CXDC - Earnings call transcript Q3 2019 | China XD Plastics Co Ltd

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Third Quarter 2019 China XD Plastics Company Limited Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Shaojie Wen. Thank you. ahead. go Please

Shaojie Wen

you XD Thank Call. joining for us Hi, Third all Quarter China Plastics Conference XXXX the everyone. for Financial Results

Joining Ma, today and me Officer; Mr. Taylor call Jie Chief Financial on Chairman Technology Ma, Han, Officer. Zhang, are Chief CEO; Operating Chief Mr. Qingwei Junjie Officer; Mr. Mr. the

results. Plastics XD China release today, a press announcing the Earlier issued third quarter XXXX

uncertainties, potential that website more in market, are the the the the limited subject to company's shift company's and results like to, and the the statements Before to that contain performance refer to our make detailed www.sec.gov. statements, risks response fact listeners statements questions. and historical and of the I diversification, remind effectiveness projection other of additional harbor company's call the company's and on XXXX in in product forward-looking All the to conference in forward-looking would of growth forward-looking your to impact and statements prepared the connection statements, presentation, of during today's not may of but operating available management's related safe its and pricing statements with company's than contain remarks filings in advanced and volatility SEC financial mix profitability policies, company's international other product call management's with management condition, our including the the product may which at the risks

XXXX. the a and Reform detailed from discussion risks the Private Act with may to and therefore, the forward-looking in today, is for unknown the and company's company, claims Actual about the the based Exchange statements current differ in and more Commission. estimates we refer on filings known The projections protection for These are contained harbor of you Securities forward-looking and expectations, company statements Litigation results Securities risks that discussed and uncertainties the and and uncertainties safe involve those of the assumptions, industry.

of In future XX, to addition, China future Plastics company's as change. XD as today, November to the management's estimate projections obligation conditions market as any XXXX. in no projection the update these performance represents assumes

net management To in to a tax, supplement to which the from company is meaningful believes interest on we reference be U.S. provide operating information net EBITDA found can today. release before earnings depreciation GAAP, the its additional earlier earnings results understand as which the income make EBITDA. reconciling income, expense, to and issued income accordance measure to will reconciled with non-GAAP present amortization, financial performance. refer A financial better to EBITDA table press

turn and Chinese, I Mr. remarks our English. over Chairman would I will Officer, Han. like Executive Han go please Han, Mr. and ahead. his be to Mr. into will Chief to speaking translate the call opening in

Jie Han

slash policies. in with financial were customers' and in demand third issued to in industry from come of XXXX. the Our have alternative tougher automobile of to of changing growth has difficulty and downturn energy China negative continuous as December subsidies the and vehicles. experienced consumer the conditions competitors our the and the since pressure industry lackluster demand reasons China. emission in Yet to reversal been XXXX medium-sized trend due small- a results China's standards is the industry environment, fulfill to stringent affected such environmental quarter Amid by the orders China negatively market, more newly automobile consistent domestic in of automobile

as larger to started suppliers As a result, orders redirecting their such XD. have China customers

in evidenced well in its increase by high-end China in higher-priced products, nonautomobile growth customers' of increasing materials regions. of rapid several the the and third During successfully achieving quarter orders with raw sales the company was domestic customer as demand as fields, able the XXXX, to leverage our produced stable up-sell

the continued net income. in decreased optimize In structure expense enhancing resulting management its efficiency, and enhanced China meanwhile, XD to and

good with We results. our are pleased

company the institutions brand. confidence our led which multiple us world expansion the consortium regions assets, the This that leading achieved bank of Last and month, in by strategy has a will business succeed in and sectors. ICBC, world financial volume commercial help to speaks company's largest by

and longer-term and We other will a debts future. by be sound in sheet in more responsible means, our unexpected maintain balance and replacing more and stabilize short-term weather the stable fiscally to vigilant capital and structure with among order potential turbulence instruments,

into Dubai, committed in base important fourth on with of for with plastics are in the inroads we capacity ability to be production our for XXX,XXX equipment further markets the various confident products quarter our high-end positioning upgrading tons platform more core in of make our for will facilities market to and ramp-up growth. continue new with and XXXX, Together specialized capacity We expanded remain Heilongjiang project engineering metric to relevant completing existing to industrial of board.

