HARBIN, China, Aug. 13 /PRNewswire-Asia-FirstCall/ -- China XD
Plastics Company Ltd. ("China XD Plastics" or the "Company"),
(OTC:CXDC) (BULLETIN BOARD: CXDC) , as the largest Chinese
manufacturer engaged in the development, manufacture, and
distribution of modified plastics primarily for use in automotive
applications, today reported financial results for the second
quarter of 2009. Second Quarter 2009 Highlights -- Revenue was
$31.9 million, an increase of 38.2% from the second quarter of 2008
-- Gross profit was $6.7 million, an increase of 15.1% from the
second quarter of 2008 -- Gross profit margin was 20.9%, compared
to 25.1% in the second quarter of 2008 -- EBITDA (Earnings before
Interest, Taxes, Depreciation, and Amortization) for the second
quarter of 2009 was $6.2 million, an increase of 12.5% from the
second quarter of 2008 -- Net income was $5.0 million, while
non-GAAP net income excluding the non-cash stock-based compensation
was $5.4 million, an increase of 6.5% from the second quarter of
2008 -- Diluted earnings per share was $0.13 and non-GAAP diluted
earnings per share was $0.14, up 22.7% and 35.9%, respectively,
from the first quarter of 2009 -- Total volume sold was 14,404
metric tons, up 27.2% from 11,328 metric tons in the second quarter
of 2008 "We are extremely pleased to report another quarter of
record revenue, underlying the resilience of our business model and
the ongoing potential for the profitable growth of our business
driven by the continuous healthy growth in China's automobile
sector," said Mr. Jie Han, Chairman and Chief Executive Officer of
China XD Plastics. "During the quarter we made solid progress
across all areas of our business, as we obtained new customers, and
expanded our distribution network beyond northeast region of China
to the more expansive northern China market. We remain optimistic
about our business prospect and look forward to reporting positive
financial results for the quarters to come. In addition, we are
pleased to announce to have acquired 7 additional product
certifications for automotive applications during the second
quarter of 2009 and will begin shipments in the third and fourth
quarter of 2009." Second Quarter 2009 Results Revenues for the
second quarter 2009 were $31.9 million, up 38.2% from $23.1 million
in the same period of 2008, and 20.9% from the first quarter 2009.
The increase in revenue is primarily attributable to the increase
in sales volume and selling prices driven by increasing demand for
modified plastics for automotive applications in China. Gross
profit for the second quarter 2009 was $6.7 million, up 15.1% from
$5.8 million in the second quarter 2008. Gross margin was 20.9%
compared to 25.1% in the same period last year, and 21.8% in the
first quarter 2009 due to the product mix change during second
quarter 2009 associated with a volume increase of lower margin
products sold for use in economy cars as a result of the on-going
sales tax cut and government subsidies to stimulate demand of
automobiles in China. Selling expenses for the second quarter 2009
were $0.06 million, up 102.2% from $0.03 million in the same period
last year as the Company invested to grow its customer base and to
expand its geographic reach into the North China market. General
and administrative (G&A) expenses were $1.1 million, up 417.1%
from $0.2 million for the same period of last year, and up 6.6%
from the first quarter 2009. The year-over-year increase in G&A
expenses reflects increased stock based compensation, depreciation
expense and other expenses related to becoming a public company in
the U.S. stock market. Research and Development ("R&D")
expenses were $0.2 million compared to $0.3 million in the same
period last year. The slight decrease of research and development
expense was primary due to installation of new equipment at the
research and development center during the second quarter 2009,
where some of the new product development activities were postponed
to the third quarter, still on time as we planned. Operating income
for the second quarter 2009 was $5.3 million, unchanged from the
$5.3 million in the same period a year ago, and up 20.8% from $4.4
million in the first quarter 2009. Operating margin was 16.6%
compared to 22.9% in the second quarter of 2008 and 16.6% in the
first quarter 2009. The year-over-year reduction in operating
margin is primarily due to the increase in operating expenses
associated with becoming a public company, but also reflects lower
gross margin related to product mix. Interest expense in the second
quarter 2009 was $0.3 million, compared to $0.2 million in the
second quarter of 2008. EBITDA (Earnings before Interest, Taxes,
Depreciation, and Amortization) for the second quarter of 2009 was
$6.2 million, up 12.5% from $5.5 million in the second quarter of
2008. For a detailed reconciliation of adjusted EBITDA, please see
the financial tables at the end of this release. Net income in the
