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
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.
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 |
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 $999,527 |
24,451,933 |
8,826,004 |
||
| Restricted cash |
46,602,834 |
376,236 |
||
| Advances to related parties |
138,038,517 |
72,318,224 |
||
| Other current assets, net |
7,637,869 |
5,555,568 |
||
| Total Current Assets |
671,767,494 |
456,024,185 |
||
| Property, plant and equipment, net |
83,500,305 |
79,828,006 |
||
| Land use rights, net |
15,360,639 |
14,912,134 |
||
| Intangible assets, net |
- |
3,341 |
||
| Deposits on loan agreements |
11,132,138 |
10,712,865 |
||
| Prepayments, non-current |
33,401,173 |
16,594,987 |
||
| Deferred tax assets |
3,487,908 |
4,240,424 |
||
| Total Non-current Assets |
146,882,163 |
126,291,757 |
||
| Total Assets |
US$ |
818,649,657 |
US$ |
582,315,942 |
| Liabilities and Equity |
||||
| Current Liabilities |
||||
| Accounts payable and bank acceptance notes to vendors, |
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 |
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 |
- |
- |
||
| Common stock - $0.002 par value; 50,000,000 |
||||
| March 31, 2018 and December 31, 2017 |
38,609 |
38,609 |
||
| Additional paid-in capital |
(28,582,654) |
(28,582,654) |
||
| Reserves |
18,389,707 |
17,562,357 |
||
| Accumulated other comprehensive income |
23,143,269 |
15,903,188 |
||
| Retained earnings |
175,690,481 |
168,244,329 |
||
| Total SORL Auto Parts, Inc. Stockholders' Equity |
188,679,412 |
173,165,829 |
||
| Noncontrolling Interest In Subsidiaries |
28,849,833 |
27,126,102 |
||
| Total Equity |
217,529,245 |
200,291,931 |
||
| Total Liabilities and Equity |
US$ |
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 |
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 |
1,723,731 |
860,423 |
||
| Comprehensive income attributable to |
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 |
||||
| 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
