Home > News
News
News
SORL Auto Parts Reports Higher Third-Quarter Net Sales In 2014
Published:2015-07-17  [Back]

ZHEJIANG, China, Nov. 14, 2014 /PRNewswire/ -- SORL Auto Parts, Inc. (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 third quarter of 2014 and the first nine months ended September 30, 2014.

Third Quarter 2014 Financial Highlights

  • Net Sales increased 7.7% to $58.7 million in the third quarter of 2014 year-over-year;
  • Aftermarket sales rose 31.5% compared to the aftermarket sales in the third quarter of 2013;
  • Gross margin was 26.3% compared to 28.3% in the same period of 2013;
  • Net Income attributable to stockholders was $2.9 million, or $0.15 per diluted share;
  • Cash and cash equivalents increased to $37.9 million with a current ratio of 4.1 to 1 at September 30, 2014;
  • Annual guidance was reiterated for sales of $230 million and net income of $13.0 million.

Mr. Xiaoping Zhang, SORL's Chief Executive Officer and Chairman, stated, "We continue to capture market share in the domestic Chinese market as we grew by 16.4% in the 2014 third quarter compared with a decline in commercial vehicle sales of 13.2% and with trucks sales declining by 21.3%. Our OEM and aftermarket sales continued to increase as our growing portfolio of advanced products address the needs of a greater range of vehicles. This expanding competitive advantage positions us to capture additional domestic market share in the future through greater penetration of current markets and expansion into new market segments."

"The advanced features, high quality and low cost of our products developed by our research and development program, are increasingly recognized through greater sales in the domestic aftermarket and OEM markets. We continue to focus on areas with government public transportation support such as increased sales into the domestic bus market, infrastructure projects and the ongoing expansion of the highway and railway systems. Exports are growing in certain markets, but slow economic growth in Europe, especially in the Ukraine, caused an overall decline in our exports. We remain well positioned to take advantage of any strength in the European markets."   

Ms. Jinrui Yu, SORL's Chief Operating Officer, commented, "We maintain a strong balance sheet to provide the resources to support our current operations and finance our future growth. Our investment in research and development has provided the upgrades and new products to enhance our customer relationships with a large portfolio of advanced products.  New production equipment enhances our productivity to keep unit costs under control.  More efficient manufacturing of advanced products will help maintain gross margins and cash flow."

Third Quarter 2014 Financial Performance

For the third quarter of 2014, net sales increased by 7.7% to $58.7 million from $54.5 million in the third quarter of 2013. Revenues from the Company's domestic OEM customers increased by 7.8% to $24.0 million from $22.3 million in the third quarter of 2013. Sales from China's domestic aftermarket rose 31.5% to $17.2 million in the third quarter of 2014 from $13.1 million in the same quarter of 2013. Revenues from international markets declined to $17.5 million, compared to $19.1 million in the third quarter of 2013, mainly due to lower sales in Europe.   

SORL's commercial vehicle brake sales increased by 11.1% to $48.1 million, which represented 82.0% of total sales in the third quarter of 2014, compared to the commercial vehicle brake sales in the third quarter in 2013. This sales growth improved SORL's leading market share in China as unit sales in the commercial vehicle market declined by 13.2% and truck market unit sales decreased by 21.3% in the third quarter of 2014, compared to the sales in the commercial vehicle market and truck market unit sales in the same quarter last year, respectively. Advanced new products and upgraded products have enhanced the Company's ability to supply a larger number of vehicles to capture greater market share in the commercial vehicle market. The Company's passenger vehicle brake sales declined slightly to $10.6 million in the third quarter of 2014, compared with sales of $11.2 million in the third quarter of 2013.  

The gross profit for the third quarter of 2014 increased slightly to $15.5 million from $15.4 million for the third quarter of 2013. Gross margin for the third quarter of 2014 was 26.3%, compared with a gross margin of 28.3% in the same quarter of 2013, which is primarily due to new product promotions initiated during the third quarter of 2014.  

Operating expenses increased to $11.9 million in the third quarter of 2014 from $11.4 million in the third quarter of 2013. The increase in operating expenses in the third quarter of 2014 mainly reflected higher selling and distribution expenditures due to higher freight and packaging expenses, and an increase in administrative fees. As a percentage of revenue, operating expenses were 20.2% in the third quarter of 2014, compared with 20.8% in the third quarter of 2013.  

