In the news release, China XD Plastics Announces Third Quarter
2014 Financial Results, issued 13-Nov-2014 by China XD Plastics Company Limited
over PR Newswire, we are advised by the company that under the
"Third Quarter 2014 Financial Highlights" section, fifth bullet
point, "5.2% YoY" should have read "4.1% YoY." The complete,
corrected release follows:
China XD Plastics Announces Third Quarter 2014 Financial Results --
Revenue Up 20% Sequentially -- -- Gross Margin Expansion up 25%
Sequentially -- -- Confirms Confidence In 2014 Guidance --
HARBIN, China, Nov. 13, 2014 /PRNewswire/ -- China XD Plastics
Company Limited (NASDAQ: CXDC, "China XD Plastics" or the
"Company"), one of China's leading
specialty chemical companies engaged in the development,
manufacture and sale of polymer composite materials primarily for
automotive applications, today announced its financial results for
the third quarter ended September 30,
2014.
Third Quarter 2014 Financial Highlights:
- Revenue was $315.7 million, an increase of 7.7% YoY and
19.5% sequentially
- Gross profit was $65.4 million, a decrease of 0.5% YoY but
up 25.4% sequentially
- Gross margin of 20.7% declined YoY but was up 100 basis points
sequentially
- Net income was $43.2 million, an increase of 5.1% YoY and
126% sequentially
- Total volume shipped was 95,204 metric tons, up 4.1% YoY
"Strong sequential growth confirms our view that business would
accelerate over the course of the year," said Jie Han, Chairman of the Board of Directors and
Chief Executive Officer of China XD Plastics. "Revenue growth was
fueled by strong domestic demand, success in our geographic
diversification efforts outside of China, and improved average selling prices
resulting from our strategic shift to higher-end products."
Mr. Han continued, "Looking forward, we continue to see numerous
opportunities to grow our business, and are acting accordingly.
With the future contribution from the Southwest Campus, we will be
able to effectively cover all major markets in China, while products from our Dubai plant will cover overseas markets
including Asia, the Middle East, Russia and Europe. Our success in product development
this year has broadened our product portfolio from six to now
eleven categories. Through our R&D efforts, we have added 3D
printing and biodegradable materials to our portfolio. With
automobile applications continuing to be our core business, we plan
to gradually diversify our product offering to include products for
applications in high-speed rail, ships, aircrafts as well as
biodegradable and electronics applications."
Third Quarter 2014 Results
Revenues for the third quarter of 2014 were $315.7 million, representing a year-over-year
increase of 7.7% from $293.1 million
in the third quarter of 2013. The increase in revenues was due
to a 4.1% increase in sales volume and 3.9% increase in the average
RMB selling price.
The greater sales volume was driven by strong demand for polymer
composite materials in the China
and Asian markets, higher penetration in the East China and
Southeast China markets, as well
as marketing efforts to develop new customers. Market demand in
general is the result of an increasing appetite for middle and
high-end automobiles by Chinese consumers, continuing substitution
of imported polymer composite materials by domestic suppliers, and
an increase in per-vehicle plastic content. The adoption rate of
advanced polymer parts is highest in luxury automobile models,
which is a rapidly expanding segment. The increase in average RMB
selling price was mainly due to the shift of product mix
toward higher-end products.
Gross profit was $65.4 million,
down slightly from $65.7 million in
the third quarter of 2013. The slight decrease in gross profit was
primarily due to higher cost of sales, as the Company utilized some
raw materials in the production of PA6 and PA66 that were
originally purchased for R&D projects and were left over after
the projects were completed. The increased cost of sales was offset
by a shift in product mix, with higher-end products (mainly PA6,
PA66, POM, PPO and plastic alloy) accounting for 75.5% of
total revenue in the third quarter, as compared to 70.7% during the
prior year period. Additionally, the average sales discount
lower-end products (PP and ABS) in the quarter was 1.2%, as
compared to 6.5% during the third quarter of 2013. Gross margin was
20.7%, compared to 22.4% in the same period of the prior year and
19.8% in the second quarter of 2014.
General and administrative (G&A) expenses were $5.4 million in the quarter, compared to
$4.4 million in the same period in
2013, representing an increase of 22.7%, or $1.0 million. The increase is primarily due to a
$1.0 million increase in non-income
taxation due to the expansion of the business.
