CARLSTADT, N.J., Nov. 14, 2012 /PRNewswire/ -- Jinpan International Ltd. (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today announced the unaudited consolidated financial results for the third quarter ended September 30, 2012.
Third Quarter 2012 Results
Net sales for the third quarter were $58.8 million, an 11.7% decrease from $66.6 million in the same period last year. The decrease in sales was primarily the result of lower domestic China sales compared to the prior year period. In the third quarter, domestic China sales accounted for $51.6 million, or 87.8% of net sales, compared to $59.1 million, which also represented 88.7% of net sales in the same period last year. Net sales outside of China for the quarter were $7.2 million, or 12.2% of net sales compared to $7.5 million, or 11.3% of net sales for the same period last year.
The sales of cast resin transformers (excluding those for wind power applications), switchgears and unit substations represented $55.2 million, or 93.9% of net sales in the third quarter, while wind energy products (cast resin transformers and VPI products for wind power applications) represented $3.6 million, or 6.1% of net sales during this quarter.
Gross profit in the third quarter decreased 21.4% year over year to $19.6 million from $24.9 million in the same period last year. Third quarter 2012 gross profit margin was 33.3%, compared to 37.4% in the prior year period, and 30.8% in the 2012 second quarter. Gross margin decreased in the third quarter mainly due to lower gross margin on recently introduced products.
Selling and administrative expenses in the third quarter were $14.8 million, or 25.2% of net sales, compared to $16.5 million, or 24.8% of net sales in the same period last year. Selling expenses decreased in the third quarter due to lower domestic product sales.
Operating income for the third quarter decreased 43.2% to $4.8 million, or 8.1% of net sales, from $8.4 million, or 12.7% of net sales, in the same period last year.
Net income for the third quarter decreased 53.7% to $3.9 million, or $0.23 per diluted share, from $8.4 million, or $0.51 per diluted share, in the same period last year. Third quarter net income as a percentage of net sales was 6.6% compared to 12.6% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented, "For the first nine months of 2012, while our top line was in line with the prior year period, our bottom line was lower mainly due to lower gross margin on sales of gas insulated switchgears and certain types of VPI products. We priced these recently introduced products aggressively to penetrate the market. Despite a softer economic environment in China, we were able to expand our cast resin transformer sales volume by 3% in the first nine months of 2012 compared to the same period last year. We also took steps to improve efficiency and reduce costs, including a reduction in headcount within our administrative and manufacturing departments."
"Our Guilin facility is on schedule to complete its first phase of construction by year end and commence production by the end of the 2013 first quarter. As this new facility gradually ramps its production, more production capacity is expected to come on line throughout 2013 allowing us to capture a greater share of China's market for standard cast resin transformers."
"At the end of September, we had a backlog of approximately $104 million, of which we expect over 41% of this backlog to be shipped in the fourth quarter. In addition, we continue to receive meaningful orders in the fourth quarter enabling us to meet our full year sales revenue guidance. We have modified our bottom line full year guidance to reflect pricing pressure associated with lower silicon steel costs, the primary component of our cast resin transformers. As we look to 2013, we believe the once-a-decade leadership change at the national level can result in increased spending on domestic infrastructure projects positioning us well for new order flow in our domestic business, particularly in the second half of the next year. We remain confident in our current and long-term operating initiatives which can improve our future revenue and profit growth."
Balance Sheet
As of September 30, 2012, the Company had $16.0 million in cash and cash equivalents, compared to $24.2 million at December 31, 2011. The Company's accounts receivable on September 30, 2012 totaled $132.8 million, compared to $110.4 million at December 31, 2011. Notes payable in the 2012 third quarter decreased to $10.2 million compared to $13.6 million on December 31, 2011. Total bank loans outstanding at September 30, 2012 were $33.9 million, compared to $23.0 million at December 31, 2011 and $45.3 million at June 30, 2012.
Financial Outlook
For the full year 2012, the Company currently anticipates net sales of $208-$219 million, a decrease of 0% to 5% compared to 2011, net income of $13.2-$14.3 million, a decrease of 40% to 45% compared to 2011, and gross profit margin of approximately 33% to 34% of net sales.
Conference Call Information
Jinpan's management will host an earnings conference call on November 14
th
, 2012 at 8:30 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-913-312-0686. A webcast will also be available via www.viavid.net. A replay of the call will be available through November 28
th
, 2012. Listeners may access the replay by dialing #1-858-384-5517, access code: 4077527.
About Jinpan International Ltd.
Jinpan International Ltd. (NASDAQ: JST) designs, manufactures, and markets cast resin transformers for power distribution and wind energy products. 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 ISO14001 certifications for its cast resin transformers. Its principal executive offices are located in Hainan, China and its United States office is based in Carlstadt, New Jersey.
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 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, 2011 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.