Reports 13% Increase in Revenues and 15% Increase in Diluted EPS
for 2008 ZHEJIANG, China, March 30 /PRNewswire-Asia-FirstCall/ --
2008 Financial Highlights: -- Revenue increased 13.1%
year-over-year to US$130.9 million -- Gross profit margin increased
to 25.7% compared with 23.3% a year ago -- Net income rose 15.1%
year-over-year to US$12.4 million; diluted EPS increased to US$0.68
from US$0.59 a year ago Revenue in 2008 was US$130.9 million, a
13.1% increase as compared to US$115.8 million in 2007. Revenues
from China's domestic OEM market were US$49.0 million, an 18.6%
increase over 2007. Revenues from China's domestic aftermarket were
US$35.5 million, a 14.1% increase over 2007. Revenues from
international markets were US$46.4 million a 6.9% increase over
2007. The increase in these market segments were primarily the
result of our introduction of new products and enhanced volume with
our principal OEM customers. In addition, greater success by our
Chinese sales network, increased production capacity, expansion of
the contract sales force, and the implementation of a focused
market plan on these market segments contributed to our success in
2008. Gross profit in 2008 was US$33.7 million, a 25% increase as
compared to US$27.0 million for the same period in 2007. Gross
profit margin reached 25.7% compared with 23.3% in 2007, an
increase of 240 basis points. The improved gross margin was the
result of several factors including increased prices on Spring
Brake Chamber and Clutch Servo and lower production costs.
Favorable changes in product and market mix helped raise the
average selling price of certain products. During 2008, the Company
enhanced sales to OEM customers by improving customer service and
increasing integrated systems and modular supplies. The successful
expansion of sales into the higher margin municipal bus market also
contributed to the gross margin improvement of the Joint Venture
since the fourth quarter of 2007. Operating expenses increased
23.8% to US$18.6 million in 2008 from US$15.0 million in 2007. As a
percentage of revenue, operating expenses increased to 14.2% in
2008 from 13.0% in 2007 primarily as a result of increased selling
and general and administrative costs due to higher R&D
expenses, increased packaging costs and increased transportation
cost driven by higher fuel prices and Chinese governmental
regulations on overloading effective since the third quarter of
2007. Also increasing general and administrative costs were
increased compensation of the sales staff associated with elevated
marketing efforts and increased benefits for management due to
business expansion. Operating income increased 25.8% or $3.1
million to US$15.1 million in 2008 from US$12.0 million in 2007.
Operating margin increased 110 basis points to 11.5% in 2008 from
10.4% in 2007 as a result of the increase in sales and gross
margin, offset slightly by the increase in operating expenses as a
percent of revenue. Net income for 2008 increased 15.1%, or $1.6
million, or $0.68 per share from $10.7 million, or $0.59 per share
in 2007. "We are very pleased with our financial performance in
2008," said Xiaoping Zhang, SORL Auto Parts' CEO and Chairman.
