omniture

Specialty Chemical Company China XD Plastics Announces Fourth Quarter and Fiscal Year 2018 Financial Results

- Net Income of $68.3 Million
- Provides Fiscal 2019 Guidance of $1.3 -$1.6 Billion in Revenue, $90- $110 Million in Net Income
2019-04-15 20:00 8505

HARBIN, China, April 15, 2019 /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 fourth quarter and fiscal year ended December 31, 2018.

Fourth Quarter 2018 Financial Highlights

  • Revenue was $349.8 million, a decrease of 18.2% YoY and an increase of 17.7% sequentially
  • Gross profit was $62.4 million, a decrease of 31.8% YoY and an increase of 32.2% sequentially
  • Gross margin of 17.8%, a decrease of 360 basis points YoY and an increase of 190 basis points sequentially
  • Net Income was $13.0 million, compared to net loss $20.5 million in the same period last year and net income of $9.0 sequentially
  • EBITDA was $38.4 million, a decrease of 53.7% YoY and an increase of 28.0% sequentially
  • Total volume shipped was 124,697 metric tons, down 19.9% YoY and an increase of 14.6% sequentially

Full Year 2018 Financial Summary

  • Revenue was $1,274.8 million, a decrease of 1.2% from $1,290.4 million for the full year 2017
  • Gross profit was $219.6 million, a decrease of 7.2% from $236.7 million for the full year 2017
  • Gross profit margin of 17.2%, a decrease of 110 basis points from 18.3% for the full year 2017
  • Net income was $68.3 million, an increase of 116.1% from $31.6 million for the full year 2017
  • EBITDA was $173.3 million, a decrease of 17.7% YoY from $210.6 million for the full year 2017
  • Total volume shipped was 443,443 metric tons, a decrease of 3.0% from 457,385 metric tons for the full year 2017

"Our fiscal 2018 results were consistent with the less anticipated severe slowdown in China auto industry, the first drop in 28 years," said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "In addition, the reduction of duty on import vehicles by an average of 46% is expected to have profound impact on the entire auto industry in China. Although we applaud the implementation of such supply side reform by the policy makers for the wellbeing of the long term benefit of China auto industry, it will have short term impact to the auto market as companies throughout the supply chain when they are adjusting themselves and adapting to such change. We are pleased with our successful trial production at our production base in Dubai and remain optimistic about our business expansion overseas, especially after positive results and feedbacks after product trial runs from customers in various countries and regions overseas."

Fourth Quarter 2018 Results

Revenues were $349.8 million for the fourth quarter of 2018, compared to $427.6 million for the same period of 2017, representing a decrease of $77.8 million, or 18.2%.  The year-over-year decrease was primarily as a combined results of a 19.9% decrease in sales volume and a 5.6% increase in average RMB selling price of our products, as compared with those of last year.

According to the China Association of Automobile Manufacturers, Automobile production and sales in China in the fourth quarter continued to follow the decline trend since the 3rd quarter of 2018.  China auto sales dropped 11.70%, 13.86% and 13.03% in this October, November and December, respectively, compared to the same periods in 2017. Weakening macroeconomic conditions since the summer of 2018 have deteriorated business conditions.  Though the Company has increased growth of 73.9% in Central China and 62.9% in Southwest China, sales decreased by 51.5% South China, 28.6% in East China, 22.6% in Northeast China and 5.1% in North China.

Premium products (PA66, PA6, POM, PPO, Plastic Alloy and PLA) in total accounted for 78.3% of revenues in the fourth quarter of 2018, compared to 73.3% in the prior year period. The Company continued to shift its production mix from traditional lower-end products to higher-end products such as PA66, PA6 and PLA , primarily due to (i) greater growth potential of advanced modified plastics in luxury automobile models in China, (ii) the stronger demand as a result of promotion by the Chinese government for clean energy vehicles and (iii) better quality from end consumer recognition of higher-end cars made by automotive manufacturers from Chinese and Germany joint ventures, and U.S. and Japanese joint ventures, which manufacturers tend to use more and higher-end modified plastics in quantity per vehicle in China.

