- Company Reports 3Q07 Revenues of $29.5 Million; Diluted EPS of $0.51 -
ENGLEWOOD CLIFFS, N.J., Nov. 13 /PRNewswire-FirstCall/ -- Jinpan International Ltd (AMEX:JST), a leading designer, manufacturer, and distributor of cast resin transformers for voltage distribution equipment, today announced consolidated financial results for the third quarter ended September 30, 2007.
Highlights for the Third Quarter Ended June 30, 2007 -- Total sales for the third quarter were USD $29.5 million, a 26.3%
increase over the same period last year. The increase in revenues was
a result of continued strong sales of the Company's cast resin
transformers, switch gear equipment, reactors and unit substations.
-- Sales growth benefited from the continued expansion of the Chinese
economy and the accompanying increase in demand for power generation
equipment. The third quarter also saw a significant increase in the
sale of custom-designed transformers, which tend to require a longer
manufacturing cycles but also bring higher gross margins.
-- Gross profit in the third quarter was $10.6 million, a 64% increase
over the same period last year. Third quarter gross margin increased
820 basis points to 35.8% compared to 27.6% in the year ago period. Gross margin benefited primarily from lower material costs associated
with growing sales of the company's new electricity transformer model
supplied to customers in China as well as from an increase in custom-
designed transformers which are generally sold at a higher gross
margin.
-- Selling, general and administrative expenses in the third quarter were
$5.7 million, or 19.5% of sales, versus $3.4 million, or 14.7% of
sales, in the year ago period. SG&A increased primarily due to
additional costs related to SOX 404 compliance and the hiring and
training of personnel for the Company's new manufacturing facility in
Wuhan.
-- Operating income increased to $4.8 million, or 16.4% of sales, compared
to $3.0, or 12.9% of sales in the prior year period.
-- Net income for the third quarter increased 96.2% to $4.1 million, or
$0.51 per diluted share, versus $2.1 million, or $0.32 per diluted
share, in the third quarter of 2006. Third quarter net income as a
percentage of revenue increased 500 basis points to 14.0% from 9.0% in
the prior year period, attributable to the increase in gross margin
which outweighed the increases in SG&A.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan commented, "Our financial performance in the third quarter was strong across the board. The increased need for power generating equipment in China and abroad remains strong, which bodes well for our business. We managed our growth well during the quarter and are pleased with our margin improvement.
Our products are well positioned in the market due to their quality, reliability, competitive pricing, and energy efficiency. In addition, our ability to efficiently and cost-effectively produce custom-designed products that meet the needs of individual customers is another strength we bring to the market.
Our cast resin transformers are meeting the needs of our expanding customer base which numbered over 400 in the third quarter. Our products are used in a broad range of applications, including urban applications such as railroad, airport, harbor, hospitals, and office buildings, commercial and industrial applications such as factories and processing plants, and electrical power plants.
Our current backlog is strong and we are operating at full capacity. We are getting close to completing our major initiative to expand our production capacity with the build out of our new Wuhan manufacturing facility. Once operational, this 400,000 square foot facility will be dedicated to the manufacturing and design of our cast resin transformers. The centralized location of this new facility in China can also help to minimize transportation and production costs. We are currently training individuals to operate and run this facility and plan for it to be operational by Jan 2008. Once fully operational, our production for cast resin transformers is expected to increase by 50%." Financial Outlook for 2007 For the full 2007 fiscal year, the Company currently anticipates revenue of approximately $113 million, a 37% increase compared to 2006 revenue of $82.3 million. The Company anticipates net income to be in the range of $13.5 to $13.9 million, or $1.67 to $1.72 per diluted share, which is an 80% to 85% increase compared to 2006 net income of $7.5 million, or $1.12 per diluted share. This increased net income estimate from the prior quarter is largely a result of higher than anticipated gross margin stemming from the sales mix of newly designed transformers, which generally have lower material production costs, and also higher than expected sales of custom-designed transformers, which tend to be sold at higher gross margins.
