HARBIN, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- China XD Plastics Company Ltd. ("China XD Plastics" or the "Company"), (OTC Bulletin Board: CXDC), engaged in the development, manufacture, and distribution of modified plastics primarily for use in automotive applications in China, today reports financial results for the 2009 third quarter ended on September 30, 2009.

    Third Quarter 2009 Highlights
    -- Revenue was $36.2 million, an increase of 62.1% from the third quarter
       of 2008
    -- Gross profit was $8.4 million, an increase of 45.9% from the third
       quarter of 2008
    -- Gross profit margin was 23.3%, compared to 25.8% in the third quarter
       of 2008
    -- Net income was $4.0 million, compared to $4.2 million in the third
       quarter of 2008
    -- Diluted earnings per share was $0.10, compared to $0.13 for the second
       quarter of 2009
    -- Adjusted non-GAAP earnings per diluted share were $0.17 compared with
       $0.14 in 2Q09
    -- Total volume shipped was 17,914 metric tons, up 78.0% from 10,063
       metric tons in the third quarter of 2008

"We are pleased with our execution as well as our strong results for the quarter," said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "During the quarter we continued to rapidly grow our sales, by adding new products, acquiring new customers and penetrating new markets to broaden our presence in the modified plastics market in China. We are also honored that our success in growing and strengthening our business created the conditions for listing our shares on the NASDAQ Global Market. We believe this will further strengthen our business and allow us to accelerate our growth and create value for our shareholders."

Third Quarter 2009 Results

Revenue for the third quarter 2009 was up 62.1% to $36.2 million, compared to $22.3 million in the same period of 2008. The increase in revenue is primarily attributable to the increase sales volume driven by an improved product mix as well as the expansion of the Company's customer base.

Gross profit for the third quarter 2009 was $8.4 million, up 45.9% from $5.8 million in the third quarter 2008. Gross margin was 23.3% compared to 25.8% in the same period last year, and 20.9% in the second quarter 2009. The year-over-year decrease in gross margin was due to lower value mix associated with the surge in demand for economy vehicle models in China in recent months. The sequential improvement is related to the Company's successful efforts to launch new higher value-added products to penetrate new segments of the automotive modified plastics market in China.

Selling expenses for the third quarter 2009 were $0.12 million, compared to $0.2 million in the same period last year as the Company shut down its Changchun office and increased its use of distributors. General and administrative (G&A) expenses were $3.6 million, up 449.6% from $0.66 million for the same period of last year. The year-over-year increase in G&A expenses was mainly attributed to the increased stock based compensation expense as well as other expenses related to being a public company. Research and Development ("R&D") expenses were $0.37 million compared to $0.24 million in the same period last year. The increase in research and development expense was primarily due to the upgrade of the research and development center and continued efforts to launch new products during the third quarter 2009.

Operating income for the third quarter 2009 was $4.3 million, compared to $4.7 million in the same period a year ago. Operating margin was 11.9% compared to 21.0% in the third quarter of 2008. The year-over-year reduction in operating margin is primarily due to the increase in operating expenses associated with becoming a public company, including stock based compensation, legal and reporting expenses, among others.

Net Interest expense in the third quarter 2009 was $0.34 million, compared to $0.32 million in the third quarter of 2008.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) for the third quarter of 2009 was $7.6 million, up 57.1% from $4.9 million in the third quarter of 2008. For a detailed reconciliation of adjusted EBITDA, a Non-GAAP measure, to its nearest GAAP equivalent, please see the financial tables at the end of this release.

Net income in the third quarter 2009 was $4.0 million, down 6.8% from $4.2 million in the same period last year. Fully diluted earnings per share for the third quarter 2009 were $0.10.

During the third quarter 2009, the Company incurred a non-cash charge of $2.8 million associated with stock-based compensation. Adjusting for this non-cash charge, non-GAAP net income for the third quarter of 2009 was $6.7 million, or $0.17 per basic and fully-diluted share. For a detailed reconciliation of adjusted net income, a non-GAAP measure, to net income, please see the financial tables at the end of this release.

