China XD Plastics Announces Second Quarter 2014 Financial Results

      China XD Plastics Announces Second Quarter 2014 Financial Results

-- Revenue Growth of 30.7% YoY --

-- Gross Profit Growth of 40.6% YoY --

-- Reiterates Full Year Guidance --

PR Newswire

HARBIN, China, Aug. 12, 2014

HARBIN, China, Aug. 12, 2014 /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, 2014.

Second Quarter 2014 Financial Highlights:

  oRevenues were$264.2 million, an increase of 30.7% from$202.2 millionin
    the second quarter of 2013
  oGross profit was$52.3 million, an increase of 40.6% from$37.2 millionin
    the second quarter of 2013
  oGross margin was 19.8%, compared to 18.4% in the second quarter of 2013
  oNet income was$19.8 million, compared to$20.8 millionin the second
    quarter of 2013
  oTotal volume shipped was 81,284 metric tons, up 16.3% from 69,915 metric
    tons in the second quarter of 2013

"We are pleased to again report solid revenue growth and improved
profitability this quarter," said Jie Han, Chairman of Board of Director and
Chief Executive Officer of China XD. "Growth reflected our leading market
share in Northeast China, accelerating penetration of the market in East China
and the initiation of sales overseas. Importantly, higher-value products
continue to grow in our product mix, enabling a higher average selling price
reflected in the fact that revenues grew faster than tonnage volume."

Mr. Han continued, "Because of the exciting growth opportunities we see in our
markets, we continue to step up our research and development spending.We take
pride in being a profitable growth company, but do recognize that directing
more gross profit into new product development can help us sustain, or even
accelerate, our growth rate in the years to come.We continue to tightly
control our selling and general expenses in line with our corporate culture."

Second Quarter 2014 Results

Revenues for the second quarter of 2014 were $264.2 million, representing a
year-over-year increase of 30.7% from $202.2 million in the second quarter of
2013. The increase in revenues was due to approximately 16.3% increase in
sales volume and 13.6% increase in the average RMB selling price. Revenues
from East China and Northeast China increased by 45.4% and 19.0%,
respectively, during the second quarter of 2014 when compared to the second
quarter of 2013.

Volume growth was achieved due to strong demand from the automotive industry
in China, a combination of growing sales volume of high-end automobiles to
Chinese consumers, the increased advanced plastics in automotive parts, and
the continuing replacement of imported polymer composite materials with
domestic supply.The increase of our average selling price was mainlydue to
the shift of product mix toward more advanced polymers.

During the quarter, the Company sold US$20.0 million to Korean market high-end
standardized products. This accounted for 7.6% of total revenues.

Gross profit was $52.3 million, up 40.6% from $37.2 million in the second
quarter of 2013. Gross margin was 19.8%, compared to 18.4% in the same period
of the prior year primarily due to the ongoing mix shift to more advanced
products, mainly including modified PA66 and plastic alloys, which grew to
75.3%of our revenues, as compared to 65.1% in the same period of the prior
year. Gross margin also benefitted from reduced sales discounts for lower-end
products such as modified PP and ABS.

General and administrative (G&A) expenses were US$4.5 million in the quarter
ended June 30, 2014, compared to US$2.9 million in the same period in 2013,
representing an increase of 55.2%, or US$1.6 million. The increase consisted
of US$1 million of additional payroll expense resulting from new hires and
salary increases, US$0.2 million of additional office and communication
expense, and US$0.3 million of new rental costs associated with growth of the
business.

Research and development ("R&D") expenses were US$13.4 million during the
quarter ended June 30, 2014, compared with US$5.8 million during the same
period in 2013, an increase of US$7.6 million, or 131.0%, reflectingincreased
research and development activities on new products. The expense consisted
primarily of consumption of raw materials for various experiments for both
automotive and non-automotive applications.As of June 30, 2014, the Company
was performing 151 ongoing research and development projects.The consumption
of raw materials for these projects accounted for 93% of total R&D
expensesfor the quarter.