Overseas sales was $15.0 million, accounting for 4.3% of total sales for the fourth quarter of 2018, as compared to $35.4 million and accounting for 8.3% of total sales for the same period of 2017. In 2018, the Company suspended sales with the existing ROK customer due to its tight funding and accounts receivable balance overdue situation. The Company had a successful trial production at our production base in Dubai in November 2018 and has tried to develop new overseas customers besides the existing customers. The Company has established business relationships with new customers in UAE and India, and shipped products to the end users in Europe in the fourth quarter of 2018. 

Gross profit was $62.4 million for the fourth quarter of 2018, compared to $91.5 million for the same period of 2017, representing a decrease of $29.1 million, or 31.8%.  Gross margin was 17.8% compared to 21.4% in the fourth quarter of 2017, primarily due to lower sales of higher-end products by Dubai Xinda.

General and administrative (G&A) expenses were $8.6 million for the fourth quarter of 2018, compared to $12.2 million for the same period of 2017, representing a decrease of $3.6 million, or 29.5%.  The decrease was primarily due to our approach on optimizing management structure and enhancing efficiency, leading to the decrease of US$3.5 million in salary and welfare and US$0.1 million in share based compensation.

Research and development (R&D) expenses were $26.9 million for the fourth quarter of 2018, compared to $11.6 million for the same period of 2017, representing an increase of US$15.3 million, or 131.9%. This significant increase was primarily due to (i) elevated R&D activities to meet the new and higher specification requirements from potential customers, especially overseas; and (ii) increased efforts directed towards applications in new electrical equipment and electronics, alternative energy applications, power devices, aviation equipment and ocean engineering, in addition to other new products primarily for advanced industrialized applications in the automobile sector and in new verticals such as ships, airplanes, high-speed rail, 3D printing materials, biodegradable plastics, and medical devices. As of December 31, 2018, the number of ongoing research and development projects was 386.

Operating income was $24.1 million for the fourth quarter of 2018, compared to $66.6 million for the same period of 2017, representing a decrease of US$42.5 million, or 63.8%. This decrease is primarily due to the lower gross margin, higher selling expenses and R&D expenses, and partially offset by lower G&A expenses.

Net interest expense was $13.1 million for the fourth quarter of 2018, compared to net interest expense of $11.2 million for the same period of 2017, representing an increase of $1.9 million or 17.0%,  primarily due to  (i) the increase of interest expense due to the increase of the average short-term and long-term loan balance in the amount of $933.3 million for the three-month period ended December 31, 2018 compared to $840.7 million for the same period in 2017, which is partially offset by the decrease of interest expense resulting from the average loan interest rate decreased to 4.6% for the three-month period ended December 31, 2018 compared 4.8% of the same period in 2017; (ii) the decrease of interest income resulting from the average interest rate decreased to 0.5% for the three-month period ended December 31, 2018 compared to 1.0% of the same period in 2017; and (iii) the decrease of weighed average deposit balance in the amount of US$270.2 million for the three-month period ended December 31, 2018 compared to US$529.8 million for the same period in 2017.

Income tax benefit was US$0.5 million for the fourth quarter of 2018, representing an effective income tax rate of negative 3.6%, compared to income tax expense of US$79.8 million in the same period of 2017, representing an effective income tax rate of 134.5%. The decrease of effective income tax rate was primarily due to (i) The Company recorded a charge of approximately US$71.0 million for the repatriation tax on deemed repatriation to the United States of accumulated earnings in the fourth quarter of 2017; (ii) the increase of additional deduction of R&D expenses resulted from the new policy issued by China's tax authority in September 2018 to increase the R&D expenses additional deduction rate from 50% to 75% for PRC entities, effective from January 1, 2018 to December 31, 2020; (iii) the increase of Sichuan Xinda's profit before tax ("PBT") percentage within the consolidating entities, and partially offset by (iv) the increase of continuous operating losses occurred in overseas subsidiaries such as Xinda Holding (HK).

