ZHEJIANG, China, November 14, 2014 /PRNewswire/ — 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 unaudited financial results for the third quarter of 2014 and the first nine months ended September 30, 2014.Third Quarter 2014 Financial HighlightsNet Sales increased 7.7% to $58.7 million in the third quarter of 2014 year-over-year; Aftermarket sales rose 31.5% compared to the aftermarket sales in the third quarter of 2013; Gross margin was 26.3% compared to 28.3% in the same period of 2013; Net Income attributable to stockholders was $2.9 million, or $0.15 per diluted share; Cash and cash equivalents increased to $37.9 million with a current ratio of 4.1 to 1 at September 30, 2014; Annual guidance was reiterated for sales of $230 million and net income of $13.0 million. Mr. Xiaoping Zhang, SORL’s Chief Executive Officer and Chairman, stated, “We continue to capture market share in the domestic Chinese market as we grew by 16.4% in the 2014 third quarter compared with a decline in commercial vehicle sales of 13.2% and with trucks sales declining by 21.3%. Our OEM and aftermarket sales continued to increase as our growing portfolio of advanced products address the needs of a greater range of vehicles. This expanding competitive advantage positions us to capture additional domestic market share in the future through greater penetration of current markets and expansion into new market segments.””The advanced features, high quality and low cost of our products developed by our research and development program, are increasingly recognized through greater sales in the domestic aftermarket and OEM markets. We continue to focus on areas with government public transportation support such as increased sales into the domestic bus market, infrastructure projects and the ongoing expansion of the highway and railway systems. Exports are growing in certain markets, but slow economic growth in Europe, especially in the Ukraine, caused an overall decline in our exports. We remain well positioned to take advantage of any strength in the European markets.” Ms. Jinrui Yu, SORL’s Chief Operating Officer, commented, “We maintain a strong balance sheet to provide the resources to support our current operations and finance our future growth. Our investment in research and development has provided the upgrades and new products to enhance our customer relationships with a large portfolio of advanced products. New production equipment enhances our productivity to keep unit costs under control. More efficient manufacturing of advanced products will help maintain gross margins and cash flow.” Third Quarter 2014 Financial PerformanceFor the third quarter of 2014, net sales increased by 7.7% to $58.7 million from $54.5 million in the third quarter of 2013. Revenues from the Company’s domestic OEM customers increased by 7.8% to $24.0 million from $22.3 million in the third quarter of 2013. Sales from China’s domestic aftermarket rose 31.5% to $17.2 million in the third quarter of 2014 from $13.1 million in the same quarter of 2013. Revenues from international markets declined to $17.5 million, compared to $19.1 million in the third quarter of 2013, mainly due to lower sales in Europe. SORL’s commercial vehicle brake sales increased by 11.1% to $48.1 million, which represented 82.0% of total sales in the third quarter of 2014, compared to the commercial vehicle brake sales in the third quarter in 2013. This sales growth improved SORL’s leading market share in China as unit sales in the commercial vehicle market declined by 13.2% and truck market unit sales decreased by 21.3% in the third quarter of 2014, compared to the sales in the commercial vehicle market and truck market unit sales in the same quarter last year, respectively. Advanced new products and upgraded products have enhanced the Company’s ability to supply a larger number of vehicles to capture greater market share in the commercial vehicle market. The Company’s passenger vehicle brake sales declined slightly to $10.6 million in the third quarter of 2014, compared with sales of $11.2 million in the third quarter of 2013. The gross profit for the third quarter of 2014 increased slightly to $15.5 million from $15.4 million for the third quarter of 2013. Gross margin for the third quarter of 2014 was 26.3%, compared