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 ended March 31, 2017.'" data-reactid="11" type="text">ZHEJIANG, China, May 15, 2017 /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 first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights'" data-reactid="12" type="text"> First Quarter 2017 Financial Highlights

• Net sales for the 2017 first quarter increased by 37.4% to $73.9 million from $53.8 million in the first quarter of 2016; 
• Gross profit increased by 42.4% with the gross margin rising to 27.8% from 26.8% in the first quarter of 2016; 
• Net Income attributable to stockholders was $6.9 million, or $0.36 per diluted share, compared with $0.4 million, or $0.02 per diluted share in the first quarter of

Mr. Xiaoping Zhang, SORL's Chief Executive Officer and Chairman, stated, "We are pleased to announce another quarter of robust performance as we posted growth in all lines of our business and achieved margin expansions from top to bottom. Since the Chinese government introduced rigorous regulations on overloading in the truck market to reduce emissions and improve safety, we have been gaining market share with our advanced new products and superior performance. On the cost side, we continued to exceed our goals due to significantly improved economy of scale, strengthened receivables collections and better-than-expected cost control results."

First Quarter 2017 Financial Results

For the first quarter of 2017, net sales increased by 37.4% to $73.9 million from $53.8 million in the 2016 first quarter. Revenues from the Company's domestic OEM customers were $41.8 million, an increase of 48.8% from $28.1 million in the first quarter of 2016. The higher OEM sales were mainly due to higher truck sales in the first quarter of 2017. During the first quarter, the total commercial vehicle sales in China grew by 22.9%, while total truck sales were up by 30.9% led by a significant increase of 93.0% year-over-year in the heavy-duty segment.

SORL's aftermarket sales in China grew by 37.1% to $18.1 million for the first quarter of 2017, compared with $13.2 million for the same period of 2016. New vehicle sales in China and the expiration of their OEM warranties assisted our aftermarket business growth. Revenues from SORL's international markets sales increased 12.0% to $14.0 million, compared to $12.5 million in the first quarter of 2016 due to an organic expansion of the customer base across several overseas markets.

The gross profit for the first quarter of 2017 increased by 42.4% to $20.5 million from $14.4 million a year ago. Gross margin was 27.8% compared with 26.8% in the first quarter of 2016.

In the first quarter of 2017, operating expenses decreased 17.8% to $11.7 million from $14.2 million in the same quarter of 2016. The decrease reflected a decline of 41.6% in general and administrative expenses. As a percentage of revenue, operating expenses were 15.8% in the first quarter of 2017, compared with 26.4% in the first quarter of 2016.

• Selling and distribution expenses remained the same at $5.6 million, yet decreased to 7.6% of quarterly revenues from 10.3% a year ago.
• General and administrative ("G&A") expenses in the first quarter of 2017 were $4.0 million, or 5.5% of quarterly revenues compared with $6.9 million, or 12.9% of total revenues in the first quarter of 2016.  The decrease in G&A expenses was mainly due to a decrease in allowance for doubtful accounts during this quarter.
• Research and development ("R&D") expenses were $2.1 million in the first quarter of 2017 compared with $1.7 million in the first quarter of 2016. As a percentage of revenue, R&D expenses were 2.8% in the first quarter of 2017 compared with 3.2% of revenue in the first quarter of 2016.

Income from operations increased by 761.7% to $9.6 million in the first quarter of 2017 compared with $1.1 million in the first quarter of 2016. As a percentage of revenue, income of operations was 13.0% in the first quarter of 2017, compared with 2.1% in the first quarter of 2016.

Financial expenses were $0.5 million in the first quarter of 2017 compared with $0.2 million in the first quarter of 2016.

Income before income taxes was $9.0 million for the first quarter of 2017, compared to $0.4 million for the same quarter of 2016. The increase in income before income taxes reflected higher sales and operating income with lower operating expenses during the first quarter of 2017 compared to the first quarter of 2016.

The provision for income taxes was $1.3 million in the first quarter of 2017, compared with a gain of $0.3 million in the first quarter of 2016.

Net income attributable to stockholders for the first quarter of 2017 was $6.9 million, or $0.36 per basic and diluted share, compared with $0.4 million, or $0.02 per basic and diluted share a year ago.

Balance Sheet

As of March 31, 2017, the Company had cash and cash equivalents of $11.5 million compared to $8.1 million on December 31, 2016. Total equity increased to $171.0 million at March 31, 2017 compared with $162.4 million at December 31, 2016. On March 31, 2017, working capital was $107.8 million with a current ratio of 1.7 to 1.

Business Outlook

For the fiscal year 2017, management has increased annual guidance of net sales to be approximately $315 million and net income to be approximately $27.5 million. These targets are based on the Company's current views on the operating and market conditions, which are subject to change.