Net income was US$13.0 million for the fourth quarter of 2018, compared to net loss of US$20.5 million for the same period of 2017, representing an increase of US$33.5 million, or 163.4%. Basic and diluted earnings per share for the fourth quarter of 2018 were both US$0.20, compared to US$0.31 losses per share per share for the same period of 2017.

The average number of shares used in the computation of basic and diluted earnings per share for the three months ended December 31, 2018 was 50.5 million, compared to 49.7 million shares for losses per share in the prior year period.

Earnings before interest, tax, depreciation and amortization (EBITDA) was $38.4 million for the fourth quarter of 2018, compared to EBITDA of $82.9 million for the same period of 2017, representing a decrease of $44.5 million, or 53.7%. 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.

Full Year 2018 Financial Results

Revenue was $1,274.8 million in fiscal 2018, compared to $1,290.4 million in fiscal 2017, representing a decrease of US$15.6 million or 1.2%. The year-over-year decrease was primarily due to an approximately 3.0% decrease in sales volume, 0.3% decrease in the average selling price of our products, and partially offset by 2.1% positive impact from exchange rate due to appreciation of RMB against US dollars.

Revenue from domestic market increased by US$51.9 million as a result of an increase of 3.9% in the average RMB selling price of our products, which was partially offset by a decrease of 1.7% in sales volume, as compared with those of last year. 

According to the China Association of Automobile Manufacturers, Automobile production and sales in China decreased by 4.2% and 2.8%, respectively, for twelve months of 2018 as compared to the same period of 2017. In such an environment, our sales decreased by 8.9% in Northeast China, and 5.8% in East China.  Thanks to our efforts to expand customers serviced by our Sichuan campus, we achieved significant sales growth of 98.0% in Central China, 81.1% in South China, 41.2% in Southwest China and 0.5% in North China. Domestic sales during the twelve-month period ended December 31, 2018 increased by 4.2% as compared to the same period of the prior year.  At the same time, due to higher sales of higher-end products of modified PA66, PA6 in China, we had an increase of 3.9% in the average RMB selling price of our products,

Overseas sales were $15.0 million, decreased by US$ 67.5 million and accounted for 1.2% of the total sales as compared to 6.4% of that in 2017.  The Company had a successful trial production at our production base in Dubai in November 2018 and has tried to develop new overseas customers besides the existing customers. The Company has established business relationships with new customers in UAE and India, and shipped products to the end users in Europe in the fourth quarter of 2018.  We are optimistic about the prospect of our business expansion overseas.

Premium products (PA66, PA6, Plastic Alloy, PLA, POM and PPO) in total accounted for 79.0% of revenues in fiscal 2018, compared to 76.9% in fiscal 2017. The Company continued to shift production mix from traditional lower-end products to higher-end products such as PA66, PA6, and PLA, primarily due to (i) greater growth potential of advanced modified plastics in luxury automobile models in China, (ii) the stronger demand as a result of promotion by the Chinese government for clean energy vehicles and (iii) better quality demand from and consumer recognition of higher-end cars made by automotive manufacturers from Chinese and Germany joint ventures, and Sino-U.S. and Sino-Japanese joint ventures, which manufacturers tend to use more and higher-end modified plastics in quantity per vehicle in China.

Gross profit was US$219.6 million in 2018, as compared to US$236.7 million in 2017, representing a decrease of US$17.1 million, or 7.2%. Our gross margin decreased to 17.2% during 2018 from 18.3% in 2017 primarily due to lower sales of higher-end products by Dubai Xinda.

General and administrative (G&A) expenses were US$37.0 million in 2018 compared to US$38.5 million in 2017, representing a slight decrease of 3.9%, or US$1.5 million. The decrease was primarily due to our approach on optimizing management structure and enhancing efficiency, leading to the decrease of (i) US$4.6 million in salary and welfare; and partially offset by the increase of (ii) US$2.8 million in stock based compensation and (iii) US$0.3 million in depreciation and amortization.

