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China XD Plastics Announces Solid Fourth Quarter and Record Full Year 2008 Results

Posted on: Monday, 23 March 2009, 15:00 CDT

HARBIN, China, March 23 /PRNewswire-Asia-FirstCall/ -- China XD Plastics Company Ltd. ("China XD Plastics" or the "Company"), (OTC Bulletin Board: CXDC), as the largest Chinese manufacturer of modified plastics for automotive applications, is engaged in the development, manufacturing, and distribution of modified plastics primarily for use in automotive applications, today reported financial results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter 2008 Highlights -- Net revenue was $20.0 million, an increase of 41.8% from the fourth quarter of 2007 -- Gross profit was $3.4 million, an increase of 56.9% from the fourth quarter of 2007 -- Gross profit margin was 17.1%, compared to 15.4% in the fourth quarter of 2007 -- Income from operations was $2.5 million, an increase of 39.2% from the fourth quarter of -- Net income was $2.2 million, up 40.2% from $1.6 million in the fourth quarter of 2007 -- Diluted earnings per share is 0.06 compare to 0.04 in the fourth quarter of 2007 Full Year 2008 Highlights -- Net revenue was $75.8 million, an increase of 121.7% from 2007 -- Gross profit was $17.3 million, an increase of 173.1% from 2007 -- Gross profit margin was 22.9%, compared to 18.6% in 2007 -- Income from operations was $14.5 million, an increase of 157.6% from 2007 -- Net income was $13.7 million, an increase of 159.6% from 2007 -- Diluted earnings per share were $0.35, compare to $0.14 in 2007

"We are excited to report a year of strong financial performance. Amid the global economic downturn in 2008, we still successfully realized our annual sale target to over 40,000 tons by broadening our customer base, expanding our product offering, increasing spending on research and development and reducing costs by streamlining operation," said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "We were also very pleased to become a publicly listed company in the US markets, which we believe, will provide us with access to capital to grow our business profitably and deliver lasting value to our shareholders."

Fourth Quarter 2008 Results

Revenues for the fourth quarter of 2008 were $20.0 million, up 41.8% compared to $14.1 million for the same period of 2007. The increase in revenue is primarily attributable to the increase in sales volume to 13,402 tons compared to 9,868 tons during fourth quarter of 2007. In addition, the Company benefited from a general increase in prices of modified plastics as well as from foreign exchange translation benefits, and a higher sales volume from high value-added products.

Gross profit for the fourth quarter of 2008 was $3.4 million, up 56.9% from $2.2 million in the fourth quarter 2007. Gross margin during the quarter increased to 17.1% from 15.4% in the same period last year, driven by a higher portion of revenue contributed from higher margin products. The average selling price for the fourth quarter of 2008 is $1,490 compared to $1,427 in the same period of last year.

Selling expenses for the fourth quarter of 2008 were $0.08 million or 0.4% of revenue, down from $0.1 million, or 0.7% of revenue, in the same period last year due to cost control measures adopted by the Company during the worldwide economic downturn. General and administrative (G&A) expenses were $0.6 million, or 3.2% of revenue, up from $0.2 million, or 1.4% of revenue for the same period last year. The increase in G&A expenses was due to the increase in personnel cost, auditing, and legal fees and costs associated with listing as a public company in the US. Research and Development ("R&D") expenses increased 128.3% to $0.22 million, or 1.1% of revenue compared to 0.7% of revenue in the same period last year. The increase in R&D expenses was primarily due to the establishment of the Company's wholly owned research and development center in 2007 and spending on research and development of new products during the fourth quarter of 2008.

Operating income for the fourth quarter of 2008 was $2.5 million, up 39.2% from $1.8 million in the same period a year ago. Operating margin was 12.3% compared to 12.6% in the fourth quarter of 2007 due to the increase in operating expenses.

Fourth quarter interest expense of $0.2 million was directly associated with the Company's short term debts. An interest expense of $0.03 million was recorded in the fourth quarter of 2007.

Net income in the fourth quarter of 2008 was $2.2 million, up 40.2% from $1.6 million in the same period last year. Fully diluted earnings per share for the fourth quarter of 2008 were$0.06, compared with fully diluted earnings per share of $0.04 in the fourth quarter of 2007.

Full Year 2008 Results

Revenue for the full year 2008 increased 121.7% to a record $75.8 million compared with $34.2 million in 2007. Total production volume in 2008 was 47,863 tons, with the capacity utilization rate of 92%. Gross profit was $17.3 million, up 173.1% from $6.3 million for the full year 2007. Gross margin was 22.9% in 2008 compared to 18.6% in 2007. The average selling price was $1,843 per ton in 2008 compare to $1,423 per ton in 2007. Income from operations was $14.5 million in 2008, up 157.6% from $5.6 million in 2007. Net income increased 159.6% to $13.7 million from $5.3 million in 2007. Fully diluted earnings per share for 2008 were $0.35 compared to $0.14 for the full year 2007.

