904)
Other Receivable (2,472) (15,726) (7,550)
Accounts Payable 9,048 57,556 23,982
Notes Payable 28,736 182,801 23,499
Income Tax 244 1,550 (3,606)
Advance From customers 2,222 14,132 23,826
Other liabilities (1,470) (9,349) (8,040)
------ ------ ------
Net Cash provided by (used in) operating activities 1,533 9,754 25,657
Investing activities
Purchases of property, plant and equipment (881) (5,603) (7,700)
Payment for construction in progress (630) (4,005) (3,799)
Sell of S/T Investment 81,181 516,415 334,000
Increase in S/T investment (89,277) (567,915) (357,000)
Receipt of government grant for new plant construction 789 5,020 1,167
--- ----- -----
Net Cash provided by (used in) investing activities (8,817) (56,088) (33,332)
Financing activities
Proceeds from bank loan 4,038 25,687 60,390
Repayment of bank loan (49) (311) (140,746)
Proceeds from exercised stock options - - 96
Dividend paid (470) (2,988) (11,967)
---- ------ -------
Net Cash provided by (used in) financing activities 3,519 22,388 (92,227)
Effect of exchange rate changes on cash (394) 692 61
---- --- ---
Net increase/(decrease) in cash and cash equivalents (4,159) (23,254) (99,841)
------ ------- -------
Cash and Cash equivalents at beginning of year 13,209 80,826 149,874
------ ------ -------
Cash and Cash equivalents at end of year 9,050 57,572 50,033
===== ====== ======
Interest paid 763 4,854 7,911
Income Tax paid 2,299 14,623 19,517
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SOURCE Jinpan International Limited