R&D expenses were $5.1
million during the quarter, unchanged from the same period in
2013, reflecting the Company's consistent R&D activities.
R&D expense is primarily a result of consumption of raw
materials for various experiments to develop both new automotive
and non-automotive applications. The consumption of raw materials
for these projects accounted for 90% of total R&D
expenses for the quarter. As of September 30, 2014, the number of ongoing
research and development projects was 128.
Operating income for the third quarter of 2014 was $54.7 million, or 17.3% of revenue, a decrease of
2.1% from $55.9 million, or 19.1% of
revenue, in the same period a year ago.
Net interest expenses was $8.8
million for the quarter, compared to net interest expenses
of $2.8 million in the same period of
2013, primarily due to (i) an increase of $4.6 million in interest payments resulting from
the Notes issued on February 4, 2014;
and (ii) an increase of $1.8 million
in interest payments resulting from the bank loans used to fund
capacity expansions in Southwest
China and Dubai. The
average balance of short-term and long-term bank loans during the
quarter was $107.8 million as
compared to $63.6 million during the
third quarter of 2013.
Net income for the third quarter of 2014 was $43.2 million, compared to a net income of
$41.1 million for the same period of
the prior year. Basic and diluted earnings per share were
$0.66 and $0.62, respectively, compared to $0.64 per basic and diluted share in the third
quarter of 2013.
Average number of shares used in computation of basic and
diluted earnings per share for the three months ended September 30, 2014 were 49.1 million and 49.2
million, respectively, compared to 47.8 million in the same period
of the prior year.
EBITDA (Earnings before Interest, Taxes, Depreciation, and
Amortization) for the third quarter of 2014 was $64.3 million, an increase of 0.2% from EBITDA of
$64.2 million in the same period of
the prior year. For a detailed reconciliation of EBITDA, a non-GAAP
measure, to its nearest GAAP equivalent, please see the financial
tables at the end of this release.
Financial Condition
As of September 30, 2014, the
Company had $62.7 million in cash and
cash equivalents, $222.4 million in
time deposits with commercial banks, $445.3
million in working capital (current assets minus current
liabilities) and a current ratio (current assets divided by current
liabilities) of 2.5. Stockholders' equity as of September 30, 2014 was $492.8 million, compared to $412.3 million as of December 31, 2013.
Compared to December 31, 2013,
Inventories increased by 70.6% due to raw materials stock-up at
attractive prices and the anticipation of the increase of customer
demand in the following quarters. Long-term prepayments to
equipment suppliers increased by 16,300.0% due to the advance for
equipments to be used in Dubai and
Southwest China facilities. Other
non-current assets increased by 1,238.9% due to a long-term
restricted time deposit to secure a three-year loan.
The Company paid down short-term loans as it utilized more
long-term bank loans to support future capacity expansion in
Southwest China and Dubai. As a result, short-term bank loans
decreased by 56.6% while long-term bank loans increased by
US$167.8 million. The aggregate
short-term and long-term bank loans decreased by 3.2% due to the
overall consideration of existing lines of credit and maintaining a
healthy asset to liability ratio. The Company has been
improving its capital structure by replacing its short-term debts
with longer tenures in order to maintain its operation stability
and support its capacity expansion. Recognized by leading financial
institutions for its creditworthiness, the Company has obtained
long-term credits from the largest state-owned banks in
China as well as well known
international banks. Bills payable increased by 68.0% due to the
increase of purchases from our domestic raw material suppliers. As
of September 30, 2014, notes payable
was US$148.6 million due to the
issuance of 11.75% guaranteed senior notes due in 2019, net of
discount.
Business Outlook and Guidance
Based on the Company's strong performance during the quarter and
positive outlook for growing customer demand in the fourth quarter,
the Company reiterates its revenue guidance for 2014. The Company
expects full-year sales to range between $950 million and $1.05 billion and net income to
range between $100 million to $120
million. This forecast is based on constant exchange rates
and the anticipated interest expense associated with both its long
and short-term debt, and reflects the Company's current and
preliminary view, which is subject to change.
