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China XD Plastics Announces First Quarter 2010 Results

作者:918 发布日期:2019-02-01

-- Revenue grew 89.6% to $50.0 million

-- Net income grew 225.7% to $13.1 million

HARBIN, China, May 12 /PRNewswire-Asia/ -- China XD Plastics 大发快三计划Company Ltd. ("China XD Plastics" or the "Company")(Nasdaq: CXDC), a leading Chinese developer, manufacturer, and distributor of modified plastics primarily for use in the automotive applications in China, today announced financial results for the first quarter ended March 31, 2010.

First Quarter 2010 Highlights

-- Revenue was a record $50.0 million, an increase of 89.6% from the first

quarter of 2009

-- Gross profit was $11.9 million, an increase of 106.7% from the first

quarter of 2009

-- Gross profit margin was 23.8%, compared to 21.8% in the first quarter

of 2009

-- Net income attributable to common shares was $10.5 million, $0.25 per

fully diluted share

-- Adjusted net income was $6.1 million or $0.15 per fully diluted share

-- Total volume shipped was 23,182 metric tons, up 29.5% from 17,899

metric tons in the first quarter of 2009

"We are very pleased with our strong results for the quarter. In addition to our recent capacity expansion, we benefited from the positive macroeconomic environment in China, as demand for vehicles continue to be strong," commented Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "We are also pleased to report that we were granted two product certifications from Shanghai General Motors Co., Ltd. (Shanghai GM), this being the first time China XD Plastics' products have been certified by a US OEM, which we believe paves the way for us to supply auto-part manufacturers selling to US OEMs and eventually expand our market opportunity to include the US in the future. We continue to see significant opportunities for the rapid and profitable growth of our business in the quarters ahead and we strongly believe we have the right strategies to participate in the expected growth of the automotive industry in China."

First Quarter 2010 Results

Revenue for the first quarter of 2010 increased 89.6% to a record of $50.0 million, compared to $26.4 million in the same period of 2009. The increase in revenue is primarily attributable to the increased sales volume driven by the strong demand for the Company's modified plastic products supported by continued growth in automotive production and consumption in China.

Gross profit for the first quarter of 2010 was $11.9 million, up 106.7% from $5.8 million in the first quarter 2009. Gross margin was 23.8% compared to 21.8% in the same period a year ago and 23.6% in the fourth quarter of 2009. The year-over-year increase in gross margin was due to higher value product mix as result of the Company's successful research, development and marketing efforts.

Selling expenses for the first quarter of 2010 were $91,379, up 100.2% from $45,651 in the same period last year. As a percentage of revenue, selling expenses remained 0.2% of sales for the first quarter 2010 and 2009. General and administrative (G&A) expenses were $1.9 million, up 81.8% from $1.0 million for the same period of last year. The increase in G&A expenses was mainly attributed to stock-based compensation to employees and consultants. Research and Development ("R&D") expenses were $1.5 million, or 3.0% of total revenue, compared to $0.3 million, or 1.1% of total revenue, in the same period last year. The increase in research and development expenses was associated with the Company's on-going efforts in R&D to launch new products.

Operating income for the first quarter of 2010 was $8.4 million, compared to an operating income of $4.4 million in the same period a year ago. Operating margin was 16.8% in the first quarter of 2010, compared to 16.6% in the comparable period a year before.

Other income (expense) in the first quarter of 2010 was $4.7 million, including $406,039 interest expense and a non-cash income of $5.1 million to account for the change in fair value of warrants and derivative liabilities in connection with the preferred stock issued in the private placement financing closed in December 2009. Other expense in the first quarter of 2009 was $356,250.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) for the first quarter of 2010 was $10.0 million, a significant increase from $4.8 million in the first quarter of 2009. For a detailed reconciliation of adjusted EBITDA, a Non-GAAP measure, to its nearest GAAP equivalent, please see the financial tables at the end of this release.

Net income for the first quarter of 2010 was $13.1 million, compared to net income of $4.0 million for the same period a year ago.

In connection with the private placement of series C preferred stock in the first quarter of 2010, the Company recorded a dividend of $2.6 million for series C preferred stock.

Net income attributable to common shareholders for the first quarter of 2010 was $10.5 million. Earnings per share attributable to common shareholders were $0.26 and $0.25 per basic and fully diluted share, respectively.