Research and development expenses were US$60.6 million in 2018 compared with US$36.8 million in 2017, an increase of US$23.8 million, or 64.7%. This significant increase was primarily due to (i) elevated R&D activities to meet the new higher specification requirements from potential customers, especially overseas; and (ii) increased efforts directed towards applications in new electrical equipment and electronics, alternative energy applications, power devices, aviation equipment and ocean engineering, in addition to other new products primarily for advanced industrialized applications in the automobile sector and in new verticals such as ships, airplanes, high-speed rail, 3D printing materials, biodegradable plastics, and medical devices. As of December 31, 2018, the number of ongoing research and development projects was 386.

Operating income was US$112.0 million in 2018 compared to US$158.2 million in 2017, representing a decrease of 29.2% or US$46.2 million in 2018. The decrease in 2018 was due to the lower gross margin, higher selling expenses and higher R&D expenses, partially offset by the lower G&A expenses.

Net interest expense was US$47.0 million in 2018, compared to net interest expense of US$40.1 million in 2017, representing an increase of 17.2% or US$6.9 million,  primarily due to  i) the increase of interest expense due to the increase of average short-term and long-term loan balance in the amount of US$861.0 million for the twelve months ended December 31, 2018 compared to US$850.0 million of the same period in 2017; ii)  the increase of interest expense resulting from the average loan interest rate increased to 4.63% for the twelve months ended December 31, 2018 compared to 4.61% of the same period in 2017; iii) the decrease of interest income resulting from the average interest rate decreased to 0.90% for the twelve months ended December 31, 2018 compared to 1.28% of the same period in 2017; iv) and partially offset by the increase of weighed average deposit balance in the amount of US$449.5 million for the twelve months ended December 31, 2018 compared to US$441.2 million for the same period in 2017.

Income tax expense was US$7.7 million for fiscal 2018, representing an effective income tax rate of 10.1%, compared to income tax expense of US$90.5 million in fiscal 2017, representing an effective income tax rate of 74.1%. Income tax expense in 2017 includes a charge of US$71.0 million, which represents management's estimate of the amount of U.S. corporate tax based on the deemed repatriation of the United States of accumulated earnings mandated by the U.S. tax reform. As of December 31, 2018, the Company finalized the calculations and tax positions used in the analysis of the impact of the Tax Act in consideration of proposed regulations and other guidance issued during 2018, and no adjustment was made to the provisional amount.

Excluding the impact of repatriation tax, our effective tax rate would be 10.1% and 16.0% for the year ended December 31, 2018 and 2017.The decrease of effective income tax rate was primarily due to i) the increase of additional deduction of R&D expenses resulted from the new policy issued by China's tax authority in September 2018 to increase the R&D expenses additional deduction rate from 50% to 75% for PRC entities, effective from January 1, 2018 to December 31, 2020; ii) the reversal of the unrecognized tax benefits accrued in year 2012, iii) the increase of Sichuan Xinda's profit before tax ("PBT") percentage within the consolidating entities, and partially offset by iv) the increase of continuous operating losses occurred in overseas subsidiaries such as Dubai Xinda and Xinda Holding (HK).

The effective income tax rate for the twelve-month period ended December 31, 2018 differs from the PRC statutory income tax rate of 25% primarily due to Sichuan Xinda's preferential income tax rate, the reversal of the unrecognized tax benefits accrued in year 2012 and 75% additional deduction of R&D expenses of the major PRC operating entities.

Net income was US$68.3 million in fiscal 2018, as compared to US$31.6 million in fiscal 2017, representing an increase of $36.7 million, or 116.1 %.  Earnings per share were $1.03 in fiscal 2018, compared to earnings per share of $0.48 for fiscal 2017.

The average number of shares used in the computation of basic and diluted earnings per share for the fiscal year 2018 was 50.3 million, compared to 49.6 million shares for fiscal 2017.

