China Advanced Constr Matls Group (MM) (NASDAQ:CADC)
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NEW YORK and BEIJING, Sept 24 /PRNewswire-FirstCall/ -- China Advanced Construction Materials Group, Inc. ("China ACM") (OTC:CADC) (BULLETIN BOARD: CADC) , a leading provider of ready-mix concrete in China, today announced financial results for the three months and fiscal year ended June 30, 2009.
Mr. Xianfu Han, Chairman and Chief Executive Officer, stated, "We are pleased to report that careful strategic planning and aggressive bidding for new projects has resulted in another quarter of substantial growth and increased profitability for China ACM. In our fiscal fourth quarter, revenue increased to $14.5 million from $7.7 million in the comparable quarter of last year. The substantial increase in revenue was the result of a number of contract wins for China's national rail network, a major focus of China ACM, given the government's goal to add 41,000 kilometers of track through the year 2020 requiring approximately 120 million tons of cement. Gross profit increased by 89.5% to $4.7 million in the fourth quarter as we continued to expand both our manufacturing and technical services. At the same time, we resumed growth in our traditional concrete sales in the Beijing area. Net income in the fourth quarter was $5.7 million, up 311% from $1.4 million in the fourth quarter of 2008."
Mr. Han continued, "For the fiscal year ended June 30, 2009, revenue was $39.7 million, up from $27.6 million in fiscal 2008, while gross profit increased by 124.6% to $15.2 million. Operating income increased to $13.5 million, a 179.7% increase, while net income totaled $12.1 million, exceeding our guidance of $9 million for fiscal 2009. A number of factors contributed to the substantial improvement in our bottom line. First, we continued to alter our revenue mix so that a greater percentage of our revenue is now derived from manufacturing and technical services which provide higher profit margins than the production of concrete. As of June 30, 2009, approximately 22.6% of our revenue was derived from these services compared to 0% at fiscal year-end 2008."
"A second contributor to our higher net income was a reduction in the corporate tax rate for China ACM from 25% to 15% which will be in effect for three years. The reduction, which was applied retroactive to January 1, 2009, was the result of a special certification awarded to China ACM by certain government entities and was based on the company's involvement in producing high-tech products, its research and development, as well as its technical services. We also obtained a 2-year extension on our 6% value added tax credit due to the fact that China ACM uses at least 30% recycled materials for the production of our concrete, thereby achieving the Chinese government's threshold for receiving tax incentives for environmentally-friendly initiatives."
"In support of our long-term strategy to participate in building out China's railway system, we invested in five portable concrete plants subsequent to our fiscal fourth quarter, bringing the total number of portable plants to nine. Our continued investment in these plants has proven to be a successful strategy and places us in a strong competitive position to win new business going forward. With the addition of four new contracts totaling $8 million since our fiscal year end, and a strong pipeline of upcoming projects, we are encouraged by the near and long-term outlook for the business. Additionally, we have strengthened our balance sheet and now have over $3 million in cash, more than $5 million of working capital, and no long-term debt."
Revenue for the three months ended June 30, 2009 was $14.5 million, as compared to $7.7 million for the three months ended June 30, 2008. Gross profit was $4.7 million for the three months ended June 30, 2009, as compared to $2.5 million for the three months ended June 30, 2008, representing gross margins of approximately 32% for both periods. Gross margin for the quarter reflects an increase in higher margin services, offset by higher concrete production at China ACM's fixed plants. Net income for the three months ended June 30, 2009 increased to $5.7 million, or $0.40 per diluted share, compared to net income of $1.4 million, or $0.12 per diluted share, for the same quarter last year.
Revenue for the twelve months ended June 30, 2009 was $39.7 million, as compared to $27.6 million for the twelve months ended June 30, 2008. Gross profit was $15.2 million for the year ended June 30, 2009, as compared to $6.8 million for the year ended June 30, 2008, representing gross margins of approximately 38% and 25%, respectively. Net income for the year ended June 30, 2009 increased to $12.1 million, or $0.86 per diluted share, compared to net income of $5.2 million, or $0.56 per diluted share, for fiscal 2008.
