ZHEJIANG, China, May 16, 2016 /PRNewswire/ -- SORL Auto Parts,
Inc. (NASDAQ: SORL) ("SORL" or the "Company"), a leading
manufacturer and distributor of automotive brake systems as well as
other key safety-related auto parts in China, announced today its unaudited financial
results for the first quarter of 2016 ended March 31, 2016.
First Quarter 2016 Financial Highlights
- Net sales for the 2016 first quarter was $53.8 million, a 3.1% increase over the first
quarter of 2015;
- Gross profit margin was 26.8%;
- Net Income attributable to stockholders was $0.4 million, or $0.02 per diluted share, compared with
$3.1 million, or $0.16 per diluted share in the first
quarter of 2015;
- Cash, cash equivalents and short-term investments were
$64.6 million with a current ratio of
2.8 to 1 at March 31, 2016.
Mr. Xiaoping Zhang, SORL's Chief
Executive Officer and Chairman, stated, "Despite Chinese economic
growth continuing to decelerate in 2016, our domestic sales
increased in the OEM and aftermarket markets. During the first
quarter, the commercial vehicle sector in China demonstrated a sign of recovery. While
overall truck sales increased by 1.1% in the first quarter of 2016,
heavy-duty truck sales rose by 7.0%. Our new, more advanced
products continued to generate sales and led our growth. Our
growing portfolio of more advanced and higher-margin products
enables us to maintain our leadership position in the commercial
vehicle braking market. In addition, we are maintaining our
gross margin, among the highest in the industry, through
differentiating product offerings, strict cost controls and
enhanced production techniques."
"We believe that the worst time for Chinese commercial vehicle
market is now behind us as we see a number of OEMs are back on
growth track. We are moving into larger facilities to accommodate
our future growth and enhance our productivity through a more
efficient facility layout." Mr. Zhang concluded.
First Quarter 2016 Financial Results
For the first quarter of 2016, net sales increased by 3.1% to
$53.8 million from $52.2 million in the 2015 first quarter. Revenues
from the Company's domestic OEM customers were $28.1 million, an increase of 8.9% from
$25.9 million in the first quarter of
2015. The higher OEM sales were mainly due to higher truck sales in
the first quarter of 2016. Total truck sales were up by 1.1% led by
a sales increase of 7.0% in the heavy-duty segment. Aftermarket
sales in China grew by 6.5% to
$13.2 million for the first quarter
of 2016, compared with $12.4 million
for the same period of 2015. New vehicle sales in China and the expiration of their OEM
warranties assisted our aftermarket business growth. New product
sales increased in the 2016 first quarter due to sales in both the
Chinese OEM market and Chinese aftermarket. Revenues from
international markets decreased 10.1% to $12.5 million, compared to $13.9 million in the first quarter of 2015 due to
lower truck production and currency depreciation in several
overseas markets.
The gross profit for the first quarter of 2016 increased by 5.2%
to $14.4 million from $13.7 million a year ago. Gross margin was
26.8% compared with 26.3% in the first quarter of 2015.
In the first quarter of 2016, operating expenses increased 45.5%
to $14.2 million from $9.8 million in the same quarter of 2015. The
increase reflected higher selling and distribution, general and
administrative, and research and development expenses. As a
percentage of revenue, operating expenses were 36.4% in the first
quarter of 2016, compared with 18.7% in the first quarter of
2015.
- Selling and distribution expenses were $5.6 million, or 10.3% of quarterly revenues,
compared with $5.4 million, or 10.3%
a year ago. The higher selling and distribution expenses were
mainly due to increased freight expense and packaging
expenses.
- General and administrative ("G&A") expenses in the first
quarter of 2016 were $6.9 million, or
12.9% of quarterly revenues compared with $2.7 million, or 5.2% of total revenues in the
first quarter of 2015. The increase in G&A expenses was mainly
due to the increase in allowance for doubtful accounts during this
quarter. As the majority of the company's customers are large
State-Owned Enterprises (SOEs) with a long standing history with
SORL. The company is not only confident on the full collection of
these outstanding receivables, but also has demonstrated proven
track records in collecting aged receivables.
- Research and development ("R&D") expenses were $1.7 million in the first quarter of 2016
compared with $1.7 million in the
first quarter of 2015. As a percentage of revenue, R&D expenses
were 3.2% in the first quarter of 2016 compared with 3.3% of
revenue in the first quarter of 2015.
