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Sorl Auto Parts, Inc. (NASDAQ:SORL) Q2 2019 Earnings Conference Call August 14, 2019 8:00 PM ET
Sorl Auto Parts，Inc。（纳斯达克股票代码：[SORL]）2019年第二季度收益电话会议2019年8月14日美国东部时间晚上8点
Kevin Theiss - IR
Jin Rui Yu - COO
- Kevin Theiss - IR
- 金瑞宇 - 首席运营官
Greetings, and welcome to the SORL Auto Parts 2019 Second Quarter Financial Results Conference Call. [Operator Instructions]. Please note, this conference is being recorded.
I would now like to turn the conference over to your host, Mr. Kevin Theiss, Investor Relations. Thank you. You may begin.
- 问候，欢迎参加SORL Auto Parts 2019第二季度财务业绩电话会议。 [操作员说明]。 请注意，此会议正在录制中。
- 我现在想把会议转交给你的主持人Kevin Thiss先生，投资者关系部。 谢谢。 你可以开始吧。
Thank you for joining us today, and welcome to SORL Auto Parts 2019 Second Quarter Conference Call. Joining us today are Ms. Jin Rui Yu, SORL's Chief Operating Officer; and Mr. Min Kun Lin, the Accounting Manager.
Before we begin, I would like to just remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, project, target, optimistic, intend, aim, will or similar expressions are intended to identify forward-looking statements. All statements, other than statements of historical facts are statements that may be deemed forward-looking statements. These forward-looking statements are based on current expectations or beliefs, including but not limited to, SORL AutoParts operations and financial performance and condition. SORL Auto Parts, cautions that these statements, by their nature, involve risks and uncertainties, and actual results may differ materially depending on different factors including those discussed in SORL Auto Parts reports with the Securities and Exchange Commission from time to time. SORL Auto Parts specifically disclaims any obligation to update the forward-looking information in the future.
The 2019 second quarter results discussed on today's call are unaudited numbers and all numbers are presented in U.S. dollars and under U.S. GAAP.
Ms. Jin Rui Yu, SORL's Chief Operating Officer, will give an overview of the operations for the 2019 second quarter, and I'll return to the financial results. Thereafter, there will be a question-and-answer session conducted. Ms. Yu, please begin your prepared remarks.
感谢您今天加入我们，欢迎参加SORL Auto Parts 2019第二季度电话会议。今天加入我们的是SORL首席运营官Jin Rui Yu女士;和会计经理闵坤林先生。
在我们开始之前，我想提醒所有听众，在整个电话会议中，我们可能会发表声明，其中可能包含1995年“私人证券诉讼改革法案”界定的前瞻性陈述。相信，期待，预期，项目，目标，乐观，意图，目标，意志或类似表达旨在识别前瞻性陈述。除历史事实陈述外，所有陈述均为可能被视为前瞻性陈述的陈述。这些前瞻性陈述基于当前的预期或信念，包括但不限于SORL AutoParts运营和财务业绩和状况。 SORL Auto Parts警告说，这些陈述本质上涉及风险和不确定性，实际结果可能会有很大差异，具体取决于不同因素，包括SORL Auto Parts报告中不时向美国证券交易委员会报告的内容。 SORL Auto Parts明确表示不承担将来更新前瞻性信息的义务。
SORL首席运营官Jin Rui Yu女士将概述2019年第二季度的运营情况，我将回到财务业绩。此后，将进行问答环节。俞女士，请开始准备好的评论。
Thank you, everyone, for joining us today. for the second quarter of 2019, China's GDP grew at 6.2% compared with 6.7% in the same quarter of 2018. This growth is the lowest in the past 27 years. The Chinese economy has been slowing trend over past quarters and over the current trade issues which the U.S. has created. Additional business uncertainties over future growth.
In addition, to a slower economic growth, the auto market was affected by the government's earlier implementation of the new automotive imaging standards. The Strict National 6, which was implemented on July 1 in some points and Taiwan cities. This action caused a prebuy of existing inventories and reduced the production of new vehicles. According to the [indiscernible] reported by the China Association of Automobile Manufacturers, in the second quarter of 2019, unit sales of the commercial vehicles declined by 1.8% in April of 2019, down by 11.8% in May and down by 17.8% percent in June. Against these headwinds, we are pleased to report our revenues increased by 85% year-over-year to $139.4 million in same quarter last year and increased 16.7% to $275.6 million for the first half 2019.