The Company's fiscal 2007 diluted EPS guidance is based on an estimated average diluted share count of approximately 8.1 million shares for the full year, which is an increase of approximately 1.4 million shares from its fiscal 2006 diluted share count of 6.7 million shares, due to its secondary offering completed in December 2006.
Mr. Li concluded, "We see many good opportunities in China and abroad for the remainder of this year and well into 2008. International sales, primarily to the U.S., continue to grow and are on a pace to double as compared to last year. We continue to take the right steps to grow our business responsibly while also ensuring the quality of our client base. We are increasingly becoming a global player with our cast resin transformers and related equipment and are encouraged with our prospects for growth. We look forward to meeting the power generating needs for our customers with the most reliant, highest quality products and are pleased with our market opportunity in the years ahead." Financial Results for the Nine Months ending September 30, 2007 -- For the nine month period ending September 30, 2007, total sales
increased 34.3% to $77.8 million compared to $57.9 million in the first
three quarters of last year.
-- Gross profit increased to $26.0 million compared to $16.1 million in
the prior year period. Gross margin increased 560 basis points to
33.4% from 28.0% in the prior year period.
-- Selling, general and administrative expenses in the for the first nine
months of 2007 were $14.2 million, or 18.2% of sales, compared to $9.1
million, or 15.8% of sales, in the prior year period.
-- Operating profit for the first nine months of 2007 increased 69% to
$11.8 million compared to $7.0 million in the prior year period. Nine
month operating margin increased 310 basis points to 15.2% compared to
12.1% in the prior year period.
-- Net income for the first nine months of 2007 was $9.8 million, or $1.21
per diluted share, compared to $4.8 million, or $0.72 per diluted share
in the prior year period.
About Jinpan International Ltd
Jinpan International Ltd. (AMEX:JST) designs, manufactures, and distributes cast resin transformers for voltage distribution equipment in China and other various countries around the world. Jinpan's cast resin transformers allow high voltage transmissions of electricity to be distributed to various locations in lower, more usable voltages. The Company has obtained ISO9001 and ISO1401 certification of its cast resin transformers. Its principal executive offices are located in Hainan, China and its U.S. headquarters is based in Englewood Cliffs, New Jersey. Safe Harbor Provision Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the company's periodic filings with the Securities and Exchange Commission.
Investor Contact Information:
Mark Du
Chief Financial Officer
Jinpan International Ltd. (201)227-0680 Bill Zima
Integrated Corporate Relations, Inc. (203) 682-8200 Jinpan International Limited and Subsidiaries
Consolidated Statements of Income (unaudited)
For the Three and Nine Month Periods Ended September 30, 2007 Three Three Nine Nine
months months months months
ended ended ended ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
(In thousands, except 2007 2006 2007 2006
per share data) US$ US$ US$ US$ Net sales 29,467 23,324 77,756 57,905
Cost of Goods Sold (18,908) (16,899) (51,777) (41,780)
Gross Margin 10,559 6,425 25,979 16,125 Operating Expenses
Selling and
administrative (5,736) (3,424) (14,154) (9,128)
Operating income 4,823 3,001 11,825 6,997 Interest Expenses (196) (86) (442) (242)
Other Income 157 33 351 41
Income before income taxes 4,784 2,948 11,734 6,796 Income taxes (652) (455) (1,910) (1,075)
Income before minority
interest 4,132 2,493 9,824 5,721
Minority Interest - (387) - (923)