"Sales growth was strong across all of our market segments despite
a year that proved to be highly unusual. Severe snowstorms
paralyzed parts of China in January 2008 and seriously affected
transportation and supply chains throughout significant portions of
China. In response to the implementation of the China III emission
standard beginning July 1, 2008, sales of trucks equipped with
China II engines accelerated before the policy was enforced in the
first half of the year, which in turn caused a significant decline
in demand in the second half of 2008. "During the 2008 Beijing
Olympic Games many of our major customers, such as FAW Qiongdao,
Beiqi Foton Zhucheng and Beiqi Foton Aumen halted production due to
traffic control in the region around Beijing. "Lastly, the global
financial crisis triggered by the subprime mortgage crisis in the
U.S. has negatively impacted the global automobile industry and
China's market was no exception. "Despite the tough market
environment in 2008, we achieved significant overall growth. We
remained committed to growing our business but also emphasized
improved efficiency and profitability. We showed considerable
achievement on this front as gross margins improved approximately
240 basis points and operating margins improved approximately 110
basis points despite our considerable investment in R&D. We
will continue to work toward this goal and are confident these
efforts will help us continue to improve our competitiveness and
financial performance in the future." Fourth Quarter 2008 Results
Revenue for the fourth quarter of 2008 was US$25.1 million, a 22.7%
decrease as compared to US$32.5 million for the same period in
2007. Revenues from China's domestic OEM market, China's domestic
aftermarket and international markets for the fourth quarter of
2008 were US$10.4 million, US$6.7 million and US$8.1 million, down
by 7.1%, 33.0% and 28.3% respectively. The decline was primarily
the result of decreased demand in domestic and international
markets due to the global financial crisis in the fourth quarter of
2008. Gross profit for the fourth quarter of 2008 was US$5.2
million, a 37.4% decrease as compared to US$8.3 million for the
same period in 2007. Gross profit margin was 20.7% compared with
25.6% in the same quarter last year, a decrease of 490 basis
points. The decreased gross margin was primarily the result of
lower sales. Operating expenses decreased 45.8% to US$3.0 million
in the fourth quarter of 2008 from US$5.6 million. As a percentage
of revenue, operating expenses decreased to 12.0% in the fourth
quarter of 2008 from 17.1% in the fourth quarter of 2007 primarily
as a result of decreased selling and G&A expenses associated
with the weak sales in the fourth quarter of 2008. The decrease was
also partially due to higher G&A and selling expenses occurred
in the same period of 2007. These included extra professional fees,
particularly Sarbanes-Oxley Section 404 consulting fees, incurred
as a result of being a public company in the fourth quarter of
2007, and high selling expense attributed to increased "3-R
Warranties" service expenses and increased transportation expenses
associated with surging sales. Operating income decreased 20.7% or
$573 thousand to US$2.2 million in the fourth quarter of 2008 from
US$2.8 million in the fourth quarter of 2007. Operating margin
increased 20 basis points to 8.7% in the fourth quarter of 2008
from 8.5% in the fourth quarter of 2007 as a result of the
decreased selling and general and administrative operating
expenses. Net income decreased 26.9% or $649 thousand to US$1.8
million, or $0.10 per diluted share in the fourth quarter of 2008
from US$2.4 million, or $0.14 per share in the fourth quarter of
2007. Conference Call Management will host a conference call at
8:30 am EDT, on Tuesday, March 31, 2009 to discuss its 2008
financial results. Listeners may access the call by dialing
1-888-713-4494 or +1-913-312-0855 for international callers. A live
webcast of the conference call will also be available at
http://www.sorl.cn/ . A replay of the call will be available from
March 31 to April 7, 2009. Listeners may access the replay by
dialing +1-719-457-0820, passcode: 8460388. 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 1000 different specifications. The Company has four authorized
international sales centers in Australia, United Arab Emirates,
India, 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 This press
release may include certain statements that are not descriptions of
historical facts, but are forward-looking statements.
Forward-looking statements can be identified by the use of
forward-looking terminology such as "will", "believes", "expects"
or similar expressions. These forward-looking statements may also
include statements about our proposed discussions related to our
business or growth strategy, which is subject to change. Such
information is based upon expectations of our management that were
reasonable when made but may prove to be incorrect. All of such
assumptions are inherently subject to uncertainties and
contingencies beyond our control and upon assumptions with respect
to future business decisions, which are subject to change. We do
not undertake to update the forward-looking statements contained in
this press release. For a description of the risks and
uncertainties that may cause actual results to differ from the
forward-looking statements contained in this press release, see our
most recent Annual Report filed with the Securities and Exchange
Commission (SEC) on Form 10-K, and our subsequent SEC filings.
Copies of filings made with the SEC are available through the SEC's
electronic data gathering analysis retrieval system (EDGAR) at
http://www.sec.gov/ . SORL Auto Parts, Inc. and Subsidiaries
Consolidated Balance Sheets December 31, 2008 and 2007 December 31,
2008 December 31, 2007 (Audited) (Audited) Assets Current Assets
Cash and Cash Equivalents US$ 7,795,987 US$ 4,340,211 Accounts
Receivable, Net of Provision 35,797,824 30,586,239 Notes Receivable
7,536,534 9,410,385 Inventory 19,105,845 8,220,373 Prepayments,
including $187,813 and $0 from related parties at December 31, 2008
and December 31, 2007, respectively. 1,013,440 1,336,212 Other
current assets, including $1,906,070 and $1,761,007 from related
parties at December 31, 2008 and December 31, 2007, respectively.
