HARBIN, China, Aug. 12, 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 second quarter ended June 30, 2014.
Second Quarter 2014 Financial Highlights:
- Revenues were $264.2 million, an increase of 30.7%
from $202.2 million in the second quarter of 2013
- Gross profit was $52.3 million, an increase of 40.6%
from $37.2 million in the second quarter of 2013
- Gross margin was 19.8%, compared to 18.4% in the second quarter
of 2013
- Net income was $19.8 million, compared to $20.8
million in the second quarter of 2013
- Total volume shipped was 81,284 metric tons, up 16.3% from
69,915 metric tons in the second quarter of 2013
"We are pleased to again report solid revenue growth and
improved profitability this quarter," said Jie Han, Chairman of Board of Director and Chief
Executive Officer of China XD. "Growth reflected our leading market
share in Northeast China,
accelerating penetration of the market in East China and the
initiation of sales overseas. Importantly, higher-value products
continue to grow in our product mix, enabling a higher average
selling price reflected in the fact that revenues grew faster than
tonnage volume."
Mr. Han continued, "Because of the exciting growth opportunities
we see in our markets, we continue to step up our research and
development spending. We take pride in being a profitable
growth company, but do recognize that directing more gross profit
into new product development can help us sustain, or even
accelerate, our growth rate in the years to come. We continue
to tightly control our selling and general expenses in line with
our corporate culture."
Second Quarter 2014 Results
Revenues for the second quarter of 2014 were $264.2 million, representing a year-over-year
increase of 30.7% from $202.2 million
in the second quarter of 2013. The increase in revenues was due to
approximately 16.3% increase in sales volume and 13.6% increase in
the average RMB selling price. Revenues from East China and
Northeast China increased by 45.4%
and 19.0%, respectively, during the second quarter of 2014 when
compared to the second quarter of 2013.
Volume growth was achieved due to strong demand from the
automotive industry in China, a
combination of growing sales volume of high-end automobiles to
Chinese consumers, the increased advanced plastics in automotive
parts, and the continuing replacement of imported polymer composite
materials with domestic supply. The increase of our average
selling price was mainly due to the shift of product mix
toward more advanced polymers.
During the quarter, the Company sold US$20.0 million to Korean market high-end
standardized products. This accounted for 7.6% of total
revenues.
Gross profit was $52.3 million, up
40.6% from $37.2 million in the
second quarter of 2013. Gross margin was 19.8%, compared to 18.4%
in the same period of the prior year primarily due to the ongoing
mix shift to more advanced products, mainly including modified PA66
and plastic alloys, which grew to 75.3% of our revenues, as
compared to 65.1% in the same period of the prior year. Gross
margin also benefitted from reduced sales discounts for lower-end
products such as modified PP and ABS.
General and administrative (G&A) expenses were US$4.5 million in the quarter ended June 30, 2014, compared to US$2.9 million in the same period in 2013,
representing an increase of 55.2%, or US$1.6
million. The increase consisted of US$1 million of additional payroll expense
resulting from new hires and salary increases, US$0.2 million of additional office and
communication expense, and US$0.3
million of new rental costs associated with growth of the
business.
Research and development ("R&D") expenses were US$13.4 million during the quarter ended
June 30, 2014, compared with
US$5.8 million during the same period
in 2013, an increase of US$7.6
million, or 131.0%, reflecting increased research and
development activities on new products. The expense consisted
primarily of consumption of raw materials for various experiments
for both automotive and non-automotive applications. As of
June 30, 2014, the Company was
performing 151 ongoing research and development projects. The
consumption of raw materials for these projects accounted for 93%
of total R&D expenses for the quarter.
Net interest expense was US$8.2
million for the three-month period ended June 30, 2014, compared to net interest expense
of US$1.9 million in the same period
of 2013. The increase of net interest expense was due to (i) an
increase of US$4.7 million interest
expenses resulting from the guaranteed senior notes issued on
February 4, 2014 (the "Notes"), (ii)
an increase of US$ 3.5 million
associated with bank loans used to fund future capacity expansion
in Southwest China and
Dubai, and (iii) partially offset
by the increase of interest income of US$2.0
million because of increase of time deposits.
Operating income for the second quarter of 2014 was $34.3 million, or 13.0% of revenues, an increase
of 20.4% over operating income from $28.5
million, or 14.1% of revenues in the same period a year
ago.
Net income for the second quarter of 2014 was $19.8 million, compared to a net income of
$20.8 million for the same period of
the prior year. Basic and diluted earnings per share were both
$0.30, when compared to last year's
results, which was at $0.32,
respectively.
Basic average numbers of shares used in computation of basic and
diluted earnings per share for the three months ended June 30, 2014 were 48.8 million, compared to 47.8
million in the same period of the prior year.
EBITDA (Earnings before Interest, Taxes, Depreciation, and
Amortization) for the second quarter of 2014 was $41.8 million, an increase of 14.2% from EBITDA
of $36.6 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 June 30, 2014, China XD
Plastics had $132.8 million in cash
and cash equivalents, $376.1 million
in time deposits with commercial banks, $576.8 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
June 30, 2014 was $442.4 million, compared to $412.3 million as of December 31, 2013.