Adjusted net income, excluding non-cash charges associated with stock based compensation, change in fair value of derivative liability and preferred dividend was $6.1 million, or $0.15 per basic and per fully diluted share. For a detailed reconciliation of adjusted net income, a non-GAAP measure, to net income, please see the financial tables at the end of this release.

Financial Condition

As of March 31, 2010, China XD plastics had $5.1 million in cash and cash equivalents, $8.8 million in restricted cash, $37.8 million in working capital and a current ratio of 2.1. Shareholder's equity as of March 31, 2010 stood at $60.8 million compared to $21.5 million at the end of 2009.

Recent Events

On February 8, 2010, the Company announced selected estimated unaudited financial results for the first quarter and fiscal year 2010.

On February 25, 2010, China XD Plastics announced the total annual production capacity of modified plastics to increase 42.9% from 70,000 tons in 2010 to 100,000 tons. The additional 30,000 tons of annual production capacity is expected to start production at the beginning of the second quarter, 2010.

On March 4, 2010, China XD Plastics announced the signing of a one-year non-exclusive agreement with Ningbo Huading New Material Technology Company Limited ("NHNM") to distribute the Company's modified plastics for automotive applications in the Eastern Chinese Market, specifically in the area of Zhejiang Province.

Business Outlook and Guidance

The Company continues to experience a favorable macroeconomic environment, supported by the Government stimulus program implemented in 2009 in response to the global economic crisis, and by positive underlying fundamentals such as rising disposal incomes, expanding highway network and increasing affordability of car ownership. Moving forward China XD Plastics expects to be able to capitalize on its recently announced capacity expansion to 100,000 tons per year, to continue to deliver rapid growth in revenue and profits.

The Company expects 2010 revenues to be in the range between $170 million to $200 million, and non-GAAP adjusted net income to be in the range between $27 million to $30 million, excluding any non-cash charge related to the change in fair value of the existing derivative liabilities and stock-based compensation.

"In the past year, the Chinese automotive industry surpassed the United States and Japan, driven by favorable government policies, as well as solid long-term fundamentals, including low car-ownership levels and rising prosperity. In addition, the competitive environment in our industry remains favorable due to high barriers to entry associated with costly OEM certification process," said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "Our business outlook remains positive, and we are on target to deliver on our guidance for the year."

Conference Call

China XD Plastics will host a conference call at 8:00 a.m. ET on Wednesday, May 12, 2010, to discuss the first quarter 2010 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877-353-4923. International callers should dial +1-702-894-2405. The pass code for the call is 72659894. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on May 12, 2010 at 11:00 a.m. ET. To access the replay, dial 1-800-642-1687. International callers should dial +1-706-645-9291. The conference pass code is 72659894. The call will be broadcast live over the internet and can be accessed at http://webcast.mzdp.com.br/publico.aspx?codplataforma=1828 . The webcast will be available for replay in the IR section of the Company's website at http://www.chinaxd.net for 90 days.

About China XD Plastics Company Ltd.

China XD Plastics Company Ltd., through its wholly owned subsidiary Harbin Xinda Macromolecule Material ("Xinda"), develops, manufactures, and distributes modified plastics, primarily for automotive applications. The Company's specialized plastics are used in the exterior and interior trim and in the functional components of more than 30 automobile brands manufactured in China including Audi, Red Flag, Volkswagen and Mazda. The Company's wholly-owned research institute is dedicated to the research and development of modified plastics, and benefits from the cooperation with well-known scientists from prestigious universities in China. As of the end of December 31, 2010, 145 products that Xinda manufactured 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 effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the Company's ability to successfully expand its production capacity; 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; the Company's ability to protect its proprietary information; 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 companies 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, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

-- Financial Tables Follow --

CHINA XD PLASTICS COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE

INCOME

(UNAUDITED)

For the Three Months Ended March 31,

2010 2009

Sales $50,036,431 $26,391,889

Cost of sales (38,139,725) (20,635,575)

Gross profit 11,896,706 5,756,314

Operating expenses

Research and development expenses 1,505,172 289,155

Selling expenses 91,379 45,651

General and administrative expenses 1,901,006 1,045,929

Total operating expenses 3,497,557 1,380,735

Operating income 8,399,149 4,375,579

Other income (expenses)

