SORL Auto Parts Reports Fourth Quarter and Fiscal 2009 Financial Results
Inc. (Nasdaq: SORL) (“SORL” or “the Company”), a leading manufacturer and
distributor of commercial vehicle air brake systems as well as related auto
fiscal year ended
2009 Fourth Quarter Financial Highlights -- OEM sales were up 115% year-over-year from $10.4 million to $22.4 million, and 29% quarter-over-quarter from $17.4 million to $22.4 million; -- Revenues rose 63% from $25.1 million to $41.0 million, -- Gross margin was 31%, up from 21% in the fourth quarter of 2008; -- Net income rose 184% year-over-year from $1.8 million to $5.0 million and 31% quarter-over-quarter from $3.8 million to $5.0 million. -- EPS was $0.28 versus $0.10 in the same quarter in 2008; -- Cash and equivalents were $10.3 million; current ratio of 5.1 to 1.
commented, “We are encouraged by a record-setting quarter as our margin
expanded and sales rose. Our margin benefited from the strategic decision we
made in early 2009 to optimize our product offerings and increase our
penetration of the domestic OEM market. After a turbulent 2008, the Chinese
truck market staged a strong come-back in 2009. Thanks to Chinese government
stimulus initiatives and their ripple effect from coastal provinces to inland
accelerated thereafter. Our strategy of optimizing our product portfolio by
launching high value-add and high-margin products started showing results. We
believe that our reputation for making quality products, for more than
20-years, and our continued dedication to R&D, form a basis for what we intend
to be steady and sustainable future growth.”
Fourth Quarter Financial Results
For the fourth quarter of 2009, net sales were
and a 20.6% gain over the net sales of
quarter of 2009, an increase of 115.4% from the
quarter of 2008, and a gain of 28.7% from the
quarter. Revenues from
fourth quarter, and a 4.6% increase compared with
third quarter. Revenues from the international markets were
the 2009 fourth quarter, an 18.5% rise compared with the
same quarter last year, and 23% gain compared with the
third quarter of 2009.
The higher domestic Chinese sales growth, especially the strong OEM
business, was mainly due to
of accelerated infrastructure construction spending during the second half of
2009 on commercial vehicle sales. The Company’s sales growth also was due to
the success of integrated products and modular supplies of air brake systems,
and penetration of the light-duty, agricultural and bus markets.
Gross profit was
42.7% gain over the
increased to 30.9% from 20.7% in the fourth quarter last year, and from 26.1%
in the 2009 third quarter. The higher gross margin was mainly due to a product
shift as more higher-margin new valve products and brake products were
Operating expenses in the fourth quarter of 2009 were
third quarter of 2009. As a percentage of revenue, operating expenses were
18.1% in the 2009 fourth quarter compared with 12.0% in the same quarter last
Selling expenses in the fourth quarter of 2009 were
percentage of total net sales was 6.4% as compared to 6.2% in the fourth
quarter of 2008.
G&A expenses in the fourth quarter of 2009 were
total net sales was 5.8% as compared to 3.3% in the fourth quarter of 2008.
The higher G&A expenses in the 2009 fourth quarter were due to increased
investment in personnel costs, rent, and travel related expenses for business
R&D expenses in the fourth quarter of 2009 were
total net sales was 5.8% as compared to 3.0% in the fourth quarter of 2008.
During the fourth quarter, the Company increased R&D expenses which were
related to new product development focused on upgrading traditional valve
products and developing electronically controlled products.
Operating income in the fourth quarter of 2009 was
increase over the
12.7% in the 2009 fourth quarter, compared with the operating margin of 8.7%
in the fourth quarter last year.
Net income attributable to stockholders for the fourth quarter of 2009 was
increase over the
Fiscal Year 2009 Results
Annual net sales were
In early 2009, the Company identified key growth areas and made strategic
moves to place more focus on the domestic OEM market and optimize its product
portfolio. The Chinese government’s stimulus package revitalized the domestic
truck market and demand continued to rise as inland
infrastructure development picked up speed. Regarding the Company’s products,
SORL removed a number of low-end and low-margin products from its portfolio in
the first half of 2009, and introduced a series of new high-margin, value-add
products into the marketplace. These products have been well received by OEM
Gross profit for the fiscal year 2009 increased by approximately
million to $35.5 million
margin increased by approximately 2.7% to 28.4% from 25.7% in 2008. The
increased profit and margin reflected an improved product portfolio as new
higher-margin products were introduced and certain low-margin items eliminated.
Selling expenses were
were essentially flat year over year.
General and administrative expenses were
increased to 5.8% of 2009′s revenues compared with 4.6% for 2008. The increase
was mainly due to higher salary and welfare costs, rent, and travel related
expenses during 2009 to support the growth of the Company.
