Specialty Chemical Company China XD Plastics Announces Fourth Quarter and Fiscal Year 2017 Financial Results
Specialty Chemical Company China XD Plastics Announces Fourth Quarter and Fiscal Year 2017 Financial Results
- Revenues of $1.3 Billion Surpassing Guidance -
- Provides Fiscal 2018 Guidance of $1.2-$1.4 Billion in Revenue, $90-$110 Million in Net Income, Excluding the Effect of Repatriation Tax -
HARBIN, China, March 15, 2018 /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, 2017.
Fourth Quarter 2017 Financial Highlights
-- Revenue was $427.6 million, an increase of 13.2% YoY and an increase of
37.3% sequentially
-- Gross profit was $91.5 million, an increase of 11.2% YoY and an increase
of 93.4% sequentially
-- Gross margin of 21.4%, a decrease of 38 basis points YoY and an increase
of 621 basis points sequentially
-- Net Loss was $20.5 million, compared to net income $36.7 million in the
same period last year and net income of $14.1sequentially
-- EBITDA was $82.9 million, an increase of 42.4% YoY and an increase of
112.6% sequentially
-- Total volume shipped was 155,716 metric tons, up 24.1% YoY and an
increase of 39.2% sequentially
Full Year 2017 Financial Summary
-- Revenue was $1,290.4 million, an increase of 7.4% from $1,201.7 million
for the full year 2016
-- Gross profit was $236.7 million, a decrease of 4.2% from $247.0 million
for the full year 2016
-- Gross profit margin of 18.3%, a decrease of 230 basis points from 20.6%
for the full year 2016
-- Net income was $31.6 million, a decrease of 68.9% from $101.6 million
for the full year 2016
-- EBITDA was $210.6 million, an increase of 8.2% YoY from $194.7 million
for the full year 2016
-- Total volume shipped was 457,385 metric tons, up 14.3% from 400,316
metric tons for the full year 2016
"We are pleased to have met our revenue guidance for 2017 abetted by strong customer demand from new growth regions in the fourth quarter. Our robust sales results for the fourth quarter of the year and solid results for fiscal year 2017 are consistent with our expectations of a steady recovery throughout China's automotive supply chain," said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "According to the China Association of Automobile Manufacturers, automobile production in China increased by 3.2% in 2017 as compared to 2016. An improved macroeconomic environment has improved business conditions and helped us to improve our profit margins."
"We are particularly pleased to see major revenue contributions from major new growth frontiers, fostered in large part by the gradual ramp up of our Sichuan manufacturing facility, a key milestone in our corporate development. The Sichuan facility will ultimately add 300,000 metric tons of annual production to our domestic capacity for a total domestic capacity of 690,000 metric tons. The new facility also extends our geographical reach beyond our established Northeast base, generating strong growth from the South and Central China regions, in addition to our continued and steady business development in Southwest and East China. We installed 50 production lines with 216,000 metric tons of annual production and construction at the complex is expected to be completed by the end of the second quarter of 2018."
"The Sichuan facility substantially expands the footprint of our auto business in China and while we expect that automotive applications will continue to be our core business, the new facility includes precision equipment which will enable us to diversify our product platform into such high-growth verticals as ships, high-speed rail, airplanes, bio-degradable materials, medical-grade materials, food packaging, electronic equipment, electrical products, alternative energy applications and power devices, which will help to propel the Company's growth."
"Our new facility in Dubai also extends our specialized high-tech products into an important new market. We are planning to complete installing 45 production lines with 12,000 metric tons of annual production capacity by the end of April, 2018, and an additional 50 production lines with 13,000 metric tons of annual production capacity by the end of 2018. This will bring the total installed production capacity in our Dubai facility to 25,000 metric tons. The Dubai facility will target high-end products for the overseas market and will ultimately enable more active inroads into the markets of Europe, the Middle East, Russia and other international regions."