Restricted cash increased by 47.4% as a result of short-term
bank deposits that are pledged as collateral for letter of credit
and bills payable relating to purchase of raw materials.
Inventories increased by 57.3% during the quarter as the Company
purchased raw materials in anticipation of growing
sales. Other non-current assets increased by 1,418.8% due to
prepayments for equipment to be purchased for the Dubai plant. The Company paid down short-term
loans as it utilized more long-term bank loans to support upcoming
capacity expansion in Southwest
China and Dubai. As a
result, short-term loans decreased by 41.5% while long-term bank
loans increased by US$162.4
million. Bills payable increased by 52.0% due to
purchases from our domestic raw material suppliers. As of
June 30, 2014, notes payable was
US$148.5 million due to the issuance
of US$150 million, 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 second half of
the year, 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 Tuesday, August 12, 2014, to discuss its second
quarter 2014 financial results. The conference call may be accessed
by calling +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 2535066.
A recording of the conference call will be available through
August 19, 2014, by calling +1 (866)
846-0868 (for callers in the U.S.) and entering pass code
2535066.
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 24 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 June 30, 2014, 300 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 increased
research and development spending; 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
Gary Dvorchak, CFA
Senior Vice President
US Phone: +1 (310) 954-1123
China Phone: +86 138 1079 1408
Email: Gary.Dvorchak@icrinc.com
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
June
30, 2014
|
|
December 31, 2013
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
|
132,855,600
|
|
|
95,545,904
|
Restricted
cash
|
|
|
20,184,964
|
|
|
13,708,971
|
Time
deposits
|
|
|
376,078,406
|
|
|
281,343,641
|
Accounts receivable,
net
|
|
|
191,208,084
|
|
|
282,320,819
|
Amounts due
from related parties
|
|
|
8,060
|
|
|
225,752
|
Inventories
|
|
|
227,951,407
|
|
|
144,885,688
|
Prepaid expenses and
other current assets
|
|
|
12,205,803
|
|
|
8,418,143
|
Total current
assets
|
|
|
960,492,324
|
|
|
826,448,918
|
Property, plant and
equipment, net
|
|
|
240,571,261
|
|
|
233,841,735
|
Land use rights,
net
|
|
|
12,027,228
|
|
|
12,457,001
|
Other non-current
assets
|
|
|
48,624,793
|
|
|
3,158,974
|
Total
assets
|
|
|
1,261,715,606
|
|
|
1,075,906,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term loans,
including current portion of long-term bank loans
|
|
|
184,092,299
|
|
|
314,682,620
|
Bills
payable
|
|
|
38,904,378
|
|
|
25,604,176
|
Accounts
payable
|
|
|
130,504,697
|
|
|
122,457,396
|
Amounts due to a
related party
|
|
|
54,710
|
|
|
-
|
Income taxes
payable
|
|
|
7,224,484
|
|
|
18,631,698
|
Warrant
liability
|
|
|
2,132,146
|
|
|
1,063,401
|
Accrued expenses and
other current liabilities
|
|
|
20,813,116
|
|
|
55,893,004
|
Total current
liabilities
|
|
|
383,725,830
|
|
|
538,332,295
|
Long-term bank loans,
excluding current portion
|
|
|
162,365,723
|
|
|
-
|
Notes
payable
|
|
|
148,491,833
|
|
|
-
|
Income taxes
payable
|
|
|
9,054,968
|
|
|
8,224,057
|
Deferred income tax
liabilities
|
|
|
18,035,495
|
|
|
19,428,706
|
Total
liabilities
|
|
|
721,673,849
|
|
|
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$0.0001 par value, 500,000,000 shares authorized, 49,140,906
shares and 47,896,133 shares issued, 49,119,906 shares and
47,875,133 shares outstanding as of June 30, 2014 and December
31, 2013, respectively
|
|
|
4,913
|
|
|
4,789
|
Treasury stock,
21,000 shares at cost
|
|
|
(92,694)
|
|
|
(92,694)
|
Additional paid-in
capital
|
|
|
77,471,214
|
|
|
76,341,659
|
Retained
earnings
|
|
|
352,880,048
|
|
|
311,047,337
|
Accumulated other
comprehensive income
|
|
|
12,201,711
|
|
|
25,043,914
|
Total
stockholders' equity
|
|
|
442,465,292
|
|
|
412,345,105
|
Commitments and
contingencies
|
|
|
-
|
|
|
-
|
Total liabilities,
redeemable convertible preferred stocks and
stockholders' equity
|
|
|
1,261,715,606
|
|
|
1,075,906,628
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
Three-Month
Period Ended
June 30,
|
|
Six-Month Period
Ended
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
