Xinyuan Real Estate Co., Ltd. Announces Third Quarter 2012 Financial Results - Meets 3Q12 Revenue and Net Income Estimates - - Exceeds 3Q12 Contract Sales Estimate - PR Newswire BEIJING, Nov. 9, 2012 BEIJING, Nov. 9, 2012 /PRNewswire/ --Xinyuan Real Estate Co., Ltd. ("Xinyuan" or "the Company") (NYSE: XIN), a residential real estate developer with primary focus on high growth, strategic Tier II cities in China, today announced its unaudited financial results for the third quarter of 2012. Highlights for the Third Quarter 2012 oTotal third quarter revenues were US$226.1 million, a 6.0% increase from US$213.3 million reported in the third quarter of 2011, a 10.7% decrease from US$253.1 million recorded in the second quarter of 2012, and within the range of its third quarter guidance forecast. oContract sales totaled US$229.8 million, a 10.6% decrease from US$257.1 million recorded in the third quarter of 2011, a 10.9% decrease from US$258.0 million recorded in the second quarter of 2012 but above the range of its third quarter guidance forecast. oTotal gross floor area ("GFA") sales were 170,700 square meters, a 9.5% decrease from 188,700 square meters sold in the third quarter of 2011 and a 12.2% decrease from 194,500 square meters sold in the second quarter of 2012. oSelling, General, and Administrative ("SG&A") expenses as a percent of total revenue totaled 6.6% compared to 6.7% in the third quarter of 2011 and 6.2% in the second quarter of 2012. oNet income totaled US$31.9 million, a 2.2% increase from US$31.2 million reported in the third quarter of 2011, a 54.0% decrease from US$69.4 million in the second quarter of 2012, and within the range of its third quarter guidance forecast. oDiluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.44, compared to diluted net earnings per ADS of US$0.42, in the third quarter of 2011 and US$0.94 per ADS, in the second quarter of 2012. oCash and cash equivalents, including restricted cash, increased by US$3.9 million to US$608.6 million as of September 30, 2012 from US$604.7 million as of June 30, 2012. Short and long term debt increased by US$21.8 million to US$250.7 million compared to US$228.9 million as of June 30, 2012. oIn the third quarter of 2012 the Company purchased 1,151,741 ADS's on the open market at a total cost of approximately US$3.2 million under its US$20.0 million share repurchase program announced in the second quarter of 2012. On October 31, 2012 the Company paid a quarterly dividend of US$0.04 per ADS to shareholders of record on October 25, 2012. oOn August 9, 2012, the Company acquired a parcel of land in Suzhou for a purchase price of US$42.6 million. Based on the proposed development plan, the estimated gross floor area is approximately 128,000 square meters. On September 29, 2012, the Company acquired a parcel of land in Beijing for a total consideration of US$162.4 million. The total site area of 57,862 square meters and the estimated gross floor area is approximately 130,000 square meters. These two acquisitions bring the number of projects under planning in China to five, all scheduled to commence presales in 2013. oIn the third quarter of 2012, the Company acquired two projects in the United States. The Company paid US$10.0 million to acquire 15 finished luxury condominium units in Irvine, California and acquired a 92,000 square foot parcel of land in the Williamsburg neighborhood of Brooklyn, New York for US$54.2 million, on which 216 condominium units are planned to be built with net sellable floor area of approximately 400,000 square feet. Mr. Yong Zhang, Xinyuan's Chairman and Chief Executive Officer said, "We are very satisfied that our third quarter profit exceeded our guidance forecast despite the continuation of purchase and mortgage restriction policies by the Chinese government. Overall consumer demand for our projects remained stable and average selling prices increased on a sequential basis at the majority of our projects. In the third quarter, we acquired two parcels of land in China in the cities of Suzhou and Beijing. As land prices in China remain at reasonable levels, we plan to acquire more land parcels by auction and direct negotiation to strengthen our project pipeline for enhanced growth over the next several years. We remain highly confident in our strategy to offer affordable developments projects in China." "At the same time, we are confident that our newly acquired development project in the United States will serve as a new revenue growth channel for Xinyuan, particularly with the American real estate market in recovery mode. We will continue to return shareholder value through our quarterly dividend payments and share repurchase program." Financial Results for the Third Quarter 