"China XD continues to value our deep working relationships with our customers above all, and is committed to creating value with our culture of hard work and innovation. We anticipate that the continued execution of our strategic plan driven by an increase in our production capacity, our entry into new markets, a diversified customer base and an escalation in international sales will help to generate business growth for years to come. For fiscal 2018, we are providing financial guidance of between $$1.2 and $1.4 billion in revenue, $90 and $110 million in net income ", Mr. Han concluded.
Fourth Quarter 2017 Results
Revenues were $427.6 million for the fourth quarter of 2017, compared to $377.8 million for the same period of 2016, representing an increase of $49.8 million, or 13.2%. The year-over-year increase was primarily due to a 24.1% increase in sales volume and a 9.2% decrease in the average RMB selling price of our products.
The increase in revenues in the fourth quarter of 2017 was driven by growth in demand for our products in the domestic China market, our aggressive efforts to expand our customer base attributable to our new plant in Sichuan and our efforts to expand overseas sales. We recorded sales increases of 46.6% in North China, 23.5% in East China, 23.3% in Central China and 4.7% in South China. Overseas sales were $35.4 million for the fourth quarter of 2017, accounting for 8.3 % of total sales, reflecting the Company's resumed sales to overseas markets in fiscal 2017.
Premium products (PA66, PA6, POM, PPO, Plastic Alloy and PLA) in total accounted for 73.3% of revenues in the fourth quarter of 2017, compared to 82.8% in the prior year period. Since the third quarter of 2017, the Company implemented a marketing strategy of offering lower-end products with lower RMB pricing to further penetrate the new regional markets in East China, Central China and Southwest China. Pending this marketing strategy, the Company intends to shift its production mix from traditional lower-end products to higher-end products such as 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.
Gross profit was $91.5 million for the fourth quarter of 2017, compared to $82.3 million for the same period of 2016, representing an increase $9.2 million, or 11.2%. Gross margin was 21.4% compared to 21.8% in the fourth quarter of 2016, primarily due to (i) lower sales of higher-end products by Dubai Xinda; and (ii) implementing a marketing strategy of offering lower-end products with lower RMB pricing to enter the new regional markets in Central China and Southwest China, since the third quarter of 2017 as compared to that of the prior year.
General and administrative (G&A) expenses were $12.2 million for the fourth quarter of 2017, compared to $9.9 million for the same period of 2016, representing an increase of $2.3 million, or 23.0%. This increase was primarily due to the increases of US$1.8 million in compensation for the terminated contracts with an equipment supplier. On a percentage basis, G&A expenses in the fourth quarter of 2017 were 2.9% compared to 2.6% for the same period of 2016.
Research and development (R&D) expenses were $11.6 million for the fourth quarter of 2017, compared to $29.3 million for the same period of 2016, representing a decrease of $17.7 million, or 60.5%, due to the decrease of raw materials used in two specific research and development projects in Sichuan Xinda. As of December 31, 2017, the number of ongoing research and development projects was 376.
Operating income was $66.6 million for the fourth quarter of 2017, compared to $42.6 million for the same period of 2016, representing an increase of $24.0 million, or 56.3%. This increase was primarily due to the higher gross profit and lower R&D expenses, partially offset by higher G&A expenses.
Net interest expense was $11.2 million for the fourth quarter of 2017, compared to net interest expense of $7.6 million for the same period of 2016, 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 $840.7 million for the three-month period ended December 31, 2017 compared to $727.4 million for the same period in 2016, (ii) the increase of the weighted loan interest rate of 4.8% for the three-month period ended December 31, 2017 as compared to 4.5% for the same period of 2016, which was partially offset by (iii) an increase of interest income resulting from the decrease of the average interest rate to 1.0% for the three-month period ended December 31, 2017 compared to 1.9% of the same period in 2016, and (iv) the increase of the average deposit balance in the amount of $529.8 million for the three-month period ended December 31, 2017 compared to $282.6 million for the same period of 2016.
Income tax expense was $79.8 million for the fourth quarter of 2017, representing an effective income tax rate of 134.5%, compared to an effective income tax rate of 6.0% for the same period of 2016. The significant increase of the effective tax rate was primarily due to management's estimate of the amount of US$71.0 million deemed repatriation tax based on overseas accumulated earnings mandated by the U.S. tax reform on December 22, 2017.
