Revenue increases to US$24.4 million; Net Income of US$2.1 million
ZHEJIANG, China, May 15 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc.
(Nasdaq: SORL), a leading manufacturer and distributor of commercial vehicle
air brake valves in China, today reported its financial results for the first
quarter ending March 31, 2007.
First Quarter Financial Highlights
-- Revenue increased to US$ 24.4 million, reflecting 25.7% year-over-year
growth;
-- Revenue from OEMs increased to US$8.9 million, reflecting 53.4% year-
over-year growth;
-- Revenue from exports increased to US$8.4 million, reflecting 37.7%
year-over-year growth;
-- Net income increased to US$ 2.1 million, reflecting 31.0% year-over-
year growth and
-- First quarter diluted earnings per share were US$ 0.11.
Revenue for the first quarter of 2007 was US$ 24.4 million, a 25.7%
increase as compared to US$ 19.4 million for the same period in 2006. Revenue
from sales to Original Equipment Manufacturers (OEM) for the first quarter of
2007 was US$ 8.9 million, a 53.4% increase as compared to US$ 5.8 million for
the first quarter of 2006. Aftermarket revenue from the Chinese domestic
market for the first quarter of 2007 was US$ 7.1 million, a slight decrease of
5.3% as compared to US$ 7.5 million for the first quarter of 2006. Revenue
from exports was US$ 8.4 million for the first quarter of 2007, an increase of
37.7% as compared to US$ 6.1 million for the first quarter of 2006.
Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are extremely
pleased that SORL has posted another strong quarter with net income growth of
31%. As domestic heavy truck market demonstrates a strong recovery and Chinese
truck exports continue to experience rapid growth, we accordingly shift our
tactical focus from the lower margin domestic aftermarket to the higher margin
OEM and export markets. We continue to expand our market share in the OEM
market as OEM orders grew over 50% during this quarter. On the export front,
we not only reinforced our marketing efforts by attending more trade shows and
launching more catalogue targeting campaigns but also expanded our contract
sales force. Our international customers are very pleased with our high
quality customer services and new product range. With SORL's strong branding
in the Middle East and Southeast Asia, we have been gradually introducing more
non-valve products in addition to our new valve products. Our robust results
reflect our strong customer base and our goal to be the 'one-stop' shop for
high quality Chinese commercial vehicle auto parts."
Gross profit for the first quarter of 2007 was US$ 5.7 million, an
increase of 29.5% as compared to US$ 4.4 million in the same period in 2006.
Operating income for the first quarter of 2007 was US$ 2.7 million, an
increase of 23.4% as compared to US$ 2.2 million in the same period in 2006.
Net income for the first quarter of 2007 was US$ 2.1 million or US$ 0.11
diluted earnings per share, an increase of 31.0% as compared to net income of
US$ 1.6 million or US$ 0.12 diluted earnings per share in the same period in
2006.
Total cash and cash equivalents as of March 31, 2007 totaled $5.9 million
as compared to $11.1 million as of December 31, 2006. Stockholder's equity
increased to $60.0 million as of the end of March 31, 2007 from $57.4 million
as of December 31, 2006. The decrease of cash and cash equivalents is due to
the increasing working capital need for expanded sales to OEMs and CAPEX
increase for capacity expansion.
Ms. Zongyun Zhou, Chief Financial Officer, said, "Thanks to our sales
focus on higher margin sectors and effective control during raw material
sourcing, we improved our gross margin from 22.6% in the first quarter of 2006
to 23.3% in the first quarter of 2007. Selling expenses increased by 36% as a
result of our strengthened efforts to penetrate the market and acquire new
customers. During the quarter, we substantially increased our R&D effort and a
new team was established to develop innovative products. In addition,
depreciation expenses increased as we invested in new production equipment and
tools. We strongly believe that the additional expenses and increased
investment will benefit SORL in the long run and our successful follow-on
public offering has enabled us to pay off our short term bank loan and reduce
our financial expenses. SORL continues to remain focused on balancing rapid
business growth with decent profit generation."
Earnings Conference Call
SORL's management team will host a conference call at 8:00PM Eastern Time
on May 15, 2007 (or 8:00AM on May 16, 2007 Beijing time). A live webcast and
replay of the conference call will be available at:
http://www.vcall.com/IC/CEPage.asp?ID=117078. The webcast replay will be
available through May 15, 2008.
