ZHEJIANG, China, May 15, 2018 /PRNewswire/ -- 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 its unaudited financial
results for the first quarter ended March
31, 2018.
First Quarter 2018 Financial Highlights
- Net sales for the 2018 first quarter increased by 44.1% to
$107.7 million from $74.4 million in the first quarter of
2017;
- Net sales by segment grew by 33.5%, 73.2% and 27.9% in the OEM,
aftermarket and international markets, respectively, in the
first quarter of 2018;
- Gross profit increased by 43.5% with a gross margin of 28.0%
compared with 28.2% in the first quarter of 2017;
- Net Income attributable to stockholders rose 19.5% to
$8.3 million, or $0.43 per diluted share, compared with
$6.9 million, or $0.36 per diluted share in the first quarter of
2017.
Mr. Xiaoping Zhang, SORL's Chief
Executive Officer and Chairman, stated, "We are pleased to report
strong sales growth across the board in the first quarter of 2018.
We have been consistently outperforming the commercial vehicle
market in China as our advanced
products with high technology content continue to capture market
shares. Our sales growth combined with strict cost controls
and higher efficiency in our new production has created earnings
growth as well."
First Quarter 2018 Financial Results
For the first quarter of 2018, net sales increased by 44.1%
year-over-year to $107.7 million from
$74.7 million in the 2017 first
quarter. Revenues from the Company's domestic OEM customers were
$51.8 million, an increase of 33.5%
from $38.7 million in the first
quarter of 2017. The higher OEM sales were mainly due to higher
truck sales in the first quarter of 2018. During the first quarter
of 2018, the total commercial vehicle sales in China grew by 3.6% year-over-year with total
truck sales up by 3.6% led by a 13.8% growth in heavy-duty truck
sales.
SORL's aftermarket sales in China grew by 73.2% to $38.0 million for the first quarter of 2018,
compared with $22.0 million for the
same period of 2017. The increase in new vehicle sales in
China and the growing expiration
of OEM warranties helped propel growth in the aftermarket
business. Revenues from SORL's international markets sales
increased 27.9% to $17.9 million,
compared to $14.0 million in the
first quarter of 2017 due to an expanding overseas customer
base.
The gross profit for the first quarter of 2018 increased by
43.5% year-over-year to $30.2 million
from $21.0 million a year ago. Gross
margin was 28.0% compared with 28.2% in the first quarter of 2017.
The gross margin change was mostly due to the product mix in the
first quarter of 2018 compared with the same quarter last
year.
In the first quarter of 2018, operating expenses increased 57.2%
year-over-year to $18.4 million from
$11.7 million in the same quarter of
2017. The increase reflected higher selling and distribution
expenses related to the quarterly sales growth, increased general
and administrative expenses ("G&A") and higher research and
development ("R&D") costs. As a percentage of revenue,
operating expenses were 17.1% in the first quarter of 2018,
compared with 15.7% in the first quarter of 2017.
- Selling and distribution expenses increased to $10.0 million from $5.6
million, and represented 9.3% of quarterly revenues from
7.5% in the same quarter last year. The increase was mainly due to
higher freight and packaging expenses related to the growth
in product volumes and increased labor costs as the Company
added more self-owned distribution centers throughout the country
to target the aftermarket segment.
- G&A expenses in the first quarter of 2018 increased to
$4.8 million from $4.0 million in the first quarter of 2017.
G&A expenses represented 4.4% of quarterly revenues compared
with 5.4% of revenues in the same quarter last year. The
increase in G&A expenses was mainly due to an increased bad
debt provision associated with higher sales in the quarter.
- R&D expenses increased to $3.6
million from $2.1 million in
the first quarter of 2017. As a percentage of revenue, R&D
expenses were 3.3% in the first quarter of 2018 compared with 2.7%
of revenue in the first quarter of 2017.
Income from operations increased by 45.4% to $14.0 million in the first quarter of 2018
compared with $9.6 million in the
first quarter of 2017. As a percentage of revenue, income of
operations was 13.0% in the first quarter of 2018 and 12.9% in the
2017 first quarter.