Conference Call
China XD Plastics' management will host a conference call at
8:30 a.m. ET on Thursday, November 13, 2014, to discuss its third
quarter 2014 financial results. The conference call can be accessed
by dialing +1 (855) 298-3404 (for callers in the U.S.),
+86-4001-200-539 (for Mainland China callers) or +852 5808 3202 (for Hong Kong callers) and entering pass code
6910713.
A recording of the conference call will be available through
November 20, 2014, by calling +1
(866) 846-0868 (for callers in the U.S.) and entering pass code
6910713.
A live webcast and replay of the conference call will be
available on the investor relations page of the Company's website
at http://www.chinaxd.net.
About China XD Plastics Company Limited
China XD Plastics Company Limited, through its wholly-owned
subsidiaries, develops, manufactures and sells polymer composites
materials, primarily for automotive applications. The Company's
products are used in the exterior and interior trim and in the
functional components of 25 automobile brands manufactured in
China, including without
limitation, AUDI, BMW, Toyota, Buick, Mazda, and VW Passat, Golf,
and Jetta. The Company's wholly-owned research center is dedicated
to the research and development of polymer composites materials and
benefits from its cooperation with well-known scientists from
prestigious universities in China.
As of September 30, 2014, 311 of the
Company's products have been certified for use by one or more of
the automobile manufacturers in China. For more information please visit
http://www.chinaxd.net.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. All statements other than statements
of historical fact in this announcement are forward-looking
statements, including but not limited to, the Company's ability to
raise additional capital to finance the Company's activities; the
Company's and its subsidiaries' ability to fully perform all of
their obligations under the Notes transaction and other contractual
obligations applicable to them; the effectiveness, profitability,
and the marketability of its the ongoing mix shift to more advanced
products; legal and regulatory risks; the Company's ability to
execute its growth strategy and the effectiveness of its marketing
strategy; the future trading of the common stock of the Company;
the Company's ability to operate as a public company; the period of
time for which its current liquidity will enable the Company to
fund its operations; general economic and business conditions; the
volatility of the Company's operating results and financial
condition; the Company's ability to attract or retain qualified
senior management personnel and research and development staff; and
other risks detailed in the Company's filings with the Securities
and Exchange Commission and available on its website at
http://www.sec.gov. These forward-looking statements involve known
and unknown risks and uncertainties and are based on current
expectations, assumptions, estimates and projections about the
Company and the industry. The Company undertakes no obligation to
update forward-looking statements to reflect subsequent occurring
events or circumstances, or to changes in its expectations, except
as may be required by law. Although the Company believes that the
expectations expressed in these forward looking statements are
reasonable, it cannot assure you that its expectations will turn
out to be correct, and investors are cautioned that actual results
may differ materially from the anticipated results.
Contacts:
China XD Plastics
Mr. Taylor Zhang
CFO (New York)
US Phone: +1 (212) 747-1118
Email: cxdc-ir@chinaxd.net
ICR
Mr. Gary Dvorchak, CFA
Senior Vice President
US Phone: +1 (310) 954-1123
China Phone: +86 (138) 1079-1408
Email: Gary.Dvorchak@icrinc.com
