- 2Q08 Sales Increases 26.7% to $40.6 Million -
ENGLEWOOD CLIFFS, N.J., Aug. 25 /PRNewswire-FirstCall/ -- Jinpan International Ltd. (Amex: JST), a leading designer, manufacturer, and marketer of cast resin transformers for voltage distribution equipment, today announced consolidated financial results for the quarter ended June 30, 2008.
Total sales for the second quarter reached $40.6 million, a 26.7% increase over total sales of $32.1 million for the same period last year. The increase in sales was primarily a result of strong demand for the Company's cast resin transformers, both in China and internationally. International sales in the second quarter increased 163% to $5.0 million, or 12.3% of total sales compared to $1.9 million, or 6% of total sales, for the same period last year. Cast resin transformers, switch gears & unit substations represented $37.0 million of sales in the second quarter while wind transformers and wind reactor products represented $3.6 million of total sales.
Gross profit in the second quarter was $13.8 million, a 29.7% increase over the same period last year. Second quarter gross margin increased 80 basis points to 34.1%, compared to 33.3% in the same period last year. The increase in gross margin was primarily due to increased sales of higher margin, customized transformer and wind power products.
Selling and administrative expenses in the second quarter of 2008 were $7.0 million, or 17.3% of sales, compared to $5.5 million, or 17.0% of sales, in the same period last year. Selling and administrative expenses increased slightly primarily due to new facility expansion initiatives.
Operating income in the second quarter of 2008 increased to $6.8 million, or 16.8% of sales, compared to $5.2 million, or 16.2% of sales in the same period last year.
Net income for the second quarter of 2008 increased 47.4% to $6.0 million, or $0.74 per diluted share, compared to $4.1 million, or $0.51 per diluted share, in the same period last year. Second quarter net income as a percentage of sales increased 210 basis points to 14.9% from 12.8% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "We made excellent progress in our business in the second quarter. We acheived sales increases for our core cast resin transformer products; we grew sales in both our domestic and international businesses; and demand for our wind power applications continued to gain healthy momentum. In spite of higher raw material costs, we were able to increase our gross margin 80 basis points largely due to increased sales of higher margin, customized cast resin transformer and wind power products.
During the quarter, we commenced operations at our new 267,000 square foot manufacturing facility in Wuhan. This facility is centrally located, closer to our material suppliers and provides easy access to highways and railroads."
On the balance sheet for the second quarter of 2008, construction in progress and short-term bank loans increased primarily due to the Company's recent acquisition of a new manufacturing site in Shanghai.
Accounts receivable at June 30, 2008, increased to $57.0 million from $43.0 million as of December 31, 2007 largely due to the increase in total sales.
Inventories at June 30, 2008 were valued at $33.2 million, a slight decrease from the end of the first quarter of 2008 and a 29% increase from the end of the fourth quarter of 2007.
Acquisition of Shanghai Manufacturing Site
On June 18, 2008, the Company purchased land for a new manufacturing facility located in the Shanghai Qinpu Industrial Park, in Shanghai, China. This site covers an area of 764,384 square feet and is zoned for industrial use. The site contains several partially completed buildings designed for manufacturing which were never completed because the previous owner was in the process of constructing the buildings when it filed for bankruptcy. The purchase price of this site was approximately $9.3 million plus administrative fees associated with the closing. To fund this purchase, the Company secured a bank loan of approximately $5.8 million and also used approximately $3.5 million of cash from its balance sheet.
Mr. Li continued, "We are excited to be acquiring a site in the Shanghai region. Purchasing the manufacturing site that contained partially completed buildings saves us significant time and construction related expenses. At the Shanghai facility, we plan to focus on the production of complementary power distribution products primarily for wind power applications, which is the fastest growing segment of our business.
2008 Financial Outlook
The Company reiterates its 2008 outlook of sales of approximately $155 million, which represents a 30% increase over 2007 sales of $119.6 million, and net income of approximately $21.4 million, or approximately $2.64 per diluted share, which represents a 30% increase over 2007 net income of $16.4 million, or $2.03 per diluted share. These forecasts include the sales contributions from the recently opened Wuhan manufacturing facility.
Mr. Li continued, "We are positioning our business for continued growth in the areas of cast resin transformers, integrated assembly products (switchgears and unit substations) and wind transformer and reactor products. With respect to operations of each of our manufacturing facilities, our Haikou facility will primarily focus on manufacturing high-end customized transformer products; our Wuhan facility will primarily focus on manufacturing standard cast resin transformers and our future Shanghai facility will primarily focus on manufacturing wind power products (transformers and reactors) and sophisticated switchgears and substation units, all of which are currently being manufactured at our Haikou facility.
The initiatives we have in place today will better position us for growth in the future. We continue to focus on expanding our market share within China's growing electrical infrastructure market, investing in new state-of-the-art facilities to increase manufacturing capacity and efficiency, and developing high margin power generation products for existing and new geographic regions. We are encouraged by our progress and look forward to continued future success," concluded Li.
About Jinpan International Ltd.
Jinpan International Ltd. (Amex: JST) designs, manufactures, and markets cast resin transformers for voltage distribution equipment in China and other various countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations in lower, more usable voltages. The Company has obtained ISO9001 and ISO1401 certifications of its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Englewood Cliffs, New Jersey.
