Generates Net Income of $2.6 Million or $0.19 per Diluted Share for
the Fiscal Second Quarter of 2009 NEW YORK AND BEIJING, Feb. 13
/PRNewswire-FirstCall/ -- China Advanced Construction Materials
Group, Inc. ("China ACM") (OTCBB: CADC), a leading provider of
ready-mix concrete in China, today announced financial results for
the three months ended December 31, 2008. Mr. Xianfu Han, Chairman
and Chief Executive Officer, stated, "We are pleased to report that
China ACM continues to thrive despite a challenging global economic
environment, as evidenced by the 169% increase in gross profit and
194% increase in operating income for the second quarter of fiscal
2009. We attribute these strong results to a combination of
favorable macro infrastructure trends within China,
company-specific initiatives and a high standard of excellence in
our ready-mix concrete and related services. As expected, our
revenue rebounded, increasing 53% over the same period last year,
as the government lifted its construction bans related to the
Olympics in and around Beijing. Additionally, we signed a number of
new contracts during the second quarter and our sales pipeline is
extremely robust." "China ACM is one of only a few concrete
companies in China with the necessary permits and experience to
produce ready-mix concrete according to the new government
standards for major infrastructure projects. With China's recently
announced $586 billion stimulus package primarily designated for
infrastructure development, we believe that China ACM will be a
major beneficiary of the government's initiatives as the country
enhances its roads, railways, airports and other infrastructure.
Approximately 75% of China ACM's revenue is derived from government
infrastructure projects and we have recently begun expanding our
operations outside of the Beijing area to better capitalize on our
relationships with general contractors active in other provinces
and inter-provincial infrastructure projects such as the Beijing to
Shijiazhuang railway." Mr. Han continued, "During the fiscal second
quarter, our gross margin increased to 36.5% from 20.8%, and our
operating margin increased to 30.9% from 16.1% for the same period
last year. Our improved margins were a direct result of the
deliberate increase in manufacturing services agreements, technical
services agreements, and marketing cooperation agreements, which
now comprise 38% of our revenue. Through these agreements, we
provide mixed of equipments, oversight, transportation, and
consulting services to third-party concrete manufacturers, who in
turn supply our proprietary concrete to China ACM customers. This
strategy allows us to cost effectively expand our geographic
presence without the upfront capital expenditures. These services
produce higher margins than our traditional ready-mix concrete
business and our strategy is to have these services comprise a
larger portion of our overall revenue, going forward." Mr. Han
continued, "We continued work on the East Datong to Gudian railway
and the Beijing to Shanghai high-speed railroad, providing
substantial quantities of ready-mix concrete this quarter for our
manufacturing services. Based on our current financial results and
expected future contract revenues, we are confident that we will
achieve a net income of at least $9 million for fiscal 2009, after
adjusting for certain transaction-related charges and expenses."
Mr. Han concluded, "We are proud of the reputation China ACM has
built over the past six years among our customers, construction
companies, general contractors, engineers and the Chinese
government. We look forward to our continued participation in
China's most important and prestigious infrastructure projects and
providing ever-increasing value to our shareholders." Revenue for
the three months ended December 31, 2008 was $10.8 million, as
compared to $7.1 million for the three months ended December 31,
2007. Gross profit was $4.0 million for the three months ended
December 31, 2008, as compared to $1.5 million for the three months
ended December 31, 2007, representing gross margin of approximately
36.5% and 20.8%, respectively. Net income for the three months
ended December 31, 2008 increased to $2.6 million, or $0.19 per
diluted share, compared to net income of $1.5 million, or $0.17 per
diluted share, for the same quarter last year. Net income for the
three months ended December 31, 2008 included a 25% income tax that
the company became subject to starting January 1, 2008 and did not
incur in 2007. As of December 31, 2008, the company had cash and
cash equivalents of $3.2 million, restricted cash of $881,484 and
working capital of $6.7 million. Conference Call China ACM will
also host a conference call at 8:00 a.m. Eastern Time on Friday,
February 13, 2009. During the call, Mr. Xianfu Han, Chairman and
Chief Executive Officer, Mr. Weili He, Vice Chairman and Chief
Operating Officer, and Gene Hsiao, Chief Financial Officer, will
discuss the Company's quarterly performance and financial results.