-Financial Tables Follow-
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
September 30,
2014
|
|
December 31,
2013
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
|
62,710,680
|
|
|
95,545,904
|
Restricted
cash
|
|
|
14,539,090
|
|
|
13,708,971
|
Time
deposits
|
|
|
222,385,142
|
|
|
281,343,641
|
Accounts receivable,
net
|
|
|
193,778,969
|
|
|
282,320,819
|
Amounts due from
a related party
|
|
|
4,073
|
|
|
225,752
|
Inventories
|
|
|
247,200,357
|
|
|
144,885,688
|
Prepaid expenses and
other current assets
|
|
|
11,032,978
|
|
|
8,418,143
|
Total current
assets
|
|
|
751,651,289
|
|
|
826,448,918
|
Property, plant and
equipment, net
|
|
|
239,216,935
|
|
|
233,841,735
|
Land use rights,
net
|
|
|
12,090,697
|
|
|
12,457,001
|
Long-term prepayments
to equipment suppliers
|
|
|
213,173,709
|
|
|
1,332,742
|
Other non-current
assets
|
|
|
24,162,039
|
|
|
1,826,232
|
Total
assets
|
|
|
1,240,294,669
|
|
|
1,075,906,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND STOCKHOLDERS'
EQUITY
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term bank
loans, including current portion of long-term
bank loans
|
|
|
136,689,475
|
|
|
314,682,620
|
Bills
payable
|
|
|
43,011,515
|
|
|
25,604,176
|
Accounts
payable
|
|
|
101,780,984
|
|
|
122,457,396
|
Amounts due to a
related party
|
|
|
361,257
|
|
|
-
|
Income taxes
payable
|
|
|
8,765,362
|
|
|
18,631,698
|
Warrants
liability
|
|
|
537,210
|
|
|
1,063,401
|
Accrued expenses and
other current liabilities
|
|
|
15,254,759
|
|
|
55,893,004
|
Total current
liabilities
|
|
|
306,400,562
|
|
|
538,332,295
|
Long-term bank loans,
excluding current portion
|
|
|
167,751,711
|
|
|
-
|
Notes
payable
|
|
|
148,553,073
|
|
|
-
|
Income taxes
payable
|
|
|
9,375,619
|
|
|
8,224,057
|
Deferred income tax
liabilities
|
|
|
17,787,182
|
|
|
19,428,706
|
Total
liabilities
|
|
|
649,868,147
|
|
|
565,985,058
|
|
|
|
|
|
|
|
Redeemable Series
D convertible preferred stock
|
|
|
97,576,465
|
|
|
97,576,465
|
Stockholders'
equity:
|
|
|
|
|
|
|
Series B preferred
stock
|
|
|
100
|
|
|
100
|
Common stock,
US$0.0001 par value, 500,000,000 shares authorized, 49,152,418
shares and 47,896,133 shares
issued, 49,131,418 shares and 47,875,133 shares outstanding as
of September 30, 2014 and
December 31, 2013, respectively
|
|
|
4,914
|
|
|
4,789
|
Treasury stock,
21,000 shares at cost
|
|
|
(92,694)
|
|
|
(92,694)
|
Additional paid-in
capital
|
|
|
77,716,977
|
|
|
76,341,659
|
Retained
earnings
|
|
|
396,038,034
|
|
|
311,047,337
|
Accumulated other
comprehensive income
|
|
|
19,182,726
|
|
|
25,043,914
|
Total stockholders'
equity
|
|
|
492,850,057
|
|
|
412,345,105
|
Commitments and
contingencies
|
|
|
-
|
|
|
-
|
Total liabilities,
redeemable convertible preferred stocks and stockholders'
equity
|
|
|
1,240,294,669
|
|
|
1,075,906,628
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
Three-Month Period
Ended
September
30,
|
|
Nine-Month Period
Ended
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
315,746,209
|
|
|
293,139,049
|
|
|
803,535,879
|
|
|
666,256,978
|
Cost of
revenues
|
|
|
(250,378,605)
|
|
|
(227,473,486)
|
|
|
(639,219,994)
|
|
|
(534,250,688)
|
Gross
profit
|
|
|
65,367,604
|
|
|
65,665,563
|
|
|
164,315,885
|
|
|
132,006,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(177,287)
|
|
|
(143,573)
|
|
|
(435,240)
|
|
|
(253,565)
|
General and
administrative expenses
|
|
|
(5,413,088)
|
|
|
(4,436,021)
|
|
|
(13,762,596)
|
|
|
(10,775,595)
|
Research and
development expenses
|
|
|
(5,081,833)
|
|
|
(5,139,610)
|
|
|
(27,068,448)
|
|
|
(15,926,298)
|
Total operating
expenses
|
|
|
(10,672,208)
|
|
|
(9,719,204)
|
|
|
(41,266,284)
|
|
|
(26,955,458)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
54,695,396
|
|
|
55,946,359
|
|
|
123,049,601
|
|
|
