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Share Name | Share Symbol | Market | Type |
---|---|---|---|
China Advanced Constr Matls Group (MM) | NASDAQ:CADC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 3.51 | 2.25 | 5.87 | 0 | 01:00:00 |
From Oct 2019 to Oct 2024
Second Quarter FY 2011 Financial Highlights
-- Revenue increased 32% year over year to $34.5 million -- Gross margin expanded to 19.4% sequentially vs.13.3% in Q1-11 -- Non-GAAP adjusted net income available to common shareholders up 14.5% YOY to $4.9 million -- Non-GAAP adjusted fully diluted EPS to common shareholders of $0.27 -- GAAP net income available to common shareholders of $3.2 million, decreased from $7.6 million YOY primarily on $4.8 million higher non- cash net expense for the change in fair value of warrants -- Quarter end backlog at record $66.7 million, up 15% sequentially from Q1-11 -- Adjusted EBITDA of $7.1 million, up 21.4% YOY.
Second Quarter FY 2011 Results Summary
China ACM reported second quarter Fiscal Year 2011 non-GAAP adjusted net income available to common shareholders increased 14.5 percent to $4.9 million on 32 percent higher revenue of $34.5 million. The non-GAAP adjusted net income available to common shareholders is before the non-cash change in fair value of warrants, option and equity-based compensation.
Concrete Sales revenue at fixed plants in Beijing increased by 29 percent year over year to a record $26.2 million with a gross margin of 12.9 percent; this gross margin compares with 9.2 percent a year ago, and 7.2 percent in Q1-11. Q2-11 and current contracts include projects for highways, schools, military officer apartments, hotels, subway lines, sewage treatment plants, technology business parks, retail buildings, residential complexes, and hospitals.
Second quarter Manufacturing Services revenue nearly doubled, increasing 94 percent year over year to a record $7.1 million with a 31 percent gross margin. Technical Services revenue decreased by two percent, year over year, to $1.2 million with a 92.2 percent gross margin.
The Company did not renew the lease on its Tianshun Concrete Sales fixed plant, which expired at the end of November, as it had become inefficient with aging equipment and had been posting negative gross margins.
The Company's second quarter blended gross margin was 19.4 percent, compared with 20.0 percent in the year-earlier quarter, and reflects a temporary increase in the number of portable plant HSR projects in transition due to project completions and a number of project start-ups that generate lower margins during the wind-down and start-up phases. While some of these projects have experienced longer than normal transition times, all contracts remain on schedule for fulfillment by original completion dates.
Management Commentary
Mr. Xianfu Han, Chairman and Chief Executive Officer of China ACM, commented, "We produced strong growth across the board in the second fiscal quarter highlighted by record quarterly revenue, rising margins, over $7 million in Adjusted EBITDA and solidly higher Adjusted Net Income. During the quarter, we announced new high speed rail (HSR) contracts worth $11.9 million, and have been finalizing new HSR contracts for our recently acquired portable plants which we expect to announce shortly."
"We also announced a letter of intent for a strategic alliance with a division of China State Construction Engineering Corporation ("China Construction" or "CSCEC") (Shanghai SE: 601668) that provides for the two organizations to jointly bid on major new projects, finance the capital costs of new projects on which we both work and share intellectual property. Subsequent to that November 18 announcement, we expanded that strategic alliance with yet another CSCEC owned company. We are continuing to build such relationships with key State Owned Enterprise (SOE) primary contractor clients for HSR and other infrastructure projects. This reflects our growing stature in China's massive infrastructure industry, and reinforces barriers to entry and provides greater pricing power." With $38 billion in annual revenue, CSCEC is ranked number 187 in the Fortune Global 500 list of companies.
