HARBIN, China, May 11, 2015 /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 first quarter ended
March 31, 2015.
First Quarter 2015 Financial
Highlights
- Revenue was $221.9 million, a decrease of 0.8% YoY and
27.7% sequentially
- Gross profit was $48.6 million, an increase of 4.3% YoY
and decrease of 16.3% sequentially
- Gross margin of 21.9% increased 105 basis points YoY and 299
basis points sequentially
- Net income was $25.4 million, an increase of 15.5% YoY and
decrease of 29.0% sequentially
- Total volume shipped was 69,355 metric tons, up 0.6% YoY but
down 27.8% sequentially
"Our first quarter 2015 results were consistent with our
expectations," said Jie Han,
Chairman of the Board of Directors and Chief Executive
Officer. "The automotive industry in China continues to experience a slower growth
rate than it has in recent years which has increased pricing
pressure on upstream businesses. We have quickly adjusted to these
changing market dynamics by offering new more cost-efficient
formulations of our Polyamide (PA) products. Our responsiveness to
market conditions and ability to adapt to customer needs and to
maintain stable gross margin are critical points of differentiation
for China XD Plastics among our peers."
Mr. Han continued, "We remain focused on maintaining our
position as an industry leader in China's auto market while also strategically
expanding our business into new markets. We are pleased to announce
that our new facility in Dubai
will be operational as of this quarter. Presence in Dubai will provide numerous advantages
including international business environment, access to low-cost
raw materials and tax exemptions. We are confident in the
resilience of our business model and our ability to capitalize on
exciting growth opportunities."
First Quarter 2015 Results
Revenues for the first quarter of 2015 were $221.9 million, representing a year-over-year
decrease of 0.8% from $223.6 million
in the first quarter of 2014. The slight year-over-year decline was
due to a 1.0% decrease in the average selling price of the
Company's products, partially offset by approximately a 0.6%
increase in sales volume.
Gross profit for the first quarter of 2015 was $48.6 million, representing a 4.3% increase from
$46.6 million in the prior year
period. Gross margin was 21.9%, compared to 20.9% in the
first quarter of 2014. The increase in gross margin was primarily
due to higher-end product sales accounting for 78.4% of the
Company's total revenues for the first quarter ended March 31, 2015, compared to 73.7% in the same
period of the prior year, and lower raw material costs as the
Company benefited from raw materials procured at lower prices due
to the decreased crude oil price since late 2014.
Premium products (POM, PPO, PA6, PA66 and plastic alloy) in
total accounted for 78.4% of revenues, compared to 73.7% in the
prior year period. Sales to the Korean market accounted for 15.7%
of total revenue. Sales to the Korean market primarily
consisted of long carbon chain PA plastic alloy and
high-performance modified PA66.
General and administrative (G&A) expenses were $5.0 million in the quarter, compared to
$3.8 million in the same period of
2014, representing an increase of 31.6%, or $1.2 million. The growth was primarily due to
increases of $0.4 million in payroll
expenses resulting from headcount and salary increases,
$0.3 million of stamp duties in
connection with the Company's business expansion, and $0.5 million in other miscellaneous expenses.
Research and development (R&D) expenses were $5.8 million during the quarter ended
March 31, 2015, compared to
$8.6 million during the same period
in 2014, a decrease of 32.6%, or $2.8
million. The decrease reflects the Company's efforts to
adjust R&D activities to new products primarily for
industrialized applications from automotive to other advanced
fields such as ships, airplanes, high-speed rail, electronics,
medical devices, bio-based plastics, food packaging, 3D printing
materials, et al. As of March 31,
2015, the number of ongoing research and development
projects was 126.
Total operating income was $37.6
million in the first quarter ended March 31, 2015, compared to $34.1 million in the same period of 2014,
representing an increase of 10.3%, or $3.5
million. The increase in operating income was primarily due
to higher gross profit and lower R&D expenses, partially offset
by higher selling expenses and G&A expenses.
Net interest expense was $8.2
million for the quarter, compared to net interest expense of
$5.6 million in the same period of
2014, primarily due to interest expense increases of $1.8 million resulting from the Notes issued on
February 4, 2014 and $ 0.2 million resulting from the increase of bank
loans to meet the Company's needs for its capacity expansion in
Southwest China and Dubai.