Net interest expense was US$8.2 million for the three-month period ended June
30, 2014, compared to net interest expense of US$1.9 million in the same
period of 2013. The increase of net interest expense was due to (i) an
increase of US$4.7 million interest expenses resulting from the guaranteed
senior notes issued on February 4, 2014 (the "Notes"), (ii) an increase of US$
3.5 million associated with bank loans used to fund future capacity expansion
in Southwest China and Dubai, and (iii) partially offset by the increase of
interest income of US$2.0 million because of increase of time deposits.

Operating income for the second quarter of 2014 was $34.3 million, or 13.0% of
revenues, an increase of 20.4% over operating income from $28.5 million, or
14.1% of revenues in the same period a year ago.

Net income for the second quarter of 2014 was $19.8 million, compared to a net
income of $20.8 million for the same period of the prior year. Basic and
diluted earnings per share were both $0.30, when compared to last year's
results, which was at $0.32, respectively.

Basic average numbers of shares used in computation of basic and diluted
earnings per share for the three months ended June 30, 2014 were 48.8 million,
compared to 47.8 million in the same period of the prior year.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) for
the second quarter of 2014 was $41.8 million, an increase of 14.2% from EBITDA
of $36.6 million in the same period of the prior year. 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, 2014, China XD Plastics had $132.8 million in cash and cash
equivalents, $376.1 million in time deposits with commercial banks, $576.8
million in working capital (current assets minus current liabilities) and a
current ratio (current assets divided by current liabilities) of 2.5.
Stockholders' equity as of June 30, 2014 was $442.4 million, compared to
$412.3 million as of December 31, 2013.

Restricted cash increased by 47.4% as a result of short-term bank deposits
that are pledged as collateral for letter of credit and bills payable relating
to purchase of raw materials. Inventories increased by 57.3% during the
quarter as the Company purchased raw materials in anticipation of growing
sales.Other non-current assets increased by 1,418.8% due to prepayments for
equipment to be purchased for the Dubai plant. The Company paid down
short-term loans as it utilized more long-term bank loans to support upcoming
capacity expansion in Southwest China and Dubai. As a result, short-term loans
decreased by 41.5% while long-term bank loans increased by US$162.4
million.Bills payable increased by 52.0% due to purchases from our domestic
raw material suppliers. As of June 30, 2014, notes payable was US$148.5
million due to the issuance of US$150 million, 11.75% guaranteed senior notes
due in 2019, net of discount.

Business Outlook and Guidance

Based on the Company's strong performance during the quarter and positive
outlook for growing customer demand in the second half of the year, the
Company reiterates its revenue guidance for 2014. The Company expects
full-year sales to range between $950 million and $1.05 billion and net income
to range between $100 million to $120 million. This forecast is based on
constant exchange rates and the anticipated interest expense associated with
both its long and short-term debt, and reflects the Company's current and
preliminary view, which is subject to change.

Conference Call

China XD Plastics' management will host a conference call at 8:30 a.m. ET on
Tuesday, August 12, 2014, to discuss its second quarter 2014 financial
results. The conference call may be accessed by calling +1 (855) 298-3404 (for
callers in the U.S.), +86-4001-200-539 (for mainland China callers) or
+852-5808-3202 (for Hong Kong callers) and entering pass code 2535066.

A recording of the conference call will be available through August 19, 2014,
by calling +1 (866) 846-0868 (for callers in the U.S.) and entering pass code
2535066.

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 24 automobile brands
manufactured in China, including without limitation, AUDI, BMW, Toyota, Buick,
Mazda, and VW Passat, Golf, and Jetta. 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, 2014, 300 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
http://www.chinaxd.net.