with a gross margin of 28.3% in the same quarter of 2013, which is primarily due to new product promotions initiated during the third quarter of 2014. Operating expenses increased to $11.9 million in the third quarter of 2014 from $11.4 million in the third quarter of 2013. The increase in operating expenses in the third quarter of 2014 mainly reflected higher selling and distribution expenditures due to higher freight and packaging expenses, and an increase in administrative fees. As a percentage of revenue, operating expenses were 20.2% in the third quarter of 2014, compared with 20.8% in the third quarter of 2013. Selling and distribution expenses were $5.9 million, or 10.0% of quarterly revenues, compared with $5.3 million, or 9.7% in the same quarter of 2013. Higher expenses were primarily due to higher packaging and freight expenses during the third quarter of 2014. General and administrative (“G&A”) expenses in the third quarter of 2014 were $3.8 million, or 6.4% of revenue, compared with $3.7 million, or 6.8% in the third quarter of 2013. The increase in expenses was mainly due to higher personnel and administrative expenses in the third quarter of 2014. Research and development (“R&D”) expenses were $2.2 million in the third quarter of 2014 compared with $2.4 million in the third quarter of 2013. As a percentage of revenue, R&D was 3.8% in the third quarter of 2014, compared with 4.4% of revenue in the third quarter of 2013. The R&D program continues to mainly focus on the development of new, higher-margin, electronically controlled mechatronic products and upgrading the Company’s traditional brake products to capture greater market share. Financial expenses were $634,282 in the third quarter of 2014 compared to $770,418 in the third quarter of 2013, primarily due to reduced interest expense related to bank loans, and discounted bank and trade acceptance notes. Income before provision for income taxes was $3.6 million for the third quarter of 2014 compared to $4.1 million for the third quarter of 2013. The slightly lower income was primarily due to higher operating expenses and reduced other operating income in the third quarter of 2014 compared with the third quarter of 2013. The pretax income margin was 6.1% in the third quarter of 2014, compared with 7.5% in the third quarter of 2013. The provision for income taxes was $0.4 million, or a 11.0% tax rate, in the third quarter of 2014, which is compared with $0.3 million, or a 8.2% tax rate, in the third quarter in 2013. Net income attributable to stockholders for the third quarter of 2014 was $2.9 million, or $0.15 per basic and diluted share, compared with $3.3 million, or $0.17 on per basic and diluted share, in the third quarter of 2013. First Nine Months 2014 Financial PerformanceNet sales for the first nine months of 2014 increased 13.8% to $174.4 million from $153.3 million for the first nine months of 2013, as each segment experienced growth in the period. Revenues from the Company’s China OEM customers increased 11.6% to $84.5 million from $75.7 million in the same period in 2013. Revenues from China’s domestic aftermarket increased 22.8% to $43.1 million from $35.1 million in the first nine months of 2013. Revenues from international markets increased 9.9% to $46.8 million from $42.5 million in the first nine months of 2013. Gross profit for the first nine months of 2014 increased 11.0% to $49.4 million from $44.5 million in the same period in 2013. Gross margin for the first nine months of 2014 decreased to 28.3% from 29.0% for the first nine months of 2013. Operating income for the first nine months of 2014 increased to $14.1 million from $12.7 million in the same period in 2013. Operating margin was 8.1% for the first nine months of 2014 versus 8.3% in first nine months of 2013. Net income attributable to stockholders for the first nine months of 2014 was $9.8 million, or $0.51 per basic and diluted share, compared with $8.6 million, or $0.44 per basic and diluted share, in the same period in 2013. Balance SheetAs of September 30, 2014, the Company had cash and cash equivalents of $37.9 million compared to $28.2 million on December 31, 2013. Total equity increased to $214.5 million at September 30, 2014 compared with $199.5 million at December 31, 2013. On September 30, 