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ZHEJIANG, China, May 15, 2019 (GLOBE NEWSWIRE) -- SORL Auto Parts, Inc. (NASDAQ: 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 financial results for the first quarter ended March 31, 2019.
First Quarter 2018 Financial Highlights
Mr. Xiaoping Zhang, SORL's Chief Executive Officer and Chairman, stated, “We are taking a ‘winner-takes-all’ mentality to expand our market shares in a business environment filled with uncertainties and anxieties. On the OEM side, we continue to strengthen our relationships with the main truck and bus producers in China through our new products and service. For the aftermarket, we differentiate ourselves with better pricing and top quality to gain market share. In the international market, we continue to focus on key markets and key customers to bolster our foothold.”
Ms. Jinrui Yu, SORL’s Chief Operating Officer, added, “Our growing product portfolio of advanced products continues to generate substantial sales growth even in the current challenging economic environment in China. We continue to add resources to our research and development program while we also maintain one of the highest gross margins in the industry.”
First Quarter 2019 Financial Results
For the first quarter of 2019, net sales increased 26.5% year-over-year to $136.2 million compared to $107.7 million in the first quarter of 2018.
Revenues from the Company’s domestic OEM customers were $74.9 million, an increase of 44.6% from $51.8 million in the first quarter of 2018. The strong year-over-year sales growth was mainly due to increased truck sales in the first quarter and improved market share. Sales to China's domestic aftermarket was $43.3 million compared with $38.0 million in the same quarter of 2018. The increase in aftermarket sales was mainly attributable to the expiration of warranties from higher sales of new vehicles over the past few years and the Company’s increased marketing campaigns to bolster its market share through its already well-established distribution network. Revenues from international markets were $18.0 million compared to $17.9 million in the same quarter of 2018.
The gross profit for the first quarter of 2019 increased 20.9% to $36.5 million from $30.2 million in the first quarter of 2018. Gross margin was 26.8% compared with 28.0% in the first quarter of 2018.
In the first quarter of 2019, operating expenses increased to $25.2 million from $18.4 million in the same quarter of 2018. As a percentage of total revenues, operating expenses were 18.5% in the first quarter of 2019 compared to 17.1% in the first quarter of 2018.
Interest income was $1.7 million compared with $1.5 million in the first quarter of 2018. Financial expenses were $4.0 million compared with $3.4 million in the first quarter of 2018.
Income before income taxes was $11.8 million in the first quarter of 2019 compared with $10.8 million in the first quarter of 2018.
Income taxes were $1.9 million in the first quarter of 2019 compared with $1.6 million in the first quarter of 2018.
Net income attributable to stockholders for the first quarter of 2019 was $9.0 million, or $0.46 per basic and diluted share, compared with $8.3 million, or $0.43 per basic and diluted share a year ago.
As of March 31, 2019, the Company had cash and cash equivalents of $8.0 million compared to $73.6 million on December 31, 2018. Accounts receivable were $178.9 million compared to $150.0 million on December 31, 2018. Inventories were $187.4 million compared to $204.3 million on December 31, 2018. Short-term bank loans were $212.4 million compared to $217.9 million on December 31, 2018. Total equity was $219.7 million at March 31, 2019 compared with $205.5 million at December 31, 2018. On March 31, 2019, working capital was $44.6 million with a current ratio of 1.1 to 1. Net cash used by operating activities was $25.8 million compared with net cash flow provided by operating activities of $36.3 million in the first quarter of 2018. Acquisition of property, equipment, plant and land use rights was $13.3 million compared with $19.7 million in the first quarter of 2018.
For the fiscal year 2019, management reiterated its expectation that net sales will be approximately $515 million and net income attributable to stockholders to be approximately $22 million. These targets are based on the Company’s current views on the operating and market conditions, which are subject to change.