"Looking ahead, the Chinese concrete industry is consolidating through attrition of marginal players and increased regulatory requirements favoring companies that can achieve scale and meet increasingly stringent environmental standards. We see tremendous strategic growth opportunities, both near and long term, and we are actively pursuing them. In recent months, we have secured over $12 million in bank financing at an average 5.9 percent annual rate of interest. Securing a prime commercial bank loan in China is an important rite of passage for any company that is not a major State Owned Enterprise."
"With GDP running at about nine percent, the Chinese economy remains the world's growth engine. The country's accelerating trend toward modernization, and urbanization, fuels the growth of our infrastructure business for many years to come. I am confident that we are on track for accelerated growth and record financial performance in the second half of the fiscal year," Mr. Han concluded.
Commenting on the quarter's results and outlook for the balance of Fiscal Year 2011, China ACM President and Chief Financial Officer Jeremy Goodwin, stated, "While we produced solid growth in the second quarter, with the blended gross margin at 19.4 percent, we expect meaningful margin improvements in the current quarter and second half of the fiscal year as we move beyond the transition phase of a number of HSR projects underway. We have six new HSR plants coming on line. We are bidding and winning increasingly longer term HSR manufacturing contracts to minimize project transition time. I am confident we will expand HSR margins in the second half to our customary levels approaching the 40 percent range."
"Further, the third and subsequent quarters' margins will benefit by our mid-second quarter termination of one leased Concrete Sales fixed plant that had been underperforming. We plan to redeploy those resources into high-margin portable plants to support contracts in the Beijing area or for new HSR business in outlying provinces. Additionally, Concrete Sales margins will benefit from capturing the current, full quarter's 25 percent average price increase, announced midway through the second fiscal quarter, against costs that increased 20 percent at that time."
"Our diversified backlog has grown to a record $66.7 million while the new business pipeline is a healthy $28.4 million. With recently established strategic alliances with CSCEC, and others in process, our new business development is becoming more efficient, and leveraged, as we begin jointly bidding projects along with major SOE contractors, some of whom will fund capital expenditures for certain projects," Mr. Goodwin said. "Our balance sheet is strong with $3.2 million in cash, $36.0 million in working capital and no long term debt. Our accounts receivable is primarily composed of large, highly creditworthy state owned enterprises."
"Also in the second fiscal quarter, we launched our new corporate website featuring major upgrades to content to provide greater transparency for our shareholders and clients," he added. "At the end of December 2010, we engaged Friedman LLP as our independent auditor. They assisted in the preparation of this second quarter's unaudited report. In the months ahead, we target geographic expansion, joint ventures, strategic alliances and will evaluate acquisitions -- all of which increases our requirement for Friedman's world class financial management and reporting expertise."
Backlog
China ACM reported that its December 31, 2010 backlog, or bids in house, increased by 15% sequentially from September 30, 2010 to a record $66.7 million. 83% of the Dec. 31 backlog is contracted with Government State Owned Enterprise contractors and 17% is contracted with private sector developers. The backlog is comprised of $43.9 million in contracted unfilled orders for its Concrete Sales segment, and $22.8 million in contracted unfilled order for its Manufacturing Services segment. Based on its historical experience, the Company's estimated time to convert these contracted orders into recognized revenues averages between four and 12 months for Concrete Sales, and six to 24 months for Manufacturing Services, depending on the scope of the projects.
The Company's new business pipeline, or bids outstanding, which is a measure of the value of bids it has submitted for Concrete Sales and Manufacturing Services business, was $2.5 million and $25.9 million, respectively, or $28.4 million total.
FY 2011 Second Quarter Results
Revenue. We generated second quarter Fiscal Year 2011 revenue of $34.5 million compared to $26.2 million during the same period of Fiscal Year 2010, an increase of $8.3 million, or 32%.
Our concrete sales revenue was $26.2 million for the second quarter ended December 31, 2010, an increase of $5.9 million or 29%. The increase in revenues attributable to concrete sales was principally due to higher prices and organic growth to include a broader client base.