2014, working capital was $158.7 million with a current ratio of 4.1 to 1. Recent Events In July 2014, SORL entered into an agreement to supply its braking products to Sichuan Hyundai Motor Company (“SHMC”) for its Chuanghu brand premium heavy-duty trucks. SHMC is a joint venture owned equally by Ziyang Nanjun Automobile Co., Ltd. and Hyundai Motor Group in South Korea.In September 2014, SORL began supplying its three-pedal braking system to the new model M3000 heavy-duty vehicles produced by the Shaanxi Automotive Group.Business OutlookFor the fiscal year 2014, management reiterated that net sales are expected to be approximately $230.0 million and net income is expected to be approximately $13.0 million. These targets are based on the Company’s current views on the operating and market conditions, which are subject to change.Conference CallManagement will host a conference call on Friday, November 14, 2014 at 8:00 A.M. EST/ 9:00 P.M. Beijing Time to discuss its 2014 third quarter financial results. Listeners may access the call by dialing U.S. toll free number +1-877-407-0778, +1-201-689-8565 for international callers, and Mainland China toll free number +86-400-120-2840. A live webcast 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 11:59 P.M. EST on December 14, 2014, or 12:59 A.M. Beijing Time on December 15, 2014. The replay dial-in numbers are: U.S. toll free number +1-877-660-6853, or the international number is +1-201-612-7415; using Conference ID “13595105″ 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 StatementThis 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.Contact InformationRaymond Lin+86.139.6777.6556+86.577.6581.7721 ljf@sorl.com.cnPhyllis Huang+86.151.6770.5972+86.577.6581.7721phyllis@sorl.com.cn Kevin TheissGrayling+1.646.284.9409kevin.theiss@grayling.com- Tables Follow – SORL Auto Parts, Inc. and SubsidiariesConsolidated Balance SheetsSeptember 30, 2014 and December 31, 2013September 30, 2014December 31, 2013(Unaudited)(Audited)AssetsCurrent AssetsCash and cash equivalentsUS$37,902,347US$28,241,983Accounts receivable, net of provision65,347,36257,912,384Bank acceptance notes from customers14,390,35520,186,787Inventories81,310,37076,364,019Prepayments6,595,6953,773,750Current portion of prepaid capital lease interest326,269453,053Other current assets1,871,5902,537,300Deferred tax assets1,829,6241,392,955 Total Current Assets209,573,612190,862,231Fixed AssetsMachinery 50,225,61746,475,961Molds 1,418,2271,388,218Office equipment2,110,1311,960,476Vehicles 2,062,1192,248,280Buildings9,103,1228,910,501Machinery held under capital lease29,012,60128,396,853Less: accumulated depreciation(50,114,599)(44,175,888) Property, plant and equipment, net43,817,21845,204,401Leasehold improvements 220,632264,612Land Use Rights, Net14,437,56614,409,170Other Non-Current AssetsIntangible assets81,051176,302Less: accumulated amortization(40,526)(126,031) Intangible assets, net40,52550,271Security deposits on lease agreement1,857,5491,818,244Non-current portion of prepaid capital lease interest151,753371,355 Total Other Non-Current Assets2,049,8272,239,870Total AssetsUS$270,098,855US$252,980,284Liabilities and Shareholders’ EquityCurrent LiabilitiesAccounts payable, including $792,275 and $810,310 due to related parties at September 30, 2014 and December 31, 2013, respectively.US$8,627,664US$13,290,282Deposit received from customers15,733,55013,931,658Short term bank loans 8,187,4524,526,863Income tax payable477,655494,658Accrued expenses12,324,37010,066,969Current portion of capital lease obligations3,715,0983,636,488Other current liabilities, including $203,560 and $94,246 due to related parties at September 30, 2014 and December 31, 2013, respectively.1,853,114256,430 Total Current Liabilities50,918,90346,203,348Non-Current LiabilitiesNon-current portion of capital lease obligations4,643,8737,272,975 Total Non-Current Liabilities4,643,8737,272,975 Total LiabilitiesUS$55,562,776US$53,476,323Stockholders’ EquityPreferred stock – no par value; 1,000,000 authorized; none issued and outstanding as of September 30, 2014 and December 31, 2013–Common stock – $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of September 30, 2014 and December 31, 201338,60938,609Additional paid-in capital42,199,01442,199,014Reserves11,600,63810,609,435Accumulated