HARBIN, China, May 11, 2012 /PRNewswire-Asia-FirstCall/ -- 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 modified plastics primarily for automotive applications, today announced its financial results for the first quarter ended March 31, 2012.
First Quarter Fiscal 2012 Financial Highlights:
Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics, commented, "I am pleased to report another quarter of record revenues and profit growth. As evidenced by the higher volumes shipped, we continue to experience strong demands for our products across our portfolio. The increase of higher average selling prices, partially resulting from our continued shift in sales mix to higher value-added products, drove gross margin expansion for this quarter. As market demand grew for these higher margin products and as part of our long-term growth strategy, we remain committed to our investment in research and development. We believe this strategy is the key to further strengthening our leading market position and will help us deliver long-term value for our stockholders. On track of our schedule, our third production base launched in December 2011 with additional 90,000 metric tons of annual production capacity across 20 new production lines have contributed approximately 16,000 tons of production during the first quarter of 2012. In addition, there are three additional factories which are currently in construction in our third production base and are expected to be completed and deployed with 30 additional production lines in the second half of 2012 to further expand our annual capacity potential by approximately 135,000 metric tons to support our future growth in 2013."
First Quarter 2012 Results
Revenues for the first quarter of fiscal 2012 were $123.2 million, representing a year-over-year increase of 61.8% from $76.1 million in the first quarter of fiscal 2011. The increase in revenues was due to approximately 32.6% increase in sales volume and 19.3% increase in the average selling price of our products on a constant dollar basis, driven by increasing demand for automotive modified plastics used in the parts of mid- and high-end branded automobiles by the Company's major customers, and a shift in product mix to include a greater percentage of sales of higher margin and higher value-added products. For the first quarter of fiscal 2012, sales of higher margin products represented 46.7% of product revenues, compared to 36.1% of product revenues in the same period of 2011.
Gross profit for the first quarter of fiscal 2012 was $31.2 million, up 68.7% from $18.5 million in the first quarter of fiscal 2011. Gross margin was 25.3%, compared to 24.3% in the same period of the prior year. The year-over-year increase in gross margin was mainly due to a shift in the Company's product mix to higher margin and higher value-added products.
G&A expenses were $2.3 million, compared to $1.4 million for the same period of the prior year. This increase is primarily due to increase of payroll resulting from raised average salary and increased headcount and increase of audit fees. R&D expenses were $2.5 million, compared to $2.3 million in the same period of the prior year. The increase in R&D expenses was due to the Company's ongoing efforts to further expand its product offering and obtain new product certifications, ultimately to increase product revenue and margin. During the first quarter of 2012, the Company successfully launched seven new AM certified products, which increased its total number of AM certified products to 218, and currently has 108 new products under research and development.
Operating income for the first quarter of fiscal 2012 was $26.3 million, or 21.3% of revenues, an increase of 80.1% over operating income of $14.6 million, or 19.2% of revenues, in the same period of the prior year.
Net income for the first quarter of fiscal 2012 was $20.6 million, compared to a net income of $11.9 million for the same period of the prior year.
Basic and diluted earnings per share were $0.32, a significant increase when compared to last year's results, which was at $0.25 and $0.24, respectively.
Basic average numbers of shares used in computation of basic earnings per share for the three months ended March 31, 2012 remained flat at 47.5 million from the same period of the prior year.
Weighted average numbers of shares used in computation of diluted earnings per share for the three months ended March 31, 2012 decreased by 410,549 to 47.6 million from 48.1 million in the same period of the prior year.
EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) for the first quarter of 2012 was $30.1 million, an increase of 84.1% from EBITDA of $16.3 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.
Adjusted net income, excluding non-cash charges associated with share-based compensation, deferred income tax benefit and change in fair value of derivative liabilities for the first quarter of 2012 was $20.0 million, or $0.42 per basic and diluted share. For a detailed reconciliation of adjusted net income, a non-GAAP measure, to GAAP net income, please see the financial tables at the end of this release.
Financial Condition
As of March 31, 2012, China XD Plastics had $127.2 million in cash and cash equivalents, $209.0 million in working capital and a current ratio of 5.0. Stockholders' equity as of March 31, 2012 was $194.5 million, compared to $173.9 million as of December 31, 2011.
Business Outlook and Guidance
Given the Company's strong performance during the first quarter of 2012 and positive outlook on customer demand for its products for the remaining of 2012, the Company reiterates its revenues for fiscal 2012 to range between $550 million and $580 million, and non-GAAP adjusted net income to range between $82 million and $85 million, excluding any non-cash charges related to deferred income tax benefit, stock based compensation and change in fair value of existing derivative liabilities. This forecast based on constant exchange rates and reflects the Company's current and preliminary view, which is subject to change.
