Specialty Chemical Company China XD Plastics Announces Second Quarter 2019 Financial Results

HARBIN, China, Aug. 14, 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 second quarter ended June 30, 2019.

Second Quarter 2019 Financial Summary

    --  Revenue was 463.1 million, an increase of 46.0% YoY and an increase of
        53.6% sequentially
    --  Gross profit was $65.3 million, an increase of 16.2% YoY, and an
        increase of 29.8% sequentially
    --  Gross margin of 14.1%, a decrease of 360 basis points YoY and 260 basis
        points sequentially
    --  Net income was $40.1 million, an increase of 47.4% YoY and 264.5%
        sequentially
    --  EBITDA was $70.1 million, an increase of 26.7% YoY and 47.3%
        sequentially
    --  Total volume shipped was 106,609 metric tons, an increase of 2.8% YoY
        and 12.9% sequentially

"We are pleased with our quarterly results with significant top and bottom line growth." said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "During the first half of this year, we have witnessed weakness in both production and sales of China's auto industry, trending low for 12 consecutive months. Amid the negative growth environment, the small and medium-sized competitors of our industry in China have experienced difficulty to fulfill customers' orders due to reasons such as changing financial conditions and tougher environmental policies. As a result, customers have started redirecting their orders to larger suppliers such as China XD. During the second quarter of 2019, the Company was able to successfully leverage the increasing customer demand and up-sell its high-end products produced with higher-priced raw materials in China, evidenced by our stable sales growth in all domestic regions. This makes us well positioned to execute our strategic plan for 2019."

"We are particularly pleased to see more revenue contributions from our successful trial production at our production base in Dubai, a positive sign in our effort of penetrating international market with our high-end products. The growing sales overseas during the second quarter of 2019 broadened our geographical reach to customers in Europe, Middle East, and other international regions. We will strive to work with global high-quality customers in automotive sector and other new fields."

"We take pride of our achievement in the past and remain confident the long term prospect of our business. Chinese government has recently issued supportive policies toward non-state-owned enterprises. This will drive the success of the Company's expansion strategy in multiple regions and sectors. We will be more fiscally vigilant and responsible and stabilize our capital structure by replacing more short term debts with longer term instruments, among other means, in order to maintain a stable and sound balance sheet and weather potential and unexpected turbulence in the future."

We are committed to completing our industrial project in Heilongjiang base for upgrading existing facilities of 100,000 metric tons capacity of engineering plastics in the fourth quarter of 2019. Together with the production capacity ramp up in Dubai, we remain confident in our ability to make further inroads into more specialized high-end products for various important new markets."

"We believe that our increased production capabilities in Heilongjiang and Dubai, geographical expansion and more diversified customer base both strengthen and augment our core automotive business. Further, our new development projects, which leverage our technical expertise, could lead to additional new business. We view ourselves as the leader in the polymer composites sector, which will enable us to provide innovative technology solutions for China's modernizing transportation, energy, healthcare and industrial sectors. We reiterate our financial guidance for fiscal 2019 and continue to be excited by our core market positioning and expanded platform for growth," Mr. Han concluded.

Second Quarter 2019 Results

Revenues were US$463.1 million in the second quarter ended June 30, 2019, an increase of US$145.8 million, or 46.0%, compared to US$317.3 million in the same period of last year. This was due to approximately 51.4% increase in the average RMB selling price, and 2.8% increase in sales volume, as compared with those of the same period of last year, and partially offset by 9.5% negative impact from exchange rate due to depreciation of RMB against US dollars.

(i) Domestic market

For the three-month period ended June 30, 2019, revenue from domestic market increased by US$128.3 million due to: i) an increase of 48.3% in the average RMB selling price of our products; ii) an increase of 1.1% in sales volume as compared with those of last year; and partially offset by iii) a depreciation of RMB against US dollars by 9.5%.

According to the China Association of Automobile Manufacturers, automobile production and sales in China decreased by 13.7% and 12.4%, respectively, for the first half year of 2019 as compared to the same period of 2018. The weakening in macroeconomic conditions since summer of 2018 continued to exacerbate auto business environment, but thanks to our positive efforts to expand our customer bases and to meet their new requirements, the Company has increased overall growth in all parts of China. We had sales growth of 118.9% in Northeast China, 16.3% in Central China, 12.1% in Southern China, 11.9% in North China, 8.7% in Southwest China and 4.3% in East China.