Net loss was $20.5 million for the fourth quarter of 2017, compared to net income $36.7 million for the same period of 2016, representing a decrease of $57.2 million. Losses per share were $0.31 for the fourth quarter ended December 31, 2017, compared to $0.56 per share in the fourth quarter of 2016.
The average number of shares used in the computation of basic and diluted earnings per share for the three months ended December 31, 2017 was 49.7 million, compared to 49.5 million shares for basic and diluted earnings per share in the prior year period.
Earnings before interest, tax, depreciation and amortization (EBITDA) was $82.9 million for the fourth quarter of 2017, compared to EBITDA of $58.2 million for the same period of 2016, representing an increase of $24.7 million, or 42.4%. 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 2017 Financial Results
Revenues were $1,290.4 million in fiscal 2017, compared to $1,201.7 million in fiscal 2016, representing an increase of $88.7 million, or 7.4%. The year-over-year increase was primarily due to a 14.3% increase in sales volume and a 3.9% decrease in the average RMB selling price of our products.
We recorded sales increases of 53.8% in Central China, 33.7% in Southwest China, 21.5% in North China, 21.1% in South China, 7.6% in East China, and 1.3% in Northeast China. Overseas sales were decreased by US$27.7 million and accounted for 6.4% of the total sales as compared to 9.2% of that in 2016.
Premium products (PA66, PA6, Plastic Alloy, PLA, POM and PPO) in total accounted for 76.9% of revenues in fiscal 2017, compared to 81.3% in fiscal 2016. The Company continued to shift production mix from traditional lower-end products to higher-end products such as PA66, PLA, and PPO, 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 and 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.
Gross profit was $236.7 million in fiscal 2017, compared to $247.0 million in fiscal 2016, representing a decrease of $10.3 million, or 4.2%. Our gross margin decreased to 18.3% during the year of 2017 from 20.6% for fiscal 2016, (i) lower sales of higher-end products in Dubai Xinda; and (ii) implementing a marketing strategy of offering lower-end products with lower RMB pricing to enter the new regional markets in Central China and Southwest China, since the third quarter of 2017 as compared to that of the prior year..
General and administrative (G&A) expenses were $38.5 million in fiscal 2017, compared to $30.0 million for fiscal 2016, representing an increase of $8.5 million, or 28.5%. This increase is primarily due to the increase of (i) US$5.6 million in salary, bonus and welfare which was resulted from the increase in the number of management and general staff from supporting departments and in the average salary and bonus; (ii) US$0.7 million in depreciation; (iii) US0.5 million in non-income taxation expenses; (iv) US$1.8 million in compensation for the terminated contracts with an equipment supplier; and partially offset by (v) the decrease of US$ 0.1 million in share based compensation.
Research and development expenses were $36.9 million in fiscal 2017compared with $48.0 million in fiscal 2016, a decrease of $11.1 million, or 23.2%. The decrease was primarily due to the decrease of raw materials used in two research and development projects in Sichuan Xinda. As of December 31, 2017, the number of ongoing research and development projects was 376. We expect to complete and commence to realize economic benefits on approximately 25% of the projects in the near term. The remaining projects are expected to be carried out for a longer period. The majority of the projects are in the field of modified plastics in automotive applications and the rest are in advanced fields such as ships, airplanes, high-speed rail, medical devices, etc.
Operating income was $158.2 million in fiscal 2017 compared to $167.7 million for fiscal 2016, representing a decrease of $ 9.5 million, or 5.7%. This decrease in 2017 was due to the lower gross margin and the higher general and administration expenses, partially offset by the lower research and development expenses.