Our net income attributable to stockholders for the same quarter of 2019 was $6.6 million or $0.29 per basic and diluted share. Net income attributable to stockholders is $14.6 million or $0.76 per basic and diluted earnings per share for the first half of 2019. We continue to invest our R&D program with $7 million in the same quarter of 2019 compared with $5.3 million. In the same quarter of 2018 and $11.8 million invested through the first 6 months of 2019 compared with $8.9 million in the same period a year ago. Our IND program is at responsible for our market leadership patio. As we developed a higher margin electronics controlled products for the new energy vehicles and enhance the performance of our basic products.
To help economic growth, the central government has its initiated a physical stimulus plan, including tax cuts as some that legacy debt regulations to oncology infrastructure projects and adopted to a more helpful monetary policy. We believe these measures will slowly improve economic conditions in China in the future.
With that, now, let me turn the call to Kevin.
我们2019年同一季度的股东应占净收入为660万美元，每股基本及摊薄股份为0.29美元。 2019年上半年归属于股东的净收入为1460万美元或每股基本和摊薄收益0.76美元。我们继续在2019年同一季度投入700万美元用于研发计划，而530万美元。 2018年同一季度和2019年前6个月的投资额为1,180万美元，而去年同期为890万美元。我们的IND计划负责我们的市场领导庭院。随着我们为新能源汽车开发出更高利润的电子控制产品，并提升了我们基本产品的性能。
Thank you, Ms. Yu. For the second -- yes, for the second quarter of 2019, net sales increased by 8.5% to $139.4 million from $128.5 million for the second quarter of 2018. Revenues from the company's domestic OEM customers increased by 10.6% to $69.2 million from $62.6 million in the second quarter of 2018. Commercial vehicle sales in China decreased in the second quarter of 2019, but SORL continued to expand its leading market share due to higher product quality and better service. Sales from China's domestic aftermarket increased 8.8% to $46.6 million in the second quarter of 2019 from $42.8 million in the same quarter of 2018. Higher aftermarket product sales were generated due to the growing number of OEM warranties that expired from prior new vehicle sales in China and the company's marketing campaign to enhance market share through its distribution campaign.
Revenue from international markets increased 2% to $23.6 million from $23.1 million in the second quarter of 2018, primarily due to a larger customer base. The gross profit for the second quarter of 2019 increased 5.3% to $36.3 million from $34.4 million of the second quarter of 2018. Gross margin for the second quarter of 2019 was 26% compared with a gross margin of 26.8% in the same quarter of 2018. The decrease in gross margin was primarily due to increased sales promotions during the second quarter of 2019. Also, gross profit and gross margin decreased in the passenger vehicle Auto parts operations. The focus for the remainder of 2019 is to increase production efficiency, include product technology and enhanced sales product portfolio to help maintain or increase gross profit margins.
Operating expenses increased 21.1% to $32.7 million from $27 million in the second quarter of 2018. Operating expenses rose due to higher research and development selling and distribution and general members trade expenses in the second quarter of 2019. As a percentage of revenue, operating expenses were 23.4% in the second quarter of 2019 compared with 21% in the second quarter of 2018.
Sales and distribution expenses increased 17.9% to $16.5 million or 11.8% of quarterly revenues compared with $14 million or 10.9% in the same quarter of 2018. The increase in expenses was mainly due to higher packaging and repair expenses, increased warranty fees and higher labor costs. General and administrative expenses in the second quarter of 2019 were $9.2 million or 6.6% of revenue compared with $7.7 million or 6% in the second quarter of 2018, primarily due to higher labor expenses. Research and development expenses were $7 million in the second quarter of 2019 compared with $5.3 million in the same quarter of 2018. As a percentage of revenue, R&D was 5% in the second quarter of 2019 compared with 4.1% of revenue in the second quarter of 2018. The R&D program mainly focused on the level of new higher-margin electronically controlled products, prices on new energy vehicles and upgrading legacy products, great products to enhance the company's market leadership.
