- Revenue of $222 million, down 0.8% YoY -HARBIN, China, May 11, 2015 — (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 first quarter ended March 31, 2015.
First Quarter 2015 Financial Highlights
- Revenue was $221.9 million, a decrease of 0.8% YoY and 27.7% sequentially
- Gross profit was $48.6 million, an increase of 4.3% YoY and decrease of 16.3% sequentially
- Gross margin of 21.9% increased 105 basis points YoY and 299 basis points sequentially
- Net income was $25.4 million, an increase of 15.5% YoY and decrease of 29.0% sequentially
- Total volume shipped was 69,355 metric tons, up 0.6% YoY but down 27.8% sequentially
"Our first quarter 2015 results were consistent with our expectations," said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "The automotive industry in China continues to experience a slower growth rate than it has in recent years which has increased pricing pressure on upstream businesses. We have quickly adjusted to these changing market dynamics by offering new more cost-efficient formulations of our Polyamide (PA) products. Our responsiveness to market conditions and ability to adapt to customer needs and to maintain stable gross margin are critical points of differentiation for China XD Plastics among our peers."
Mr. Han continued, "We remain focused on maintaining our position as an industry leader in China's auto market while also strategically expanding our business into new markets. We are pleased to announce that our new facility in Dubai will be operational as of this quarter. Presence in Dubai will provide numerous advantages including international business environment, access to low-cost raw materials and tax exemptions. We are confident in the resilience of our business model and our ability to capitalize on exciting growth opportunities."
First Quarter 2015 Results
Revenues for the first quarter of 2015 were $221.9 million, representing a year-over-year decrease of 0.8% from $223.6 million in the first quarter of 2014. The slight year-over-year decline was due to a 1.0% decrease in the average selling price of the Company's products, partially offset by approximately a 0.6% increase in sales volume.
Gross profit for the first quarter of 2015 was $48.6 million, representing a 4.3% increase from $46.6 million in the prior year period. Gross margin was 21.9%, compared to 20.9% in the first quarter of 2014. The increase in gross margin was primarily due to higher-end product sales accounting for 78.4% of the Company's total revenues for the first quarter ended March 31, 2015, compared to 73.7% in the same period of the prior year, and lower raw material costs as the Company benefited from raw materials procured at lower prices due to the decreased crude oil price since late 2014.
Premium products (POM, PPO, PA6, PA66 and plastic alloy) in total accounted for 78.4% of revenues, compared to 73.7% in the prior year period. Sales to the Korean market accounted for 15.7% of total revenue. Sales to the Korean market primarily consisted of long carbon chain PA plastic alloy and high-performance modified PA66.
General and administrative (G&A) expenses were $5.0 million in the quarter, compared to $3.8 million in the same period of 2014, representing an increase of 31.6%, or $1.2 million. The growth was primarily due to increases of $0.4 million in payroll expenses resulting from headcount and salary increases, $0.3 million of stamp duties in connection with the Company's business expansion, and $0.5 million in other miscellaneous expenses.
Research and development (R&D) expenses were $5.8 million during the quarter ended March 31, 2015, compared to $8.6 million during the same period in 2014, a decrease of 32.6%, or $2.8 million. The decrease reflects the Company's efforts to adjust R&D activities to new products primarily for industrialized applications from automotive to other advanced fields such as ships, airplanes, high-speed rail, electronics, medical devices, bio-based plastics, food packaging, 3D printing materials, et al. As of March 31, 2015, the number of ongoing research and development projects was 126.
Total operating income was $37.6 million in the first quarter ended March 31, 2015, compared to $34.1 million in the same period of 2014, representing an increase of 10.3%, or $3.5 million. The increase in operating income was primarily due to higher gross profit and lower R&D expenses, partially offset by higher selling expenses and G&A expenses.
Net interest expense was $8.2 million for the quarter, compared to net interest expense of $5.6 million in the same period of 2014, primarily due to interest expense increases of $1.8 million resulting from the Notes issued on February 4, 2014 and $ 0.2 million resulting from the increase of bank loans to meet the Company's needs for its capacity expansion in Southwest China and Dubai.
Income tax expense was $4.2 million, representing an effective income tax rate of 14.3%, compared to an effective income tax rate of 24.7% in the first quarter of 2014. The decrease was primarily due to Sichuan Xinda Group's preferential income tax rate and exemption of income tax for the income earned by the Company's Dubai subsidiary, which generated a greater proportion of the Company's net income in the first quarter of 2015 compared to the first quarter of 2014.
Net income for the first quarter of 2015 was $25.4 million, compared to $22.0 million for the same period of the prior year. Basic and diluted earnings per share were $0.39, compared to $0.34 per basic and diluted share in the first quarter of 2014.
Average number of shares used in the computation of basic and diluted earnings per share for the three months ended March 31, 2015 was 49.2 million, compared to 48.3 million in the prior year period.
EBITDA for the first quarter of 2015 was $46.3 million, an increase of 6.4% from EBITDA of $43.5 million in the prior year period. 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.
As of March 31, 2015, the Company had $31.2 million in cash and cash equivalents, $269.2 million in time deposits with commercial banks, $409.3 million in working capital (current assets minus current liabilities) and a current ratio (current assets divided by current liabilities) of 1.9. Stockholders' equity as of March 31, 2015 was $550.8 million , compared to $525.3 million as of December 31, 2014 .