HARBIN, China, May 14, 2014 /PRNewswire/ -- China XD Plastics Company Limited (NASDAQ: CXDC, "China XD Plastics" or the "Company"), one of China's leading specialty chemical players 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 31,2014.
First Quarter 2014 Financial Highlights:
"We are pleased to report our solid revenue growth and positive business development for the first quarter of 2014," said Jie Han, Chairman of Board of Director and Chief Executive Officer of China XD. "The year over year growth reflected China XD's strong execution of solidifying our leading position in the marketplace. Revenues from Southwest China, East China and North China during the first quarter of 2014 increased by 63.1%, 62.8%, and 43.2%, respectively, compared to revenues during the first quarter of 2013. Our gross margin increased to 20.9% during the quarter ended March 31, 2014 from 17.1% during the same quarter of 2013 primarily due to (i) higher-end product sales accounting for 73.7% of our total revenues for the first quarter ended March 31, 2014 as compared to 63.6% of that of the prior year; and (ii) the suspension of sales discounts for the first quarter ended March 31, 2014. As evidenced by the higher volumes shipped, we continue to experience strong demand for our products across our portfolio. As market demand grows for our higher-end products and as part of our long-term growth strategy, we remain committed to our investment in research and development in order to enhance our product offerings especially for the higher-end applications. We believe this strategy is the key to further strengthening our market position and will help us deliver long-term value for our stockholders."
First Quarter 2014 Results
Revenues for the first quarter of 2014 were $223.6 million, representing a year-over-year increase of 30.8% from $171.0 million in the first quarter of 2013. The increase in revenues was due to approximately 12.8% increase in sales volume and 14.0% increase in average RMB selling price of our products, driven by increasing demand for automotive polymer composite materials used in the parts of mid- and high-end branded automobiles by the Company's major customers.
Gross profit for the first quarter of 2014 was $46.6 million, up 59.6% from $29.2 million in the first quarter of 2013. Gross margin was 20.9%, compared to 17.1% in the same period of the prior year primarily due to (i) higher-end product sales accounting for 73.7% of total revenues for the first quarter ended March 31, 2014 as compared to 63.6% of that of the prior year; and (ii) the suspension of sales discounts for the first quarter ended March 31, 2014.
G&A expenses were $3.8 million, compared to $3.5 million for the same period of the prior year, representing an increase of 8.6%, or US$0.3 million. This increase is primarily due to the increase of (i) US$ 0.1 million increase of travel and office expenses and (ii) US$ 0.2 million increase of stamp duties in line with the business expansion.
Research and development ("R&D") expenses were US$8.6 million, or 3.9% of total revenues, compared to US5.0 million, or 3.0% of total revenues, in the same period of last year. The increase in R&D expenses was due to the Company's ongoing research and development activities on new products primarily in consumption of raw materials for various experiments for automotive applications from automobile manufacturers as well as other non-automotive applications. As of March 31, 2014, the number of ongoing research and development projects was 128. The consumption of raw materials for these projects accounted for 90% of total R&D expenses for the quarter ended March 31, 2014.
Net interest expense was US$5.6 million for the three-month period ended March 31, 2014, compared to net interest expense of US$1.8 million in the same period of 2013, primarily due to (i) US$2.9 million interest expenses resulting from the senior note issued on February 4, 2014; and (ii) US$ 2.3 million interest expenses resulting from the increase of bank loans to meet the need of our future capacity expansion in Southwest China. The average loan balance for the three months ended March 31, 2014 was US$293.0 million as compared to US$176.8 million for the three months ended March 31, 2013, leading to US$2.3 million more interest expense. The increase of net interest expense was partially offset by the increase of interest income as the result of increase of time deposits during the three months ended March 31, 2014.
Operating income for the first quarter of 2014 was $34.1 million, or 15.3% of revenues, an increase of 65.5% over operating income from $20.6 million, or 12.1% of revenues in the same period a year ago. This increase is primarily due to higher gross profit, partially offset by higher research & development expenses.
Net income for the first quarter of 2014 was $22.0 million, compared to a net income of $14.5 million for the same period of the prior year.
Basic and diluted earnings per share were $0.34, which represent significant increase when compared to last year's results, which was at $0.23, respectively.
