China Architectural Engineering, (AMEX:RCH)
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China Architectural Engineering, Inc. (CAE) (AMEX:RCH), a leader in the
design, engineering, fabrication and installation of high-end building
envelope systems, today reported record financial results for the Company’s
first quarter ended March 31, 2008. Revenues, gross margins, net income
and earnings per share all rose substantially, driven primarily by the
Company’s expansion into higher-margin markets
outside of China.
Revenues for the first quarter ended March 31, 2008 totaled $25.35
million, an increase of 76% from $14.43 million reported in the first
quarter of 2007. The Company attributed the increase largely to the
ongoing success of its international expansion strategy. Net income for
the first quarter of 2008 was $5.17 million, or $0.09 per fully diluted
share, up 205% (200% on a per-share basis) from $1.70 million, or $0.03
cents per fully diluted share, in the first quarter of 2007.
Gross profit for the first quarter of 2008 was $8.45 million, up 190%
from $2.90 million in the first quarter of 2007. Gross margin rose to
33% in the latest quarter from 20% a year earlier. CAE attributed the
rise to the growth in higher-margin projects outside of China.
Sales, general and administrative (SG&A) expenses rose to $3.00 million
in the first quarter of 2008 from $874,375 in the first quarter of 2007.
As with revenues and margins, the rise in SG&A was due largely to the
Company’s international expansion strategy,
which led to increased expenses related to new staff, offices and other
costs related to the initial start-up of CAE’s
new international operations. Despite the higher SG&A, operating income
in the first quarter of 2008 rose by 169%, to $5.45 million from $2.02
million in the first quarter of 2007.
Ken Yi Luo, China Architectural Engineering’s
Chairman and CEO, commented, “Our results for
the first quarter of 2008 confirm that CAE is now a company of true
global reach, capable of serving the world’s
most vibrant construction markets. In addition to China, we have
established ongoing operations in the Persian Gulf region and the United
States – where we were just awarded our first
contract, for $11.6 million, to build a curtain-wall system at a luxury
condominium project in Manhattan. Our China business also remains
strong, as was evidenced by our recent announcement of a $15 million
contract award for work at the ‘Silicon Valley’
project in the city of Guangzhou.”
Conference Call and Webcast Information
The Company will host a conference call at 11:00 a.m. ET today, May 14,
2008, to discuss today’s financial results.
To listen to the call live, please tune into the webcast via the
investor relations section of Company’s
website at www.caebuilding.com
or by dialing 877-407-8035 or 201-689-8035 for international callers and
asking for the China Architectural Engineering, Inc. earnings call.
Please call at least 10 minutes prior to the start time.
To be added to China Architectural Engineering’s
investor lists, please contact Haris Tajyar at htajyar@irintl.com
or at 818-382-9702.
About China Architectural Engineering
China Architectural Engineering, Inc. (CAE) (AMEX:RCH), which began
operations in 1992, has maintained a leading position in the global
commercial construction industry by providing timely, high-quality,
reliable, fully integrated and cost-effective service solutions to its
clients utilizing specialized technical expertise in the design,
engineering, fabrication and construction of structural exterior
cladding systems. It specializes in high-end curtain wall systems
(including glass, stone & metal curtain walls), roofing systems, steel
construction systems, eco-energy saving building conservation systems
and related products, for public works and commercial real estate
projects.
CAE has worked with world-renowned architects and building engineers
from China and other countries and has completed over 100 large, complex
and unique projects throughout China, Hong Kong, Macau, Australia
and Southeast Asia, including numerous award-winning landmark buildings
in many of Asia's major cities. It is now capitalizing on its
industry-leading expertise by expanding aggressively beyond China into
some of the most active construction markets in the world, including the
Middle East, Central Asia, United States and Eastern Europe. For further
information on China Architectural Engineering please visit www.caebuilding.com.