4,445,778 4,275,294 Total Current Assets 75,695,408 58,168,714
Fixed Assets Property, Plant and Equipment 32,927,306 27,889,182
Less: Accumulated Depreciation (8,951,886) (6,094,229) Property,
Plant and Equipment, Net 23,975,420 21,794,953 Land Use Rights, Net
14,514,983 13,889,705 Other Assets Deferred compensation cost-stock
options 9,935 69,571 Intangible Assets 161,347 76,150 Less:
Accumulated Amortization (39,018) (25,116) Intangible Assets, Net
122,329 51,034 Deferred tax assets 189,228 -- Total Other Assets
321,492 120,605 Total Assets US$ 114,507,303 US$ 93,973,977
Liabilities and Stockholders' Equity Current Liabilities Accounts
Payable and Notes Payable, including $0 and $97,503 due to related
parties at December 31, 2008 and December 31, 2007, respectively.
US$ 4,623,850 US$ 5,305,172 Deposit Received from Customers
6,295,857 2,079,946 Short term bank loans -- 3,370,328 Income tax
payable 340,138 373,769 Accrued Expenses 2,389,314 1,859,938 Other
Current Liabilities 460,124 463,563 Total Current Liabilities
14,109,283 13,452,716 Non-Current Liabilities Deferred tax
liabilities 106,826 -- Total Liabilities 14,216,109 13,452,716
Minority Interest 10,007,166 8,024,152 Stockholders' Equity Common
Stock - $0.002 Par Value; 50,000,000 authorized, 18,279,254 and
18,279,254 issued and outstanding as of December 31, 2008 and
December 31, 2007, respectively 36,558 36,558 Additional Paid In
Capital 37,498,452 37,498,452 Reserves 3,126,086 1,882,979
Accumulated other comprehensive income 10,848,248 5,432,189
Retained Earnings 38,774,684 27,646,931 90,284,028 72,497,109 Total
Liabilities and Stockholders' Equity US$ 114,507,303 US$ 93,973,977
SORL Auto Parts, Inc. and Subsidiaries Consolidated Statements of
Income For Years Ended on December 31, 2008 and 2007 2008 2007
Sales US$ 130,893,422 115,760,070 Include: sales to related parties
2,816,816 1,398,638 Cost of Sales 97,225,582 88,757,611 Gross
Profit 33,667,840 27,002,459 Expenses: Selling and Distribution
Expenses 8,423,124 7,461,652 General and Administrative Expenses
9,295,299 6,542,522 Financial Expenses 852,640 1,000,931 Total
Expenses 18,571,063 15,005,105 Operating Income 15,096,777
11,997,354 Other Income 683,104 731,982 Non-Operating Expenses
(441,288) (141,814) Income Before Provision for Income Taxes
15,338,593 12,587,522 Provision for Income Taxes 1,586,503 636,976
Net Income Before Minority Interest & Other Comprehensive
Income US$ 13,752,090 11,950,546 Minority Interest 1,381,230
1,206,515 Net Income Attributable to Stockholders 12,370,860
10,744,031 Foreign Currency Translation Adjustment 6,017,843
4,810,800 Minority Interest's Share 601,784 481,080 Comprehensive
Income 17,786,919 15,073,751 Weighted average common share - Basic
18,279,254 18,277,094 Weighted average common share - Diluted
18,279,254 18,323,315 EPS - Basic 0.68 0.59 EPS - Diluted 0.68 0.59
DATASOURCE: SORL Auto Parts, Inc. CONTACT: SORL Auto Parts, Inc. -
Ben Chen, Director of Investor Relations, +86-577-6581-7721, or ;
Or ICR, Inc.: In China - Wei-Jung Yang, +86-10-8523-3088, or and In
U.S. - Brian M. Prenoveau, CFA, +1-203-682-8200, or Web site:
http://www.sorl.cn/
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