Basic average numbers of shares used in computation of basic and diluted earnings per share for the three months ended March 31, 2014 were 48.3 million, compared to 47.7 million in the same period of the prior year.
EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) for the first quarter of 2014 was $43.5 million, an increase of 57.6% from EBITDA of $27.6 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 March 31, 2014, China XD Plastics had $170.4 million in cash and cash equivalents, $324.1 million in time deposits with commercial banks, $477.5 million in working capital (current assets minus current liabilities) and a current ratio (current assets divided by current liabilities) of 2.0. Stockholders' equity as of March 31, 2014 was $420.6 million, compared to $412.3 million as of December 31, 2013.
Restricted cash increased by 83.9% as a result of increase short-term bank deposits that are pledged as collateral for letter of credit and bills payable relating to purchase of raw materials, and short-term bank borrowings. Inventories increased by 63.6% due to the anticipation of the increase of customer demand in the following quarters. Short-term bank loans decreased by 23.3% due to the utilization of company self-generated operating cash inflow to partially repay bank borrowings to reduce our short-term debt ratio, as well as the leverage of long-term bank loans of US$27.3 to meet the need to support our future capacity expansion in Southwest China. Bills payable and accounts payable increased by 104.3% and 12.2%, respectively, due to the increase of purchases from our domestic raw material suppliers As of March 31, 2014, notes payable was US$148.4 million due to the gross proceeds from the issuance of US$150 million aggregate principal amount of 11.75% guaranteed senior notes due in 2019, net of discount.
Business Outlook and Guidance
Given the Company's strong performance during the first quarter of 2014 and positive outlook on customer demand for its products and business development for 2014, the Company now reiterates revenues for 2014 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 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 9:00 a.m. ET on Wednesday, May 14, 2014, to discuss its first 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 5566995.
A recording of the conference call will be available through May 21, 2014, by calling +1-866-846-0868 (for callers in the U.S.) and entering pass code 5566995.
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 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 March 31, 2014, 290 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 products; legal and regulatory risks; the Company's ability to execute its growth strategy and the effectiveness of its marketing strategy; the future trading of the common stock of the Company; the Company's ability to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; 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 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)
Phone: +1-212-747-1118
Email: cxdc@chinaxd.net
-Financial Tables Follow- | ||||||||
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
US$ | US$ | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 170,415,179 | 95,545,904 | ||||||
Restricted cash | 25,221,993 | 13,708,971 | ||||||
Time deposits | 324,142,591 | 281,343,641 | ||||||
Accounts receivable, net | 185,946,834 | 282,320,819 | ||||||
Amounts due from related parties | 39,727 | 225,752 | ||||||
Inventories | 237,065,510 | 144,885,688 | ||||||
Prepaid expenses and other current assets | 26,589,597 | 8,418,143 | ||||||
Total current assets | 969,421,431 | 826,448,918 | ||||||
Property, plant and equipment, net | 224,162,174 | 233,841,735 | ||||||
Land use rights, net | 12,066,715 | 12,457,001 | ||||||
Other non-current assets | 6,901,965 | 3,158,974 | ||||||
Total assets | 1,212,552,285 | 1,075,906,628 | ||||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term loans | 241,427,485 | 314,682,620 | ||||||
Bills payable | 52,281,063 | 25,604,176 | ||||||
Accounts payable | 137,428,176 | 122,457,396 | ||||||
Income taxes payable | 7,077,908 | 18,631,698 | ||||||
Warrant liability | 1,226,140 | 1,063,401 | ||||||
Accrued expenses and other current liabilities | 52,436,449 | 55,893,004 | ||||||
Total current liabilities | 491,877,221 | 538,332,295 | ||||||