Income tax expense was $4.2
million, representing an effective income tax rate of 14.3%,
compared to an effective income tax rate of 24.7% in the first
quarter of 2014. The decrease was primarily due to Sichuan
Xinda Group's preferential income tax rate and exemption of income
tax for the income earned by the Company's Dubai subsidiary, which generated a greater
proportion of the Company's net income in the first quarter of 2015
compared to the first quarter of 2014.
Net income for the first quarter of 2015 was $25.4 million, compared to $22.0 million for the same period of the prior
year. Basic and diluted earnings per share were $0.39, compared to $0.34 per basic and diluted share in the first
quarter of 2014.
Average number of shares used in the computation of basic and
diluted earnings per share for the three months ended March 31, 2015 was 49.2 million, compared to 48.3
million in the prior year period.
EBITDA for the first quarter of 2015 was $46.3 million, an increase of 6.4% from EBITDA of
$43.5 million in the prior year
period. 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 March 31, 2015, the Company
had $31.2 million in cash and cash
equivalents, $269.2 million in time
deposits with commercial banks, $409.3
million in working capital (current assets minus current
liabilities) and a current ratio (current assets divided by current
liabilities) of 1.9. Stockholders' equity as of March 31, 2015 was $550.8
million, compared to $525.3
million as of December 31,
2014.
Inventories increased by 19.7% to meet anticipated demand in the
coming quarters, especially from customers located in more distant
regions as well as to stock up on raw materials at low price
level.
Short-term loans, including the current portion of long-term
loans, increased by $61.3 million, or
61.5%, during the first quarter, primarily due to loans guaranteed
by Investment Company affiliated with the local Government and
overseas bank loans borrowed by the Company's Dubai subsidiary. The Company took on
additional long-term bank loans of $31.2
million to support its expansion in Southwest China and Dubai. Accounts
payable increased by 43.8% as a result of more purchases made by
the Company because of the lower purchase price of raw materials
and the Company's strategy to stock up on inventory. As of
March 31, 2015, notes payable was
$148.7 million, due to the issuance
of 11.75% guaranteed senior notes due in 2019.
Business Outlook and Guidance
Based on the Company's consideration for slowing demand
throughout the Chinese automotive supply chain and uncertainty of
the impact of volatile crude oil prices on polymer composite
materials in 2015, the Company reiterates its guidance for 2015.
The Company full-year sales to range between $960 million and $1.06 billion and net income to
range between $100 million to $120
million. This forecast assumes constant exchange rates
and anticipated interest expense associated with both its long and
short-term debt, and reflects the Company's current and preliminary
view of its business outlook in fiscal 2015, which is subject to
change based on then actual circumstances.
Conference Call
China XD Plastics' management will host a conference call at
8:00 a.m. ET on Monday, May 11, 2015, to discuss its first
quarter of 2015 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 6865785.
A recording of the conference call will be available through
May 18, 2015, by calling +1 (866)
846-0868 (for callers in the U.S.) and entering pass code
6865785.