second quarter 2009 was $5.0 million, down 2.0% from $5.1 million
in the same period last year and up 24.4% from the first quarter
2009. Fully diluted earnings per share for the second quarter 2009
were $0.13, a sequential increase of 22.7% over the first quarter
2009. During the second quarter 2009, the Company incurred a
non-cash charge of $0.4 million associated with stock-based
compensation. Adjusting for this non-cash charge, non-GAAP net
income for the second quarter of 2009 was $5.4 million, or $0.17
basic earnings per share and $0.14 fully diluted earnings per
share. For a detailed reconciliation of non-GAAP net income to GAAP
net income, please see the financial tables at the end of this
release. Six Months Results For the first six months of 2009, total
revenue was $58.3 million, up 74.2% from the first six months of
2008. Total volume sold during the first six months was 32,303
metric tons compared to 17,656 metric tons in the comparable period
of last year. Gross profit for the first six months of 2009 was
$12.4 million, up 52.4% from gross profit of $8.2 million in the
comparable period a year ago. Gross margin was 21.3% and 24.3% for
the first six months of 2009 and 2008, respectively. Income from
operations was $9.7 million, up 31.7% from $7.3 million in the
first six months of 2008. EBITDA was $11.0 million in the first six
months of 2009, up 42.2% from $7.7 million in first six months of
2008. Net income for the first six months of 2009 was $9.0 million,
up 25.3% from $7.2 million in the first six months of 2008. Basic
earnings per share were $0.56 and fully diluted earnings per share
were $0.23 for the first six months of 2009. Adjusting for non-cash
charges associated with stock-based compensation, non-GAAP net
income for the first six months of 2009 was $9.4 million or $0.59
basic earnings per share and $0.24 fully diluted earnings per
share. Financial Condition As of June 30, 2009, China XD plastics
had $1.5 million in cash and cash equivalents, $13.7 million in
working capital and a current ratio of 1.4. Shareholder's equity as
of June 30, 2009 stood at $33.5 million compared to $24.1 million
at the end of 2008. Business Outlook and Guidance During the second
quarter China XD Plastics expanded its production capacity to
70,000 tons from 40,000 tons at the end of 2008, and strengthened
its northeast sales office and its distribution network in the
Northeast and North China region to take advantage of growth
opportunities in those markets. The automotive industry environment
in China remains healthy, despite the economic slowdown worldwide.
During the first half of 2009, total number of vehicles sold in
China topped 6 million units, according to China Association of
Automobile Manufacturers. The on-going stimulus plan implemented by
the government in China reduced the sales tax on vehicles with an
engine capacity of less than 1.6 liters by half to 5% and provided
subsidies to farmers for replacing three-wheeled vehicles or
outdated trucks with small fuel efficient vehicles. These measures
are expected to continue to support the continued growth of the
auto industry in China, which is expected to contribute to a
further increase in the demand for China XD Plastics' products. For
2009, the Company reaffirms its guidance for annual revenues in 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. This guidance is based
on non-GAAP results and excludes non-cash charges resulting from
stock compensation expense. "As we enter the third quarter we
remain well positioned to achieve our goals for 2009, and to
position China XD Plastics as a leader in the modified plastics
industry in China," said Mr. Jie Han, Chairman and Chief Executive
Officer of China XD Plastics. "Going forward, our priority remains
to invest in technology development, certify additional products
with the automotive OEMs, add high margin products, and gradually
expand our capacity to drive future growth in our core business."
Recent Events On July 30, 2009, China XD Plastics announced that
the Company's information is now made available via Standard &
Poor's Market Access Program, an information distribution service
that enables subscribing publicly traded companies to have their
company information disseminated to users of Standard & Poor's
Advisor Insight. On July 13, 2009, China XD Plastics announced it
has signed a half-year provisional agreement with Tianjin Huapu
Company to distribute its specialized modified plastics for
automotive applications in Northern China. On June 4, 2009, China
XD Plastics announced that during the first quarter of 2009, the
Company obtained five product certifications from the FAW Group
Corporation, one of the leading automobile manufacturers and
vanguard of automobile industry in China. On June 2, 2009, China XD
Plastics announced the appointment of four new directors and
establishment the Audit, Compensation and Nominating Committees.