Nine Months Results

For the first nine months of 2009, total revenue was $94.5 million, up 69.3% from the first nine months of 2008. Total volume shipped during the first nine months was 50,327 metric tons compared to 27,769 metric tons in the comparable period of last year. Gross profit for the first nine months of 2009 was $20.8 million, up 49.7% from gross profit of $13.9 million in the comparable period a year ago. Gross margin was 22.1% and 24.9% for the first nine months of 2009 and 2008, respectively. Income from operations was $14.0 million, up 16.3% from $12.0 million in the first nine months of 2008. EBITDA was $18.7 million in the first nine months of 2009, up 47.9% from $12.6 million in first nine months of 2008. Net income for the first nine months of 2009 was $13.0 million, up 13.4% from $11.4 million in the first nine months of 2008. Earnings per basic share were $0.54 and earnings per fully diluted share were $0.33 for the first nine months of 2009. Adjusting for non-cash charges associated with stock-based compensation, adjusted net income, a non-GAAP measure, was $16.2 million or $0.68 basic earnings per share and $0.41 fully diluted earnings per share.

Financial Condition

As of September 30, 2009, China XD plastics had $5.1 million in cash and cash equivalents, $20.3 million in working capital and a current ratio of 1.9. Shareholder's equity as of September 30, 2009 stood at $40.2 million compared to $24.1 million at the end of 2008.

Recent Events

On November 6, 2009, China XD Plastics announced the engagement of Ernst & Young to assist the Company in the implementation of Section 404 of the Sarbanes-Oxley Act of 2002.

On November 2, 2009, China XD Plastics engaged Moore Stephens Hong Kong as its new independent auditor. Moore Stephens replaced Bagell Josephs Levine & Company, LLC, which was dismissed on the same day.

On September 24, 2009, China XD Plastics announced that during the third quarter of 2009 the Company was granted eight product certifications, including three high-end modified nylon compounds for its newly launched products by the FAW Group Corporation, one of the leading automobile manufacturers and vanguard of automobile industry in China with sales of over one million vehicles in the first seven months of 2009.

On August 31, 2009, China XD Plastics announced that the Company entered into a long-term non-exclusive agreement with Changchun Wanbofeng Plastics Company Limited ("Wanbofeng") to distribute carbon fiber reinforced nylon composite ("CFRNC"), a product newly developed by the Company.

On July 30, 2009, China XD Plastics announced that the Company's information is now made available via Standard & Poor's Market Access Program, an information distribution service that enables subscribing publicly traded companies to have their company information disseminated to users of Standard & Poor's Advisor Insight.

On July 13, 2009, China XD Plastics announced it has signed a half-year provisional agreement with Tianjin Huapu Company to distribute its specialized modified plastics for automotive applications in Northern China.

Business Outlook and Guidance

During the first nine months of 2009, vehicle sales in China reached 9.7 million units, up 34 percent from a year earlier and on target to top 12 million units by the end of 2009. In October, the 2009 China automobile output has reached over 10 million units for the first time in history, a milestone that only United States and Japan have achieved previously. The stimulus plan implemented by the government in China continues to have strong effect on the demand of the automobiles in China. In addition, as the Chinese economy recovers from the global recession, sales of high-end automobiles are expected to expand at a faster pace, allowing China XD Plastics to continue its push towards higher value added products.

For 2009, the Company reaffirms its guidance for annual revenues in the range of $110 million to $130 million, and annual adjusted net income, non-cash charges resulting from stock compensation expense, in the range of $17 million to $20 million.