Net income 4,132 2,106 9,824 4,798 Earnings per share -Basic US$0.52 US$0.32 US$1.23 US$0.73 -Diluted US$0.51 US$0.32 US$1.21 US$0.72 Weighted average number
of shares -Basic 7,974,295 6,570,755 7,974,295 6,570,755 -Diluted 8,087,308 6,662,141 8,087,308 6,662,141 Jinpan International Limited and Subsidiaries
Consolidated Balance Sheets (unaudited)
As of September 30, 2007 Sept. 30 June. 30
2007 2007
US$ US$
Assets
Current assets:
Cash and cash equivalents 9,220 15,361
Investment available for sales 193 683
Accounts receivable, net 39,537 35,728
Inventories 21,503 19,281
Prepaid expenses 9,645 4,112
Other receivables 2,279 3,231
Total current assets 82,377 78,396 Property, plant and equipment, net 7,608 4,444
Construction in progress 2,593 3,408
Deferred tax assets 99 102 Total assets 92,677 86,350
Liabilities and Shareholders' Equity
Current liabilities:
Short term bank loans 6,376 6,355
Accounts payable 5,560 3,535
Income tax 1,282 953
Advance from customers 4,668 5,065
Other Payable 12,834 13,381
Total current liabilities 30,720 29,289
Minority interest - -
Shareholders' equity:
Common stock, US$0.009 par value:
Authorized shares - 20,000,000
Issued and outstanding shares -
8,186,617 in 2007 and 6,791,246 in 2006 73 73
Convertible preferred stock,
US$0.009 par value:
Authorized shares - 1,000,000
Issued and outstanding shares -
6,111 in 2007 and 2006 -
Additional paid-in capital 23,577 23,556
Reserves 3,617 3,595
Retained earnings 33,020 29,528
Accumulated other comprehensive income 2,474 1,127
62,761 57,879
Less: Treasure shares at cost, common
stock-206,470 in 2007 and 208,470 in 2006 (804) (818)
Total shareholders' equity 61,957 57,061 Total liabilities and shareholders' equity 92,677 86,350 Jinpan International Limited and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2007 (Unaudited) Nine Nine
months months
ended ended
Sept. 30 Sept. 30
2007 2006
Operating activities
Net income 9,824 4,798
Adjustments to reconcile net income to
net cash provided by/(used in)
operating activities:
Depreciation 762 614
Deferred Income Tax 6 -
Provision for Doubtful Debt 373 (36)
Loss/(Gain) on disposal of fixed assets 8 -
Employee Stock based compensation 21 -
Minority interest - 923
Changes in operating assets and liabilities
Accounts receivable (13,207) (5,839)
Notes receivable 188 451
Inventories (2,152) (4,692)
Prepaid expenses (4,736) (1,926)
Other receivables (707) (1,219)
Accounts payable (845) (1,160)
Note Payable (1,043) -
Income tax 660 690
Advance from customers 851 2,092
Other liabilities 1,980 1,636
Net cash provided by/(used in)
operating activities (8,017) (1,348)
Investing activities
Purchases of property, plant and equipment (4,018) (754)
Proceeds from sales of property, plant
and equipment 18 -
Payment for construction in progress (795) (739)
Purchase of available-for -sales securities - -
Net cash provided by (used in) investing
activities (4,795) (1,493)
Financing activities
Proceeds from bank loan 9,309 12,729
Repayment of bank loan (9,157) (12,982)
Acquisition of treasury stock - -
Proceeds from exercise of stock options 34 308
Decrease in dividend payable to
minority shareholders - (680)
Acquired minority interest (11,000) -
Dividends paid (1,931) (1,594)
Net cash provided by/(used in)
financing activities (12,745) (2,219)
Effect of exchange rate changes on cash 662 87
Net increase/(decrease) in cash and
cash equivalents (24,895) (4,973)
Cash and cash equivalents at
beginning of period 34,115 8,020
Cash and cash equivalents at end of period 9,220 3,047 Interest paid 274 194
Income taxes paid 1,282 384
DATASOURCE: Jinpan International Ltd CONTACT: Mark Du, Chief Financial Officer, Jinpan International Ltd., +1-201-227-0680; or Bill Zima, Integrated Corporate Relations, Inc., +1-203-682-8200
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