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.