"We are on target to achieve our targets for 2009, and as we look to 2010, we continue to see tremendous opportunities for the continued rapid growth of our business which will position China XD Plastics as a leader in the modified plastics industry in China," said Mr. Jie Han, Chairman and Chief Executive Officer of China XD Plastics. "We will continue to pursue our strategy to invest in technology development targeting high margin products, win new product certifications from auto OEMs, and expand our capacity to expand our market share as we participate in the growth of the automotive industry in China."

Conference Call

China XD Plastics will host a conference call at 8:00 a.m. ET on Monday, November 16, 2009, to discuss the 2009 third quarter financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-419-5570. International callers should dial +1-617-896-9871. The pass code for the call is 47688055. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, November 16, 2009 at 10:00 a.m. ET. To access the replay, dial 888-286-8010. International callers should dial +1-617-801-6888. The conference pass code is 21636927.

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 the cooperation with well-known scientists from prestigious universities in China. As of the end of September 30, 2009, 137 products that Xinda manufactured 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
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                                   (UNAUDITED)

                         For the Three Months Ended  For the Nine Months Ended
                               September 30,             September 30,
                             2009         2008         2009         2008

    Sales                 $36,194,459  $22,324,847  $94,498,615  $55,802,003

    Cost of sales         (27,777,237) (16,555,094) (73,656,568) (41,880,768)

    Gross profit            8,417,222    5,769,753   20,842,047   13,921,235

    Operating expenses
      Research and
       development
       expenses               370,279      237,106      868,252      557,746
      Selling expenses        118,018      194,029      224,261      241,823
      General and
       administrative
       expenses             3,606,997      656,322    5,768,050    1,102,261
    Total operating
     expenses               4,095,294    1,087,457    6,860,563    1,901,830

    Operating income        4,321,928    4,682,296   13,981,484   12,019,405

    Other income
     (expenses)
      Interest income
       (expenses)            (340,464)    (318,608)  (1,033,183)    (481,875)
      Other income                407          485       62,949       25,665
      Other expense            (1,052)    (100,881)     (10,937)    (100,881)

    Total other
     expense                 (341,109)    (419,004)    (981,171)    (557,091)

    Income before
     income taxes           3,980,819    4,263,292   13,000,313   11,462,314

    Provision for
     income taxes              24,179       18,182       30,641       24,411

    Net income             $3,956,640   $4,245,110  $12,969,672  $11,437,903

    Other
     comprehensive
     income (loss)
      Foreign currency
       translation
       adjustment             (19,210)     220,337      (46,606)   1,031,080

    Comprehensive
     income                $3,937,430   $4,465,447  $12,923,066  $12,468,983

    Basic and diluted
     earnings per
     common share
      Basic                     $0.10       $10.46        $0.54       $28.19
      Diluted                   $0.10       $10.46        $0.33       $28.19

    Weighted average
     common share
     outstanding
      Basic               39,140,751      405,802   23,797,701      405,802
      Diluted             39,188,824      405,802   39,206,884      405,802



                        CHINA XD PLASTICS COMPANY LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                              September 30,       December 31,
                                                   2009               2008
                                               (Unaudited)
                                 ASSETS
    Current assets:
      Cash and cash equivalents                $5,065,380          $3,869,035
      Restricted cash                                  --           3,664,346
      Notes receivable                            118,951             303,437
      Accounts receivable - net of
       allowance for bad debts of
       $99,614 and $99,669,
       respectively                            11,977,316          11,234,507
      Other receivables                           268,638              21,917
      Inventories                              15,276,568          12,438,782
      Due from related parties                     48,551                  --
      Advance to employees                        435,516              92,329
      Advance to suppliers                      9,832,879          13,131,074
      Taxes receivable                            223,680                  --
      Prepaid expenses                             34,796                  --

        Total current assets                   43,282,275          44,755,427

    Property, plant and equipment, net         19,675,869          19,332,712

    Other assets:
      Deferred charges                                 --             378,073
      Intangible assets, net                      243,362             247,681