As for the RMB selling price, the increase of 48.3% was mainly due to: i) increased sales of new categories of higher-end products of PA66 and PA6 produced with high-priced raw materials with higher selling price in domestic market; and ii) sales of high-priced work in progress in domestic market during the three-month period ended June 30, 2019.

(ii) Overseas market

For the three-month period ended June 30, 2019, revenues from overseas market was US$17.5 million as compared to US$53,353 of the same period of 2018.

After a successful trial production at our production base in Dubai in November 2018, the Company has established business relationships with new customers in UAE and India, and shipped products to the end users in Europe. 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 83.6% of revenues from sales of finished goods in the second quarter of 2019, compared to 82.5% for the same period of 2018. The Company continued to shift production mix from traditional lower-end products such as PP to higher-end products such as PA6 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 demand from and consumer recognition of higher-end cars made by automotive manufacturers from Chinese and Germany joint ventures, 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.

The Company also sold high-priced work in progress with discounted price in domestic markets during the three-month period ended June 30, 2019 in order to accelerate inventory turnover and replenish operating funds.

Gross profit was US$65.3 million in the second quarter ended June 30, 2019, compared to US$56.2 million in the same period of 2018, representing an increase of 16.2% or US$9.1 million. Our gross margin decreased to 14.1% during the second quarter ended June 30, 2019 from 17.7% during the same quarter of 2018 primarily due to the adopted discounted-priced strategy on sales of work in progress in the domestic market in order to return capital as compared to that of the prior year.

General and administrative (G&A) expenses were US$5.8 million for the quarter ended June 30, 2019 compared to US$11.3 million in the same period in 2018, representing a decrease of 48.7%, or US$5.5 million. The decrease was primarily due to our approach on optimizing management structure and enhancing efficiency, leading to the decrease of (i) US$2.5 million in share based compensation incurred for external consultancy, (ii) US$2.0 million in salary and welfare, and (iii) US$1.0 million in travelling, transportation and miscellaneous expense.

R&D expenses were US$9.6 million during the quarter ended June 30, 2019 compared with US$5.3 million during the same period in 2018, representing an increase of US$4.3 million, or 81.1%. 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 June 30, 2019, the number of ongoing research and development projects was 371.

Operating income was $49.7 million for the second quarter of 2019, compared to $36.0 million for the same period of 2018, representing an increase of $13.7 million, or 38.1%. This increase is primarily due to higher gross profit, lower selling expenses and G&A expenses, partially offset by higher R&D expenses.

Net interest expenses were US$11.6 million for the three-month period ended June 30, 2019, compared to $10.3 million in the same period of 2018, representing an increase of 12.6% or US$1.3 million, primarily due to (i) the increase of interest expense resulting from the average loan interest rate increased to 5.2% for the three-month period ended June 30, 2019 compared to 4.6% of the same period in 2018; (ii) the decrease of average deposit balance in amount of US$221.1 million for the three-month period ended June 30, 2019 compared to US$506.7 million for the same period in prior year; (iii) the decrease of interest income resulting from the average deposit interest rate decreased to 0.8% for the three-month period ended June 30, 2019 compared to 1.1% of the same period in 2018; and partially offset by (iv) the decrease of average short-term and long-term loan balance in amount of US$882.5 million for the three-month period ended June 30, 2019 compared to US$925.0 million for the same period in 2018.

Income tax expense was $2.6 million for the second quarter of 2019, representing an effective income tax rate of 6.2%, compared to income tax expense of $5.5 million in the same period of 2018, representing an effective income tax rate of 16.8%. The significant decrease of effective income tax rate was primarily due to (i) the increase of additional deduction of R&D expenses resulted from the increase of R&D expenses incurred and 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 decrease of continuous operating losses occurred in overseas subsidiaries such as Dubai Xinda and Xinda Holding (HK). The effective income tax rate for the three-month period ended June 30, 2019 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 2013 and 75% additional deduction of R&D expenses of the major PRC operating entities.

Net income was $40.1 million for the second quarter of 2019, compared to $27.2 million for the same period of 2018, representing an increase of $12.9 million, or 47.4%. Basic and diluted earnings per share for the three-month period ended June 30, 2019 were $0.60, compared to $0.41 per basic and diluted share for the same period of 2018. The average number of shares used in the computation of basic and diluted earnings per share in the current quarter was 50.9 million compared to 50.3 million shares for basic and diluted earnings per share in the prior year period.

