China Advanced Construction Materials Group, Inc.

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China ACM Reports Third Quarter Fiscal Year 2013 Results, Provides Quarterly Guidance for the Fourth Quarter of Fiscal Year 2013, and Updates the Yearly Guidance for Fiscal Year 2013

BEIJING -- (Marketwired) -- 05/15/13 -- China Advanced Construction Materials Group, Inc. (NASDAQ: CADC) ("China ACM" or the "Company"), a provider of ready-mix concrete and related technical services in China, has announced its financial results for the third quarter of fiscal year 2013 ended March 31, 2013. The Company will host a conference call to discuss the results at 8:00 a.m., Eastern Time on May 16, 2013. Further details are provided below.

Third Quarter FY 2013 Financial Highlights

  • Revenue reduced 61.7% from the prior year the same quarter to $7.2 million
  • Gross margin at 0.81%
  • Net loss of $8.8 million or EPS of $(0.49)

Third Quarter FY 2013 Results
Revenue. Our revenue is primarily generated from sales of our advanced ready-mix concrete products, manufacturing services. For the three months ended March 31, 2013, we generated revenue of $7.2 million, compared to $18.9 million during the same period in 2012, a decrease of $11.7 million, or 61.7%. The decrease in our revenue is due primarily to decreased revenue from our manufacturing services and concrete sales for the three months ended March 31, 2013.

Our concrete sales revenue was approximately $7.2 million for the three months ended March 31, 2013, a decrease of $10.8 million or 60% from the three months ended March 31, 2012. The decrease in revenues from concrete sales was principally due to the decreased demand of concrete sales in line with slowing down of the housing market and overall economic growth. Revenue from our manufacturing services segment was $5,616 for the three months ended March 31, 2013, a decrease of $0.85 million, or 99.3%, as compared to the three months ended March 31, 2012. Such decrease in revenue was attributable principally to the suspension of operations of certain of our portable plants during the three months ended March 31, 2013.

Gross Profit. Gross profit was $0.1 million for the three months ended March 31, 2013, as compared to $2.1 million for the three months ended March 31, 2012. Our gross profit for the sale of concrete was $0.6 million, or 9.0% of revenue, for the three months ended March 31, 2013, as compared to $2.6 million, or 15% of revenue, for the same period last year. The decreased gross profit margin reflects lower demand and lower prices for our concrete products in Beijing as compared to the same period last year.

Our gross loss with respect to our manufacturing services segment was $0.6 million for the three months ended March 31, 2013, flat with $0.6 million gross loss for the same period last year.

Provision for doubtful accounts. We incurred provision for doubtful accounts of $1.3 million for the three months ended March 31, 2013, a decrease of $2.3 million, as compared to $3.6 million for the three months ended March 31, 2012. An estimate of doubtful accounts is recorded when collection of the full amount is no longer probable. Known bad debts are written off against allowance for doubtful accounts when identified. The accrual ratio is 5% for accounts receivable past due less than one year, 50% for accounts receivable past due from one to two years and 100% for accounts receivable past due beyond two years. In accordance with our allowance for doubtful accounts policy, at the end of each quarter, we conduct an aging analysis of each customer's arrears to determine whether allowance for doubtful accounts is adequate. In establishing allowance for doubtful accounts, we consider historical experience, economy, trends in the construction industry, the expected collectability of amount receivable that are past due, and the expected collectability of overdue receivables.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist of sales commissions, advertising and marketing costs, office rent and expenses, costs associated with staff and support personnel who manage our business activities, and professional and legal fees paid to third parties. We incurred selling, general and administrative expenses of $3.8 million for the three months ended March 31, 2013, an increase of $0.7 million, or 22%, as compared to $3.1 million for the three months ended March 31, 2012. The increase was principally due to an increase in salary and employment benefit expense, and advertising expense.

