Revenue Grows 26% and Net Income Grows 68% First Quarter Financial
Highlights -- Revenue increased 25.6% year-over-year to US$30.7
million -- Gross profit margin increased to 28.2% compared with
23.3% a year ago -- Net income rose 68.0% year-over-year to US$3.5
million; diluted EPS increased to US$0.19 from US$0.11 a year ago
ZHEJIANG, China, May 14 /Xinhua-PRNewswire-FirstCall/ -- SORL Auto
Parts, Inc. (NASDAQ:SORL) ("The Company"), a leading manufacturer
and distributor of commercial vehicle air brake valves as well as
related auto parts in China, announced today financial results for
the first quarter ended March 31, 2008. First Quarter Results
Revenue for the first quarter of 2008 was US$30.7 million, a 25.6%
increase as compared to US$24.4 million for the same period in
2008. Revenues from China's domestic OEM market, China's domestic
aftermarket and international markets for the first quarter of 2008
were US$10.7 million, US$9.9 million and US$10.1 million,
respectively. All three segments grew significantly, though overall
growth was slowed somewhat by the snow storms that paralyzed parts
of China in January and February and seriously affected
transportation and supply chains in central and east China. Gross
profit for the first quarter of 2008 was US$8.6 million, a 51.9%
increase as compared to US$5.7 million for the same period in 2007.
Gross profit margin reached 28.2% compared with 23.3% in the same
quarter last year, an increase of 490 basis points. The improved
gross margin was the result of several factors including increased
prices on certain products, the introduction of improved models
which command higher margins, increased sale of systems (as opposed
to individual components) which command higher margins, and
improved manufacturing efficiency. Operating expenses increased
38.6% from $3.0 million in the first quarter of 2007 to $4.2
million in the first quarter of 2008. As a percentage of revenue,
operating expenses increased from 12.4% in the first quarter of
2007 to 13.7% in the first quarter of 2008 primarily as a result of
foreign currency losses related to the depreciation of the US
dollar versus the Chinese currency and an approximately 100%
increase in research and development expenses related to developing
electronic truck parts. Operating income increased 66.9% or $1.8
million from $2.7 million in the first quarter of 2007 to $4.5
million in the first quarter of 2008. Operating margin increased
360 basis points from 10.9% in the first quarter of 2007 to 14.5%
in the first quarter of 2008 as a result of the increase in gross
margin slightly offset by the increase in operating expenses as a
percent of revenue. Net income increased 68% or $1.4 million from
$2.1 million in the first quarter of 2007, or $0.11 per share, to
$3.5 million in the first quarter of 2008, or $0.19 per share. Net
margin increased 290 basis points from 8.6% in the first quarter of
2007 to 11.5% in the first quarter of 2008. "We are very pleased
with our financial performance in the first quarter of 2008," said
Xiaoping Zhang, SORL Auto Parts' CEO and Chairman. "Top line growth
was strong across all of our market segments despite difficult
conditions in China due to severe snow storms and the related
transportation problems. As we entered 2008, while we remained
committed to growing our business, we also decided to place greater
emphasis on improving efficiency and profitability. During the
first quarter of 2008, our gross margin improved by almost 5%
demonstrating the success we are having relative to this goal,
particularly as relates to improving manufacturing productivity and
bringing higher margin products and systems to market. 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." Management will host a conference call
at 8:00 am ET on Wednesday, May 14, 2008. Listeners may access the
call by dialing #913-981-5529. A live webcast of the conference
call will also be available at http://www.viavid.net/ . A replay of
the call will be available from May 14, 2008 to June 3, 2008.