Financial expenses were $3.4
million in the first quarter of 2018 compared with
$0.5 million in the first quarter of
2017. The increase in financial expenses was due to a higher
average interest rate on a larger amount of loans outstanding
compared with the first quarter of 2017.
Income before income taxes was $10.8
million for the first quarter of 2018, compared to
$9.0 million for the same quarter of
2017. The increase in income before income taxes reflected higher
sales and operating income during the first quarter of 2018
compared to the first quarter of 2017.
The provision for income taxes was a $1.6
million expense in the first quarter of 2018, compared with
an expense of $1.3 million in the
first quarter of 2017.
Net income attributable to stockholders for the first quarter of
2018 was $8.3 million, or
$0.43 per basic and diluted share,
compared with $6.9 million, or
$0.36 per basic and diluted share, a
year ago.
Balance Sheet
As of March 31, 2018, the Company
had cash, cash equivalents and restricted cash of $69.3 million compared to $4.6 million on December
31, 2017. Net accounts receivable rose to $173.2 million from $134.4
million at December 31, 2017.
Bank acceptance notes from customers increased to $141.4 million at March
31, 2018 from $116.0 million
at December 31, 2017. Inventories
rose to $117.8 million from
$114.3 million at the end of 2017.
Short-term bank loans were $239.6
million at March 31, 2018
compared with $125.4 million at
December 31, 2017. Total equity
increased to $217.5 million at
March 31, 2018 compared with
$200.3 million at December 31, 2017. On March 31, 2018, working capital was $102.4 million with a current ratio of 1.2 to
1. Net cash flows provided by operations was $36.3 million in the first quarter of 2018.
Business Outlook
Management has reiterated its fiscal year 2018 guidance for net
sales of $450 million and net income
attributable to common stockholders of $28
million. These targets are based on the Company's current
views on the operating and market conditions, which are subject to
change.
"Our growing broad line of advanced products with their higher
performance and reliability is providing the growth stimulus to
enhance our market position in key markets. We are now better
positioned in our markets than any time in our history," stated Ms.
Jinrui Yu, SORL's Chief Operating
Officer.
Conference Call
Management will host a conference call on Tuesday, May 15,
2018, at 8:00 A.M. EDT/ 8:00 P.M. Beijing Time to
discuss its unaudited 2018 first quarter results. Listeners may
access the call by dialing U.S. toll free
number +1-877-407-0778 and +1-201-689-8565 for
international callers, and Mainland China toll free +86
400-120-2840. 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 8:00 A.M. EDT or 8:00 P.M.
Beijing Time on June 15, 2018. The replay dial-in numbers are:
U.S. toll free number +1-877-481-4010 or the
international number +1-919-882-2331; using Conference ID
"29319" to access the replay.
About SORL Auto Parts, Inc.
As a global tier one supplier of brake and control systems to
the commercial vehicle industry, SORL Auto Parts, Inc. is the
market leader for commercial vehicles brake systems, such as trucks
and buses in China. 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 systems and
others. The Company has four authorized international sales centers
in UAE, India, the United States and Europe.