Interest income (expenses) (406,039) (355,606)

Other income 6,561 --

Other expense (16,237) (644)

Changes in fair value of warrants

and embedded derivatives 5,121,654 --

Total other income (expense) 4,705,939 (356,250)

Income before income taxes 13,105,088 4,019,329

Provision for income taxes (22,732) (2,685)

Net income $13,082,356 $4,016,644

Other comprehensive income (loss)

Foreign currency

translation adjustment 17,645 (37,617)

Comprehensive income $13,100,001 $3,979,027

Net income $13,082,356 $4,016,644

Dividend to Series C

preferred stockholders $(2,560,916) $--

Net income attributable to

common shareholders 10,521,440 4,016,644

Basic and diluted earnings

per common share

Basic $0.26 $4.98

Diluted $0.25 $0.10

Weighted average common share

outstanding

Basic 41,178,249 805,802

Diluted 41,612,074 38,999,874

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

GAAP results for the three months and full year ended December 31, 2010 include non-cash charges. To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of those items in this release. The Company's management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

Three Months Ended March

31,

2010 2009

Adjusted Net Income - Non GAAP 6,145,180 4,016,644

Change in fair value of warrants

and derivative liabilities (5,121,654)

Non-Cash Stock-based compensation 745,394

Option Arrangement Between Shareholders

Dividends (series C preferred stock) (2,560,916)

Net Income - GAAP 13,082,356 4,016,644

Weighted average number of

shares outstanding:

Basic 41,178,249 805,802

Diluted 41,612,074 38,999,874

EPS:

Basic 0.15 4.98

Diluted 0.15 0.10

Reconciliation of Net Income to Adjusted EBITDA

Adjusted EBITDA is a financial measure that is not defined by US GAAP. Adjusted EBITDA was derived by calculating earnings before interest, taxes, depreciation, stock-based compensation and amortization. The Company's management believes that the presentation of Adjusted EBITDA provides useful information regarding China XD Plastics' results of operations because it assists in analyzing and benchmarking the performance and value of China XD Plastics' business. The Company's calculation of Adjusted EBITDA may not be consistent with similarly titled measures of other companies. The table below provides a reconciliation of EBITDA to net income, the most comparable GAAP measure.

CHINA XD PLASTICS COMPANY LIMITED

Reconciliation of Net Income to EBITDA

(Amounts expressed in United States dollars)

Three Months Ended

March 31,

2010 2009

Net Income $13,082,356 $4,016,644

Interest Expense $406,039 $355,606

Provision for Income Taxes $22,732 2,685

Stock-based compensation 745,394 --

Option arrangement between

shareholders -- --

Change in fair value of warrants and

derivative liabilities $(5,121,654) --

Depreciation and amortization $830,162 $445,890

EBITDA $9,965,029 $4,820,825

CHINA XD PLASTICS COMPANY LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,

2010 2009

ASSETS (Unaudited)

Current assets:

Cash and cash equivalents $5,128,234 $6,850,784

Restricted cash 8,790,075 -

Notes receivable 449,747 407,487

Accounts receivable - net of

allowance for doubtful

receivables of

$166,123 and $166,095,

respectively 14,218,223 8,558,172

Prepaid expenses and other

receivables 238,083 253,172

Inventories 21,713,157 18,371,485

Due from related parties -- --

Advances to employees 541,558 512,745

Advances to suppliers 20,308,122 20,245,861

Taxes receivable -- 406,755

Total current assets 71,387,199 55,606,461

Property, plant and equipment, net 30,253,614 31,083,389

Other assets:

Intangible assets, net 240,592 241,945

Total assets $101,881,405 $86,931,795

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short term loans $21,242,682 $21,678,565