During the second quarter ended December 31, 2010, we continued to supply concrete products to ten railway projects throughout China through our portable plants, specifically the projects located in Shaanxi Province, Hebei Province, Guangxi Province, Zhejiang Province, Guangdong Province, Liaoning Province, and Anhui Province. These ten projects contributed $7.1 million to our total revenue for the quarter, an increase of $3.4 million, or 94%, compared with the year-ago quarter.
In addition, revenue generated through our technical consulting services was $1.2 million during the second quarter ended December 31, 2010, a decrease of 2% as compared to the same fiscal quarter in 2009.
Gross Profit was $6.7 million for the second quarter ended December 31, 2010, as compared to $5.2 for the second quarter ended December 31, 2009. Our gross profit for sale of concrete was $3.4 million, or 13% of revenue, for the quarter, compared to $1.9 million, or 9% of revenue, for the same period last year, an increase of $1.5 million. The higher gross margin for concrete sales for the second quarter ended December 31, 2010, compared with the same period in 2009, reflects higher demand and higher prices for our concrete products in Beijing as compared to the same period last year. More specifically, on November 15, 2010 we announced a 25% average price increase across our various concrete grade sales to keep in line with an average raw material cost increase of 19.8%.
Selling, General and Administrative expenses were $2.6 million for the three months ended December 31, 2010, an increase of $1.4 million or 128%, as compared to $1.2 million for the three months ended December 31, 2009. The increase was principally due to an increase in employment, salary and benefit and lease expenses resulting from higher production and a larger base of operations during the year, and professional and consulting expenses from being a public company and resulting from our overall production expansion during the year.
Net Income available to Common shareholders. Excluding the effect from non-cash charges related to changes in fair market of warrants, and stock and option-based compensation, our net income available to Common shareholders would be $4.9 million for the three months ended December 31, 2010, an increase of $0.6 million or 14.5%, as compared to net income after cash dividends paid of $4.3 million for the same period in 2009.
Six Month Results ended December 31, 2010
For the six months ended December 31, 2010, net revenues increased by 43% to $65.5 million from $45.6 million in the corresponding period of fiscal year 2010. Gross profit increased 27% in the first six months of fiscal year 2011 to $10.8 million from approximately $8.5 million in the year-ago period. Gross margin was 16.5% in the first half of fiscal year 2011. Adjusted EBITDA grew by $2.5 million, or 26%, to $12.0 million from $9.6 million in the year-earlier period. Net income attributable to common shareholders for the first six months of 2011, was $6.5 million, with diluted net earnings per share of $0.36. During the 2011 fiscal six months period, the Company recognized a non-cash expense on the fair value of its warrants and options of $1.3 million and a non-cash stock-based compensation expense of $0.5 million. Non-GAAP adjusted net income attributable to common shareholders for the first six months of FY 2011 increased by $1.5 million to $8.3 million, with non-GAAP diluted net earnings per share of $0.46.
Balance Sheet Overview
China ACM had working capital of $36.0 million at December 31, 2010, including $3.2 million in cash and no long term debt. Shareholders' equity was $70.3 million compared with $61.2 million on June 30, 2010. The total number of shares outstanding as of February 11, 2011 is 17,739,387.
Conference Call
The Company will host a corresponding conference call with a live webcast and a full Q&A session today at 10:00 a.m. Eastern time/7:00 a.m. Pacific time, to discuss these results and answer questions.
Individuals interested in participating in the conference call may do so by dialing 877-477-1461 from the United States, or 973-409-9694 from outside the United States and referencing conference ID #41693975. Those interested in listening to the conference call live via the Internet may do so by visiting the Investor Relations section of the Company's Web site at www.china-acm.com.
A telephone replay will be available through February 25, 2011, by dialing 800-642-1687 from the United States, or 706-645-9291 from outside the United States, and entering conference ID #41693975. A webcast replay will be available for 90 days.
