SORL Auto Parts announced its unaudited financial results for the first quarter ended March 31, 2014. Revenues increased by 21.1% to $50 million.
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Gross margin increased to 30.8% in the first quarter of 2014;Net Income increased by 124.6% to $2.8 million, or $0.14 per diluted share;Cash and cash equivalents were $35.8 million compared with $28.2 million at December 31, 2013.
For the first quarter of 2014, net sales were $50.0 million, compared with $41.3 million for the first quarter of 2013. Revenues from the Company's domestic OEM customers increased by 25.4% to $28.6 million, compared with $22.8 million for the first quarter of 2013.
The Company's domestic aftermarket revenues rose by 14.1% to $10.5 million, compared with $9.2 million in the first quarter of 2013. Revenues from international market increased by 17.2% to $10.9 million, compared with $9.3 million in the first quarter in 2013.
Higher spending on real estate and infrastructure construction generated higher demand for commercial vehicles, especially trucks in the first quarter of 2014. The growing number of warranty expirations is driving the Company's aftermarket growth.
International sales grew as the distribution network increased to provide greater recognition of SORL to end users. Higher sales of new products contributed to the increased sales in the OEM market, aftermarket and international market.
The gross profit for the first quarter of 2014 increased by 25.9% to $15.4 million, from $12.2 million for the first quarter of 2013. Gross margin for the first quarter of 2014 improved to 30.8%from 29.6% for the first quarter of 2013.
The gross margin increased primarily due to high value-added new products, more automated production line and the reclassifications of certain costs associated with post-sales product modifications at OEM sites, from costs of sales to selling and distribution expenses.
Retrospective adjustments to the historical income statement have also been made to provide a consistent basis of comparison for the financial results. These reclassifications did not have a material impact on net earnings or the Company's financial condition in the first quarter of 2014.
The Company believes its gross margin can be maintained by improving production efficiencies and introducing products with more advanced technologies.
Operating expenses increased to $11.5 million in the first quarter of 2014 from $10 million in the first quarter of 2013. The increase in operating expenses reflected higher expenditures in the selling and distribution, general and administrative, and research and development areas.
As a percentage of revenue, operating expenses were 23.0% in the first quarter of 2014, compared with 24.1% in the first quarter of 2013. ■