Research and development expenses were
product development, with an emphasis on improving its traditional valve
products and developing electronically controlled products.
Operating income in 2009 rose to
Income taxes were
2008 year. SORL has been awarded the Chinese government’s “High-Tech
Enterprise” designation which is valid for three years and provides for a
reduced tax rate of 15% for years 2009 through 2011. The previous taxation
exemption was superceded from 2009.
The net income attributable to stockholders for the fiscal year 2009 was
per share (“EPS”), both basic and diluted, for 2009 and 2008, were
strategic alliance with the Shandong Shifeng Group. According to the
preliminary agreement, Shandong Shifeng Group intends to increase its
purchases of brake systems and related products from SORL during 2010.
Furthermore, Shandong Shifeng plans to implement new joint product development
programs with SORL. Shandong Shifeng Group is one of the largest agricultural
vehicle and light-duty truck producers in
agreement with Shenzhen Wuzhoulong Motors Co. Ltd. to supply clutch cylinders.
Shenzhen Wuzhoulong is one of the leading alternative energy bus manufacturers
Ltd., was awarded the Chinese government’s “National High-Tech Enterprise”
designation. The High-Tech Enterprise certificate designation is awarded to
industry leaders with the most advanced technologies and is valid for three
years. It provides for a reduced tax rate of 15% for years 2009 through 2011.
For the first quarter of fiscal year 2010, the management is expecting net
sales to be approximately
Company’s current views on the operating and market conditions, which are
subject to change.
commented, “We remain cautiously optimistic as the further urbanization and
growing infrastructure build out of ports, highways, airports and rails will
continue to create demand for more trucks. We will continue to introduce new
products with more advanced technology and stronger pricing power. On the
export side, 2010 can be a time we test new marketplaces where global sourcing
is booming. With the strong cash on hand and established capacity, we are
confident that we have ample financial resources to fund our organic growth in
Management will host a conference call at
Listeners may access the call by dialing # 1-877-407-0778 or # 1-201-689-8565
for international callers. 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 following the conclusion of
the earnings call through
dialing # 1-877-660-6853 or # 1-201-612-7415 for international callers;
account: 286; conference ID: 347283.
SORL Auto Parts, Inc.
systems and other related auto parts. SORL Auto Parts, Inc. ranked No. 1 for
market share in the segment for commercial vehicles, such as trucks and buses.
The Company distributes products both within
the SORL trademark. SORL is listed among the top 100 auto component suppliers
specifications in air brake system, air controlling system and others. The
Company has four authorized international sales centers in
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.
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 SORL Auto Parts, Inc. Corporate Secretary Director of Investor Relations Email: firstname.lastname@example.org Kevin Theiss Grayling Phone: +1-646-284-9409 Email: email@example.com SORL Auto Parts, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2009 and 2008 December 31, December 31, 2009 2008 Assets Current Assets Cash and Cash Equivalents US$ 10,255,259 US$ 7,795,987 Accounts Receivable, Net of Provision 44,546,107 35,797,824 Notes Receivable 13,083,691 7,536,534 Inventory 18,760,724 19,105,845 Prepayments, including $0 and $187,813 from related parties at December 31, 2009 and December 31, 2008, respectively 7,558,140 1,013,440 Other current assets, including $0 and $1,906,070 from related parties at December 31, 2009 and December 31, 2008, respectively 444,281 4,445,778 Total Current Assets 94,648,202 75,695,408 Fixed Assets Property, Plant and Equipment 35,335,958 32,927,306 Less: Accumulated Depreciation (11,608,920) (8,951,886) Property, Plant and Equipment, Net 23,727,038 23,975,420 Leasehold Improvements in Progress 477,681 -- Land Use Rights, Net 14,198,392 14,514,983 Other Assets Deferred compensation cost-stock options -- 9,935 Intangible Assets 161,499 161,347 Less: Accumulated Amortization (54,380) (39,018) Intangible Assets, Net 107,119 122,329 Deferred tax assets 220,577 189,228 Total Other Assets 327,696 321,492 Total Assets US$ 133,379,009 US$ 114,507,303 Liabilities and Shareholders' Equity Current Liabilities Accounts Payable, including $1,985,291 and $0 due to related parties at December 31, 2009 and December 31, 2008, respectively US$ 9,724,715 US$ 4,623,850 Deposit Received from Customers 3,670,369 6,295,857 Income tax payable 551,900 340,138 Accrued Expenses 4,206,297 2,389,314 Other Current Liabilities, including $200,762 and $0 from related parties at December 31, 2009 and December 31, 2008, respectively 585,176 460,124 Total Current Liabilities 18,738,457 14,109,283 Non-Current Liabilities Deferred tax liabilities 115,481 106,826 Total Liabilities 18,853,938 14,216,109 Stockholders' Equity Preferred Stock - No Par Value; 1,000,000 authorized; none issued and outstanding as of December 31, 2009 and December 31, 2008 -- -- Common Stock - $0.002 Par Value; 50,000,000 authorized, 18,304,921 and 18,279,254 issued and outstanding as of December 31, 2009 and December 31, 2008 36,609 36,558 Additional Paid In Capital 37,498,401 37,498,452 Reserves 4,425,784 3,126,086 Accumulated other comprehensive income 10,939,100 10,848,248 Retained Earnings 50,231,052 38,774,684 Total SORL Auto Parts, Inc. 103,130,946 90,284,028 stockholders' equity Noncontrolling Interest In 11,394,125 10,007,166 Subsidiaries Total Equity 114,525,071 100,291,194 Total Liabilities and Stockholders' Equity US$ 133,379,009 US$ 114,507,303 SORL Auto Parts, Inc. and Subsidiaries Consolidated Statements of Income and Comprehensive Income For Years Ended on December 31, 2009 and 2008 2009 2008 Sales US$ 124,979,741 130,893,422 Include: sales to related parties 569,621 2,816,816 Cost of Sales 89,516,540 97,225,582 Gross Profit 35,463,201 33,667,840 Expenses: Selling and Distribution Expenses 8,137,377 8,423,124 General and Administrative Expenses 7,282,110 6,075,404 Research and development expenses 4,335,464 3,219,895 Financial Expenses 131,080 852,640 Total Expenses 19,886,031 18,571,063 Operating Income 15,577,170 15,096,777 Other Income 488,123 683,104 Non-Operating Expenses (135,814) (441,288) Income Before Provision for Income Taxes 15,929,479 15,338,593 Provision for Income Taxes 1,796,622 1,586,503 Net Income US$ 14,132,857 13,752,090 Other Comprehensive Income - Foreign Currency Translation Adjustment 100,968 6,017,843 Total Comprehensive Income 14,233,825 19,769,933 Less: Net income Attributable to Non-controlling Interest In Subsidiaries 1,376,791 1,381,230 Other Comprehensive Income Attributable to Non-controlling Interest's Share 10,116 601,784 Total Comprehensive Income Attributable to Non-controlling Interest's Share 1,386,907 1,983,014 SORL Auto Parts, Inc. and Subsidiaries Consolidated Statements of Cash Flows For Years Ended on December 31,2009 and 2008 2009 2008 Cash Flows from Operating Activities Net Income US$ 12,756,066 12,370,860 Adjustments to reconcile net income (loss) to net cash from operating activities: Noncontrolling Interest In Subsidiaries 1,376,791 1,381,230 Bad Debt Expense 18,943 32,674 Depreciation and Amortization 3,017,677 2,706,053 Stock-Based Compensation Expense 9,935 59,636 Loss on disposal of Fixed Assets 11,835 24,892 Changes in Assets and Liabilities: Account Receivables (8,743,435) (3,000,167) Notes Receivables (5,537,498) 2,437,182 Other Currents Assets 3,808,215 111,707 Inventory 362,858 (9,977,123) Prepayments (2,179,237) 400,877 Deferred tax assets (31,185) (182,938) Accounts Payable and Notes Payable 5,062,595 (1,011,371) Income Tax Payable 211,344 (33,631) Deposits Received from Customers (2,630,156) 3,937,491 Other Current Liabilities and Accrued Expenses 2,179,900 312,840 Deferred tax liabilities 8,550 103,275 Net Cash Flows from Operating Activities 9,703,198 9,673,487 Cash Flows from Investing Activities Acquisition of Property and Equipment (6,817,073) (3,063,458) Leasehold Improvements in Progress (477,876) -- Sales proceeds of disposal of fixed assets 42,590 4,187 Investment in Intangible Assets -- (77,303) Net Cash Flows from Investing Activities (7,252,359) (3,136,574) Cash Flows from Financing Activities Proceeds from (Repayment of) Bank Loans -- (3,482,360) Capital contributed by Minority S/H 52 -- Net Cash flows from Financing Activities 52 (3,482,360) Effects on changes in foreign exchange rate 8,381 401,223 Net Change in Cash and Cash Equivalents 2,459,272 3,455,776 Cash and Cash Equivalents- Beginning of the year 7,795,987 4,340,211 Cash and cash Equivalents - End of the year US$ 10,255,259 7,795,987 Supplemental Cash Flow Disclosures: Interest Paid -- 182,385 Tax Paid 2,302,527 2,106,992 Non-Cash Financing Activities: Cashless exercise of options and warrants and issuance of common stock 51 --
SOURCE SORL Auto Parts, Inc.