Jinpan International Reports Fourth Quarter and Full Year 2014 Financial Results
* Fourth quarter revenue increased 14.4% year-over-year to $72.2 million; Full year 2014 revenue increased 6.8% to a record $241.0 million
* Fourth quarter net income increased 9.1% year-over-year to $4.4 million, or $0.27 per share; Full year 2014 net income decreased 6.4% to $15.5 million, or $0.93 per share
* Fiscal 2015 earnings outlook: revenue expected to increase 3% to approximately $248 million; net income expected to be flat year-over-year at $15.5 million, or $0.93 per share
Carlstadt, N.J., March 16, 2015 - 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, 2014.
Fourth Quarter 2014 Results
Net sales for the fourth quarter were $72.2 million, a 14.4% increase from $63.1 million in the same period last year. The increase was driven by very strong growth in sales of our integrated products, including switchgear and unit substations, as we have leveraged our increased capacity to diversify our product portfolio and enter larger markets.
In the fourth quarter, China sales increased 15.6% year-over-year to $66.6 million, or 92.2% of net sales, compared to $57.6 million, or 91.2% of net sales in the same period last year. Net sales outside of China for the quarter increased 1.2% year-over-year to $5.6 million, or 7.8% of net sales, compared to $5.5 million, or 8.8% of net sales, for the same period last year.
Sales of cast resin transformers decreased 5.0% year-over-year to $40.1 million, or 55.6% of net sales, compared to $42.2 million or 66.9% of net sales, for the same period last year. Sales of our integrated products, including switchgear and unit substations, increased 56.3% year-over-year to $23.2 million, or 32.2% of sales, compared to $14.9 million, or 23.6% of net sales, for the same period last year.
Sales to OEM customers decreased 3.1% year-over-year to $8.8 million, or 12.2% of net sales, compared to $9.1 million, or 14.4% of net sales in the same period last year.
Gross profit in the fourth quarter decreased 1.9% year over year to $20.4 million from $20.8 million in the same period last year. Fourth quarter 2014 gross profit margin was 28.3%, compared to 33.0% in the prior year period. Gross margin in the fourth quarter decreased compared to the same period last year primarily due to an increased mix of sales of switchgear and unit substations, which carry lower gross margins. Gross margins were also impacted by price declines on our cast resin transformer products and increased raw materials costs.
Selling and administrative expenses in the fourth quarter were $18.1 million, or 25.1% of net sales, compared to $18.5 million, or 29.3% of net sales in the same period last year. Selling and administrative expenses decreased from the same period last year due to lower selling expenses associated with the sales of switchgear and unit substations. This reduction was partially offset by approximately $0.6 million in expenses associated with the proposed going private transaction, which was terminated in December 2014.
Operating income for the fourth quarter increased 4.8% to $2.3 million, or 3.2% of net sales, from $2.2 million, or 3.5% of net sales, in the same period last year.
Net income for the fourth quarter increased 9.1% to $4.4 million, or $0.27 per diluted share, compared to $4.1 million, or $0.24 per diluted share, in the same period last year. Fourth quarter net income, as a percentage of net sales, was 6.2% compared to 6.5% in the same period last year.
Full Year 2014 Results
Net sales for the full year 2014 were a record $241.0 million, a 6.8% increase from $225.7 million last year. Gross profit in 2014 increased 4.1% to $75.5 million and gross profit margin decreased to 31.3%, compared to 32.1% during 2013. Selling and administrative expenses were $59.6 million, compared to $55.8 million last year. Operating profit in 2014 decreased 4.8% to $15.9 million, or 6.6% of net sales, compared to $16.7 million, or 7.4% of net sales, last year. Net income in 2014 decreased 6.4% to $15.5 million, or $0.93 per share, compared to $16.6 million, or $0.99 per share, in the prior year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, “Our 2014 results reflect another year of record sales despite facing a challenging economic environment characterized by uncertainty and a lack of visibility within the Chinese market. Importantly, the year was marked by positive progress with the execution of several of our strategic initiatives.”
“Our product diversification was a major highlight during the year, as our additional manufacturing capacity in Guilin provided us with flexibility to increase our production of switchgear and unit substations. These products are integrated systems, incorporating our transformers as well as other components, and carry higher sales prices and provide access to larger addressable markets. While these products typically generate lower gross margins, this impact is largely offset by lower selling expenses. We are very pleased with our success with these product categories and expect continued growth and diversification this year.”
“We remained active with our OEM customers during the year. Although 2014 OEM sales declined slightly, we expect a strong rebound during 2015 drive by an increase in sales to our largest OEM customer and a ramp up in sales to our newest OEM customer within the wind power markets.”