Listeners may access the replay by dialing 719-457-0820; passcode:
2438044. 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 March
31, 2008 and December 31, 2007 31-Mar-08 31-Dec-07 (Unaudited)
(Audited) Assets Current Assets Cash and Cash Equivalents US$
2,732,810 US$ 4,340,211 Accounts Receivable, Net of Provision
35,854,111 30,586,239 Notes Receivable 10,434,941 9,410,385
Inventory 11,083,242 8,220,373 Prepayments 2,530,131 1,336,212
Other current assets, including $0 and $1,761,007 from related
parties at March 31, 2008 and December 31, 2007, respectively
2,056,025 4,275,294 Total Current Assets 64,691,260 58,168,714
Fixed Assets Property, Plant and Equipment 29,592,712 27,889,182
Less: Accumulated Depreciation (6,927,803) (6,094,229) Property,
Plant and Equipment, Net 22,664,909 21,794,953 Land Use Rights, Net
14,374,566 13,889,705 Other Assets Deferred compensation cost-stock
options 54,662 69,571 Intangible Assets 79,889 76,150 Less:
Accumulated Amortization (28,102) (25,116) Intangible Assets, Net
51,788 51,034 Total Other Assets 106,450 120,605 Total Assets
US$101,837,185 US$ 93,973,977 Liabilities and Shareholders' Equity
Current Liabilities Accounts Payable and Notes Payable, including
$3,120,968 and $97,503 due to related parties at March 31, 2008 and
December 31, 2007, respectively US$ 7,417,133 US$ 5,305,172 Deposit
Received from Customers 2,657,046 2,079,946 Short term bank loans
1,025,511 3,370,328 Income tax payable 513,673 373,769 Accrued
Expenses 2,030,046 1,859,938 Other Current Liabilities 387,490
463,563 Total Current Liabilities 14,030,899 13,452,716 Minority
Interest 8,754,160 8,024,152 Shareholders' Equity Common Stock -
$0.002 Par Value; 50,000,000 authorized, 18,279,254 issued and
outstanding as of March 31, 2008 and December 31, 2007 respectively
36,558 36,558 Additional Paid In Capital 37,498,452 37,498,452
Statutory Reserves 2,237,597 1,882,979 Accumulated other
comprehensive income 8,456,090 5,432,189 Retained Earnings
30,823,429 27,646,931 79,052,126 72,497,109 Total Liabilities and
Shareholders' Equity US$101,837,185 US$ 93,973,977 SORL Auto Parts,
Inc. and Subsidiaries Consolidated Statements of Income For The
First Quarter Ended on March 31, 2008 and 2007 Three Months Ended
March 31, 2008 2007 Sales US$ 30,658,442 24,416,989 include: sales
to related parties 817,918 914,683 Cost of Sales 22,016,581
18,726,052 Gross Profit 8,641,861 5,690,937 Expenses: Selling and
Distribution Expenses 1,839,275 1,183,647 General and
Administrative Expenses 1,976,201 1,693,187 Financial Expenses
369,676 143,168 Total Expenses 4,185,152 3,020,002 Operating Income
4,456,709 2,670,935 Other Income 111,078 32,340 Non-Operating
Expenses (79,178) (4,089) Income (Loss) Before Provision for Income
Taxes 4,488,609 2,699,186 Provision for Income Taxes 563,474
362,465 Net Income Before Minority Interest & Other
Comprehensive Income US$ 3,925,135 2,336,721 Minority Interest
394,019 235,189 Net Income Attributable to Shareholders 3,531,116
2,101,532 Foreign Currency Translation Adjustment 3,359,890 621,941
Minority Interest's Share 335,989 62,194 Comprehensive Income
(Loss) 6,555,017 2,661,279 Weighted average common share - Basic
18,279,254 18,275,126 Weighted average common share - Diluted
18,290,126 18,333,009 EPS - Basic 0.19 0.11 EPS - Diluted 0.19 0.11
DATASOURCE: SORL Auto Parts, Inc. CONTACT: Richard Cai, Director of
Investor Relations at SORL Auto Parts, Inc., +86-577-6581-7720, or
; Dan Joseph of ICR, Inc., +86-21-6122-1077, or ; Bill Zima of ICR,
Inc., +1-203- 682-8200, or , all for SORL Auto Parts, Inc. Web
site: http://www.sorl.cn/ http://www.viavid.net/
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