As of June 30, 2009, the company had cash of $3.6 million, restricted cash of $453,192, working capital of $5.3 million, and no long-term debt. The Company reduced its long-term receivables by transferring approximately $5.7 million of its receivables as a method of payment for equipment and other asset purchases. The company also transferred another $6.4 million of receivables for future lease payments and factored approximately $4.1 million of additional receivables. China ACM also paid off a $4.4 million short-term loan subsequent to the fiscal year end.
Conference Call
China ACM will also host a conference call at 8:00 a.m. Eastern Time on Thursday, September 24, 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 (877) 221-1081 (U.S. callers) or (706) 758-6511 (International callers), conference ID #31107275. A live webcast of the call will also be available on the company's website http://www.china-acm.com/. 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 website and investors will be able to access an encore recording of the conference call through midnight October 1, 2009 by calling (800) 642-1687 (U.S. callers) or (706) 645-9291 (International callers) and entering conference ID #31107275. 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 eight ready-mix concrete plant network covering Beijing metropolitan area. China ACM owns one plant, leases three 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.
(tables follow)
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND 2008
ASSETS 2009 2008
---- ----
CURRENT ASSETS:
Cash $3,634,805 $1,910,495
Restricted cash 453,192 913,092
Marketable securities 71,880 61,767
Notes receivable 10,799 -
Accounts receivable, net of allowance
for doubtful accounts of $120,986 and
$224,924, respectively 11,815,402 9,365,486
Inventories 1,216,014 237,836
Other receivables 3,845,186 505,968
Prepayments 4,255,326 3,240,394
--------- ---------
Total current assets 25,302,604 16,235,038
---------- ----------
PLANT AND EQUIPMENT, net 22,089,717 16,730,220
---------- ----------
OTHER ASSETS:
Accounts receivable (non-current),
net of allowance for doubtful
accounts of $328,563 and
$411,061 respectively 4,132,706 4,753,006
Long term prepayments 4,794,746 -
--------- ---
Total other assets 8,927,452 4,753,006
--------- ---------
Total assets $56,319,773 $37,718,264
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term loans $4,512,200 $4,271,222
Accounts payable 10,722,741 6,293,553
Customer deposits - 165,434
Other payables 352,880 254,259
Other payables - shareholder 806,946 880,302
Accrued liabilities 593,057 145,207
Taxes payable 3,048,179 1,073,237
--------- ---------
Total current liabilities 20,036,003 13,083,214
Total liabilities 20,036,003 13,083,214
COMMITMENTS AND CONTINGENCIES
REDEEMABLE CONVERTIBLE PREFERRED STOCK
($0.001 par value, 851,125 shares issued
and outstanding as of June 30, 2009 and
875,000 shares issued and outstanding
as of June 30, 2008), net of discount
for the amount of $567,581 and
$1,168,548 as of June 30, 2009 and
2008, respectively 6,241,419 5,831,452
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred stock $0.001 par value,
1,000,000 shares authorized, 851,125
issued and outstanding as of June 30,
2009, and 875,000 shared issued and
outstanding as of June 30, 2008
and classified outside shareholders'
equity (see above), liquidation
preference of $8.00 per share and
accrued dividends as of June 30,
2009 and June 30, 2008 - -
Common stock, $0.001 par value,
74,000,000 shares authorized,
10,595,500 and 10,525,000 shares
issued and outstanding, as of
June 30, 2009 and June 30, 2008,
respectively 10,596 10,525
Paid-in-capital 12,987,417 12,722,260
Contribution receivable (1,210,000) (1,210,000)
Deferred compensation - (27,708)
Retained earnings 12,783,892 3,257,276
Statutory reserves 2,765,179 1,452,779
Accumulated other comprehensive
income 2,705,267 2,598,466
