China ACM Reports Fourth Quarter and Fiscal Year 2011 Results; FY-11 Revenue Up 48% to $138 Million
Teleconference Begins Today at 11 a.m. Eastern, 8 a.m. Pacific
(firmenpresse) - BEIJING -- (Marketwire) -- 09/23/11 -- China Advanced Construction Materials Group, Inc. (NASDAQ: CADC) ("China ACM"), a leading provider of ready-mix concrete and related technical services in China, today announced its audited financial results for the fiscal year ended June 30, 2011. The Company will host a conference call to discuss the results today at 11:00 a.m. Eastern, 8:00 a.m. Pacific; details are provided below.
Revenue increased 59% year over year to $49.3 million
Gross margin at 21.9%
Non-GAAP adjusted net income available to common shareholders of $5.3 million
Non-GAAP adjusted fully diluted EPS to common shareholders of $0.30
GAAP net income available to common shareholders of $7.0 million or $0.39 EPS
Revenue increased 48% year over year to $137.9 million
Gross margin at 18.6%
Non-GAAP adjusted net income available to common shareholders increased 2% YOY to $16.0 million
Non-GAAP adjusted fully diluted EPS to common shareholders of $0.88
Net income available to common shareholders rose 42% YOY to $17.1 million
$47.2 million in working capital at June 30, 2011
Mr. Xianfu Han, Chairman and Chief Executive Officer of China ACM, commented, "Fiscal Year 2011 was another year of growth and profitability for China ACM. During fiscal 2011, our volumes from our Beijing fixed plants increased as we expanded our customer base in that market. We also experienced increased volumes from our portable plant division that primarily services the build out of China's high-speed rail network."
"However, in light of the recent government suspension of new and ongoing high-speed rail projects, our near-term outlook for the manufacturing services division is uncertain. The government is conducting ongoing quality inspections at high-speed rail construction sites across the country, which has resulted in a slowdown in overall construction. As a result, we are focused on managing our cost structure in anticipation of lower volumes from our portable plant network for the foreseeable future."
. Our revenue is primarily generated from sales of our advanced ready-mix concrete products, manufacturing services and technical consulting services. For the three months ended June 30, 2011, we generated revenue of $49.3 million, compared to $30.9 million during the same period in 2010, an increase of $18.4 million, or 59%. The increase in our revenue is due primarily to our increased production volumes both in and outside of Beijing for the three months ended June 30, 2011 compared to the same period in 2010.
Our concrete sales revenue was $41.2 million for the three months ended June 30, 2011, an increase of $17.4 million, or 73%. The increase in revenues was principally due to higher average selling prices coupled with higher volumes as a result of a broader client base. The higher volumes were achieved despite the closure of one fixed plant that had become unprofitable and was closed in the second quarter of fiscal year 2011.
Revenue from our manufacturing services segment was $7.9 million for the three months ended June 30, 2011, an increase of $2.8 million, or 55%, as compared to the three months ended June 30, 2010. The increase in revenue was attributable principally to the addition of several new portable plants needed to service a growing business pipeline compared to the same period in the prior fiscal year.
. Gross profit was $10.8 million for the three months ended June 30, 2011, as compared to $6.7 million for the three months ended June 30, 2010. Our gross profit for the sale of concrete was $8.1 million, or 19.6% of revenue, for the three months ended June 30, 2011, as compared to $2.4 million, or 10.4% of revenue, for the same period last year. The increased gross profit margin reflects higher demand and higher prices for our concrete products in Beijing as compared to the same period last year.
Our gross profit with respect to our Manufacturing services segment was $2.7 million, or 33.8% of revenue, for the three months ended June 30, 2011, as compared to $2.3 million, or 45.7% of revenue, for the same period last year. The decrease in gross profit margin was principally the result of an increase in fixed costs due to slowing production rates at plants nearing project completion and increases in transportation costs.
. We incurred selling, general and administrative expenses of $9.1 million for the three months ended June 30, 2011, an increase of $7.3 million, as compared to $1.8 million for the three months ended June 30, 2010. The increase was principally due to a $6.3 million increase in bad debt expense taken in the quarter, including $2.3 million of direct write-off. In addition, we experienced an increase in employment, occupancy, and professional expenses resulting from a larger base of operations as compared to the prior year's quarter.