Taylor With call our CFO, through to our turn Taylor? the you Zhang, that, walk now will over financials. I to

Taylor Zhang

Thank you, everyone, thank joining call today. and for Mr. Han, you, the

that me XXXX, discuss I state otherwise. I please quarter remind review unless numbers, the are all the for of I Before third this figures you let reporting period,

quarter Additionally, XXXX. and any third year-over-year comparison XXXX, quarter the is the any sequential is to second comparison of to of

were quarter compared same an period the or $XXX.X million So increase results. the year. third go to quarter, XX.X% $XXX.X in in million let's million of over last $XX our third Revenues

of of volume with As of and of in by RMB products a decrease as against offset the RMB last U.S. a price a our depreciation sales by combined year. results, in partially an of selling dollar XX.X% and compared average XX.X% those increase X.X%

in was period September compared XXXX, third profit million XX, ended the $XX.X of $XX.X to same Gross quarter XXXX. in the million

XX.X% XXXX XXXX higher-end the prior due the to quarter increased from ended quarter September products September XX.X% quarter the of third this of to compared XX, XX, Our during same gross during to during ended that margin sales as primarily more year. XXXX, of

XX, representing million decrease decrease last XX.X% of to September $X.X the General XXXX million. share-based $X.X ended external miscellaneous was and or were our transportation approach $X due in primarily compensation in and compared incurred $X.X $X.X million optimize same traveling, The of the welfare, $X.X expenses. to expenses enhancing quarter in to in and efficiency, a to year, administrative management decrease and million for period for million leading structure salary of consultancy, million the

was a of Research R&D million in September a and $X.X development in $X.X expenses welfare with were million due personnel. $XX.X decrease XX.X%. the XX, same million compared the the decrease of This million representing of quarter XXXX $X.X a last during decrease raw and consumption and to during year, ended of salary $XX.X material decrease million primarily or period

number projects development XXX. XXXX, September the of ongoing of As and research XX, was

increase was XXX% expenses, to was in last expenses. or increase in the lower and due million. This expenses $XX income the same $XX.X this million Operating selling G&A $XX.X R&D of representing to higher profit, quarter an period year, primarily compared gross of million

in last $X.XX and million XXXX million million for for earnings third last September $XX compared per of of was and respectively, diluted this year was million XX.X%. compared used income period. income ended year period computation $X compared same basic same net the to in the an Net million both quarter earnings the diluted earnings basic XX year, XX.X period XX, basic of or number per current the increase per of and to million to the were diluted $X.XX for three a XX.X $X The the in of year. of the representing shares prior and average share, share shares Basic quarter quarter in share per months diluted the of and

period EBITDA of was a quarter of $XX.X XXXX $XX million $XX.X representing for the XXXX, increase an to compared XX%. million or for the third same of million

For of the our today. table a nearest GAAP press its the end EBITDA, of to detailed measure release a issued reconciliation please at equivalent, see financial non-GAAP earlier

turn let's balance sheet. Now the to

restricted of cash of $XXX.X As to equivalents the to of due or XX, of XXXX, cash, outflows operating December the million cash million compared amount $XXX.X used total XXXX, in XX.X% activities. company a XX, as in decrease September $XXX as mainly cash, million and had

a was $XXX.X of current to as ratio XXXX. XX, X.X As was million, million million, current of million as XXXX, increase compared or of of the of XXXX $XXX.X X.X XX.X% equity of $XXX.X as December XXXX. XX, capital September XX, and December was compared working Stockholders' ratio as to an September $XX.X XX,

Limited, Recent financial Bank of Holding wholly-owned a Company XXXX X, an October Macau facility the on Hong China by of agreement a and facility developments. and aggregate Commercial with Kong Industrial subsidiary for $XXX in a limited. of a million company, Xinda institutions led banks of entered loan into amount consortium

the Moving to our Chinese certain come policy guidance safety first eliminating XXXX. is demand changing current showing will for macroeconomic industry of ensuring automobile still environment light the XXXX. the continue market opt company and to to -- of adopt China. in decline, during and yet China, trend The to outlook of in and capital auto inventories the quarter In reversal financial of

of categories, completion its base capacity diversified customer billion $X.X company the and rage revision fiscal facilities, resulting run income This and the $X.X of U.S. outlook the and on to upgrading changing based the added, assumes successful current is any net With Heilongjiang exchange in view markets billion market million. financial at the range to our XXXX existing overseas, of be X.X. subject average reflects production into between new and financial Dubai, to to base and RMB in guidance XXXX in trial new business fiscal expansion escalation for of sales time. to million guidance updated also at It $XX revenues, for rate dollar conditions company's $XX for its

that questions both directed and call to their note is questions opening we will the questions, Before any I I like answers. to for the would to management your translate China,

of ask for Chinese, our ask to a in the benefit also it in want you please English listeners. question If

note question financial we'll about also results. our respond to operating that Please be to and able only

are already-issued private to For we to private respond able not the We'll press other to including refer principles to of questions offer going transaction. releases. about the that our matters, going the directed you proposed be a offer,

to that, your we're opening the With now questions. Operator? call

Operator

Instructions]. [Operator

Larson comes question National of from first line from the The Securities. Matthew

Matthew Larson

here, of couple a it to make Just questions I'm trying short.