Earnings before interest, tax, depreciation and amortization (EBITDA) were $70.1 million for the second quarter of 2019, compared to $55.3 million for the same period of 2018, representing an increase of $14.8 million, or 26.8%. 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 June 30, 2019, the Company had $506.9 million in the total amount of cash, cash equivalents and restricted cash, an increase of $139.9 million or 38.1% as compared to $367.0 million as of December 31, 2018. As of the June 30, 2019, working capital was $35.2 million (current assets minus current liabilities) and the current ratio (current assets divided by current liabilities) was 1.0, as compared to the current ratio of 0.9 as of December 31, 2018. Stockholders' equity as of June 30, 2019 was $798.0 million, an increase of $49.1 million or 6.6% as compared to $748.9 million as of December 31, 2018.

Cash, cash equivalents and restricted cash increased by 38.1% or US$139.9 million due to the increase of net cash provided by financing activities and operating activities. Inventories increased by 18.4% 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. Prepaid expenses and other current assets increased by 19.7% or US$26.0 million because (i) HLJ Xinda Group has reclassified US$15.8 million of long-term prepayments to Green River to receivables due from Shanghai sales; (ii) advances to suppliers for purchasing raw materials and receivables from Hong Kong Grand Royal Trading Co., Ltd. increased by US$24.3 million and partially offset by (iii) consideration for sales of Shanghai Sales decreased by US$7.3 million; (iv) other prepaid expenses mainly including miscellaneous service fee and staff advance, and value added taxes receivables decreased by US$6.8 million. The aggregate short-term and long-term bank loans increased by 10.6% due to using the line of credits to support operating and investing activities in HLJ Xinda Group and Sichuan Xinda. We define the manageable debt level as the sum of aggregate short-term and long-term loans over total assets.

Financial Guidance and Business Outlook

In light of the current changing macroeconomic environment in China, Chinese auto industry market still showing certain decline though narrower, the Company will continue to adopt the policy of eliminating inventories and ensuring capital safety during the second half year of 2019. With the completion of Heilongjiang base for upgrading existing facilities, and the successful trial run in Dubai resulting in new production capacity to be added, our expansion into new markets overseas, diversified customer base and escalation of sales categories, the Company reiterates its financial guidance for fiscal 2019 to range $1.3 and $1.6 billion in revenue, net income to range between $90 and $110 million. It also assumes the average exchange rate of the US dollar to RMB at 7.0. 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 Wednesday, August 14, 2019, to discuss its second quarter 2019 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 2594868.

A recording of the conference call will be available through August 22, 2019, by calling +1-855-452-5696 (for callers in the U.S.) and entering pass code 2594868.

A live webcast and replay of the conference call will be available on the investor relations page of the Company's website at http://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 June 30, 2019, 497 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 -

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


                                                                                                            
       
       CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES


                                                                                                              
       
       UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS




                                                                                                                                                                       June 30,                   December 31,


                                                                                                                                                                           2019               2018



                                                                                                                                                                          US$                     US$




            
              ASSETS



            
              Current assets:



            Cash and cash equivalents                                                                                                                                            194,763,132              41,301,817



            Restricted cash                                                                                                                                                      312,109,750             325,690,023



            Accounts receivable, net of allowance for doubtful accounts                                                                                                          113,277,495             294,688,288



            Amounts due from a related party                                                                                                                                         278,370



            Inventories                                                                                                                                                          734,184,823             620,033,195



            Prepaid expenses and other current assets                                                                                                                            158,318,331             132,218,528




            
               Total current assets                                                                                                                                   1,512,931,901           1,413,931,851




            Property, plant and equipment, net                                                                                                                                   824,360,375             775,941,280



            Land use rights, net                                                                                                                                                  29,439,676              29,796,795



            Long-term prepayments to equipment and construction suppliers                                                                                                        448,633,091             530,636,319



            Operating lease right-of-use assets, net                                                                                                                              15,760,841



            Other non-current assets                                                                                                                                               3,153,997               3,212,986




            
               Total assets                                                                                                                                           2,834,279,881           2,753,519,231






            
              LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY



            
              Current liabilities:



            Short-term bank loans, including current portion of long-term bank loans                                                                                             678,586,573             729,666,920