Financial expenses were $0.2
million in both the first quarter of 2016 and 2015.
Income before income taxes was $0.4
million for the first quarter of 2016, compared to
$4.2 million for the same quarter of
2015. The decrease in income before income taxes reflected higher
operating expenses during the first quarter of 2016 compared to the
first quarter of 2015. The pretax income margin was 0.8% in the
first quarter of 2016, compared with 8.0% in the first quarter of
2015.
The provision for income taxes was a positive gain of
$0.03 million in the first quarter of
2016, compared with an expense of $1.0
million in the first quarter of 2015.
Net income attributable to stockholders for the first quarter of
2016 was $0.4 million, or
$0.02 per basic and diluted share,
compared with $3.1 million, or
$0.16 per basic and diluted share a
year ago.
Balance Sheet
As of March 31, 2016, the Company
had cash, cash equivalents, and short-term investments of
$64.6 million compared to
$91.2 million on December 31, 2015. Inventory was $68.2 million compared to $73.7 million on December
31, 2015. Short-term bank loans were $17.4 million compared to $23.4 million on December
31, 2015. Total equity increased to $224.0 million at March
31, 2016 compared with $222.4
million at December 31, 2015.
On March 31, 2016, working capital
was $172.0 million with a current
ratio of 2.8 to 1.
Recent Events
On May 5, 2016 SORL Auto Parts,
Inc. (the "Company"), through its principal operating subsidiary,
Ruili Group Ruian Auto Parts Co., Ltd. (the "Subsidiary"), entered
into a Purchase Agreement with Ruili Group Co., Ltd., a related
party under common control with the Company pursuant to which the
Company agreed to purchase the land use rights and factory
facilities located at No. 2666 Kaifaqu Avenue, Rui'an Economic
Development Zone, Rui'an City, Zhejiang
Province (the "Development Zone Facility").
In exchange for the Development Zone Facility, the Company will
transfer to the Ruili Group the land use rights and factory
facilities located at No. 1169 Yumeng Road, Rui'an Economic
Development Zone, Rui'an City, Zhejiang
Province (the "Dongshan Facility") that the Company
currently owns, plus RMB501 million
in cash. The cash consideration in the amount of RMB481 million will be paid to the Ruili Group
before June 30, 2016, and the
remaining RMB20 million will be paid
within 10 days of completion of the required procedures in the
Purchase Agreement.
The market valuations of the Dongshan Facility and the
Development Zone Facility have been recently assessed by the
leading independent appraiser, DTZ/Cushman & Wakefield.
The total floor area of the Dongshan Facility is 58,714 square
meters compared with the total floor area of the Development Zone
Facility of 157,619 square meters, which will provide more
manufacturing and service capacity to support the Company's future
growth.
Business Outlook
For the fiscal year 2016, management reiterates that it expects
net sales to be approximately $200
million and net income to be approximately $11.5 million. These targets are based on the
Company's current views on the operating and market conditions,
which are subject to change.
"The growth in the overall commercial vehicle business and
especially the important heavy-duty truck segment, provides
optimism for the future. We are adding more advanced braking
products to provide more solutions to fulfill our customers' needs
and attract more customers. With our new facility, we are adding
capacity and the ability to better control our costs," Ms.
Jinrui Yu, SORL's Chief Operating
Officer, stated.
Conference Call
Management will host a conference call on Monday, May 16, 2016 at 8:00 A.M. EDT/ 8:00
P.M. Beijing Time to discuss its 2016 first quarter results.
Listeners may access the call by dialing U.S. toll free
number +1-877-407-0778 and +1-201-689-8565 for
international callers, and Mainland China toll free
+864-001-202-840. A live web cast of the conference call will also
be available at http://www.sorl.cn.
A replay of the call will be available shortly after the
conference call through 11:59 P.M. EDT on June 16, 2016, or 11:59 A.M. Beijing Time on
June 17, 2016. The replay dial-in
numbers are: U.S. toll free number +1-877-660-6853 or the
international number +1-201-612-7415; using Conference ID
"13636680" to access the replay.
About SORL Auto Parts, Inc.