  • Selling and distribution expenses were $5.9 million, or 10.0% of quarterly revenues, compared with $5.3 million, or 9.7% in the same quarter of 2013. Higher expenses were primarily due to higher packaging and freight expenses during the third quarter of 2014.
  • General and administrative ("G&A") expenses in the third quarter of 2014 were $3.8 million, or 6.4% of revenue, compared with $3.7 million, or 6.8% in the third quarter of 2013. The increase in expenses was mainly due to higher personnel and administrative expenses in the third quarter of 2014.
  • Research and development ("R&D") expenses were $2.2 million in the third quarter of 2014 compared with $2.4 million in the third quarter of 2013. As a percentage of revenue, R&D was 3.8% in the third quarter of 2014, compared with 4.4% of revenue in the third quarter of 2013. The R&D program continues to mainly focus on the development of new, higher-margin, electronically controlled mechatronic products and upgrading the Company's traditional brake products to capture greater market share.

Financial expenses were $634,282 in the third quarter of 2014 compared to $770,418 in the third quarter of 2013, primarily due to reduced interest expense related to bank loans, and discounted bank and trade acceptance notes.

Income before provision for income taxes was $3.6 million for the third quarter of 2014 compared to $4.1 million for the third quarter of 2013. The slightly lower income was primarily due to higher operating expenses and reduced other operating income in the third quarter of 2014 compared with the third quarter of 2013. The pretax income margin was 6.1% in the third quarter of 2014, compared with 7.5% in the third quarter of 2013. 

The provision for income taxes was $0.4 million, or a 11.0% tax rate, in the third quarter of 2014, which is compared with $0.3 million, or a 8.2% tax rate, in the third quarter in 2013.

Net income attributable to stockholders for the third quarter of 2014 was $2.9 million, or $0.15 per basic and diluted share, compared with $3.3 million, or $0.17 on per basic and diluted share, in the third quarter of 2013.

First Nine Months 2014 Financial Performance

Net sales for the first nine months of 2014 increased 13.8% to $174.4 million from $153.3 million for the first nine months of 2013, as each segment experienced growth in the period. Revenues from the Company's China OEM customers increased 11.6% to $84.5 million from $75.7 million in the same period in 2013. Revenues from China's domestic aftermarket increased 22.8% to $43.1 million from $35.1 million in the first nine months of 2013. Revenues from international markets increased 9.9% to $46.8 million from $42.5 million in the first nine months of 2013.

Gross profit for the first nine months of 2014 increased 11.0% to $49.4 million from $44.5 million in the same period in 2013. Gross margin for the first nine months of 2014 decreased to 28.3% from 29.0% for the first nine months of 2013.

Operating income for the first nine months of 2014 increased to $14.1 million from $12.7 million in the same period in 2013. Operating margin was 8.1% for the first nine months of 2014 versus 8.3% in first nine months of 2013.  

Net income attributable to stockholders for the first nine months of 2014 was $9.8 million, or $0.51 per basic and diluted share, compared with $8.6 million, or $0.44 per basic and diluted share, in the same period in 2013.

Balance Sheet

As of September 30, 2014, the Company had cash and cash equivalents of $37.9 million compared to $28.2 million on December 31, 2013. Total equity increased to $214.5 million at September 30, 2014 compared with $199.5 million at December 31, 2013. On September 30, 2014, working capital was $158.7 million with a current ratio of 4.1 to 1.

Recent Events

In July 2014, SORL entered into an agreement to supply its braking products to Sichuan Hyundai Motor Company ("SHMC") for its Chuanghu brand premium heavy-duty trucks. SHMC is a joint venture owned equally by Ziyang Nanjun Automobile Co., Ltd. and Hyundai Motor Group in South Korea.

In September 2014, SORL began supplying its three-pedal braking system to the new model M3000 heavy-duty vehicles produced by the Shaanxi Automotive Group.

Business Outlook

For the fiscal year 2014, management reiterated that net sales are expected to be approximately $230.0 million and net income is expected to be approximately $13.0 million. 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 Friday, November 14, 2014 at 8:00 A.M. EST/ 9:00 P.M. Beijing Time to discuss its 2014 third quarter financial results. Listeners may access the call by dialing U.S. toll free number +1-877-407-0778, +1-201-689-8565 for international callers, and Mainland China toll free number +86-400-120-2840. A live webcast of the conference call will also be available athttp://www.sorl.cn.