        Total other assets                        243,362             625,754

        Total assets                          $63,201,506         $64,713,893


                      LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Short term loans                        $20,215,841         $20,520,337
      Bank acceptance notes payable                    --           8,061,561
      Accounts payable                            626,766             113,232
      Other payable                               147,871             106,232
      Accrued expenses                            303,970             820,625
      Taxes payable                                16,219              17,777
      Due to related parties                      777,462           7,542,950
      Deferred revenue                            937,499           3,469,796

        Total current liabilities              23,025,628          40,652,510

    Commitments and contingencies

    Stockholders' equity

      Common Stock, $0.0001 par value,
       500,000,000 shares authorized,
       40,809,898 and 805,802 shares
       issued and outstanding as of
       September 30, 2009 and December
       31, 2008, respectively                       4,081                  81
      Series A Preferred Stock, $0.0001
       par value, 50,000,000 shares
       authorized, - 0 - and 1,000,000
       shares issued and outstanding
       as of September 30, 2009 and
       December 31 2008, respectively                  --                 100
      Series B Preferred Stock, $0.0001
       par value, 50,000,000 shares
       authorized, 1,000,000 shares
       issued and outstanding as of
       September 30, 2009 and December
       31, 2008                                       100                 100
      Additional paid-in-capital                5,670,316            2,482,786
      Retained earnings                        33,020,813           20,051,142
      Accumulated other comprehensive
       income                                   1,480,568            1,527,174

        Total stockholders' equity             40,175,878           24,061,383

        Total liabilities and
         stockholders' equity                 $63,201,506          $64,713,893



                         CHINA XD PLASTICS COMPANY LIMITED
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

                                                  For the Nine Months ended
                                                        September 30,
                                                    2009              2008
     Cash flows from operating activities
        Net income                              $12,969,672       $11,437,903
        Adjustments to reconcile net
         income to net cash provided by
        (used in) operating activities:
           Loss in disposal of property,
            plant and equipment                      45,342                --
           Depreciation & amortization            1,457,983           685,860
           Stock-based compensation
            expense                               3,191,430                --
        Changes in assets and liabilities:
        (Increase) decrease in -
           Restricted cash                        3,659,063         1,403,171
           Accounts receivable and other
            receivables                            (995,004)      (14,010,629)
           Tax receivable                          (223,483)               --
           Inventory                             (2,842,260)       (4,649,965)
           Prepaid expenses                         (34,796)           22,344
           Notes receivables                        184,153          (804,096)
           Due from related parties                 (50,389)               --
           Advance to employees                    (341,056)               --
           Advances to suppliers                  3,287,927        (6,900,409)
           Deferred charge                          377,528                --
        Increase (decrease) in -
           Accounts payable and other
            payable                                 554,807         3,894,526
           Accrued expenses                        (515,740)          644,019
           Tax payable                               (1,536)       (1,378,125)
           Deferred revenue                      (2,528,120)          168,341

        Net cash provided by (used in)
         operating activities                    18,195,521        (9,487,060)

     Cash flows from investing activities
           Purchase of property, plant and
            equipment                            (1,842,306)       (5,103,516)

        Net cash used in investing
         activities                              (1,842,306)       (5,103,516)

     Cash flows from financing activities
           Repayment to short term loans           (292,725)               --
           Proceeds from short term loans                --        19,758,944
           Repayment of bank acceptance
            notes payable                        (8,049,938)       (3,865,880)
           Repayment to related party
            Loans                                (7,328,683)               --
           Proceeds from related party
            Loan                                    562,511           730,228

        Net cash (used in) provided by
         financing activities                   (15,108,835)       16,623,292

     Effect of exchange rate changes on
      cash and cash equivalents                     (48,035)           46,845

     Net increase in cash and cash
      equivalents                                 1,196,345         2,079,561

     Cash and cash equivalents, beginning
      of period                                   3,869,035            87,455

     Cash and cash equivalents, end of
      period                                     $5,065,380        $2,167,016

