SORL SORL Auto Parts Inc

Revenue Increased to Record High of US$ 29.2 Million; Net Income Increased to US$ 4.1 Million With a 73% YoY Growth ZHEJIANG, China, Aug. 14 /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 second quarter ending June 30, 2007. Second Quarter Financial Highlights -- Revenue increased to US$ 29.2 million, reflecting 45.1% year-over-year growth; -- Revenue from OEM's increased to US$12.0 million, reflecting 100% year- over-year growth; -- Revenue from exports increased to US$10.9 million, reflecting 22.5% year-over-year growth; -- Net income increased to US$ 4.1 million, reflecting 73.2% year-over- year growth and -- Second quarter fully diluted earnings per share were US$ 0.22. Revenue for the second quarter of 2007 was US$ 29.2 million, a 45.1% increase as compared to US$ 20.1 million for the same period in 2006. Sales to Original Equipment Manufacturers (OEM) for the second quarter of 2007 were US$ 12.0 million, a 100% increase as compared to US$ 6.0 million for the second quarter of 2006. Aftermarket revenue from the Chinese domestic market for the second quarter of 2007 was US$ 6.3 million, an increase of 21.2% as compared to US$ 5.2 million for the second quarter of 2006. Revenue from exports was US$ 10.9 million for the second quarter of 2007, an increase of 22.5% as compared to US$ 8.9 million for the second quarter of 2006. Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are excited to report record high quarterly revenue as our sales to OEMs doubled and growth continued to accelerate. In the first half of 2007, the Chinese heavy duty truck market demonstrated robust 58% sales growth and semi-trailer sales increased by 123%. Encouragingly, in the first half of 2007, SORL's largest customer FAW, a Fortune Global 500 company, recorded the highest unit sales of heavy duty trucks in China. We are pleased that our focus and strategy in the high-quality brake products for the heavy duty market continues to be successful. We were able to increase our production capacity while at the same time maintaining product quality to capture the market opportunities in China. Our leadership in the Chinese OEM market also helped strengthen SORL brand name and benefited our aftermarket sales in China." Gross profit for the second quarter of 2007 was US$ 6.4 million, an increase of 37.1% as compared to US$ 4.6 million in the same period in 2006. Operating income for the second quarter of 2007 was US$ 3.9 million, an increase of 32.4% as compared to US$ 2.9 million in the same period in 2006. Net income for the second quarter of 2007 was US$ 4.1 million, an increase of 73.2% as compared to net income of US$ 2.4 million. The fully diluted earnings per share for the second quarter of 2007 were US$ 0.22 as compared to US$ 0.18 in the same period in 2006. Total cash and cash equivalents as of June 30, 2007 totalled $5.8 million as compared to $11.1 million as of December 31, 2006. Stockholder's equity increased to $65.1 million as of the end of June 30, 2007 from $57.4 million as of December 31, 2006. The decrease of cash and cash equivalents was due to the increased working capital needs to support the Company's expanded sales to OEMs and the higher capital expenditures for capacity expansion. In early July, SORL announced a capacity expansion of 25% which included additional quality control equipment. Ms. Zongyun Zhou, Chief Financial Officer, said, "In the second quarter of 2007, we encountered gross margin decrease mainly due to the appreciation of the Chinese currency affecting our export margin. In response to the margin erosion, we not only increased our sales to domestic China market, but also focused on supplier selection and production streamlining to lower cost and material wastage. As a result, our overall gross margin only experienced a slight decrease of 1%. We focused on leveraging our relationships with our long-term OEM customers to reach economies-of-scale and our selling expenses stabilized during the second quarter. Our effort in receivable collections also enabled us to reverse nearly US$ 234,154 of bad debt provision during the second quarter. As the Chinese government encourages domestic equipment purchase, SORL received an income tax refund of $991,133 for the purchase of domestic equipment, which has been reflected as a reduction to current income tax expense. We will continue to focus on internal cost control and rationally expand our capacity to capture the market opportunities and enjoy the favorable policies from the local government." Recent Development In July 2007, SORL announced that it has successfully completed the installation of new equipment to increase production capacity and to meet the growing demand from large OEM customers in China. The Company installed 10 additional die casting machines, added 47 computerized numerical control machines to the 198 machines previously in use, purchased 4 new tooling machines for the clutch servo product and streamlined the production facility to increase total capacity by nearly 25%. All equipment completed testing and has begun mass production. The Company plans to further invest in new equipment and continue to expand capacity in the second half of 2007. Earnings Conference Call SORL's management team will host a conference call at 8:30AM Eastern Time on August 14, 2007. 