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SORL Auto Parts Reports Fourth Quarter and Fiscal Year 2006

编辑:K8 日期:2018-10-04

SORL Auto Parts Reports Fully Diluted Earnings Per Share of $0.56 for Fiscal Year 2006 and $0.13 in the Fourth Quarter of Fiscal 2006, ended December 31, 2006

Fourth Quarter Financial Highlights

-- Revenue increased to US$24.1 million, reflecting 30.9% year-over-year

growth

-- Net income increased to US$1.9 million, reflecting 242% year-over-year

growth

-- Fourth quarter earnings per share increased to US$0.13, reflecting

225% year-over-year growth from US$0.04 in the fourth quarter of 2005

Fiscal Year 2006 Financial Highlights

-- Fiscal year 2006 revenue increased to US$84.9 million, reflecting 32.3%

year-over-year growth

-- Fiscal year 2006 net income increased to US$7.7 million, reflecting

55.5% year-over-year growth

-- China domestic OEM revenue for fiscal year 2006 was US$27.1 million,

reflecting a 31.6% year-over-year growth

-- Revenue from exports was US$33.9 million in fiscal year 2006,

reflecting a 44.9% year-over-year growth

-- Fiscal year 2006 diluted earnings per share increased to US$0.56,

reflecting a 50.2% year-over-year growth

ZHEJIANG, China, March 25 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc. (Nasdaq: SORL), a leading manufacturer and distributor of commercial vehicle air brake valves as well as other auto parts in China, today reported its financial results for the fourth quarter and fiscal year 2006 ended December 31, 2006.

Fiscal Year 2006

Revenue for fiscal year 2006 was US$84.9 million, a 32.3% increase as compared to US$64.2 million for fiscal year 2005. OEM revenue for fiscal year 2006 was US$27.1 million, a 31.6% increase as compared to US$20.6 million for fiscal year 2005. Aftermarket revenue in fiscal year 2006 was US$23.9 million, an increase of 18.3% as compared to US$20.2 million for fiscal year 2005. Revenue from exports was US$33.9 million in fiscal year 2006, an increase of 44.9% as compared to US$23.4 million in fiscal year 2005. In fiscal year 2006, nearly all export sales were from the overseas aftermarket.

Gross profit for fiscal year 2006 was US$19.3 million, an increase of 34.6% as compared to US$14.3 million for fiscal year 2005. Income from operations for fiscal year 2006 was US$9.9 million, an increase of 77.9% as compared to US$5.5 million for fiscal year 2005. Net income for fiscal year 2006 was US$7.7 million, an increase of 55.5% as compared to a net income of US$4.9 million for fiscal year 2005. Fully diluted earnings per share for fiscal year 2006 were US$ 0.56, an increase of 50.2% as compared to US$ 0.37 earnings per share for fiscal year 2005.

Total cash and cash equivalents as of December 31, 2006 totaled $11.1 million as compared to $1.0 million as of December 31, 2005. Including the total net proceeds of approximately $32.5 million from the follow-on public offering in November 2006 and the exercise of the over-allotment option granted to the underwriters in December 2006, stockholder's equity increased to $57.4 million as of December 31, 2006 from $16.0 million as of December 31, 2005.

Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "We are very pleased to report another successful year for SORL as measured by solid growth in our OEM revenues, aftermarket sales, and exports. We have further extended our leading position in air brake valves for heavy-duty vehicles in China and increased our penetration into other international markets. Exports continued to grow at a strong pace and represented approximately 40% of our total revenue in 2006, as our quality products and brand name continued to receive positive feedback from our international customers and distributors. After a sluggish 2005 due to the macroeconomic environment, the commercial vehicle market in China rebounded with favorable results in 2006. All of our top five OEM customers reported strong recoveries and continued to dominate the heavy-duty truck market in China with a combined 84% market share between Jan and Nov 2006. As a result, our sales to Chinese commercial vehicle OEMs also experienced strong growth."

Fourth Quarter 2006

Revenue for the fourth quarter of 2006 was US$ 24.1 million, a 30.9% increase as compared to US$18.4 million for the same period in 2005. Revenues from China domestic OEM, China domestic aftermarket and international market for the fourth quarter of 2006 were US$8.6 million, US$6.0 million and US$9.5 million, respectively.

Income from operations for the fourth quarter of 2006 was US$2.4 million, an increase of 316% as compared to US$0.58 million in the same period in 2005. Net income for the fourth quarter of 2006 was US$1.9 million or US$0.13 earnings per share, as compared to net income of US$0.57 million or US$0.04 earnings per share in the same period in 2005.

Chief Financial Officer Zongyun Zhou said, "In the fiscal year 2006, the successful efforts in receivable collection, especially to domestic OEM customers, enabled SORL to achieve 22% overall reduction of general & administrative expenses while our top line experienced a solid 32% year over year growth. Subsequently, our net income in fiscal year 2006 increased by 55.5%. We have also improved our balance sheet by strengthening our cash position and reducing our short term debt."

Follow-on Public Offering

In November 2006, SORL successfully completed its follow-on public offering of 4,285,714 shares of common stock at $7.25 per share. The lead underwriter of the offering also exercised the over-allotment option in full to purchase an additional 642,857 shares of common stock in December 2006. Upon the deduction of underwriters' commissions and the non-accountable expense allowance and related offering expenses, the aggregate net proceeds to SORL of its offering was approximately US$32.5 million.

The net proceeds will be used to fund capital expenditures including the construction of a new plant, equipment purchases, expanded research and development efforts, further development of the international sales network as well as working capital and other general corporate purposes including possible strategic alliances.