谢谢你，余女士。第二个 - 是的，2019年第二季度净销售额从2018年第二季度的1.285亿美元增长8.5％至1.394亿美元。该公司国内OEM客户的收入从6260万美元增长10.6％至6920万美元2019年第二季度中国商用车销量下降，但由于更高的产品质量和更好的服务，SORL继续扩大其领先的市场份额。 2019年第二季度中国国内售后市场的销售额从2018年同期的4280万美元增长8.8％至4660万美元。售后市场产品销售额增加的原因是中国新车销售过期的OEM保修数量增加以及公司通过其分销活动提高市场份额的营销活动。
来自国际市场的收入从2018年第二季度的2310万美元增长2％至2360万美元，这主要归功于更大的客户群。 2019年第二季度的毛利润从2018年第二季度的3440万美元增长5.3％至3630万美元。2019年第二季度的毛利率为26％，而2018年同期的毛利率为26.8％。毛利率下降主要是由于2019年第二季度的促销活动增加。此外，乘用车汽车零部件业务的毛利和毛利率下降。 2019年剩余时间的重点是提高生产效率，包括产品技术和增强的销售产品组合，以帮助维持或增加毛利润率。
销售和分销费用增长17.9％至1650万美元，占季度收入的11.8％，而2018年同期为1400万美元或10.9％。费用增加主要是由于更高的包装和维修费用，更高的保修费用和更高的人工成本。 2019年第二季度的一般和管理费用为920万美元，占收入的6.6％，而2018年第二季度为770万美元或6％，主要原因是劳动力成本增加。 2019年第二季度的研发费用为700万美元，而2018年同期为530万美元。作为收入的一部分，2019年第二季度的研发费用为5％，而第二季度为4.1％。研发计划主要集中在新的高利润电子控制产品的水平，新能源汽车的价格和升级传统产品，优质产品，以提高公司的市场领导地位。
Income from operations was $6.1 million in the second quarter of 2019 compared with $9.8 million in the same quarter of 2018. Interest income was 5.1% -- I'm sorry, was $1.5 million in the second quarter of 2019 compared with $0.8 million in the same quarter of 2018. Financial expenses were $3.2 million in the second quarter of 2019 compared with $3.5 million in the second quarter of 2018. The decrease was mainly due to lower long-term loans outstanding. Exchange differences were $0.5 million in the second quarter of 2019 compared with $1.1 million in the same quarter of 2018.
Income before income taxes was $6.6 million for the second quarter of 2019 compared to $8.7 million for the second quarter of 2018. The pretax income margin was 4.7% in the second quarter of 2019 compared with 6.8% in the second quarter of last year. The provision for income taxes was $0.3 million in the second quarter of 2019 compared with $1.2 million in the second quarter of 2018.
Net income attributable to stockholders for the second quarter of 2019 was $5.6 million or $0.29 per basic and diluted share compared with $6.7 million or 35% -- I'm sorry, $0.35 per basic and diluted share in the second quarter of 2018.
Now we'll go over the first 6 months 2019 financial performance highlights. Net sales for the first 6 months of 2019 increased 16.7% to $275.6 million from $236.2 million for the first 6 months of 2018. Net sales in the company's China OEM market increased 26% to $144.1 million from $114.4 million in the same period in 2018. Revenues from Chinese domestic aftermarket increased 11.1% to $89.9 million from $80.9 million in the first 6 months of 2018. Revenues from international markets increased 1.6% to $41.6 million from $40.9 million in the first 6 months of 2018. Gross profit for the 6 months of 2019 increased 12.6% to $72.8 million from $64.6 million in the same period in 2018. Gross margins for the first 6 months ended June 30, 2019, was 26.4% compared to 27.4% for the first 6 months of 2018.
Operating income for the first 6 months of 2019 decreased 16.6% to $19.9 million from $23.8 million in the same period in 2018. Operating margin was 7.2% versus 10.1% in the first 6 months of 2018. Net income attributable to stockholders for the first 6 months of 2019 was $14.6 million or $0.76 per basic and diluted share compared with $15 million or $0.78 per basic and diluted share in the same period in 2018.
Now we will highlight a few balance sheet and financial items. As of June 30, 2019, the company has cash and cash equivalents of $10.3 million, up from $8 million at March 31, 2019, and compared with $73.6 million at December 31, 2018. Cash and cash equivalents plus restricted cash was $24.9 million on June 30, 2019, compared with $92.9 million at December 31, 2018.
Inventories decreased to $183.5 million at June 30, 2019, from $204.3 million at December 31, 2018. Bank accepted notes from customers increased to $73.7 million on June 30, 2019, from $62.1 million on December 31, 2018. Short-term bank loans increased to $224.4 million on June 30, 2019, from $217.9 million at December 31, 2018.