The telephone number for the conference call is (201) 689-8035. A
live webcast of the call will also be available on the company's
website, http://www.china-acm.com/ or the new China ACM IR HUB at:
http://www.agoracom.com/IR/chinaacm. To listen to the live call
online, please visit the site at least 10 minutes early to
register, download and install any necessary audio software. The
webcast will be archived on the site as well as the China ACM IR
Hub, and investors will be able to access an encore recording of
the conference call for one month by calling (201) 612-7415 and
entering account #286, ID #312978. The encore recording will be
available two hours after the conference call has concluded. About
China ACM China ACM, founded in 2002 and based in Beijing, China,
is a leading producer of advanced construction materials for large
scale commercial, residential, and infrastructure developments. The
company is primarily focused on producing and supplying a wide
range of advanced ready-mix concrete materials for highly
technical, large scale, and environmental construction projects.
The company also aims to develop and produce new and innovative
environmentally conscious construction materials. China ACM
provides materials and services through its seven ready-mix
concrete plant network covering Beijing metropolitan area. China
ACM owns one plant, leases two plants and has technical services
and preferred procurement agreements with four other
independently-owned plants. China ACM is ISO 9001 (product
quality), ISO 14001 (environmental safety), and ISO 18001
(employment environment safety) certified. Additional information
about the company is available at http://www.china-acm.com/. This
press release contains "forward-looking statements" within the
meaning of the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and
unknown risks, uncertainties and other factors that could cause the
actual results of the Company to differ materially from the results
expressed or implied by such statements, including changes from
anticipated levels of sales, future national or regional economic
and competitive and regulatory conditions, changes in relationships
with customers, access to capital, difficulties in developing and
marketing new products, marketing existing products, customer
acceptance of existing and new products, and other factors.
Additional Information regarding risks can be found in the
Company's Annual Report on Form 10K and in the Company's recent
report on Form 8K filed with the SEC. Accordingly, although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. The
Company has no obligation to update the forward-looking information
contained in this press release. Contact: Crescendo Communications,
LLC David Waldman or Klea Theoharis Tel: (212) 671-1020 Email: Web:
http://www.china-acm.com/ (tables follow) CONSOLIDATED BALANCE
SHEETS AS OF DECEMBER 31 AND JUNE 30, 2008 ASSETS ------ December
31, 2008 June 30, 2008 (Unaudited) RESTATED CURRENT ASSETS: Cash
$3,225,178 $1,910,495 Restricted cash 881,484 913,092 Marketable
securities 42,829 61,767 Accounts receivable, net of allowance for
doubtful accounts of $273,787 and $224,924 as of December 31, 2008
and June 30, 2008, respectively 11,919,751 9,365,486 Inventories
1,102,088 237,836 Other receivables 717,903 505,968 Prepayment
3,706,629 3,240,394 Total current assets 21,595,862 16,235,038
PLANT AND EQUIPMENT, net 15,780,128 16,730,220 OTHER ASSETS:
Accounts receivable (non-current), net of allowance for doubtful
accounts of $508,462 and $411,061 as of December 31, 2008 and June
30, 2008, respectively 6,057,289 4,753,006 Total assets $43,433,279
$37,718,264 LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ CURRENT LIABILITIES: Accounts
payable $5,665,840 $6,293,553 Customer deposits 164,104 165,434
Short term loans 4,899,047 4,271,222 Other payables 311,289 254,259
Other payables - shareholder 837,641 880,302 Accrued liabilities
313,120 145,207 Taxes payable 2,673,051 1,073,237 Total current
liabilities 14,864,092 13,083,214 Total liabilities $14,864,092
$13,083,214 COMMITMENTS, CONTINGENCIES, AND SUBSEQUENT EVENT - -
REDEEMABLE PREFERRED STOCK ($0.001 par value, 875,000 shares
issued) net of discount of $868,064 and $1,168,548 at December 31,
2008 and June 30, 2008, respectively, 6,131,936 5,831,452 no
liquidation preference SHAREHOLDERS' EQUITY: Preferred stock $0.001
par value, 1,000,000 shares authorized, 875,000 redeemable
preferred shares issued and outstanding in 2008, and classified
