-- Revenue of $1.2
Billion and Net Income of $101.6
Million for Fiscal Year 2016 In Line with Guidance
--
-- Provides Fiscal 2017 Guidance of $1.2 - $1.3 Billion in Revenue, $85.0 - $100.0 Million in Net Income
--
HARBIN, China, March 16, 2017 /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 fourth quarter and fiscal year ended December 31, 2016.
Fourth Quarter 2016 Financial Highlights
- Revenue was $377.8 million, an increase of 38.5% YoY and
an increase of 13.9% sequentially
- Gross profit was $82.3 million, an increase of 58.3% YoY
and an increase of 18.2% sequentially
- Gross margin of 21.8%, an increase of 270 basis points YoY and
80 basis points sequentially
- Net income was $36.7 million, an increase of 36.9% YoY and
an increase of 81.7% sequentially
- EBITDA was $58.2 million, an
increase of 13.7% YoY and an increase of 26.2% sequentially
- Total volume shipped was 125,525 metric tons, up 30.4% YoY and
an increase of 15.5% sequentially
Full Year 2016 Financial Summary
- Revenue was $1,201.7 million, an
increase of 20.3% from $999.2 million
for the full year 2015
- Gross profit was $247.0 million,
an increase of 36.2% from $181.4
million for the full year 2015
- Gross profit margin of 20.6%, an increase of 240 basis points
from the full year 2015
- Net income was $101.6 million, an
increase of 21.4% from $83.7 million
for the full year 2015
- EBITDA was $194.7 million, an
increase of 13.1% YoY from $172.2
million for the full year 2015
- Total volume shipped was 400,316 metric tons, up 20.5% from
332,144 metric tons for the full year 2015
"We are pleased to have met our revenue and net income guidance
for 2016 abetted by strong customer demand from new growth regions
in the fourth quarter. Our robust financial results for the
fourth quarter of the year and solid results for fiscal year 2016
are consistent with our expectations of a steady recovery
throughout China's automotive
supply chain," said Jie Han,
Chairman of the Board of Directors and Chief Executive Officer.
"According to the China Association of Automobile Manufacturers,
automobile production in China
increased by 14.5% in 2016 as compared to 2015. An improved
macroeconomic environment has improved business conditions and
helped us to generate stronger profit margins."
"We are particularly pleased to see major revenue contributions
from major new growth frontiers, fostered in large part by the
commissioning of our Sichuan
manufacturing facility in July 2016,
a key milestone in our corporate development. The
Sichuan facility will ultimately
add 300,000 metric tons of annual production to our domestic
capacity for a total domestic capacity of 690,000 metric
tons. The new facility also extends our geographical reach
beyond our established Northeast base, generating strong growth
from the South and Central China
regions, in addition to our continued and steady business
development in Southwest and East China. We installed 50 production
lines with 60,000 metric tons of annual production in the second
half of 2016 and construction at the complex is expected to be
completed by the end of 2017."
"The Sichuan facility
substantially expands the footprint of our auto business in
China and while we expect that
automotive applications will continue to be our core business, the
new facility includes precision equipment which will enable us to
diversify our product platform into such high-growth verticals as
ships, high-speed rail, airplanes, bio-degradable materials,
medical-grade materials, food packaging, electronic equipment,
electrical products, alternative energy applications and power
devices, which will help to propel the Company's growth."
"Our new facility in Dubai also
extends our specialized high-tech products into an important new
market. We are planning to complete installing 45 production lines
with 12,000 metric tons of annual production capacity by the end of
July 2017, and an additional 50
production lines with 13,000 metric tons of annual production
capacity by the end of January 2018. This will bring the
total installed production capacity in our Dubai facility to 25,000 metric tons. The
Dubai facility will target
high-end products for the overseas market and will ultimately
enable more active inroads into the markets of Europe, the Middle
East, Russia and other
international regions."
"China XD continues to value our deep working relationships with
our customers above all, and is committed to creating value with
our culture of hard work and innovation. We anticipate that
the continued execution of our strategic plan driven by an increase
in our production capacity, our entry into new markets, a
diversified customer base and an escalation in international sales
will help to generate business growth for years to come. For
fiscal 2017, we are providing financial guidance of between
$1.2 billion and $1.3 billion in
revenue and between $85 million and $100
million in net income," Mr. Han concluded.
Fourth Quarter 2016 Results
Revenues were $377.8 million for
the fourth quarter of 2016, compared to $272.8 million for the same period of 2015,
representing an increase of $105.0
million, or 38.5%. The year-over-year increase was
primarily due to a 30.4% increase in sales volume and an 11.7%
increase in the average RMB selling price of our products.
The increase in revenues in the fourth quarter of 2016 was
driven by growth in demand for our products in the domestic
China market, our aggressive
efforts to expand our customer base attributable to our new plant
in Sichuan and our efforts to
expand overseas sales. We recorded sales increases of 422.0%
in South China, 121.0% in
Central China, 39.2% in East China
and 16.7% in Southwest China.
