omniture

SORL Auto Parts Reports 2007 First Quarter Results

2007-05-16 09:01 800

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

Source: SORL Auto Parts, Inc.
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Keywords: Auto