The dial-in by telephone details for the live conference call: U.S. Toll
Free Number +1-877-407-8035, International dial-in number +1-201-689-8035.
About SORL Auto Parts, Inc.
As China's leading manufacturer and distributor of automotive air brake
valves, SORL Auto Parts, Inc. ranks first in market share in the segment for
commercial vehicles weighing more than three tons, such as trucks and buses.
The Company distributes products both within China and internationally under
the SORL trademark. SORL ranks among the top 100 auto component suppliers in
China, with a product range that includes 40 types of air brake valves and
over 800 different specifications. The Company has four authorized
international sales centers in Australia, United Arab Emirates, the United
States and India, with additional offices slated to open in other locations in
the near future.
Safe Harbor Statement
Statements made in this press release that are not historical fact are
"forward-looking statements," which are based on current expectations that
include a number of risks and uncertainties. Additional factors that could
potentially affect the Company's financial results may be found on the
Company's filings with the Securities and Exchange Commission
( http://www.sec.gov ).
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Balance Sheets
Mar 31, 2007 and December 31,2006
31-Mar-07 31-Dec-06
(Unaudited) (Audited)
Assets
Current Assets
Cash and Cash Equivalents US$ 5,852,480 US$ 11,137,501
Accounts Receivable, Net of Provision 29,176,534 26,750,778
Notes Receivable 7,926,848 3,494,327
Inventory 4,841,944 4,528,856
Prepayments 3,658,036 5,532,802
Other current assets 3,145,564 2,925,558
Total Current Assets 54,601,406 54,369,822
Fixed Assets
Property, Plant and Equipment 22,783,011 20,418,557
Less: Accumulated Depreciation -4,483,501 -4,106,901
Property, Plant and Equipment, Net 18,299,510 16,311,656
Other Assets
Deferred compensation cost-stock options 114,298 129,207
Intangible Assets 66,231 45,779
Less: Accumulated Amortization -19,126 -17,655
Intangible Assets, Net 47,105 28,124
Other Non-current Assets 41,399 41,299
Total Other Assets 202,802 198,630
Total Assets US$ 73,103,718 US$ 70,880,108
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable and Notes Payable US$ 3,689,573 US$ 4,620,692
Deposit Received from Customers 800,975 508,268
Income tax payable 366,126 358,367
Accrued Expenses 1,103,610 1,232,845
Other Current Liabilities 479,266 454,430
Total Current Liabilities 6,439,550 7,174,602
Minority Interest 6,633,940 6,336,557
Shareholders' Equity
Common Stock - $0.002 Par Value;
50,000,000 authorized, 18,275,126
issued and outstanding as of
March 31, 2007 and December 31,
2006 respectively 36,550 36,550
Additional Paid In Capital 37,444,051 37,444,051
Reserves 1,008,786 797,116
Accumulated other comprehensive income 1,662,216 1,102,469
Retained Earnings 19,878,625 17,988,763
Total Shareholders' Equity 60,030,228 57,368,949
Total Liabilities and
Shareholders' Equity US$ 73,103,718 US$ 70,880,108
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Income
For The First Quarter Ended on March 31, 2007 and 2006
Three Months Ended March 31,
2007 2006
(Unaudited) (Unaudited)
Sales US$ 24,416,989 19,419,584
Cost of Sales 18,726,052 15,023,826
Gross Profit 5,690,937 4,395,758
Expenses:
Selling and Distribution Expenses 1,183,647 868,016
General and Administrative Expenses 1,693,187 1,096,963
Financial Expenses 143,168 265,547
Total Operating Expenses 3,020,002 2,230,526
Operating Income 2,670,935 2,165,232
Other Income 32,340 -
Non-Operating Expenses -4,089 -89,675
Income (Loss) Before Provision
for Income Taxes 2,699,186 2,075,557
Provision for Income Taxes 362,465 293,608
Net Income Before Minority Interest
& Other Comprehensive Income US$ 2,336,721 1,781,950
Minority Interest 235,189 178,195
Net Income Attributable to Shareholders 2,101,532 1,603,755
Foreign Currency Translation Adjustment 621,941 126,705
Minority Interest's Share 62,194 12,671
Comprehensive Income (Loss) 2,661,279 1,717,789
Weighted average common share - Basic 18,275,126 13,346,555
Weighted average common share - Diluted 18,333,009 13,347,123
EPS - Basic 0.11 0.12
EPS - Diluted 0.11 0.12