ZHEJIANG, China, Aug. 14, 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, today announced its unaudited financial
results for the second quarter of 2017 and the first six months
ended June 30, 2017.
Second Quarter 2017 Financial Highlights
- Net sales increased 22.7% to $90.2
million compared with $73.5
million in the second quarter last year;
- Gross margin was 26.3% in the second quarter of 2017 compared
to 28.0% in the same period of 2016;
- Income from operations increased 14.6% to $8.8 million from $7.7
million in the same quarter last year.
First Six Months of 2017 Financial Highlights
- Net sales increased 28.8% to $164.1
million compared with $127.4
million in same period of last year;
- Operating income increased 109.7% to $18.4 million from $8.8
million in the same period in 2016;
- Net income attributable to stockholders increased 66.2% to
$12.8 million, or $0.67 per basic and diluted share, compared with
$7.7 million, or $0.40 in the same period of 2016.
Mr. Xiaoping Zhang, SORL's Chief
Executive Officer and Chairman, stated," We achieved solid growth
in all three business lines led by a 28.8% increase in the segment
of our China domestic OEM market.
We continued to gain market share as our growth outperformed the
overall commercial OEM vehicle market."
Second Quarter 2017 Financial Performance
For the second quarter of 2017, net sales increased by 22.7% to
$90.2 million from $73.5 million for the second quarter of 2016.
Revenues from the Company's domestic OEM customers increased by
28.9% to $47.3 million from
$36.7 million in the second quarter
of 2016. Commercial vehicle production and sales increased in the
second quarter of 2017 and SORL continued to increase its leading
market position. Sales from China's domestic aftermarket increased 20.1%
to $22.7 million in the second
quarter of 2017 from $18.9 million in
the same quarter of 2016. Higher product sales due to the
expiration of OEM warranties from prior new vehicle sales drove the
Company's aftermarket business in China. Also, the Chinese government's
increased support for public transportation due to greater
urbanization expanded SORL's bus aftermarket sales. Revenues from
international markets increased 12.8% to $20.2 million from $17.9
million in the second quarter of 2016 primarily due to a
larger customer base.
The gross profit for the second quarter of 2017 increased 15.5%
to $23.7 million from $20.6 million for the second quarter of 2016.
Gross margin for the second quarter of 2017 was 26.3%, compared
with a gross margin of 28.0% in the same quarter of 2016. The
decrease in gross margin was primarily due to increased sales
promotions during the period and higher raw material costs.
Operating expenses increased 12.2% to $16.2 million from $14.4
million in the second quarter of 2016. Operating expenses
rose due to higher research and development and selling and
distribution expenses with flat general and administrative expenses
in the second quarter of 2017. As a percentage of revenue,
operating expenses were 18.9% in the second quarter of 2017,
compared with 19.6% in the second quarter of 2016.
- Selling and distribution expenses were $9.0 million, or 10.0% of quarterly revenues,
compared with $7.1 million, or 9.7%
in the same quarter of 2016. The increase in expenses was mainly
due to higher packaging and transportation costs as unit sales
rose.
- General and administrative ("G&A") expenses in the second
quarter of 2017 were $4.7 million, or
5.2% of revenue, compared with $4.9
million, or 6.7% in the second quarter of 2016.
- Research and development ("R&D") expenses were $2.5 million in the second quarter of 2017
compared with $2.4 million in the
same quarter of 2016. As a percentage of revenue, R&D was 2.8%
in the second quarter of 2017 and compared with 3.2% of revenue in
the second quarter of 2016. The R&D program mainly focused on
the development of new, higher-margin, electronically controlled
mechatronic products and to upgrade the Company's legacy brake
products to build market leadership.
Income from operations increased 14.6% to $8.8 million in the second quarter of 2017
compared with $7.7 million in the
same quarter of 2016.
Other income was only $50 in the
second quarter of 2017 compared to $0.85
million in the same quarter of 2016.
Financial expenses were $0.5
million in the second quarter of 2017 compared with
$0.1 million in the second quarter of
2016. The increase was due to a rise in interest rates and a higher
amount of average loans outstanding.
Income before income taxes was $7.9
million for the second quarter of 2017 compared to
$9.3 million for the second quarter
of 2016. The pretax income margin was 8.8% in the second quarter of
2017, compared with 12.7% in the second quarter of 2016.
The provision for income taxes was $1.3
million in both the second quarters of 2017 and 2016.
Net income attributable to stockholders for the second quarter
of 2017 decreased to $5.9 million, or
$0.31 per basic and diluted share,
compared with $7.2 million, or
$0.37 on per basic and diluted share,
in the second quarter of 2016.