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 may include certain statements that are not
descriptions of historical facts, but are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements can be identified by
the use of forward-looking terminology such as "expects,"
"anticipates," "believes," "targets," "goals," "projects,"
"intends," "plans," "seeks," "estimates," "may," "will," "should"
or similar expressions. For example, when the Company describes the
evaluation of the preliminary non-binding proposal letter, it is
using forward-looking statements. These forward-looking statements
may also include statements about the Company's proposed
discussions related to its business or growth strategy, which are
subject to change. Such information is based upon expectations of
the Company's management that were reasonable when made, but may
prove to be incorrect. All of such assumptions are inherently
subject to uncertainties and contingencies beyond the Company's
control and upon assumptions with respect to future business
decisions, which are subject to change. The Company does not
undertake to update the forward-looking statements contained in
this press release. These risks and uncertainties may include, but
are not limited to general political, economic and business
conditions which may impact the demand for commercial vehicles or
passenger vehicles in China and the other significant
markets where the Company's products are sold, uncertainty
regarding such political, economic and business conditions, trends
in consumer debt levels and bad debt write-offs, general
uncertainty related to possible recessions, natural disasters, the
political stability of China and the impact of any of
those events on demand for commercial or passenger vehicles,
changes in consumer confidence, new product development and
introduction, competitive products and pricing, seasonality,
availability of alternative sources of supply in the case of
the loss of any significant supplier or any supplier's inability to
fulfill the Company's orders, cost of labor and raw materials, the
loss of or curtailed sales to significant customers, the Company's
dependence on key employees and officers, the ability to secure and
protect trademarks, patents and other intellectual property rights,
potential effects of competition in the Company's business, the
dependency of the Company upon the normal operation of its sole
manufacturing facility, potential effect of the economic and
currency instability in China and countries to which the
Company sold its products, the ability of the Company to
successfully manage its expenses on a continuing basis, the
continued availability to the Company of financing and credit on
favorable terms, business disruptions, disease, general risks
associated with doing business in China or other
countries including, without limitation, foreign trade policies,
import duties, tariffs, quotas, political and economic stability,
and the other factors discussed in the Company's Annual Report on
Form 10-K and other filings with the Securities and Exchange
Commission. For additional information regarding known material
factors that could cause the Company's results to differ from its
projected results, please see its filings with the SEC, including
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K. 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
Phyllis Huang
+86-151-6770-5972
+86-577-6581-7721
phyllis@sorl.com.cn
Kevin Theiss
Investor Relations
Awaken Advisors
212-521-4050
kevin.theiss@awakenlab.com
-- Tables Follow --
SORL Auto Parts,
Inc. and Subsidiaries
Consolidated
Balance Sheets
March 31, 2018 and
December 31, 20176
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash equivalents
|
US$
|
22,682,734
|
US$
|
4,221,940
|
Accounts receivable, net, including $1,369,846 and
$1,297,734 from related
party at March 31, 2018 and D
ecember 31, 2017,
respectively
|
|
173,176,607
|
|
134,384,961
|
Bank acceptance notes from customers
|
|
141,418,791
