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SORL Auto Parts Reports a 37.4% Increase in Sales and a Significant Increase in EPS for the First Quarter of 2017

2017-05-15 18:00
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ZHEJIANG, China, May 15, 2017 /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, 2017.

 First Quarter 2017 Financial Highlights

  • Net sales for the 2017 first quarter increased by 37.4% to $73.9 million from $53.8 million in the first quarter of 2016; 
  • Gross profit increased by 42.4% with the gross margin rising to 27.8% from 26.8% in the first quarter of 2016; 
  • Net Income attributable to stockholders was $6.9 million, or $0.36 per diluted share, compared with $0.4 million, or $0.02 per diluted share in the first quarter of

Mr. Xiaoping Zhang, SORL's Chief Executive Officer and Chairman, stated, "We are pleased to announce another quarter of robust performance as we posted growth in all lines of our business and achieved margin expansions from top to bottom. Since the Chinese government introduced rigorous regulations on overloading in the truck market to reduce emissions and improve safety, we have been gaining market share with our advanced new products and superior performance. On the cost side, we continued to exceed our goals due to significantly improved economy of scale, strengthened receivables collections and better-than-expected cost control results."

First Quarter 2017 Financial Results

For the first quarter of 2017, net sales increased by 37.4% to $73.9 million from $53.8 million in the 2016 first quarter. Revenues from the Company's domestic OEM customers were $41.8 million, an increase of 48.8% from $28.1 million in the first quarter of 2016. The higher OEM sales were mainly due to higher truck sales in the first quarter of 2017. During the first quarter, the total commercial vehicle sales in China grew by 22.9%, while total truck sales were up by 30.9% led by a significant increase of 93.0% year-over-year in the heavy-duty segment.

SORL's aftermarket sales in China grew by 37.1% to $18.1 million for the first quarter of 2017, compared with $13.2 million for the same period of 2016. New vehicle sales in China and the expiration of their OEM warranties assisted our aftermarket business growth. Revenues from SORL's international markets sales increased 12.0% to $14.0 million, compared to $12.5 million in the first quarter of 2016 due to an organic expansion of the customer base across several overseas markets.

The gross profit for the first quarter of 2017 increased by 42.4% to $20.5 million from $14.4 million a year ago. Gross margin was 27.8% compared with 26.8% in the first quarter of 2016.

In the first quarter of 2017, operating expenses decreased 17.8% to $11.7 million from $14.2 million in the same quarter of 2016. The decrease reflected a decline of 41.6% in general and administrative expenses. As a percentage of revenue, operating expenses were 15.8% in the first quarter of 2017, compared with 26.4% in the first quarter of 2016.

  • Selling and distribution expenses remained the same at $5.6 million, yet decreased to 7.6% of quarterly revenues from 10.3% a year ago.
  • General and administrative ("G&A") expenses in the first quarter of 2017 were $4.0 million, or 5.5% of quarterly revenues compared with $6.9 million, or 12.9% of total revenues in the first quarter of 2016.  The decrease in G&A expenses was mainly due to a decrease in allowance for doubtful accounts during this quarter.
  • Research and development ("R&D") expenses were $2.1 million in the first quarter of 2017 compared with $1.7 million in the first quarter of 2016. As a percentage of revenue, R&D expenses were 2.8% in the first quarter of 2017 compared with 3.2% of revenue in the first quarter of 2016.

Income from operations increased by 761.7% to $9.6 million in the first quarter of 2017 compared with $1.1 million in the first quarter of 2016. As a percentage of revenue, income of operations was 13.0% in the first quarter of 2017, compared with 2.1% in the first quarter of 2016.

Financial expenses were $0.5 million in the first quarter of 2017 compared with $0.2 million in the first quarter of 2016.

Income before income taxes was $9.0 million for the first quarter of 2017, compared to $0.4 million for the same quarter of 2016. The increase in income before income taxes reflected higher sales and operating income with lower operating expenses during the first quarter of 2017 compared to the first quarter of 2016.