About China ACM
China ACM is a leading producer of advanced, certified eco-friendly ready-mix concrete (RMC) and related technical services for large scale, high-speed rail (HSR) and other complex infrastructure projects. Leveraging its proprietary technology and value-add engineering services model, the Company has won work on numerous high profile projects including the 30,000 km China HSR expansion, the Olympic Stadium Bird's Nest, Beijing South Railway Station, Beijing International Airport, National Centre for Performing Arts, CCTV Headquarters, Beijing Yintai Building and U.S. and French embassies.
Founded in 2002, Beijing-based China ACM provides its materials and services through its network of fixed ready-mix concrete plants covering the Beijing metropolitan area. It also has technical consulting services and preferred procurement agreements with other independently-owned plants across China. Additionally, the Company owns numerous portable plants deployed in various provinces across China primarily to major high speed rail projects. More information about the Company is available at www.china-acm.com.
Use of Non-GAAP Financial Measures
The Company makes reference to Non-GAAP financial measures in portions of "Management's Discussion of Financial Condition and Results of Operations". Management believes that investors may find it useful to review our financial results that exclude the non-cash expense of $1,722,339 for the six months ended December 31, 2010 on option and stock-based compensation along with the change in fair value of warrants liability, shown in the below chart, due to the adoption of Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 815, "Derivatives and Hedging," accounting standard as discussed in the section "Derivative Liability" below.
Management believes that these Non-GAAP financial measures are useful to investors in that they provide supplemental information to possibly better understand the underlying business trends and operating performance of the Company. The Company uses these Non-GAAP financial measures to evaluate operating performance. However, Non-GAAP financial measures should not be considered as an alternative to net income or any other performance measures derived in accordance with GAAP.
Three Months Ended December 31, Increase 2010 2009 (Decrease) (Unaudited) Net Income (Loss) -GAAP $ 3,231,989 $ 7,945,081 $(4,713,092) Subtract: Dividends and accretion on redeemable convertible preferred stock $ - $ 318,835 $ (318,835) ------------ ----------- ----------- Net Income available to Common shareholders -GAAP $ 3,231,989 $ 7,626,246 $(4,394,257) ------------ ----------- ----------- Add Back (Subtract): Change in fair value of warrants $ 1,414,408 $(3,356,796) $4,771,204 ------------ ----------- ----------- Add Back (Subtract): Change in Option and Equity Based Compensation $ 283,887 $ 38,534 $ 245,353 ------------ ----------- ----------- Adjusted Net Income available to Common shareholders -non-GAAP $ 4,930,284 $ 4,307,984 $ 622,300 ------------ ----------- ----------- Basic earning per share - GAAP $ 0.18 $ 0.62 $ (0.44) Add back (Subtract): Change in fair value of warrant $ 0.08 $ (0.27) $ 0.35 ------------ ----------- ----------- Add back (Subtract): Change in Option and Equity-Based Compensation $ 0.02 $ 0.00 $ 0.02 ------------ ----------- ----------- Adjusted basic earning per share non-GAAP $ 0.28 $ 0.35 $ (0.07) ------------ ----------- ----------- Diluted earning per share-GAAP $ 0.18 $ 0.50 $ (0.32) Add back (Subtract): Change in fair value of warrant $ 0.08 (a) $ (0.21) $ 0.29 ------------ ----------- ----------- Add back (Subtract): Change in Option and Equity-Based Compensation $ 0.01 (b) $ 0.00 $ (0.01) ------------ ----------- ----------- Adjusted diluted earning