Overseas sales were $37.7 million for
the fourth quarter of 2016, accounting for 10.0% of total sales,
reflecting the Company's resumed sales to overseas markets in
fiscal 2016.
Premium products (PA66, PA6, Plastic Alloy, PLA, POM and PPO) in
total accounted for 82.8% of revenues in the fourth quarter of
2016, compared to 81.1% in the prior year period. The Company
continued to shift its production mix from traditional polymer
materials to higher-end products due to (i) the greater growth
potential of advanced modified plastics in luxury automobile models
in China, (ii) the stronger demand
as a result of promotion by the Chinese government for clean
energy vehicles, and (iii) better quality from end consumer
recognition of higher-end cars made by automotive manufacturers
from Chinese and Germany joint
ventures, and U.S. and Japanese joint ventures, where
manufacturers tend to use more and higher-end modified
plastics in quantity per vehicle in China.
Gross profit was $82.3 million for
the fourth quarter of 2016, compared to $52.0 million for the same period of 2015,
representing an increase $30.3
million, or 58.3%. Gross margin was 21.8% compared to
19.1% in the fourth quarter of 2015, primarily due to a higher
contribution of higher-margin products sold overseas.
General and administrative (G&A) expenses were $9.9 million for the fourth quarter of 2016,
compared to $6.5 million for the same
period of 2015, representing an increase of $3.4 million, or 52.3%. This increase was
primarily due to the increases in salary, including bonus and
welfare expenses, due to the increase in the number of management
and general staff from various supporting departments. On a
percentage basis, G&A expenses in the fourth quarter of 2016
were 2.6% compared to 2.4% for the same period of 2015.
Research and development (R&D) expenses were $29.3 million for the fourth quarter of 2016,
compared to $2.8 million for the same
period of 2015, representing an increase of $26.5 million, or 946.4%. This increase was
primarily due to (i) elevated R&D activities to meet the higher
quality requirements of potential customers from Europe which resulted in an increase amount of
$15.3 million, (ii) increased R&D
efforts directed towards applications in new electrical equipment,
electronics, alternative energy applications, power devices,
aviation equipment and ocean engineering in addition to other new
products primarily for advanced industrialized applications in the
automobile sector and in new verticals such as ships, airplanes,
high-speed rail, 3D printing materials, biodegradable plastics and
medical devices which resulted in an increase amount of
$10.0 million, and (iii) increased
depreciation expenses after the reclassification of construction in
progress (CIP) for R&D purposes to fixed assets in Sichuan
Enterprise Group Company Limited ("Sichuan Xinda") which resulted
in an increase of $0.09
million. As of December 31,
2016, the number of ongoing research and development
projects was 212.
Operating income was $42.6 million
for the fourth quarter of 2016, compared to $42.3 million for the same period of 2015,
representing an increase of $0.3
million, or 0.7%. This increase was primarily due to the
higher gross margin, partially offset by higher research and
development expenses.
Net interest expense was $7.6
million for the fourth quarter of 2016, compared to net
interest expense of $9.3 million for
the same period of 2015, primarily due to (i) a decrease in
interest expense of $1.7 million, due
to a decrease in the average interest rate to 4.5% in the fourth
quarter of 2016 compared to 5.2% for the same period of 2015, (ii)
a very slight increase in interest income due to an increase in the
average deposit balance to $282.6
million for the fourth quarter of 2016 compared to
$265.0 million for the same period of
2015, partially offset by (iii) an increase in the average
short-term and long-term loan balance to $727.4 million for the fourth quarter of 2016
compared to $416.2 million for the
same period of 2015, and (iv) a decrease in the average interest
rate to 1.9% for the fourth quarter of 2016 compared to 2.2% for
the same period of 2015.
Income tax expense was $2.3
million for the fourth quarter of 2016, representing an
effective income tax rate of 6.0%, compared to an effective income
tax rate of 19.2% for the same period of 2015. The decrease
of the effective tax rate was primarily due to a greater
contribution to consolidated Company profit by AL Composites
Materials FZE ("Dubai Xinda") which was exempted from income taxes.
The effective income tax rate for the fourth quarter of 2016
differs from the People's Republic of
China (PRC) statutory income tax rate of 25% primarily due
to (i) the effect of the preferential tax rate of Dubai Xinda not
subject to PRC income tax, (ii) the preferential tax rate of
Sichuan Xinda, and (iii) the deduction of higher R&D expenses,
partially offset by (iv) the increase of valuation allowances
against deferred income tax assets of certain subsidiaries which
were at a cumulative loss position, and (v) the effect of
non-deductible expenses.
Net income was $36.7 million for
the fourth quarter of 2016, compared to $26.8 million for the same period of 2015,
representing an increase of $9.9
million, or 36.9%. Basic and diluted earnings per share were
$0.56, compared to $0.41 per basic and diluted share in the fourth
quarter of 2015.
The average number of shares used in the computation of basic
and diluted earnings per share for the three months ended
December 31, 2016 was 49.5 million,
compared to 49.3 million shares for basic and diluted earnings per
share in the prior year period.