As a global tier one supplier of brake and control systems to
the commercial vehicle industry, SORL Auto Parts, Inc. is the
market leader for commercial vehicles brake systems, such as trucks
and buses in China. The Company
distributes products both within China and internationally under the SORL
trademark. SORL is listed among the top 100 auto component
suppliers in China, with a product
range that includes 65 categories with over 2000 specifications in
brake systems and others. The Company has four authorized
international sales centers in UAE, India, the United
States and Europe. SORL is
working to establish a broader global sales network. 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 within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements can be identified by
the use of forward-looking terminology such as "expects,"
"anticipates," "believes," "targets," "goals," "projects,"
"intends," "plans," "seeks," "estimates," "may," "will," "should"
or similar expressions. For example, when the Company describes the
evaluation of the preliminary non-binding proposal letter, it is
using forward-looking statements. These forward-looking statements
may also include statements about the Company's proposed
discussions related to its business or growth strategy, which are
subject to change. Such information is based upon expectations of
the Company's management that were reasonable when made, but may
prove to be incorrect. All of such assumptions are inherently
subject to uncertainties and contingencies beyond the Company's
control and upon assumptions with respect to future business
decisions, which are subject to change. The Company does not
undertake to update the forward-looking statements contained in
this press release. These risks and uncertainties may include, but
are not limited to general political, economic and business
conditions which may impact the demand for commercial vehicles or
passenger vehicles in China and
the other significant markets where the Company's products are
sold, uncertainty regarding such political, economic and business
conditions, trends in consumer debt levels and bad debt write-offs,
general uncertainty related to possible recessions, natural
disasters, the political stability of China and the impact of any of those events on
demand for commercial or passenger vehicles, changes in consumer
confidence, new product development and introduction, competitive
products and pricing, seasonality, availability of alternative
sources of supply in the case of the loss of any significant
supplier or any supplier's inability to fulfill the Company's
orders, cost of labor and raw materials, the loss of or curtailed
sales to significant customers, the Company's dependence on key
employees and officers, the ability to secure and protect
trademarks, patents and other intellectual property rights,
potential effects of competition in the Company's business, the
dependency of the Company upon the normal operation of its sole
manufacturing facility, potential effect of the economic and
currency instability in China and
countries to which the Company sold its products, the ability of
the Company to successfully manage its expenses on a continuing
basis, the continued availability to the Company of financing and
credit on favorable terms, business disruptions, disease, general
risks associated with doing business in China or other countries including, without
limitation, foreign trade policies, import duties, tariffs, quotas,
political and economic stability, and the other factors discussed
in the Company's Annual Report on Form 10-K and other filings with
the Securities and Exchange Commission. For additional information
regarding known material factors that could cause the Company's
results to differ from its projected results, please see its
filings with the SEC, including its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
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.