Financial Condition

As of December 31, 2008, China XD plastics had $3.9 million in cash and cash equivalents, $4.1 million in working capital and a current ratio of 1.10. Shareholder's equity at the end of 2008 stood at $24.1 million compared to $9.5 million at the end of 2007.

Recent Events

On February 5 2009, China XD Plastics announced to the completion of a 1-for-124.1 reverse split of its Common Stock that took effect with the opening of the stock market on February 6, 2009 and its trading symbol changed to "CXDC" (OTC Bulletin Board: CXDC) on the OTC Bulletin Board from "NBTE".

On February 17, 2009, China XD Plastics announced that the Company's wholly owned subsidiary, Harbin Xinda Macromolecule Material Co., Ltd. ("Xinda"), was recognized as the Enterprise with the highest growth potential by the China Engineering Plastics Industry Association ("CEPIA"), which also honored Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics, with the outstanding entrepreneur.

On March 11, 2009, China XD Plastics announced that the Company's US office representative, Mr. Kirby Zhao, was interviewed by the Wall Street Transcript and ICIS News to discuss the Company's leading position in the industry of modified plastics in China and management's expectation for the continued growth of the Chinese auto industry.

Business Outlook

According to industry analysts, auto sales in China are estimated to hit 10.7 million in 2009, compared to 9.4 million in 2008. 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 the full year 2009, the Company expects revenues between the range of $110 million to $130 million, and net income in the range of $17 million to $20 million.

"Despite the slowdown of the global economy, Chinese auto sales volume are projected to increase 10% compared to the sales volume in 2008 due to the implementation of the stimulus plan to increase domestic demand and revitalize the automobile industry. The auto industry in China is expected to keep its upward trend. We believe that we will be able to further leverage our integrated business model including state-of-art R&D institute, experienced marketing and management team to steadily increase our offering of high value added products," said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "We also continue to be optimistic about the near term and long term health of the Chinese automotive industry."

About China XD Plastics Company Ltd.

China XD Plastics Company Ltd., through its wholly owned subsidiary Harbin Xinda Macromolecule Material ("Xinda"), develops, manufactures, and distributes modified plastics, primarily for automotive applications. The Company's specialized plastics are used in the exterior and interior trim and in the functional components of more than 30 automobile brands manufactured in China including Audi, Red Flag, Volkswagen and Mazda. The Company's wholly owned research institute is dedicated to the research and development of modified plastics and benefits from technology collaboration with well-known scientists from leading Universities in China. At present, Xinda manufactures approximately 145 types of automobile-specific modified plastic products, 117 of which 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 effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the Company's ability to successfully expand its production capacity; 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; the Company's ability to protect its proprietary information; 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 companies 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, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