Income tax expense was $90.5 million in fiscal 2017, representing an effective income tax rate of 74.1%, compared to an effective income tax rate of 14.6% in fiscal 2016. The significant increase of our effective tax rate is due to estimated cost of US$71.0 million mandatory deemed repatriation of non-U.S. earning according to the Tax Cuts and Jobs Act (the "Act") enacted on December 22, 2017 which accounted for 78.5% of t our recognized income tax expenses for the year ended December 31, 2017. Excluding the impact of repatriation tax for 2017, our effective tax rate would be 16.0% for the year ended December 31, 2017.
The effective income rate increased 1.4% (excluding the impact of repatriation tax) from 14.6% in 2016, primarily due to the less proportion of the consolidated profit was generated by Dubai Xinda which was exempted from income taxes and a decrease of the 50% additional deduction of R&D expense.
Net income was $31.6 million in fiscal 2017, compared to $101.6 million for fiscal 2016, representing a decrease of $70.0 million, or 68.9%. Earnings per share were $0.48 in fiscal 2017, compared to earnings per share of $1.54 for fiscal 2016.
The average number of shares used in the computation of basic and diluted earnings per share for the fiscal year 2017 was 49.6 million, compared to 49.4 million shares for fiscal 2016.
Earnings before interest, tax, depreciation and amortization (EBITDA) was $210.6 million for the fiscal year 2017 as compared to EBITDA of $194.7 million for fiscal 2016, representing an increase of $15.9 million, or 8.2%. 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, 2017, the Company had $190.4 million in cash and cash equivalents, $288.0 million in time deposits with commercial banks, $60.5 million in working capital (current assets minus current liabilities) and a current ratio (current assets divided by current liabilities) of 1.0. Stockholders' equity as of December 31, 2017 was $712.8 million, an increase of 12.4% as compared to $634.3 million as of December 31, 2016.
Accounts receivable decreased by 27.1% or US$111.2 million due to the management efforts to collect outstanding balances due from the domestic customers. Inventory increased by 50.1% to $421.7 million as of fiscal year end 2017 as compared to fiscal year end 2016 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. Prepayment to equipment and construction suppliers increased by 1,242.3% mainly because advance to purchases for the storage facility and other equipment of HLJ Xinda group. The aggregate short-term and long-term bank loans increased by 28.1% mainly because the Xinda Group obtained a seven-year unsecured loan of RMB526.3 million (equivalent to US$80.6 million) due to the utilization of existing lines of credit to support the expansion of the Sichuan and Dubai facilities. We believe our current debt level is manageable. 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
Excluding the effect from the one time repatriation tax, the Company met its financial guidance for fiscal 2017, with revenue of $1.3 billion, surpassing its forecasted revenue estimate range of $1.2 billion and $1.3 billion.
In light of anticipated contribution from production capacity to be added, our entry to new markets, diversified customer base and escalation of sales overseas, the Company projects revenue for fiscal 2018 to range between $1.2 and $1.4 billion in revenue. Gross margin in fiscal 2018 is expected to remain stable as compared to that of fiscal 2017. The Company project net income to range between $90 and $110 million, excluding the effect of repatriation tax. This is based on the anticipation of a steady recovery throughout the Chinese automotive supply chain and a stabilization of crude oil pricing and its impact on polymer composite materials in 2018. This forecast also assumes contributions from the Sichuan plant and the Dubai second phase project, both of which will start production by the end of second quarter of 2018 and the end of 2018, respectively. It also assumes the average exchange rate of the US dollar to RMB at 6.3. This financial guidance reflects the Company's preliminary view of its business outlook for fiscal 2018 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 Thursday, March 15, 2018, to discuss its fourth quarter and fiscal 2017 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 3594219 .
A recording of the conference call will be available through March 22, 2018, +1-855-452-5696 (for callers in the U.S.) and entering passcode 3594219 .
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 30 automobile brands manufactured in China, including without limitation, AUDI, Mercedes Benz, BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei, 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, 2017, 442 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://www.chinaxd.net, 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 2018. 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.
