SORL Auto Parts Reports 2006 Second Quarter Results
- Demonstrated strong growth across all divisions,
export hit historical high -
ZHEJIANG, China, Aug. 11 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc. , a leading manufacturer and distributor of commercial vehicle air brake valves as well as other auto parts in China, today announced its financial results for the second quarter of 2006.
Second Quarter Financial Highlights
* Revenue increased to $20.1 million, reflecting a 35% year-over-year
growth;
* Export revenue increased to $8.9 million, reflecting a 75%
year-over-year growth;
* Operating income increased to $3.2 million, reflecting a 81%
year-over-year growth;
* Net income increased to $2.4 million, reflecting a 71% year-over-year
growth; and
* Second quarter diluted earnings per share increased to $0.18,
reflecting a 64% year-over-year growth
Total revenue for the second quarter of 2006 was $20.1 million, a 35% increase as compared to $14.9 million for the same period in 2005. Revenue from sales to Original Equipment Manufacturers (OEM) for the second quarter of 2006 was $6.0 million, an 18% increase as compared to $5.1 million for the second quarter of 2005. Aftermarket revenue from the Chinese domestic market for the second quarter of 2006 was $5.2 million, an increase of 11% as compared to $4.7 million for the second quarter of 2005. Revenue from exports from China was $8.9 million for the second quarter of 2006, an increase of 75% as compared to $5.1 million for the second quarter of 2005. The significant increase in export sales was a result of the company's participation in and growing focus on the higher margin business. The export market's contribution to total revenue has increased from 34% in the second quarter of 2005 to 44% in the second quarter of 2006.
Gross profit for the second quarter of 2006 was $4.6 million, an increase of 38% as compared to $3.4 million in the same period in 2005. Operating income for the second quarter of 2006 was $3.2 million, an increase of 81% as compared to $1.8 million in the same period in 2005. Net income for the second quarter of 2006 was $2.4 million or $0.18 diluted earnings per share, an increase of 69% and 64% respectively as compared to net income of $1.4 million or $0.11 diluted earnings per share in the same period in 2005.
Total cash and cash equivalents as of June 30, 2006 totaled $2.2 million as compared to $0.96 million as of December 31, 2005. Stockholder's equity increased to $20.6 million as of the end of June 30, 2006 from $16.0 million as of December 31, 2005.
Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are highly encouraged by our second quarter financial results. The solid export growth led our total revenue increase. Export sales accounted for 44% of the total revenue in the second quarter. We utilized our well-established international sales channels to broaden product offerings to our international customers. As the trend of global purchasing, especially in the auto parts area, continues, we believe that we are well positioned to benefit from the fast growing export market. Domestically, after a difficult period for heavy duty truck sales due to the macroeconomic regulation by the Chinese government, we are delighted to see that the market condition has been recovering during this quarter. We continue to execute our strategy in maintaining good relationships with large Chinese OEMs by introducing more innovative products to help them improve quality at a lower cost."
Ms Zongyun Zhou, Chief Financial Officer, said, "The rising price of raw materials continued to exert pressure on our gross margin. However, we successfully took advantage of our R&D capabilities to increase productivity, reduce power consumption and rearrange material mix. Therefore, we achieved the same gross margin as for the same period last year. Thanks to our successful collection of significant portion of above-one-year accounts receivable, the G&A expenses were lowered substantially. This demonstrates that our relationships with large OEMs remain stable and our high-quality product offerings are gaining traction. We continue to increase R&D by expanding our engineering team and strengthening internal career development. We believe that R&D is one of the key differentiating factors and a long-term investment for us to maintain leadership in the marketplace."
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. For more information, please visit http://www.sorl.cn/
(TABLE TO FOLLOW)
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Sales US $20,117,002 14,924,151 US $39,536,586 29,440,016
Cost of Sales 15,477,658 11,561,779 30,501,484 22,857,952
Gross Profit 4,639,344 3,362,372 9,035,102 6,582,064
Operating Expenses
Selling and
Distribution
Expenses 1,376,442 954,666 2,244,458 1,881,755
General and
Administrative
Expenses 86,289 652,039 1,183,251 1,206,293
Total Operating
Expenses 1,462,731 1,606,705 3,427,709 3,088,048
Operating Income 3,176,613 1,755,667 5,607,393 3,494,016
Financial Expenses (241,900) (126,348) (507,447) (186,800)
Other Income 68,696 - 68,696 -
Non-Operating Expenses (67,050) (66,473) (156,725) (75,626)
Income Before Provision
for Income Taxes 2,936,359 1,562,846 5,011,917 3,231,590
Provision for Income
Taxes 293,897 - 587,505 -
Net Income Before
Minority Interest &
Other Comprehensive
Income US $2,642,462 1,562,846 US $4,424,412 3,231,590
Minority Interest 264,246 156,285 442,441 323,159
Net Income Attributable
to Shareholders 2,378,216 1,406,561 3,981,971 2,908,431
Foreign Currency
Translation Adjustment 59,974 - 186,680 -
Minority Interest's
Share (5,997) - (18,668) -
Comprehensive Income 2,432,193 1,406,561 4,149,983 2,908,431
Weighted average
common share -
Basic 13,346,555 13,287,055 13,346,555 13,287,055
Weighted average
common share -
Diluted 13,359,861 13,287,055 13,355,426 13,287,055
EPS - Basic 0.18 0.11 0.30 0.22
EPS - Diluted 0.18 0.11 0.30 0.22
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
2006 2005
(Unaudited) (Audited)
Assets
Current Assets
Cash and Cash Equivalents US $2,221,050 US $961,131
Accounts Receivable, Net of Provision 29,368,553 25,339,774
Notes Receivable 1,155,537 1,488,104
Inventory 1,374,179 2,512,583
Prepayments 1,409,268 1,801,829
Other current assets 407,250 48,115
Total Current Assets 35,935,837 32,151,536
Fixed Assets
Property, Plant and Equipment 10,670,515 10,140,947
Less: Accumulated Depreciation (3,494,385) (3,024,281)
Property, Plant and Equipment, Net 7,176,130 7,116,666
Construction in progress 344,012 -
Other Assets
Deferred compensation cost-stock options 308,551 -
Intangible Assets 44,709 44,297
Less: Accumulated Amortization (15,369) (11,873)
Intangible Assets, Net 29,340 32,424
Total Other Assets 337,891 32,424
Total Assets US $43,793,870 US $39,300,626
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable and Notes Payable US $7,651,396 US $3,746,666
Deposit Received from Customers 806,551 1,324,085
Short term bank loans 11,506,328 16,026,717
Accrued Expenses 595,968 482,982
Other Current Liabilities 424,403 -
Total Current Liabilities 20,984,646 21,580,450
Minority Interest 2,196,927 1,735,818
Shareholders' Equity
Common Stock - $0.002 Par Value; 50,000,000
authorized, 13,346,555 issued
and outstanding as of June 30,
2006 and December 31, 2005 26,693 26,693
Additional Paid In Capital 4,922,074 4,444,118
Accumulated other comprehensive income 505,005 336,993
Retained Earnings 15,158,525 11,176,554
20,612,297 15,984,358
Total Liabilities and Shareholders'
Equity US $43,793,870 US $39,300,626