“We generated strong cash flow during the year, enabling us to strengthen our balance sheet. Cash flow from operations increased to $20.7 million during 2014, a 44.1% increase from $14.3 million during the prior year. This cash flow enabled Jinpan to return to a positive net cash position at year-end.”
“China’s economic environment remains challenging, particularly within our core cast resin transformer markets, where we are faced with slowing growth and pricing pressure. While we are pleased with our successful expansion into the larger switchgear and unit substation markets, the market is nonetheless volatile. As such, we are approaching 2015 with a disciplined focus on prudent sales growth, cost control, and margin preservation.”
“At the end of December 2014, our backlog equaled $119 million, up 19.0% from the same period last year and down 6.3% from the third quarter of 2014.”
Balance Sheet
As of December 31, 2014, the Company had $27.5 million in cash and cash equivalents, restricted cash, and short term investments, compared to $30.8 million as of December 31, 2013. The Company’s accounts receivable on December 31, 2014 totaled $140.2 million, compared to $144.6 million as of December 31, 2013. Total bank loans outstanding at December 31, 2014 were $26.2 million, compared to $43.1 million at December 31, 2013.
Financial Outlook
For the full year 2015, the Company projects revenue growth of approximately 3% compared to 2014. Net sales are expected to be approximately $248 million. Net income is expected to be approximately $15.5 million, or $0.93 per share, flat with the prior year. We expect continued growth in sales of our integrated products and sales into the OEM channel to offset slight volume declines and pricing pressure within the cast resin transformer market. Due to the uncertainty within the Chinese economy, we are opting to take a conservative view until visibility improves.
Recent Developments
On September 22, 2014, the Company announced that its Board of Directors has received a preliminary, non-binding proposal letter dated September 21, 2014 from Li Zhiyuan, the Company’s Chairman of the Board of Directors, President, and Chief Executive Officer and FNOF E&M Investment Limited (collectively, with Mr. Li, the “Buyer Parties”), to acquire all of the outstanding common shares of the Company not currently owned by the Buyer Parties in a going private transaction for $8.80 per common share, subject to certain conditions (the “Proposal”). The Company’s Board of Directors formed a committee of independent directors (the “Special Committee”) on September 26, 2014 to evaluate the Proposal. The Special Committee subsequently retained a legal counsel and a financial advisor. On December 29, 2014, the Company announced that the Buyer Parties withdrew their preliminary non-binding proposal.
Conference Call Information
Jinpan’s management will host a conference call and webcast on Monday, March 16, 2015, at 8:30 a.m. Eastern Time. Listeners may access the call by dialing 1-888-389-5988 (toll free) or 1-719-325-2393 (international). A webcast will also be available via http://public.viavid.com, with event ID: 113275. A replay of the call will be available through March 23, 2015, by dialing 1-877-870-5176, access code 5620905.
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.
Investor Contact Information:
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At Jinpan International Ltd.:
Mark Du
Chief Financial Officer
(201) 460-8778
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|
At Tobin Tao & Company, Inc.:
Mark Tobin
(949) 870-9778
jinpan@tobintao.com
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FINANCIAL STATEMENTS FOLLOW:
Jinpan International Limited and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Three and Twelve Month Periods Ended December 31, 2014