The provision for income taxes was $1.3 million in the first quarter of 2017, compared with a gain of $0.3 million in the first quarter of 2016.

Net income attributable to stockholders for the first quarter of 2017 was $6.9 million, or $0.36 per basic and diluted share, compared with $0.4 million, or $0.02 per basic and diluted share a year ago.

Balance Sheet

As of March 31, 2017, the Company had cash and cash equivalents of $11.5 million compared to $8.1 million on December 31, 2016. Total equity increased to $171.0 million at March 31, 2017 compared with $162.4 million at December 31, 2016. On March 31, 2017, working capital was $107.8 million with a current ratio of 1.7 to 1.

Business Outlook

For the fiscal year 2017, management has increased annual guidance of net sales to be approximately $315 million and net income to be approximately $27.5 million. These targets are based on the Company's current views on the operating and market conditions, which are subject to change.

"We continue to roll out new advanced braking products which immediately gain traction in the market due to their enhanced performance, added features and improved reliability. We have implemented stricter cost controls, purchased more advanced machinery and moved into new facilities to improve our efficiency and increase our profitability," Ms. Jinrui Yu, SORL's Chief Operating Officer, stated.

Conference Call

Management will host a conference call on Monday, May 15, 2017, at 8:00 A.M. EDT/ 8:00 P.M. Beijing Time to discuss its 2017 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 +864-001-202-840. 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 15, 2017, or 11:59 A.M. Beijing Time on June 16, 2017. 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 "10392" 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
646-726-6511
kevin.theiss@awakenlab.com

 

-- Tables Follow --

 

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Balance Sheets

March 31, 2017 and December 31, 2016




March 31, 2017




December 31, 2016




(Unaudited)






Assets










Current Assets










Cash and cash equivalents


US$

11,455,214




US$

8,057,155


Accounts receivable, net, including $0 and $5,025,509 from related parties at March 31,
2017 and December 31, 2016, respectively



104,844,561





102,129,294


Bank acceptance notes from customers



45,638,224





42,697,276


Inventories



71,745,365





65,776,517


Prepayments



20,159,736





10,797,601


Restricted cash



5,596,257





5,476,621


Other current assets



1,774,940





1,124,608


Deferred tax assets



3,219,643





3,210,575


Total Current Assets



264,433,940





239,269,647












Property, plant and equipment, net



54,885,852





53,737,706


Land use rights, net



8,284,055





8,309,333


Intangible assets, net



9,324





11,438


Total Non-Current Assets



63,179,231





62,058,477


Total Assets


US$

327,613,171




US$

301,328,124












Liabilities and Equity










Current Liabilities










Accounts payable and bank acceptance notes to vendors, including $6,234,911 and
$1,953,707 due to related parties at March 31, 2017 and December 31, 2016,
respectively


US$

60,477,514




US$

65,672,626


Deposit received from customers



25,900,566





22,733,742


Short term bank loans



48,871,970





27,416,376


Income tax payable



1,268,213





996,522


Accrued expenses



17,688,422





20,103,392


Other current liabilities



2,410,732





2,013,943


Total Current Liabilities



156,617,417





138,936,601












Total Liabilities



156,617,417





138,936,601












Equity










Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of
March 31, 2017 and December 31, 2016



-





-


Common stock - $0.002 par value; 50,000,000 authorized,










19,304,921 issued and outstanding as of










March 31, 2017 and December 31, 2016



38,609





38,609


Additional paid-in capital



(28,582,654)





(28,582,654)


Reserves



15,822,287





15,129,935


Accumulated other comprehensive income



6,937,331





6,117,042


Retained earnings



152,583,697





146,352,530


Total SORL Auto Parts, Inc. Stockholders' Equity



146,799,270





139,055,462


Noncontrolling Interest In Subsidiaries



24,196,484





23,336,061


Total Equity



170,995,754





162,391,523


Total Liabilities and Equity


US$

327,613,171




US$

301,328,124


 

 

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Income and Comprehensive Income

For The Three Months Ended March 31, 2017 and 2016 (Unaudited)