Contact Information
Raymond Lin
+86-139-6777-6556
+86-577-6581-7721
ljf@sorl.com.cn
Phyllis Huang
+86-151-6770-5972
+86-577-6581-7721
phyllis@sorl.com.cn
Investor Relations
+1-646-726-6511
sorl@compassbell.com
-Tables Follow –
SORL Auto Parts,
Inc. and Subsidiaries
|
Consolidated
Balance Sheets
|
March 31, 2016 and
December 31, 2015
|
|
|
|
|
|
March 31,
2016
(unaudited)
|
|
December 31,
2015
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
US$
|
6,103,766
|
US$
|
30,230,828
|
|
Accounts receivable,
net
|
|
71,711,260
|
|
71,823,328
|
|
Bank acceptance notes
from
customers
|
|
28,096,561
|
|
22,870,791
|
|
Short term
investments
|
|
58,527,775
|
|
61,007,709
|
|
Inventories
|
|
68,154,818
|
|
73,661,860
|
|
Prepayments,
including $1,754,420
and $0 prepayments to related
parties at March 31, 2016 and
December 31, 2015, respectively
|
|
8,233,271
|
|
3,350,607
|
|
Due from related
party
|
|
18,247,384
|
|
-
|
|
Prepaid capital lease
interest
|
|
54,189
|
|
93,458
|
|
Restricted
cash
|
|
1,067,461
|
|
785,999
|
|
Other current assets,
net
|
|
1,463,295
|
|
1,241,864
|
|
Deferred tax
assets
|
|
3,506,814
|
|
2,909,729
|
|
Total Current
Assets
|
|
265,166,594
|
|
267,976,173
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
37,053,716
|
|
37,561,905
|
|
Land use rights,
net
|
|
13,208,647
|
|
13,232,149
|
|
Intangible assets,
net
|
|
21,050
|
|
23,854
|
|
Security deposits on
lease agreement
|
|
1,768,800
|
|
1,759,975
|
|
Total Non-Current
Assets
|
|
52,052,213
|
|
52,577,883
|
|
Total
Assets
|
US$
|
317,218,807
|
US$
|
320,554,056
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Accounts payable and
bank
acceptance notes to vendors,
including $496,146 and $1,133,537
due to related parties at March 31,
2016 and December 31, 2015,
respectively
|
US$
|
37,640,498
|
US$
|
35,292,277
|
|
Deposit received from
customers
|
|
21,304,652
|
|
20,012,087
|
|
Short term bank
loans
|
|
17,447,655
|
|
23,367,207
|
|
Accrued
expenses
|
|
11,964,864
|
|
13,870,587
|
|
Capital lease
obligations
|
|
2,653,200
|
|
3,519,949
|
|
Other current
liabilities, including
$97,404 and $0 due to related
parties at March 31, 2016 and
December 31, 2015,
respectively
|
|
2,198,308
|
|
2,067,449
|
|
Total Current
Liabilities
|
|
93,209,177
|
|
98,129,556
|
|
Total
Liabilities
|
|
93,209,177
|
|
98,129,556
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Preferred stock - no
par value;
1,000,000 authorized; none issued
and outstanding as of March 31,
2016 and December 31, 2015
|
|
-
|
|
-
|
|
Common stock - $0.002
par value; 50,000,000 authorized,
|
|
|
|
19,304,921 issued and
outstanding
as of March 31, 2016 and
|
|
|
|
|
|
December 31,
2015
|
|
38,609
|
|
38,609
|
|
Additional paid-in
capital
|
|
42,199,014
|
|
42,199,014
|
|
Reserves
|
|
13,260,606
|
|
13,207,972
|
|
Accumulated other
comprehensive
income
|
|
16,658,615
|
|
15,662,639
|
|
Retained
earnings
|
|
129,433,106
|
|
129,055,099
|
|
Total SORL Auto
Parts, Inc.
Stockholders' Equity
|
|
201,589,950
|
|
200,163,333
|
|
Noncontrolling
Interest In
Subsidiaries
|
|
22,419,680
|
|
22,261,167
|
|
Total
Equity
|
|
224,009,630
|
|
222,424,500
|
|
Total Liabilities
and Equity
|
US$
|
317,218,807
|
US$
|
320,554,056
|
|
|
|
|
|
|
SORL Auto Parts,
Inc. and Subsidiaries
|
|
Consolidated
Statements of Income and Comprehensive Income
|
|
For The Three
Months Ended March 31, 2016 and 2015 (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Net Sales
|
US$
|
53,836,728
|
US$
|
52,197,966
|
|
Include: sales to
related parties
|
|
2,580,846
|
|
1,011,924
|
|
Cost of
sales
|
|
39,397,649
|
|
38,466,892
|
|
Gross
profit
|
|
14,439,079
|
|
13,731,074
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Selling and
distribution expenses
|
|
5,562,432
|
|
5,350,998
|
|
General and
administrative expenses
|
|
6,929,858
|
|
2,719,372
|
|
Research and
development expenses
|
|
1,743,687
|
|
1,712,621
|
|
Total operating
expenses
|
|
14,235,977
|
|
9,782,991
|
|
|
|
|
|
|
|
