ENGLEWOOD CLIFFS, N.J., Aug. 14 /PRNewswire-FirstCall/ -- Jinpan International Ltd. (
Net sales in the second quarter were $40.9 million, a 0.7% increase from $40.6 million in the same period last year. Net sales remained approximately the same as that of the second quarter of 2008 primarily due to downward pressure on unit sale price stemming from lower material prices. In the second quarter, net sales outside of China increased 16.0% to $5.8 million, or 14.2% of net sales, compared to $5 million, or 12.3% of net sales in the same period last year. Cast resin transformers (excluding those for wind power applications), switch gears and unit substations represented $32.6 million, or 79.7% of net sales in the second quarter, while wind energy products represented $8.3 million, or 20.3% of net sales in the second quarter.
Gross profit in the second quarter was $19.0 million, a 37.6% increase from $13.8 million, in the same period last year. Second quarter gross margin increased to 46.6% compared to 34.1% in the same period last year. The Company benefited from a lower cost of sales on an absolute basis due to lower raw material prices compared to the same period last year and an increase in sales of customized, high-end products resulting in gross margins during the second quarter which were above normal levels.
Selling, general and administrative expenses in the second quarter were $9.0 million, or 22.1% of net sales, a 28.6% increase compared to $7.0 million, or 17.3% of net sales in the same period last year. These expenses increased primarily due to increase in R&D expense and additional overhead costs at the Company's Wuhan and Shanghai facilities, which were not operating during the same period last year.
Operating income in the second quarter was $10.0 million, or 24.4% of net sales, a 46.9% increase compared to $6.8 million, or 16.8% of net sales in the same period last year.
Net income in the second quarter was $8.7 million, or $1.07 per diluted share, a 44.0% increase compared to $6.0 million, or $0.74 per diluted share, in the same period last year. Second quarter net income as a percentage of net sales was 21.2% as compared to 14.9% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan made the following comments: "In such a difficult economic environment, we were pleased with our results for the second quarter. We were able to have modest revenue growth in an environment with lower prices. Also in the second quarter, we recorded favorable gross margins because of lower raw materials prices, but also because of a high level of customized, high-end orders that the Company was able to deliver to its clients. For the second half of 2009, we believe gross margins will return to more typical levels of 33% - 34%, which is a level to be proud of in this industry.
"We were also pleased to see an increase in orders from our international business segment and believe international orders could generate a growing percentage of net sales in 2009. Our international customers are placing orders for cast resin transformers that benefit wind power applications as well as our more traditional power generation applications typically used in urban settings (such as trains and subways, hospitals, airports and office buildings), industrial (factories) and commercial development settings (processing plants, data centers).
"JST continues to take the necessary steps to ensure we have the capacity to meet growing demand from domestic and international customers. Both our Wuhan facility now in operation and soon to be completed first phase of our Shanghai facility can deliver increased production. Our Shanghai facility will house our growing wind energy products business.
"As we evaluate our financial performance for the remainder of the year, we anticipate that order volume to grow but the dollar value of our projects will likely remain subject to the challenging global market conditions, thus impacting our original sales projections. We expect gross margins within the high end of our historic range and anticipate net income and EPS growth. We believe we will benefit from the stimulus plans of China and the U.S. and expect growth in our overall financial performance as the domestic and international markets in which we operate continue to show signs of stabilization and increased infrastructure development projects materialize. JST has a strong balance sheet, a healthy cash position, manageable debt and the right strategic plan to sustainably manage our business for growth this year and beyond. We look forward to capitalizing on our opportunities and enhancing value for our shareholders," concluded Mr. Li.
Balance Sheet
As of June 30, 2009, the Company had $21.3 million of cash and cash equivalents, compared to $16.7 million at December 31, 2008. The Company's accounts receivables on June 30, 2009 totaled $60.2 million, compared to $58.8 million at December 31, 2008.
Financial Outlook
For the full year 2009, the Company currently anticipates net sales of approximately $154 million to $159 million, a 0% to 3% increase over 2008 sales of $154 million. The Company reiterates its original estimate of net income of approximately $22.5 million to $23.3 million, a 14% to 18% increase over 2008 net income of $19.8 million. The Company anticipates that diluted earnings per share for 2009 will be between $2.75 to $2.85 per share.
Conference Call Information
Jinpan's management will host an earnings conference call today, August 14, 2009 at 8:30 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-913-312-1450. A webcast will also be available via the Company's website at www.viavid.net. A recording of the call will be available through August 28, 2009. Listeners may access it by dialing #1-719-457-0820, access code: 9513647.