Long-term bank loans | 27,347,018 | - | ||||||
Notes payable | 148,431,718 | - | ||||||
Income taxes payable | 8,317,267 | 8,224,057 | ||||||
Deferred income tax liabilities | 18,439,327 | 19,428,706 | ||||||
Total liabilities | 694,412,551 | 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$0.0001 par value, 500,000,000 shares authorized, 48,570,338 shares and 47,896,133 shares issued, 48,549,338 shares and 47,875,133 shares outstanding as of March 31, 2014 and December 31, 2013, respectively | 4,856 | 4,789 | ||||||
Treasury stock, 21,000 shares at cost | (92,694) | (92,694) | ||||||
Additional paid-in capital | 76,752,440 | 76,341,659 | ||||||
Retained earnings | 333,043,388 | 311,047,337 | ||||||
Accumulated other comprehensive income | 10,855,179 | 25,043,914 | ||||||
Total stockholders' equity | 420,563,269 | 412,345,105 | ||||||
Commitments and contingencies | - | - | ||||||
Total liabilities, redeemable convertible preferred stocks and stockholders' equity | 1,212,552,285 | 1,075,906,628 | ||||||
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Three-Month Period Ended March 31, | ||||
2014 | 2013 | |||
US$ | US$ | |||
Revenues | 223,580,675 | 170,967,571 | ||
Cost of revenues | (176,932,337) | (141,811,440) | ||
Gross profit | 46,648,338 | 29,156,131 | ||
Selling expenses | (122,328) | (62,774) | ||
General and administrative expenses | (3,796,364) | (3,483,915) | ||
Research and development expenses | (8,630,734) | (5,010,919) | ||
Total operating expenses | (12,549,426) | (8,557,608) | ||
Operating income | 34,098,912 | 20,598,523 | ||
Interest income | 3,035,365 | 1,069,604 | ||
Interest expense | (8,579,977) | (2,935,986) | ||
Foreign currency exchange gains (losses) | (479,190) | 489,193 | ||
Government grant | 1,311,239 | 208,919 | ||
Change in fair value of warrant liability | (162,739) | 20,324 | ||
Total non-operating expense, net | (4,875,302) | (1,147,946) | ||
Income before income taxes | 29,223,610 | 19,450,577 | ||
Income tax expense | (7,227,559) | (4,999,722) | ||
Net income | 21,996,051 | 14,450,855 | ||
Earnings per common share: | ||||
Basic and diluted | 0.34 | 0.23 | ||
Net Income | 21,996,051 | 14,450,855 | ||
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment, net of nil income taxes | (14,188,735) | 881,276 | ||
Comprehensive income | 7,807,316 | 15,332,131 | ||
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Three-Month Period Ended March 31, | ||||||||
2014 | 2013 | |||||||
US$ | US$ | |||||||
Cash flows from operating activities: | ||||||||
Net cash provided by operating activities | 26,174,417 | 68,826,607 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from maturity of time deposits | 111,155,365 | 24,106,067 | ||||||
Purchase of time deposits | (162,265,820) | (87,783,014) | ||||||
Purchases of property, plant and equipment | (1,020,326) | (4,678,651) | ||||||
Net cash used in investing activities | (52,130,781) | (68,355,598) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from bank borrowings | 176,935,307 | 105,865,810 | ||||||
Repayment of bank borrowings | (215,370,999) | (76,938,530) | ||||||
Placement of restricted cash as collateral for bank borrowings | (2,786,383) | - | ||||||
Proceeds from issuance of the Notes | 148,396,175 | - | ||||||
Payment of issuance cost of the Notes | (3,481,955) | - | ||||||
Net cash provided by financing activities | 103,692,145 | 28,927,280 | ||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | (2,866,506) | 528,955 | ||||||
Net increase in cash and cash equivalents | 74,869,275 | 29,927,244 | ||||||
Cash and cash equivalents at beginning of period | 95,545,904 | 83,822,602 | ||||||
Cash and cash equivalents at end of period | 170,415,179 | 113,749,846 | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | 5,242,256 | 825,939 | ||||||
Income taxes paid | 18,749,381 | 6,036,785 | ||||||
Accrual for issuance costs of the Notes | 1,439,209 | - | ||||||
Accrual for purchase of equipment | 155,285 | - | ||||||
CHINA XD PLASTICS COMPANY LIMITED. Reconciliation of Net Income to EBITDA (Amounts expressed in United States dollars) | ||
Three Months Period Ended | ||
March 31, | ||
2014 | 2013 | |
Net income | $ 21,996,051 | $ 14,450,855 |
Interest expense | 8,579,977 | 2,935,986 |
Income tax expense | 7,227,559 | 4,999,722 |
Depreciation and amortization expense | 5,670,411 | 5,227,033 |
EBITDA | 43,473,998 | 27,613,596 |
