HARBIN, China, May 13 /PRNewswire-Asia-FirstCall/ -- China XD Plastics Company Ltd. (“China XD Plastics” or the “Company”),
(OTC Bulletin Board: CXDC), as the largest Chinese manufacturer engaged in the development, manufacturing, and distribution of modified plastics primarily for use in automotive applications, today reported financial results for the first quarter of 2009.
First Quarter 2009 Highlights
-- Revenue was $26.4 million, an increase of 154.2% from the first quarter
of 2008
-- Gross profit was $5.8 million, an increase of 144.0% from the first
quarter of 2008
-- Gross profit margin was 21.8%, compared to 22.7% in the first quarter
of 2008
-- Income from operations was $4.4 million, up 114.2% from the first
quarter of 2008
-- Net income was $4.0 million, up 91.8% from $2.1 million in the first
quarter of 2008
-- Diluted earnings per share was $0.10
“We are extremely pleased to report our strong financial performance in the first quarter as a public company. We have achieved record revenue and during the quarter despite the global economic slowdown, a testament to the strength of China’s economy and our leadership position within the modified plastics industry for automotive applications,” said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. “During the first quarter we have continued to execute our strategy of leveraging our research and development capabilities to launch new products and gradually expanding our capacity to meet the increasing demand from the domestic market. We remain optimistic on the outlook of our business and look forward to reporting positive results in the quarters ahead.”
First Quarter 2009 Results
Revenues for the first quarter of 2009 were $26.4 million, up 154.2% compared to $10.4 million for the same period of 2008. The increase in revenue is primarily attributable to the increase in sales volume to 17,899 tons compared to 6,328 tons during first quarter of 2008 driven by increasing domestic demand for modified plastics for automotive applications and strengthened by the stimulus initiatives for automobile consumption implemented by the government in China.
Gross profit for the first quarter 2009 was $5.8 million, up 144.0% from $2.4 million in the first quarter 2008. Gross margin is 21.8% compared to 22.7% in the same period last year due to the slight increase in sales of lower margin products as a percentage of total revenue in response to increasing demand for modified plastics use by economy vehicle models in China which benefited from the economic stimulus plan by the Chinese government. The average selling price for the first quarter of 2009 was $1,407 per ton compared to $1,747 per ton in the same period of last year.
Selling expenses for the first quarter of 2009 were $0.05 million or 0.2% of revenue, up from $0.02 million, or 0.02% of revenue in the same period last year due to the Company’s increased efforts to grow its customer base. General and administrative (G&A) expenses were $1.0 million, or 4.0% of revenue, up from $0.2 million, or 2.2% of revenue for the same period of last year. The increase in G&A expenses reflects increased salary expense, depreciation expense and other expenses associated with the reverse merger and listing in the U.S. Research and Development (“R&D”) expenses increased 323.8% to $0.3 million, or 1.1% of revenue compared to $0.07 million, or 0.7% of revenue in the same period last year. The increase in R&D expenses was primarily due to efforts in new product development as the Company hired more researchers and increased raw material usage.
Operating income for the first quarter of 2009 was $4.4 million, up 114.2% from $2.0 million in the same period a year ago. Operating margin was 16.6% compared to 19.7% in the first quarter of 2008 due to the increase in operating expenses.
First quarter interest expense of $0.4 million was directly associated with the Company’s short term debts. An interest income of $0.03 million was recorded in the first quarter of 2008.
Net income in the first quarter of 2009 was $4.0 million, up 91.8% from $2.1 million in the same period last year. Fully diluted earnings per share for the first quarter of 2009 were $0.10.
Financial Condition
As of March 31, 2009, China XD plastics had $1.9 million in cash and cash equivalents, $8.5 million in working capital and a current ratio of 1.3. Shareholder’s equity as of March 31, 2009 stood at $28.0 million compared to $24.1 million at the end of 2008.
Recent Events
On April 14, 2009, China XD Plastics announced it was recertified for the ISO/TS16949:2002 certification of quality management system.
On April 17, 2009, China XD Plastics announced the Company’s wholly owned subsidiary, Harbin Xinda Macromolecule Material Research Institute (“Xinda Research Institute”), is collaborating with Harbin Institute of Technology on the pre-research of pre-foamed modified polypropylene (“PP”) and has successfully completed a small trial testing.
On April 23, 2009, China XD Plastics announced that the Company expects to increase its annual production capacity to 70,000 tons with the addition of 7 production lines acquired at the end of 2008.
On May 1, 2009, China XD Plastics announced the appointment of Taylor Zhang as Chief Financial Officer effective immediately.
Business Outlook
The Company plans to increase its annual production capacity to 70,000 tons during 2009, up from 40,000 tons in 2008 and 25,000 tons in 2007. The automotive industry environment in China remains healthy, despite the overall economic slowdown worldwide. During the first quarter of 2009, total number of automobiles sold in China reached 2.7 million according to the statistics data provided by the China Association of Automobile Manufacturers. The Company expects to see continued growth of the auto industry in China, which is expected to contribute to a further increase in the demand for the Company’s products.
For 2009, the Company expects annual revenues between the range of $110.0 million to $130.0 million, and annual net income in the range of $17.0 million to $20.0 million.
“We continue to see tremendous opportunity for the profitable growth of our business in the quarters and years ahead, driven by the growth in the Chinese economy in general as well as by our ability to leverage our capabilities to grab market share from imports,” said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. “In fiscal year 2009, we will continue to drive growth through the launch of new product offerings and by gradual expansion of our capacity in line with the expected growth of the Chinese automotive industry.”
