ZHEJIANG, China, May 16, 2011 /PRNewswire-Asia-FirstCall/ --
SORL Auto Parts, Inc. (NASDAQ: SORL) ("SORL" or "The
Company"), a leading manufacturer and distributor of automotive
brake systems as well as other key safety-related auto parts in
China, announced today financial
results for the first quarter ended March
31, 2011.
First Quarter 2011 Financial Highlights
- Revenues rose 34.6% year-over-year;
- OEM sales rose 39.7% year-over-year;
- Gross margin was 28.1% in the first quarter of 2011;
- Net income rose 34.0% year-over-year;
- EPS $0.25 versus $0.19 in the first quarter of 2010.
Mr. Xiaoping Zhang, SORL Auto
Parts' Chief Executive Officer and Chairman, stated, "We are
pleased to report continued strong growth from all segments of our
business. While our OEM business achieved the largest sales gains,
we are pleased to see more balance in aftermarket sales and exports
as our production capacity has been expanded to meet market demand.
We continue to build relationships with existing OEM customers and
penetrate new markets."
Financial Performance
For the first quarter of 2011, net sales were $52.0 million, a 34.6% increase compared to
$38.6 million for the first quarter
of 2010. Revenues from the Company's domestic OEM customers were
$32.0 million, a 39.7% increase over
the first quarter of 2010. Revenues from China's domestic aftermarket were $8.6 million, a 32.3% increase over the previous
year's first quarter. Revenues from international markets were
$11.4 million, a 23.9% increase from
the same period in 2010. The sales increases were primarily due to
continued growth in China's auto
market, a greater number of vehicles in operation in China requiring more replacement parts, and an
improved foreign customer base. Further, OEM customers increasingly
purchased the Company's integrated systems and modular supplies of
air brake systems instead of single products, which also
consolidated our strategic partnerships with these OEMs. We
increasingly focused on the light-duty, bus and agricultural
vehicle markets in 2011.
First quarter gross profit increased 25.6% to $14.6 million from $11.6
million a year ago. Gross margin was 28.1%, slightly less
than the 30.1% in the same period a year ago. The gross margin
decrease was primarily the result of higher material and labor
expenses, and the impact of appreciation in the value of Chinese
currency against other currencies. The Company believes production
efficiencies and greater sales of higher-profit, new products will
help maintain its gross profit margin.
Operating expenses increased 20% to $8.5
million in the first quarter of 2011 from $7.0 million in the first quarter of 2010. As a
percentage of revenue, operating expenses decreased to 16.3% in the
first quarter 2011 from 18.2% in the first quarter of 2010 mainly
as greater expenses were partially offset by higher sales.
Selling and distribution expenses were $3.1 million, or 5.9% of quarterly revenue
compared with $2.4 million, and 6.2%
in the same quarter of 2010. General and administrative (G&A)
expenses in the first quarter of 2011 were $2.9 million, or 5.5% of revenue compared with
$3.0 million, or 7.8% in the previous
year's first quarter. Research and development (R&D) expenses
were almost $2.0 million, or 3.8% of
revenue in the 2011 first quarter compared with $1.5 million, or 3.9% in the first quarter a year
ago.
Operating income increased 33.7% to $6.1
million for the first quarter 2011 from $4.6 million for the same quarter last year.
Net income attributable to stockholders for the first quarter of
2011 increased 34.0% to $4.9 million,
or $0.25 per basic and diluted share,
from $3.6 million, or $0.19 million per basic and diluted share, in the
first quarter of 2010.
As of March 31, 2011, the Company
had cash and cash equivalents of $12.2
million as compared to $6.7
million on December 31, 2010.
Bank acceptance note to vendors were $7.1
million compared with $1.0
million at December 31, 2010.
Total equity increased to $154.7
million at the end of March
2011 compared with $147.8
million at December 31, 2010.
Net cash flow from operating activities was $8.3 million compared with $1.2 million for the first quarter of 2010.
Recent Developments
SORL Auto Parts, Inc. announced that its operating subsidiary,
Ruili Group Ruian Auto Parts Co., Ltd. (Ruili), was awarded a "core
supplier" designation from the China FAW Group Corporation (FAW
Group). SORL was one of only 26 suppliers to be recognized as an
FAW Group "core supplier." We believe that this will create
an opportunity for us to increase our sales to FAW Group. FAW Group
is one of SORL's top three current customers, and we believe that
we can increase sales to FAW Group by 10% to 15% in 2011. FAW Group
is one of the largest auto producers in China. .
Business Outlook
For the second quarter of fiscal year 2011, management is
expecting net sales to be approximately $65
million and net income to be approximately $6.1million. These targets are based on the
Company's current views on the operating and market conditions,
which are subject to change.