I than year guidance. year-to-date if to But lower news nine billion $X.X done through is is which revenue, guidance, in yet $X.XXX $X.X billion the guidance the Your your months, previous release, for already at billion. whole your look company's and your

fourth also. quarter, negative So know adjusted because in -- guys the you're what you you isn't fourth you accurate have for on of revenues kind that quarter. not basis the going that can't But net do the guidance earn income to have I

that typo? was a So just

Taylor Zhang

typo. a not is this Matthew,

industry So earnings essentially, weakening as auto we macroeconomy of we for release, in also been the while. has quite headwind a and described our have the

COO. there Mr. answer the our from came So Ma, --

in conservatism building there guidance. some So probably the of

So to the $X.X guidance billion. is billion a $X.X

closer in probably likely, somewhere we'll billion. and So between most hopefully to $X.X

environment. is guess, we seeing that conservative been I in challenging are have So, we this

Matthew Larson

already you've than still $X.X zero one you if revenue -- talking just you did down shut lower I that. done -- that's it's the guidance. get even end if just your I fourth No, in your billion, point. would Anyway, of then the more or quarter, a exceed -- business,

hand, in unable to the other period China all release because the get you that orders lower that get. the automobile the Plastics companies going you is industry in -- times less On are all -- XD benefiting undercapitalized your like difficult difficult -- smaller there said are the -- to press over companies

be So and long should that investors. a in the yourself beneficial run, to

because you'll an point, for point, industry automobile I been XX there So has just see think, a an cycle. down up the months cycles over have industries since in China, at At uptick the some way in work. cyclical some that's row. And

be investing to the anybody a so cycle bottom at do so would at of cyclical the top. better the company And in than

follow screen, mean, me -- In I this. least other stock that every you invest wider about generally a company's traded let has I've ask and most the is Now my that the or between for in, I months. stock $X ever I probably seen. volatile $X.XX band. It's almost something on

to that's manipulated trade the $X.XX, just it's to you of stock other XX as situation, I've then And of entities held kind a it shares. $X.XX, since closely band held run it's held up Has looked narrow up of Han the almost any $X.XX, handful ever XX is million happened. which if down that two a or is Half by it's an ever at million maybe or by Mr. people. never -- it's float, company, this XX% unusual occurred because and in is might almost

there's The He's Mr. Han? a of upset can all years XX put a any doesn't in a there just it the that it this hard as mean, or sort Is sense at value a I him well? tied on company fraction ever establish where Does valuations ago. money just and there's at seems that -- trading $X years. thing. that to if and he's price for perpetual in was can XX I seller put a And got some up. mean, Or pattern. the his of buyer you So does, $X.XX up work bad comment at go out owned maybe is lot he's down. the make doesn't you perpetual considering you that of doesn't put sense? it good out it whenever press releases, then of it why if releases, press go holdings you

Taylor Zhang

Han, Matthew, here's from the Chairman. Mr. answer coming

executing historically business So probably been back. every time He stock him, has been its efforts the stock make glued the has of most The is to volatile he his very and is a narrow number the a of price not range stock to basically, strategy. for where to now company trading, sure day. spent years

has not something of. he insight that's or knowledge that So

As been The way over he feels years. valuation, as has the company for same the probably undervalued you.

Matthew Larson

I With Morgan development, which like and the say I'll they guarantee all that right. were everybody the shareholder consortium, way, All get, Stanley commitment pledged has you great else to personal made shares Mr. new mean, and by on loan. from his a the loan a and a able with this. is Han retreating are the

Han have if banks make would and and anything the loan they loses. with is thing, the up. Han, you who they to can't now it, do stock Morgan the So myself, The investors Stanley, then Because same Mr. that get like company banks, go their stock Stanley collateralize -- Mr. which to this can't people, Morgan like all loses.

your very from us we And I would in things now value growing the expect book is revenues $XXX would I the point just million, get because if grow dramatically. this grow your to value with get equity, the to or of aligned. earnings cycle metrics up assume continues view, months intrinsic good better. company So going forward in upcoming And shareholder that an everybody days, or weeks and almost

Taylor Zhang

Okay. Thank you, Matthew.

Operator

this the back There to hand are to please I today's host. at now continue. questions would conference no Shaojie, further like time.

Shaojie Wen

want in thank you of participation Plastics, your behalf China to XD On call. we for this interest and

If numbers Taylor the press are would speak The you. end you for all to or further, of us New us please call at either office. listed like Thank contact in with of the myself York release.

Operator

for Ladies concludes participating. conference today's gentlemen, this Thank you and call.

You may disconnect. now

Shaojie Wen	IR Contact, New York, US
Jie Han	Chairman, CEO & President
Taylor Zhang	CFO, Secretary & Director
Qingwei Ma	COO & Director
Matthew Larson	National Securities

China XD Plastics (CXDC) 14 Nov 192019 Q3 Earnings call transcript