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 technology collaboration with well-known scientists from leading Universities in China. At present, Xinda manufactures approximately 145 types of automobile-specific modified plastic products, 117 of which 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,
2009 2008
Sales $26,391,889 $10,382,422
Cost of sales (20,635,575) (8,023,576)
Gross profit 5,756,314 2,358,846
Operating Expenses
Research and
development expenses 289,155 68,224
Selling expenses 45,651 17,822
General and
Administrative expenses 1,045,929 230,278
Total Operating Expenses 1,380,735 316,324
Operating Income 4,375,579 2,042,522
Other Income (expenses)
Interest Income (expenses) (355,606) 26,816
Other Income (111) 25,168
Other expense (533) --
Total Other expense (356,250) 51,985
Income before income taxes 4,019,329 2,094,507
Provision for income taxes 2,685 --
Net Income $4,016,644 $2,094,507
Other Comprehensive Income
Foreign Currency
Translation Adjustment (37,617) 396,156
Comprehensive Income $3,979,027 $2,490,663
Basic and Diluted Income
per common share
Basic $4.98 $5.16
Diluted $0.10 $5.16
Weighted average common share
outstanding
Basic 805,802 405,802
Diluted 38,999,874 405,802
CHINA XD PLASTICS COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2009 2008
(Unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $1,852,532 $3,869,035
Restricted Cash 4,360,805 3,664,346
Notes Receivable 51,696 303,437
Accounts receivable - net of
allowance for bad debts of
$99,508 and $99,669, respectively 5,854,990 11,234,507
Other receivables 28,171 21,917
Inventories 15,550,381 12,438,782
Due from related parties 1,702 --
Advance to employees 218,089 92,329
Advances to suppliers 10,365,041 13,131,074
Total current assets 38,283,407 44,755,427
Property, plant and equipment, net 18,885,891 19,332,712
Other assets:
Deferred charges 446,359 378,073
Intangible assets, net 245,887 247,681
Total other assets 692,246 625,754
Total Assets $57,861,544 $64,713,893
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short term loans $18,291,969 $20,520,337
Bank acceptance notes payable 9,804,495 8,061,561
Accounts payable 232,239 113,232
Other payable 264,576 106,232
Accrued expenses 395,650 820,625
Taxes payable 132,005 17,777
Due to related party 420,846 7,542,950
Deferred revenue 279,354 3,469,796
Total current liabilities 29,821,134 40,652,510
Stockholders’ equity
Common Stock, $0.0001 par value,
100,000,000 shares authorized,
805,802 and 405,402 shares issued
and outstanding as of March 31,
2009 & December 31, 2008, respectively 81 81
Series A Preferred Stock, $0.0001
par value, 10,000,000 shares authorized,
1,000,000 and nil shares issued
and outstanding as of March 31,
2009 and December 31, 2008, respectively 100 100
Series B Preferred Stock, $0.0001
par value, 10,000,000 shares authorized,
1,000,000 and nil shares issued
and outstanding as of March 31, 2009
and December 31, 2008, respectively 100 100
Additional Paid-in-Capital 2,482,786 2,482,786
Retained earnings 24,067,785 20,051,141
Accumulated other comprehensive income 1,489,558 1,527,175
Total Stockholders’ equity 28,040,410 24,061,383
Total Liabilities and Stockholders’ Equity $57,861,544 $64,713,893
CHINA XD PLASTICS COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months ended
March 31,
2009 2008
Cash flows from operating activities
Net income $4,016,644 $2,136,711
Adjustments to reconcile net income
to net cash provided
by Operating activities:
Depreciation & amortization 445,890 168,382
Changes in assets and liabilities:
(Increase) decrease in -
Restricted cash (702,135) 1,619,610
Accounts receivable and
other receivables 5,352,875 1,370,040
Inventories (3,130,573) (639,503)
Prepaid expenses -- 21,789
Notes receivables 251,150 (19,966)
Advance to employees (125,875) --
Advances to suppliers 2,743,624 (1,397,849)
Deferred charge (68,873) --
Increase (decrease) in -
Accounts payable and other payable 277,662 1,890,051
Accrued expenses (423,476) 19,287
Tax payable 114,212 (1,388,948)
Deferred revenue (3,183,553) 502,720
Net cash provided by operating
activities 5,567,572 4,282,324
Cash flows from investing activities
Purchase of fixed assets (29,175) (4,452,986)
Collection on due from related party (10,616) 107,488
Net cash used in investing activities (39,791) (4,345,498)
Cash flows from financing activities
Proceeds from (Repayment to)
Short Term Loan (2,194,173) 4,607,512
Proceeds from bank acceptance
notes payable 1,755,338 --
Repayment of bank acceptance
notes payable -- (3,350,918)
Proceeds from (Repayment to) related
party Loan (7,098,504) 69,811
Net cash provided by (used in)
financing activities (7,537,339) 1,326,405
Effect of exchange rate changes on
cash and cash equivalents (6,945) 30,587
Net increase(decrease) in cash and
cash equivalents (2,016,503) 1,293,817
Cash and cash equivalents, beginning
of period 3,869,035 87,455
Cash and cash equivalents,
end of period $1,852,532 $1,381,272
Supplemental disclosures of cash
flow information:
Interest paid $ 389,638 $ 83,079
Income taxes paid $ 8,864 $ --
For more information, please contact:
China XD Plastics Company Ltd.
Mr. Taylor Zhang, Chief Financial Officer
Tel: +1-212-747-1118 (New York)
Mr. Allan Lao, IR Director
Tel: +86-451-84346600 (China)
Email: cxdc@chinaxd.net
Web: http://www.chinaxd.net/
CCG Investor Relations
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Mr. Ed Job, CFA
Tel: +1-646-213-1914 (New York)
Email: ed.job@ccgir.com
Web: http://www.ccgirasia.com
