ZHEJIANG, China, May 16, 2011 /PRNewswire-Asia-FirstCall/ -- SORL Auto Parts, Inc. (NASDAQ:SORL - News) ("SORL" or "The Company"), a leading manufacturer and distributor of automotive brake systems as well as other key safety-related auto parts inChina, announced today financial results for the first quarter ended March 31, 2011.

First Quarter 2011 Financial Highlights

• Revenues rose 34.6% year-over-year;
• OEM sales rose 39.7% year-over-year;
• Gross margin was 28.1% in the first quarter of 2011;
• Net income rose 34.0% year-over-year;
• EPS $0.25 versus $0.19 in the first quarter of 2010.

Mr. Xiaoping Zhang, SORL Auto Parts' Chief Executive Officer and Chairman, stated, "We are pleased to report continued strong growth from all segments of our business. While our OEM business achieved the largest sales gains, we are pleased to see more balance in aftermarket sales and exports as our production capacity has been expanded to meet market demand. We continue to build relationships with existing OEM customers and penetrate new markets."

Financial Performance

For the first quarter of 2011, net sales were $52.0 million, a 34.6% increase compared to $38.6 million for the first quarter of 2010. Revenues from the Company's domestic OEM customers were $32.0 million, a 39.7% increase over the first quarter of 2010. Revenues from China's domestic aftermarket were $8.6 million, a 32.3% increase over the previous year's first quarter. Revenues from international markets were $11.4 million, a 23.9% increase from the same period in 2010. The sales increases were primarily due to continued growth in China's auto market, a greater number of vehicles in operation in China requiring more replacement parts, and an improved foreign customer base. Further, OEM customers increasingly purchased the Company's integrated systems and modular supplies of air brake systems instead of single products, which also consolidated our strategic partnerships with these OEMs. We increasingly focused on the light-duty, bus and agricultural vehicle markets in 2011.

First quarter gross profit increased 25.6% to $14.6 million from $11.6 million a year ago. Gross margin was 28.1%, slightly less than the 30.1% in the same period a year ago. The gross margin decrease was primarily the result of higher material and labor expenses, and the impact of appreciation in the value of Chinese currency against other currencies. The Company believes production efficiencies and greater sales of higher-profit, new products will help maintain its gross profit margin.

Operating expenses increased 20% to $8.5 million in the first quarter of 2011 from $7.0 million in the first quarter of 2010. As a percentage of revenue, operating expenses decreased to 16.3% in the first quarter 2011 from 18.2% in the first quarter of 2010 mainly as greater expenses were partially offset by higher sales.

Selling and distribution expenses were $3.1 million, or 5.9% of quarterly revenue compared with $2.4 million, and 6.2% in the same quarter of 2010. General and administrative (G&A) expenses in the first quarter of 2011 were $2.9 million, or 5.5% of revenue compared with $3.0 million, or 7.8% in the previous year's first quarter. Research and development (R&D) expenses were almost $2.0 million, or 3.8% of revenue in the 2011 first quarter compared with $1.5 million, or 3.9% in the first quarter a year ago.

Operating income increased 33.7% to $6.1 million for the first quarter 2011 from $4.6 million for the same quarter last year.

Net income attributable to stockholders for the first quarter of 2011 increased 34.0% to $4.9 million, or $0.25 per basic and diluted share, from $3.6 million, or $0.19 million per basic and diluted share, in the first quarter of 2010.

As of March 31, 2011, the Company had cash and cash equivalents of $12.2 million as compared to $6.7 million on December 31, 2010. Bank acceptance note to vendors were $7.1 million compared with $1.0 million at December 31, 2010. Total equity increased to$154.7 million at the end of March 2011 compared with $147.8 million at December 31, 2010. Net cash flow from operating activities was $8.3 million compared with $1.2 million for the first quarter of 2010.

Recent Developments

SORL Auto Parts, Inc. announced that its operating subsidiary, Ruili Group Ruian Auto Parts Co., Ltd. (Ruili), was awarded a "core supplier" designation from the China FAW Group Corporation (FAW Group). SORL was one of only 26 suppliers to be recognized as an FAW Group "core supplier."  We believe that this will create an opportunity for us to increase our sales to FAW Group. FAW Group is one of SORL's top three current customers, and we believe that we can increase sales to FAW Group by 10% to 15% in 2011. FAW Group is one of the largest auto producers in China. .

Business Outlook

For the second quarter of fiscal year 2011, management is expecting net sales to be approximately $65 million and net income to be approximately $6.1million. These targets are based on the Company's current views on the operating and market conditions, which are subject to change.

Conference Call

Management will host a conference call on Monday, May 16, 2011 at 8:00 a.m. EDT / 8:00 p.m. Beijing Time to discuss its 2011 first quarter financial results. Listeners may access the call by dialing U.S. toll free number +1-877-407-0778begin_of_the_skype_highlighting              +1-877-407-0778      end_of_the_skype_highlighting, or +1-201-689-8565begin_of_the_skype_highlighting              +1-201-689-8565      end_of_the_skype_highlighting for international callers. 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 6, 2011, or 11:59 a.m. Beijing Time on June 7, 2011. The replay dial-in numbers are:  U.S. toll free number +1-877-660-6853begin_of_the_skype_highlighting              +1-877-660-6853      end_of_the_skype_highlighting, or the international number is +1-201-612-7415 begin_of_the_skype_highlighting              +1-201-612-7415      end_of_the_skype_highlighting; using Account "286" and Conference ID "372506" to access the replay.

About SORL Auto Parts, Inc.

As a leading manufacturer and distributor of automotive brake systems and other key safety related auto parts in China, management believes that SORL Auto Parts, Inc. ranks No. 1 for market share in China in the segment for brake systems for commercial vehicles, such as trucks and buses. 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 system and others. The Company has four authorized international sales centers in Australia, UAE, India, andthe United States. 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 includes 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) athttp://www.sec.gov.

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