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 ability to raise additional capital to finance the Company's
activities; the Company's and its subsidiaries' ability to fully perform all
of their obligations under the Notes transaction and other contractual
obligations applicable to them; the effectiveness, profitability, and the
marketability of its the ongoing mix shift to more advanced products; legal
and regulatory risks; the Company's ability to execute its growth strategy and
the effectiveness of its increased research and development spending; the
future trading of the common stock of the Company; the Company's ability to
operate as a public company; the period of time for which its current
liquidity will enable the Company to fund its operations; general economic and
business conditions; the volatility of the Company's operating results and
financial condition; the Company's ability to attract or retain qualified
senior management personnel and research and development staff; 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. These
forward-looking statements involve known and unknown risks and uncertainties
and are based on current expectations, assumptions, estimates and projections
about the Company and the industry. 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)
US Phone: +1 (212) 747-1118
Email: cxdc-ir@chinaxd.net

ICR

Mr. Gary Dvorchak, CFA
Gary Dvorchak, CFA
Senior Vice President
US Phone: +1 (310) 954-1123
China Phone: +86 138 1079 1408
Email:Gary.Dvorchak@icrinc.com



CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                            June 30,2014   December31,2013
                                            US$             US$
ASSETS
Current assets:
Cash and cash equivalents                    132,855,600       95,545,904
Restricted cash                              20,184,964        13,708,971
Time deposits                                376,078,406       281,343,641
Accounts receivable, net                     191,208,084       282,320,819
Amounts due fromrelated parties             8,060             225,752
Inventories                                  227,951,407       144,885,688
Prepaid expenses and other current assets    12,205,803        8,418,143
Total current assets                     960,492,324       826,448,918
Property, plant and equipment, net           240,571,261       233,841,735
Land use rights, net                         12,027,228        12,457,001
Other non-current assets                     48,624,793        3,158,974
Total assets                             1,261,715,606     1,075,906,628
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCKS AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans, including current          184,092,299       314,682,620
portion of long-term bank loans
Bills payable                                38,904,378        25,604,176
Accounts payable                             130,504,697       122,457,396
Amounts due to a related party               54,710            -
Income taxes payable                         7,224,484         18,631,698
Warrant liability                            2,132,146         1,063,401
Accrued expenses and other current           20,813,116        55,893,004
liabilities
Total current liabilities                383,725,830       538,332,295
Long-term bank loans, excluding current      162,365,723       -
portion
Notes payable                                148,491,833       -
Income taxes payable                         9,054,968         8,224,057
Deferred income tax liabilities              18,035,495        19,428,706
Total liabilities                        721,673,849       565,985,058
Redeemable Series D convertible preferred    97,576,465        97,576,465
stock
Stockholders' equity:
Series B preferred stock                     100               100
Common stock, US$0.0001 par value,
500,000,000 shares authorized, 49,140,906
shares and 47,896,133 shares issued,         4,913             4,789
49,119,906 shares and 47,875,133 shares
outstanding as ofJune 30, 2014 and
December 31, 2013, respectively
Treasury stock, 21,000 shares at cost        (92,694)          (92,694)
Additional paid-in capital                   77,471,214        76,341,659
Retained earnings                            352,880,048       311,047,337
Accumulated other comprehensive income       12,201,711        25,043,914
Total stockholders' equity               442,465,292       412,345,105
Commitments and contingencies                -                 -
Total liabilities, redeemable
convertible preferred stocks and             1,261,715,606     1,075,906,628
stockholders' equity



CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                 Three-Month Period Ended        Six-Month Period Ended
                                                                                 June 30,                        June 30, 
                                                                                 2014            2013            2014            2013
                                                                                 US$             US$             US$             US$
Revenues   264,208,995     202,150,358     487,789,670     373,117,929
Cost of revenues                                                                  (211,909,052)   (164,965,762)   (388,841,389)   (306,777,202)
Gross profit                                                                  52,299,943      37,184,596      98,948,281      66,340,727
Selling expenses                                                                  (135,625)       (47,218)        (257,953)       (109,992)
General and administrative expenses                                               (4,553,144)     (2,855,659)     (8,349,508)     (6,339,574)
Research and development expenses                                                 (13,355,881)    (5,775,769)     (21,986,615)    (10,786,688)
Total operating expenses                                                      (18,044,650)    (8,678,646)     (30,594,076)    (17,236,254)
Operating income                                                              34,255,293      28,505,950      68,354,205      49,104,473
Interest income                                                                   3,454,649       1,470,113       6,490,014       2,539,717
Interest expense                                                                  (11,614,261)    (3,374,738)     (20,194,238)    (6,310,724)
Foreign currency exchange gains (losses)                                          406,479         877,423         (72,711)        1,366,616
Losses on foreign currency forward contracts                                      (934,765)       -               (934,765)       -
Change in fair value of warrants liability                                        (906,006)       400,007         (1,068,745)     420,331
Government grant                                                                  12,974          1,172           1,324,213       210,091
Total non-operating expense, net                                              (9,580,930)     (626,023)       (14,456,232)    (1,773,969)
Income before income taxes                                                    24,674,363      27,879,927      53,897,973      47,330,504
Income tax expense                                                                (4,837,703)     (7,073,314)     (12,065,262)    (12,073,036)
Net income                                                                    19,836,660      20,806,613      41,832,711      35,257,468
Earnings per common share:
Basic and diluted                                                                 0.30            0.32            0.64            0.55
Net Income                                                                        19,836,660      20,806,613      41,832,711      35,257,468
Other comprehensive income (loss)
Foreign currency translation adjustment, net of nil income taxes                  1,346,532       3,758,011       (12,842,203)    4,639,287
Comprehensive income                                                              21,183,192      24,564,624      28,990,508      39,896,755



CHINA XD PLASTICS COMPANY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               Six-Month Period Ended
                                               June 30,
                                               2014            2013
                                               US$             US$
Cash flows from operating activities:
Net cash provided by operating activities       61,291,114      38,925,612
Cash flows from investing activities:
Proceeds from maturity of time deposits         259,984,756     56,618,325
Purchase of time deposits                       (362,130,254)   (182,063,524)
Purchases of property, plant and equipment      (86,442,465)    (13,419,444)
Net cash used in investing activities           (188,587,963)   (138,864,643)
Cash flows from financing activities:
Proceeds from bank borrowings                   422,150,363     226,906,170
Repayments of bank borrowings                   (383,003,049)   (146,861,566)
Release of restricted cash                      3,243,383       1,629,354
Placement of restricted cash as collateral      (20,595,485)    (888,846)
for bank borrowings
Proceeds from the exercise of Series A          596,740
investor warrants
Proceeds from issuance of the Notes             148,396,175     -
Payment of issuance costs of the Notes          (3,970,357)     -
Net cash provided byfinancing activities       166,817,770     80,785,112
Effect of foreign currency exchange rate        (2,211,225)     1,343,214
changes on cash and cash equivalents
Net increase (decrease) in cash and cash        37,309,696      (17,810,705)
equivalents
Cash and cash equivalents at beginning of       95,545,904      83,822,602
period
Cash and cash equivalents at end of period      132,855,600     66,011,897
Supplemental disclosure of cash flow
information:
Interest paid                                   12,985,268      4,476,797
Income taxes paid                               23,029,798      11,108,922



CHINA XD PLASTICS COMPANY LIMITED
Reconciliation of Net Income to EBITDA
(Amounts expressed in United States dollars)
                                      Three Months Period Ended
                                      June 30
                                      2014         2013
Net income                            $19,836,660  $20,806,613
Interest expense                      11,614,261   3,374,738
Income tax expense                    4,837,703    7,073,314
Depreciation and amortization expense 5,549,705    5,348,440
EBITDA                                41,838,329   36,603,105

SOURCE China XD Plastics Company Limited

Website: http://www.chinaxd.net
 
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