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Jinpan International Reports Fourth Quarter and Full Year 2013 Financial Results

Companies mentioned in this article: Jinpan International

CARLSTADT, N.J., March 10, 2014 /PRNewswire/ -- Jinpan International Limited (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the fourth quarter and full year ending December 31, 2013.

Fourth Quarter 2013 Results

Net sales for the fourth quarter were $63.1 million, an 18.2% increase from $53.4 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 fourth quarter, China sales increased 18.7% year-over-year to $57.5 million, or 91.1% of net sales, compared to $48.5 million, or 90.8% of net sales in the same period last year. Net sales outside of China for the quarter increased 14.3% year-over-year to $5.6 million, or 8.9% of net sales, compared to $4.9 million, or 9.2% 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 17.2% year-over-year to $58.5 million, or 92.7% of net sales in the fourth quarter, while wind energy products (cast resin transformers and VPI reactors for wind power applications) represented $4.6 million, or 7.3% of net sales during this quarter.

Gross profit in the fourth quarter increased 27.2% year over year to $20.7 million from $16.3 million in the same period last year. Fourth quarter 2013 gross profit margin was 32.9%, compared to 30.5% in the prior year period. Gross margin in the fourth quarter increased compared to the same period last year due to a stabilized pricing environment and favorable raw material costs.

Selling and administrative expenses in the fourth quarter were $18.5 million, or 29.3% of net sales, compared to $14.0 million, or 26.2% 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 research and development expenses, which were abnormally low in the prior year period.

Operating income for the fourth quarter decreased 4.8% to $2.2 million, or 3.5% of net sales, from $2.3 million, or 4.4% of net sales, in the same period last year.

Net income for the fourth quarter increased 6.2% to $4.1 million, or $0.24 per diluted share, compared to $3.8 million, or $0.23 per diluted share, in the same period last year. Fourth quarter net income, as a percentage of net sales, was 6.4% compared to 7.2% in the same period last year.

Full Year 2013 Results

Net sales for the full year 2013 were $225.7 million, a 7.2% increase from $210.5 million last year. Gross profit in 2013 increased 5.3% to $72.4 million and gross profit margin decreased to 32.1%, compared to 32.7% during 2012. Selling and administrative expenses were $55.7 million, compared to $53.9 million last year. The Company reclassified installation service fees of $4.4 million from selling expense to cost of goods sold for the year 2013. Operating profit in 2013 increased 12.1% to $16.7 million, or 7.4% of net sales, compared to $14.9 million, or 7.1% of net sales, last year. Net income in 2013 increased 17.8% to $16.6 million, or $0.99 per share, compared to $14.1 million, or $0.84 per share, in the prior year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our accomplishments during 2013, which translated into a return to growth and operating margin expansion for the year. Our team's exceptional execution on the ramp-up of production at our new Guilin facility enabled us to achieve record annual sales and has put us on a path for continued revenue and earnings growth."

"We remain focused on the disciplined execution of our growth strategy. We believe the key factors are in place to drive sustainable demand for our products within our core electrical infrastructure sector as well as within renewable energy sectors such as wind power and utility-scale solar. Looking ahead, we anticipate steady demand from the domestic market and are making good progress with our international OEM customers. Our optimism about our growth outlook is reflected by the Board of Directors' recent decision to increase our quarterly dividend."

"At the end of December, our backlog equaled $100 million, down 27.5% from the prior year period and down 4.8% from the third quarter of 2013. The increased production of standardized cast resin transformers from our Guilin facility has accelerated our average cycle time and enabled us to convert orders into revenue more quickly. This is reflected by our record level of inventory turnover for 2013. We are comfortable with our backlog and expect it to gradually increase from these levels as our business expands."

Balance Sheet

As of December 31, 2013, the Company had $30.8 million in cash and cash equivalents, restricted cash, and short term investments, compared to $30.5 million as of December 31, 2012. The Company's accounts receivable on December 31, 2013 totaled $144.6 million, compared to $124.6 million as of December 31, 2012. Total bank loans outstanding at December 31, 2013 were $43.1 million, compared to $43.9 million at December 31, 2012.