2019年第二季度的运营收入为610万美元，而2018年同期为980万美元。利息收入为5.1％ - 对不起，2019年第二季度的收入为150万美元，而2019年第二季度的财务费用为320万美元，而2018年第二季度的财务费用为350万美元。这一下降主要是由于长期贷款减少所致。 2019年第二季度的汇兑差额为50万美元，而2018年同期为110万美元。
2019年第二季度归属于股东的净收入为560万美元或每基本和稀释后0.29美元，而670万美元或35％ - 对不起，2018年第二季度基本和摊薄后每股0.35美元。
现在我们将讨论2019年前6个月的财务业绩亮点。 2019年前6个月的净销售额从2018年前6个月的2.362亿美元增长16.7％至2.756亿美元。该公司中国OEM市场的净销售额从2018年同期的1.144亿美元增长26％至1.441亿美元。中国国内售后市场的收入从2018年前6个月的8090万美元增长11.1％至8990万美元。国际市场的收入从2018年前6个月的4090万美元增长1.6％至4160万美元。 2019年2019年同期的6460万美元增长12.6％至7280万美元。截至2019年6月30日的前6个月的毛利率为26.4％，而2018年前6个月为27.4％。
Total equity was $221.2 million at June 30, 2019. And on June 30, 2019, the working capital was $35.7 million.
Moving on to the business outlook. For the fiscal year 2019, we reiterate the expectation for annual net sales to be approximately $515 million and net income 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.
With that, we'll now open the floor for questions. Operator?
继续展望商业前景。 对于2019财年，我们重申预计年度净销售额约为5.15亿美元，净收入约为2200万美元。 这些目标基于公司目前对运营和市场状况的看法，这些看法可能会发生变化。
[Operator Instructions]. Our first question comes from the line of Jim Burn, with Private Investor.
[操作员说明]。 我们的第一个问题来自Jim Burn，私人投资者。
Just had a couple of questions. One is that I noticed this is the second call I've been on where your CFO and your CEO are not present. I'm just -- this is -- I've never heard of this kind of thing, but both of these two people missing on a conference call. I'm just puzzled as to why they don't have an hour in a quarter to spend with their shareholders, number one. And the other one is, why is some of your cash restricted?
刚收到几个问题。 一个是我注意到这是我第二次打电话，你的首席财务官和首席执行官不在场。 我只是 - 这是 - 我从来没有听说过这种事情，但这两个人都在电话会议中失踪了。 我只是感到困惑的是，为什么他们没有一个季度的时间与股东一起度过，排名第一。 而另一个是，为什么你的一些现金受到限制？
So this is the payment structure in China. For a manufacturer to pay -- typically for a manufacturer to pay the suppliers, and they will go to the bank, ask bank to issue a bank note. These are -- those bank notes are usually due in 6 months. Some are even longer. So what this will do is they will issue a bank note to -- on your behalf to the supplier. But it's -- these notes are -- they're close to cash, but it has a 6-month duration. You can only cash out to receive the full amount at the end of the 6 months. And however, if you want to cash out earlier, you can still go to the bank to bank will have to take a discount based on the interest rate. So for us as a customer to those suppliers, we need -- we go to the bank, we need to put a deposit, and that deposit will sort of provide bank a safety net. And so when they write out that note, the note to the supplier, our supplier, and they know there's a cash behind it. So that's why those cash are in a bank as a restricted cash. I hope that explains.
所以这就是中国的支付结构。对于制造商支付 - 通常是制造商向供应商付款，他们将去银行，要求银行发行银行票据。这些是 - 这些钞票通常在6个月内到期。有些甚至更长。那么它将做的是他们将代表您向供应商发行一张纸币。但它 - 这些笔记是 - 它们接近现金，但它有6个月的持续时间。您只能在6个月结束时兑现以获得全额金额。然而，如果您想提前兑现，您仍然可以去银行银行，必须根据利率进行折扣。因此，对于我们作为这些供应商的客户，我们需要 - 我们去银行，我们需要存款，而这笔存款将为银行提供一个安全网。因此，当他们写出这份说明时，给供应商，我们的供应商的说明，他们知道它背后有现金。所以这就是为什么这些现金作为受限制现金存入银行。我希望这可以解释。
Yes. And then the other question I had is, this is the second call I've been on, were both the CEO and the CFO are not on the call. That concerns me because I've never -- I've never heard of a CEO and a CFO, not being on an earnings call, and this has happened twice now.
是。 然后我提出的另一个问题是，这是我第二次打电话，首席执行官和首席财务官都没有接听电话。 这让我感到担忧，因为我从来没有 - 我从来没有听说过首席执行官和首席财务官，没有参加过财务电话会议，现在这已经发生了两次。
Okay. Yes, again, it's not an excuse. But we will definitely have them on the next call. The reason is this quarter, they are, as you know, the ongoing trade discussion with U.S. So they've been buried in a meeting with customers and -- international customers. So at this moment, it's -- but again, no excuse, we'll get -- get the message across and we'll have them attend the call next time.