|
|
116,040,688
|
Inventories
|
|
117,758,209
|
|
114,300,564
|
Prepayments, current, including $9,690,080 and $999,527
to related parties at
March 31, 2018 and December 31,
2017,
respectively
|
|
24,451,933
|
|
8,826,004
|
Restricted cash
|
|
46,602,834
|
|
376,236
|
Advances to related parties
|
|
138,038,517
|
|
72,318,224
|
Other current assets, net
|
|
7,637,869
|
|
5,555,568
|
Total
Current Assets
|
|
671,767,494
|
|
456,024,185
|
Property, plant and
equipment, net
|
|
83,500,305
|
|
79,828,006
|
Land use rights, net
|
|
15,360,639
|
|
14,912,134
|
Intangible assets, net
|
|
-
|
|
3,341
|
Deposits on loan agreements
|
|
11,132,138
|
|
10,712,865
|
Prepayments, non-current
|
|
33,401,173
|
|
16,594,987
|
Deferred tax assets
|
|
3,487,908
|
|
4,240,424
|
Total
Non-current Assets
|
|
146,882,163
|
|
126,291,757
|
Total
Assets
|
US$
|
818,649,657
|
US$
|
582,315,942
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts payable and bank acceptance notes to vendors,
including $10,104,627
and $15,896,804 due to related
parties at March 31,
2018 and December 31, 2017,
respectively
|
US$
|
192,341,749
|
US$
|
118,051,633
|
Deposits received from customers
|
|
49,997,137
|
|
43,087,473
|
Short term bank loans
|
|
239,625,661
|
|
125,380,899
|
Current portion of long term loans
|
|
26,141,459
|
|
24,266,031
|
Income tax payable
|
|
1,709,222
|
|
3,249,727
|
Accrued expenses
|
|
17,651,012
|
|
25,154,658
|
Due to related parties
|
|
36,939,943
|
|
1,572,963
|
Deferred income
|
|
927,678
|
|
1,020,273
|
Other current liabilities
|
|
4,013,302
|
|
2,857,130
|
Total
Current Liabilities
|
|
569,347,163
|
|
344,640,787
|
Long term loans, less current portion and net of
unamortized debt
issuance costs
|
|
31,773,249
|
|
37,383,224
|
Total
Non-current Liabilities
|
|
31,773,249
|
|
37,383,224
|
Total
Liabilities
|
|
601,120,412
|
|
382,024,011
|
Equity
|
|
|
|
|
Preferred stock - no par value; 1,000,000 authorized; none
issued and outstanding
as of March 31, 2018 and December
31, 2017
|
|
-
|
|
-
|
Common stock - $0.002 par value; 50,000,000
authorized,19,304,921
issued and outstanding as of
|
|
|
|
|
March 31, 2018 and
December 31, 2017
|
|
38,609
|
|
38,609
|
Additional paid-in
capital
|
|
(28,582,654)
|
|
(28,582,654)
|
Reserves
|
|
18,389,707
|
|
17,562,357
|
Accumulated other
comprehensive income
|
|
23,143,269
|
|
15,903,188
|
Retained
earnings
|
|
175,690,481
|
|
168,244,329
|
Total SORL Auto Parts, Inc. Stockholders' Equity
|
|
188,679,412
|
|
173,165,829
|
Noncontrolling Interest In Subsidiaries
|
|
28,849,833
|
|
27,126,102
|
Total Equity
|
|
217,529,245
|
|
200,291,931
|
Total Liabilities and
Equity
|
US$
|
818,649,657
|
US$
|
582,315,942
|
SORL Auto Parts,
Inc. and Subsidiaries
Consolidated
Statements of Income and Comprehensive Income
For
The Three Months Ended March 31, 2018 and 2017
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Sales
|
US$
|
107,726,682
|
US$
|
74,746,394
|
Include: sales to
related parties
|
|
7,701,054
|
|
4,008,684
|
Cost of
sales
|
|
77,527,196
|
|
53,700,458
|
Gross
profit
|
|
30,199,486
|
|
21,045,936
|
Expenses:
|
|
|
|
|
Selling and
distribution expenses
|
|
10,037,861
|
|
5,608,623
|
General and
administrative expenses
|
|
4,773,778
|
|
4,044,913
|
Research and
development expenses
|
|
3,590,402
|
|
2,055,096
|
Total operating
expenses
|
|
18,402,041
|
|
11,708,632
|
Other operating
income, net
|
|
2,197,324
|
|
290,237
|
Income from
operations
|
|
13,994,769
|
|
9,627,541
|
Interest
income
|
|
1,488,264
|
|
10,550
|
Government
grants
|
|
133,933
|
|
28,909
|
Other
income
|
|
27,066
|
|
664
|
Interest
expenses
|
|
(3,353,711)
|
|
(481,160)
|
Exchange
differences
|
|
(601,286)
|
|
(92,732)
|
Other
expenses
|
|
(890,814)
|
|
(114,799)
|
Income before income
taxes provision
|
|
10,798,221
|
|
8,978,973
|
Provision for income
taxes
|
|
1,605,441
|
|
1,286,174
|
Net income
|
US$
|
9,192,780
|
US$
|
7,692,799
|
Net income
attributable to noncontrolling
interest in subsidiaries
|
|
919,278
|
|
769,280
|
|
|
|
|