other comprehensive income 26,357,42122,465,720Retained earnings113,356,629104,544,120Total SORL Auto Parts, Inc. Stockholders’ Equity193,552,311179,856,898Noncontrolling Interest In Subsidiaries20,983,76819,647,063Total Equity214,536,079199,503,961Total Liabilities and Stockholders’ EquityUS$270,098,855US$252,980,284SORL Auto Parts, Inc. and SubsidiariesConsolidated Statements of Income and Comprehensive IncomeFor The Three Months and Nine Months Ended September 30, 2014 and 2013 (Unaudited)Three Months Ended September 30,Nine Months Ended September 30,2014201320142013SalesUS$58,702,505US$54,488,640US$174,419,540US$153,317,804Include: sales to related parties 534,195825,1012,169,7782,067,673Cost of sales43,240,74639,075,431125,056,960108,858,673Gross profit15,461,75915,413,20949,362,58044,459,131Expenses:Selling and distribution expenses5,871,463 5,277,02018,050,068 14,596,863General and administrative expenses3,759,3073,696,71512,786,33513,079,992Research and development expenses2,242,6202,384,9025,934,3775,392,513Total operating expenses11,873,39011,358,63736,770,78033,069,368Other operating income 545,752 444,791 1,471,014 1,280,683Income from operations 4,134,121 4,499,363 14,062,814 12,670,446Other income 100,534413,862352,130505,215Financial expenses(634,282)(770,418)(1,773,223)(2,208,756)Non-operating expenses(44,637)(77,073)(277,945)(272,374)Income before provision for income taxes3,555,7364,065,73412,363,77610,694,531Provision for income taxes391,988332,0271,556,4331,040,215Net incomeUS$ 3,163,748US$3,733,707US$10,807,343US$9,654,316Net income attributable tononcontrolling interest in subsidiaries262,813423,0871,003,6311,075,525Net income attributable tocommon stockholdersUS$2,900,935US$3,310,620US$9,803,712US$8,578,791Comprehensive income:Net incomeUS$3,163,748US$3,733,707US$10,807,343US$9,654,316Foreign currency translation adjustments (108,081)1,023,444 4,224,7754,833,515Comprehensive income 3,055,6674,757,151 15,032,11814,487,831Comprehensive income attributable to noncontrolling interest in subsidiaries193,652532,3331,336,7051,564,259 Comprehensive income attributable to common shareholders US$ 2,862,015 US$ 4,224,818 US$ 13,695,413 US$ 12,923,572Weighted average common share – basic19,304,92119,304,92119,304,92119,304,921Weighted average common share – diluted19,304,92119,304,92119,304,92119,304,921EPS – basicUS$ 0.15US$0.17US$ 0.51US$0.44EPS – dilutedUS$0.15US$0.17US$0.51US$0.44SORL Auto Parts, Inc. and SubsidiariesConsolidated Statements of Cash FlowsFor The Nine Months Ended September 30, 2014 and 2013 (Unaudited)Nine Months Ended September 30,20142013Cash Flows from Operating ActivitiesNet incomeUS$10,807,343US$9,654,316Adjustments to reconcile net income to net cashfrom operating activities:Allowance for doubtful accounts1,697,0681,371,727Depreciation and amortization5,597,8675,617,369Deferred income tax(405,594)(252,018)Loss on disposal of fixed assets35,6555,196Changes in assets and liabilities:Account receivable(7,790,502)8,037,713Bank acceptance notes from customers6,153,022(12,252,121)Other currents assets755,849(1,756,558)Inventories(3,305,061)(12,687,012)Prepayments(2,716,212)(319,823)Prepaid capital lease interest362,790342,776Accounts payable (4,895,398)(6,259,596)Income tax payable(26,461)-Deposits received from customers1,506,4207,317,768Other current liabilities and accrued expenses3,630,4572,248,257Net Cash Flows Provided By Operating Activities11,407,2431,067,994Cash Flows from Investing ActivitiesAcquisition of property and equipment(2,994,571)(3,356,852)Proceeds of disposal of fixed assets57,33914,602Net Cash Flows Used In Investing Activities(2,937,232)(3,342,250)Cash Flows from Financing ActivitiesProceeds from bank loans28,383,95360,307,996Repayment of bank loans(24,924,952)(69,079,151)Repayment of capital lease(2,776,407)(11,400,163)Proceeds from capital lease-12,783,841Net Cash flows Provided By (Used In) Financing Activities682,594(7,387,477)Effects on changes in foreign exchange rate507,759928,771Net change in cash and cash equivalents9,660,364(8,732,962)Cash and Cash Equivalents- Beginning of the Year28,241,98341,253,353Cash and Cash Equivalents – End of the PeriodUS$37,902,347US$32,520,391Supplemental Cash Flow Disclosures:Interest paidUS$1,126,215US$1,247,619Tax paidUS$1,983,823US$1,772,230