好的。 是的，再次，这不是一个借口。 但我们肯定会在下一次电话会议上讨论它们。 原因是这个季度，正如你所知，他们正在与美国进行贸易讨论，因此他们被埋没在与客户和国际客户的会面中。 所以在这一刻，它是 - 但再次，没有任何借口，我们会得到 - 得到消息，我们将让他们下次参加电话会议。
Our next question comes from the line of Derek Winter [ph], a Private Investor.
我们的下一个问题来自私人投资者Derek Winter [ph]。
Yes. Can you give us an update on the take private offer that you received and the strategic review of those proposals?
Okay. So to answer your question, the company's Board of Director, actually they add a few more Directors, has formed a special committee. The special committee has also retained legal counsel and financial adviser. And they are reviewing the large shareholders going private proposal. And when they make progress the will make -- do an announcement. So please stay tuned. We'll -- we're waiting for the...
好的。 所以回答你的问题，该公司的董事会，实际上他们增加了几个董事，已经组建了一个特别委员会。 特别委员会还聘请了法律顾问和财务顾问。 他们正在审查大股东提出私人提案。 当他们取得进展时，他们会做出公告。 所以请继续关注。 我们 - 我们正在等待......
How long might that take?
Okay. So the timeline is actually decided by the special committee. Management doesn't have -- because there is a separate line, so we only have the information when they provided us, then we'll make announcement. So I think it involves a number of things, including the due diligence, including the evaluation of the offer. So it's ongoing. It's in progress. So that's all we can tell you proportionally at this point.
好的。 所以时间表实际上是由特别委员会决定的。 管理层没有 - 因为有一条单独的线路，所以我们只有在他们提供给我们时才有信息，然后我们会发布公告。 所以我认为它涉及许多方面，包括尽职调查，包括对报价的评估。 所以它正在进行中。 它正在进行中。 所以我们可以在这一点上按比例告诉你。
[Operator Instructions]. Our next question comes from the line of Peter Siris [ph], a Private Investor.
[操作员说明]。 我们的下一个问题来自私人投资者Peter Siris [ph]。
First, I have a comment. There is a small error the 10-Q on Page 23 where it shows the percent of sales for 2018 in the commercial vehicles brake system and passenger vehicle auto parts, the percentages are wrong. You might just want to take a look, it's not a serious matter, but since I actually read the 10-Q and so on, I'm just bringing it to your attention. Okay, that's number one.
首先，我有一个评论。 第10页的10-Q有一个小错误，它显示了2018年商用车制动系统和乘用车汽车零部件的销售百分比，百分比是错误的。 你可能只是想看一看，这不是一个严重的问题，但是因为我实际上已经阅读了10-Q等等，所以我只是把它引起你的注意。 好的，那是第一名。
Thank you, Peter. We'll look into that.
Your chief is going to look at it. Okay. The second thing, I just wanted to say is, given the market for auto sales in China is in a great quarter. Are you taking share for people? What's your strategy that's enabled you to stay above water when the market is declining so much?
你的负责人会去看看它。 好的。 第二件事，我只是想说，鉴于中国汽车销售市场是一个很大的季度。 你在为人们分享吗？ 当市场下跌如此之多时，您的策略是什么让您能够保持在水面之上？
Okay. First, thank you for ongoing support for all these years. Second, we -- as has been part of our growth strategy in the last couple of years and how to continuously establish our market leadership and expand our market share. So we took a few steps. First, we want to beat our competitors, large or small, with our best value. So for the same price, we'll provide the best functions -- for the same functions, we'll provide the best price. So our price-to-value is the best in the market. So we are very, very competitive. And not to mention our quality is top-notch, and both OEM and aftermarket customers have been recurring. So that's -- we're very fortunate for that.
And secondly, we've been working harder in the last few years to increase and improve our service quality. And we believe if we go close to the market, close to -- stay close to our customer, understand what their needs, we will better retool all product to meet their demand. So with better and improved service, we're receiving increased order from those customers. And lastly, we're looking for area for growth and internally, and see from different department to discuss what we can improve. For instance, some of the customers are with us for a long time and can we expand our product offering to better service them and also to increase our exposure with this particular customer. So we're increasing our bundle sells of the different products. And for them, it's also a value as they are doing more volume purchase. That value shows. So in building to our strategic plan. As the market, as you know, is somewhat saturated at this moment. In prior to 2019, you see a number of years that has been growing.
So those grow high-growth years are -- the difference between the competitors. You can see everyone's having growth, it's just who is growing more than the other. But now we're in a different economic cycle. And so we are aiming to take over some market shares, and we have been taking over market share with our better pricing value and service. And so -- and product offering. So with all that, we are squeezing a lot of smaller players out of this market. So we take pride on that. That battle is not finished yet. As we are then going to second half of the year, I think we'll have to work harder to continue to expand. But so far, as the numbers speaks for itself, when the market's sort of on the reverse, but we continue to advance. So we have -- and also realize the business having growth, which is in this market not many auto part company from China can achieve that.