Conference Call
Management will host a conference call on Monday, May 16, 2011 at 8:00 a.m. EDT / 8:00
p.m. Beijing Time to discuss its 2011 first quarter
financial results. Listeners may access the call by dialing U.S.
toll free number +1-877-407-0778, or +1-201-689-8565 for
international callers. A live web cast of the conference call will
also be available at http://www.sorl.cn.
A replay of the call will be available shortly after the
conference call through 11:59 p.m.
EDT on June 6, 2011, or
11:59 a.m. Beijing Time on
June 7, 2011. The replay dial-in
numbers are: U.S. toll free number +1-877-660-6853, or the
international number is +1-201-612-7415; using Account "286" and
Conference ID "372506" to access the replay.
About SORL Auto Parts, Inc.
As a leading manufacturer and distributor of automotive brake
systems and other key safety related auto parts in China, management believes that SORL Auto
Parts, Inc. ranks No. 1 for market share in China in the segment for brake systems for
commercial vehicles, such as trucks and buses. The Company
distributes products both within China and internationally under the SORL
trademark. SORL is listed among the top 100 auto component
suppliers in China, with a product
range that includes 65 categories with over 2000 specifications in
brake system and others. The Company has four authorized
international sales centers in Australia, UAE, India, and the
United States. SORL is working to establish a broader global
sales network. For more information, please visit
http://www.sorl.cn.
Safe Harbor Statement
This press release includes certain statements that are not
descriptions of historical facts, but are forward-looking
statements. Forward-looking statements can be identified by the use
of forward-looking terminology such as "will", "believes",
"expects" or similar expressions. These forward- looking statements
may also include statements about our proposed discussions related
to our business or growth strategy, which is subject to change.
Such information is based upon expectations of our management that
were reasonable when made but may prove to be incorrect. All of
such assumptions are inherently subject to uncertainties and
contingencies beyond our control and upon assumptions with respect
to future business decisions, which are subject to change. We do
not undertake to update the forward-looking statements contained in
this press release. For a description of the risks and
uncertainties that may cause actual results to differ from the
forward-looking statements contained in this press release, see our
most recent Annual Report filed with the Securities and Exchange
Commission (SEC) on Form 10-K, and our subsequent SEC filings.
Copies of filings made with the SEC are available through the SEC's
electronic data gathering analysis retrieval system (EDGAR) at
http://www.sec.gov.
Contact
Information
|
|
|
|
Ben Chen
|
|
Director of Investor
Relations
|
|
+86 577 6581 7721
|
|
Email:
ben@sorl.com.cn
|
|
|
|
Kevin Theiss
|
|
Grayling
|
|
Tel:
+1-646-284-9409
|
|
Email:
kevin.theiss@grayling.com
|
|
|
- Tables follow -
|
|
SORL Auto
Parts, Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
March 31,
2011 and December 31, 2010
|
|
|
|
|
|
|
|
March 31, 2011
|
|
December 31, 2010
|
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
Assets
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
US$
|
12,189,960
|
US$
|
6,691,078
|
|
|
Accounts Receivable, Net of
Provision
|
|
64,413,585
|
|
54,168,856
|
|
|
Notes Receivable
|
|
12,267,520
|
|
27,318,361
|
|
|
Inventory
|
|
37,421,450
|
|
31,960,053
|
|
|
Prepayments
|
|
10,012,821
|
|
7,632,674
|
|
|
Other current assets,
including $73,479 and $52,743
from related parties at March 31, 2011 and December 31, 2010,
respectively.
|
|
3,992,146
|
|
3,497,659
|
|
|
Total Current
Assets
|
|
140,297,482
|
|
131,268,681
|
|
Fixed Assets
|
|
|
|
|
|
|
Property, Plant and
Equipment
|
|
70,368,340
|
|
67,926,160
|
|
|
Less: Accumulated
Depreciation
|
|
(24,855,526)
|
|
(23,032,159)
|
|
|
Property, Plant and
Equipment, Net
|
|
45,512,814
|
|
44,894,001
|
|
|
Leasehold Improvements in
Progress
|
|
412,121
|
|
424,881
|
|
|
|
|
|
|
|
|
Land Use Rights,
Net
|
|
14,357,142
|
|
14,298,522
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
Intangible Assets
|
|
168,194
|
|
166,510
|
|
|
Less: Accumulated
Amortization
|
|
(76,585)
|
|
(71,868)
|
|
|
Intangible Assets,
Net
|
|
91,609
|
|
94,642
|
|
|
Deferred tax assets
|
|
366,686
|
|
398,034
|
|
|
|
|
|
|
|
|
|
Total Other
Assets
|
|
458,295
|
|
492,676
|
|
|
Total Assets
|
US$
|
201,037,854
|
US$
|
191,378,761
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts Payable,
including $1,196,760 and
$3,151,493 due to related parties at March 31, 2011 and December
31, 2010, respectively.
