- Demonstrated strong growth across all divisions, export hit
historical high - ZHEJIANG, China, Aug. 11 /Xinhua-PRNewswire/ --
SORL Auto Parts, Inc. (NASDAQ:SORL), 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/ 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/). (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 DATASOURCE: SORL Auto Parts, Inc.
CONTACT: David Ming He of SORL Auto Parts, Inc., +86-577-6581-7720,
; or Christopher Chu of The Global Consulting Group,
+1-646-284-9426, Web site: http://www.sorl.cn/
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