好的。首先，感谢您对这些年来的持续支持。其次，我们 - 这是过去几年我们的增长战略的一部分，以及如何不断建立我们的市场领导地位和扩大我们的市场份额。所以我们采取了几个步骤。首先，我们希望以最大的价值击败我们的大小竞争对手。因此，以同样的价格，我们将提供最好的功能 - 对于相同的功能，我们将提供最优惠的价格。因此，我们的价格与价值是市场上最好的。所以我们非常非常有竞争力。更不用说我们的质量是一流的，OEM和售后市场客户都经常出现。那就是 - 我们非常幸运。
其次，我们在过去几年中一直在努力提高和改善我们的服务质量。我们相信，如果我们靠近市场，靠近 - 靠近我们的客户，了解他们的需求，我们将更好地重新调整所有产品以满足他们的需求。因此，通过更好和更好的服务，我们可以从这些客户那里获得更多订单。最后，我们正在寻找增长和内部的领域，并从不同的部门看到我们可以改进的内容。例如，一些客户与我们在一起很长时间，我们可以扩展我们的产品以更好地为他们提供服务，并增加我们与这个特定客户的接触。因此，我们正在增加不同产品的捆绑销售。对他们来说，这也是一个价值，因为他们正在进行更多的批量购买。这个价值表明。所以建立我们的战略计划。正如您所知，市场目前有点饱和。在2019年之前，您会看到多年来一直在增长。
因此，那些成长高增长的年份是 - 竞争对手之间的差异。你可以看到每个人都在成长，只有谁比其他人增长更多。但现在我们处于不同的经济周期。因此，我们的目标是接管一些市场份额，我们以更好的定价和服务赢得了市场份额。等等 - 以及产品供应。所有这些，我们正在挤压这个市场中的许多小型玩家。所以我们为此感到自豪。那场战斗尚未结束。由于我们将在今年下半年开始，我认为我们必须更加努力地继续扩展。但到目前为止，由于这些数字不言自明，当市场出现逆转时，我们仍在继续前进。所以我们已经 - 并且也意识到业务有增长，在这个市场上，没有多少来自中国的汽车零部件公司可以实现这一目标。
Yes. No, it's great. I was also surprised that your international markets held up so well, that I find it where -- especially with the trade war with the U.S., at what markets are you gaining in?
是。 不，这很棒。 我还惊讶于你的国际市场保持如此良好，我发现它在哪里 - 特别是与美国的贸易战，你在哪些市场获得？
So Peter, the trade impact -- the U.S.-China trade war impact actually are smaller than we expected to our business to be honest. Mainly, our customers are in a very strong position in the marketplace. So our customer in the U.S. in a very strong market position. So far, we see the impact is minimal. And so that being said, clearly, there are other products in the market, but we are -- whether from quality, pricing or the service, clearly, we still are in the -- they're still in the old product, that just shows how competitive this is.
因此，彼得，贸易影响 - 美中贸易战的影响实际上比我们对诚实的业务预期要小。 主要是，我们的客户在市场中处于非常有利的地位。 因此我们在美国的客户处于非常强大的市场地位。 到目前为止，我们认为影响微乎其微。 所以说，显然，市场上还有其他产品，但我们 - 无论是质量，价格还是服务，显然，我们仍然在 - 它们仍然是旧产品，只是 表明这是多么有竞争力。
Very interesting. And finally, I just have a comment to make, which is...
Peter, let me finish the answer.
For the other markets, we have the other emerging market. We benefit from the Belt and Road initiative by the Chinese government. These markets are now because the Chinese are building infrastructures in those emerging markets and they are using obviously those Chinese contracts are using Chinese equipment, so those large OEM equipment producers are many are already our customers in China. So with their increased deployment of their vehicles, construction equipment and going to these markets, they need more million parts, reliable parts, they know. So it comes naturally for us to go with them to expand into those markets.
对于其他市场，我们拥有另一个新兴市场。 我们受益于中国政府的“一带一路”倡议。 现在这些市场是因为中国人正在这些新兴市场建设基础设施，他们显然正在使用中国合同使用中国设备，所以那些大型OEM设备生产商很多已经是我们在中国的客户。 他们知道，随着他们的车辆，建筑设备的部署和进入这些市场的增加，他们需要更多的零件，可靠的零件。 因此，我们很自然地与他们一起扩展到这些市场。
Yes, I have always said One Belt, One Road would be a big benefit to you. I just have one comment to make, which is I am disappointed to see the continuing amount of interrelated party transactions and loans. I think if the Chairman and his family want to take the company public, the shareholders should have a chance to see what the company looks like without all these deals with Ruili Group and others. I think they're making a mistake, but that's my $0.02.
