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
|
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