-Financial Tables Follow- CHINA XD PLASTICS COMPANY LIMITED (FORMERLY NB TELECOM, INC.) CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 For Three Months Ended December 31, 2008 2007 (Unaudited) (Unaudited) Sales $19,963,425 $14,078,703 Cost of sales 16,551,030 11,904,489 Gross profit $3,412,395 $2,174,213 Operating Expenses Research and development expenses 221,248 96,890 Selling expenses 80,827 102,732 General and administrative expenses 645,388 204,003 Total Operating Expenses 947,461 403,625 Total Operating Income $2,464,932 $1,770,589 Other Income (expenses) Interest Income (expenses) (205,784) (34,745) Other Income/Subsidy Income 2,618 3,836 Other expenses (1,258) (135,542) Total Other income (expense) (204,424) (166,451) Income before income taxes $2,260,507 $1,604,137 Provision for income taxes 10,921 0 Net Income $2,249,587 $1,604,137 Other Comprehensive Income Foreign Currency Translation Adjustment (123,011) 245,733 Comprehensive Income $2,126,576 $1,849,871 Basic and Diluted Income per common share Basic $5.11 $3.95 Diluted $0.06 $0.04 Weighted average common share outstanding Basic 440,585 405,802 Diluted 38,634,657 38,599,874 Years Ended December 31, 2008 2007 Sales $75,765,428 $34,177,415 Cost of sales 58,431,799 27,829,973 Gross profit $17,333,629 $6,347,440 Operating Expenses Research and development expenses 778,994 189,329 Selling expenses 322,650 131,772 General and administrative expenses 1,747,648 403,834 Total Operating Expenses 2,849,292 724,935 Total Operating Income $14,484,337 $5,622,507 Other Income (expenses) Interest Income (expenses) (687,659) (152,684) Other Income/Subsidy Income 28,283 10,434 Other expenses (102,139) (207,687) Total Other income (expense) (761,515) (349,937) Income before income taxes $13,722,822 $5,272,569 Provision for income taxes 35,332 0 Net Income $13,687,490 $5,272,569 Other Comprehensive Income Foreign Currency Translation Adjustment 908,069 482,932 Comprehensive Income $14,595,559 $5,755,502 Basic and Diluted Income per common share Basic $33.02 $12.99 Diluted $0.35 $0.14 Weighted average common share outstanding Basic 414,569 405,802 Diluted 38,608,641 38,599,874 CHINA XD PLASTICS COMPANY LIMITED CONSOLIDATED BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 2008 2007 ASSETS Current assets: Cash and cash equivalents $3,869,035 $87,455 Restricted Cash 3,664,346 5,428,673 Notes Receivable 303,437 -- Accounts receivable -- net of allowance for bad debts of -- -- $100,148 and $93,219, respectively 11,234,507 5,117,840 Other receivables 21,917 6,360 Inventory 12,438,782 5,587,862 Prepaid expenses -- 21,393 Due from related parties -- 105,537 Advance to employees 92,329 122,298 Advances to suppliers 13,131,074 1,746,063 TOTAL CURRENT LIABILITIES $44,755,427 $18,223,481 Property, plant and equipment, net 19,332,712 7,533,619 Other Assets: Deferred Charges 378,073 -- Intangible assets, net 247,681 236,867 Total other assets $625,754 $236,867 TOTAL ASSETS $64,713,893 $25,993,967 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short Term Loan $20,520,337 $1,370,877 Notes Payable $8,061,561 $12,886,245 Accounts payable $113,232 $647,436 Other payable $106,232 $31,861 Accrued expenses $820,625 $43,940 Tax payable $17,777 $1,454,745 Due to related parties $7,542,950 $0 Deferred revenue $3,469,796 $93,040 TOTAL CURRENT LIABILITIES $40,652,510 $16,528,144 Stockholders' equity Common Stock, $0.0001 par value, 100,000,000 shares authorized, 805,802 and 405,402 shares issued and outstanding as of December 31, 2008 & December 31, 2007, respectively 81 41 Series A Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, 1,000,000 shared issued and outstanding as of December 31, 2008 and 2007, respectively 100 100 Series B Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, 1,000,000 shared issued and outstanding as of December 31, 2008 and 2007, respectively 100 100 Additional Paid-in-Capital 2,482,786 2,482,826 Retained earnings 20,051,141 6,363,651 Accumulated other comprehensive income 1,527,175 619,106 TOTAL STOCKHOLDERS' EQUITY $24,061,383 $9,465,824 Total LIABILIBY AND STOCKHOLDERS' EQUITY $64,713,893 $25,993,967 CHINA XD PLASTICS COMPANY LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 2008 2007 Cash flows from operating activities Net income $13,687,490 $5,272,570 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation & amortization 967,105 280,925 Bad debt expense -- 89,424 Gain on disposal of fixed assets -- (3,774) Changes in assets and liabilities: (Increase) decrease in - Restricted cash 2,101,449 (559,438) Accounts receivable and other receivables (5,677,947) (183,301) Tax Receivable -- 4,255 Inventories (6,347,868) (987,411) Prepaid expenses 22,462 -- Notes receivables (293,656) -- Advance to employees 37,740 297,060 Advances to suppliers (11,061,383) (1,577,433) Deferred charge (371,266) -- Increase (decrease) in - Accounts payable and other payable (497,713) (2,187,580) Accrued expenses 759,716 21,778 Tax payable (1,509,948) 1,454,745 Deferred revenue 3,309,634 (7,176) Net cash provided by (used in) operating activities (4,874,185) 1,914,643 Cash flows from investing activities Purchase of fixed assets (12,037,135) (4,393,949) Proceeds from sale of fixed assets -- 144,657 Collection on due from related party 110,808 -- Net cash used in investing activities (11,926,327) (4,249,292) Cash flows from financing activities Proceeds (Repayment) from Short Term Loan 18,711,534 (1,315,063) Proceeds from bank acceptance notes payable 20,582,687 1,354,858 Repayment of bank acceptance notes payable (26,196,147) -- Proceeds from related party Loan 7,411,175 1,850,861 Net cash provided by financing activities 20,509,249 1,890,656 Effect of exchange rate changes on cash and cash equivalents 72,843 202,956 Net increase(decrease) in cash and cash equivalents 3,781,580 (241,037) Cash and cash equivalents, beginning of year 87,455 328,492 Cash and cash equivalents, end of year $3,869,035 $87,455 Supplemental disclosures of cash flow information: Interest paid $700,260 $212,926 Income taxes paid $7,600 $ -- For more information, please contact: China XD Plastics Company Ltd. Mr. Kirby Zhao, US Representative Phone: +1-212-747-1118 (New York) Mr. Allan Lao, IR Director Phone: +86-451-8434-6600 (China) Email: ir@chinaxd.net Web: http://www.chinaxd.net/ CCG Investor Relations Mr. Crocker Coulson, President Phone: +1-646-213-1915 (New York) Mr. Ed Job, CFA Phone: +1-646-213-1914 (New York) Email: ed.job@ccgir.com Web: http://www.ccgirasia.com

SOURCE China XD Plastics Company Ltd.

Source: PR Newswire

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