105,050,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,058,843
|
|
|
1,702,488
|
|
|
8,548,857
|
|
|
4,242,205
|
Interest
expense
|
|
|
(10,865,335)
|
|
|
(4,499,497)
|
|
|
(31,059,573)
|
|
|
(10,810,221)
|
Foreign currency
exchange gains (losses)
|
|
|
(120,435)
|
|
|
550,010
|
|
|
(193,146)
|
|
|
1,916,626
|
Gains (losses) on
foreign currency forward contracts
|
|
|
309,999
|
|
|
-
|
|
|
(624,766)
|
|
|
-
|
Change in fair value
of warrants liability
|
|
|
1,594,936
|
|
|
(112,229)
|
|
|
526,191
|
|
|
308,102
|
Government
grant
|
|
|
-
|
|
|
709,655
|
|
|
1,324,213
|
|
|
919,746
|
Total non-operating
expense, net
|
|
|
(7,021,992)
|
|
|
(1,649,573)
|
|
|
(21,478,224)
|
|
|
(3,423,542)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
47,673,404
|
|
|
54,296,786
|
|
|
101,571,377
|
|
|
101,627,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(4,515,418)
|
|
|
(13,235,220)
|
|
|
(16,580,680)
|
|
|
(25,308,256)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
43,157,986
|
|
|
41,061,566
|
|
|
84,990,697
|
|
|
76,319,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
|
|
0.66
|
|
|
0.64
|
|
|
1.30
|
|
|
1.19
|
Diluted earnings per
common share
|
|
|
0.62
|
|
|
0.64
|
|
|
1.29
|
|
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
43,157,986
|
|
|
41,061,566
|
|
|
84,990,697
|
|
|
76,319,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment, net of nil
income taxes
|
|
|
6,981,015
|
|
|
768,724
|
|
|
(5,861,188)
|
|
|
5,408,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
50,139,001
|
|
|
41,830,290
|
|
|
79,129,509
|
|
|
81,727,045
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
Nine-Month Period
Ended September 30,
|
|
|
2014
|
|
2013
|
|
|
US$
|
|
US$
|
Cash flows from
operating activities:
|
|
|
|
|
Net cash provided
by operating activities
|
|
|
64,066,706
|
|
|
60,137,200
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Proceeds from
maturity of time deposits
|
|
|
530,549,654
|
|
|
145,189,952
|
Purchase of time
deposits
|
|
|
(475,702,678)
|
|
|
(275,929,213)
|
Purchases of
property, plant and equipment
|
|
|
(275,649,634)
|
|
|
(16,086,974)
|
Net cash used in
investing activities
|
|
|
(220,802,658)
|
|
|
(146,826,235)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from bank
borrowings
|
|
|
574,971,049
|
|
|
324,695,542
|
Repayments of bank
borrowings
|
|
|
(580,584,760)
|
|
|
(230,155,513)
|
Release of restricted
cash
|
|
|
7,501,176
|
|
|
4,824,298
|
Placement of
restricted cash as collateral for bank borrowings
|
|
|
(20,597,823)
|
|
|
(4,013,492)
|
Proceeds from the
exercise of Series A investor warrants
|
|
|
596,740
|
|
|
-
|
Proceeds from
issuance of the Notes
|
|
|
148,396,175
|
|
|
-
|
Payment of issuance
costs of the Notes
|
|
|
(4,693,152)
|
|
|
-
|
Net cash provided
by financing activities
|
|
|
125,589,405
|
|
|
95,350,835
|
|
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
|
|
(1,688,677)
|
|
|
1,772,631
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(32,835,224)
|
|
|
10,434,431
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
95,545,904
|
|
|
83,822,602
|
Cash and cash
equivalents at end of period
|
|
|
62,710,680
|
|
|
94,257,033
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Interest
paid
|
|
|
27,770,246
|
|
|
8,316,403
|
Income taxes
paid
|
|
|
26,287,989
|
|
|
17,638,502
|
|
|
|
|
|
|
|
CHINA XD PLASTICS
COMPANY LIMITED
|
Reconciliation of
Net Income to EBITDA
|
(Amounts expressed
in United States dollars)
|
|
|
Three Months
Period Ended
|
|
September
30,
|
|
2014
|
2013
|
Net income
|
$
43,157,986
|
$
41,061,566
|
Interest
expense
|
10,865,335
|
4,499,497
|
Income tax
expense
|
4,515,418
|
13,235,220
|
Depreciation and
amortization expense
|
5,788,924
|
5,394,521
|
EBITDA
|
64,327,663
|
64,190,804
|
SOURCE China XD Plastics Company Limited