Earnings before interest, tax, depreciation and amortization
(EBITDA) was $58.2 million for the
fourth quarter of 2016, compared to EBITDA of $51.2 million for the same period of 2015,
representing an increase of $7.0
million, or 13.7%. 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.
Full Year 2016 Financial Results
Revenues were $1,201.7 million in
fiscal 2016, compared to $999.2
million in fiscal 2015, representing an increase of
$202.5 million, or 20.3%. The
year-over-year increase was primarily due to a 20.5% increase in
sales volume and a 4.8% increase in the average RMB selling price
of our products.
The increase in revenues in fiscal 2016 was driven by growth in
demand for our products in the domestic China market, our aggressive efforts to expand
our customer base attributable to our new plant in Sichuan and our efforts to expand overseas
sales. We recorded sales increases of 196.7% in South China, 112.4% in Central China, 39.4% in Southwest China and 35.6% in East China.
Overseas sales were $110.2
million in fiscal 2016, accounting for 9.2% of total sales,
representing an increase of $38.6
million, or 53.9%. This increase reflects our efforts
to reduce our concentration of sales in the domestic China market.
Premium products (PA66, PA6, Plastic Alloy, PLA, POM and PPO) in
total accounted for 81.3% of revenues in fiscal 2016, compared to
79.1% in fiscal 2015. The Company continued to shift its production
mix from traditional polymer materials to higher-end products due
to (i) the greater growth potential of advanced modified plastics
in luxury automobile models in China, (ii) the stronger demand as a result of
promotion by the Chinese government for clean energy vehicles
and (iii) end consumer recognition of better quality of higher-end
cars made by automotive manufacturers from Chinese and Germany joint ventures, and U.S. and
Japanese joint ventures, which manufacturers tend to use more
and higher-end modified plastics in quantity per vehicle in
China. In addition, the Company
sold primarily higher-end Plastic Alloy to the customer
overseas.
Gross profit was $247.0 million in
fiscal 2016, compared to $181.4
million in fiscal 2015, representing an increase of
$65.6 million, or 36.2%. Our gross
margin increased to 20.6% during the year of 2016 from 18.2% for
fiscal 2015, primarily due to higher contribution
of higher-margin product sales from the overseas
market.
General and administrative (G&A) expenses were $30.0 million in fiscal 2016, compared to
$23.8 million for fiscal 2015,
representing an increase of $6.2
million, or 26.1%. This increase is primarily due to the
increase of (i) $5.8 million in
salary, including bonus and welfare expenses, due to the increase
in the number of management and general staff from various
supporting departments, (ii) $0.8
million in travelling and transportation expenses, (iii)
$0.4 million in professional fees,
and (iv) $0.4 million in rental fees,
partially offset by (v) a decrease of $1.5
million in non-income taxation expenses.
Research and development expenses were $48.0 million in fiscal 2016 compared with
$21.1 million in fiscal 2015, an
increase of $26.9 million, or 127.5%.
This increase was primarily due to (i) elevated activities to meet
the higher quality requirements of potential customers from
Europe which resulted in an
increase of $15.3 million, (ii)
increased efforts directed towards applications in new electrical
equipment and electronics, alternative energy applications, power
devices, aviation equipment and ocean engineering, in addition to
other new products primarily for advanced industrialized
applications in the automobile sector and in new verticals such as
ships, airplanes, high-speed rail, 3D printing materials,
biodegradable plastics and medical devices, which resulted in an
increase of $10.0 million, and (iii)
an increase in depreciation expenses after additional R&D
equipment was put into use at Sichuan Xinda which resulted in an
increase of $0.09 million. As of
December 31, 2016, the number of
ongoing research and development projects was 212.
Operating income was $167.7
million in fiscal 2016 compared to $135.0 million for fiscal 2015, representing an
increase of $32.7 million, or 24.2%.
This increase was due to the higher gross margin, partially offset
by higher general and administration expenses and higher research
and development expenses.
Income tax expense was $17.4
million in fiscal 2016, representing an effective income tax
rate of 14.6%, compared to an effective income tax rate of 17.9% in
fiscal 2015. The decrease of the effective income tax rate in
fiscal 2016 is primarily due to the greater contribution to
consolidated Company profit generated by Dubai Xinda, which was
exempted from income taxes. The effective income tax rate in
fiscal 2016 differs from the PRC statutory income tax rate of 25%
primarily due to (i) the effect of the preferential tax rate of
Dubai Xinda which is not subject to PRC income tax, (ii) the
preferential tax rate of Sichuan Xinda, and (iii) the deduction of
higher R&D expenses, partially offset by (vi) the loss
generated by the debt extinguishment of Favor Sea Limited, a
British Virgin Islands entity that
is not subject to PRC income tax, (iv) the increase of valuation
allowances against deferred income tax assets of certain
subsidiaries which were at a cumulative loss position, and (v) the
effect of non-deductible expenses.
