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Jinpan International Reports Third Quarter 2015 Financial Results

* Third quarter revenue increased 22.3% year-over-year to RMB462.6 million (US$72.7 million) * Third quarter net income decreased 25% year-over-year to RMB19.6 million (US$3.1 million), or RMB1.21 (US$0.19) per share * Fiscal 2015 earnings outlook: revenue expected to increase 15-20% to approximately RMB1.70 billion to RMB1.76 billion (US$267 million to US$277 million); earnings per share are expected to be RMB5.48 to RMB5.68 (US$0.86 to US$0.89) per share.

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

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/jinpan-international-reports-third-quarter-2015-financial-results-300176652.html

SOURCE Jinpan International Limited


Source: PR Newswire (November 11, 2015 - 4:05 PM EST)

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