|
Net income
attributable to common stockholders
|
US$
|
8,273,502
|
US$
|
6,923,519
|
Comprehensive
income:
|
|
|
|
|
Net income
|
US$
|
9,192,780
|
US$
|
7,692,799
|
Foreign currency
translation adjustments
|
|
8,044,534
|
|
911,432
|
Comprehensive
income
|
|
17,237,314
|
|
8,604,231
|
Comprehensive income
attributable to
noncontrolling interest in
subsidiaries
|
|
1,723,731
|
|
860,423
|
Comprehensive income
attributable to
common stockholders
|
US$
|
15,513,583
|
US$
|
7,743,808
|
Weighted average
common share - basic
|
|
19,304,921
|
|
19,304,921
|
Weighted average
common share - diluted
|
|
19,304,921
|
|
19,304,921
|
EPS -
basic
|
US$
|
0.43
|
US$
|
0.36
|
EPS -
diluted
|
US$
|
0.43
|
US$
|
0.36
|
SORL Auto Parts,
Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
For The Three
Months Ended March 31, 2018 and 2017 (Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
|
Net income
|
US$
|
9,192,780
|
US$
|
7,692,799
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
provided by (used
in) operating activities:
|
|
|
|
|
Allowance for
doubtful accounts
|
|
278,397
|
|
-
|
Depreciation and
amortization
|
|
2,847,303
|
|
2,017,224
|
Amortization of debt
issuance costs
|
|
372,025
|
|
-
|
Deferred income
tax
|
|
900,839
|
|
8,453
|
Changes in assets
and liabilities:
|
|
|
|
|
Account
receivable
|
|
(32,888,322)
|
|
(2,151,307)
|
Bank acceptance notes
from customers
|
|
12,354,888
|
|
(2,700,239)
|
Other currents
assets
|
|
(1,890,438)
|
|
(638,653)
|
Inventories
|
|
996,280
|
|
(5,594,100)
|
Prepayments,
current
|
|
(14,987,105)
|
|
1,142,387
|
Accounts payable and
bank acceptance notes to vendors
|
|
63,073,488
|
|
(4,434,657)
|
Income tax
payable
|
|
(1,635,670)
|
|
265,518
|
Deposits received
from customers
|
|
5,123,039
|
|
3,033,848
|
Deferred
income
|
|
(129,981)
|
|
-
|
Other current
liabilities and accrued expenses
|
|
(7,302,268)
|
|
(2,133,534)
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
|
36,305,255
|
|
(3,492,261)
|
Cash Flows From
Investing Activities
|
|
|
|
|
Acquisition of
property, equipment and land use rights
|
|
(19,682,775)
|
|
(14,320,981)
|
Advances to related
parties
|
|
(67,694,035)
|
|
-
|
Repayments of
advances to related parties
|
|
5,821,183
|
|
-
|
Net Cash Flows
Used In Investing Activities
|
|
(81,555,627)
|
|
(14,320,981)
|
Cash Flows From
Financing Activities
|
|
|
|
|
Proceeds from short
term bank loans
|
|
222,636,613
|
|
21,247,576
|
Repayments of short
term bank loans
|
|
(115,398,302)
|
|
-
|
Proceeds from related
parties
|
|
264,565,400
|
|
-
|
Repayments to related
parties
|
|
(256,883,171)
|
|
-
|
Repayments of long
term loans
|
|
(6,401,331)
|
|
-
|
Net Cash Flows
Provided By Financing Activities
|
|
108,519,209
|
|
21,247,576
|
Effects on changes in
foreign exchange rate
|
|
1,418,555
|
|
83,361
|
Net change in cash,
cash equivalents, and restricted cash
|
|
64,687,392
|
|
3,517,695
|
Cash, cash
equivalents, and restricted cash - beginning of the
period
|
|
4,598,176
|
|
13,533,776
|
Cash, cash
equivalents, and restricted cash - end of the period
|
US$
|
69,285,568
|
US$
|
17,051,471
|
Supplemental Cash
Flow Disclosures:
|
|
|
|
|
Interest
paid
|
US$
|
2,278,298
|
US$
|
250,601
|
Income taxes
paid
|
US$
|
2,340,272
|
US$
|
1,012,203
|
Non-cash Investing
and Financing Transactions
|
|
|
|
|
Repayments to related
party in the form of bank acceptance notes
|
US$
|
5,846,083
|
US$
|
-
|
Loans from related
party in the form of bank acceptance notes
|
US$
|
32,791,380
|
US$
|
-
|
Reconciliation of
cash, cash equivalents, and restricted cash as shown on
the consolidated balance sheets
|
|
|
|
|
Cash and cash
equivalents
|
US$
|
22,682,734
|
US$
|
11,455,214
|
Restricted
cash
|
|
46,602,834
|
|
5,596,257
|
Total cash, cash
equivalents, and restricted cash at end of period
|
US$
|
69,285,568
|
US$
|
17,051,471
|
View original
content:http://www.prnewswire.com/news-releases/sorl-auto-parts-reports-a-44-1-sales-increase-in-the-first-quarter-of-2018--300648312.html
SOURCE SORL Auto Parts, Inc.