Other operating
income
|
|
914,205
|
|
585,717
|
|
|
|
|
|
|
|
Income from
operations
|
|
1,117,307
|
|
4,533,800
|
|
|
|
|
|
|
|
Interest
income
|
|
88,102
|
|
110,955
|
|
Government
grants
|
|
4,757
|
|
25,980
|
|
Other
income
|
|
45,589
|
|
67,411
|
|
Interest
expenses
|
|
(174,460)
|
|
(166,656)
|
|
Other
expenses
|
|
(637,629)
|
|
(370,688)
|
|
|
|
|
|
|
|
Income before income
taxes provision / benefit
|
|
443,666
|
|
4,200,802
|
|
|
|
|
|
|
|
Income taxes
provision (benefit)
|
|
(34,824)
|
|
998,278
|
|
|
|
|
|
|
|
Net income
|
US$
|
478,490
|
US$
|
3,202,524
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interest In subsidiaries
|
|
47,849
|
|
152,243
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
US$
|
430,641
|
US$
|
3,050,281
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
US$
|
478,490
|
US$
|
3,202,524
|
|
Foreign currency
translation adjustments
|
|
1,106,640
|
|
(813,243)
|
|
Comprehensive
income
|
|
1,585,130
|
|
2,389,281
|
|
Comprehensive income
attributable to noncontrolling
interest in subsidiaries
|
158,513
|
|
88,568
|
|
Comprehensive income
attributable to common
shareholders
|
US$
|
1,426,617
|
US$
|
2,300,713
|
|
|
|
|
|
|
|
Weighted average
common share - basic
|
|
19,304,921
|
|
19,304,921
|
|
|
|
|
|
|
|
Weighted average
common share - diluted
|
|
19,304,921
|
|
19,304,921
|
|
|
|
|
|
|
|
EPS -
basic
|
US$
|
0.02
|
US$
|
0.16
|
|
|
|
|
|
|
|
EPS -
diluted
|
US$
|
0.02
|
US$
|
0.16
|
|
SORL Auto Parts,
Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
For The Three
Months Ended March 31, 2016 and 2015 (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
|
Net Income
|
US$
|
478,490
|
US$
|
3,202,524
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Allowance for
doubtful accounts
|
|
3,676,683
|
|
(338,319)
|
Depreciation and
amortization
|
|
1,733,874
|
|
1,937,064
|
Deferred income
tax
|
|
(596,802)
|
|
(162,875)
|
Changes in assets
and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(3,192,855)
|
|
(4,556,747)
|
Bank acceptance notes
from customers
|
|
(5,236,626)
|
|
720,695
|
Other currents
assets
|
|
(216,932)
|
|
(557,779)
|
Inventories
|
|
6,020,763
|
|
3,937,590
|
Prepayments
|
|
(4,828,231)
|
|
(492,545)
|
Prepaid capital lease
interest
|
|
40,714
|
|
87,570
|
Accounts payable and
bank acceptance notes to vendors
|
2,389,292
|
|
(4,765,769)
|
Income tax
payable
|
|
-
|
|
394,992
|
Deposits received
from customers
|
|
1,221,498
|
|
1,716,287
|
Other current
liabilities and accrued expenses
|
|
(1,900,667)
|
|
(1,608,205)
|
Net Cash Flows
Used In Operating Activities
|
|
(410,799)
|
|
(485,517)
|
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
|
Change in short term
investments
|
|
2,854,289
|
|
(10,157,715)
|
Acquisition of
property and equipment
|
|
(1,247,024)
|
|
(859,313)
|
Change in restricted
cash
|
|
(284,338)
|
|
-
|
Advance to related
party
|
|
(18,695,590)
|
|
-
|
Net Cash Flows
Used In Investing Activities
|
|
(17,372,663)
|
|
(11,017,028)
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
Proceeds from bank
loans
|
|
13,795,728
|
|
8,643,266
|
Repayment of bank
loans
|
|
(20,050,944)
|
|
(5,470,663)
|
Repayment of capital
lease
|
|
(906,123)
|
|
(932,092)
|
Net Cash Flows
Provided By (Used In) Financing Activities
|
|
(7,161,339)
|
|
2,240,511
|
|
|
|
|
|
Effects on changes in
foreign exchange rate
|
|
817,739
|
|
(20,110)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(24,127,062)
|
|
(9,282,144)
|
|
|
|
|
|
Cash and cash
equivalents- beginning of the period
|
|
30,230,828
|
|
14,009,597
|
|
|
|
|
|
Cash and cash
equivalents - end of the period
|
US$
|
6,103,766
|
US$
|
4,727,453
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Disclosures:
|
|
|
|
|
Interest
paid
|
US$
|
275,913
|
US$
|
191,154
|
Income taxes
paid
|
US$
|
677,301
|
US$
|
766,161
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sorl-auto-parts-reports-higher-sales-for-the-first-quarter-of-2016-300268889.html
SOURCE SORL Auto Parts, Inc.