Net income was $101.6 million in
fiscal 2016, compared to $83.7
million for fiscal 2015, representing an increase of
$17.9 million, or 21.4%. Basic
and diluted earnings per share were $1.54 in fiscal 2016, compared to basic and
diluted earnings per share of $1.27
for fiscal 2015.
The average number of shares used in the computation of basic
and diluted earnings per share for the fiscal year 2016 was 49.4
million, compared to 49.2 million shares for fiscal 2015.
Earnings before interest, tax, depreciation and amortization
(EBITDA) was $194.7 million for the
fiscal year 2016 as compared to EBITDA of $172.2 million for fiscal 2015, representing an
increase of $22.5 million, or
13.1%. 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 December 31, 2016, the
Company had $168.1 million in cash
and cash equivalents, $184.8 million
in time deposits with commercial banks, $239.5 million in working capital (current assets
minus current liabilities) and a current ratio (current assets
divided by current liabilities) of 1.2. Stockholders' equity
as of December 31, 2016 was
$634.3 million, an increase of 9.7%
as compared to $578.0 million as of
December 31, 2015.
Inventory decreased by 4.7% to $280.9
million as of fiscal year end 2016 as compared to fiscal
year end 2015 due to the Company's ability to increase sales.
Property, plant and equipment, net, increased by 41.1% to
$806.4 million as of fiscal year end
2016 as compared to fiscal year end 2015 mainly due to the delivery
of equipment to Dubai Xinda at the beginning of
2016. Prepayment to equipment suppliers decreased by 92.2% to
$14.2 million as of year-end fiscal
2016 as compared to fiscal year end 2015 mainly due to the delivery
of equipment to Dubai Xinda. The aggregate short-term and long-term
bank loans increased by 77.2% to $694.3
million as of fiscal year end 2016 as compared to fiscal
year end 2015 due to the utilization of existing lines of credit
and our taking out a $180 million
syndicated loan to redeem our 11.75% guaranteed senior notes due
February 4, 2019. We believe our
current debt level is manageable. We define the manageable debt
level as the sum of aggregate short-term and long-term loans, and
notes payable, over total assets.
On August 29, 2016, the Company
fully redeemed all of its 11.75% guaranteed senior notes due on
February 4, 2019 (the "Senior
Notes"), plus accrued and unpaid interest to the redemption
date. The aggregate amount paid to redeem the Senior Notes
was $166.6 million, plus accrued and
unpaid interest to the redemption date, which resulted in a
one-time, non-operating charge of $19.0
million as loss on debt extinguishment in the third quarter
of 2016. On August 22, 2016, a wholly-owned subsidiary of the
Company, Xinda Holding (HK) Company Limited, entered into an
agreement for a loan facility in an aggregate amount of $180.0
million with a consortium of banks and financial institutions
led by Standard Chartered Bank (Hong
Kong) Limited ("Standard Chartered"). Pursuant to the
agreement with Standard Chartered, the proceeds of the loan
facility was applied primarily to the redemption of the Senior
Notes.
Recent Events
On February 17, 2017, the Company
issued a press release announcing that its Board of Directors (the
"Board") has received a preliminary non-binding proposal letter,
dated February 16, 2017, from its
Chairman and Chief Executive Officer, Mr. Jie Han ("Mr. Han"), XD Engineering Plastics
Company Limited ("XD Engineering"), a company incorporated in the
British Virgin Islands and wholly
owned by Mr. Han, and MSPEA Modified Plastics Holding Limited, an
affiliate of Morgan Stanley Private Equity Asia III, Inc.
(collectively, the "Buyer Consortium"), to acquire all of the
outstanding shares of common stock of the Company not already
beneficially owned by the Buyer Consortium in a "going-private"
transaction (the "Transaction") for $5.21 per share of common stock in cash.
The proposal letter states that the Buyer Consortium expects
that the Board will appoint a special committee of independent
directors to consider the proposal and make a recommendation to the
Board. The proposal letter also states that the Buyer
Consortium will not move forward with the proposed Transaction
unless it is approved by such a special committee, and the proposed
Transaction will be subject to a non-waivable condition requiring
approval by majority shareholder vote of shareholders other than
the Buyer Consortium members. The Buyer Consortium currently
beneficially owns approximately 74% of the issued and outstanding
shares of common stock of the Company on a fully diluted and
as-converted basis.
The Board has established a special committee (the "Special
Committee") of disinterested directors to consider the proposal.
The Special Committee is composed of the following
independent directors of the Company: Mr. Lawrence W. Leighton, Mr. Feng Li, and
Mr. Linyuan Zha, with Mr. Leighton serving as chairperson of
the Special Committee. The Special Committee will be
responsible for evaluating, negotiating and recommending to the
Board any proposals involving a strategic transaction by the
Company with one or more third parties. The Special Committee
intends to retain advisors, including an independent financial
advisor, to assist in the evaluation of the proposal and any
additional proposals that may be made by the Buyer Consortium.