| |
|
Three months ended
|
|
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Twelve months ended
|
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| |
|
December 31
|
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|
December 31
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
In US$ thousands, except per share data
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(audited)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
72,218 |
|
|
|
63,148 |
|
|
|
241,007 |
|
|
|
225,727 |
|
|
Cost of Goods Sold
|
|
|
(51,793 |
) |
|
|
(42,399 |
) |
|
|
(165,540 |
) |
|
|
(153,325 |
) |
|
Gross Profit
|
|
|
20,425 |
|
|
|
20,749 |
|
|
|
75,467 |
|
|
|
72,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative Expenses
|
|
|
(18,101 |
) |
|
|
(18,531 |
) |
|
|
(59,585 |
) |
|
|
(55,718 |
) |
|
Operating income
|
|
|
2,324 |
|
|
|
2,218 |
|
|
|
15,882 |
|
|
|
16,684 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expenses
|
|
|
(497 |
) |
|
|
(731 |
) |
|
|
(2,323 |
) |
|
|
(2,072 |
) |
|
Other Income
|
|
|
3,125 |
|
|
|
2,781 |
|
|
|
4,747 |
|
|
|
4,636 |
|
|
Income Before Income Taxes
|
|
|
4,952 |
|
|
|
4,268 |
|
|
|
18,306 |
|
|
|
19,248 |
|
| |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Income Taxes
|
|
|
(508 |
) |
|
|
(195 |
) |
|
|
(2,792 |
) |
|
|
(2,677 |
) |
|
Net Income After Taxes
|
|
|
4,444 |
|
|
|
4,073 |
|
|
|
15,514 |
|
|
|
16,571 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income ( loss)
Foreign currency translation adjustment
|
|
|
(34 |
) |
|
|
(14 |
) |
|
|
(29 |
) |
|
|
(27 |
) |
|
Total comprehensive income
|
|
|
4,410 |
|
|
|
4,059 |
|
|
|
15,485 |
|
|
|
16,544 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.27 |
|
|
$ |
0.25 |
|
|
$ |
0.96 |
|
|
$ |
1.02 |
|
|
Diluted
|
|
$ |
0.27 |
|
|
$ |
0.24 |
|
|
$ |
0.93 |
|
|
$ |
0.99 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
16,232,381 |
|
|
|
16,230,165 |
|
|
|
16,232,381 |
|
|
|
16,230,165 |
|
|
Diluted
|
|
|
16,633,683 |
|
|
|
16,631,378 |
|
|
|
16,632,497 |
|
|
|
16,711,192 |
|
Jinpan International Limited and Subsidiaries
Consolidated Balance Sheet
| |
|
|
|
|
|
|
| |
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
In US$ thousands, except number of shares and per share data
|
|
(unaudited)
|
|
|
(audited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
13,209 |
|
|
|
24,582 |
|
|
Restricted cash
|
|
|
1,178 |
|
|
|
1,316 |
|
|
Short term investment
|
|
|
13,156 |
|
|
|
4,920 |
|
|
Notes receivable
|
|
|
11,557 |
|
|
|
15,802 |
|
|
Accounts receivable, net
|
|
|
140,225 |
|
|
|
144,606 |
|
|
Inventories, net
|
|
|
50,003 |
|
|
|
33,614 |
|
|
Prepaid expenses
|
|
|
20,856 |
|
|
|
4,204 |
|
|
Land use right
|
|
|
377 |
|
|
|
377 |
|
|
Deferred tax assets
|
|
|
2,574 |
|
|
|
2,119 |
|
|
Other receivables
|
|
|
6,901 |
|
|
|
6,891 |
|
|
Total current assets
|
|
|
260,036 |
|
|
|
238,431 |
|
| |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
73,976 |
|
|
|
75,601 |
|
|
Construction in progress
|
|
|
2,693 |
|
|
|
3,787 |
|
|
Land use right
|
|
|
14,479 |
|
|
|
14,840 |
|
|
Goodwill
|
|
|
13,768 |
|
|
|
13,818 |
|
|
Other assets
|
|
|
47 |
|
|
|
124 |
|
|
Total Assets
|
|
|
364,999 |
|
|
|
346,601 |
|
| |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Short term loans
|
|
|
- |
|
|
|
11,101 |
|
|
Accounts payable
|
|
|
37,364 |
|
|
|
27,013 |
|
|
Notes payable
|
|
|
14,665 |
|
|
|
10,498 |
|
|
Advances from customers
|
|
|
21,563 |
|
|
|
14,207 |
|
|
Income tax payable
|
|
|
2,025 |
|
|
|
2,516 |
|
|
Other payables
|
|
|
31,490 |
|
|
|
30,339 |
|
|
Total current liabilities
|
|
|
107,107 |
|
|
|
95,674 |
|
| |
|
|
|
|
|
|
|
|
|
Long term loans
|
|
|
26,238 |
|
|
|
31,998 |
|
|
Deferred income
|
|
|
4,964 |
|
|
|
4,785 |
|
|
Total Liabilities
|
|
|
138,309 |
|
|
|
132,457 |
|
