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

Marketwired

BEIJING--(Marketwired - May 15, 2013) - China Advanced Construction Materials Group, Inc. (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

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