Financial Outlook

For the full year 2014, the Company projects revenue and earnings growth of approximately 10% to 15% compared to 2013. Net sales are expected to be in the range of $248 million to $260 million and net income is expected to be in the range of $18.2 million to $19.1 million, or $1.09 to $1.14 per share.

Conference Call Information

Jinpan's management will host a conference call and webcast on Monday, March 10, 2014, at 4:30 p.m. Eastern Time. Listeners may access the call by dialing 1-888-230-5498 (toll free) or 1-913-905-3226 (international). A webcast will also be available via http://public.viavid.com, with event ID: 108065. A replay of the call will be available through March 24, 2014, by dialing 1-877-870-5176, access code 9355802.

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, 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

    Consolidated Statements of Comprehensive Income (unaudited)

    For the Three and Twelve Month Periods Ended December 31, 2013



                                                                   Three months ended    Twelve months
                                                                                             ended

                                                                      December 31        December 31


                                                                                   2013               2012        2013        2012
                                                                                   ----               ----        ----        ----

    (In thousands, except per share data)                                           US$                US$         US$         US$


    Net sales                                                                    63,148             53,422     225,727     210,537

    Cost of Goods Sold                                                          (42,399)           (37,112)   (153,325)   (141,747)
                                                                                -------            -------    --------    --------

    Gross Margin                                                                 20,749             16,310      72,402      68,790


    Operating Expenses

    Selling and administrative                                                  (18,531)           (13,981)    (55,718)    (53,903)
                                                                                -------            -------     -------     -------

    Operating income                                                              2,218              2,329      16,684      14,887


    Interest Expenses                                                              (731)              (325)     (2,072)     (1,766)

    Other Income                                                                  2,781              2,287       4,636       3,223
                                                                                  -----              -----       -----       -----

    Income before income taxes                                                    4,268              4,291      19,248      16,344


    Income taxes                                                                   (195)              (456)     (2,677)     (2,282)
                                                                                   ----               ----      ------      ------

    Net income after taxes                                                        4,073              3,835      16,571      14,062
                                                                                  =====              =====      ======      ======


    Other comprehensive income (loss)

       Foreign currency translation adjustment                                      (14)               (20)        (27)        (73)
                                                                                    ---                ---         ---         ---

    Total comprehensive income                                                    4,059              3,815      16,544      13,989
                                                                                  =====              =====      ======      ======


    Earnings per share


    -Basic                                                                     US$ 0.25           US$ 0.24    US$ 1.02    US$ 0.87
                                                                               ========           ========    ========    ========


    -Diluted                                                                   US$ 0.24           US$ 0.23    US$ 0.99    US$ 0.84
                                                                               ========           ========    ========    ========


    Weighted average number of shares


    -Basic                                                                   16,230,165         16,170,107  16,230,165  16,170,107
                                                                             ==========         ==========  ==========  ==========


    -Diluted                                                                 16,631,378         16,701,657  16,711,192  16,717,277
                                                                             ==========         ==========  ==========  ==========

    Jinpan International Limited and Subsidiaries

    Consolidated Balance Sheet



                                                                                   (Unaudited)          (Audited)

                                                                             December 31, 2013  December 31, 2012
                                                                             -----------------  -----------------

    (In thousands, except number of shares and per share data)                             US$                US$

    Assets

    Current assets:

         Cash and cash equivalents                                                      24,582             18,510

         Restricted cash                                                                 1,316                824

         Short-term investment                                                           4,920             11,137

         Notes receivable                                                               15,802             15,720

         Accounts receivable, net                                                      144,606            124,608

         Inventories, net                                                               33,614             29,565

         Prepaid expenses                                                                4,204              2,528

         Land use right                                                                    367                366

         Deferred tax assets                                                             2,119              1,339

         Other receivables                                                               6,891              5,900
                                                                                         -----              -----


         Total current assets                                                          238,421            210,497


    Property, plant and equipment, net                                                  75,601             41,361

    Construction-in-progress                                                             3,787             29,196

    Land use right                                                                      14,850             14,760

    Goodwill                                                                            13,818             13,403

    Other assets                                                                            90                 32

    Deferred tax assets                                                                     34                 34
                                                                                           ---                ---


    Total assets                                                                       346,601            309,283
                                                                                       =======            =======