The Special Committee cautions the Company's shareholders and
others considering trading in its securities that the Special
Committee has not made any decisions with respect to the Company's
response to the proposal. There can be no assurance that any
definitive offer will be made by the Buyer Consortium or any other
person, that any definitive agreement will be executed relating to
the proposed Transaction, or that this or any other transaction
will be approved or consummated.
After initial approval by the Board of Directors and the
Company's major investor on December 8,
2016, Sichuan Xinda entered into a strategic investment
agreement with Shunqing Government, Nanchong City, Sichuan Province, on December 12, 2016. Due to the uncertainty
of securing the necessary land use rights for the project, the
Company waited until March 13, 2017
and entered into a "Land Use Right Transfer Agreement" with the
government agency. The Company expects to sign the official and
definitive investment agreement pertaining to the production of
300,000 metric tons of bio-composite materials and additive
manufacturing used composites (3D printing materials) and 20,000
metric tons of functional masterbatch with Shunqing Government,
Nanchong City, Sichuan Province on
March 17, 2017. The Company
will make necessary and appropriate disclosure in accordance with
required rules and regulations so that further details of the
definitive investment agreement will be forthcoming.
Financial Guidance and Business Outlook
The Company met its financial guidance for fiscal 2016, with
revenue of $1.2 billion, surpassing
its forecasted revenue estimate range of $1.0 billion and $1.1
billion, and net income of $101.6
million, in line with the forecasted net income estimate
range of $100.0 million to $110.0
million.
In light of an anticipated contribution from additional
production capacity, our entry to new markets, a further
diversified customer base and an escalation of sales overseas, the
Company projects revenue for fiscal 2017 to range between
$1.2 billion and $1.3 billion. Gross
margin in fiscal 2017 is expected to remain stable as compared to
that of fiscal 2016. In order to support the Company's long-term
and sustainable growth, it is expected that general and
administrative, research and development, and selling expenses
could increase by $14.5
million. Also, our interest expense could increase by
30%, or approximately $20 million,
mainly to replace short-term debt with long-term loans to improve
our capital structure and fund our growth projects. Therefore, the
Company projects net income to range between $85.0 million to $100.0 million. This is based on
the anticipation of a continued recovery throughout the Chinese
automotive supply chain and a stabilization of crude oil pricing
and its impact on polymer composite materials in 2017. This
forecast also assumes contributions from the Sichuan plant and the Dubai second phase project, both of which will
start production in the second half of 2017. It also assumes
the average exchange rate of the US dollar to RMB at 6.8. This
financial guidance reflects the Company's preliminary view of its
business outlook for fiscal 2017 and is subject to revision based
on changing market conditions at any time.
Conference Call
China XD Plastics' senior management will host a conference call
at 9:00 am Eastern Time on
Thursday, March 16, 2017, to discuss
its fourth quarter and fiscal 2016 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 9251507.
A recording of the conference call will be available through
March 23, 2017, by calling +1 (866)
846-0868 (for callers in the U.S.) and entering pass code
9251507.
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 29 automobile brands manufactured in
China, including without
limitation, AUDI, Mercedes Benz,
BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei
and VW Passat, Golf, Jetta, etc.. 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 December
31, 2016, 402 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 the Company's English website at
http://www.chinaxd.net, and the Chinese website at
http://www.xdholding.com.
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 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 Company's projections of
its revenues for performance in fiscal 2017. These
forward-looking statements can be identified by terminology such as