Mr. Han concluded, "we continue to execute our business plan in multiple fronts in which we generated strong operational and financial results and further built on our leadership position in the marketplace. We are pleased with the development of our product mix and product certifications, both key areas we believe give us significant competitive advantages as we continue to expand our customer base and increase sales. Looking ahead, we continue to be enthusiastic about the prospects for our business. Demand for our products remains strong, the production contribution from capacity and product lines installed in December 2011 is on schedule, and we are making the necessary investments in R&D to ensure we are well positioned to leverage positive market dynamics both now and in the future. In light of our strong performance in the first quarter of 2012 and positive growth trends for the sector and our business we remain optimistic about business and growth in 2012."
Conference Call
China XD Plastics' management will host a conference call at 9:00 a.m. ET on Friday, May 11, 2012, to discuss its first quarter of fiscal 2012 financial results. The conference call may be accessed by calling +1-866-519-4004 (for callers in the U.S.) or +65-6723--9381 (for international callers) and entering pass code 78044199.
A recording of the conference call will be available through May 20, 2012, by calling +1-866-214-5335 (for callers in the U.S.) or +61-28235-5000 (for callers outside the U.S.) and entering pass code 78044199.
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 (the "Company"), develops, manufactures and sells modified plastics, primarily for automotive applications. The Company's products are used in the exterior and interior trim and in the functional components of 23 automobile brands manufactured in China, including AUDI, BMW, Toyota, Buick, Mazda, VW Golf, Jetta, and Hafei new energy vehicles. The Company's wholly-owned research center is dedicated to the research and development of modified plastics, and benefits from its cooperation with well-known scientists from prestigious universities in China. As of March 31, 2012, 218 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 effectiveness, profitability, and the marketability of its products; legal and regulatory risks; the ability for the 20 new production lines added in the fiscal year 2011 and an additional 30 production lines expected to be added in the fiscal year 2012 to increase the Company's annual production capacity; the Company's ability to execute its growth 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, | December 31, | |||||
2012 | 2011 | |||||
US$ | US$ | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | 127,220,393 | 135,482,386 | ||||
Restricted cash | 11,115,522 | 11,128,106 | ||||
Accounts receivable, net of allowance for doubtful accounts | 57,451,130 | 45,232,013 | ||||
Amounts due from related parties | 11,909 | 78,912 | ||||
Inventories | 60,411,014 | 44,953,958 | ||||
Prepaid expenses and other current assets | 5,582,358 | 12,857,223 | ||||
Total current assets | 261,792,326 | 249,732,598 | ||||
Property, plant and equipment, net | 98,439,568 | 100,933,429 | ||||
Land use rights, net | 4,046,517 | 4,055,363 | ||||
Deposits for purchase of land use rights and plant | 5,605,559 | 5,608,765 | ||||
Other non-current assets | 264,511 | 264,662 | ||||
Total assets | 370,148,481 | 360,594,817 | ||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Short-term bank loans | 18,737,594 | 31,459,032 | ||||
Bills payable | 22,231,044 | 22,243,760 | ||||
Accounts payable | 854,433 | 398,043 | ||||
Amounts due to a related party | 13,074 | - | ||||
Income taxes payable | 6,717,344 | 5,814,988 | ||||
Accrued expenses and other current liabilities | 4,232,791 | 3,213,181 | ||||
Total current liabilities | 52,786,280 | 63,129,004 | ||||
Deferred income tax liabilities | 21,697,278 | 22,102,431 | ||||
Warrants liability | 3,529,222 | 3,862,927 | ||||
Embedded derivative liability | 596 | 610 | ||||
Total liabilities | 78,013,376 | 89,094,972 | ||||
Redeemable Series C convertible preferred stock | 1,829 | 1,829 | ||||
Redeemable Series D convertible preferred stock | 97,576,465 | 97,576,465 | ||||
Stockholders' equity: | ||||||
Series B preferred stock | 100 | 100 | ||||
Common stock, US$0.0001 par value, 500,000,000 shares authorized, 47,548,367 shares issued, 47,527,367 shares outstanding as of March 31, 2012 and December 31, 2011, respectively | 4,754 | 4,754 | ||||
Treasury stock, at cost: 21,000 shares as of March 31, 2012 and December 31, 2011, respectively | (92,694) | (92,694) | ||||
Additional paid-in capital | 71,343,364 | 71,190,659 | ||||
Retained earnings | 111,903,233 | 91,340,855 | ||||
Accumulated other comprehensive income | 11,398,054 | 11,477,877 | ||||