2012 Contract Sales Contract sales totaled US$229.8 million in the third quarter compared to US$257.1 million in the third quarter of 2011 and US$258.0 million in the second quarter of 2012. The Company's GFA sales were 170,700 square meters in the third quarter of 2012 versus 188,700 square meters in the third quarter of 2011 and 194,500 square meters in the second quarter of 2012. The average selling price per square meter sold was RMB8,505 (US$1,346) in the third quarter of 2012 versus RMB8,857 (US$1,362) in the third quarter of 2011 and RMB8,367 (US$1,326) in the second quarter of 2012. Breakdown of GFA Sales and ASP's by Project Q3 2011 Q2 2012 Q3 2012 Unsold GFA ASP GFA ASP GFA ASP GFA Project (m^2 (Rmb) (m^2 (Rmb) (m^2 (Rmb) (m^2 000) 000) 000) 000) Chengdu Splendid I 7.6 5,674 3.4 5,739 4.0 5,693 8.4 Chengdu Splendid II 21.0 6,916 20.8 6,905 8.9 7,078 1.8 Zhengzhou Modern 17.4 8,808 12.2 8,399 3.0 14,671 7.4 City Zhengzhou Royal 12.1 14,388 18.6 10,058 19.6 10,303 66.0 Palace Zhengzhou Century 25.7 8,705 21.1 8,503 30.8 8,355 54.6 East B Kunshan Intl City 14.0 9,786 17.8 7,942 41.7 7,851 61.3 Garden Suzhou Intl City 20.6 10,969 27.5 10,716 10.1 10,843 3.1 Garden Xuzhou Colorful 7.6 8,785 0.3 6,554 - - - Garden Jinan Xinyuan 22.9 9,482 33.8 7,783 43.6 7,956 385.5 Splendid Zhengzhou 38.8 6,928 36.2 7,192 8.7 8,637 13.8 Yipinxiangshan II Others 1.0 - 2.8 - 0.3 - 3.2 Total 188.7 8,857 194.5 8,367 170.7 8,505 605.1 Revenue under the Percentage of Completion Method In the third quarter of 2012, the Company's total revenue using the percentage of completion method was US$226.1million compared to US$213.3 million in the third quarter of 2011 and US$253.1 million in the second quarter of 2012. Construction delays occurred at the Company's Jinan Xinyuan Splendid project due to technical piling issues from an unexpected geological situation resulting in a lower than expected percentage of completion for revenue recognition purposes. Gross Profit Gross profit for the third quarter of 2012 was US$65.5 million, or 29.0% of revenue, compared to gross profit of US$63.8 million, or 29.9% of revenue, in the third quarter of 2011 and a gross profit of US$77.5 million, or 30.6% of revenue, in the second quarter of 2012. The Company revised total project cost and sales projections for certain projects resulting in the recognition of a US$0.3 million reduction of cumulative gross profit in the third quarter of 2012 under the percentage of completion method. This negative change of estimates was largely due to the Company's decision to endure contractual penalties at its Xuzhou Colorful Garden project by delaying delivery in order to rectify roof leakage issues before delivering apartments to Xinyuan's customers. Selling, General and Administrative Expenses SG&A expenses were US$14.9 million for the third quarter of 2012 compared to US$14.2 million for the third quarter of 2011 and US$15.8 million for the second quarter of 2012. As a percentage of total revenue, SG&A expenses were 6.6% compared to 6.7% in the third quarter of 2011 and 6.2% in the second quarter of 2012. Net Income Net income for the third quarter of 2012 was US$31.9 million compared to US$31.2 million for the same period in 2011, and US$69.4 million in the second quarter of 2012. Net margin was 14.1%, compared to 14.6% in the third quarter of 2011 and 27.4% in the second quarter of 2012. Diluted earnings per ADS were US$0.44, compared to US$0.42 per ADS in the same period in 2011, and US$0.94 per ADS in the second quarter of 2012. Balance Sheet As of September 30, 2012, the Company reported US$608.6 million in cash and cash equivalents (including restricted cash) compared to US$604.7 million as of June 30, 2012. Total debt outstanding was US$250.7 million, an increase of US$21.8 million compared to US$228.9 million at the end of the second quarter of 2012. The value of the Company's real estate property under development at the end of the third quarter was US$631.9 million compared to US$635.3 million at the end of the second quarter of 2012. In the third quarter, the Company made payments of US$160 million related to Xuzhou, Suzhou, and Beijing land acquisitions with an additional US$63 million payable on these purchases in the fourth quarter of 2012. Also in the third quarter, the Company made payments of US$36 million on its Irvine, California and Brooklyn, New York project acquisitions while incurring short term debt of US$29 million on the Brooklyn project. Project Status Below is a summary table of projects that were active in the third quarter of 2012. GFA Contract Sales ProjectCost (m^2 000) (US$ million) % Complete Total Sold to Total Sales % Project Active date Active to date Projects Projects Sold Chengdu Splendid I 