Contacts:
China XD Plastics
Mr. Taylor Zhang, CFO (New York)
Phone: +1 (212) 747-1118
Email: cxdc@chinaxd.net
- Financial Tables Follow -
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
------------
2017 2016
---- ----
US$ US$
ASSETS
Current assets:
Cash and cash equivalents 190,392,211 168,086,445
Restricted cash 129,699,454 103,489,402
Time deposits 288,023,017 184,806,112
Accounts receivable, net of allowance for doubtful accounts 298,868,984 410,049,559
Amounts due from a related party - 229,624
Inventories 421,736,682 280,939,008
Prepaid expenses and other current assets 144,326,151 125,310,309
----------- -----------
Total current assets 1,473,046,499 1,272,910,459
------------- -------------
Property, plant and equipment, net 835,561,739 806,363,692
Land use rights, net 31,943,652 22,536,397
Long-term prepayments to equipment and construction suppliers 190,627,514 14,167,702
Other non-current assets 12,924,279 10,521,949
---------- ----------
Total assets 2,544,103,683 2,126,500,199
============= =============
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans, including current portion of long-term 775,396,929 444,757,476
bank loans
Bills payable 252,768,510 148,392,677
Accounts payable 227,993,140 320,013,040
Amounts due to a related party - 11,548
Income taxes payable 17,710,217 897,625
Accrued expenses and other current liabilities 138,605,509 119,339,366
----------- -----------
Total current liabilities 1,412,474,305 1,033,411,732
------------- -------------
Long-term bank loans, excluding current portion 114,208,319 249,520,615
Deferred income 99,168,276 69,311,102
Other non-current liabilities 107,898,318 42,420,619
Total liabilities 1,733,749,218 1,394,664,068
Redeemable Series D convertible preferred stock (redemption 97,576,465 97,576,465
amount of US$244,044,200 and US$212,212,300 as of December 31,
2017 and 2016, respectively)
Stockholders' equity:
Series B preferred stock 100 100
Common stock, US$0.0001 par value, 500,000,000 shares authorized, 4,975 4,952
49,748,731 shares and 49,532,541 shares issued, 49,727,731 shares and
49,511,541 shares outstanding as of December 31, 2017 and 2016,
respectively
Treasury stock, 21,000 shares at cost (92,694) (92,694)
Additional paid-in capital 83,159,893 82,606,404
Retained earnings 648,790,469 617,168,735
Accumulated other comprehensive loss (19,084,743) (65,427,831)
Total stockholders' equity 712,778,000 634,259,666
Commitments and contingencies
Total liabilities, redeemable convertible preferred stock and 2,544,103,683 2,126,500,199
stockholders' equity
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Three-Month Period
Ended December 31, Ended December 31,
------------------ ------------------
2017 2016 2017 2016
---- ---- ---- ----
US$ US$ US$ US$
Revenues 1,290,447,748 1,201,678,898 427,632,945 377,661,511
Cost of revenues (1,053,782,105) (954,723,617) (336,167,827) (295,504,993)
-------------- ------------ ------------ ------------
Gross profit 236,665,643 246,955,281 91,465,118 82,156,518
----------- ----------- ---------- ----------
Selling expenses (3,176,928) (1,356,843) (1,094,039) (351,203)
General and administrative expenses (38,495,704) (29,952,304) (12,194,264) (9,917,384)
Research and development expenses (36,838,261) (47,989,665) (11,582,764) (29,308,647)
----------- ----------- ----------- -----------
Total operating expenses (78,510 893) (79,298,812) (24,871,067) (39,577,234)
----------- ----------- ----------- -----------
Operating income 158, 154,750 167,656,469 66,594,051 42,579,284
------------ ----------- ---------- ----------
Interest income 5,290,705 5,847,274 1,262,406 1,374,799
Interest expense (45,370,872) (41,370,432) (12,504,933) (8,966,648)
Foreign currency exchange gains (losses) (6,498,908) 1,951,732 (1,779,485) 1,595,060
Losses on foreign currency contracts (1,048,599) - (463,875) -
