SORL SORL Auto Parts Inc

Revenue increases to US$24.4 million; Net Income of US$2.1 million ZHEJIANG, China, May 15 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc. (NASDAQ:SORL), a leading manufacturer and distributor of commercial vehicle air brake valves in China, today reported its financial results for the first quarter ending March 31, 2007. First Quarter Financial Highlights -- Revenue increased to US$ 24.4 million, reflecting 25.7% year-over-year growth; -- Revenue from OEMs increased to US$8.9 million, reflecting 53.4% year- over-year growth; -- Revenue from exports increased to US$8.4 million, reflecting 37.7% year-over-year growth; -- Net income increased to US$ 2.1 million, reflecting 31.0% year-over- year growth and -- First quarter diluted earnings per share were US$ 0.11. Revenue for the first quarter of 2007 was US$ 24.4 million, a 25.7% increase as compared to US$ 19.4 million for the same period in 2006. Revenue from sales to Original Equipment Manufacturers (OEM) for the first quarter of 2007 was US$ 8.9 million, a 53.4% increase as compared to US$ 5.8 million for the first quarter of 2006. Aftermarket revenue from the Chinese domestic market for the first quarter of 2007 was US$ 7.1 million, a slight decrease of 5.3% as compared to US$ 7.5 million for the first quarter of 2006. Revenue from exports was US$ 8.4 million for the first quarter of 2007, an increase of 37.7% as compared to US$ 6.1 million for the first quarter of 2006. Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are extremely pleased that SORL has posted another strong quarter with net income growth of 31%. As domestic heavy truck market demonstrates a strong recovery and Chinese truck exports continue to experience rapid growth, we accordingly shift our tactical focus from the lower margin domestic aftermarket to the higher margin OEM and export markets. We continue to expand our market share in the OEM market as OEM orders grew over 50% during this quarter. On the export front, we not only reinforced our marketing efforts by attending more trade shows and launching more catalogue targeting campaigns but also expanded our contract sales force. Our international customers are very pleased with our high quality customer services and new product range. With SORL's strong branding in the Middle East and Southeast Asia, we have been gradually introducing more non-valve products in addition to our new valve products. Our robust results reflect our strong customer base and our goal to be the 'one-stop' shop for high quality Chinese commercial vehicle auto parts." Gross profit for the first quarter of 2007 was US$ 5.7 million, an increase of 29.5% as compared to US$ 4.4 million in the same period in 2006. Operating income for the first quarter of 2007 was US$ 2.7 million, an increase of 23.4% as compared to US$ 2.2 million in the same period in 2006. Net income for the first quarter of 2007 was US$ 2.1 million or US$ 0.11 diluted earnings per share, an increase of 31.0% as compared to net income of US$ 1.6 million or US$ 0.12 diluted earnings per share in the same period in 2006. Total cash and cash equivalents as of March 31, 2007 totaled $5.9 million as compared to $11.1 million as of December 31, 2006. Stockholder's equity increased to $60.0 million as of the end of March 31, 2007 from $57.4 million as of December 31, 2006. The decrease of cash and cash equivalents is due to the increasing working capital need for expanded sales to OEMs and CAPEX increase for capacity expansion. Ms. Zongyun Zhou, Chief Financial Officer, said, "Thanks to our sales focus on higher margin sectors and effective control during raw material sourcing, we improved our gross margin from 22.6% in the first quarter of 2006 to 23.3% in the first quarter of 2007. Selling expenses increased by 36% as a result of our strengthened efforts to penetrate the market and acquire new customers. During the quarter, we substantially increased our R&D effort and a new team was established to develop innovative products. In addition, depreciation expenses increased as we invested in new production equipment and tools. We strongly believe that the additional expenses and increased