"will," "expect," "project," "anticipate," "forecast," "plan,"
"believe," "estimate" and similar statements. Forward-looking
statements involve inherent risks and uncertainties and are based
on current expectations, assumptions, estimates and projections
about the Company and the industry. A number of important factors
could cause actual results to differ materially from those
contained in any forward-looking statement. Potential risks and
uncertainties include, but are not limited to, the global economic
uncertainty could further impair the automotive industry and limit
demand for our products; fluctuations in automotive sales and
production could have a material adverse effect on our results of
operations and liquidity; our financial performance may be affected
by the prospect of our Dubai
facility and the associated expansion into Middle East, Europe and other parts of Asia; the withdrawal of preferential
government policies and the tightening control over the Chinese
automotive industry and automobile purchase restrictions imposed in
certain major cities may limit market demand for our products; the
slowing of Chinese automotive industry's growth; the concentration
of our distributors, customers and suppliers; 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. 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)
Phone: +1 (212) 747-1118
Email: cxdc@chinaxd.net
Investor Relations: Citigate Dewe Rogerson
Ms. Vivian Chen, Managing
Director
US: +1 (347) 481-3711
Email: Vivian.chen@citigatedr.com
- Financial Tables Follow -
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
168,086,445
|
|
|
|
119,928,485
|
|
Restricted
cash
|
|
|
103,489,402
|
|
|
|
50,852,327
|
|
Time
deposits
|
|
|
184,806,112
|
|
|
|
237,626,806
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
410,049,559
|
|
|
|
234,542,739
|
|
Amounts due from
a related party
|
|
|
229,624
|
|
|
|
244,836
|
|
Inventories
|
|
|
280,939,008
|
|
|
|
294,665,195
|
|
Prepaid expenses and
other current assets
|
|
|
125,310,309
|
|
|
|
15,675,848
|
|
Total current
assets
|
|
|
1,272,910,459
|
|
|
|
953,536,236
|
|
Property, plant and
equipment, net
|
|
|
806,363,692
|
|
|
|
571,746,507
|
|
Land use rights,
net
|
|
|
22,536,397
|
|
|
|
24,506,837
|
|
Long-term prepayments
to equipment and construction suppliers
|
|
|
14,167,702
|
|
|
|
183,226,006
|
|
Other non-current
assets
|
|
|
10,521,949
|
|
|
|
18,966,622
|
|
Total
assets
|
|
|
2,126,500,199
|
|
|
|
1,751,982,208
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND STOCKHOLDERS'
EQUITY
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Short-term bank
loans, including current portion of long-term
bank loans
|
|
|
444,757,476
|
|
|
|
284,339,089
|
|
Bills
payable
|
|
|
148,392,677
|
|
|
|
33,522,287
|
|
Accounts
payable
|
|
|
320,013,040
|
|
|
|
257,417,000
|
|
Amounts due to a
related party
|
|
|
11,548
|
|
|
|
8,439
|
|
Income taxes
payable
|
|
|
897,625
|
|
|
|
6,881,946
|
|
Accrued expenses and
other current liabilities
|
|
|
119,339,366
|
|
|
|
140,988,712
|
|
Total current
liabilities
|
|
|
1,033,411,732
|
|
|
|
723,157,473
|
|
Long-term bank loans,
excluding current portion
|
|
|
249,520,615
|
|
|
|
107,481,709
|
|
Notes
payable
|
|
|
-
|
|
|
|
145,634,996
|
|
Deferred
income
|
|
|
69,311,102
|
|
|
|
62,039,050
|
|
Other non-current
liabilities
|
|
|
42,420,619
|
|
|
|
38,046,917
|
|
Total
liabilities
|
|
|
1,394,664,068
|
|
|
|
1,076,360,145
|
|
|
|
|
|
|
|
|
|
|
Redeemable Series
D convertible preferred stock (redemption amount of US$212,212,300
and US$184,461,800 as of December 31, 2016 and 2015,
respectively)
|
|
|
97,576,465
|
|
|
|
97,576,465
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Series B preferred
stock
|
|
|
100
|
|
|
|
100
|
|
Common stock,
US$0.0001 par value, 500,000,000 shares authorized, 49,532,541
shares and 49,344,284 shares issued, 49,511,541 shares and
49,323,284 shares outstanding as of December 31, 2016 and
2015, respectively
|
|
|
4,952
|
|
|
|
4,933
|
|
Treasury stock,
21,000 shares at cost
|
|
|
(92,694)
|
|
|
|
(92,694)
|
|
Additional paid-in
capital
|
|
|
82,606,404
|
|
|
|
81,919,932
|
|
Retained
earnings
|
|
|
617,168,735
|
|
|
|
515,555,985
|
|
Accumulated other
comprehensive loss
|
|
|
(65,427,831)
|
|
|
|
(19,342,658)
|
|
Total stockholders'
equity
|
|
|
634,259,666
|
|
|
|
578,045,598
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Total liabilities,