Loss on debt extinguishment (18,963,834) - -
Government grants 11,619,037 3,914,360 6,200,539 2,475,771
---------- --------- --------- ---------
Total non-operating expenses, net (36,008,637) (48,620,900) (7,285,348) (3,521,018))
----------- ----------- ---------- -----------
Income before income taxes 122,146,113 119,035,569 59,308,703 39,058,266
Income tax expense (90,524,379) (17,422,819) (79,788,408) (2,335,447)
----------- ----------- ----------- ----------
Net income 31,621,734 101,612,750 (20,479,705) 36,722,819
========== =========== =========== ==========
Earnings (losses) per common share:
Basic and diluted 0.48 1.54 (0.31) 0.56
==== ==== ===== ====
Net Income (loss) 31,621,734 101,612,750 (20,479,705) 36,722,819
Other comprehensive income (loss)
Foreign currency translation adjustment, net 46,343,088 (46,085,173) 12,786,001 (27,617,945)
of nil income taxes
---
Comprehensive income (loss) 77,964,822 55,527,577 (7,693,704) 9,104,874
========== ========== ========== =========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Series B Preferred Stock Common Stock Additional Accumulated Total
Other
-----
Number Amount Number Amount Treasury Paid-in Retained Comprehensive Stockholders'
of of
Stock Capital Earnings Income (Loss) Equity
Shares Shares
------ ------
US$ US$ US$ US$ US$ US$ US$
Balance at 1,000,000 100 49,151,796 4,916 (92,694) 80,875,787 431,823,706 12,775,801 525,387,616
January 1,
2015
Net income - - - - - - 83,732,279 - 83,732,279
Other - - - - - - - (32,118,459) (32,118,459)
comprehensive
loss - Foreign
currency
translation
adjustment,
net of nil
income taxes
Stock based - - - - - 1,044,162 - 1,044,162
compensation
Vesting of - - 171,488 17 - (17) - - -
unvested shares
Balance as of 1,000,000 100 49,323,284 4,933 (92,694) 81,919,932 515,555,985 (19,342,658) 578,045,598
December 31,
2015
Net income - - - - - - 101,612,750 - 101,612,750
Other - - - - - - - (46,085,173) (46,085,173)
comprehensive
loss - Foreign
currency
translation
adjustment,
net of nil
income taxes
Stock based - - - - - 686,491 - 686,491
compensation
Vesting of - - 188,257 19 - (19) - - -
unvested shares
Balance as of 1,000,000 100 49,511,541 4,952 (92,694) 82,606,404 617,168,735 (65,427,831) 634,259,666
December 31,
2016
Net income - - - - - 31,621,734 - 31,621,734
Other - - - - - - - 46,343,088 46,343,088
comprehensive
income
Foreign
currency
translation
adjustment,
net of nil
income taxes
Stock based - - - - - 553,512 - - 553,512
compensation
Vesting of - - 216,190 23 - (23) - - -
unvested
shares
Balance as of 1,000,000 100 49,727,731 4,975 (92,694) 83,159,893 648,790,469 (19,084,743) 712,778,000
December 31,
2017
CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
------------------------
2017 2016 2015
---- ---- ----
US$ US$ US$
Cash flows from operating activities:
Net income 31,621,734 101,612,750 83,732,279
Adjustments to reconcile net income to net cash provided by operating
activities:
Net reversal for doubtful accounts - - (69,281)
Depreciation and amortization 43,055,976 34,244,842 27,540,212
Stock-based compensation 553,512 686,491 1,044,162
Amortization of discount and issuance cost of the Notes - 767,170 1,086,010
Amortization of issuance cost of the Syndicate loan facility 3,750,028 1,273,438 -
Change in fair value of foreign currency option contracts 1,048,599 - -
Foreign currency exchange losses (gains) 6,038,799 (2,965,949) 2,720,131
Losses on disposals of property, plant and equipment 17,509 259,104 9,036
Deferred income tax benefit (2,407,706) (2,292,830) (2,380,236)
Loss on debt extinguishment - 18,963,834 -
Restricted cash (31,588,120) (27,269,199) (4,011,349)
Accounts receivable 120,443,715 (190,860,210) (40,614,289)
Amounts due from a related party 243,779 - (35,937)
Inventories (120,026,438) (3,764,167) (58,103,919)