Management will host a conference call on Wednesday, May 15, 2019, at 8:00 P.M. EDT/ 8:00 A.M. Beijing Time on May 16, 2019, to discuss its unaudited financial results for the 2019 first quarter ended March 31, 2019. Listeners may access the call by dialing U.S. toll free number +1-877-407-0778 and +1-201-689-8565 for international callers, and Mainland China toll free +86 400-120-2840. 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 8:00 P.M. EDT on June 15, 2019 or 8:00 A.M. Beijing Time on June 16, 2019 . The replay dial-in numbers are: U.S. toll free number +1-877-481-4010 or the international number +1-919-882-2331; using Conference ID “49126” 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) at http://www.sec.gov.
-Tables Follow –
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2019 and December 31, 2018
|Cash and cash equivalents||US$||8,024,006||US$||73,588,229|
|Accounts receivable, net, including $341,110 and $261,889 from related parties as of March 31, 2019 and December 31, 2018, respectively||178,871,527||150,047,797|
|Bank acceptance notes from customers||73,404,114||62,052,225|
|Prepayments, current, including $5,129,110 and $3,670,573 to related party at March 31, 2019 and December 31, 2018, respectively||17,350,867||7,776,591|
|Restricted cash, current||16,804,852||19,307,003|
|Advances to related parties||98,136,035||79,739,417|
|Deposits on loan agreements, current||5,197,891||-|
|Other current assets, net||11,566,191||15,697,448|
|Total Current Assets||596,739,622||612,494,137|
|Property, plant and equipment, net||107,063,204||96,053,386|
|Land use rights, net||21,355,991||21,124,455|
|Intangible assets, net||132,294||220,232|
|Deposits on loan agreements, non-current||5,197,891||10,199,324|
|Other assets, non-current||574,397||563,542|
|Restricted cash, non-current||18,415,386||18,067,374|
|Operating lease right of use assets||1,222,064||-|
|Deferred tax assets||3,566,545||4,073,838|
|Total Non-current Assets||190,597,678||181,877,389|
|Liabilities and Equity|
|Accounts payable and bank acceptance notes to vendors, including $30,167,916 and $23,805,200
due to related parties as of March 31, 2019 and December 31, 2018, respectively
|Deposits received from customers||53,150,261||51,529,795|
|Short term bank loans||212,363,818||217,940,471|
|Current portion of long term loans, net of unamortized debt issuance costs||25,086,705||21,141,029|
|Income tax payable, current||3,229,510||3,421,486|
|Due to related party||6,820,963||5,959,752|
|Operating lease liabilities, current||492,494||-|
|Other current liabilities||3,452,129||3,288,344|
|Total Current Liabilities||552,120,582||565,213,779|
|Long term loans, less current portion and net of unamortized debt issuance costs||5,426,193||14,429,404|
|Operating lease liabilities, non-current||797,107||-|
|Income tax payable, non-current||9,259,307||9,259,307|
|Total Non-current Liabilities||15,482,607||23,688,711|
|Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of March 31, 2019 and December 31, 2018||-||-|
|Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of March 31, 2019 and December 31, 2018||38,609||38,609|
|Additional paid-in capital||(28,582,654||)||(28,582,654||)|
|Accumulated other comprehensive income||10,516,102||6,655,803|
|Total SORL Auto Parts, Inc. Stockholders’ Equity||189,484,969||176,654,143|
|Noncontrolling Interest In Subsidiaries||30,249,142||28,814,893|
|Total Liabilities and Equity||US$||787,337,300||US$||794,371,526|
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
For The Quarters Ended March 31, 2019 and 2018 (Unaudited)
Three months ended
|Include: sales to related parties||10,646,746||7,701,054|
|Cost of sales||99,699,354||77,527,196|
|Selling and distribution expenses||12,884,567||10,037,861|
|General and administrative expenses||7,374,893||4,773,778|
