SOURCE: China ACM
February 11, 2011 08:50 ET
China ACM Reports Second Quarter FY-2011 Results; Revenue Rises 32% to Record $34.5 Million
Q2-11 Non-GAAP Adjusted Net Income Available to Common Shareholders Up 14.5% YOY to $4.9 Million or $0.27 Adjusted EPS
Teleconference Begins Today at 10 a.m. Eastern, 7 a.m. Pacific
BEIJING--(Marketwire - February 11, 2011) - 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 financial results
for the Fiscal Year 2011 second quarter ended December 31, 2010. The
Company will host a conference call to discuss the results today at 10:00
a.m. Eastern, 7:00 a.m. Pacific; details are provided below.
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)
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Net cash (used in) provided by operating
activities (2,433,775) 1,055,871
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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) -
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Net cash used in investing activities (12,029,417) (260,835)
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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)
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Net cash provided by (used in) financing
activities 12,263,045 (2,726,172)
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EFFECT OF EXCHANGE RATE CHANGE ON CASH 2,052,476 (7,330)
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NET DECREASE IN CASH (147,671) (1,938,466)
CASH, beginning of period 3,300,820 3,634,805
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CASH, end of period $ 3,153,149 $ 1,696,339
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