A replay of the call will be available shortly after the conference call through 11:59 P.M. EST on December 14, 2014, or 12:59 A.M. Beijing Time on December 15, 2014. The replay dial-in numbers are:  U.S. toll free number +1-877-660-6853, or the international number is +1-201-612-7415; using Conference ID "13595105" 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. 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) athttp://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                                                       

Kevin Theiss
Grayling
+1.646.284.9409
kevin.theiss@grayling.com

- Tables Follow -

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2014 and December 31, 2013










September 30, 2014


December 31, 2013




(Unaudited)


(Audited)


Assets





Current Assets






Cash and cash equivalents

US$

37,902,347

US$

28,241,983


Accounts receivable, net of provision


65,347,362


57,912,384


Bank acceptance notes from customers


14,390,355


20,186,787


Inventories


81,310,370


76,364,019


Prepayments


6,595,695


3,773,750


Current portion of prepaid capital lease interest


326,269


453,053


Other current assets


1,871,590


2,537,300


Deferred tax assets


1,829,624


1,392,955


 Total Current Assets


209,573,612


190,862,231

Fixed Assets






Machinery


50,225,617


46,475,961


Molds


1,418,227


1,388,218


Office equipment


2,110,131


1,960,476


Vehicles


2,062,119


2,248,280


Buildings


9,103,122


8,910,501


Machinery held under capital lease


29,012,601


28,396,853


Less: accumulated depreciation


(50,114,599)


(44,175,888)


    Property, plant and equipment, net


43,817,218


45,204,401


Leasehold improvements


220,632


264,612







Land Use Rights, Net


14,437,566


14,409,170







Other Non-Current Assets












Intangible assets


81,051


176,302


Less: accumulated amortization


(40,526)


(126,031)


     Intangible assets, net


40,525


50,271


Security deposits on lease agreement


1,857,549


1,818,244


Non-current portion of prepaid capital lease interest


151,753


371,355


     Total Other Non-Current Assets


2,049,827


2,239,870


Total Assets

US$

270,098,855

US$

252,980,284








Liabilities and Shareholders' Equity





Current Liabilities






Accounts payable, including $792,275 and $810,310
due to related parties at September 30, 2014 and
December 31, 2013, respectively.

US$

8,627,664

US$

13,290,282


Deposit received from customers


15,733,550


13,931,658


Short term bank loans


8,187,452


4,526,863


Income tax payable


477,655


494,658


Accrued expenses


12,324,370


10,066,969


Current portion of capital lease obligations


3,715,098


3,636,488


Other current liabilities, including $203,560
and $94,246 due to related parties at September 30, 2014
and December 31, 2013, respectively.


1,853,114


256,430


 Total Current Liabilities


50,918,903


46,203,348







Non-Current Liabilities






Non-current portion of capital lease obligations


4,643,873


7,272,975


 Total Non-Current Liabilities


4,643,873


7,272,975








     Total Liabilities

US$

55,562,776

US$

53,476,323







Stockholders' Equity












Preferred stock - no par value; 1,000,000 authorized;
none issued and outstanding as of September 30, 2014
and December 31, 2013


-


-


Common stock - $0.002 par value; 50,000,000 authorized,
19,304,921 issued and outstanding as of September 30, 2014
and December 31, 2013


38,609


38,609


Additional paid-in capital


42,199,014


42,199,014


Reserves


11,600,638


10,609,435


Accumulated other comprehensive income


26,357,421


22,465,720


Retained earnings


113,356,629


104,544,120


Total SORL Auto Parts, Inc. Stockholders' Equity


193,552,311


179,856,898


Noncontrolling Interest In Subsidiaries


20,983,768


19,647,063


Total Equity


214,536,079


199,503,961


Total Liabilities and Stockholders' Equity

US$

270,098,855

US$

252,980,284








SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Income and Comprehensive Income

For The Three Months and Nine Months Ended September 30, 2014 and 2013 (Unaudited)

































Three Months Ended September 30,


Nine Months Ended September 30,







2014


2013


2014


2013














Sales





US$

58,702,505

US$

54,488,640

US$

174,419,540

US$

153,317,804

Include: sales to related parties




534,195


825,101


2,169,778


2,067,673

Cost of sales




43,240,746


39,075,431


125,056,960


108,858,673

Gross profit






15,461,759


15,413,209


49,362,580


44,459,131

Expenses:













Selling and distribution expenses




5,871,463


 

5,277,020


18,050,068


 

14,596,863

General and administrative expenses




3,759,307


3,696,715


12,786,335


13,079,992

Research and development expenses




2,242,620


2,384,902


5,934,377


5,392,513

Total operating expenses




11,873,390


11,358,637


36,770,780


33,069,368

Other operating income





 