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, one of China's leading specialty chemical companies,
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 27 automobile
brands manufactured in China,
including without limitation, AUDI, BMW, Volkswagen, Buick, Mazda,
and Toyota. 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 March 31, 2015, 329 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 growth
potential in international markets; the effectiveness and
profitability of the Company's product diversification strategy;
the impact of the Company's product mix shift to more advanced
products and related pricing policies; the volatility of the
Company's operating results and financial condition; 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 guaranteed senior 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; the prospect of the
Company's Dubai facility, and the
associated expansion into Middle
East, Europe and other
parts of Asia; the prospect of the
Company's Southwest China
facility, and its penetration into Southwest China; the impact of volatile crude
oil prices on the Company's efforts to diversify its product
offers; market for plastic resins; legal and regulatory risks; the
Company's projections of its revenues for performance in fiscal in
2015; 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
William Zima
Partner
US Phone: +1-(203) 682-8233
Email: william.zima@icrinc.com
-Financial Tables Follow-
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
March
31,
2015
|
|
|
December
31,
2014
|
|
|
|
US$
|
|
|
US$
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
31,198,246
|
|
|
|
45,456,612
|
|
Restricted
cash
|
|
|
28,829,206
|
|
|
|
12,545,772
|
|
Time
deposits
|
|
|
269,216,517
|
|
|
|
238,532,702
|
|
Accounts receivable,
net
|
|
|
199,160,030
|
|
|
|
203,998,138
|
|
Amounts due
from a related party
|
|
|
27,705
|
|
|
|
220,262
|
|
Inventories
|
|
|
298,917,784
|
|
|
|
249,797,244
|
|
Prepaid expenses and
other current assets
|
|
|
15,662,270
|
|
|
|
11,253,828
|
|
Total current
assets
|
|
|
843,011,758
|
|
|
|
761,804,558
|
|
Property, plant and
equipment, net
|
|
|
316,039,885
|
|
|
|
318,324,600
|
|
Land use rights,
net
|
|
|
18,824,797
|
|
|
|
11,896,542
|
|
Prepayments to
equipment and construction suppliers
|
|
|
266,678,237
|
|
|
|
182,259,578
|
|
Other non-current
assets
|
|
|
41,340,286
|
|
|
|
25,499,744
|
|
Total
assets
|
|
|
1,485,894,963
|
|
|
|
1,299,785,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
EQUITY
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Short-term bank
loans, including current portion of long-term
bank loans
|
|
|
161,005,484
|
|
|
|
99,735,422
|
|
Bills
payable
|
|
|
27,208,472
|
|
|
|
43,389,928
|
|
Accounts
payable
|
|
|
218,740,159
|
|
|
|
152,073,014
|
|
Income taxes
payable
|
|
|
4,499,918
|
|
|
|
3,269,115
|
|
Accrued expenses and
other current liabilities
|
|
|
22,281,199
|
|
|
|
24,484,583
|
|
Total
current liabilities
|
|
|
433,735,232
|
|
|
|
322,952,062
|
|
Long-term bank loans,
excluding current portion
|
|
|
205,538,523
|
|
|
|
174,274,446
|
|
Notes
payable
|
|
|
148,682,290
|
|
|
|
148,617,057
|
|
Income taxes
payable
|
|
|
15,251,469
|
|
|
|
14,025,825
|
|
Deferred income tax
liabilities
|
|
|
16,506,164
|
|
|
|
16,951,551
|
|
Deferred
income
|
|
|
17,722,212
|
|
|
|
-
|
|
Total
liabilities
|
|
|
837,435,890
|
|
|
|
676,820,941
|
|
|
|
|
|
|
|
|
|
|
Redeemable Series
D convertible preferred stock
|
|
|
97,576,465
|
|
|
|
97,576,465
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Series B preferred
stock
|
|
|
100
|
|
|
|
100
|
|
Common stock,
US$0.0001 par value, 500,000,000 shares
authorized,
49,182,284 shares and 49,172,796 shares issued,
49,161,284 shares and
49,151,796 shares outstanding as
of March 31,
2015 and December 31, 2014, respectively
|
|
|
4,917
|
|
|
|
4,916
|
|
Treasury stock,
21,000 shares at cost
|
|
|
(92,694)
|
|
|
|
(92,694)
|
|
Additional paid-in
capital
|
|
|
81,131,512
|
|
|
|
80,875,787
|
|
Retained
earnings
|
|
|
457,227,732
|
|
|
|
431,823,706
|
|
Accumulated other
comprehensive income
|
|
|
12,611,041
|
|
|
|
12,775,801
|
|
Total stockholders'
equity
|
|
|
550,882,608
|
|
|
|
525,387,616
|
|
Commitments and
contingencies
|
|
|
-
|
|
|
|
-
|
|
Total liabilities,