investment will benefit SORL in the long run and our successful follow-on public offering has enabled us to pay off our short term bank loan and reduce our financial expenses. SORL continues to remain focused on balancing rapid business growth with decent profit generation." Earnings Conference Call SORL's management team will host a conference call at 8:00PM Eastern Time on May 15, 2007 (or 8:00AM on May 16, 2007 Beijing time). A live webcast and replay of the conference call will be available at: http://www.vcall.com/IC/CEPage.asp?ID=117078. The webcast replay will be available through May 15, 2008. The dial-in by telephone details for the live conference call: U.S. Toll Free Number +1-877-407-8035, International dial-in number +1-201-689-8035. 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 four authorized international sales centers in Australia, United Arab Emirates, the United States and India, 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 Balance Sheets Mar 31, 2007 and December 31,2006 31-Mar-07 31-Dec-06 (Unaudited) (Audited) Assets Current Assets Cash and Cash Equivalents US$ 5,852,480 US$ 11,137,501 Accounts Receivable, Net of Provision 29,176,534 26,750,778 Notes Receivable 7,926,848 3,494,327 Inventory 4,841,944 4,528,856 Prepayments 3,658,036 5,532,802 Other current assets 3,145,564 2,925,558 Total Current Assets 54,601,406 54,369,822 Fixed Assets Property, Plant and Equipment 22,783,011 20,418,557 Less: Accumulated Depreciation -4,483,501 -4,106,901 Property, Plant and Equipment, Net 18,299,510 16,311,656 Other Assets Deferred compensation cost-stock options 114,298 129,207 Intangible Assets 66,231 45,779 Less: Accumulated Amortization -19,126 -17,655 Intangible Assets, Net 47,105 28,124 Other Non-current Assets 41,399 41,299 Total Other Assets 202,802 198,630 Total Assets US$ 73,103,718 US$ 70,880,108 Liabilities and Shareholders' Equity Current Liabilities Accounts Payable and Notes Payable US$ 3,689,573 US$ 4,620,692 Deposit Received from Customers 800,975 508,268 Income tax payable 366,126 358,367 Accrued Expenses 1,103,610 1,232,845 Other Current Liabilities 479,266 454,430 Total Current Liabilities 6,439,550 7,174,602 Minority Interest 6,633,940 6,336,557 Shareholders' Equity Common Stock - $0.002 Par Value; 50,000,000 authorized, 18,275,126 issued and outstanding as of March 31, 2007 and December 31, 2006 respectively 36,550 36,550 Additional Paid In Capital 37,444,051 37,444,051 Reserves 1,008,786 797,116 Accumulated other comprehensive income 1,662,216 1,102,469 Retained Earnings 19,878,625 17,988,763 Total Shareholders' Equity 60,030,228 57,368,949 Total Liabilities and Shareholders' Equity US$ 73,103,718 US$ 70,880,108 SORL Auto Parts, Inc. and Subsidiaries Consolidated Statements of Income For The First Quarter Ended on March 31, 2007 and 2006 Three Months Ended March 31, 2007 2006 (Unaudited) (Unaudited) Sales US$ 24,416,989 19,419,584 Cost of Sales 18,726,052 15,023,826 Gross Profit 5,690,937 4,395,758 Expenses: Selling and Distribution Expenses 1,183,647 868,016 General and Administrative Expenses 1,693,187 1,096,963 Financial Expenses 143,168 265,547 Total Operating Expenses 3,020,002 2,230,526 Operating Income 2,670,935 2,165,232 Other Income 32,340 - Non-Operating Expenses -4,089 -89,675 Income (Loss) Before Provision for Income Taxes 2,699,186 2,075,557 Provision for Income Taxes 362,465 293,608 Net Income Before Minority Interest & Other Comprehensive Income US$ 2,336,721 1,781,950 Minority Interest 235,189 178,195 Net Income Attributable to Shareholders 2,101,532 1,603,755 Foreign Currency Translation Adjustment 621,941 126,705 Minority Interest's Share 62,194 12,671 Comprehensive Income (Loss) 2,661,279 1,717,789 Weighted average common share - Basic 18,275,126 13,346,555 Weighted average common share - Diluted 18,333,009 13,347,123 EPS - Basic 0.11 0.12 EPS - Diluted 0.11 0.12 DATASOURCE: SORL Auto Parts, Inc. CONTACT: Richard Cai, of SORL Auto Parts, Inc., +86-577-6581-7720, ; or Christopher Chu, of The Global Consulting Group, +1-646-284-9426, , for SORL Auto Parts, Inc. Web site: http://www.vcall.com/IC/CEPage.asp?ID=117078

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