Prepaid expenses and other current assets (26,354,886) 21,222,125 (4,542,796)
Value added tax in long-term prepayments to equipment suppliers (23,267,330) (575,483) -
Other non-current assets 45,674 1,386,939 (371,872)
Bills payable 92,130,473 122,226,675 (8,119,365)
Accounts payable (108,053,082) 82,085,904 116,133,982
Amounts due to a related party (12,155) 3,792 8,167
Income taxes payable 16,581,508 (5,807,300) (3,889,710)
Accrued expenses and other current liabilities 18,609,923 (75,664,932) 86,963,823
Deferred income (4,630,632) (304,465) 3,371,249
Other non-current liabilities 64,895,667 9,255,439 11,098,323
---------- --------- ----------
Net cash provided by operating activities 82,696,547 84,483,968 227,370,738
---------- ---------- -----------
Cash flows from investing activities:
Proceeds from maturity of time deposits 475,873,199 515,088,058 463,771,799
Purchase of time deposits (564,710,760) (475,315,245) (474,254,312)
Purchase of land use rights (8,279,334) - (13,931,804)
Purchases of and deposits for property, plant and equipment (456,474,007) (210,840,098) (267,427,681)
Refund of deposit from an equipment supplier 280,814,137 - -
Deposits for acquisition of equity (11,937,192)
Government grant related to the construction of Sichuan plant 29,382,885 22,478,569 11,499,000
---------- ---------- ----------
Net cash used in investing activities (255,331,072) (148,588,716) (280,342,998)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from bank borrowings 842,571,025 687,164,318 504,218,741
Repayment of bank borrowings (682,921,893) (537,809,334) (339,528,477)
Redemption of notes payable - (165,366,000) -
Proceeds from Syndicate loan facility - 180,000,000 -
Proceeds from early exercise of options - - 121,725
Release of restricted cash as collateral for bank borrowings 92,186,142 31,375,326 -
Placement of restricted cash as collateral for bank borrowings (68,227,246) (66,757,459) (33,077,094)
Payments of issuance cost of bank borrowings - (6,770,000) -
--- ---------- ---
Net cash provided by financing activities 183,608,028 121,836,851 131,734,895
----------- ----------- -----------
Effect of foreign currency exchange rate changes on cash and cash 11,332,263 (9,574,143) (4,290,762)
equivalents
Net increase in cash and cash equivalents 22,305,766 48,157,960 74,471,873
Cash and cash equivalents at beginning of year 168,086,445 119,928,485 45,456,612
----------- ----------- ----------
Cash and cash equivalents at end of year 190,392,211 168,086,445 119,928,485
=========== =========== ===========
Supplemental disclosure of cash flow information:
Interest paid, net of US$2,893,630, US$ 2,562,026and US$ 231,356 38,695,738 45,782,010 40,136,978
capitalized for the years ended December 31, 2017, 2016 and 2015,
respectively
Income taxes paid 13,030,643 19,521,472 8,982,167
Non-cash investing and financing activities:
Government grant related to construction in the form of repayment of bank - - 38,118,231
loans on behalf of the Company by the government
Government grant related to the construction of Sichuan plant in the form of 1,537,935 - 11,117,817
restricted cash (note 2(e))
Accrual for purchase of equipment 5,144,134 94,031,275 41,251,663
CHINA XD PLASTICS COMPANY LIMITED
Reconcilation of Net Income to EBITDA
(Amounts expressed in United States Dollars)
Three-Month Period Ended Years Ended December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
Net income -GAAP $(20,479,705) $36,722,819 $31,621,734 $101,612,750
Interest expense 12,504,933 8,966,648 45,370,872 41,370,432
Provision for income taxes 79,788,408 2,335,447 90,524,379 17,422,819
Depreciation and amortization expense 11,055,793 10,207,125 43,055,976 34,244,842
EBITDA 82,869,429 58,232,039 210,572,961 194,650,843
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SOURCE China XD Plastics Company Limited
