SORL Auto Parts Reports 2006 First Quarter Results
ZHEJIANG, China, May 16, 2006 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc. , a leading manufacturer and distributor of commercial vehicle air brake valves in China, today announced its financial results for the first quarter of 2006.
First Quarter Financial Highlights
-- Revenue increased to US$ 19.4 million, reflecting 33.8% year-over-year
growth;
-- Net income increased to US$ 1.6 million, reflecting 6.8% year-over-year
growth; and
-- First quarter diluted earnings per share increased to US$ 0.12,
reflecting 6.3% year-over-year growth
Revenue for the first quarter of 2006 was US$ 19.4 million, a 33.8% increase as compared to US$ 14.5 million for the same period in 2005. Revenue from sales to Original Equipment Manufacturers (OEM) for the first quarter of 2006 was US$ 5.8 million, a 12.1% decrease as compared to US$ 6.6 million for the first quarter of 2005. Aftermarket revenue from domestic market for the first quarter of 2006 was US$ 7.5 million, an increase of 102.7% as compared to US$ 3.7 million for the first quarter of 2005. Revenue from exports was US$ 6.1 million for the first quarter of 2006, an increase of 45.2% as compared to US$ 4.2 million for the first quarter of 2005.
Gross profit for the first quarter of 2006 was US$ 4.4 million, an increase of 36.5% as compared to US$ 3.2 million in the same period in 2005. Operating income for the first quarter of 2006 was US$ 2.4 million, an increase of 41.2% as compared to US$ 1.7 million in the same period in 2005. Net income for the first quarter of 2006 was US$ 1.6 million or US$0.12 diluted earnings per share, an increase of 6.3% as compared to net income of US$ 1.5 million or US$ 0.11 diluted earnings per share in the same period in 2005.
Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, ''We are delighted to report our first quarter revenue and net income growth. Due to the Chinese Government's macroeconomic regulation policy, which negatively impacted the production of heavy duty trucks, the domestic OEM market remained sluggish. After a historical low in the OEM revenue in the fourth quarter of 2005, we improved our sales to the OEM customers in China in the first quarter of 2006. On the other side, with our high quality products, we continue to successfully penetrate both domestic aftermarket and export market by strengthening relations with domestic and international distributors.''
Ms Zongyun Zhou, Chief Financial Officer, said, ''Despite the rising price of raw materials, we had a slight improvement in our gross margin (from 22.2% in the first quarter of 2005 to 22.6% in the first quarter of 2006) which is due to economies of scale, shift of our sales mix and consistent efforts to optimize our production techniques. In the first quarter of 2006, we shifted the product mix and introduced more innovative valve products, which provided a higher profit margin. While accomplishing a strong top line growth, we increased the allowance for doubtful account receivables. Our SG&A expenses related to this allowance were higher in the first quarter of 2006 than in the same period in 2005. We believe that our strong relations with large state- owned OEM customers will eventually enable us to complete the collection. Due to the increase in outstanding debt to finance our working capital and new equipment purchases, the financial expense for the first quarter of 2006 increased as compared to the same period of 2005. We continue to invest in R&D and expand production to meet the growing demand for our products from both domestic and international markets.''
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 three authorized international sales centers in Australia, United Arab Emirates, and the United States, 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 Statements of Income
For Years Ended March 31, 2006 and 2005
2006 Q1 2005 Q1
Sales US$ 19,419,584 14,515,866
Cost of Sales 15,023,826 11,296,173
Gross Profit 4,395,758 3,219,692
Expenses:
Selling and Distribution Expenses 868,016 927,089
General and Administrative Expenses 1,096,962 554,254
Total Expenses 1,964,978 1,481,343
Operating Income 2,430,780 1,738,349
Financial Expenses 265,547 60,452
Other Expenses 89,675 9,153
Income (Loss) Before Provision for Income
Taxes 2,075,558 1,668,745
Provision for Income Taxes 293,608 --
Net Income Before Minority Interest &
Other Comprehensive Income US$ 1,781,950 1,668,745
Minority Interest 178,195 166,875
Net Income Attributable to Shareholders 1,603,755 1,501,870
Foreign Currency Translation Adjustment 126,705 --
Minority Interest's Share 12,671 --
Comprehensive Income (Loss) 1,717,789 1,501,870
Weighted average common share - Basic 13,346,555 13,285,867
Weighted average common share - Diluted 13,347,138 13,285,867
EPS - Basic 0.12 0.11
EPS - Diluted 0.12 0.11
Consolidated Balance Sheets
Mar 31, 2006 and December 31, 2005
Assets March 31, December 31,
2006 2005
(Unaudited) (Audited)
Current Assets
Cash and cash equivalents US$ 1,153,781 961,131
Account receivables, net of provision 28,673,136 25,339,774
Notes receivables 2,156,920 1,488,104
Inventory 1,134,773 2,512,583
Prepayments 1,321,678 1,801,829
Other current assets 510,474 48,115
Total Current Assets 34,950,762 32,151,536
Fixed Assets
Property, plant and equipment 10,423,487 10,140,947
Construction In progress 88,276 --
Less: Accumulated depreciation (3,287,358) (3,024,281)
Fixed Assets, Net 7,224,405 7,116,666
Other Assets
Deferred compensation cost-stock options 173,934 --
Intangible assets 44,590 44,297
Less: Accumulated amortization (13,790) (11,873)
Intangible Assets, Net 30,800 32,424
Total Other Assets 204,734 32,424
Total Assets US$ 42,379,901 39,300,626
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and Notes Payable US$ 5,349,133 3,485,987
Deposit received from customers 1,081,277 1,324,085
Short term bank loans 14,511,114 16,026,717
Accrued expenses 641,023 482,982
Other current liabilities 989,617 260,679
Total Current Liabilities 22,572,165 21,580,450
Long-Term Liabilities
Long term bank loans -- --
Other long term liabilities -- --
Total Liabilities 22,572,165 21,580,450
Minority Interest 1,926,684 1,735,818
Shareholders' Equity
Common stock, $0.002 par value,
50,000,000 authorized, 26,693 26,693
13,346,555 issued and outstanding at
03/31/2006 and
12/31/2005
Paid in capital 4,623,022 4,444,118
Accumulated other comprehensive (loss) 451,028 336,993
Retained earnings 12,780,309 11,176,554
17,881,052 15,984,358
Total Liabilities and Shareholders' US$
Equity 42,379,901 39,300,626
For more information, please contact:
David Ming He
SORL Auto Parts, Inc.
Tel: +86-577-6581-7720
Email: davidhe@sorl.com.cn
Christopher Chu
The Global Consulting Group
Tel: +1-646-284-9426
Email: cchu@hfgcg.com