--------- ---------
Total shareholders' equity 30,042,351 18,803,598
---------- ----------
Total liabilities, redeemable
preferred stock and
shareholders' equity $56,319,773 $37,718,264
=========== ===========
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
2009 2008
---- ----
REVENUE
Sales of concrete $ 28,118,492 $ 27,565,044
Manufacturing services 7,053,728 -
Technical services 1,924,089 -
Mixer rental 2,618,493 -
--------- ---
Total revenue 39,714,802 27,565,044
---------- ----------
COST OF SALES
Concrete 20,657,312 20,799,398
Manufacturing services 2,768,255 -
Technical services 147,418 -
Mixer rental 945,057 -
------- ---
Total cost of revenue 24,518,042 20,799,398
---------- ----------
GROSS PROFIT 15,196,760 6,765,646
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,717,794 1,946,541
--------- ---------
INCOME FROM OPERATIONS 13,478,966 4,819,105
---------- ---------
OTHER INCOME (EXPENSE), NET
Other subsidy income 2,109,290 1,586,192
Non-operating expense, net (602,020) (79,312)
Interest expense, net (802,650) (149,419)
-------- --------
TOTAL OTHER INCOME, NET 704,620 1,357,461
------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 14,183,586 6,176,566
PROVISION FOR INCOME TAXES 2,115,097 1,012,382
--------- ---------
NET INCOME 12,068,489 5,164,184
DIVIDENDS AND ACCRETION ON
REDEEMABLE PREFERRED STOCK 1,229,473 33,387
--------- ------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS 10,839,016 5,130,797
---------- ---------
RECONCILIATION OF COMPREHENSIVE INCOME:
Net Income 12,068,489 5,164,184
Unrealized gain (loss) from
marketable securities 20,605 (12,482)
Foreign currency translation
adjustment 86,196 1,951,026
------ ---------
COMPREHENSIVE INCOME $ 12,175,290 $ 7,102,728
========== =========
EARNING PER COMMON SHARE ALLOCATED TO
COMMON SHAREHOLDERS
Weighted average number of shares:
Basic 10,526,719 9,064,359
========== =========
Diluted 14,032,479 9,255,616
========== =========
Earnings per share:
Basic $ 1.03 $ 0.57
==== ====
Diluted $ 0.86 $ 0.56
==== ====
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,068,489 $ 5,164,184
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 2,184,462 1,178,745
Amortization of long term
deferred expense 179,463 -
Bad debt expense, net of recovery (189,052) 443,171
Amortization of deferred
compensation expense 107,477 5,542
Changes in operating assets and liabilities
Accounts receivable (13,681,007) 1,561,399
Inventories (977,200) 211,569
Other receivables (3,347,936) 1,109,454
Prepayment 419,258 (2,825,219)
Accounts payable 4,403,314 (2,933,778)
Customer deposits (166,114) 156,125
Other payables 97,849 108,430
Accrued liabilities 291,597 (80,851)
Taxes payable 1,970,528 1,012,153
--------- ---------
Net cash provided by operating
activities 3,361,128 5,110,924
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, and equipment (1,771,915) (8,701,026)
---------- ----------
Net cash used in investing
activities (1,771,915) (8,701,026)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short term loans 8,247,950 3,925,075
Payments for short term loans (8,024,538) (5,906,096)
Payments on other payables - Shareholders (73,889) -
Restricted cash 459,900 (913,092)
Proceeds from issuance of redeemable
preferred stock - 6,397,500
Proceeds from capital contribution - 100
Proceeds from advances by shareholder - 873,020
Preferred dividends paid (472,851) -
-------- ---
Net cash provided by financing
activities 136,572 4,376,507
------- ---------
EFFECTS OF EXCHANGE RATE CHANGE IN CASH (1,475) (300,793)
------ --------
INCREASE IN CASH 1,724,310 485,612
CASH, beginning of year 1,910,495 1,424,883
--------- ---------
CASH, end of year $ 3,634,805 $ 1,910,495
========= =========
DATASOURCE: China Advanced Construction Materials Group, Inc.
CONTACT: David Waldman or Klea Theoharis, both of Crescendo
Communications, LLC, +1-212-671-1020,
Web Site: http://www.china-acm.com/