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 August 14, 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. For more information, please log on 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/ ). SORL Auto Parts, Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2007 and December 31,2006 June 30,2007 December 31, 2006 (Unaudited) (Audited) Assets Current Assets Cash and Cash Equivalents US$ 5,751,342 US$ 11,137,501 Accounts Receivable, Net of Provision 31,994,767 26,750,778 Notes Receivable 9,297,671 3,494,327 Inventory 7,362,666 4,528,856 Prepayments 2,290,204 5,532,802 Other current assets 3,872,774 2,925,558 Total Current Assets 60,569,424 54,369,822 Fixed Assets Property, Plant and Equipment 26,435,259 20,418,557 Less: Accumulated Depreciation (4,924,874) (4,106,901) Property, Plant and Equipment, Net 21,510,385 16,311,656 Other Assets Deferred compensation cost-stock options 99,389 129,207 Intangible Assets 67,264 45,779 Less: Accumulated Amortization Intangible (20,916) (17,655) Assets, Net 46,348 28,124 Other Non-current Assets 42,045 41,299 Total Other Assets 187,782 198,630 Total Assets US$ 82,267,591 US$ 70,880,108 Liabilities and Shareholders' Equity Current Liabilities Accounts Payable and Notes Payable US$ 5,823,167 US$ 4,620,692 Deposit Received from Customers 809,348 508,268 Short term bank loans 1,504,571 -- Income tax payable 430,981 358,367 Accrued Expenses 916,109 1,232,845 Other Current Liabilities 439,357 454,430 Total Current Liabilities 9,923,533 7,174,602 Minority Interest 7,203,435 6,336,557 Shareholders' Equity Common Stock - $0.002 Par Value; 50,000,000 authorized, 18,275,126 issued and outstanding as of June 30, 2007 and December 31, 2006 respectively 36,550 36,550 Additional Paid In Capital 37,467,252 37,444,051 Reserves 1,424,523 797,116 Accumulated other comprehensive income 2,630,299 1,102,469 Retained Earnings 23,581,999 17,988,763 Total Shareholders' Equity 65,140,623 57,368,949 Total Liabilities and Shareholder's Equity US$ 82,267,591 US$ 70,880,108 SORL Auto Parts, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income For The Second Quarter Ended June 30, 2007 and 2006 Three Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Sales US$ 29,189,572 20,117,002 US$ 53,606,561 39,536,586 Cost of Sales 22,829,287 15,477,658 41,555,339 30,501,484 Gross Profit 6,360,285 4,639,344 12,051,222 9,035,102 Operating Expenses Selling and Distribution Expenses 1,331,643 1,376,442 2,515,290 2,244,458 General and Administrative Expenses 1,027,436 86,289 2,720,623 1,183,251 Financial Expenses 114,268 241,900 257,436 507,447 Total Operating Expenses 2,473,347 1,704,631 5,493,349 3,935,156 Operating Income 3,886,938 2,934,713 6,557,873 5,099,946 Other Income 351,932 68,696 384,272 68,696 Non-Operating Expenses (80,550) (67,050) (84,639) (156,725) Income Before Provision for Income Taxes 4,158,320 2,936,359 6,857,506 5,011,917 Provision for Income Taxes (422,721) 293,897 (60,256) 587,505 Net Income Before Minority Interest & Other Comprehensive Income US$ 4,581,041 2,642,462 US$ 6,917,762 4,424,412 Minority Interest 461,930 264,246 697,119 442,441 Net Income Attributable to Shareholders 4,119,111 2,378,216 6,220,643 3,981,971 Foreign Currency Translation Adjustment 1,075,648 59,974 1,697,589 186,680 Minority Interest's Share (107,565) (5,997) (169,759) (18,668) Comprehensive Income 5,087,194 2,432,193 7,748,473 4,149,983 Weighted average common share - Basic 18,275,126 13,287,055 18,275,126 13,287,055 Weighted average common share - Diluted 18,322,260 13,287,055 18,328,526 13,287,055 EPS - Basic 0.23 0.18 0.34 0.3 EPS - Diluted 0.22 0.18 0.34 0.3 For more information, please contact: Richard Cai Investor Relations SORL Auto Parts, Inc. Tel: +86-577-6581-7720 Email: Kevin Theiss Investor Relations The Global Consulting Group Tel: +1-646-284-9409 Email: Sophy Miles/Ivette Almeida Media Relations The Global Consulting Group Tel: +1-646-284-9400 Email: or DATASOURCE: SORL Auto Parts, Inc. CONTACT: Richard Cai, Investor Relations of SORL Auto Parts, Inc., +86-577-6581-7720, or ; Kevin Theiss, Investor Relations of The Global Consulting Group, +1-646-284-9409, or ; Sophy Miles, Media Relations of The Global Consulting Group, +1-646-284-9400, or ; Ivette Almeida, Media Relations of The Global Consulting Group, +1-646-284-9400, or

Copyright