Net Loss. We recognized net loss of approximately $8.8 million for the three months ended March 31, 2013, as compared to net loss of approximately $4.2 million for the three months ended March 30, 2012, an increase of $4.6 million. Such increase in net loss was primarily due to the decrease in gross profits of concrete sales and manufacturing service, the increase in selling, general, and administrative expense, and an impairment charge for long-lived assets.

Balance Sheet Overview
China ACM had working capital of $37.8 million at March 31, 2013, including $2.3 million in cash and equivalents, $4.3 million in restricted cash and $63.2 million in total liabilities. Shareholders' equity was $61.8 million compared with $79 million at June 30, 2012. The total number of shares outstanding as of May 10, 2013 was 17.8 million.

Guidance Update

During the third quarter ended June 30, 2013, the management expects the Company to earn revenue of between $13 million and $15 million, recognize net loss of between $8 million and $9 million, and EPS of between $(0.45) and $(0.50) based on weighted average shares of 17.83 million. 

In addition, the Company updates its full year guidance for the fiscal year ending June 30, 2013, and currently expects to earn revenue of between $72 million and $75 million, recognize net loss of $25 million to $ 27 million, and EPS of $(1.40) to $(1.51) based on weighted average shares of 17.83 million.

Conference Call

The Company will host a conference call with a live webcast and a full Q&A session on May 16, 2013, at 8:00 a.m., Eastern Time, to discuss financial results for the third quarter of Fiscal Year 2013.

Individuals interested in participating in the conference call may do so by dialing 877-407-8035 from the United States, or +1 201-689-8035 from outside the United States, and referencing conference ID number 414699.

A replay of the call will remain available until June 15, 2013, at 11:59 PM.

To access the replay, please dial either of the following numbers:

USA: 877-660-6853 International: +1 201-612-7415

To pre-check system compatibility prior to the call, visit: http://www.investorcalendar.com/aboutus/HelpDesk.asp

About China ACM

China ACM is a producer of advanced, certified eco-friendly ready-mix concrete (RMC) and provider of 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 many 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.

More information about China ACM is available at www.china-acm.com.

Safe Harbor Statement

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 Form 10-K for the fiscal year ended June 30, 2012. 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)

                                                  March 31,      June 30,
                     ASSETS                         2013           2012
                                               -------------- --------------

CURRENT ASSETS:
  Cash                                         $    2,252,496 $    2,409,914
  Restricted cash                                   4,324,090      6,536,082
  Accounts and notes receivable, net of
   allowance for doubtful accounts of
   $33,291,143 and $24,913,151, respectively       66,096,131    109,977,143
  Inventories                                         846,488      2,042,156
  Other receivables and advances, net               5,226,523      1,298,942
  Other receivable from termination of lease,
   net                                              6,167,396
  Prepayments                                       9,055,149     11,694,758
  Deferred tax assets                               3,293,051      3,293,051
                                               -------------- --------------
   Total current assets                            97,261,324    137,252,046
                                               -------------- --------------

PROPERTY, PLANT AND EQUIPMENT, net                 16,448,846     20,622,505
                                               -------------- --------------

OTHER ASSETS:
  Other receivable from termination of lease,
   net                                              6,046,218              -
  Advances on equipment purchases                   4,646,510      4,617,360
  Prepayments                                               -      1,140,498
  Deferred tax assets                                 578,413        578,413
                                               -------------- --------------
Total other assets                                 11,271,141      6,336,271
                                               -------------- --------------

Total assets                                   $  124,981,311 $  164,210,822
                                               ============== ==============

     LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Short term loans, banks                      $   14,664,800 $   19,008,000
  Short term borrowing                                267,154              -
  Accounts payable                                 38,247,116     57,171,917
  Customer deposits                                 1,219,481        798,096
  Other payables                                    1,147,510      4,514,828
  Other payables - shareholders                       751,378        804,001
  Accrued liabilities                                 819,845      1,712,414
  Warrants liability                                        -        132,427
  Capital lease obligations-current                 1,813,477              -
  Taxes payable                                       548,930      1,064,953
                                               -------------- --------------
Total current liabilities                          59,479,691     85,206,636