264,208,995
|
|
|
202,150,358
|
|
|
487,789,670
|
|
|
373,117,929
|
Cost of
revenues
|
|
|
(211,909,052)
|
|
|
(164,965,762)
|
|
|
(388,841,389)
|
|
|
(306,777,202)
|
Gross
profit
|
|
|
52,299,943
|
|
|
37,184,596
|
|
|
98,948,281
|
|
|
66,340,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(135,625)
|
|
|
(47,218)
|
|
|
(257,953)
|
|
|
(109,992)
|
General and
administrative expenses
|
|
|
(4,553,144)
|
|
|
(2,855,659)
|
|
|
(8,349,508)
|
|
|
(6,339,574)
|
Research and
development expenses
|
|
|
(13,355,881)
|
|
|
(5,775,769)
|
|
|
(21,986,615)
|
|
|
(10,786,688)
|
Total operating
expenses
|
|
|
(18,044,650)
|
|
|
(8,678,646)
|
|
|
(30,594,076)
|
|
|
(17,236,254)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
34,255,293
|
|
|
28,505,950
|
|
|
68,354,205
|
|
|
49,104,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
3,454,649
|
|
|
1,470,113
|
|
|
6,490,014
|
|
|
2,539,717
|
Interest
expense
|
|
|
(11,614,261)
|
|
|
(3,374,738)
|
|
|
(20,194,238)
|
|
|
(6,310,724)
|
Foreign currency
exchange gains (losses)
|
|
|
406,479
|
|
|
877,423
|
|
|
(72,711)
|
|
|
1,366,616
|
Losses on foreign
currency forward contracts
|
|
|
(934,765)
|
|
|
-
|
|
|
(934,765)
|
|
|
-
|
Change in fair value
of warrants liability
|
|
|
(906,006)
|
|
|
400,007
|
|
|
(1,068,745)
|
|
|
420,331
|
Government
grant
|
|
|
12,974
|
|
|
1,172
|
|
|
1,324,213
|
|
|
210,091
|
Total non-operating
expense, net
|
|
|
(9,580,930)
|
|
|
(626,023)
|
|
|
(14,456,232)
|
|
|
(1,773,969)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
24,674,363
|
|
|
27,879,927
|
|
|
53,897,973
|
|
|
47,330,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(4,837,703)
|
|
|
(7,073,314)
|
|
|
(12,065,262)
|
|
|
(12,073,036)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
19,836,660
|
|
|
20,806,613
|
|
|
41,832,711
|
|
|
35,257,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
0.30
|
|
|
0.32
|
|
|
0.64
|
|
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
19,836,660
|
|
|
20,806,613
|
|
|
41,832,711
|
|
|
35,257,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
|
|
1,346,532
|
|
|
3,758,011
|
|
|
(12,842,203)
|
|
|
4,639,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
21,183,192
|
|
|
24,564,624
|
|
|
28,990,508
|
|
|
39,896,755
|
CHINA XD PLASTICS
COMPANY LIMITED AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
Six-Month Period
Ended
June 30,
|
|
|
2014
|
|
2013
|
|
|
US$
|
|
US$
|
Cash flows from
operating activities:
|
|
|
|
|
Net cash provided
by operating activities
|
|
|
61,291,114
|
|
|
38,925,612
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Proceeds from
maturity of time deposits
|
|
|
259,984,756
|
|
|
56,618,325
|
Purchase of time
deposits
|
|
|
(362,130,254)
|
|
|
(182,063,524)
|
Purchases of
property, plant and equipment
|
|
|
(86,442,465)
|
|
|
(13,419,444)
|
Net cash used in
investing activities
|
|
|
(188,587,963)
|
|
|
(138,864,643)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from bank
borrowings
|
|
|
422,150,363
|
|
|
226,906,170
|
Repayments of bank
borrowings
|
|
|
(383,003,049)
|
|
|
(146,861,566)
|
Release of restricted
cash
|
|
|
3,243,383
|
|
|
1,629,354
|
Placement of
restricted cash as collateral for bank borrowings
|
|
|
(20,595,485)
|
|
|
(888,846)
|
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
|
|
|
(3,970,357)
|
|
|
-
|
Net cash provided
by financing activities
|
|
|
166,817,770
|
|
|
80,785,112
|
|
|
|
|
|
|
|
Effect of foreign
currency exchange rate changes on cash and cash
equivalents
|
|
|
(2,211,225)
|
|
|
1,343,214
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
37,309,696
|
|
|
(17,810,705)
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
95,545,904
|
|
|
83,822,602
|
Cash and cash
equivalents at end of period
|
|
|
132,855,600
|
|
|
66,011,897
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Interest
paid
|
|
|
12,985,268
|
|
|
4,476,797
|
Income taxes
paid
|
|
|
23,029,798
|
|
|
11,108,922
|
CHINA XD PLASTICS
COMPANY LIMITED
|
Reconciliation of
Net Income to EBITDA
|
(Amounts expressed
in United States dollars)
|
|
|
Three Months
Period Ended
|
|
June
30
|
|
2014
|
2013
|
Net income
|
$19,836,660
|
$20,806,613
|
Interest
expense
|
11,614,261
|
3,374,738
|
Income tax
expense
|
4,837,703
|
7,073,314
|
Depreciation and
amortization expense
|
5,549,705
|
5,348,440
|
EBITDA
|
41,838,329
|
36,603,105
|
SOURCE China XD Plastics Company Limited