Mr. Lawrence W. Leighton serves as Chairman of the audit committee
while Mr. Cosimo J. Pattiand and Mr. Linyuan Zhai serve as Chairman
of the compensation and nomination committees, respectively. On May
1, 2009, China XD Plastics announced the appointment of Taylor
Zhang as Chief Financial Officer effective immediately. 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
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 14, 2009, China XD Plastics announced
it was recertified for the ISO/TS16949:2002 certification of
quality management system Conference Call China XD Plastics will
host a conference call at 9:00 a.m. EDT on Thursday, August 13,
2009, to discuss the 2009 second quarter financial results. To
participate in the conference call, please dial the following
number five to ten minutes prior to the scheduled conference call
time: 1-866-800-8648. International callers should dial
+1-617-614-2702. The pass code for the call is 67523688. If you are
unable to participate in the call at this time, a replay will be
available for 14 days starting on Thursday August 13, 2009 at 11:00
a.m. EDT. To access the replay, dial 1-888-286-8010. International
callers should dial +1-617-801-6888. The conference pass code is
43304415. 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. As of the end of
June 30, 2009, 129 of China XD Plastics' modified plastic 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
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 For the Six Months June 30, Ended June 30, 2009 2008
2009 2008 Sales $31,912,267 $23,094,734 $58,304,156 $33,477,156
Cost of Sales (25,243,756) (17,302,099) (45,879,331) (25,325,675)
Gross Profit 6,668,511 5,792,635 12,424,825 8,151,481 Operating
Expenses Research and development expenses 208,818 252,416 497,973
320,640 Selling expenses 60,593 29,972 106,243 47,795 General and
administrative expenses 1,115,123 215,659 2,161,053 445,937 Total
Operating Expenses 1,384,534 498,047 2,765,269 814,372 Operating
Income 5,283,977 5,294,588 9,659,556 7,337,109 Other Income
(Expenses) Interest income (expenses) (337,113) (190,083) (692,719)
(163,267) Other income 62,654 11 62,542 25,180 Other expense
(9,352) -- (9,885) -- Total Other Expense (283,811) (190,072)
(640,062) (138,087) Income before Income Taxes 5,000,166 5,104,516
9,019,494 7,199,022 Provision for Income Taxes 3,775 6,229 6,461
6,229 Net Income $4,996,391 $5,098,287 $9,013,033 $7,192,793 Other
Comprehensive Income (Loss) Foreign Currency Translation Adjustment
10,220 414,587 (27,396) 810,743 Comprehensive Income $5,006,611
$5,512,874 $8,985,637 $8,003,536 Basic and Diluted Income per
Common Share Basic $0.16 $12.56 $0.56 $17.72 Diluted $0.13 $12.56
$0.23 $17.72 Weighted Average Common Share Outstanding Basic
31,167,002 405,802 16,070,273 405,802 Diluted 39,552,722 405,802
39,298,420 405,802 Reconciliation of Net Income to Adjusted Net
Income GAAP results for the three months and six months ended June
30, 2009 include non-cash stock based compensation expense. To
supplement the Company's condensed consolidated financial
statements presented on a GAAP basis, the Company has provided
non-GAAP financial information excluding the impact of this item 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. CHINA XD PLASTICS COMPANY
LIMITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE
MONTHS AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 Three Months
Ended Three Months Ended June 30, 2009 June 30, 2008 Net Basic
Diluted Net Basic Diluted Income EPS EPS Income EPS EPS Adjusted
Net Income - Non GAAP $5,430,484 $0.17 $0.14 $5,098,287 $12.56
$12.56 Non-Cash Stock-based compensation (1) $434,093 $0.01 $0.01
-- -- -- Net Income - GAAP $4,996,391 $0.16 $0.13 $5,098,287 $12.56
$12.56 Six Months Ended Six Months Ended June 30, 2009 June 30,
2008 Net Basic Diluted Net Basic Diluted Income EPS EPS Income EPS
EPS Adjusted Net Income Net Income (Loss) Diluted EPS Adjusted Net
Income $9,447,126 $0.59 $0.24 $7,192,793 $17.72 $17.72 - Non GAAP
Non-Cash Stock-based compensation (1) $434,093 $0.03 $0.01 -- -- --
Net Income - GAAP $9,013,033 $0.56 $0.23 $7,192,793 $17.72 $17.72
(1) the adjustment to Non-GAAP net income to GAAP net income is
related to the non-cash stock compensation 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 Six Months Ended June 30, June 30, 2009 2008 2009 2008
Net Income $4,996,391 $5,098,287 $9,013,033 $7,192,793 Interest
Expense $337,113 $190,083 $692,719 $163,267 Provision for $3,775
$6,229 $6,461 $6,229 Income Taxes Stock-based compensation $434,093
-- $434,093 -- Depreciation and amortization $453,236 $239,153
$899,126 $407,535 EBITDA $6,224,608 $5,533,752 $11,045,432
$7,769,824 YoY Growth 12.5% 42.2% CHINA XD PLASTICS COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2009