是的，我一直说一条腰带，一条路对你来说是一个很大的好处。 我只有一条评论要做，这是令我失望的是看到相互关联的交易和贷款的持续数量。 我认为，如果主席及其家人想要公开上市，股东应该有机会看到公司的样子，而不与瑞丽集团和其他公司达成所有这些交易。 我认为他们犯了一个错误，但这是我的0.02美元。
Okay. Peter, so in terms of related party loans, as of the -- the Ruili Group was making increased efforts to reduce that. So as of March 31, the outstanding loan is about $98 million. As of this reporting, June 30, that amount reduced to $76 million. Then as of a couple of days ago, August 12 and 13, that now has already been reduced to $60 million. So Ruili Group has been making effort to reduce that. So we are fully aware your concern. We're working with them diligently to reduce and control that related party transactions.
好的。 彼得，就关联方贷款而言，瑞丽集团正在加大努力以减少这种情况。 截至3月31日，未偿还贷款约为9800万美元。 截至6月30日的报告，这一数额降至7600万美元。 然而，就在几天前，即8月12日和13日，现在已经减少到6000万美元。 所以瑞丽集团一直在努力减少这种情况。 所以我们完全了解您的担忧。 我们正努力与他们合作，以减少和控制关联方交易。
But there are also, as by my math, and my math isn't perfect, but I see that the company has provided credit line guarantees for Ruili Group of -- it looks to me like over $100 million.
但是，就我的数学而言，我的数学并不完美，但我看到该公司已经为瑞丽集团提供了信用额度保证 - 我认为它超过1亿美元。
So the short answer is, yes, we'll provide that guarantee at the bank for Ruili Group. However, the most recent year's growth also attributable to this ongoing support for Ruili Group. They are providing similar guarantee for our expansion that when you need to open the bank line. So their guarantee for us is about -- it's over $200 million.
所以简短的回答是，是的，我们将在瑞丽集团的银行提供担保。 然而，最近一年的增长也归功于对瑞丽集团的持续支持。 他们为我们的扩张提供类似的保证，当您需要打开银行线时。 所以他们对我们的保证是 - 它超过2亿美元。
I know that. Saying is it makes things complicated for investors and investment and the independent committee to understand what the value of [indiscernible] is because there's so many things crossed. That's all.
我知道。 说是让投资者和投资以及独立委员会弄清楚[音频不清晰]的价值是多么复杂，因为有太多事情要交叉。 就这样。
Thank you for your suggestion. We're looking into that.
Our next question comes from the line of Paul Renart [ph], with Private Investor.
我们的下一个问题来自Paul Renart [ph]与私人投资者的关系。
I have a three part question. The first question is, what were the standard utilized to determine the independence of the two directors serving on the special committee. The second part to my question is, how were they selected to serve on the board. And then third, I would like to know who is responsible or what parties are responsible for negotiating the sale price with regard to going private?
我有三个部分的问题。 第一个问题是，用于确定在特别委员会任职的两位董事的独立性的标准是什么。 我的问题的第二部分是，他们是如何被选中在董事会任职的。 然后第三，我想知道谁负责或哪些政党负责谈判私有化的销售价格？
Okay. So to answer your question, as you heard, before we started this whole process, the company board outreached to some of the advisers who is familiar with the procedure. And those at the professional companies have suggested according to the U.S. laws and regulation, and you need to appoint such caliber to meet such criteria, such caliber of Directors. So we appointed two more in addition to our outstanding Directors. And so secondly, in the appointment after the completion of the new board, then we're going through a selection process and to make sure, again, to meet the rules and laws of being a U.S. listed public company and based on their backlog, credential, track record and then select those people to be special committee. And lastly, to answer your question. The special committee is in charge of reviewing the proposal, evaluating the proposal as well as negotiating discussion -- having discussion with the offer -- with the large shareholder's offer. So all these are handled by this special committee. They are independent. And so that's all we can provide information at this moment.