First Six Months 2017 Financial Performance
Net sales for the first six months of 2017 increased 28.8% to
$164.1 million from $127.4 million for the first six months of 2016.
Net sales from the Company's China OEM market increased 37.3% to
$89.1 million from $64.8 million in the same period in 2016.
Revenues from China's domestic
aftermarket increased 27.1% to $40.8
million from $32.1 million in
the first six months of 2016. Revenues from international markets
increased 12.5% to $34.2 million from
$30.4 million in the first six months
of 2016.
Gross profit for the first six months of 2017 increased 26.3% to
$44.3 million from $35.0 million in the same period in 2016. Gross
margin for the six months ended June 30,
2017, was 27.0% compared to 27.5% for the first six months
of 2016.
Operating income for the first six months of 2017 increased
109.7% to $18.4 million from
$8.8 million in the same period in
2016. Operating margin was 11.2% versus 6.9% in first six months of
2016.
Net income attributable to stockholders for the first six months
of 2017 was $12.8 million, or
$0.67 per basic and diluted share,
compared with $7.7 million, or
$0.40 per basic and diluted share, in
the same period in 2016.
Balance Sheet
As of June 30, 2017, the Company
had cash and cash equivalents of $7.9
million. Inventories increased to $84.0 million at June 30,
2017 from $65.8 million at
December 31, 2016. Bank acceptance
notes from customers increased to $55.1
million on June 30, 2017 from
$42.7 million, and accounts
receivables were $121.2
million compared with $102.1
million on December 31, 2016.
Total equity was $180.8 million at
June 30, 2017. On June 30, 2017, working capital was $91.0 million with a current ratio of 1.5 to
1.
Business Outlook
For the fiscal year 2017, management has reiterated its
expectation for annual 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.
Conference Call
Management will host a conference call on Monday, August
14, 2017 at 8:00 A.M. EDT/ 8:00 P.M. Beijing
Time to discuss its 2017 second quarter and six months 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 on September 14,
2017, or 8:00 P.M. Beijing Time on September 15, 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 "19821" 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
SORL Auto Parts,
Inc. and Subsidiaries
|
Consolidated
Balance Sheets
|
June 30, 2017 and
December 31, 2016
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
US$
|
7,892,336
|
US$
|
8,057,155
|
Accounts receivable,
net, including $0 and
$5,025,509 from related parties at June 30, 2017
and December 31, 2016, respectively
|
|
121,195,863
|
|
102,129,294
|
Bank acceptance notes
receivable
|
|
55,051,719
|
|
42,697,276
|
Inventories
|
|
84,010,792
|
|
65,776,517
|
Prepayments,
current
|
|
5,505,494
|
|
10,797,601
|
Restricted
cash
|
|
362,390
|
|
5,476,621
|
Other current
assets
|
|
4,402,609
|
|
1,124,608
|
Deferred tax
assets
|
|
3,282,926
|
|
3,210,575
|
Total Current
Assets
|
|
281,704,129
|
|
239,269,647
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
64,897,237
|
|
53,737,706
|
Land use rights,
net
|
|
8,364,804
|
|
8,309,333
|
Intangible assets,
net
|
|
7,279
|
|
11,438
|
Prepayments,
non-current
|
|
16,530,890
|
|
-
|
Total Non-current
Assets
|
|
89,800,210
|
|
62,058,477
|
Total
Assets
|
US$
|
371,504,339
|
US$
|
301,328,124
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts payable and
bank acceptance notes to
vendors, including $4,063,994 and $1,953,707
due to related parties at June 30, 2017 and
December 31, 2016, respectively
|
US$
|
66,616,160
|
US$
|
65,672,626
|
Deposit received from
customers
|
|
31,797,486
|
|
22,733,742
|
Short term bank
loans
|
|
47,005,701
|
|
27,416,376
|
Income tax
payable
|
|
1,466,131
|
|
996,522
|
Accrued