|
US$
|
8,625,752
|
US$
|
10,672,514
|
|
|
Bank acceptance note
to vendors
|
|
7,077,054
|
|
966,373
|
|
|
Deposit Received from
Customers
|
|
5,254,318
|
|
7,484,839
|
|
|
Short term bank loans
|
|
15,978,270
|
|
15,770,448
|
|
|
Income tax payable
|
|
1,194,705
|
|
1,174,976
|
|
|
Accrued Expenses
|
|
7,434,305
|
|
6,777,830
|
|
|
Other Current Liabilities,
including $117,950 and $200,762 due to related parties at March 31,
2011 and December 31, 2010, respectively.
|
|
597,508
|
|
559,575
|
|
|
Total Current
Liabilities
|
|
46,161,912
|
|
43,406,555
|
|
|
|
|
|
|
|
|
Non-Current
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
187,083
|
|
171,981
|
|
|
Total
Liabilities
|
US$
|
46,348,995
|
US$
|
43,578,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock - No Par Value;
1,000,000 authorized; none issued and outstanding as of March 31,
2011 and December 31, 2010
|
US$
|
-
|
|
-
|
|
|
Common Stock - $0.002 Par Value;
50,000,000 authorized,
|
|
|
|
|
|
|
19,304,921 and 19,304,921 issued
and outstanding as of
|
|
|
|
|
|
|
March 31, 2011 and December 31,
2010
|
|
38,609
|
|
38,609
|
|
|
Additional Paid In
Capital
|
|
42,199,014
|
|
42,199,014
|
|
|
Reserves
|
|
7,134,049
|
|
6,641,547
|
|
|
Accumulated other comprehensive
income
|
|
16,112,365
|
|
14,731,607
|
|
|
Retained Earnings
|
|
74,034,107
|
|
69,672,286
|
|
|
Total SORL Auto Parts, Inc.
stockholders' equity
|
|
139,518,144
|
|
133,283,063
|
|
|
Noncontrolling Interest In
Subsidiaries
|
|
15,170,715
|
|
14,517,162
|
|
|
Total Equity
|
|
154,688,859
|
|
147,800,225
|
|
|
Total Liabilities and
Stockholders' Equity
|
US$
|
201,037,854
|
US$
|
191,378,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SORL Auto
Parts, Inc. and Subsidiaries
|
|
Consolidated
Statements of Income
|
|
For The
First Quarter Ended on March 31, 2011 and 2010
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Sales
|
US$
|
51,992,965
|
|
38,631,601
|
|
Include: sales to related
parties
|
|
904,947
|
|
249,156
|
|
Cost of Sales
|
|
37,403,946
|
|
27,016,524
|
|
|
|
|
|
|
|
Gross Profit
|
|
14,589,019
|
|
11,615,077
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Selling and Distribution
Expenses
|
|
3,069,228
|
|
2,413,547
|
|
|
General and Administrative
Expenses
|
|
2,866,448
|
|
3,000,139
|
|
|
Research and development
expenses
|
|
1,978,901
|
|
1,525,797
|
|
|
Financial Expenses
|
|
567,352
|
|
108,267
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
8,481,929
|
|
7,047,750
|
|
|
|
|
|
|
|
|
Operating Income
|
|
6,107,090
|
|
4,567,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
205,248
|
|
108,545
|
|
Non-Operating
Expenses
|
|
(8,137)
|
|
(12,659)
|
|
|
|
|
|
|
|
Income Before Provision for
Income Taxes
|
|
6,304,201
|
|
4,663,213
|
|
|
|
|
|
|
|
Provision for Income
Taxes
|
|
949,743
|
|
695,775
|
|
|
|
|
|
|
|
Net Income
|
|
5,354,458
|
|
3,967,438
|
|
|
|
|
|
|
|
Other Comprehensive Income -
Foreign Currency Translation Adjustment
|
US$
|
1,534,176
|
|
39,970
|
|
|
|
|
|
|
|
Total Comprehensive
Income
|
|
6,888,634
|
|
4,007,408
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Net income attributable to
Noncontrolling Interest In Subsidiaries
|
|
500,135
|
|
345,585
|
|
|
|
|
|
|
|
Other Comprehensive Income
Attributable to Non-controlling Interest's
Share
|
|
|
153,418
|
|
4,269
|
|
|
|
|
|
|
|
|