redeemable convertible preferred stock
and stockholders'
equity
|
|
|
1,485,894,963
|
|
|
|
1,299,785,022
|
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
Three-Month Period
Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
221,926,395
|
|
|
|
223,580,675
|
|
Cost of
revenues
|
|
|
(173,284,119)
|
|
|
|
(176,932,337)
|
|
Gross
profit
|
|
|
48,642,276
|
|
|
|
46,648,338
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(296,820)
|
|
|
|
(122,328)
|
|
General and
administrative expenses
|
|
|
(4,964,758)
|
|
|
|
(3,796,364)
|
|
Research and
development expenses
|
|
|
(5,813,863)
|
|
|
|
(8,630,734)
|
|
Total operating
expenses
|
|
|
(11,075,441)
|
|
|
|
(12,549,426)
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
37,566,835
|
|
|
|
34,098,912
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,428,071
|
|
|
|
3,035,365
|
|
Interest
expense
|
|
|
(10,629,353)
|
|
|
|
(8,579,977)
|
|
Foreign currency
exchange losses
|
|
|
(90,415)
|
|
|
|
(479,190)
|
|
Gains on foreign
currency forward contracts
|
|
|
354,519
|
|
|
|
-
|
|
Government
grant
|
|
|
-
|
|
|
|
1,311,239
|
|
Change in fair value
of warrant liability
|
|
|
-
|
|
|
|
(162,739)
|
|
Total non-operating
expense, net
|
|
|
(7,937,178)
|
|
|
|
(4,875,302)
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
29,629,657
|
|
|
|
29,223,610
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(4,225,631)
|
|
|
|
(7,227,559)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
25,404,026
|
|
|
|
21,996,051
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
0.39
|
|
|
|
0.34
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
25,404,026
|
|
|
|
21,996,051
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
|
|
(164,760)
|
|
|
|
(14,188,735)
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
25,239,266
|
|
|
|
7,807,316
|
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
Three-Month Period
Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
US$
|
|
|
US$
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
|
|
37,529,772
|
|
|
|
26,174,417
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchase of time
deposits
|
|
|
(110,597,161)
|
|
|
|
(162,265,820)
|
|
Proceeds from
maturity of time deposits
|
|
|
80,026,889
|
|
|
|
111,155,365
|
|
Purchase of and
deposits for property, plant and equipment
|
|
|
(86,042,231)
|
|
|
|
-
|
|
Purchases of land use
rights
|
|
|
(5,522,219)
|
|
|
|
(1,020,326)
|
|
Net cash used in
investing activities
|
|
|
(122,134,722)
|
|
|
|
(52,130,781)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from bank
borrowings
|
|
|
203,658,524
|
|
|
|
176,935,307
|
|
Repayment of bank
borrowings
|
|
|
(111,397,430)
|
|
|
|
(215,370,999)
|
|
Proceeds from
issuance of the Notes
|
|
|
-
|
|
|
|
148,396,175
|
|
Payment of issuance
costs of the Notes
|
|
|
-
|
|
|
|
(3,481,955)
|
|
Placement of
restricted cash as collateral for bank borrowings
|
|
|
(22,298,692)
|
|
|
|
(2,786,383)
|
|
Net cash provided
by financing activities
|
|
|
69,962,402
|
|
|
|
103,692,145
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and
cash equivalents
|
|
|
384,182
|
|
|
|
(2,866,506)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(14,258,366)
|
|
|
|
74,869,275
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
45,456,612
|
|
|
|
95,545,904
|
|
Cash and cash
equivalents at end of period
|
|
|
31,198,246
|
|
|
|
170,415,179
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid, net of
capitalized interest
|
|
|
14,508,630
|
|
|
|
5,242,256
|
|
Income taxes
paid
|
|
|
2,215,158
|
|
|
|
18,749,381
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Accrual for issuance
costs of the Notes
|
|
|
-
|
|
|
|
1,439,209
|
|
Accrual for purchase
of equipment
|
|
|
14,224
|
|
|
|
155,285
|
|
CHINA XD PLASTICS
COMPANY LIMITED.
|
Reconciliation of
Net Income to EBITDA
|
|
Three Months
Ended
|
|
March
31,
|
|
2015
|
2014
|
Net income
|
$25,404,026
|
$21,996,051
|
Interest
expense
|
10,629,353
|
8,579,977
|
Income tax
expense
|
4,225,631
|
7,227,559
|
Depreciation and amortization expense
|
6,025,968
|
5,670,411
|
EBITDA
|
46,284,978
|
43,473,998
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/china-xd-plastics-announces-first-quarter-2015-financial-results-300080790.html
SOURCE China XD Plastics Company Limited