2008 (Unaudited) (Audited) ASSETS Current assets: Cash and cash
equivalents $1,466,634 $3,869,035 Restricted cash 3,923,469
3,664,346 Notes receivable 53,801 303,437 Accounts receivable - net
of allowance for bad debts of $99,550 and $99,669, respectively
9,731,911 11,234,507 Other receivables 138,673 21,917 Inventory
14,873,718 12,438,782 Advance to employees 5,037 92,329 Advance to
suppliers 14,514,312 13,131,074 Tax receivable 174,712 -- Prepaid
expenses 704 -- Total current assets 44,882,971 44,755,427
Property, plant and equipment, net 19,124,324 19,332,712 Other
assets: Deferred charges 425,195 378,073 Intangible assets, net
244,600 247,681 Total other assets 669,795 625,754 Total Assets
$64,677,090 $64,713,893 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Short term loans $20,202,937 $20,520,337 Bank
acceptance notes payable 9,808,672 8,061,561 Accounts payable
16,595 113,232 Other payable 150,429 106,232 Accrued expenses 8,784
820,625 Taxes payable -- 17,777 Due to related party 391,815
7,542,950 Deferred revenue 616,745 3,469,796 Total current
liabilities 31,195,977 40,652,510 Stockholders' equity Common
Stock, $0.0001 par value, 100,000,000 shares authorized, 40,789,874
and 805,802 shares issued and outstanding as of June 30, 2009 and
December 31, 2008, respectively 4,079 81 Series A Preferred Stock,
$0.0001 par value, 10,000,000 shares authorized, - 0 - and
1,000,000 shares issued and outstanding as of June 30, 2009 and
December 31, 2008, respectively -- 100 Series B Preferred Stock,
$0.0001 par value, 10,000,000 shares authorized, 1,000,000 shares
issued and outstanding as of June 30, 2009 and December 31, 2008
100 100 Additional Paid-in-Capital 2,912,981 2,482,786 Retained
earnings 29,064,174 20,051,141 Accumulated other comprehensive
income 1,499,779 1,527,175 Total Stockholders' equity 33,481,113
24,061,383 Total Liabilities And Stockholders' Equity $64,677,090
$64,713,893 CHINA XD PLASTICS COMPANY LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six
Months ended June 30, 2009 2008 Cash flows from operating
activities Net income $9,013,033 $7,192,793 Adjustments to
reconcile net income to net cash provided by (used in) Operating
activities: Depreciation & amortization 899,126 407,535
Stock-based compensation expense 434,093 -- Changes in assets and
liabilities: (Increase) decrease in - Restricted cash (263,424)
1,346,505 Accounts receivable and other receivables 1,371,850
(13,814,699) Inventories (2,448,993) (3,105,029) Prepaid expenses
(702) 21,393 Notes receivables 249,185 (376,656) Advance to
employees 87,148 -- Advances to suppliers (1,398,493) (3,230,094)
Deferred charge (47,560) -- Increase (decrease) in - Accounts
payable and other payable (52,123) 5,109,230 Accrued expenses
(810,573) 140,159 Tax payable (192,399) (1,333,736) Deferred
revenue (2,847,892) 24,321 Net cash provided by (used in) operating
activities 3,992,276 (7,618,278) Cash flows from investing
activities Purchase of fixed assets (711,153) (4,984,561)
Collection on due from related party -- 105,537 Net cash used in
investing activities (711,153) (4,879,024) Cash flows from
financing activities Repayment to short term loan (292,694) --
Proceeds from short term loan -- 16,269,921 Proceeds from bank
acceptance notes payable 1,756,161 -- Repayment of bank acceptance
notes payable -- (2,680,824) Repayment to related party loan
(7,141,606) -- Proceeds from related party loan -- 82,518 Net cash
provided by (used in) financing activities (5,678,139) 13,671,615
Effect of exchange rate changes on cash and cash equivalents
(5,385) 189,832 Net increase(decrease) in cash and cash equivalents
(2,402,401) 1,364,145 Cash and cash equivalents, beginning of
period 3,869,035 87,455 Cash and cash equivalents, end of period
$1,466,634 $1,451,600 Supplemental disclosures of cash flow
information: Interest paid $720,826 $261,078 Income taxes paid $--
$-- Non-cash investing and financing activities: Warrants issued
for consulting service $46,260 $-- Common stock issued for services
$5,370,000 $-- 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:
+86-451-8434-6600 (China) Email: Web: http://www.chinaxd.net/ CCG
Investor Relations Mr. Crocker Coulson, President Phone:
+1-646-213-1915 (New York) Mr. Ed Job, CFA Phone: +1-646-213-1914
(New York) Email: Web: http://www.ccgirasia.com/ DATASOURCE: China
XD Plastics Company Ltd. CONTACT: China XD Plastics Company Ltd.,
Mr. Taylor Zhang, Chief Financial Officer, +1-212-747-1118 (New
York); Or Mr. Allan Lao, IR Director, +86-451-8434-6600 (China), or
; Or CCG Investor Relations, Mr. Crocker Coulson, President,
+1-646-213-1915 (New York); Or Mr. Ed Job, CFA, +1-646-213-1914
(New York), or Web site: http://www.chinaxd.net/
Copyright