- EPS of $0.21 in the 2009 third quarter - ZHEJIANG, China, Nov. 13
/PRNewswire-Asia-FirstCall/ -- SORL Auto Parts, Inc. (NASDAQ:SORL)
("SORL" or "The Company"), a leading manufacturer and distributor
of commercial vehicle air brake systems as well as related auto
parts in China, announced financial results for the third quarter
ended September 30, 2009. SORL provides both year over year and
sequential comparisons when discussing its third quarter 2009
financial performance. Third Quarter Financial Highlights --
Revenues rose 14.3% from the 2009 second quarter; -- OEM sales were
up 67.3% year-over-year; -- Gross margin was 26.1% up from 25.5% in
the third quarter of 2008, -- Net income rose 62.7% year-over-year
and 27.1% quarter-over-quarter; -- EPS $0.21 versus $0.13 in the
corresponding period in 2008; -- Cash and equivalents were $12.5
million; current ratio of 4.8 to 1. Business outlook We project
approximately $120 million of sales revenue and $11 million of net
income attributable to our common stockholders for the full year
ending December 31, 2009. Financial Performance For the third
quarter of 2009, net sales were $34.0 million, a $1 million or 3.1%
increase over the $33.0 million in the same quarter of 2008, and a
14.3% gain over the net sales of $29.7 million in the second
quarter of 2009. The higher sales in the domestic Chinese market,
especially the strong growth of the OEM business, partially
resulted from the steady recovery of China's economy and
accelerated infrastructure construction spending. Revenues from
China's domestic OEM market were $17.4 million, a $7.0 million or
67.3% increase over the $10.4 million in 2008 third quarter sales,
and a gain of 23.4% compared with the 2009 second quarter sales.
Revenues from China's domestic aftermarket were $8.7 million, a
$0.3 million or 3.6% increase over the $8.4 million in the year ago
same quarter, and a 20.8% gain compared with the 2009 second
quarter. Revenues from the international markets were $7.8 million,
a decline of $6.3 million or 44.7% compared with the $14.1 million
of the third quarter of 2008, and a 7.1% reduction compared with
the 2009 second quarter. Gross profit was $8.9 million for the
third quarter of 2009, an increase of $0.5 million or 5.4% from
$8.4 million in the 2008 third quarter, and was also 5.4% above the
2009 second quarter profit. Gross margin of 26.1% in the 2009 third
quarter increased 60 basis points from 25.5% in the third quarter
last year. Increased gross margin is the result of the Company's
successful strategic shift which emphasizes production efficiency,
product mix (including sales of its higher-margin new valve
products), and technology content. Operating expenses in the third
quarter of 2009 were $4.0 million, a decline of $1.5 million or
27.8% from the $5.5 million in the 2008 third quarter, and an 8.5%
reduction from the 2009 second quarter. As a percentage of revenue,
operating expenses were 11.7% in the 2009 third quarter compared
with 16.7% in the same quarter last year. The lower percentage of
operating expenses in the 2009 third quarter was due to reduced
expenses, especially general and administrative expenses and
selling and distribution expenses. General and Administrative
expense declined to $1.8 million, a 40.2% reduction from the $3.0
million in the 2008 third quarter primarily because the provision
for bad debts reversed to a positive in the 2009 third quarter.
Selling expenses declined due to lower international shipping
expenses and increased domestic logistics efficiency. Operating
income in the third quarter of 2009 was $4.9 million, a 68.1%
increase over the $2.9 million in the 2008 third quarter, and a
20.2% increase over the $4.1 million reported in the 2009 second
quarter. Operating margin was 14.4% in the 2009 third quarter, an
increase of 560 basis points compared with the operating margin of
8.8% in the third quarter last year, and compared with 13.7% for
the second quarter of 2009. The increase in operating income and
margin is due to sales growth, a higher gross margin and lower
operating expenses during the third quarter of 2009. Net income
attributable to stockholders for the third quarter of 2009 was $3.8
million, or $0.21 per diluted share, a 62.7% gain over the $2.3
million, or $0.13 per diluted share, in the year ago third quarter,
and a 27.1% increase over the $3.0 million or $0.16 per diluted
share, in the 2009 second quarter. At September 30, 2009, the
Company had cash and cash equivalents of $12. 5 million compared
with $7.8 million at December 31, 2008. Working capital was $70.5
million at September 30, 2009, with a current ratio of 4.8 to 1.