     Supplemental disclosures of cash flow
      information:

        Interest paid                            $1,033,183          $481,875
        Income taxes paid                               $--               $--

     Non-cash investing and financing
      activities:
        Warrants issued for consulting
         service                                    $46,260                --
        Common stock issued for services         $5,487,541                --

Reconciliation of Net Income to Adjusted Net Income

GAAP results for the three months and nine months ended September 30, 2009 include non-cash stock based compensation expense. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of this item in this release. The Company's management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

                        CHINA XD PLASTICS COMPANY LIMITED

                  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
     FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

                                         Three Months Ended September 30, 2009
                                         Net Income    Basic EPS   Diluted EPS
    Adjusted Net Income - Non GAAP       $6,713,977       $0.17        $0.17
    Non-Cash Stock-based
     compensation (1)                    $2,757,337       $0.07        $0.07
    Net Income - GAAP                    $3,956,640       $0.10        $0.10


    Adjusted Net Income                  Nine Months Ended September 30, 2009
    Net Income (Loss) Diluted EPS        Net Income    Basic EPS   Diluted EPS
    Adjusted Net Income - Non GAAP      $16,161,103       $0.68        $0.41
    Non-Cash Stock-based
     compensation (1)                    $3,191,430       $0.14        $0.08
    Net Income - GAAP                   $12,969,672       $0.54        $0.33


                                         Three Months Ended September 30, 2008
                                         Net Income    Basic EPS   Diluted EPS
    Adjusted Net Income - Non GAAP       $4,245,110      $10.46       $10.46
    Non-Cash Stock-based
     compensation (1)                            --          --           --
    Net Income - GAAP                    $4,245,110      $10.46       $10.46


    Adjusted Net Income                  Nine Months Ended September 30, 2008
    Net Income (Loss)                    Net Income    Basic EPS   Diluted EPS
     Diluted EPS
    Adjusted Net Income - Non GAAP      $11,437,903      $28.19       $28.19
    Non-Cash Stock-based
     compensation (1)                            --          --           --
    Net Income - GAAP                   $11,437,903      $28.19       $28.19

    (1) The adjustment to Non-GAAP is related to the non-cash stock
        compensation

Reconciliation of Net Income to Adjusted EBITDA

Adjusted EBITDA is a financial measure that is not defined by US GAAP. Adjusted EBITDA was derived by calculating earnings before interest, taxes, depreciation, stock-based compensation and amortization. The Company's management believes that the presentation of Adjusted EBITDA provides useful information regarding China XD Plastics' results of operations because it assists in analyzing and benchmarking the performance and value of China XD Plastics' business. The Company's calculation of Adjusted EBITDA may not be consistent with similarly titled measures of other companies. The table below provides a reconciliation of EBITDA to net income, the most comparable GAAP measure.

                      CHINA XD PLASTICS COMPANY LIMITED.
                    Reconciliation of Net Income to EBITDA
                 (Amounts expressed in United States dollars)

                          Three Months Ended           Nine Months Ended
                             September 30,               September 30,
                          2009          2008          2009           2008

    Net Income         $3,956,640    $4,245,110   $12,969,672    $11,437,903
    Interest
     Expense             $340,464      $318,608    $1,033,183       $481,875
    Provision for         $24,179       $18,182       $30,641        $24,411
    Income Taxes
    Stock-based
     compensation      $2,757,337            $0    $3,191,430             $0
    Depreciation
     and amortization    $558,857      $278,325    $1,457,983       $685,860
    EBITDA             $7,637,476    $4,860,225   $18,682,909    $12,630,048
    YoY Growth                  57.1 %                       47.9 %


    For more information, please contact:

    China XD Plastics Company Ltd.
     Mr. Taylor Zhang, Chief Financial Officer
     Phone: +1-212-747-1118 (New York)
     Mr. Allan Lao, IR Director
     Phone: +86-451-84346600 (China)
     Email: cxdc@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.

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