redeemable convertible preferred stocks and stockholders'
equity
|
|
|
2,126,500,199
|
|
|
|
1,751,982,208
|
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
|
|
|
Years Ended December 31,
|
|
|
Three
Months Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
1,201,678,898
|
|
|
|
999,192,894
|
|
|
|
377,661,511,
|
|
|
|
272,752,694
|
|
Cost of
revenues
|
|
|
(954,723,617)
|
|
|
|
(817,811,445)
|
|
|
|
(295,504,993)
|
|
|
|
(220,831,046)
|
|
Gross
profit
|
|
|
246,955,281
|
|
|
|
181,381,449
|
|
|
|
82,156,518
|
|
|
|
51,921,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(1,356,843)
|
|
|
|
(1,458,658)
|
|
|
|
(351,203)
|
|
|
|
(367,380)
|
|
General and
administrative expenses
|
|
|
(29,952,304))
|
|
|
|
(23,816,148)
|
|
|
|
(9,917,384)
|
|
|
|
(6,495,472)
|
|
Research and
development expenses
|
|
|
(47,989,665)
|
|
|
|
(21,061,345)
|
|
|
|
(29,308,647)
|
|
|
|
(2,756,980)
|
|
Total operating
expenses
|
|
|
(79,298,812)
|
|
|
|
(46,336,151)
|
|
|
|
(39,577,234)
|
|
|
|
(9,619,832)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
167,656,469
|
|
|
|
135,045,298
|
|
|
|
42,579,284
|
|
|
|
42,301,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
5,847,274
|
|
|
|
8,221,532
|
|
|
|
1,374,799
|
|
|
|
1,370,540
|
|
Interest
expense
|
|
|
(41,370,432)
|
|
|
|
(42,704,097)
|
|
|
|
(8,966,648)
|
|
|
|
(10,712,778)
|
|
Foreign currency
exchange gains (losses)
|
|
|
1,951,732
|
|
|
|
(2,237,541)
|
|
|
|
1,595,060
|
|
|
|
(1,214,553)
|
|
Gains on foreign currency forward contracts
|
|
|
-
|
|
|
|
653,569
|
|
|
|
-
|
|
|
|
-
|
|
Loss on debt
extinguishment
|
|
|
(18,963,834)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Government
grants
|
|
|
3,914,360
|
|
|
|
2,991,493
|
|
|
|
2,475,771
|
|
|
|
1,439,298
|
|
Total non-operating
expenses, net
|
|
|
(48,620,900)
|
|
|
|
(33,075,044)
|
|
|
|
(3,521,018)
|
|
|
|
(9,117,493)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
119,035,569
|
|
|
|
101,970,254
|
|
|
|
39,058,266
|
|
|
|
33,184,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(17,422,819)
|
|
|
|
(18,237,975)
|
|
|
|
(2,335,447)
|
|
|
|
(6,369,171)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
101,612,750
|
|
|
|
83,732,279
|
|
|
|
36,722,819
|
|
|
|
26,815,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
1.54
|
|
|
|
1.27
|
|
|
|
0.56
|
|
|
|
0.41
|
|
Net
Income
|
|
|
101,612,750
|
|
|
|
83,732,279
|
|
|
|
36,722,819
|
|
|
|
26,815,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
|
|
(46,085,173)
|
|
|
|
(32,118,459)
|
|
|
|
(27,617,945)
|
|
|
|
(15,606,469)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
55,527,577
|
|
|
|
51,613,820
|
|
|
|
9,104,874
|
|
|
|
11,208,683
|
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
|
|
Years Ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
101,612,750
|
|
|
|
83,732,279
|
|
|
|
120,776,369
|
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net reversal for
doubtful accounts
|
|
|
-
|
|
|
|
(69,281)
|
|
|
|
(35,849)
|
|
Depreciation and
amortization
|
|
|
34,244,842
|
|
|
|
27,540,212
|
|
|
|
22,916,893
|
|
Stock-based
compensation
|
|
|
686,491
|
|
|
|
1,044,162
|
|
|
|
1,003,040
|
|
Loss on change in
fair value of warrants liability
|
|
|
-
|
|
|
|
-
|
|
|
|
1,871,074
|
|
Amortization of
discount and issuance cost of the Notes
|
|
|
2,040,608
|
|
|
|
1,086,010
|
|
|
|
898,634
|
|
Loss on change in
fair value of forward contract
|
|
|
-
|
|
|
|
-
|
|
|
|
2,435
|
|
Foreign currency
exchange losses (gains)
|
|
|
(2,965,949)
|
|
|
|
2,720,131
|
|
|
|
2,051,596
|
|
Losses on disposals
of property, plant and equipment
|
|
|
259,104
|
|
|
|
9,036
|
|
|
|
10,292
|
|
Deferred income tax
benefit
|
|
|
(2,292,830)
|
|
|
|
(2,380,236)
|
|
|
|
(2,018,757)
|
|
Loss on debt
extinguishment
|
|
|
18,963,834
|
|
|
|
-
|
|
|
|
-
|
|
Restricted
cash
|
|
|
(27,269,199)
|
|
|
|
4,011,349
|
|
|
|
(6,427,562)
|
|
Accounts
receivable
|
|
|
(190,860,210)
|
|
|
|
(40,614,289)
|
|
|
|
72,318,976
|
|
Amounts due from a
related party
|
|
|
-
|
|
|
|
(35,937)
|
|
|
|
-
|
|
Inventories
|
|
|
(3,764,167)
|
|
|
|
(58,103,919)
|
|
|
|
(109,198,972)
|
|
Prepaid expenses and
other current assets
|
|
|
21,222,125
|
|
|
|
(4,542,796)
|
|
|
|
(3,719,794)
|
|
Other non-current
assets
|
|
|
811,456
|
|
|
|
(371,872)
|
|
|
|
-
|
|
Bills
payable
|
|
|
122,226,675
|
|
|
|
(8,119,365)
|
|
|
|
18,538,133
|
|
Accounts
payable
|
|
|
82,085,904
