China XD Plastics Announces Record First Quarter 2009 Results
HARBIN, China, May 13, 2009 China XD Plastics Company Ltd. (''China XD Plastics'' or the ''Company''), (OTC:CXDC) (BULLETIN BOARD: CXDC) , as the largest Chinese manufacturer engaged in the development, manufacturing, and distribution of modified plastics primarily for use in automotive applications, today reported financial results for the first quarter of 2009.
First Quarter 2009 Highlights
Revenue was $26.4 million, an increase of 154.2% from the first quarter of 2008
Gross profit was $5.8 million, an increase of 144.0% from the first quarter of 2008
Gross profit margin was 21.8%, compared to 22.7% in the first quarter of 2008
Income from operations was $4.4 million, up 114.2% from the first quarter of 2008
Net income was $4.0 million, up 91.8% from $2.1 million in the first quarter of 2008
Diluted earnings per share was $0.10
''We are extremely pleased to report our strong financial performance in the first quarter as a public company. We have achieved record revenue and during the quarter despite the global economic slowdown, a testament to the strength of China's economy and our leadership position within the modified plastics industry for automotive applications,'' said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. ''During the first quarter we have continued to execute our strategy of leveraging our research and development capabilities to launch new products and gradually expanding our capacity to meet the increasing demand from the domestic market. We remain optimistic on the outlook of our business and look forward to reporting positive results in the quarters ahead.''
First Quarter 2009 Results
Revenues for the first quarter of 2009 were $26.4 million, up 154.2% compared to $10.4 million for the same period of 2008. The increase in revenue is primarily attributable to the increase in sales volume to 17,899 tons compared to 6,328 tons during first quarter of 2008 driven by increasing domestic demand for modified plastics for automotive applications and strengthened by the stimulus initiatives for automobile consumption implemented by the government in China.
Gross profit for the first quarter 2009 was $5.8 million, up 144.0% from $2.4 million in the first quarter 2008. Gross margin is 21.8% compared to 22.7% in the same period last year due to the slight increase in sales of lower margin products as a percentage of total revenue in response to increasing demand for modified plastics use by economy vehicle models in China which benefited from the economic stimulus plan by the Chinese government. The average selling price for the first quarter of 2009 was $1,407 per ton compared to $1,747 per ton in the same period of last year.
Selling expenses for the first quarter of 2009 were $0.05 million or 0.2% of revenue, up from $0.02 million, or 0.02% of revenue in the same period last year due to the Company's increased efforts to grow its customer base. General and administrative (G&A) expenses were $1.0 million, or 4.0% of revenue, up from $0.2 million, or 2.2% of revenue for the same period of last year. The increase in G&A expenses reflects increased salary expense, depreciation expense and other expenses associated with the reverse merger and listing in the U.S. Research and Development (''R&D'') expenses increased 323.8% to $0.3 million, or 1.1% of revenue compared to $0.07 million, or 0.7% of revenue in the same period last year. The increase in R&D expenses was primarily due to efforts in new product development as the Company hired more researchers and increased raw material usage.
Operating income for the first quarter of 2009 was $4.4 million, up 114.2% from $2.0 million in the same period a year ago. Operating margin was 16.6% compared to 19.7% in the first quarter of 2008 due to the increase in operating expenses.
First quarter interest expense of $0.4 million was directly associated with the Company's short term debts. An interest income of $0.03 million was recorded in the first quarter of 2008.
Net income in the first quarter of 2009 was $4.0 million, up 91.8% from $2.1 million in the same period last year. Fully diluted earnings per share for the first quarter of 2009 were $0.10.
As of March 31, 2009, China XD plastics had $1.9 million in cash and cash equivalents, $8.5 million in working capital and a current ratio of 1.3. Shareholder's equity as of March 31, 2009 stood at $28.0 million compared to $24.1 million at the end of 2008.
On April 14, 2009, China XD Plastics announced it was recertified for the ISO/TS16949:2002 certification of quality management system.
On April 17, 2009, China XD Plastics announced the Company's wholly owned subsidiary, Harbin Xinda Macromolecule Material Research Institute (''Xinda Research Institute''), is collaborating with Harbin Institute of Technology on the pre-research of pre-foamed modified polypropylene ("PP") and has successfully completed a small trial testing.
On April 23, 2009, China XD Plastics announced that the Company expects to increase its annual production capacity to 70,000 tons with the addition of 7 production lines acquired at the end of 2008.
On May 1, 2009, China XD Plastics announced the appointment of Taylor Zhang as Chief Financial Officer effective immediately.
The Company plans to increase its annual production capacity to 70,000 tons during 2009, up from 40,000 tons in 2008 and 25,000 tons in 2007. The automotive industry environment in China remains healthy, despite the overall economic slowdown worldwide. During the first quarter of 2009, total number of automobiles sold in China reached 2.7 million according to the statistics data provided by the China Association of Automobile Manufacturers. The Company expects to see continued growth of the auto industry in China, which is expected to contribute to a further increase in the demand for the Company's products.
For 2009, the Company expects annual revenues between the range of $110.0 million to $130.0 million, and annual net income in the range of $17.0 million to $20.0 million.
''We continue to see tremendous opportunity for the profitable growth of our business in the quarters and years ahead, driven by the growth in the Chinese economy in general as well as by our ability to leverage our capabilities to grab market share from imports,'' said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. ''In fiscal year 2009, we will continue to drive growth through the launch of new product offerings and by gradual expansion of our capacity in line with the expected growth of the Chinese automotive industry.''