545,752


 

444,791


 

1,471,014


 

 

1,280,683

Income from operations





 

4,134,121


 

4,499,363


 

14,062,814


 

12,670,446

Other income





 

100,534


413,862


352,130


505,215

Financial expenses





(634,282)


(770,418)


(1,773,223)


(2,208,756)

Non-operating expenses




(44,637)


(77,073)


(277,945)


(272,374)














Income before provision for income taxes



3,555,736


4,065,734


12,363,776


10,694,531














Provision for income taxes




391,988


332,027


1,556,433


1,040,215

Net income





US$

 

3,163,748

US$

3,733,707

US$

10,807,343

US$

9,654,316














Net income attributable to
noncontrolling interest in subsidiaries




262,813


423,087


1,003,631


1,075,525

Net income attributable to
common stockholders



US$

2,900,935

US$

3,310,620

US$

9,803,712

US$

8,578,791

Comprehensive income:










Net income





US$

3,163,748

US$

3,733,707

US$

10,807,343

US$

9,654,316














Foreign currency translation adjustments



 

(108,081)


1,023,444


 

4,224,775


4,833,515

Comprehensive income





 

3,055,667


4,757,151


 

15,032,118


14,487,831

Comprehensive income attributable to
noncontrolling interest in subsidiaries

193,652


532,333


1,336,705


1,564,259

 

Comprehensive
income attributable
to common shareholders



US$

 

 

 

2,862,015

 

 

 

US$

 

 

 

4,224,818

 

 

 

US$

 

 

 

13,695,413

 

 

 

US$

 

 

 

12,923,572














Weighted average common share
- basic



19,304,921


19,304,921


19,304,921


19,304,921














Weighted average common share
- diluted



19,304,921


19,304,921


19,304,921


19,304,921














EPS - basic






US$

 

0.15

US$

0.17

US$

 

0.51

US$

0.44














EPS - diluted





US$

0.15

US$

0.17

US$

0.51

US$

0.44

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For The Nine Months Ended September 30, 2014 and 2013 (Unaudited)






Nine Months Ended September 30,






2014


2013









Cash Flows from Operating Activities





Net income




US$

10,807,343

US$

9,654,316

Adjustments to reconcile net income to net cash





from operating activities:















Allowance for doubtful accounts




1,697,068


1,371,727

Depreciation and amortization




5,597,867


5,617,369

Deferred income tax




(405,594)


(252,018)

Loss on disposal of fixed assets



35,655


5,196

Changes in assets and liabilities:






Account receivable




(7,790,502)


8,037,713

Bank acceptance notes from customers



6,153,022


(12,252,121)

Other currents assets




755,849


(1,756,558)

Inventories





(3,305,061)


(12,687,012)

Prepayments




(2,716,212)


(319,823)

Prepaid capital lease interest



362,790


342,776

Accounts payable



(4,895,398)


(6,259,596)

Income tax payable




(26,461)


-

Deposits received from customers




1,506,420


7,317,768

Other current liabilities and accrued expenses



3,630,457


2,248,257

Net Cash Flows Provided By Operating Activities


11,407,243


1,067,994









Cash Flows from Investing Activities






Acquisition of property and equipment



(2,994,571)


(3,356,852)

Proceeds of disposal of fixed assets



57,339


14,602

Net Cash Flows Used In Investing Activities


(2,937,232)


(3,342,250)









Cash Flows from Financing Activities






Proceeds from bank loans

28,383,953


60,307,996

Repayment of bank loans

(24,924,952)


(69,079,151)

Repayment of capital lease



(2,776,407)


(11,400,163)

Proceeds from capital lease



-


12,783,841

Net Cash flows Provided By (Used In) Financing Activities


682,594


(7,387,477)





Effects on changes in foreign exchange rate


507,759


928,771





Net change in cash and cash equivalents


9,660,364


(8,732,962)





Cash and Cash Equivalents- Beginning of the Year


28,241,983


41,253,353





Cash and Cash Equivalents - End of the Period


US$

37,902,347

US$

32,520,391





Supplemental Cash Flow Disclosures:






Interest paid




US$

1,126,215

US$

1,247,619

Tax paid




US$

1,983,823

US$

1,772,230

 

Disclaimer | Privacy Policy | Term of Use Copyright 2004-2018 SORL Auto Parts, Inc.