OTHER LIABILITIES
  Capital lease obligations-non current             3,707,677              -
                                               -------------- --------------
Total liabilities                                  63,187,368     85,206,636
                                               -------------- --------------

Commitments and contingencies

SHAREHOLDERS' EQUITY:

  Preferred stock, $0.001 par value, 1,000,000
   shares authorized; no shares issued or
   outstanding                                              -              -
  Common stock, $0.001 par value, 74,000,000
   shares authorized, 17,839,464 and
   17,829,464 shares issued and outstanding as
   of March 31, 2013 and June 30, 2012,
   respectively                                        17,839         17,829
  Additional paid-in capital                       35,209,004     35,154,257
  Retained earnings                                11,327,801     29,010,766
  Statutory reserves                                6,248,357      6,248,357
  Accumulated other comprehensive income            8,990,942      8,572,977
                                               -------------- --------------
Total shareholders' equity                         61,793,943     79,004,186
                                               -------------- --------------
Total liabilities and shareholders' equity     $  124,981,311 $  164,210,822
                                               ============== ==============



     CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (LOSS)
                                (UNAUDITED)

                    For the three months ended   For the nine months ended
                             March 31,                   March 31,
                        2013          2012           2013          2012
                    ------------  ------------  -------------  ------------
REVENUE
  Sales of concrete $  7,221,971  $ 18,055,172  $  55,159,367  $ 98,121,928
  Manufacturing
   services                5,616       859,326      4,456,196     7,937,472
                    ------------  ------------  -------------  ------------
    Total revenue      7,227,587    18,914,498     59,615,563   106,059,400
                    ------------  ------------  -------------  ------------

COST OF REVENUE
  Concrete             6,595,355    15,406,059     45,178,730    78,219,193
  Manufacturing
   services              573,922     1,434,725      3,849,999     7,478,478
                    ------------  ------------  -------------  ------------
    Total cost of
     revenue           7,169,277    16,840,784     49,028,729    85,697,671
                    ------------  ------------  -------------  ------------

GROSS PROFIT              58,310     2,073,714     10,586,834    20,361,729

PROVISION FOR
 DOUBTFUL ACCOUNTS     1,292,052     3,559,143     11,101,244    13,920,185
SELLING, GENERAL
 AND ADMINISTRATIVE
 EXPENSES              3,761,220     3,076,851      9,408,162     9,007,506
RESEARCH AND
 DEVELOPMENT
 EXPENSES                205,343       684,523        779,135     2,739,978
LOSS FROM
 TERMINATION OF
 LEASE                         -             -      4,096,984             -
IMPAIRMENT LOSS OF
 LONG-LIVED ASSETS       250,746             -        250,746             -
                    ------------  ------------  -------------  ------------
LOSS FROM
 OPERATIONS           (5,451,051)   (5,246,803)   (15,049,437)   (5,305,940)
                    ------------  ------------  -------------  ------------

OTHER INCOME
 (EXPENSE), NET
  Other subsidy
   income                433,656     1,134,916      3,576,935     6,373,939
  Non-operating
   income
   (expense), net     (3,643,362)      (76,464)    (4,284,234)     (115,373)
  Change in fair
   value of
   warrants
   liability              30,776        47,418        132,427      (154,080)
  Interest income        280,342        89,578        338,403       425,029
  Interest expense      (404,424)     (543,219)    (1,585,696)   (1,242,434)
                    ------------  ------------  -------------  ------------
TOTAL OTHER INCOME
 (EXPENSE), NET       (3,303,012)      652,229     (1,822,165)    5,287,081
                    ------------  ------------  -------------  ------------

LOSS BEFORE
 PROVISION FOR
 INCOME TAXES         (8,754,063)   (4,594,574)   (16,871,602)      (18,859)