Mr. Xiaoping Zhang commented, "The successful completion of our follow-on offering reflects growing investor confidence in SORL's solid business fundamentals and future growth prospects. With the arrival of new capital, we will be able to expand our production capacity, improve sales and distribution procurement and explore more business partnership opportunities with other international players. The upgrade to NASDAQ Global Market status not only strengthens SORL's existing corporate image and product brand name, but signifies SORL's emergence as a key player in the rapidly growing global auto parts market."

India Initiative

In 2006, SORL was accepted by TATA Motors to supply SORL's high quality auto parts to TATA's commercial vehicles and aftermarket replacement division. On March 12th, 2007, SORL entered into a new sales agreement with TATA Motors (NYSE: TTM; NSE: TATAMOTORS), the largest commercial vehicle manufacturer in India. In addition, SORL also announced that the company has opened a sales center in Pune, India with 4 sales representatives and 2 engineers to focus on strengthening the existing relationship with TATA Motors and to develop new business with other OEMs. The sales center will also concentrate on forming alliances with aftermarket distributors in India.

Mr. Xiaoping Zhang concluded, "We are very excited about the Indian market opportunity for our products. The Indian market has been one of the key markets for heavy-duty commercial vehicles, as the country is experiencing strong economic growth and infrastructure expansion. As the established market leader in air brake products in China, we aim to expand into other fast growing emerging market such as India. SORL has established a reputable brand name in the rest of world in particular in the aftermarket domain in the Middle East, Australia and South East Asia. With our local presence in India, we expect to substantially boost the confidence of Indian OEMs and local aftermarket distributors in SORL products."

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 800 different specifications. The Company has three authorized international sales centers in Australia, United Arab Emirates, 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

Statements made in this press release that are not historical fact are "forward-looking statements," which are based on current expectations that include a number of risks and uncertainties. Additional factors that could potentially affect the Company's financial results may be found on the Company's filings with the Securities and Exchange Commission ( http://www.sec.gov ).

(TABLE TO FOLLOW)

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2006 and 2005

December 31, December 31,

2006 2005

(Audited) (Audited)

Assets

Current Assets

Cash and Cash Equivalents US$ 11,137,501 US$ 961,131

Accounts Receivable, Net of

Provision 26,750,778 25,339,774

Notes Receivable 3,494,327 1,488,104

Inventory 4,528,856 2,512,583

Prepayments 5,532,802 1,801,829

Other current assets 2,925,558 48,115

Total Current Assets 54,369,822 32,151,536

Fixed Assets

Property, Plant and

Equipment 20,418,557 10,140,947

Less: Accumulated

Depreciation -4,106,901 -3,024,281

Property, Plant and

Equipment, Net 16,311,656 7,116,666

Other Assets

Deferred compensation

cost-stock options 129,207 --

Intangible Assets 45,779 44,297

Less: Accumulated

Amortization -17,655 -11,873

Intangible Assets, Net 28,124 32,424

Other Non-current Assets 41,299

Total Other Assets 198,630 32,424

Total Assets US$ 70,880,108 US$ 39,300,626

Liabilities and

Shareholders' Equity

Current Liabilities

Accounts Payable and Notes

Payable US$ 4,620,692 US$ 3,746,666

Deposit Received from

Customers 508,268 1,324,085

Short term bank loans -- 16,026,717

Income tax payable 358,367

Accrued Expenses 1,232,845 482,982

Other Current Liabilities 454,430 --

Total Current Liabilities 7,174,602 21,580,450

Minority Interest 6,336,557 1,735,818

Shareholders' Equity

Common Stock - $0.002 Par

Value; 50,000,000 authorized,

18,275,126 and 13,346,555

issued and outstanding as of

December 31, 2006 and

December 31, 2005 respectively 36,550 26,693

Additional Paid In Capital 37,444,051 4,444,118

Reserves 797,116

Accumulated other

comprehensive income 1,102,469 336,993

Retained Earnings 17,988,763 11,176,554

57,368,949 15,984,358

Total Liabilities and

Shareholders' Equity US$ 70,880,108 US$ 39,300,626

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Income

For Years Ended on December 31, 2006, 2005 and 2004

2006 2005 2004

Sales US$ 84,898,316 US$ 64,182,544 US$ 46,815,037

Cost of Sales 65,631,004 49,865,235 35,904,232

Gross Profit 19,267,312 14,317,309 10,910,805

Expenses:

Selling and

Distribution

Expenses 5,101,313 3,919,996 2,737,652

General and

Administrative

Expenses 3,259,066 4,169,460 2,489,604

Financial Expenses 1,055,237 688,811 287,433

Total Expenses 9,415,616 8,778,267 5,514,689

Operating Income 9,851,696 5,539,042 5,396,116

Other Income 146,530 52,592

Non-Operating

Expenses -250,357 -92,067 -55,067

Income (Loss) Before

Provision for Income 9,747,869 5,499,567 5,341,049

Taxes

Provision for Income

Taxes 1,252,858 -- --

Net Income Before

Minority Interest

& Other

Comprehensive

Income US$ 8,495,011 US$ 5,499,567 US$ 5,341,049

Minority Interest 797,117 549,957 534,105

Net Income

Attributable to

Shareholders 7,697,894 4,949,610 4,806,944

Foreign Currency

Translation

Adjustment 850,529 374,437 --

Minority Interest's

Share 85,053 37,444 --

Comprehensive Income

(Loss) 8,463,370 5,286,603 4,806,944

Weighted average

common share - Basic 13,753,991 13,302,763 13,165,241

Weighted average

common share -

Diluted 13,778,535 13,302,763 13,165,241

EPS - Basic 0.56 0.37 0.37

EPS - Diluted 0.56 0.37 0.37