above outside shareholders' equity above, no liquidation preference
- - Common Stock, $0.001 par value, 74,000,000 shares authorized,
10,525,000 shares issued and outstanding, respectively 10,525
10,525 Paid-in-capital 12,723,533 12,722,260 Contribution
receivable (1,210,000) (1,210,000) Retained earnings 6,283,769
3,257,276 Statutory reserves 1,911,996 1,452,779 Accumulated other
comprehensive income 2,717,428 2,598,466 Deferred compensation -
(27,708) Total shareholders' equity 22,437,251 18,803,598 Total
liabilities, redeemable preferred stock, and shareholders' equity
$43,433,279 $37,718,264 CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME FOR THE SIXTH MONTHS AND THREE MONTHS ENDED
DECEMBER 31, 2008 AND 2007 (UNAUDITED) Six months ended Three
months ended December 31, December 31, 2008 2007 2008 2007 REVENUE:
Sales of concrete $9,837,565 $13,050,518 $7,969,878 $7,068,849
Manufacturing services 3,996,539 - 2,070,996 - Technical services
1,040,127 - 423,330 - Mixer rental 996,581 - 339,767 - Marketing
cooperation 94,135 - 24,230 - Total revenue 15,964,947 13,050,518
10,828,201 7,068,849 COST OF REVENUE: Cost of concrete 7,554,204
10,550,302 5,993,897 5,599,431 Manufacturing services 1,293,088 -
795,880 - Technical services 97,683 - 29,781 - Mixer rental 337,043
- 44,998 - Marketing cooperation 38,707 - 7,837 - Total cost of
revenue 9,320,725 10,550,302 6,872,393 5,599,431 GROSS PROFIT
6,644,222 2,500,216 3,955,808 1,469,418 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,269,480 629,266 612,371 330,291 INCOME
FROM OPERATIONS 5,374,742 1,870,950 3,343,437 1,139,127 OTHER
(EXPENSE) INCOME, NET Other subsidy income 830,021 782,725 602,427
424,010 Non-operating income (expense), net (83,188) (27,391)
(85,295) (12,682) Interest income 3,840 - 2,406 (1,196) Interest
expense (446,344) (147,569) (217,570) (63,029) Total other income,
net 304,329 607,765 301,968 347,103 INCOME BEFORE PROVISION FOR
INCOME TAXES 5,679,071 2,478,715 3,645,405 1,486,230 PROVISION FOR
INCOME TAXES 1,575,230 - 1,000,403 - NET INCOME 4,103,841 2,478,715
2,645,002 1,486,230 Dividends and accretion on redeemable preferred
stock 618,132 - 309,036 - Net income available to common
shareholders 3,485,709 2,478,715 2,335,966 1,486,230 RECONCILIATION
OF COMPREHENSIVE INCOME: Net income 4,103,841 2,478,715 2,645,002
1,486,230 Unrealized (loss) gain from marketable securities
(19,217) 23,443 (5,876) (4,084) Foreign currency translation
adjustment 138,179 559,325 74,755 386,510 COMPREHENSIVE INCOME
$4,222,803 $3,061,483 $2,713,881 $1,868,656 EARNING PER SHARE Basic
Weighted average number of shares 10,525,000 8,809,583 10,525,000
8,809,583 Earning per share $0.33 $0.28 $0.22 $0.17 Diluted
Weighted average number of shares 14,220,410 8,809,583 14,220,410
8,809,583 Earning per share $0.29 $0.28 $0.19 $0.17 CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2008
AND 2007 (UNAUDITED) 2008 2007 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income $4,103,841 $2,478,715 Adjustments to
reconcile net income to cash (used in) provided by operating
activities: Depreciation 1,071,362 544,359 Stock-based compensation
expense 26,210 - Amortization of deferred compensation expense
2,771 - Bad debt expense 142,485 3,089 Changes in operating assets
and liabilities Accounts receivable (8,111,508) 6,003,336
Inventories (861,184) 56,148 Other receivables (208,733) 962,577
Other receivables - related parties - (3,903,903) Prepayment
155,626 (4,564) Accounts payable 2,931,338 (4,788,317) Other
payables 55,886 159,128 Accrued liabilities 166,881 (1,488)
Customer deposits (2,232) - Taxes payable 1,590,669 (630) Net cash
provided by operating activities 1,063,412 1,508,450 CASH FLOWS
FROM INVESTING ACTIVITIES: Purchase of plant and equipment (31,666)
(11,385) Net cash used in investing activities (31,666) (11,385)
CASH FLOWS FINANCING ACTIVITIES: Principal payments of short term
loan (6,749,544) 3,031,400) Proceeds from short term loan 7,354,278
644,648 Other payables - shareholders (43,282) - Preferred
dividends paid (317,648) - Restricted cash 31,608 - Net cash
provided by (used in) financing activities 275,412 (2,386,752)
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 7,525 2,391 INCREASE
(DECREASE) IN CASH 1,314,683 (887,296) CASH, beginning of period
1,910,495 1,424,883 CASH, end of period $3,225,178 $537,587
DATASOURCE: China Advanced Construction Materials Group, Inc.
CONTACT: David Waldman or Klea Theoharis, +1-212-671-1020, , both
of Crescendo Communications, LLC Web Site:
http://www.china-acm.com/
Copyright