Bank acceptance notes payable 5,860,050 --

Accounts payable 4,509,532 1,258,459

Other payables 342,241 714,504

Accrued expenses 306,797 648,358

Taxes payable 19,912 4,134

Due to an employee --

Due to related parties 100,394 148,397

Deferred revenue 174,641 300,296

Dividends payable 983,250 77,396

Total current liabilities 33,539,499 24,830,109

Other liabilities

Common stock warrant purchase

liabilities 6,183,046 7,892,513

Embedded conversion feature

liabilities 712,915 18,798,059

Total other liabilities 6,895,961 26,690,572

Total liabilities 40,435,460 51,520,681

Series C convertible redeemable

preferred stock: 752 and 15,188

shares issued and outstanding

as of March 31, 2010 and

December 31, 2009, respectively 687,821 13,891,477

Commitments and contingencies

Stockholders' equity

Series B Preferred Stock,

$0.0001 par value, 50,000,000

shares authorized,

1,000,000 shares issued

and outstanding as of

March 31, 2010 and

December 31, 2009 100 100

Common Stock, $0.0001 par

value, 500,000,000 shares

authorized, 44,007,589 and

40,867,050 shares issued

and outstanding as of March

31, 2010 and December 31,

2009, respectively 4,401 4,087

Additional paid-in-capital 43,982,642 15,360,949

Retained earnings 12,759,456 2,160,621

Statutory surplus reserve fund 2,471,007 2,471,007

Accumulated other

comprehensive income 1,540,518 1,522,873

Total stockholders' equity 60,758,124 21,519,637

Total liabilities and stockholders'

equity $101,881,405 $86,931,795

CHINA XD PLASTICS COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Three Months ended

March 31,

2010 2009

Cash flows from operating activities

Net income $13,082,356 $4,016,644

Adjustments to reconcile net

income to net cash provided

by (used in) operating

activities:

Depreciation and

amortization 830,162 445,890

Stock-based compensation

expense 745,394 --

Change in fair value of

warrants and derivative

liabilities (5,121,654) --

Allowance for doubtful

receivables 28 --

Loss on disposals of

property, plant and

equipment 14,836 --

Changes in assets and

liabilities:

(Increase)decrease in -

Restricted cash (8,788,043) (702,135)

Notes receivables (42,183) 251,150

Accounts receivable and

other receivables (5,657,496) 5,352,875

Prepaid expenses 106,643 --

Inventories (3,337,831) (3,130,573)

Advances to employees (120,090) (125,875)

Advances to suppliers (58,867) 2,743,624

Taxes receivable 406,729 --

Deferred charge -- (68,873)

Increase (decrease) in -

Accounts payable and

other payables 2,877,856 277,662

Due to an employee

Accrued expenses (341,577) (423,476)

Taxes payable 15,774 114,212

Deferred revenue (125,675) (3,183,553)

Net cash provided by (used in)

operating activities (5,513,638) 5,567,572

Cash flows from investing activities

Purchase of property,

plant and equipment (24,561) (29,175)

Proceeds from sales of

property, plant and

equipment 15,722 --

Repayment to related

party -- (10,616)

Net cash used in investing

activities (8,839) (39,791)

Cash flows from financing activities

Dividends paid (1,577,666) --

Repayment of short term

loans (439,402) (2,194,173)

Proceeds from bank

acceptance notes 5,858,695 1,755,338

Repayment of bank

acceptance notes

payable --

Repayment of related

party loans (142,722) (7,098,504)

Proceeds from related

party loan 100,394 --

Net cash provided by (used in)

financing activities 3,799,299 (7,537,339)

Effect of exchange rate changes on

cash and cash equivalents 628 (6,945)

Net decrease in cash and cash

equivalents (1,722,550) (2,016,503)

Cash and cash equivalents, beginning

of period 6,850,784 3,869,035

Cash and cash equivalents, end of

period $5,128,234 $1,852,532

Supplemental disclosures of cash

flow information:

Interest paid $387,372 $356,188

Income taxes paid $66,227 $8,864

Non-cash investing and financing

activities:

Embedded conversion feature

reclassified to equity upon

conversion $14,672,957 --

Preferred stock converted to

common stock $13,203,656 --

For more information, please contact:

China XD Plastics Company Ltd.

Mr. Taylor Zhang, Chief Financial Officer

Phone: +1-212-747-1118 (New York)

Mr. Allan Lao, IR Director

Phone: +86-451-84346600 (China)

Email: cxdc@chinaxd.net

Web: http://www.chinaxd.net

CCG Investor Relations

Mr. Crocker Coulson, President

Phone: +1-646-213-1915 (New York)

Mr. Ed Job, CFA

Phone: +86-138-1699-7314 (Shanghai)

Email: ed.job@ccgir.com

Web: http://www.ccgirasia.com

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