Earnings before interest, tax, depreciation and amortization (EBITDA) was $173.3 million for the fiscal year 2018 as compared to EBITDA of $210.6 million for fiscal 2017, representing a decrease of $37.3 million, or 17.7%.  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 December 31, 2018, the Company had US$367.0 million in the total amount of cash and cash equivalents, restricted cash and time deposits, a decrease of US$241.1 million or 39.6% as compared to US$608.1 million as of December 31, 2017. Working capital was negative US$180.2 million (current assets minus current liabilities) and the current ratio (current assets divided by current liabilities) was 0.9, as compared to the current ratio of 1.0 as of December 31, 2017. Stockholders' equity as of December 31, 2018 was $748.9 million, an increase of 5.1% as compared to $712.8 million as of December 31, 2017.

Inventories increased by 47.0% as compared to the end of fiscal year 2017 as a result of more purchases of the raw materials and the Company's strategy to stock up the finished goods for the upcoming orders.  Long-term prepayments to equipment and construction suppliers increased by 178.4% or US$340.0 million because (i) HLJ Xinda Group prepaid to purchase equipment for the industrial project with 300,000 metric tons capacity of biological based composite material and upgrading existing 100,000 metric tons of engineering plastics facilities and (ii) Sichuan Xinda prepaid to purchase equipment with 300,000 metric tons capacity of bio-composite materials. The aggregate short-term and long-term bank loans decreased by 5.4% due to the loan repayments. We define the manageable debt level as the sum of aggregate short-term and long-term loans, and notes payable over total assets.

Financial Guidance and Business Outlook

During fiscal year 2018 China auto market has experienced an unexpected and unprecedent turn with both numbers of car produced and sold plummeted. The results from China Auto Industry Association came drastically below its early expectation. It has a ripple effect and impact throughout China auto supply chain, including the Company.

In light of the foregoing changing market condition and the macro economic environment in China, the successful trial run in Dubai resulting in new production capacity to be added, our expansion into to new markets overseas, diversified customer base and escalation of sales categories, the Company projects revenue for fiscal 2019 to range between $1.3 and $1.6 billion in revenue. Gross margin in fiscal 2019 is expected to remain stable as compared to that of fiscal 2018. The Company projects net income to range between $90 and $110 million. It also assumes the average exchange rate of the US dollar to RMB at 6.8. This financial guidance reflects the Company's current view of its business outlook for fiscal 2019 and is subject to revision based on changing market conditions at any time.

Conference Call

China XD Plastics' senior management will host a conference call at 9:00 am Eastern Time on Monday, April 15 2019, to discuss its fourth quarter and fiscal 2018 financial results.  The conference call can be accessed by dialing +1- 845-675-0437 (for callers in the U.S.), +86-4006-208-038 (for Mainland China callers) or +852- 3018-6771 (for Hong Kong callers) and entering passcode 2687154 .

A recording of the conference call will be available through April 23rd, 2019 , +1-855-452-5696 (for callers in the U.S.) and entering passcode 2687154. 

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 31 automobile brands manufactured in China, including without limitation, Audi, Mercedes Benz, BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei and VW Passat, Golf, Jetta, etc. 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 December 31, 2018, 488 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 the Company's English website at http://chinaxd.irpass.com/, and the Chinese website at http://www.xdholding.com.