| |
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, US$0.0045 par value:
|
|
|
|
|
|
|
|
|
|
Authorized shares - 2,000,000
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares - none in 2014 and 2013
|
|
|
|
|
|
|
|
|
|
Common stock, US$0.0045 par value:
|
|
|
|
|
|
|
|
|
|
Authorized shares - 40,000,000
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares - 16,418,456 in 2014 and 2013
|
|
|
74 |
|
|
|
74 |
|
|
Common stock - warrants
|
|
|
- |
|
|
|
- |
|
|
Additional paid-in capital
|
|
|
38,138 |
|
|
|
37,694 |
|
|
Reserves
|
|
|
13,442 |
|
|
|
12,849 |
|
|
Retained earnings
|
|
|
149,197 |
|
|
|
136,874 |
|
|
Accumulated other comprehensive income
|
|
|
26,107 |
|
|
|
26,937 |
|
| |
|
|
226,958 |
|
|
|
214,427 |
|
|
Less: Treasury shares at cost
|
|
|
|
|
|
|
|
|
|
Common stock - 135,488 in 2014 and 138,306 in 2013
|
|
|
(268 |
) |
|
|
(283 |
) |
|
Total Shareholders' Equity
|
|
|
226,690 |
|
|
|
214,144 |
|
|
Total Liabilities and Shareholders' Equity
|
|
|
364,999 |
|
|
|
346,601 |
|
Jinpan International Limited and Subsidiaries
Consolidated Statement of Cash Flows
For the Twelve Months Ended December 31, 2014
| |
|
Twelve Months Ended
|
|
| |
|
31-Dec
|
|
| |
|
2014
|
|
|
2013
|
|
|
In US$ thousands
|
|
(unaudited)
|
|
|
(audited)
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net Income
|
|
|
15,514 |
|
|
|
16,571 |
|
|
Adjustments to reconcile net income to
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
7,018 |
|
|
|
6,491 |
|
|
Amortization of prepaid lease
|
|
|
307 |
|
|
|
372 |
|
|
Deferred Income Tax
|
|
|
(429 |
) |
|
|
(727 |
) |
|
Provision for doubtful debts
|
|
|
1,723 |
|
|
|
4,295 |
|
|
Loss/(gain) on disposal of fixed assets
|
|
|
- |
|
|
|
(40 |
) |
|
Stock-based compensation Cost
|
|
|
447 |
|
|
|
277 |
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Restricted Cash
|
|
|
133 |
|
|
|
(459 |
) |
|
Accounts Receivable
|
|
|
2,142 |
|
|
|
(20,188 |
) |
|
Notes Receivable
|
|
|
4,195 |
|
|
|
399 |
|
|
Inventories
|
|
|
(16,540 |
) |
|
|
(3,439 |
) |
|
Prepaid Expenses
|
|
|
(16,698 |
) |
|
|
(1,573 |
) |
|
Other Receivable
|
|
|
8 |
|
|
|
(852 |
) |
|
Accounts Payable
|
|
|
10,468 |
|
|
|
1,191 |
|
|
Notes Payable
|
|
|
4,212 |
|
|
|
4,238 |
|
|
Income Tax
|
|
|
(483 |
) |
|
|
569 |
|
|
Advance From customers
|
|
|
7,421 |
|
|
|
158 |
|
|
Other liabilities
|
|
|
1,228 |
|
|
|
6,701 |
|
|
Net Cash provided by (used in) operating activities
|
|
|
20,666 |
|
|
|
14,337 |
|
| |
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(1,278 |
) |
|
|
(370 |
) |
|
Proceeds from sales of property, plant and equipment
|
|
|
- |
|
|
|
40 |
|
|
Payment for construction in progress
|
|
|
(3,303 |
) |
|
|
(12,667 |
) |
|
Sale of S/T Investment
|
|
|
66,062 |
|
|
|
57,179 |
|
|
Increase in S/T investment
|
|
|
(74,330 |
) |
|
|
(50,719 |
) |
|
Receipt of government grant for new plant construction
|
|
|
196 |
|
|
|
1,582 |
|
|
Net Cash provided by (used in) investing activities
|
|
|
(12,653 |
) |
|
|
(4,955 |
) |
| |
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from bank loan
|
|
|
9,887 |
|
|
|
42,213 |
|
|
Repayment of bank loan
|
|
|
(26,622 |
) |
|
|
(44,400 |
) |
|
Proceeds from exercised stock options
|
|
|
16 |
|
|
|
216 |
|
|
Dividend paid
|
|
|
(2,605 |
) |
|
|
(1,950 |
) |
|
Net Cash provided by (used in) financing activities
|
|
|
(19,324 |
) |
|
|
(3,921 |
) |
| |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
(62 |
) |
|
|
611 |
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
(11,373 |
) |
|
|
6,072 |
|
|
Cash and Cash equivalents at beginning of year
|
|
|
24,582 |
|
|
|
18,510 |
|
|
Cash and Cash equivalents at end of year
|
|
|
13,209 |
|
|
|
24,582 |
|
| |
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
1,651 |
|
|
|
2,724 |
|
|
Income tax paid
|
|
|
3,701 |
|
|
|
2,470 |
|