            Bills payable                                                                                                                                                        576,257,873             618,166,453



            Accounts payable                                                                                                                                                     115,275,006              84,958,469



            Amounts due to related parties                                                                                                                                        20,072,759              18,365,738



            Income taxes payable                                                                                                                                                  18,314,186              15,975,367



            Operating lease liabilities, current                                                                                                                                   1,888,376



            Accrued expenses and other current liabilities                                                                                                                        67,303,357             126,926,898




            
               Total current liabilities                                                                                                                              1,477,698,130           1,594,059,845




            Long-term bank loans, excluding current portion                                                                                                                      252,503,403             111,808,244



            Deferred income                                                                                                                                                       97,121,826              99,583,477



            Operating lease liabilities, non-current                                                                                                                              14,588,111



            Other non-current liabilities                                                                                                                                         96,824,770             101,573,772



            
               Total liabilities                                                                                                                                      1,938,736,240           1,907,025,338





            
              Redeemable Series D convertible preferred stock (redemption amount of                                                                                      97,576,465              97,576,465
    US$300,791,600 and US$280,650,800 as of June 30, 2019 and  December 31, 2018,
    respectively)



            
              Stockholders' equity:



            Series B preferred stock                                                                                                                                                     100                     100



            Common stock, US$0.0001 par value, 500,000,000 shares authorized, 50,969,841 shares                                                                                        5,097                   5,097
    issued, 50,948,841 shares outstanding as of  June 30, 2019 and December 31, 2018,
    respectively



            Treasury stock, 21,000 shares at cost                                                                                                                                   (92,694)               (92,694)



            Additional paid-in capital                                                                                                                                            86,633,582              86,633,582



            Retained earnings                                                                                                                                                    768,195,922             717,103,890



            Accumulated other comprehensive loss                                                                                                                                (56,774,831)           (54,732,547)




            
               Total stockholders' equity                                                                                                                               797,967,176             748,917,428




            Commitments and contingencies




            
               Total liabilities, redeemable convertible preferred stock and stockholders' equity                                                                     2,834,279,881           2,753,519,231


                                                                                
        
                CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES


                                                                             
     
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)




                                                                                                   Three-Month Period Ended                                                              Six-Month Period Ended
                                                                                                June 30,                                                                            June 30,



                                                                                  2019                                                        2018                               2019                                       2018



                                                                                   US$                                                        US$                               US$                                       US$





              Revenues                                                                     463,073,880                                                             317,329,520                                     764,539,887       627,782,553



              Cost of revenues                                                           (397,813,194)                                                          (261,175,654)                                  (648,949,533)    (517,761,231)




              
                 Gross profit                                                    65,260,686                                                              56,153,866                                     115,590,354       110,021,322






              Selling expenses                                                               (247,410)                                                            (3,562,711)                                      (525,230)      (4,613,720)



              General and administrative expenses                                          (5,764,593)                                                           (11,348,767)                                   (14,539,978)     (20,223,776)



              Research and development expenses                                            (9,551,721)                                                            (5,288,636)                                   (19,613,907)     (10,338,534)




              
                 Total operating expenses                                      (15,563,724)                                                           (20,200,114)                                   (34,679,115)     (35,176,030)






              
                 Operating income                                                49,696,962                                                              35,953,752                                      80,911,239        74,845,292






              Interest income                                                                  454,357                                                               1,029,675                                         890,136         3,342,298



              Interest expense                                                            (12,059,242)                                                           (11,274,575)                                   (29,559,519)     (24,168,780)



              Foreign currency exchange gains                                                3,050,612                                                               5,632,970                                         909,747         1,677,162



              Losses on foreign currency option contracts                                                                                                                                                                           (520,981)



              Gains on disposal of a subsidiary                                                                                                                                                                      518,491



              Government grant                                                               1,611,216                                                               1,378,484                                       3,706,153         2,856,043




              
                 Total non-operating expense, net                               (6,943,057)                                                            (3,233,446)                                   (23,534,992)     (16,814,258)






              
                 Income before income taxes                                      42,753,905                                                              32,720,306                                      57,376,247        58,031,034





              Income tax expense                                                           (2,642,588)                                                            (5,496,228)                                    (6,284,215)     (11,707,055)






              
                 Net income                                                      40,111,317                                                              27,224,078                                      51,092,032        46,323,979






              
                Earnings per common share:



              Basic and diluted                                                                   0.60                                                                    0.41                                            0.76              0.70






              
                Net Income                                                       40,111,317                                                              27,224,078                                      51,092,032        46,323,979





              
                
                  Other comprehensive income (loss)



              Foreign currency translation adjustment, net of nil                         (16,713,085)                                                           (39,306,010)                                    (2,042,284)      (9,644,600)
    income taxes






              
                 Comprehensive income (loss)                                     23,398,232                                                            (12,081,932)                                     49,049,748        36,679,379


                                                                                                                         
       
         CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES


                                                                                                                      
        
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




                                                                                                                                                                                                     Six-Month Period Ended June 30,



                                                                                                                                                                                         2019                                        2018



                                                                                                                                                                                          US$                                        US$



              
                Cash flows from operating activities:



              
                Net cash provided by operating activities                                                                                                                              92,864,032                                152,600,917








              
                Cash flows from investing activities:



              Proceeds from maturity of time deposits                                                                                                                                                                                      388,105,630



              Purchase of time deposits                                                                                                                                                                                                  (210,380,884)



              Purchase of and deposits for property, plant and equipment                                                                                                                        (52,396,204)                             (334,739,673)



              Refund of deposit from an equipment supplier                                                                                                                                                                                  60,054,417



              Deposits for acquisition of equity                                                                                                                                                                                           (3,640,688)



              Government grants related to the construction projects                                                                                                                                                                        10,558,608



              Proceeds from sales of a subsidiary                                                                                                                                                  7,376,807



              Cash disposed for sales of a subsidiary                                                                                                                                                (3,202)




              
                Net cash used in investing activities                                                                                                                                (45,022,599)                              (90,042,590)






              
                Cash flows from financing activities:



              Proceeds from bank borrowings                                                                                                                                                    1,400,043,299                                470,494,396



              Repayments of bank borrowings                                                                                                                                                  (1,307,643,944)                              (587,236,484)



              Investment received in advance from a related party                                                                                                                                                                           75,567,512



              Proceeds from interest-free advances from related parties                                                                                                                           67,389,859



              Repayments of interest-free advances from related parties                                                                                                                         (65,152,460)




              
                Net cash provided by (used in) financing activities                                                                                                                    94,636,754                               (41,174,576)






              Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted                                                                                          (2,597,145)                               (5,499,604)
    cash




              
                Net increase in cash, cash equivalents and restricted cash                                                                                                            139,881,042                                 15,884,147






              
                Cash, cash equivalents and restricted cash at beginning of period                                                                                                     366,991,840                                320,091,665




              
                Cash, cash equivalents and restricted cash at end of period                                                                                                           506,872,882                                335,975,812






              
                Supplemental disclosure of cash flow information:



              Interest paid, net of capitalized interest                                                                                                                                          29,586,602                                 23,267,235



              Income taxes paid                                                                                                                                                                    6,067,051                                 12,906,780



              
                Non-cash investing and financing activities:



              Accrual for purchase of equipment and construction included in accrued expenses and other                                                                                            1,721,729                                  6,057,014
    current liabilities





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




                                                                                                                                                                                           
            
                June 30,



                                                                                                                                                                                         2019                                        2018



                                                                                                                                                                                          US$                                        US$



              Cash and cash equivalents                                                                                                                                                          194,763,132                                 72,721,460



              Restricted cash                                                                                                                                                                    312,109,750                                263,254,352




              
                Total cash, cash equivalents, and restricted cash shown in the                                                                                                        506,872,882                                335,975,812
    statement of cash flows


                                    
              
                CHINA XD PLASTICS COMPANY LIMITED




                                 
              
                Reconciliation of Net Income to EBITDA


                              
              
                (Amounts expressed in United States Dollars)




                                                                                                   
       
             Three-Month Period Ended


                                                                                                     
          
                June 30,



                                                                                                                2019                      2018

                                                                                                                                          ---




          
                Net income -GAAP                                                                 $40,111,317               $27,224,078



          Interest expense                                                                               12,059,242                11,274,575



          Provision for income taxes                                                                      2,642,588                 5,496,228



          Depreciation and amortization expense                                                          15,143,020                11,348,832



          Amortization of  operating lease right-of-use                                                     157,806
    assets



          
                EBITDA                                                                            70,113,973                55,343,713

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SOURCE China XD Plastics Company Limited