per share non-GAAP $ 0.27 $ 0.29 $ (0.02) ------------ ----------- ----------- Weighted average number of shares Basic 17,651,620 12,377,182 5,274,438 ============ =========== Diluted 18,202,555 15,955,516 2,247,039 ============ =========== Six Months Ended December 31, Increase 2010 2009 (Decrease) (Unaudited) Net Income (Loss) -GAAP $ 6,540,309 $ 3,422,144 $ 3,118,165 Subtract: Dividends and accretion on redeemable convertible preferred stock $ - $ 659,699 $ (659,699) ------------ ------------ ----------- Net Income available to Common shareholders -GAAP $ 6,540,309 $ 2,762,445 $ 3,777,864 ------------ ------------ ----------- Add Back (Subtract): Change in fair value of warrants $ 1,260,150 $ 3,916,645 $(2,656,495) ------------ ------------ ----------- Add Back (Subtract): Change in Option and Equity Based Compensation $ 462,189 $ 120,778 $ 341,411 ------------ ------------ ----------- Adjusted Net Income available to Common shareholders -non-GAAP $ 8,262,648 $ 6,799,868 $ 1,462,780 ------------ --- ------------ ----------- Basic earning per share - GAAP $ 0.37 $ 0.24 $ 0.13 Add back (Subtract): Change in fair value of warrant $ 0.07 $ 0.34 $ (0.27) ------------ ------------ ----------- Add back (Subtract): Change in Option and Equity-Based Compensation $ 0.03 $ 0.01 $ 0.02 ------------ ------------ ----------- Adjusted basic earning per share non-GAAP $ 0.47 $ 0.59 $ (0.12) ------------ ------------ ----------- Diluted earning per share-GAAP $ 0.36 $ 0.22 $ 0.14 Add back (Subtract): Change in fair value of warrant $ 0.07 (a) $ 0.25 $ (0.18) ------------ ------------ ----------- Add back (Subtract): Change in Option and Equity-Based Compensation $ 0.03 (b) $ 0.01 $ 0.02 ------------ ------------ ----------- Adjusted diluted earning per share non-GAAP $ 0.46 $ 0.48 $ (0.02) ------------ ------------ ----------- Weighted average number of shares Basic 17,585,082 11,681,294 ============ ============ Diluted 18,067,924 15,624,782 ============ ============
(a) The Company adopted the provisions of FASB ASC 815, which provides guidance with respect to determining whether an instrument (or embedded feature) is indexed to an entity's own stock. As a result of adopting this accounting standard, warrants previously treated as equity pursuant to the derivative treatment exemption are no longer afforded equity treatment because the warrants have a downward ratchet provision on the exercise price. As a result, the warrants are not considered indexed to the Company's own stock, and as such, all future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expired. Effective July 1, 2009, the Company reclassified the fair value of these warrants from equity to liability, as if these warrants were treated as a derivative liability since their issuance in June 2008. The Company recognized a $1,414,408 charge from the change in fair value for the three months ended December 31, 2010.
(b) The Company records stock-based compensation expense pursuant to FASB's accounting standard regarding stock compensation which requires companies to measure compensation cost for stock-based employee compensation plans at fair value at the grant date and recognize the expense over the employee's requisite service period. Under ASC 718, "Compensation-Stock Compensation," the Company's expected volatility assumption is based on the historical volatility of Company's stock or the expected volatility of similar entities. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. For the six months ended December 31, 2010 and 2009, the Company recognized $462,189 and $57,382 of restricted stock as compensation expense. For the six months ended December 31, 2010 and 2009, the Company recognized $0 and $63,396, respectively, as compensation expenses for its stock option plan.