231.0 222.6 196.1 185.2 94.4% 94.9% Chengdu Splendid II 216.9 215.1 231.7 229.9 99.2% 93.1% ZhengzhouModernCity 226.4 219.0 308.6 288.2 93.4% 84.2% Zhengzhou Royal Palace 132.2 66.2 219.8 129.2 58.8% 73.3% Zhengzhou Century East B 166.5 111.9 235.4 150.6 64.0% 76.9% Kunshan Intl City Garden 498.3 437.0 586.9 503.9 85.9% 96.4% Suzhou Intl City Garden 204.9 201.8 326.2 320.5 98.2% 98.1% Xuzhou Colorful Garden 101.8 101.8 119.2 119.2 100.0% 93.1% Jinan Xinyuan Splendid 565.4 179.9 761.9 237.3 31.1% 65.7% Zhengzhou Yipinxiangshan II 198.5 184.7 228.1 212.7 93.3% 81.3% Others remaining GFA 3.2 Total active projects 2,545.1 1,940.0 3,213.9 2,376.7 73.9% 83.4% As of September 30, 2012, unsold GFA in active projects fell to 605,100 square meters with all but four projects more than 90% sold. The Company's total sellable GFA for both active projects and projects under planning was approximately 1,253,100 square meters. Below is a summary of all projects at Xinyuan that are in the planning stage: UnsoldGFA Pre sales (m^2 000) Scheduled Zhengzhou Century East A 77.3 Q1 2013 Newly Acquired Zhengzhou Land 208.3 Q3 2013 Newly Acquired Xuzhou Land 117.6 Q3 2013 Newly Acquired Suzhou Land 125.2 Q3 2013 Newly Acquired Beijing Land 119.6 Q3 2013 Total projects under planning 648.0 Total active projects 605.1 Total all Xinyuan projects 1,253.1 Fourth Quarter and Full Year 2012 Outlook With several projects nearly sold out, the Company's sellable inventory is expected to decrease until new projects are brought on line in 2013. The Company expects contract sales in the fourth quarter of 2012 to be in the range of US$150-160 million. For the fourth quarter, revenue under the percentage of completion method is expected to range between US$140 and US$150 million and net income is expected to be in the range of US$17 to US$20 million. For the full year 2012, contract sales are expected to be in the range of US$790 to US$800 million. Revenue under the percentage of completion method is expected to also range between US$790 and US$800 million and net income is expected to be in the range of US$140 to US$143 million. Conference Call Information Xinyuan's management will host an earnings conference call on November 9^th, 2012 at 8:00 a.m. U.S. Eastern Time. Listeners may access the call by dialing 1-719-325-2393. A webcast will also be available through the Company's investor relations website at http://www.xyre.com. Listeners may access the replay by dialing 1-858-384-5517, access code: 4244340. About Xinyuan Real Estate Co., Ltd. Xinyuan Real Estate Co., Ltd. ("Xinyuan") (NYSE: XIN) is a developer of large scale, high quality residential real estate projects aimed at providing middle-income consumers with a comfortable and convenient community lifestyle. Xinyuan focuses on China's Tier I and II cities, characterized as larger, more developed urban areas with above average GDP and population growth rates. Xinyuan has expanded its network to cover a total population of over 64.7 million people in eight strategically selected cities, comprising Beijing, Hefei, Jinan, Kunshan, Suzhou, Zhengzhou, Xuzhou and Chengdu. Xinyuan's U.S. development arm, XIN Development Group International, Inc. ("XIN") is a pioneer amongst Chinese real estate residential developers, entering the US market with three projects in 2012. Xinyuan is the first real estate developer from China to be listed on the New York Stock Exchange. For more information, please visit http://www.xyre.com. Safe Harbor Statement This press release contains forward-looking statements. These statements are made under the ''safe harbor'' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including, but not limited to, the risk that: our financing costs are subject to changes in interest rates; our results of operations may fluctuate from period to period; the recognition of our real estate revenue and costs relies on our estimation of total project sales value and costs; we may be unable to acquire desired development sales at commercially reasonable costs; increases in the price of raw materials may increase our cost of sales and reduce our earnings; we are heavily dependent on the performance of the residential property market in China, which is at a relatively early development stage; PRC economic, political and social conditions as well as government policies can affect our business; the market price of our ADSs may be volatile, and other risks outlined in our public filings with the Securities and Exchange Commission, including our annual report on Form 20-F/A for the year ended December 31, 2011. All information provided in this press release is as of November 9, 2012. