China ACM

Message: China ACM Reports Net Income Up 73% to $2.6 Million for Q2 2009

China ACM Reports Net Income Up 73% to $2.6 Million for Q2 2009

posted on Feb 13, 2009 02:00AM

Generates Net Income of $2.6 Million or $0.19 per Diluted Share for the Fiscal Second Quarter of 2009

NEW YORK AND BEIJING, Feb. 13 -- China Advanced Construction Materials Group, Inc. ("China ACM") (OTCBB: CADC), a leading provider of ready-mix concrete in China, today announced financial results for the three months ended December 31, 2008.

Mr. Xianfu Han, Chairman and Chief Executive Officer, stated, "We are pleased to report that China ACM continues to thrive despite a challenging global economic environment, as evidenced by the 169% increase in gross profit and 194% increase in operating income for the second quarter of fiscal 2009. We attribute these strong results to a combination of favorable macro infrastructure trends withinChina , company-specific initiatives and a high standard of excellence in our ready-mix concrete and related services. As expected, our revenue rebounded, increasing 53% over the same period last year, as the government lifted its construction bans related to the Olympics in and aroundBeijing. Additionally, we signed a number of new contracts during the second quarter and our sales pipeline is extremely robust."

"China ACM is one of only a few concrete companies in China with the necessary permits and experience to produce ready-mix concrete according to the new government standards for major infrastructure projects. With China's recently announced$586 billion stimulus package primarily designated for infrastructure development, we believe that China ACM will be a major beneficiary of the government's initiatives as the country enhances its roads, railways, airports and other infrastructure. Approximately 75% of China ACM's revenue is derived from government infrastructure projects and we have recently begun expanding our operations outside of theBeijing area to better capitalize on our relationships with general contractors active in other provinces and inter-provincial infrastructure projects such as theBeijing to Shijiazhuang railway."

Mr. Han continued, "During the fiscal second quarter, our gross margin increased to 36.5% from 20.8%, and our operating margin increased to 30.9% from 16.1% for the same period last year. Our improved margins were a direct result of the deliberate increase in manufacturing services agreements, technical services agreements, and marketing cooperation agreements, which now comprise 38% of our revenue. Through these agreements, we provide mixed of equipments, oversight, transportation, and consulting services to third-party concrete manufacturers, who in turn supply our proprietary concrete to China ACM customers. This strategy allows us to cost effectively expand our geographic presence without the upfront capital expenditures. These services produce higher margins than our traditional ready-mix concrete business and our strategy is to have these services comprise a larger portion of our overall revenue, going forward."

Mr. Han continued, "We continued work on the East Datong to Gudian railway and the Beijing to Shanghai high-speed railroad, providing substantial quantities of ready-mix concrete this quarter for our manufacturing services. Based on our current financial results and expected future contract revenues, we are confident that we will achieve a net income of at least$9 million for fiscal 2009, after adjusting for certain transaction-related charges and expenses."

Mr. Han concluded, "We are proud of the reputation China ACM has built over the past six years among our customers, construction companies, general contractors, engineers and the Chinese government. We look forward to our continued participation in China's most important and prestigious infrastructure projects and providing ever-increasing value to our shareholders."

Revenue for the three months ended December 31, 2008 was $10.8 million, as compared to $7.1 million for the three months ended December 31, 2007. Gross profit was $4.0 million for the three months ended December 31, 2008, as compared to $1.5 million for the three months ended December 31, 2007, representing gross margin of approximately 36.5% and 20.8%, respectively. Net income for the three months ended December 31, 2008 increased to $2.6 million, or $0.19 per diluted share, compared to net income of $1.5 million, or $0.17 per diluted share, for the same quarter last year. Net income for the three months ended December 31, 2008 included a 25% income tax that the company became subject to starting January 1, 2008 and did not incur in 2007.

As of December 31, 2008, the company had cash and cash equivalents of $3.2 million, restricted cash of $881,484 and working capital of $6.7 million.

Conference Call

China ACM will also host a conference call at 8:00 a.m. Eastern Time on Friday, February 13, 2009. During the call, Mr. Xianfu Han, Chairman and Chief Executive Officer, Mr. Weili He, Vice Chairman and Chief Operating Officer, and Gene Hsiao, Chief Financial Officer, will discuss the Company's quarterly performance and financial results.

The telephone number for the conference call is (201) 689-8035. A live webcast of the call will also be available on the company's website, or the new China ACM IR HUB at: . To listen to the live call online, please visit the site at least 10 minutes early to register, download and install any necessary audio software.

The webcast will be archived on the site as well as the China ACM IR Hub, and investors will be able to access an encore recording of the conference call for one month by calling (201) 612-7415 and entering account #286, ID #312978. The encore recording will be available two hours after the conference call has concluded.

About China ACM

China ACM, founded in 2002 and based in Beijing, China, is a leading producer of advanced construction materials for large scale commercial, residential, and infrastructure developments. The company is primarily focused on producing and supplying a wide range of advanced ready-mix concrete materials for highly technical, large scale, and environmental construction projects. The company also aims to develop and produce new and innovative environmentally conscious construction materials.

China ACM provides materials and services through its seven ready-mix concrete plant network covering Beijing metropolitan area. China ACM owns one plant, leases two plants and has technical services and preferred procurement agreements with four other independently-owned plants. China ACM is ISO 9001 (product quality), ISO 14001 (environmental safety), and ISO 18001 (employment environment safety) certified. Additional information about the company is available

This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, and other factors. Additional Information regarding risks can be found in the Company's Annual Report on Form 10K and in the Company's recent report on Form 8K filed with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

Crescendo Communications, LLC
David Waldman or Klea Theoharis
Tel: (212) 671-1020
Email: [email protected]

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