好的。所以回答你的问题，正如你所听到的，在我们开始这整个过程之前，公司董事会向一些熟悉程序的顾问进行了宣传。那些专业公司的人根据美国的法律法规提出建议，你需要指定这样的水准才能达到这样的标准，如董事级别。因此，除了我们优秀的董事之外，我们还任命了两位。其次，在新董事会完成后的任命中，我们将经历一个选拔过程，并再次确保符合成为美国上市公司的规则和法律，并根据他们的积压，凭证，跟踪记录然后选择那些人作为特别委员会。最后，回答你的问题。特别委员会负责审查提案，评估提案以及与大股东的提议进行讨论 - 与提议进行讨论。所有这些都由这个特别委员会处理。他们是独立的。所以我们现在可以提供所有信息。
That's helpful. But how was the pool of potential Directors arrived at. So many U.S. firms would use a large search firm to determine a pool from which to select Independent Directors. So how did you go about the selection process to arrive at these two Independent Directors?
这很有帮助。 但潜在董事的人才如何到来。 如此多的美国公司会使用一家大型搜索公司来确定一个选择独立董事的资金池。 那么你是如何选择这两位独立董事的呢？
The company's going private process is we've seen -- there are a number of companies doing that. And however, and the advisories or firms are very much a few firms out there. And so everyone sort of know everyone. So similar to what you just mentioned, we used a third-party firm to advise us the procedure and the candidate to -- they will provide some candidate and for us to interview. And also for the Board to interview. Also, the current Board member, they will also -- Independent Board Member also will recommend a few other candidates, who they know. And lastly is our legal counsel. Using their network to help us to identify a few other candidates. So through these three channels, so we're able to get a few candidates and then narrow down to these two later on to be -- eventually to be elected.
我们已经看到公司的私营流程 - 有很多公司正在这样做。 然而，这些咨询或公司是很多公司。 所以每个人都了解每个人。 与你刚才提到的类似，我们使用第三方公司向我们提供程序和候选人的建议 - 他们将提供一些候选人和我们采访。 还有董事会采访。 此外，现任董事会成员，他们也将 - 独立董事会成员也会推荐一些他们认识的其他候选人。 最后是我们的法律顾问。 使用他们的网络帮助我们确定其他一些候选人。 因此，通过这三个渠道，我们能够得到一些候选人，然后缩小到这两个候选人 - 最终成为当选者。
Okay. And then lastly, could you please give a sense, I understand you don't have a time line. But could you please give a sense how urgent of a matter the Board views this offer and the negotiation? Is it high on the urgency, medium or low, just to give some sense for the level of urgency from the Board?
好的。 最后，请你理解，我知道你没有时间表。 但是，请您理解董事会对此提议和谈判的看法有多紧迫？ 在紧急程度，中等或低程上是否很高，只是为了对董事会的紧迫程度有所了解？
Yes. So obviously, the special committee is formed to handle this particular task. In terms of priority, it's very high. In terms of urgency, it's also a very urgent and for their mission. So it's ongoing. And so we want you to be rest assured they're working diligently on that. And also, again, as we mentioned earlier, they are professionals. They have seen this type of transaction before so they've experienced. And so that will also be baked into the time line in terms of how they manage it. And lastly, we you can either -- if you want to reach out to them, if you want to have a conversation to them -- with them, you can send the information to us, the management team, and we'll pass it on to the special committee. And we can have the -- I think also in doing the offer, which is a public announced, there are some inflammation about compact information -- well, contact information that you can contact them directly. But again, the easiest way is you send it to us. We'll make sure they receive your inquiry and then they will hopefully get back to you sooner than later.
是。显然，成立了特别委员会来处理这一特定任务。在优先级方面，它非常高。就紧迫性而言，这也是一项非常紧迫的任务。所以它正在进行中。因此，我们希望您放心，他们正在努力工作。而且，正如我们之前提到的，他们也是专业人士。他们之前经历过这种类型的交易。因此，就如何管理而言，它也将被纳入时间表。最后，我们你可以 - 如果你想与他们联系，如果你想与他们交谈 - 与他们，你可以将信息发送给我们，管理团队，我们将通过它到特别委员会。而且我们可以拥有 - 我认为也是在公开宣布的报价中，有一些关于紧凑信息的炎症 - 以及您可以直接联系他们的联系信息。但同样，最简单的方法是将它发送给我们。我们会确保他们收到您的询问，然后他们会希望早日回复您。
[Operator Instructions]. Since there are no further questions up in the queue. I would like to turn the call back over to Kevin Theiss for any closing remarks.
[操作员说明]。 由于队列中没有其他问题。 我想把这个电话转回给Kevin Theiss，以获得任何结束语。
I want to thank, everyone for joining us on this call, and we look forward to speaking with you in the future. Have a good time with the rest of your day.
This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
这就结束了今天的电话会议。 您现在可以断开线路。 感谢您的参与，祝您度过愉快的一天。
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