|Research and development expenses||4,951,536||3,590,402|
|Total operating expenses||25,210,996||18,402,041|
|Other operating income, net||2,462,602||2,197,324|
|Income from operations||13,772,176||13,994,769|
|Income before income taxes provision||11,844,621||10,798,221|
|Provision for income taxes||1,868,767||1,605,441|
|Net income attributable to noncontrolling interest in subsidiaries||1,005,327||919,278|
|Net income attributable to common stockholders||US$||8,970,527||US$||8,273,502|
|Foreign currency translation adjustments||4,289,221||8,044,534|
|Comprehensive income attributable to noncontrolling interest in subsidiaries||1,434,249||1,723,731|
|Comprehensive income attributable to common stockholders||US$||12,830,826||US$||15,513,583|
|Weighted average common share - basic||19,304,921||19,304,921|
|Weighted average common share - diluted||19,304,921||19,304,921|
|EPS - basic||US$||0.46||US$||0.43|
|EPS - diluted||US$||0.46||US$||0.43|
SORL Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For The Three Months Ended March 31, 2019 and 2018 (Unaudited)
Three Months Ended
|Cash Flows From Operating Activities|
|Adjustments to reconcile net income to net cash provided by (used in) operating activities:|
|Allowance for doubtful accounts||(79,426||)||278,397|
|Depreciation and amortization||3,382,629||2,847,303|
|Deferred income tax||580,171||900,839|
|Gain on disposal of property and equipment||(29,768||)||-|
|Amortization of debt issuance costs||181,333||372,025|
|Changes in assets and liabilities:|
|Bank acceptance notes from customers||(10,059,686||)||12,354,888|
|Other currents assets, net||3,162,436||(1,890,438||)|
|Operating lease right of use assets||125,799||-|
|Accounts payable and bank acceptance notes to vendors||(13,728,060||)||63,073,488|
|Deposits received from customers||621,908||5,123,039|
|Income tax payable||(207,909||)||(1,635,670||)|
|Operating lease liabilities||(326,476||)||-|
|Other current liabilities and accrued expenses||(4,598,818||)||(7,302,268||)|
|Net Cash Flows Provided By (Used In) Operating Activities||(25,819,311||)||36,305,255|
|Cash Flows From Investing Activities|
|Acquisition of property, equipment, plant and land use rights||(13,252,877||)||(19,682,775||)|
|Advances to related parties||(15,305,460||)||(67,694,035||)|
|Repayment of advances to related parties||-||5,821,183|
|Net Cash Flows Used In Investing Activities||(28,558,337||)||(81,555,627||)|
|Cash Flows From Financing Activities|
|Proceeds from short term bank loans||113,629,530||222,636,613|
|Repayment of short term bank loans||(123,310,819||)||(115,398,302||)|
|Proceeds from related parties||739,289||264,565,400|
|Repayments to related parties||-||(256,883,171||)|
|Repayment of long term loans||(5,869,199||)||(6,401,331||)|
|Net Cash Flows Provided By (Used In) Financing Activities||(14,811,199||)||108,519,209|
|Effects on changes in foreign exchange rate||1,470,485||1,418,555|
|Net change in cash, cash equivalents and restricted cash||(67,718,362||)||64,687,392|
|Cash, cash equivalents, and restricted cash - beginning of the period||110,962,606||4,598,176|
|Cash, cash equivalents, and restricted cash - end of the period||US$||43,244,244||US$||69,285,568|
|Supplemental Cash Flow Disclosures:|
|Income taxes paid||US$||1,471,174||US$||2,340,272|
|Non-cash Investing and Financing Transactions|
|Loans from related party in the form of bank acceptance notes||US$||-||US$||32,791,380|
|Repayments to related party in the form of bank acceptance notes||US$||-||US$||5,846,083|
|Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets|
|Cash and cash equivalents||US$||8,024,006||US$||22,682,734|
|Restricted cash, current||16,804,852||46,602,834|
|Restricted cash, non-current||18,415,386||-|
|Total cash, cash equivalents, and restricted cash at end of the period||US$||43,244,244||US$||69,285,568|