    Liabilities and shareholders' equity


    Current liabilities:


         Short-term bank loans                                                          11,101             17,644

         Accounts payable                                                               27,013             25,029

         Notes Payable                                                                  10,498              6,008

         Income tax payable                                                              2,516              1,880

         Advances from customers                                                        14,207             13,624

         Other liabilities                                                              30,339             22,844
                                                                                        ------             ------


         Total current liabilities                                                      95,674             87,029


    Commitments and contingencies

    Long term liability:

         Deferred Income                                                                 4,785              3,080

         Long Term bank loans                                                           31,998             26,315
                                                                                        ------             ------


    Total Liabilities                                                                  132,457            116,424


    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                                                          37,726             37,374

    Reserves                                                                            12,849             12,023

    Retained earnings                                                                  136,874            123,065

    Accumulated other comprehensive income                                              26,937             20,781
                                                                                        ------             ------

                                                                                       214,460            193,317

    Less: Treasury shares at cost,


    Common stock -135,306 in 2013 and 215,306 in  2012                                    (316)              (458)
                                                                                          ----               ----


    Total shareholders' equity                                                         214,144            192,859
                                                                                       -------            -------


    Total liabilities and shareholders' equity                                         346,601            309,283
                                                                                       =======            =======

    Jinpan International Limited and Subsidiaries

    Consolidated Statement of Cash Flows

    For the Twelve Months Ended December 31, 2013 (unaudited)



                                                                     For the Twelve Months
                                                                     Ended

                                                                                     December 31

                                                                            2013          2012
                                                                            ----          ----

                                                                             US$           US$

    (In thousands)


    Operating Activities

          Net Income                                                      16,571        14,062

          Adjustments to reconcile net income to

               Net Cash provided by (used in ) operating activities:

               Depreciation                                                6,491         5,246

               Amortization of prepaid lease                                 372

               Deferred Income Tax                                          (727)         (326)

               Provision for doubtful debts                                4,295         2,733

               Loss/(gain) on disposal of fixed assets                       (40)           (4)

               Stock-based compensation Cost                                 277           406


         Changes in operating assets and liabilities

               Restricted Cash                                              (459)         (501)

               Accounts Receivable                                       (20,188)      (16,671)

               Notes Receivable                                              399         3,437

               Inventories                                                (3,086)        7,192

               Prepaid Expenses                                           (1,573)       10,743

               Other Receivable                                             (852)         (426)

               Accounts Payable                                            1,191         1,492

               Notes Payable                                               4,238        (7,628)

               Income Tax                                                    569          (461)

               Advance From customers                                        159           951

               Other liabilities                                           6,700          (928)
                                                                           -----          ----

    Net Cash provided by ( used in ) operating activities                 14,337        19,317


    Investing activities

         Purchases of property, plant and equipment                         (370)       (8,787)

         Proceeds from sales of property, plant and equipment                 40            29

         Payment for construction in progress                            (12,667)      (26,751)

         Purchase of Land use right                                            -           434

         Sale of short term investment                                    57,179        12,711

         Increase in short term investment                               (50,719)      (23,834)

         Receipt of government grant for new plant construction            1,582         3,080

         Decrease in investment in Beijing Jinpan Huineng Co.                  -            32
                                                                             ---           ---

    Net Cash provided by ( used in ) investing activities                 (4,955)      (43,086)


    Financing activities

         Proceeds from bank loan                                          42,213        63,218

         Repayment of bank loan                                          (44,400)      (42,315)

         Proceeds from exercised stock option                                216            21

         Dividend paid                                                    (1,950)       (2,912)
                                                                          ------        ------

    Net Cash provided by ( used in ) financing activities                 (3,921)       18,012


    Effect of exchange rate changes on cash                                  611            49
                                                                             ---           ---


    Net increase/(decrease) in cash and cash equivalents                   6,072        (5,708)
                                                                           -----        ------


    Cash and Cash equivalents at beginning of year                        18,510        24,218
                                                                          ------        ------


    Cash and Cash equivalents at end of year                              24,582        18,510
                                                                          ======        ======


    Interest paid                                                          2,724         1,673

    Income Tax paid                                                        2,470         3,027

SOURCE Jinpan International