Shareholders' equity grew by 8.7% to $98.1 million at September 30,
2009 from $90.3 million at December 31, 2008. SORL announced on
November 11, 2009, it has entered into a joint venture agreement
with MGR, a Hong Kong-based global auto parts distribution
specialist firm. The new joint venture, named SORL International
Holding, Ltd. ("SIH"), will be primarily devoted to expanding
SORL's international sales network in Asia-Pacific and creating a
larger footprint in Europe, the Middle East and Africa with the aim
of creating a global distribution network. SORL holds a 60%
interest in the joint venture. The three principals of MGR have
held senior positions at WABCO Holdings (NYSE:WBC) building its
international division. "The central government's 4 trillion RMB
stimulus package has improved China's economy as GDP rose by 8.9%
in the 2009 third quarter," said Xiaoping Zhang, SORL Auto Parts'
CEO and Chairman. "We are experiencing improved results in many
areas on both a sequential basis and year-over-year basis. Sales
increased 14.3%, operating income increased 68.1% and net income
rose 27.1% between the second and third quarters of 2009. "The
recovery of the Chinese economy is improving the commercial vehicle
market as it expands infrastructure construction and highway
building which requires more trucks. Rising urbanization requires
more buses to move people. Additionally, the government's programs
to improve the agriculture market with direct vehicle subsidies as
well as incentives to trade in older, less fuel efficient and less
environmentally friendly vehicles is also improving the commercial
vehicle market. Production of heavy-duty vehicles including heavy
trucks, trailers and chassis for the three month ended September
30, 2009 was up 67.2% year-over-year and 10.2% quarter-over-quarter
higher. "International sales remained challenging but we see signs
of recovery especially in the aftermarket. We have established a
new joint venture with MGR, whose senior team has a proven record
of sales growth in key overseas markets. We are very confident we
will further expand our international market share in the future."
Mr. Zhang concluded. Conference Call Management will host a
conference call at 8:00 am EST, on Friday, November 13, 2009 to
discuss its third quarter 2009 financial results. Listeners may
access the call by dialing #1-877-407-0789 or # 1-201-689-8562 for
international callers. A live webcast of the conference call will
also be available at http://www.sorl.cn/ . A replay of the call
will be available from November 13, 2009 to November 20, 2009.
Listeners may access the replay by dialing 1-877-660-6853 or #
1-201-612-7415 for overseas callers; using account: 3055;
conference ID: 337306. About SORL Auto Parts, Inc. As China's
leading manufacturer and distributor of automotive brake systems,
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/ . For more information, please contact: Ben
Chen Director of Investor Relations SORL Auto Parts, Inc. Tel:
+86-577-6581-7721 Email: Kevin Theiss Grayling Tel: +1-646-284-9409
Email: SORL Auto Parts, Inc. and Subsidiaries Consolidated Balance
Sheets September 30, 2009 and December 31, 2008 September 30,
December 31, 2009 2008 (Unaudited) (Audited) Assets Current Assets
Cash and Cash Equivalents US$ 12,542,642 US$ 7,795,987 Accounts
Receivable, Net of Provision 42,598,949 35,797,824 Notes Receivable
11,270,861 7,536,534 Inventory 15,874,610 19,105,845 Prepayments,
including $0 and $187,813 to related parties at September 30, 2009
and December 31, 2008, respectively 6,083,150 1,013,440 Other
current assets, including $154,995 and $1,906,070 to related
parties at September 30, 2009 and December 31, 2008, respectively
493,450 4,445,778 Total Current Assets 88,863,662 75,695,408 Fixed
Assets Property, Plant and Equipment 34,329,214 32,927,306 Less:
Accumulated Depreciation (10,910,816) (8,951,886) Property, Plant
and Equipment, Net 23,418,398 23,975,420 Leasehold Improvements in