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 growth potential in international markets; the effectiveness and profitability of the Company's product diversification strategy; the impact of the Company's product mix shift to more advanced products and related pricing policies;  the effectiveness, profitability, and the marketability of its the ongoing mix shift to more advanced products; the prospect of the Company's Dubai facility, and the associated expansion into Middle East, Europe and other parts of Asia; the prospect of the Company's Southwest China facility, the prospects of the Company's Harbin facility, and its penetration into Northeast China; and its penetration into Southwest China; the Company's projections of its revenues for performance in fiscal 2019.   These forward-looking statements can be identified by terminology such as "will," "expect," "project," "anticipate," "forecast," "plan," "believe," "estimate" and similar statements. Forward-looking statements involve inherent risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, the global economic uncertainty could further impair the automotive industry and limit demand for our products; fluctuations in automotive sales and production could have a material adverse effect on our results of operations and liquidity; our financial performance may be affected by the prospect of our Dubai facility and the associated expansion into Middle East, Europe and other parts of Asia; the withdrawal of preferential government policies and the tightening control over the Chinese automotive industry and automobile purchase restrictions imposed in certain major cities may limit market demand for our products; the slowing of Chinese automotive industry's growth; the concentration of our distributors, customers and suppliers; 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. 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.

- Financial Tables Follow -

CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 




December 31,




2018



2017




US$



US$


ASSETS







Current assets:







Cash and cash equivalents



41,301,817




190,392,211


Restricted cash



325,690,023




129,699,454


Time deposits



-




288,023,017


Accounts receivable, net of allowance for doubtful accounts



294,688,288




298,868,984


Inventories



620,033,195




421,736,682


Prepaid expenses and other current assets



132,218,528




144,326,151


    Total current assets



1,413,931,851




1,473,046,499


Property, plant and equipment, net



775,941,280




835,561,739


Land use rights, net



29,796,795




31,943,652


Long-term prepayments to equipment and construction suppliers



530,636,319




190,627,514


Other non-current assets



3,212,986




12,924,279


    Total assets



2,753,519,231




2,544,103,683











LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY


Current liabilities:









Short-term bank loans, including current portion of long-term bank loans



729,666,920




775,396,929


Bills payable



618,166,453




252,768,510


Accounts payable



84,958,469




227,993,140


Amounts due to related parties



18,365,738




-


Income taxes payable



15,975,367




17,710,217


Accrued expenses and other current liabilities



126,926,898




138,605,509


    Total current liabilities



1,594,059,845




1,412,474,305


Long-term bank loans, excluding current portion



111,808,244




114,208,319


Deferred income



99,583,477




99,168,276


Other non-current liabilities



101,573,772




107,898,318


    Total liabilities



1,907,025,338




1,733,749,218











Redeemable Series D convertible preferred stock (redemption amount of
US$280,650,800 and US$244,044,200 as of December 31, 2018 and 2017,
respectively)



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, 50,969,841 shares
and 49,748,731 shares issued, 50,948,841 shares and 49,727,731 shares outstanding as
of December 31, 2018 and 2017, respectively



5,097




4,975


Treasury stock, 21,000 shares at cost



(92,694)




(92,694)


Additional paid-in capital



86,633,582




83,159,893


Retained earnings



717,103,890




648,790,469


Accumulated other comprehensive loss



(54,732,547)




(19,084,743)


    Total stockholders' equity



748,917,428




712,778,000


Commitments and contingencies







-


    Total liabilities, redeemable convertible preferred stock and stockholders' equity



2,753,519,231




2,544,103,683


 

CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)




Years Ended December 31,


Three-Month Period Ended December 31,




2018



2017


2018



2017




US$



US$


US$



US$














Revenues



1,274,833,282




1,290,447,748



349,825,989




427,632,945


Cost of revenues



(1,055,220,493)




(1,053,782,105)



(287,461,458)




(336,167,827)


    Gross profit



219,612,789




236,665,643



62,364,531




91,465,118


















Selling expenses



(10,068,971)




(3,176,928)



(2,714,095)




(1,094,039)


General and administrative expenses



(36,985,700)




(38,495,704)



(8,644,155)




(12,194,264)


Research and development expenses



(60,576,574)




(36,838,261)



(26,895,719)




(11,582,764)


    Total operating expenses



(107,631,245)




(78,510 893)



(38,253,969)




(24,871,067)


















    Operating income



111,981,544




158, 154,750



24,110,562




66,594,051


















Interest income



3,977,116




5,290,705



369,980




1,262,406


Interest expense



(51,031,735)