|
|
|
|
116,133,982
|
|
|
|
32,823,457
|
|
Amounts due to a
related party
|
|
|
3,792
|
|
|
|
8,167
|
|
|
|
-
|
|
Income taxes
payable
|
|
|
(5,807,300)
|
|
|
|
3,889,710
|
|
|
|
(8,996,712)
|
|
Accrued expenses and
other current liabilities
|
|
|
(75,664,932)
|
|
|
|
86,963,823
|
|
|
|
5,935,116
|
|
Deferred
income
|
|
|
(304,465)
|
|
|
|
3,371,249
|
|
|
|
-
|
|
Other non-current
liabilities
|
|
|
9,255,439
|
|
|
|
11,098,323
|
|
|
|
-
|
|
Net cash provided by operating
activities
|
|
|
84,483,968
|
|
|
|
227,370,738
|
|
|
|
148,748,369
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of time
deposits
|
|
|
(475,315,245)
|
|
|
|
(474,254,312)
|
|
|
|
(626,994,741)
|
|
Proceeds from
maturity of time deposits
|
|
|
515,088,058
|
|
|
|
463,771,799
|
|
|
|
663,216,581
|
|
Purchases of and
deposits for property, plant and equipment
|
|
|
(210,840,098)
|
|
|
|
(267,427,681)
|
|
|
|
(334,092,742)
|
|
Purchase of land use
rights
|
|
|
-
|
|
|
|
(13,931,804)
|
|
|
|
(1,460,754)
|
|
Government grant
related to the construction of Sichuan plant
|
|
|
22,478,569
|
|
|
|
11,499,000
|
|
|
|
-
|
|
Net cash used in investing
activities
|
|
|
(148,588,716)
|
|
|
|
(280,342,998)
|
|
|
|
(299,331,656)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from bank
borrowings
|
|
|
687,164,318
|
|
|
|
504,218,741
|
|
|
|
797,615,642
|
|
Repayment of bank
borrowings
|
|
|
(537,809,334)
|
|
|
|
(339,528,477)
|
|
|
|
(831,932,534)
|
|
Redemption of notes
payable
|
|
|
(165,366,000)
|
|
|
|
-
|
|
|
|
-
|
|
Proceeds from
Syndicate loan facility
|
|
|
180,000,000
|
|
|
|
|
|
|
|
|
|
Proceeds from Senior
Notes Payable
|
|
|
-
|
|
|
|
-
|
|
|
|
148,396,175
|
|
Payment of issuance
costs of the Notes
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,718,452)
|
|
Proceeds from
exercise of Series A investor warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
596,740
|
|
Proceeds from early
exercise of options
|
|
|
-
|
|
|
|
121,725
|
|
|
|
-
|
|
Release of restricted
cash as collateral for bank borrowings
|
|
|
31,375,326
|
|
|
|
-
|
|
|
|
10,022,398
|
|
Placement of
restricted cash as collateral for bank borrowings
|
|
|
(66,757,459)
|
|
|
|
(33,077,094)
|
|
|
|
(20,612,868)
|
|
Payments of issuance
cost of bank borrowings
|
|
|
(6,770,000)
|
|
|
|
-
|
|
|
|
-
|
|
Net cash provided by financing
activities
|
|
|
121,836,851
|
|
|
|
131,734,895
|
|
|
|
99,367,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
|
|
(9,574,143)
|
|
|
|
(4,290,762)
|
|
|
|
1,126,894
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
48,157,960
|
|
|
|
74,471,873
|
|
|
|
(50,089,292)
|
|
Cash and cash
equivalents at beginning of year
|
|
|
119,928,485
|
|
|
|
45,456,612
|
|
|
|
95,545,904
|
|
Cash and cash
equivalents at end of year
|
|
|
168,086,445
|
|
|
|
119,928,485
|
|
|
|
45,456,612
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid, net of
US$ 2,562,026, US$ 231,356 and US$ 113,317 capitalized for
the years ended December 31, 2016, 2015 and 2014,
respectively
|
|
|
45,782,010
|
|
|
|
40,136,978
|
|
|
|
33,537,952
|
|
Income taxes
paid
|
|
|
19,521,472
|
|
|
|
8,982,167
|
|
|
|
29,288,894
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Government grant
related to construction in the form of repayment of bank loans on
behalf of the Company by the government (note 13)
|
|
|
-
|
|
|
|
38,118,231
|
|
|
|
-
|
|
Government grant
related to the construction of Sichuan plant in the form of
restricted cash (note 13)
|
|
|
-
|
|
|
|
11,117,817
|
|
|
|
-
|
|
Accrual for purchase
of equipment
|
|
|
94,031,275
|
|
|
|
41,251,663
|
|
|
|
-
|
|
Accrual for issuance
cost of the Notes
|
|
|
-
|
|
|
|
-
|
|
|
|
202,712
|
|
CHINA XD PLASTICS
COMPANY LIMITED
|
Reconciliation of
EBITDA to Net Income
|
|
|
Three Months
Ended
|
Years
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
EBITDA
|
58,232,039
|
51,151,220
|
194,650,843
|
172,214,563
|
Less: Interest
expense
|
8,966,648
|
10,712,778
|
41,370,432
|
42,704,097
|
Income tax expense
|
2,335,447
|
6,369,171
|
17,422,819
|
18,237,975
|
Depreciation and amortization expense
|
10,207,125
|
7,254,119
|
34,244,842
|
27,540,212
|
Net income
|
$36,722,819
|
$26,815,152
|
$101,612,750
|
$83,732,279
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/specialty-chemical-company-china-xd-plastics-announces-fourth-quarter-and-fiscal-year-2016-financial-results-300424749.html
SOURCE China XD Plastics Company Limited