Progress 465,818 -- Land Use Rights, Net 14,279,268 14,514,983
Other Assets Deferred compensation cost-stock options -- 9,935
Intangible Assets 161,480 161,347 Less: Accumulated Amortization
(50,543) (39,018) Intangible Assets, Net 110,937 122,329 Deferred
tax assets 370,305 189,228 Total Other Assets 481,242 321,492 Total
Assets US$ 127,508,388 US$ 114,507,303 Liabilities and
Shareholders' Equity Current Liabilities Accounts Payable and Notes
Payable, including $1,676,153 and $0 to related parties at
September 30, 2009 and December 31, 2008, respectively US$
6,694,424 US$ 4,623,850 Deposit Received from Customers 6,188,582
6,295,857 Income tax payable 1,677,143 340,138 Accrued Expenses
3,253,979 2,389,314 Other Current Liabilities 531,957 460,124 Total
Current Liabilities 18,346,085 14,109,283 Non-Current Liabilities
Deferred tax liabilities 171,062 106,826 Total Liabilities
18,517,147 14,216,109 Stockholders' Equity Preferred Stock - No Par
Value; 1,000,000 authorized; none -- -- Common Stock - $0.002 Par
Value; 50,000,000 authorized, 18,279,254 issued and outstanding as
of September 30, 2009 and December 31, 2008 36,558 36,558
Additional Paid In Capital 37,498,452 37,498,452 Reserves 3,902,190
3,126,086 Accumulated other comprehensive income 10,926,200
10,848,248 Retained Earnings 45,749,676 38,774,684 Total SORL Auto
Parts, Inc. stockholders' equity 98,113,076 90,284,028
Noncontrolling Interest In Subsidiaries 10,878,165 10,007,166 Total
Equity 108,991,241 100,291,194 Total Liabilities and Stockholders'
Equity US$ 127,508,388 US$ 114,507,303 SORL Auto Parts, Inc. and
Subsidiaries Consolidated Statements of Income and Comprehensive
Income (Unaudited) For The Three Months and Nine Months Ended
September 30,2009 and 2008 Three Months Ended Nine Months Ended
Sept 30, Sept 30, 2009 2008 2009 2008 Sales US$ 33,989,937
32,967,579 83,973,887 105,812,140 Include: sales to related parties
181,873 540,304 383,484 2,362,453 Cost of Sales 25,116,609
24,550,613 61,166,233 77,343,967 Gross Profit 8,873,328 8,416,966
22,807,654 28,468,173 Expenses: Selling and Distribution Expenses
2,131,054 2,261,143 5,509,506 6,872,221 General and Administrative
Expenses 1,804,368 3,018,390 6,870,181 7,712,808 Including:
Research and development expenses 410,397 721,897 1,968,155
2,458,859 Financial Expenses 37,216 221,694 75,307 974,690 Total
Expenses 3,972,638 5,501,227 12,454,994 15,559,719 Operating Income
4,900,690 2,915,739 10,352,660 12,908,454 Other Income 121,567
276,752 337,028 610,592 Non-Operating Expenses (61,226) (119,677)
(75,842) (374,640) Income Before Provision for Income Taxes
4,961,031 3,072,814 10,613,846 13,144,406 Provision for Income
Taxes 728,322 468,935 2,000,413 1,351,166 Net Income US$ 4,232,709
2,603,879 8,613,433 11,793,240 Other Comprehensive Income - Foreign
Currency 45,431 578,065 86,614 6,048,704 Translation Adjustment
Total Comprehensive Income 4,278,140 3,181,944 8,700,047 17,841,944
Less: Net Income Attributable to Non-controlling 423,271 261,904
862,337 1,183,852 Interest In Subsidiaries Other Comprehensive
Income Attributable to Non-controlling Interest's Share 4,543
57,807 8,662 604,871 Total Comprehensive Income Attributable to
Non-controlling Interest's Share 427,814 319,711 870,999 1,788,723
Net Income Attributable to Stockholders 3,809,438 2,341,975
7,751,096 10,609,388 Other Comprehensive Income Attributable to
Stockholders 40,888 520,258 77,952 5,443,833 Total Comprehensive
Income Attributable to Stockholders 3,850,326 2,862,233 7,829,048
16,053,22 Weighted average common share - Basic 18,279,254
18,279,254 18,279,254 18,279,254 Weighted average common share -
Diluted 18,279,254 18,283,011 18,279,254 18,287,094 EPS - Basic
0.21 0.13 0.42 0.58 EPS - Diluted 0.21 0.13 0.42 0.58 DATASOURCE:
SORL Auto Parts, Inc. CONTACT: Ben Chen, Director of Investor
Relations, SORL Auto Parts, Inc., +86-577-6581-7721, or ; or Kevin
Theiss, Grayling, +1-646-284- 9409, or Web site:
http://www.sorl.cn/
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