expenses
|
|
17,999,096
|
|
20,103,392
|
Due to related
party
|
|
23,299,371
|
|
-
|
Other current
liabilities
|
|
2,517,997
|
|
2,013,943
|
Total Current
Liabilities
|
|
190,701,942
|
|
138,936,601
|
|
|
|
|
|
Total
Liabilities
|
|
190,701,942
|
|
138,936,601
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred stock - no
par value; 1,000,000
authorized; none issued and outstanding as of
June 30, 2017 and December 31, 2016
|
|
-
|
|
-
|
Common stock - $0.002
par value; 50,000,000
authorized, 19,304,921 issued and outstanding as
of June 30, 2017 and December 31, 2016
|
|
38,609
|
|
38,609
|
Additional paid-in
capital
|
|
(28,582,654)
|
|
(28,582,654)
|
Reserves
|
|
16,414,768
|
|
15,129,935
|
Accumulated other
comprehensive income
|
|
9,838,499
|
|
6,117,042
|
Retained
earnings
|
|
157,916,027
|
|
146,352,530
|
Total SORL Auto
Parts, Inc. Stockholders' Equity
|
|
155,625,249
|
|
139,055,462
|
Noncontrolling
Interest In Subsidiaries
|
|
25,177,148
|
|
23,336,061
|
Total
Equity
|
|
180,802,397
|
|
162,391,523
|
Total Liabilities
and Equity
|
US$
|
371,504,339
|
US$
|
301,328,124
|
SORL Auto Parts,
Inc. and Subsidiaries
|
Consolidated
Statements of Income and Comprehensive Income
|
For The Three and
Six Months Ended June 30, 2017 and 2016 (Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Sales
|
US$
|
90,214,630
|
US$
|
73,535,732
|
US$
|
164,110,411
|
US$
|
127,372,460
|
Include: sales to
related parties
|
|
900,859
|
|
3,968,105
|
|
3,927,783
|
|
6,548,951
|
|
Cost of
sales
|
|
66,507,343
|
|
52,941,316
|
|
119,855,419
|
|
92,338,965
|
Gross
profit
|
|
23,707,287
|
|
20,594,416
|
|
44,254,992
|
|
35,033,495
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Selling and
distribution expenses
|
|
8,985,562
|
|
7,125,085
|
|
14,594,185
|
|
12,687,517
|
General and
administrative expenses
|
|
4,710,522
|
|
4,909,129
|
|
8,755,435
|
|
11,838,987
|
Research and
development expenses
|
|
2,481,563
|
|
2,379,962
|
|
4,536,659
|
|
4,123,649
|
Total operating
expenses
|
|
16,177,647
|
|
14,414,176
|
|
27,886,279
|
|
28,650,153
|
|
|
|
|
|
|
|
|
|
Other operating
income, net
|
|
1,253,856
|
|
1,484,939
|
|
2,042,324
|
|
2,399,144
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
8,783,496
|
|
7,665,179
|
|
18,411,037
|
|
8,782,486
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
11,475
|
|
925,586
|
|
22,025
|
|
1,013,688
|
Government
grants
|
|
84,395
|
|
140,255
|
|
113,304
|
|
145,012
|
Other
income
|
|
50
|
|
845,165
|
|
714
|
|
890,754
|
Interest
expenses
|
|
(542,176)
|
|
(126,113)
|
|
(1,023,336)
|
|
(300,573)
|
Other
expenses
|
|
(442,608)
|
|
(129,663)
|
|
(650,139)
|
|
(767,292)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes provision
|
|
7,894,632
|
|
9,320,409
|
|
16,873,605
|
|
9,764,075
|
|
|
|
|
|
|
|
|
|
Income taxes
provision
|
|
1,311,509
|
|
1,277,277
|
|
2,597,683
|
|
1,242,453
|
|
|
|
|
|
|
|
|
|
Net income
|
US$
|
6,583,123
|
US$
|
8,043,132
|
US$
|
14,275,922
|
US$
|
8,521,622
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interest in subsidiaries
|
|
658,312
|
|
804,313
|
|
1,427,592
|
|
852,162
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common
stockholders
|
US$
|
5,924,811
|
US$
|
7,238,819
|
US$
|
12,848,330
|
US$
|
7,669,460
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
US$
|
6,583,123
|
US$
|
8,043,132
|
US$
|
14,275,922
|
US$
|
8,521,622
|
Foreign currency
translation adjustments
|
|
3,223,520
|
|
(4,596,167)
|
|
4,134,952
|
|
(3,489,527)
|
Comprehensive
income
|
|
9,806,643
|
|
3,446,965
|
|
18,410,874
|
|
5,032,095
|
Comprehensive income
attributable to
noncontrolling interest in subsidiaries
|
|
980,664
|
|
344,696
|
|
1,841,087
|
|
503,209
|
Comprehensive income
attributable to
common stockholders
|
US$
|
8,825,979
|
US$
|
3,102,269
|
US$