(45,370,872)



(13,469,069)




(12,504,933)


Foreign currency exchange gains (losses)



5,710,754




(6,498,908)



(353,574)




(1,779,485


Losses on foreign currency contracts



(520,981)




(1,048,599)



-




(463,875)


Losses on disposal of a subsidiary



(214,557)




-



(214,557)




-


Government grants



6,124,393




11,619,037



2,122,647




6,200,539


    Total non-operating expenses, net



(35,955,010)




(36,008,637)



(11,544,573)




(7,285,348)


















    Income before income taxes



76,026,534




122,146,113



12,565,989




59,308,703


















Income tax expense



(7,713,113)




(90,524,379)



458,512




(79,788,408)


















    Net income (loss)



68,313,421




31,621,734



13,024,501




(20,479,705)


















Earnings (losses) per common share:
















Basic and diluted



1.03




0.48



0.20




(0.31)


Net Income (loss)



68,313,421




31,621,734



13,024,501




(20,479,705)


















Other comprehensive income (loss)
















Foreign currency translation adjustment, net of nil
income taxes



(35,647,804)




46,343,088



2,493,897




12,786,001


















Comprehensive income (loss)



32,665,617




77,964,822



15,518,398




(7,693,704)


















 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY




Series B Preferred Stock



Common Stock






Additional






Accumulated Other



Total




Number of

Shares



Amount



Number of

Shares



Amount



Treasury

Stock



Paid-in

Capital



Retained

Earnings



Comprehensive

Income (Loss)



Stockholders'

Equity







US$






US$



US$



US$



US$



US$



US$


Balance at January 1,
2017



1,000,000




100




49,511,541




4,952




(92,694)




82,606,404




617,168,735




(65,427,831)




634,259,666


Net income



-




-




-




-




-




-




31,621,734




-




31,621,734


Other comprehensive
income - Foreign currency
translation adjustment, net
of nil income taxes



-




-




-




-




-




-




-




46,343,088




46,343,088


Stock based compensation



-




-




-




-




-




553,512




-








553,512


Vesting of unvested shares



-




-




216,190




23




-




(23)




-




-




-


Balance as of December 31,
2017



1,000,000




100




49,727,731




4,975




(92,694)




83,159,893




648,790,469




(19,084,743)




712,778,000


Net income



-




-




-




-




-








68,313,421




-




68,313,421


Other comprehensive loss
- Foreign currency
translation adjustment, net
of nil income taxes



-




-




-




-




-




-




-




(35,647,804)




(35,647,804)


Stock based compensation



-




-




-




-




-




3,353,811




-




-




3,353,811


Exercise of stock options



-




-




500,000




50




-




119,950




-




-




120,000


Vesting of unvested shares



-




-




721,110




72




-




(72)




-




-




-


Balance as of December 31,
2018



1,000,000




100




50,948,841




5,097




(92,694)




86,633,582




717,103,890




(54,732,547)




748,917,428








































 

CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS






Years Ended December 31,





2018



2017





US$



US$



Cash flows from operating activities:








Net income



68,313,421




31,621,734



Adjustments to reconcile net income to net cash
provided by operating activities:










Depreciation and amortization



46,282,307




43,055,976



Stock-based compensation



3,353,811




553,512



Amortization of issuance cost of the Syndicate loan facility



1,736,535




3,750,028



Losses (gains) on foreign currency option contracts



(1,070,779)




1,048,599



Foreign currency exchange losses (gains)



(5,425,545)




6,038,799



Losses on disposals of property, plant and equipment



2,423,326




17,509



Losses on disposal of a subsidiary



214,557




-



Deferred income tax benefit



(1,917,993)




(2,407,706)



Accounts receivable



(5,147,409)




120,443,715



Amounts due from a related party



-




243,779



Inventories



(228,481,188)




(120,026,438)



Prepaid expenses and other current assets



(39,949,682)




(26,354,886)



Value added tax in long-term prepayments to equipment
suppliers



(50,794,483)




