Demonstrated strong growth in sales to OEMs, export set new historical high
ZHEJIANG, China, Nov. 9 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc.
(Nasdaq: SORL), a leading manufacturer and distributor of commercial vehicle
air brake valves as well as other auto parts in China, today announced its
financial results for the third quarter of 2006.
Third Quarter Financial Highlights
-- Revenue increased to $21.3 million, reflecting a 30% year-over-year
growth;
-- Revenue from sales to OEMs increased to $6.7 million, reflecting a
48.9% year-over-year growth;
-- Export revenue increased to $9.4 million, reflecting a 34%
year-over-year growth;
-- Operating income increased to $2.6 million, reflecting a 44%
year-over-year growth;
-- Net income increased to $1.8 million, reflecting a 20% year-over-year
growth; and
-- Third quarter diluted earnings per share increased to $0.13, reflecting
a 18% year-over-year growth
Total revenue for the third quarter of 2006 was $21.3 million, a 30%
increase as compared to $16.4 million for the same period in 2005. Revenue
from sales to Original Equipment Manufacturers (OEM) for the third quarter of
2006 was $6.7 million, a 49% increase as compared to $4.5 million for the
third quarter of 2005. Aftermarket revenue from the Chinese domestic market
for the third quarter of 2006 was $5.2 million, an increase of 6% as compared
to $4.9 million for the third quarter of 2005. Revenue from exports from China
was $9.4 million for the third quarter of 2006, an increase of 34% as compared
to $7.0 million for the third quarter of 2005. The export market's
contribution to total revenue has slightly increased from 43% in the third
quarter of 2005 to 44% in the third quarter of 2006.
Gross profit for the third quarter of 2006 was $4.8 million, an increase
of 38% as compared to $3.5 million in the same period in 2005. Operating
income for the third quarter of 2006 was $2.6 million, an increase of 44% as
compared to $1.8 million in the same period in 2005. Net income for the third
quarter of 2006 was $1.8 million or $0.13 diluted earnings per share, an
increase of 20% and 18% respectively as compared to net income of $1.5 million
or $0.11 diluted earnings per share in the same period in 2005. The disparity
between operating income and net income was mainly due to the expiration of
the two-year tax holiday which increased our tax rate effective January 2006.
Beginning in 2006, there is a three-year period for tax reduction with the
reduced tax rate expected to be at 13.2%.
Total cash and cash equivalents as of Sept 30, 2006 totaled $1.19 million
as compared to $0.96 million as of December 31, 2005. Stockholder's equity
increased to $22.61 million as of the end of Sept 30, 2006 from $15.98 million
as of December 31, 2005.
Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are delighted
to see our growth momentum continue. We are highly encouraged by the recovery
of Chinese domestic commercial vehicle sector. In particular, the heavy duty
truck sales improved from same period last year. Many of our long term OEM
customers benefited from the continuous economic development throughout China
and growing export to other emerging markets."
About SORL Auto Parts, Inc.
As China's leading manufacturer and distributor of automotive air brake
valves, SORL Auto Parts, Inc. ranks first in market share in the segment for
commercial vehicles weighing more than three tons, such as trucks and buses.
The Company distributes products both within China and internationally under
the SORL trademark. SORL ranks among the top 100 auto component suppliers in
China, with a product range that includes 40 types of air brake valves and
over 800 different specifications. The Company has three authorized
international sales centers in Australia, United Arab Emirates, and the United
States, with additional offices slated to open in other locations in the near
future. For more information, please visit http://www.sorl.cn
Safe Harbor Statement
Statements made in this press release that are not historical fact are
"forward-looking statements," which are based on current expectations that
include a number of risks and uncertainties. Additional factors that could
potentially affect the Company's financial results may be found on the
Company's filings with the Securities and Exchange Commission
(http://www.sec.gov).
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Sales US$ 21,288,002 16,376,928 US$ 60,824,588 45,794,109
Cost of Sales 16,511,343 12,909,886 47,012,827 35,747,428
Gross Profit 4,776,659 3,467,042 13,811,761 10,046,681
Operating Expenses
Selling and Distribution
Expenses 1,163,077 849,854 3,407,535 2,732,863
General and
Administrative Expenses 1,028,862 822,925 2,212,113 2,027,085
Total Operating Expenses 2,191,939 1,672,779 5,619,648 4,759,948
Operating Income 2,584,720 1,794,263 8,192,113 5,286,733
Financial Expenses 259,587 145,168 767,034 331,254
Other Income 24,280 - 92,976 -
Non-Operating Expenses 75,841 12,642 232,566 88,615
Income Before Provision
for Income Taxes 2,273,572 1,636,453 7,285,489 4,866,864
Provision for Income
Taxes 311,208 - 898,713 -
Net Income Before
Minority Interest
& Other
Comprehensive
Income US$ 1,962,364 1,636,453 US$ 6,386,776 4,866,864
Minority Interest (196,236) (163,645) (638,677) (486,686)
Net Income Attributable
to Shareholders 1,766,128 1,472,808 5,748,099 4,380,178
Foreign Currency
Translation Adjustment 262,110 312,320 448,790 312,320
Minority Interest's
Share (26,211) (31,232) (44,879) (31,232)
Comprehensive Income 2,002,027 1,753,896 6,152,010 4,661,266
Weighted average common
share - Basic 13,346,555 13,297,055 13,346,555 13,290,388
Weighted average common
share - Diluted 13,368,387 13,297,055 13,360,639 13,290,388
EPS - Basic 0.13 0.11 0.43 0.33
EPS - Diluted 0.13 0.11 0.43 0.33
The accompanying notes are an integral part of these financial statements
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2006 and December 31, 2005
September 30, December 31,
2006 2005
(Unaudited) (Audited)
Assets
Current Assets
Cash and Cash Equivalents US$ 1,190,574 US$ 961,131
Accounts Receivable, Net of
Provision 28,219,063 25,339,774
Notes Receivable 3,521,942 1,488,104
Inventory 2,298,109 2,512,583
Prepayments 1,719,034 1,801,829
Other current assets 1,081,395 48,115
Total Current Assets 38,030,117 32,151,536
Fixed Assets
Property, Plant and Equipment 12,147,798 10,140,947
Less: Accumulated Depreciation (3,779,836) (3,024,281)
Property, Plant and Equipment, Net 8,367,962 7,116,666
Construction in progress -
Other Assets
Deferred compensation cost-stock options 218,879 -
Intangible Assets 45,200 44,297
Less: Accumulated Amortization (16,485) (11,873)
Intangible Assets, Net 28,715 32,424
Other Non-current Assets 56,185
Total Other Assets 303,779 32,424
Total Assets US$ 46,701,858 US$ 39,300,626
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable and Notes Payable US$ 8,438,819 US$ 3,746,666
Deposit Received from Customers 967,998 1,324,085
Short term bank loans 10,874,101 16,026,717
Accrued Expenses 841,410 482,982
Other Current Liabilities 545,832 -
Total Current Liabilities 21,668,160 21,580,450
Minority Interest 2,419,374 1,735,818
Shareholders' Equity
Common Stock - $0.002 Par Value;
50,000,000 authorized, 13,346,555
issued and outstanding as of
September 30, 2006 and December 31,
2005 26,693 26,693
Additional Paid In Capital 4,922,074 4,444,118
Accumulated other comprehensive
income 740,904 336,993
Retained Earnings 16,924,653 11,176,554
22,614,324 15,984,358
Total Liabilities and Shareholders'
Equity US$ 46,701,858 US$ 39,300,626
The accompanying notes are an integral part of these financial statements