|
16,569,787
|
US$
|
4,528,886
|
|
|
|
|
|
|
|
|
|
Weighted average
common share - basic
|
|
19,304,921
|
|
19,304,921
|
|
19,304,921
|
|
19,304,921
|
|
|
|
|
|
|
|
|
|
Weighted average
common share - diluted
|
|
19,304,921
|
|
19,304,921
|
|
19,304,921
|
|
19,304,921
|
|
|
|
|
|
|
|
|
|
EPS -
basic
|
US$
|
0.31
|
US$
|
0.37
|
US$
|
0.67
|
US$
|
0.40
|
|
|
|
|
|
|
|
|
|
EPS -
diluted
|
US$
|
0.31
|
US$
|
0.37
|
US$
|
0.67
|
US$
|
0.40
|
SORL Auto Parts,
Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
For The Six Months
Ended June 30, 2017 and 2016 (Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
|
Net income
|
US$
|
14,275,922
|
US$
|
8,521,622
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
used in operating
activities:
|
|
|
|
|
Allowance for
doubtful accounts
|
|
381,715
|
|
5,399,425
|
Depreciation and
amortization
|
|
4,187,811
|
|
3,436,677
|
Deferred income
tax
|
|
4,566
|
|
(950,451)
|
|
|
|
|
|
Changes in assets
and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(16,819,493)
|
|
(19,302,545)
|
Bank acceptance notes
receivable
|
|
3,181,918
|
|
(14,353,761)
|
Other currents
assets
|
|
(3,197,226)
|
|
566,936
|
Inventories
|
|
(16,436,720)
|
|
14,139,460
|
Prepayments,
current
|
|
4,815,945
|
|
(7,284,955)
|
Prepaid capital lease
interest
|
|
-
|
|
69,239
|
|
|
|
|
|
Accounts payable and
bank acceptance notes to vendors
|
|
(395,358)
|
|
1,817,414
|
Income tax
payable
|
|
438,458
|
|
1,466,704
|
Deposits received
from customers
|
|
8,402,222
|
|
3,782,517
|
Other current
liabilities and accrued expenses
|
|
(2,087,738)
|
|
535,090
|
Net Cash Flows
Used In Operating Activities
|
|
(3,247,978)
|
|
(2,156,628)
|
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
|
Change in short term
investments
|
|
-
|
|
57,261,374
|
Acquisition of
property, plant, and equipment and land use right
|
|
(29,561,593)
|
|
(7,315,047)
|
Advance to related
party
|
|
-
|
|
(18,247,384)
|
Repayment of advance
to related party
|
|
-
|
|
18,247,384
|
Change in restricted
cash
|
|
5,198,792
|
|
377,608
|
Net Cash Flows
Provided By (Used In) Investing Activities
|
|
(24,362,801)
|
|
50,323,935
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
Proceeds from bank
loans
|
|
41,540,998
|
|
31,796,224
|
Repayment of bank
loans
|
|
(23,035,449)
|
|
(29,597,070)
|
Distribution to
controlling shareholder in connection with plant and
land use rights exchange with entity under common
control
|
|
-
|
|
(70,781,668)
|
Repayment of capital
lease
|
|
-
|
|
(1,779,040)
|
Proceeds from related
party
|
|
62,786,671
|
|
-
|
Repayment to related
party
|
|
(54,076,148)
|
|
-
|
|
|
|
|
|
Net Cash Flows
Provided By (Used In) Financing Activities
|
|
27,216,072
|
|
(70,361,554)
|
|
|
|
|
|
Effects on changes in
foreign exchange rate
|
|
229,888
|
|
271,744
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(164,819)
|
|
(21,922,503)
|
|
|
|
|
|
Cash and cash
equivalents - beginning of the period
|
|
8,057,155
|
|
30,230,828
|
|
|
|
|
|
Cash and cash
equivalents - end of the period
|
US$
|
7,892,336
|
US$
|
8,308,325
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Disclosures:
|
|
|
|
|
Interest
paid
|
US$
|
785,502
|
US$
|
450,677
|
Income taxes
paid
|
US$
|
2,154,659
|
US$
|
1,288,659
|
|
|
|
|
|
Non-cash Investing
and Financing Transactions:
|
|
|
|
|
Transfer of plant and
land use right to entity under common control
|
US$
|
-
|
US$
|
17,342,372
|
Liabilities assumed
in connection with the plant and land use right
exchange
|
US$
|
-
|
US$
|
5,351,196
|
Loan from related
party in form of bank acceptance notes
|
US$
|
14,375,855
|
US$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/sorl-auto-parts-reports-146-increase-in-income-from-operations-in-the-2017-second-quarter-300503613.html
SOURCE SORL Auto Parts, Inc.