PROVISION (BENEFIT)
 FOR INCOME TAXES         36,027      (389,168)       811,363       649,837
                    ------------  ------------  -------------  ------------
NET LOSS AVAILABLE
 TO COMMON
 SHAREHOLDERS       $ (8,790,090) $ (4,205,406) $ (17,682,965) $   (668,696)
                    ============  ============  =============  ============

COMPREHENSIVE
 INCOME (LOSS):
  Net Loss            (8,790,090)   (4,205,406)   (17,682,965)     (668,696)
  Foreign currency
   translation
   adjustment            378,779       515,684        417,965     1,954,252
                    ------------  ------------  -------------  ------------


COMPREHENSIVE
 INCOME (LOSS)      $ (8,411,311) $ (3,689,722) $ (17,265,000) $  1,285,556
                    ============  ============  =============  ============

LOSS PER COMMON
 SHARE ALLOCATED TO
 COMMON
 SHAREHOLDERS
  Weighted average
   number of
   shares:
    Basic and
     diluted          17,839,464    17,822,623     17,837,530    17,814,837
                    ============  ============  =============  ============

  Loss per share:
    Basic and
     diluted        $      (0.49) $      (0.24) $       (0.99) $      (0.04)
                    ============  ============  =============  ============



     CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)

                                                 For the nine months ended
                                                         March 31,
                                                    2013           2012
                                               -------------  -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                     $ (17,682,965) $    (668,696)
  Adjustments to reconcile net loss to cash
   provided by (used in) operating activities:
    Depreciation                                   2,732,964      3,299,211
    Stock-based compensation expense                  54,757        112,680
    Deferred tax benefit                                   -     (2,366,431)
    Provision for doubtful accounts               11,101,244     13,920,185
    Change in fair value of warrants liability      (132,427)       154,080
    Loss realized from disposal of property,
     plant, and equipment                          3,766,895         49,363
    Loss from termination of lease                 4,096,984              -
    Impairment loss of long-lived assets             250,746              -
  Changes in operating assets and liabilities
    Accounts and notes receivable                 (1,386,175)   (27,445,560)
    Inventories                                    1,114,636       (487,577)
    Other receivables                               (479,144)       123,334
    Prepayments                                    2,528,160     (6,702,172)
    Long term prepayments                                  -      1,265,447
    Other receivable from termination of lease     2,409,825              -
    Accounts payables                             (2,688,926)     8,206,872
    Customer deposits                                414,518        364,332
    Other payables                                (2,995,764)       299,866
    Accrued liabilities                             (897,456)      (700,732)
    Taxes payable                                   (492,554)     1,354,597
                                               -------------  -------------
  Net cash provided by (used in) operating
   activities                                      1,715,318     (9,221,201)
                                               -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from disposal of property, plant,
     and equipment                                   673,315          6,288
    Purchases of property, plant and equipment      (267,744)      (251,062)
    Purchase of capital lease equipment             (287,707)             -
    Proceeds from investments, net of payments
     for investments                                       -     12,418,800
                                               -------------  -------------
  Net cash provided by investing activities          117,864     12,174,026
                                               -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from short term loan                 23,375,600     25,314,820
    Payments for short term loan                 (27,798,500)   (18,163,410)
    Proceeds from short term borrowing             3,773,251              -
    Payments for short term borrowing             (3,507,270)             -
    Rent payable to shareholder                      (52,723)        11,891
    Restricted cash                                2,243,361     (8,244,543)
                                               -------------  -------------
  Net cash used in financing activities           (1,966,281)    (1,081,242)
                                               -------------  -------------

EFFECT OF EXCHANGE RATE CHANGE ON CASH               (24,319)       (21,936)
                                               -------------  -------------

NET INCREASE (DECREASE) IN CASH                     (157,418)     1,849,647

CASH, beginning of period                          2,409,914      1,610,699
                                               -------------  -------------

CASH, end of period                            $   2,252,496  $   3,460,346
                                               =============  =============


        Contact: China ACM Investor Relations Phone: +86-10-82525361 E-mail: IR@china-acm.com

Source: China Advanced Construction Materials Group, Inc.

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