Total Comprehensive Income
Attributable to Non-controlling Interest's
Share
|
|
|
653,553
|
|
349,854
|
|
|
|
|
|
|
|
|
Net Income Attributable to
Stockholders
|
|
|
4,854,323
|
|
3,621,853
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
Attributable to Stockholders
|
|
|
1,380,758
|
|
35,701
|
|
|
|
|
|
|
|
|
Total Comprehensive Income
Attributable to Stockholders
|
|
|
6,235,081
|
|
3,657,554
|
|
|
|
|
|
|
|
Weighted average common share -
Basic
|
|
|
19,304,921
|
|
18,871,588
|
|
|
|
|
|
|
|
Weighted average common share -
Diluted
|
|
|
19,304,921
|
|
18,871,588
|
|
|
|
|
|
|
|
EPS - Basic
|
|
|
0.25
|
|
0.19
|
|
|
|
|
|
|
|
EPS - Diluted
|
|
|
0.25
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SORL Auto
Parts, Inc. and Subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
For The
First Quarter Ended on March 31, 2011 and 2010
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
Net Income
|
US$
|
4,854,323
|
|
3,621,853
|
|
Adjustments to reconcile
net income (loss) to net cash
|
|
|
|
|
|
from operating
activities:
|
|
|
|
|
|
Noncontrolling Interest In
Subsidiaries
|
|
500,135
|
|
345,585
|
|
Bad Debt
Expense
|
|
-
|
|
157,199
|
|
Depreciation and
Amortization
|
|
1,688,888
|
|
1,188,241
|
|
Stock-Based Compensation
Expense
|
|
-
|
|
-
|
|
Loss on disposal of Fixed
Assets
|
|
-
|
|
-
|
|
Changes in Assets and
Liabilities:
|
|
|
|
|
|
Accounts
Receivable
|
|
(9,744,191)
|
|
2,919,311
|
|
Notes
Receivable
|
|
15,249,986
|
|
(3,329,084)
|
|
Other Current
Assets
|
|
(540,196)
|
|
(28,417)
|
|
Inventory
|
|
(5,112,991)
|
|
(2,843,151)
|
|
Prepayments
|
|
(399,564)
|
|
942,716
|
|
Deferred tax
assets
|
|
35,194
|
|
(100,421)
|
|
Accounts Payable and Bank
acceptance note to vendors
|
|
3,274,639
|
|
(1,972,587)
|
|
Income Tax
Payable
|
|
7,808
|
|
(336,074)
|
|
Deposits Received from
Customers
|
|
(2,294,562)
|
|
1,104,956
|
|
Other Current Liabilities
and Accrued Expenses
|
|
812,543
|
|
(488,406)
|
|
Deferred tax
liabilities
|
|
13,296
|
|
12,833
|
|
Net Cash Flows from
Operating Activities
|
|
8,345,308
|
|
1,194,554
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities
|
|
|
|
|
|
Acquisition of Property
and Equipment
|
|
(2,987,014)
|
|
(3,270,650)
|
|
Leasehold Improvements in
Progress
|
|
|
|
|
|
Sales proceeds of disposal
of fixed assets
|
|
-
|
|
-
|
|
Investment in Intangible
Assets
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Net Cash Flows from
Investing Activities
|
|
(2,987,014)
|
|
(3,270,650)
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities
|
|
|
|
|
|
Proceeds from (Repayment
of) Bank Loans
|
|
48,104
|
|
-
|
|
Proceeds from Share
Issuance
|
|
-
|
|
9,399,978
|
|
Capital contributed by Minority
S/H
|
|
-
|
|
1,038,900
|
|
|
|
|
|
|
|
Net Cash flows from
Financing Activities
|
|
48,104
|
|
10,438,878
|
|
|
|
|
|
|
|
Effects on changes in foreign
exchange rate
|
|
92,484
|
|
2,751
|
|
|
|
|
|
|
|
Net Change in Cash and Cash
Equivalents
|
|
5,498,882
|
|
8,365,533
|
|
|
|
|
|
|
|
Cash and Cash Equivalents-
Beginning of the year
|
|
6,691,078
|
|
10,255,259
|
|
|
|
|
|
|
|
Cash and cash Equivalents - End
of the period
|
US$
|
12,189,960
|
|
18,620,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Disclosures:
|
|
|
|
|
|
Interest Paid
|
|
551,121
|
|
-
|
|
Tax Paid
|
|
893,444
|
|
1,028,418
|
|
|
|
|
|
|
|
|
SOURCE SORL Auto Parts, Inc.