Total stockholders' equity | 194,556,811 | 173,921,551 | ||||
Commitments and contingencies | - | - | ||||
Total liabilities, redeemable convertible preferred stocks and stockholders' equity | 370,148,481 | 360,594,817 | ||||
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES | |||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||
Three-Month Period Ended March 31, | |||||||||
2012 | 2011 | ||||||||
US$ | US$ | ||||||||
Revenues | 123,176,815 | 76,138,290 | |||||||
Cost of revenues | (91,955,249) | (57,633,888) | |||||||
Gross profit | 31,221,566 | 18,504,402 | |||||||
Selling expenses | (129,688) | (183,617) | |||||||
General and administrative expenses | (2,362,787) | (1,449,874) | |||||||
Research and development expenses | (2,455,039) | (2,283,897) | |||||||
Total operating expenses | (4,947,514) | (3,917,388) | |||||||
Operating income | 26,274,052 | 14,587,014 | |||||||
Interest income | 1,001,729 | 10,723 | |||||||
Interest expense | (485,400) | (357,184) | |||||||
Other income | - | 4,245 | |||||||
Other expense | - | (53) | |||||||
Change in fair value of embedded conversion option | 14 | 328 | |||||||
Change in fair value of warrants liability | 333,705 | 541,129 | |||||||
Total non-operating income, net | 850,048 | 199,188 | |||||||
Income before income taxes | 27,124,100 | 14,786,202 | |||||||
Income tax expense | (6,561,692) | (2,880,080) | |||||||
Net income | 20,562,408 | 11,906,122 | |||||||
Earnings per share of common stock: | |||||||||
Basic | 0.32 | 0.25 | |||||||
Diluted | 0.32 | 0.24 | |||||||
Net income | 20,562,408 | 11,906,122 | |||||||
Other comprehensive income (loss) | |||||||||
Foreign currency translation adjustment, net of nil income taxes | (79,823) | 1,179,904 | |||||||
Comprehensive income | 20,482,585 | 13,086,026 | |||||||
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Three-Month Period Ended March 31, | ||||||||
2012 | 2011 | |||||||
US$ | US$ | |||||||
Cash flows from operating activities: | ||||||||
Net cash provided by operating activities | 4,520,959 | 1,441,708 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (30,587) | (89,784) | ||||||
Net cash used in investing activities | (30,587) | (89,784) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from bank borrowings | 15,850,121 | 27,360,674 | ||||||
Repayments of bank borrowings | (28,530,218) | (21,280,524) | ||||||
Dividends paid to redeemable Series C convertible preferred stockholders | - | (120) | ||||||
Advance from a related party | 259,021 | |||||||
Net cash provided by (used in) financing activities | (12,680,097) | 6,339,051 | ||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | (72,268) | 424,020 | ||||||
Net increase (decrease) in cash and cash equivalents | (8,261,993) | 8,114,995 | ||||||
Cash and cash equivalents at beginning of period | 135,482,386 | 22,720,766 | ||||||
Cash and cash equivalents at end of period | 127,220,393 | 30,835,761 | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | 485,400 | 353,803 | ||||||
Income taxes paid | 6,049,473 | 72,255 | ||||||
Non-cash investing and financing activities: | ||||||||
Accrual for purchase of equipment | - | 2,091,324 | ||||||
CHINA XD PLASTICS COMPANY LIMITED | ||
Reconciliation of Net Income to EBITDA | ||
(Amounts expressed in United States dollars) | ||
Three Months Ended | ||
March 31, | ||
2012 | 2011 | |
Net income | 20,562,408 | 11,906,122 |
Interest expense | 485,400 | 357,184 |
Income tax expense | 6,561,692 | 2,880,080 |
Depreciation and amortization expense | 2,479,488 | 1,198,995 |
EBITDA | 30,088,988 | 16,342,381 |
CHINA XD PLASTICS COMPANY LIMITED | ||
Reconciliation of GAAP Net Income Available to Common Stockholders to Non-GAAP Adjusted Net Income | ||
(Amounts expressed in United States dollars, except share data) | ||
Three Months Ended March 31, | ||
2012 | 2011 | |
Net income available to common stockholders -GAAP | 20,562,378 | 11,906,092 |
Change in fair value of warrants liability and embedded derivative liability | (333,719) | (541,457) |
Deferred income tax benefit | (391,796) | - |
Share-based compensation | 152,705 | 151,814 |
Adjusted Net Income Attributable to Common Stockholders - Non GAAP | 19,989,568 | 11,516,449 |
Weighted average number of shares outstanding | ||
Basic | 47,527,367 | 47,539,983 |
Diluted | 47,647,006 | 48,057,555 |
EPS basic and diluted | 0.42 | 0.24 |
*Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income GAAP results for the three months ended March 31, 2012 and 2011 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 calculation of earnings per share in this table does not take into consideration the effect of participating securities' rights to undistributed earnings and hence differs from that applying the two-class method under US GAAP. 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. | ||