(23,267,330)



Other non-current assets



49,182




10,113,931



Bills payable



391,738,736




92,130,473



Accounts payable



(148,839,736)




(108,053,082)



Amounts due to related parties



-




(12,155)



Income taxes payable



(1,701,689)




16,581,508



Accrued expenses and other current liabilities



38,528,151




20,097,830



Deferred income



(4,917,452)




(4,630,632)



Other non-current liabilities



(3,000,815)




64,895,667



   Net cash provided by operating activities



61,393,255




125,840,831



Cash flows from investing activities:










Proceeds from maturity of time deposits



540,066,526




475,873,199



Purchase of time deposits



(255,518,597)




(564,710,760)



Purchase of land use rights



-




(8,279,334)



Purchases of and deposits for property, plant and
equipment



(429,205,807)




(456,474,007)



Proceeds from disposal of property, plant and
equipment



416,968




-



Refund of deposit from equipment suppliers



120,532,191




280,814,137



Deposits for acquisition of equity



(3,506,048)




(11,937,192)



Refund of deposits for acquisition of equity



15,299,214




-



Government grant related to the construction of Sichuan
plant



10,281,222




29,382,885



Cash disposed for sales of a subsidiary



(41,631)




-



   Net cash used in investing activities



(1,675,962)




(255,331,072)



Cash flows from financing activities:










Proceeds from bank borrowings



1,238,947,716




842,571,025



Repayment of bank borrowings



(1,255,214,637)




(682,921,893)



Proceeds from interest-free advances from related
parties



22,145,247




-



Repayment of interest-free advances from related
parties



(3,779,509)




-



Investment received in advance from a related party



75,567,512




-



Refund investment received in advance from a related
party



(75,567,512)




-



Proceeds from exercise of stock options



120,000







   Net cash provided by financing activities



2,218,817




159,649,132



Effect of foreign currency exchange rate changes on
cash, cash equivalents and restricted cash



(15,035,935)




18,356,927



Net increase in cash, cash equivalents and restricted
cash



46,900,175




48,515,818



Cash, cash equivalents and restricted cash at
beginning of year



320,091,665




271,575,847



Cash, cash equivalents and restricted cash at
end of year



366,991,840




320,091,665



Supplemental disclosure of cash flow information:










Interest paid, net of US$2,416,818 and US$2,893,631
capitalized for the years ended December 31, 2018 and
2017, respectively



43,664,817




38,695,738



Income taxes paid



17,982,507




13,030,643



Non-cash investing and financing activities:










Consideration receivable for the disposal of a subsidiary



7,285,231




-



Accrual for purchase of equipment and construction
included in accrued expenses and other current
liabilities



6,188,847




5,144,134



The following table shows a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to that presented in the above consolidated statements of cash flows.



December 31,




2018



2017




US$



US$









Cash and cash equivalents



41,301,817




190,392,211


Restricted cash



325,690,023




129,699,454


Total cash, cash equivalents, and restricted cash shown in
the statement of cash flows



366,991,840




320,091,665


 


CHINA XD PLASTICS COMPANY LIMITED


Reconciliation of Net Income to EBITDA


(Amounts expressed in United States Dollars)




Three-Month Period Ended

December 31,

Years Ended December 31,


2018

2017

2018

2017






Net income -GAAP

$   13,024,501

$    (20,479,705)

$    68,313,421

$   31,621,734

Interest expense

13,469,069

12,504,933

51,031,735

45,370,872

Provision for income taxes

(458,512)

79,788,408

7,713,113

90,524,379

Depreciation and amortization expense

12,333,626

11,055,793

46,282,307

43,055,976

EBITDA

38,368,684

82,869,429

173,340,576

210,572,961

Cision View original content:http://www.prnewswire.com/news-releases/specialty-chemical-company-china-xd-plastics-announces-fourth-quarter-and-fiscal-year-2018-financial-results-300831948.html

Source: China XD Plastics Company Limited
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