Forward Looking Statements: In addition to historical
information, the statements set forth above include forward-looking
statements that may involve risk and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Such risks and uncertainties include, but are not limited
to, uncertainty of contract negotiations and payments under existing
contracts, the Company’s dependence on
government contracts, changes in the laws of the PRC that affect the
Company’s operations, fluctuation and
unpredictability of costs related to the Company’s
products and services, the Company’s
dependence on the steel and aluminum markets, reduction or reversal of
the Company’s recorded revenue or profits due
to “percentage of completion”
method of accounting and expenses and costs associated with the
issuance of convertible bonds. The forward-looking statements are also
identified through use of the words “believe,”
“enable,” “may,”
“will,” “could,”
“intends,” “estimate,”
“anticipate,”
“plan,” “predict,”
“probable,” “potential,”
“possible,” “should,”
“continue,” and
other words of similar meaning. Actual results could differ materially
from the expectations contained in forward-looking statements as a
result of several factors, including regulatory approval requirements
and competitive conditions. These and other factors that may result in
differences are discussed in greater detail in the Company’s
reports and other filings with the Securities and Exchange Commission.
CHINA ARCHITECTURAL ENGINEERING, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2008 AND 2007
(STATED IN US DOLLARS)
(UNAUDITED)
Three Months Ended March 31,
2008
2007
Contract revenues earned
$
25,349,306
$
14,430,092
Cost of contract revenues earned
(16,903,754
)
(11,532,607
)
Gross profit
$
8,445,552
$
2,897,485
Selling, general and administrative expenses
(3,000,425
)
(874,375
)
Income from operations
$
5,445,127
$
2,023,110
Interest income
6,963
3,637
Interest expense
(334,137
)
(4,080
)
Other income
111,162
Income before taxation
$
5,229,115
$
2,022,667
Income tax
(47,367
)
(327,048
)
Equity loss and minority interests
(8,030
)
-
Net income
$
5,173,718
$
1,695,619
Earnings per share:
Basic
$
0.10
$
0.03
Diluted
$
0.09
$
0.03
Weighted average shares outstanding:
Basic
51,783,416
50,000,000
Diluted
55,489,023
50,000,000
Note: The notes in the Company’s
Form 10-Q are an integral part of these financial statements.
CHINA ARCHITECTURAL ENGINEERING, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
(STATED IN US DOLLARS)
March 31, 2008
December 31, 2007
(unaudited)
(audited)
ASSETS
Current assets
Cash and cash equivalents
$
5,950,336
$
4,040,168
Restricted cash
661,340
595,016
Contract receivables, net
31,867,941
13,047,559
Costs and earnings in excess of billings
49,507,336
57,488,693
Job disbursements advances
2,218,256
2,454,106
Tender and other site deposits
341,950
83,046
Other receivables
7,850,316
6,640,865
Inventories
342,088
528,743
Other current assets
-
109,533
Total current assets
98,739,563
84,987,729
Non-current assets
Plant and equipment, net
2,859,357
2,582,554
Intangible Assets
54,231
70,386
Organization cost
-
92,741
Goodwill
7,995,896
7,995,896
Other non-current asset
7,527
7,505
TOTAL ASSETS
$
109,656,574
$
95,736,811
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans
$
2,327,595
$
2,578,550
Accounts payable
22,841,062
18,737,771
Amount due to shareholder
1,953,804
1,334,856
Other payables
10,633,862
9,193,186
Income tax payable
2,639,710
2,673,643
Business and other taxes payable
3,503,438
3,538,336
Customers’ deposits
67,110
757,079
Other Accrual
360,270
499,684
Total current liabilities
44,326,851
39,313,105
Note: The notes in the Company’s
Form 10-Q are an integral part of these financial statements.
March 31, 2008
December 31, 2007
Non-current liabilities
Long term bank loans
$
1,977,700
$
443,881
Convertible bond payable, net
5,871,428
3,465,741
Minority interest
37,264
49,482
TOTAL LIABILITIES
$
52,213,243
$
43,272,209
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0
shares issued and outstanding at March 31, 2008 and December 31,
2007; Common stock, $0.001 par value, 100,000,000 shares authorized,
51,783,416 shares issued and outstanding at March 31, 2008 and
December 31, 2007, respectively
$
51,784
$
51,784
Additional paid in capital
21,594,712
23,665,558
Statutory reserves
3,040,595
3,040,595
Accumulated other comprehensive income
3,768,686
1,892,829
Retained earnings
28,987,554
23,813,836
57,443,331
52,464,602
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
$
109,656,574
$
95,736,811
Note: The notes in the Company’s
Form 10-Q are an integral part of these financial statements.