About Jinpan International Ltd
Jinpan International Ltd. (
Safe Harbor Provision
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations and involve known and unknown risks, and uncertainties or other factors not under the Company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, the following:
Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
Jinpan International Limited and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
For the Three and Six Month Periods Ended June 30, 2009
Three Three Six Six
months months months months
ended ended ended ended
June 30 June 30 June 30 June 30
(In thousands, except 2009 2008 2009 2008
per share data) US$ US$ US$ US$
Net sales 40,903 40,604 73,290 64,402
Cost of Goods Sold (21,859) (26,767) (42,530) (43,106)
Gross Margin 19,044 13,837 30,760 21,296
Operating Expenses
Selling and administrative (9,047) (7,033) (15,277) (11,503)
Operating income 9,997 6,804 15,483 9,793
Interest Expenses (248) (291) (352) (470)
Other Income 72 187 122 371
Income before income taxes 9,821 6,700 15,253 9,694
Income taxes (1,133) (667) (1,886) (1,261)
Net income 8,688 6,033 13,367 8,433
Earnings per share
-Basic $1.09 $0.76 $1.67 $1.06
-Diluted $1.07 $0.74 $1.65 $1.03
Weighted average number of
shares
-Basic 8,002,794 7,984,147 8,002,794 7,984,147
-Diluted 8,086,090 8,152,304 8,086,090 8,152,304
Jinpan International Limited and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
June 30, December 31,
2009 2008
(In thousands) US$ US$
Assets
Current assets:
Cash and cash equivalents 21,331 16,739
Accounts receivable, net 60,196 58,793
Inventories 28,508 31,868
Prepaid expenses 27,934 4,713
Other receivables 6,915 7,317
Total current assets 144,884 119,430
Property, plant and equipment, net 18,045 18,213
Construction in progress 6,693 6,055
Land use right 6,130 6,098
Intangible asset-Goodwill 12,333 12,348
Deferred tax assets 257 301
Total assets 188,342 162,445
Liabilities and Shareholders' Equity
Current liabilities:
Short term bank loans 4,392 11,726
Accounts payable 9,758 11,300
Notes Payable 26,352 -
Tax Payable 1,640 3,671
Advances from customers 6,419 7,828
Other Payable 19,544 20,733
Total current liabilities 68,105 55,258
Shareholders' equity:
Common stock, US$0.009 par value:
Authorized shares - 20,000,000
Issued and outstanding shares -
8,209,684 in 2009 74 73
and 8,189,684 in 2008
Common Stock, Warrants 854 854
Convertible preferred stock, US$0.009 par
value:
Authorized shares - 1,000,000
Issued and outstanding shares - 3,044 in 2008 - -
and 2009
Additional paid-in capital 34,266 34,035
Reserves 3,906 3,906
Retained earnings 72,692 60,296
Accumulated other comprehensive income 9,192 8,812
120,984 107,976
Less: Treasury shares at cost, common
stock-192,470 in 2009 and 202,470 in 2008 (747) (789)
Total shareholders' equity 120,237 107,187
Total liabilities and shareholders' equity 188,342 162,445
Jinpan International Limited and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2009 (Unaudited)
Six Six
months months
ended ended
June 30, June 30,
2009 2008
(In thousands) US$ US$
Operating activities
Net income 13,367 8,433
Adjustments to reconcile net income to
net cash provided by/(used in) operating
activities:
Depreciation 1,454 632
Provision for doubtful debt (286) (282)
Loss on disposal of fixed assets - 1
Deferred income tax 43 277
Stock-based compensation cost 205 184
Changes in operating assets and liabilities
Accounts receivable (1,188) (10,639)
Inventories 3,324 (5,662)
Prepaid expenses (23,241) (4,209)
Other receivables 394 207
Accounts payable (1,529) 3,003
Notes payable 26,367 -
Tax payable (2,028) (463)
Advance from customers (1,401) 888
Other payable (1,164) 2,706
Net cash provided by/(used in) operating
activities 14,317 (4,924)
Investing activities
Purchases of property, plant and equipment (1,348) (1,055)
Proceeds from sales of property, plant and
equipment - 2
Payment for construction in progress (645) (10,952)
Purchase of available-for sale securities - (1,180)
Net cash used in investing activities (1,993) (13,185)
Financing activities
Proceeds from bank loan 4,850 17,436
Repayment of bank loan (12,175) (4,580)
Proceeds from exercise of stock options 70 -
Dividends paid (970) (967)
Net cash provided by/(used in) financing
activities (8,225) 11,889
Effect of exchange rate changes on cash 493 464
Net increase/(decrease) in cash and cash
equivalents 4,592 (5,756)
Cash and cash equivalents at beginning of
year 16,739 17,122
Cash and cash equivalents at end of the
period 21,331 11,366
Interest paid 364 544
Income taxes paid 2,971 1,715
SOURCE Jinpan International Ltd.