Forward-Looking Statements
This press release contains statements that are forward-looking in nature, including statements regarding the Company's competitive position and product and service offerings. These statements are based on current expectations on the date of this press release and involve a number of risks and uncertainties, which may cause actual results to differ significantly from such estimates. The risks include, but are not limited to, the degree of market adoption of the Company's product and service offerings; market competition; dependence on strategic partners; and the Company's ability to manage its business effectively in a rapidly evolving market. Certain of these and other risks are set forth in more detail in "Item 1A. Risk Factors" in China ACM's Annual Report on Form 10-K for the fiscal year ended June 30, 2010. China ACM does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31, June 30, ASSETS 2010 2010 ------------- ------------- CURRENT ASSETS: Cash $ 3,153,149 $ 3,300,820 Restricted cash - 57,580 Accounts receivable, net of allowance for doubtful accounts of $1,159,148 62,491,063 36,072,691 and $456,085, respectively Inventories 2,443,336 2,164,769 Investment 11,947,960 - Other receivables 3,607,624 1,416,653 Prepayments 3,795,404 2,821,687 ------------- ------------- Total current assets 87,438,536 45,834,200 ------------- ------------- PROPERTY, PLANT AND EQUIPMENT, net 28,707,245 26,488,354 ------------- ------------- OTHER ASSETS: Accounts receivable, net of allowance for doubtful accounts of $0 and $4,607 respectively - 364,371 Deferred tax assets - 127,741 Advances on equipment purchases 5,806,104 8,382,383 Prepayments 3,655,754 4,414,391 ------------- ------------- Total other assets 9,461,858 13,288,886 ------------- ------------- Total assets $ 125,607,639 $ 85,611,440 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term loans, banks $ 14,367,800 $ - Accounts payable 30,336,112 16,473,080 Customer deposits 857,323 711,219 Other payables 387,318 329,136 Other payables - shareholders 767,370 772,644 Accrued liabilities 1,899,288 1,652,751 Taxes payable 2,863,330 1,569,914 ------------- ------------- Total current liabilities 51,478,541 21,508,744 OTHER LIABILITIES Warrants liability 3,805,755 2,920,520 ------------- ------------- Total liabilities 55,284,296 24,429,264 ------------- ------------- Commitments and contingencies SHAREHOLDERS' EQUITY: Common stock, $0.001 par value, 74,000,000 shares authorized, 17,726,887 and 17,467,104 shares issued and outstanding as of December 31 and June 30, 2010, respectively 17,727 17,467 Paid-in-capital 34,557,606 33,720,762 Retained earnings 25,563,396 19,912,444 Statutory reserves 5,400,877 4,511,520 Accumulated other comprehensive income 4,783,737 3,019,983 ------------- ------------- Total shareholders' equity 70,323,343 61,182,176 ------------- ------------- Total liabilities and shareholders' equity $ 125,607,639 $ 85,611,440 ============= ============= CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) For the three months ended For the six months ended December 31, December 31, 2010 2009 2010 2009 ------------ ------------ ------------ ------------ REVENUE Sales of concrete $ 26,205,792 $ 20,316,502 $ 51,526,739 $ 35,203,259 Manufacturing services 7,108,447 3,663,114 11,580,224 6,468,728 Technical services 1,207,396 1,234,760 2,366,456 2,479,655 Other 4,311 949,936 9,609 1,493,806 ------------ ------------ ------------ ------------ Total revenue 34,525,946 26,164,312 65,483,028 45,645,448 ------------ ------------ ------------ ------------ COST OF REVENUE Concrete 22,835,629 18,453,296 46,344,312 32,790,012 Manufacturing services 4,913,916 2,063,646 8,131,041 3,820,813 Technical services 94,291 81,516 200,301 135,999 Other - 331,228 - 376,962 ------------ ------------ ------------ ------------ Total cost of revenue 27,843,836 20,929,686 54,675,654 37,123,786 ------------ ------------ ------------ ------------ GROSS PROFIT 6,682,110 5,234,626 10,807,374 8,521,662 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,632,218 1,157,250 4,826,007 2,052,281 ------------ ------------ ------------ ------------ INCOME FROM OPERATIONS 4,049,892 4,077,376 5,981,367 6,469,381 ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE), NET Other subsidy income 1,998,855 1,323,515 3,786,418 2,290,287 Realized gain from sales of marketable securities - 27,008 - 27,008 Non-operating (expense), net (357,201) (29,325) (187,974) (78,528) Change in fair value of warrants liability (1,414,408) 3,356,796 (1,260,150) (3,916,645) Interest income 157,220 1,524 162,149 3,021 Interest expense (224,136) - (237,042) (23,753) ------------ ------------ ------------ ------------ TOTAL OTHER INCOME (EXPENSE), NET 160,330 4,679,518 2,263,401 (1,698,610) ------------ ------------ ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES 4,210,222 8,756,894 8,244,768 4,770,771 PROVISION FOR INCOME TAXES 978,233 811,813 1,704,459 1,348,627 ------------ ------------ ------------ ------------ NET INCOME 3,231,989 7,945,081 6,540,309 3,422,144 DIVIDENDS AND ACCRETION ON REDEEMABLE CONVERTIBLE PREFERRED STOCK - 318,835 - 659,699 ------------ ------------ ------------ ------------ NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 3,231,989 7,626,246 6,540,309 2,762,445 ------------ ------------ ------------ ------------ COMPREHENSIVE INCOME: Net Income 3,231,989 7,945,081 6,540,309 3,422,144 Foreign currency translation adjustment 693,572 (17,663) 1,763,754 (80,094) ------------ ------------ ------------ ------------ COMPREHENSIVE INCOME $ 3,925,561 $ 7,927,418 $ 8,304,063 $ 3,342,050 ============ ============ ============ ============ EARNINGS PER COMMON SHARE ALLOCATED TO COMMON SHAREHOLDERS Weighted average number of shares: Basic 17,651,620 12,377,182 17,585,082 11,681,294 ============ ============ ============ ============ Diluted 18,202,555 15,955,516 18,067,924 15,624,782 ============ ============ ============ ============ Earnings per share: Basic $ 0.18 $ 0.62 $ 0.37 $ 0.24 ============ ============ ============ ============ Diluted $ 0.18 $ 0.50 $ 0.36 $ 0.22 ============ ============ ============ ============ CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the six months ended December 31, 2010 2009 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,540,309 $ 3,422,144 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation 1,819,065 1,387,883 Stock-based compensation expense 462,189 120,778 Deferred tax provision 129,354 - Provision for (recovery) of allowance for doubtful accounts 676,697 (129,354) Change in fair value of warrants liability 1,260,150 3,916,645 Loss realized from disposal of property, plant, and equipment 252,727 - Realized gain on sale of marketable securities - (27,008) Changes in operating assets and liabilities Accounts receivable (25,411,159) (19,737,549) Notes receivable - (3,502) Inventories (217,625) (664,483) Other receivables (2,135,501) 2,011,537 Prepayments (886,350) (1,276,446) Long term prepayment 864,656 (424,307) Accounts payable 12,598,938 11,375,636 Customer deposits 125,331 462,849 Other payables 50,438 39,898 Accrued liabilities 202,793 896,045 Taxes payable 1,234,213 (314,895) ------------ ------------ Net cash (used in) provided by operating activities (2,433,775) 1,055,871 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of marketable securities - 78,207 Advances on equipment purchase - (80,462) Proceeds from disposal of property, plant, and equipment 742,242 - Purchase of property, plant and equipment (890,859) (258,580) Investment (11,880,800) - ------------ ------------ Net cash used in investing activities (12,029,417) (260,835) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short term loan 12,285,820 146,284 Payments on short term loan (74,580) (4,502,287) Rent payment to shareholder (5,775) (141,060) Restricted cash 57,580 192,330 Proceeds from warrants exercised - 386,100 Proceeds from issuance of common stock, net of offering costs - 1,497,242 Preferred dividends paid - (304,781) ------------ ------------ Net cash provided by (used in) financing activities 12,263,045 (2,726,172) ------------ ------------ EFFECT OF EXCHANGE RATE CHANGE ON CASH 2,052,476 (7,330) ------------ ------------ NET DECREASE IN CASH (147,671) (1,938,466) CASH, beginning of period 3,300,820 3,634,805 ------------ ------------ CASH, end of period $ 3,153,149 $ 1,696,339 ============ ============
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