Excluding the effect from non-cash charges related to changes in fair market value of warrants, accretion of discount on redeemable preferred stock and share-based compensation, our adjusted net income available to common shareholders was $5.3 million for the three months ended June 30, 2011, a decrease of 1% as compared to the same period in 2010. See the attached section "Use of Non-GAAP Financial Measures" for an explanation regarding the presentation of net income excluding non-cash items.
. For the fiscal year ended June 30, 2011, we generated revenue of $137.9 million, compared to $93.0 million during the same period in 2010, an increase of $44.9 million, or 48%. The increase in our revenue is due primarily to our increased production volumes both in and outside of Beijing for the fiscal year ended June 30, 2011 compared to the same period in 2010.
Our concrete sales revenue was $109.3 million for the fiscal year ended June 30, 2011, an increase of $38.7 million, or 55%. The increase in revenues was principally due to higher average selling prices coupled with higher volumes as a result of a broader client base. The higher volumes were achieved despite the closure of one fixed plant that had become unprofitable and was closed in the second quarter of fiscal year 2011.
Revenue from our manufacturing services segment was $25.6 million for the fiscal year ended June 30, 2011, an increase of $10.0 million, or 64%, as compared to the fiscal year ended June 30, 2010. The increase in revenue was attributable principally to the addition of several new portable plants needed to service a growing business pipeline compared to the same period in the prior fiscal year.
. Gross profit was $25.6 million for the fiscal year ended June 30, 2011, as compared to $19.3 million for the fiscal year ended June 30, 2010. Our gross profit for the sale of concrete was $15.5 million, or 14.2% of revenue, for the fiscal year ended June 30, 2011, as compared to $6.0 million, or 8.4% of revenue, for the same period last year. The increased gross profit margin reflects higher demand and higher prices for our concrete products in Beijing as compared to the same period last year.
Our gross profit with respect to our Manufacturing services segment was $7.5 million, or 29.5% of revenue, for the fiscal year ended June 30, 2011, as compared to $7.4 million, or 47.2% of revenue, for the same period last year. The decrease in gross profit margin was principally the result of an increase in fixed costs due to slowing production rates at plants nearing project completion, the addition of several new portable plants before they commenced production and increases in transportation costs.
. We incurred selling, general and administrative expenses of $16.6 million for the fiscal year ended June 30, 2011, an increase of $11.2 million, as compared to $5.4 million for the fiscal year ended June 30, 2010. The increase was principally due to a $7.4 million increase in bad debt expense, including $2.3 million of direct write-off taken in the year. In addition, we experienced an increase in employment, occupancy, and professional expenses resulting from a larger base of operations as compared to the prior year.
Excluding the effect from non-cash charges related to changes in fair market value of warrants, accretion of discount on redeemable preferred stock and share-based compensation, our adjusted net income available to common shareholders was $16.0 million for the fiscal year ended June 30, 2011, an increase of $0.3 million, or 2%, as compared to the fiscal year ended June 30, 2010. Non-GAAP adjusted fully diluted EPS to common shareholders was $0.88 for the fiscal year ended June 30, 2011, down from $0.95 for the fiscal year ended June 30, 2010. See the attached section "Use of Non-GAAP Financial Measures" for an explanation regarding the presentation of net income excluding non-cash items.
China ACM had working capital of $47.2 million at June 30, 2011, including $14.7 million in cash, equivalents and short term investments and $15.5 million in total debt. Shareholders' equity was $83.1 million compared with $61.2 million on June 30, 2010. The total number of shares outstanding as of September 22, 2011 is 17.8 million.
Individuals interested in participating in the fourth quarter and fiscal year 2011 conference call may do so by dialing 877-941-0844 from the United States, or 480-629-9835 from outside the United States and referencing conference ID #4474900. 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 . A telephone replay will be available through October 7, 2011, by dialing 800-406-7325 from the United States, or 303-590-3030 from outside the United States, and entering conference ID #4474900. A webcast replay will be available for 90 days.
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 .
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 net non-cash income 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.
(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 down-round 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 $1,926,948 credit from the change in fair value for the fiscal year ended June 30, 2011.
(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 fiscal year ended June 30, 2011 and 2010, the Company recognized $885,674 and $268,150 of restricted stock as compensation expense. For the fiscal year ended June 30, 2011 and 2010, the Company recognized $0 and $327,738, respectively, as compensation expenses for its stock option plan.
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expected financial results in 2011 and our ability to deliver such results, expected growth in industry demand and our business, our expected financial performance and strategic and operational plans, our future operating results, the degree of market adoption of our 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, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as 'will,' 'believes,' 'expects' or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ('SEC'), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at .
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