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Notes to Unaudited Financial Information This release contains unaudited financial information which is subject to year end audit adjustments. Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this unaudited financial information. For more information, please contact: In China: Mr. Tom Gurnee Chief Financial Officer Tel: +86 (10) 8588-9390 Email: email@example.com Ms. Helen Zhang Financial Controller Tel: +86 (10) 8588-9255 Email: firstname.lastname@example.org ICR, LLC In U.S.: +1-646-308-1472 In China: +86 (10) 6583-7511 Email: William.email@example.com (Financial Tables on Following Pages) XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All US$ amounts and number of shares data in thousands, except per share data) Three months ended September30, June 30, September30, 2012 2012 2011 (unaudited) (unaudited) (unaudited) Revenue 226,062 253,059 213,272 Cost of revenue (160,576) (175,569) (149,464) Gross profit 65,486 77,490 63,808 Selling and distribution expenses (5,220) (4,825) (6,773) General and administrative expenses (9,667) (10,974) (7,453) Operating income 50,599 61,691 49,582 Interest income 2,827 1,923 1,230 Income from operations before income taxes 53,426 63,614 50,812 Income taxes (21,498) 5,752 (19,591) Net income 31,928 69,366 31,221 Less: net income attributable to non-controlling interest - 410 (59) Net income attributable to shareholders 31,928 68,956 31,280 Earnings per share: Basic 0.44 0.95 0.42 Diluted 0.44 0.94 0.42 Shares used in computation: Basic 71,839 72,955 75,507 Diluted 72,076 73,480 75,507 XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All US$ amounts and number of shares data in thousands, except per share data) Nine months ended September 30, September 30, 2012 2011 (unaudited) (unaudited) Revenue 651,705 487,738 Cost of revenue (459,502) (344,370) Gross profit 192,203 143,368 Selling expenses (13,517) (12,564) General and administrative expenses (29,134) (19,225) Operating income 149,552 111,579 Interest income 6,078 2,712 Exchange gains - 56 Income from operations before income taxes 155,630 114,347 Income taxes (31,091) (39,651) Net income 124,539 74,696 Less: net income attributable to non-controlling 1,110 593 interest Net income attributable to shareholders 123,429 74,103 Earnings per share: Basic 1.70 0.98 Diluted 1.70 0.98 Shares used in computation: Basic 72,521 76,220 Diluted 72,750 76,220 XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (All US$ amounts and number of shares data in thousands) September 30, June 30, December 31, 2012 2012 2011 (unaudited) (unaudited) (audited) ASSETS Current assets Cash and cash equivalents 443,091 421,378 319,218 Restricted cash 165,537 183,286 168,384 Accounts receivable 2,876 6,598 20,806 Other receivables 8,831 14,759 13,352 Other deposits and prepayments 216,296 75,838 60,006 Advances to suppliers 14,056 18,427 13,579 Real estate property development 1,939 2,328 6,775 completed Real estate property under 631,945 635,255 761,871 development Other current assets 18,566 8,855 659 Total current assets 1,503,137 1,366,724 1,364,650 Real estate properties held for 21,715 23,538 18,527 lease, net Property and equipment, net 2,580 2,691 2,981 Other long-term investment 239 240 242 Deferred tax asset 1,529 1,519 1,307 Other assets 2,280 2,471 2,907 TOTAL ASSETS 1,531,480 1,397,183 1,390,614 XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (All US$ amounts and number of shares data in thousands) September30, June 30, December31, 2012 2012 2011 (unaudited) (unaudited) (audited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable 254,369 209,634 235,911 Short-term bank loans 56,763 66,819 42,950 Customer deposits 131,002 106,426 69,524 Income tax payable 35,977 30,524 69,909 Deferred tax liabilities 43,142 32,712 22,175 Other payables and accrued 53,437 52,755 50,970 liabilities Payroll and welfare payable 10,746 8,247 7,018 Current portion of long-term bank 168,941 162,115 129,403 loans and other debt Total current liabilities 754,377 669,232 627,860 Non- current liabilities Long-term bank loans 25,000 - 73,482 Unrecognized tax benefits 8,765 8,787 13,824 Other long-term debt - - 39,709 TOTAL LIABILITIES 788,142 678,019 754,875 Shareholders' equity Common shares 15 15 15 Treasury shares (13,667) (10,496) (7,959) Additional paid-in capital 511,331 510,894 509,713 Statutory reserves 33,579 33,579 33,579 Retained earnings 212,080 185,172 99,280 TOTAL SHAREHOLDERS' EQUITY 743,338 719,164 634,628 Non-controlling interest - - 1,111 TOTAL EQUITY 743,338 719,164 635,739 TOTAL LIABILITIES AND EQUITY 1,531,480 1,397,183 1,390,614 SOURCE Xinyuan Real Estate Co., Ltd. Website: http://www.xyre.com
Xinyuan Real Estate Co., Ltd. Announces Third Quarter 2012 Financial Results
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