Safe Harbor Provision
Forward Looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
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, 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:
-- our ability to successfully implement our business strategy;
-- the impact of existing and new competitors in the markets in which we
compete, including competitors that may offer less expensive products
and services, more desirable or innovative products or technological
substitutes, or have more extensive resources or better financing;
-- the effects of rapid technological changes and vigorous competition in
the markets in which we operate;
-- uncertainties about the future growth in electricity consumption and
infrastructure development in the markets in which we operate;
-- uncertainties about the degree of growth in the number of consumers in
the markets in which we operate using mobile personal communications
services and the growth in the population in those areas;
-- other factors or trends affecting the industry generally and our
financial condition in particular;
-- the effects of the higher degree of regulation in the markets in which
we operate;
-- general economic and political conditions in the countries in which we
operate or other countries which have an impact on our business
activities or investments;
-- the monetary and interest rate policies of the countries in which we
operate;
-- changes in competition and the pricing environments in the countries in
which we operate;
-- exchange rates; and
-- other factors listed from time to time in the our filings with the
Securities and Exchange Commission, including, without limitation, our
Annual Report on Form 20-F for the period ended December 31, 2006 and
our subsequent reports on Form 6-K.
Jinpan International Limited and Subsidiaries
Consolidated Statements of Income (unaudited)
For the Three and Six Month Periods Ended June 30, 2008
Three Three Six Six
months months months months
ended ended ended ended
June 30 June 30 June 30 June 30
2008 2007 2008 2007
(In thousands, except per US$ US$ US$ US$
share data)
Net sales 40,604 32,056 64,402 48,289
Cost of Goods Sold (26,767) (21,386) (43,106) (32,869)
Gross Margin 13,837 10,670 21,296 15,420
Operating Expenses
Selling and administrative (7,033) (5,463) (11,503) (8,418)
Operating income 6,804 5,207 9,793 7,002
Interest Expenses (291) (188) (470) (246)
Other Income 187 6 371 194
Income before income taxes 6,700 5,025 9,694 6,950
Income taxes (667) (933) (1,261) (1,258)
Income before minority interest 6,033 4,092 8,433 5,692
Minority Interest - - - -
Net income 6,033 4,092 8,433 5,692
Earnings per share
-Basic US$0.76 US$0.51 US$1.06 US$0.71
-Diluted US$0.74 US$0.51 US$1.03 US$0.70
Weighted average number of
shares
-Basic 7,984,147 7,971,336 7,984,147 7,971,336
-Diluted 8,152,304 8,083,467 8,152,304 8,083,467
Jinpan International Limited and Subsidiaries
Consolidated Balance Sheets (unaudited)
As of June 30, 2008
30-Jun 31-Dec
2008 2007
US$ US$
Assets
Current assets:
Cash and cash equivalents 11,366 17,122
Investment available for sales 1,424 193
Accounts receivable, net 57,026 43,026
Inventories 33,219 25,743
Prepaid expenses 12,790 7,943
Other receivables 2,944 2,969
Total current assets 118,769 96,996
Property, plant and equipment, net 10,037 9,031
Construction in progress 14,372 2,889
Intangible asset-Goodwill 12,757 11,549
Deferred tax assets 571 807
Total assets 156,506 121,272
Liabilities and Shareholders' Equity
Current liabilities:
Short term bank loans 23,766 9,874
Accounts payable 9,875 6,372
Income tax 2,024 2,353
Advance from customers 5,849 4,638
Other Payable 19,054 15,292
Total current liabilities 60,568 38,529
Shareholders' equity:
Common stock, US$0.009 par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 73 73
8,186,617 in 2008 and 8,186,617 in 2007
Common Stock, Warrants 854 854
Convertible preferred stock, US$0.009
par value:
Authorized shares - 1,000,000
Issued and outstanding shares - 1 1
6,111 in 2007 and 2006
Additional paid-in capital 33,938 33,938
Reserves 3,905 3,905
Retained earnings 49,786 39,659
Accumulated other comprehensive income 8,170 5,102
96,727 83,532
Less: Treasure shares at cost, common (789) (789)
stock - 206,470 in 2008 and 206,470
in 2007
Total shareholders' equity 95,938 82,743
Total liabilities and shareholders'
equity 156,506 121,272
Jinpan International Limited and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2008
(Unaudited)
Six Six
months months
ended ended
June 30 June 30
2008 2007
Operating activities
Net income 8,433 5,692
Adjustments to reconcile net income to
net cash provided by/(used in) operating activities:
Depreciation 632 545
Provision for Doubtful Debt (282) 67
Loss/(Gain) on disposal of fixed assets 1 (13)
Deferred Income Tax 277 -
Stock-based compensation cost 184
Changes in operating assets and liabilities
Accounts receivable (10,639) (10,060)
Notes receivable 182 (546)
Inventories (5,662) (487)
Prepaid expenses (4,209) 578
Other receivables 25 (991)
Accounts payable 3,003 (2,718)
Note Payable - (1,037)
Income tax (463) 360
Advance from customers 888 1,368
Other liabilities 2,706 3,918
Net cash provided by/(used in) operating activities (4,924) (3,324)
Investing activities
Purchases of property, plant and equipment (1,055) (815)
Proceeds from sales of property, plant and equipment 2 40
Payment for construction in progress (10,952) (1,675)
Purchase of available-for -sales securities (1,180) (489)
Net cash provided by (used in) investing activities (13,185) (2,939)
Financing activities
Proceeds from bank loan 17,436 3,575
Repayment of bank loan (4,580) (3,274)
Proceeds from exercise of stock options - 27
Decrease in Minority Interest - (1,084)
Acquired minority interest - (11,000)
Dividends paid (967) (964)
Net cash provided by/(used in) financing activities 11,889 (12,720)
Effect of exchange rate changes on cash 464 229
Net increase/(decrease) in cash and cash equivalents (5,756) (18,754)
Cash and cash equivalents at beginning of year 17,122 34,115
Cash and cash equivalents at end of period 11,366 15,361
Interest paid 544 193
Income taxes paid 1,715 906
SOURCE Jinpan International Ltd.
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