Three Months Ended March 31,





2017




2016











Sales



US$

73,895,781




US$

53,836,728


Include: sales to related parties




3,026,924





2,580,846


Cost of sales




53,348,076





39,397,649


Gross profit




20,547,705





14,439,079













Expenses:











Selling and distribution expenses




5,608,623





5,562,432


General and administrative expenses




4,044,913





6,929,858


Research and development expenses




2,055,096





1,743,687


Total operating expenses




11,708,632





14,235,977













Other operating income, net




788,468





914,205













Income from operations




9,627,541





1,117,307













Interest income




10,550





88,102


Government grants




28,909





4,757


Other income




664





45,589


Interest expenses




(481,160)





(174,460)


Other expenses




(207,531)





(637,629)













Income before income taxes provision (benefit)




8,978,973





443,666













Income taxes provision (benefit)




1,286,174





(34,824)













Net income



US$

7,692,799




US$

478,490













Net income attributable to noncontrolling interest in subsidiaries




769,280





47,849













Net income attributable to common stockholders



US$

6,923,519




US$

430,641













Comprehensive income:






















Net income



US$

7,692,799




US$

478,490


Foreign currency translation adjustments




911,432





1,106,640


Comprehensive income




8,604,231





1,585,130


Comprehensive income attributable to noncontrolling interest in subsidiaries




860,423





158,513


Comprehensive income attributable to common shareholders



US$

7,743,808




US$

1,426,617













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$

0.36




US$

0.02













EPS - diluted



US$

0.36




US$

0.02


 

 

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For The Three Months Ended March 31, 2017 and 2016 (Unaudited)









Three Months Ended March 31,





2017




2016











Cash Flows From Operating Activities











Net Income



US$

7,692,799




US$

478,490


Adjustments to reconcile net income to net cash











used in operating activities:






















Allowance for doubtful accounts




-





3,676,683


Depreciation and amortization




2,017,224





1,733,874


Deferred income tax




8,453





(596,802)













Changes in assets and liabilities:











Accounts receivable




(2,151,307)





(3,192,855)


Bank acceptance notes from customers




(2,700,239)





(5,236,626)


Other currents assets




(638,653)





(216,932)


Inventories




(5,594,100)





6,020,763


Prepayments




1,142,387





(4,828,231)


Prepaid capital lease interest  




-





40,714


Accounts payable and bank acceptance notes to vendors




(4,434,657)





2,389,292


Income tax payable




265,518





-


Deposits received from customers




3,033,848





1,221,498


Other current liabilities and accrued expenses




(2,133,534)





(1,900,667)


Net Cash Flows Used In Operating Activities




(3,492,261)





(410,799)













Cash Flows From Investing Activities











Change in short term investments




-





2,854,289


Acquisition of property and equipment




(14,320,981)





(1,247,024)


Advance to related party




-





(18,695,590)


Change in restricted cash




(89,465)





(284,338)


Net Cash Flows Used In Investing Activities




(14,410,446)





(17,372,663)













Cash Flows From Financing Activities











Proceeds from bank loans




21,247,576





13,795,728


Repayment of bank loans  




-





(20,050,944)


Repayment of capital lease




-





(906,123)


Net Cash Flows Provided By (Used In) Financing Activities




21,247,576





(7,161,339)













Effects on changes in foreign exchange rate




53,190





817,739













Net change in cash and cash equivalents




3,398,059





(24,127,062)













Cash and cash equivalents - beginning of the period




8,057,155





30,230,828













Cash and cash equivalents - end of the period



US$

11,455,214




US$

6,103,766
























Supplemental Cash Flow Disclosures:











Interest paid



US$

250,601




US$

275,913


Income taxes paid



US$

1,012,203




US$

677,301


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sorl-auto-parts-reports-a-374-increase-in-sales-and-a-significant-increase-in-eps-for-the-first-quarter-of-2017-300457350.html

Source: SORL Auto Parts, Inc.

Related stocks: NASDAQ-NMS:SORL

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