Jinpan International Reports First Quarter 2015 Financial Results
* First quarter revenue increased 41.1% year-over-year to RMB357.0 million (US$58.1 million)
* First quarter net income decreased 1.4% year-over-year to RMB9.2 million (US$1.5 million), or RMB0.55 (US$0.09) per share
* Fiscal 2015 earnings outlook: revenue expected to increase 7-10% to approximately RMB1.57 billion to RMB1.62 billion (US$258 million to US$265 million); earnings per share are expected to be RMB5.42 to RMB5.70 (US$0.88 to US$0.93) per share.
Carlstadt, N.J., May 14, 2015 - Jinpan International Limited. (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers, today reported unaudited consolidated financial results for the first quarter ending March 31, 2015. This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.1422 to US$1.00, the rate published by China administration of foreign exchange on March 31, 2015.
First Quarter 2015 Results
Net sales for the first quarter were RMB357.0 million (US$58.1 million), a 41.1% increase from RMB 253.0 million (US$41.3 million) in the same period last year. The increase was driven by broad-based growth across all product categories and markets, with particular strength in international OEM sales and in sales of switchgear and unit substations.
In the first quarter, China sales increased 29.8% year-over-year to RMB295.0 million (US$48.0 million), or 82.6% of net sales, compared to RMB227.3 million (US$37.1 million), or 89.8% of net sales in the same period last year. Net sales outside of China for the first quarter increased 141.1% year-over-year to RMB62.0 million (US$10.1 million), or 17.4% of net sales, compared to RMB25.7 million (US$4.2 million), or 10.2% of net sales, for the same period last year.
Sales of cast resin transformers increased 28.5% year-over-year to RMB200.2 million (US$32.6 million), or 56.1% of net sales, compared to RMB155.8 million (US$25.4 million) or 61.6% of net sales, for the same period last year. Sales of our integrated products, including switchgear and unit substations, increased 72.1% year-over-year to RMB96.0 million (US$15.6 million), or 26.9% of sales, compared to RMB55.8 million (US$9.1 million), or 22.1% of net sales, for the same period last year.
Sales to OEM customers increased 109.5% year-over-year to RMB83.6 million (US$13.6 million), or 23.4% of net sales, compared to RMB39.9 million (US$6.5 million), or 15.8% of net sales in the same period last year.
Gross profit in the first quarter increased 14.0% year over year to RMB89.3 million (US$14.5 million) from RMB78.3 million (US$12.8 million) in the same period last year. First quarter 2015 gross profit margin was 25.0%, compared to 31% in the prior year period. Gross margin in the first quarter decreased compared to the same period last year primarily due to increased materials prices and an increased mix of sales of switchgear and unit substations, which carry lower gross margins.
Selling and administrative expenses in the first quarter were RMB76.3 million (US$12.4 million), or 21.4% of net sales, compared to RMB66.5 million (US$10.9 million), or 26.3% of net sales in the same period last year. Selling and administrative expenses increased from the same period last year due to the increased sales volume and higher general and administrative expenses.
Operating income for the first quarter increased 10.1% to RMB13.1 million (US$2.1 million), or 3.7% of net sales, from RMB11.9 million (US$1.9 million), or 4.7% of net sales, in the same period last year.
Net income for the first quarter decreased 1.4% to RMB9.2 million (US$1.5 million), or RMB0.55 (US$0.09) per diluted share, compared to RMB9.3 million (US$1.5 million), or RMB0.56 (US$0.09) per diluted share, in the same period last year. First quarter net income, as a percentage of net sales, was 2.6% compared to 3.7% in the same period last year.
Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, “Our 1Q15 results reflect well balanced revenue growth across our product lines and our markets, which drove abnormally strong sales during our typically weakest quarter. We also remained focused on managing our working capital and collecting our accounts receivable. I applaud the entire Jinpan team for their hard work and dedication to achieve these results during the holiday quarter.”
“We continue to face a challenging environment within the Chinese market, marked by increasing material costs and pricing pressure which impacted margins. We are addressing this margin pressure by attempts to drive increased sales volume, reflected by the strong sales during the first quarter, as well as through targeted price increases to pass through the rising materials costs on our more recent orders. Additionally, visibility into demand for the second half of 2015 remains limited and we continue to adhere to our cautious approach.”
“Our first quarter results reflect continued diversification of our business, by product line and by market. In particular, our sales of integrated products, such as switchgear and substations, increased by more than 60% and now represent more than 25% of our total sales. These products typically carry higher sales prices and provide access to larger, albeit more competitive and therefore lower margin, end markets. We are pleased with our progress with these product lines and expect this trend to continue.”
“Our OEM business was a highlight during the quarter, with first quarter revenue more than doubling from the same period last year. This strength was driven by a recovery in shipments to our largest OEM customer and a ramp-up of shipments to our newest OEM customer. Sales forecasts from our OEM partners suggest continued strength during the second quarter, but are less certain for the second half of the year.”
“At the end of March 2015, our backlog equaled RMB 872 million (US$142 million), up 20.3% from the same period last year and up 19.3% from the fourth quarter of 2014.”
Balance Sheet
As of March 31, 2015, the Company had RMB112.8 million (US$18.4 million) in cash and cash equivalents, restricted cash, and short term investments, compared to RMB168.5 million (US$27.5 million) as of December 31, 2014. The Company’s net accounts receivable on March 31, 2015 totaled RMB923.6 million (US$150.4 million), compared to RMB858.0 million (US$139.7 million) as of December 31, 2014. Total bank loans outstanding at March 31, 2015 were RMB160.5 million (US$26.1 million), compared to RMB160.6 million (US$26.2 million) at December 31, 2014.
Financial Outlook
For the full year 2015, the Company projects revenue growth of approximately 7-10% compared to 2014. Net sales are expected to be approximately RMB1.57 billion to RMB1.62 billion (US$258 million to US$265 million). Net income is expected to be in a range of approximately RMB90.0 million to RMB94.8 million (US$14.7 million to US$15.5 million). Earnings per share are expected to be RMB5.42 to RMB5.70 (US$0.88 to US$0.93) per share.
Year to date, our sales and orders are tracking slightly ahead of our expectations. However, the margin pressure has been more intense than expected. While we are taking steps to mitigate the impact, it will take several months for this margin recovery to be reflected in our financial results.
Conference Call Information
Jinpan’s management will host a conference call and webcast at 4:30 p.m. ET on Thursday, May 14, 2015. The conference call can be accessed by dialing 1-888-438-5448 (toll free) or 1-719-325-2469 (international). A webcast will also be available via http://public.viavid.com, with event ID: 114484. A replay of the call will be available through May 21, 2015, by dialing 1-877-870-5176, access code 5958617.
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, 2014 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.