NEW YORK, May 14, 2015 (GLOBE NEWSWIRE) -- 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, on May 14, 2015, reported financial results for the quarter ended March 31, 2015, i.e., the third quarter of the fiscal year 2015.
Third Quarter Fiscal Year 2015 Financial Highlights:
- Revenue decreased by 27% year over year to $5.1 million;
- Gross loss of $0.2 million, decreased by $1 million further year over year;
- Net income of $1.0 million or basic EPS $0.5;
- $28.9 million in working capital as of March 31, 2015.
Third Quarter Fiscal Year 2015 Results
Revenue. For the three months ended March 31, 2015, we generated total revenue of approximately $5.1 million compared to approximately $7.0 million during the three months ended March 31, 2014, a decrease of approximately $1.9 million or 27%. Such decrease is due to the production volume decrease in the current quarter caused by the delays in some of our customers' production activities. Such unexpected delays were caused by prolonged bureaucratic procedures for our customers to obtain construction permits as the Beijing government strengthened regulations in the construction industry as part of the environmental protection efforts to improve air quality in the urban area.
Cost of Revenue. For the three months ended March 31, 2015, total cost of revenue was approximately $5.3 million compared to approximately $7.1 million for the three months ended March 31, 2014, a decrease of approximately $1.8 million, or 25%. The decrease in cost of revenue was primarily due to the decrease in production from our concrete plants in the Beijing area compared to the three months ended March 31, 2014.
Gross Loss. Total gross loss was approximately $0.2 million for the three months ended March 31, 2015, as compared to gross loss of approximately $0.1 million for the three months ended March 31, 2014. The decrease in gross profit for the three months ended March 31, 2015, compared with the three months ended March 31, 2014, was primarily caused by the decreased production volume while we were subject to relatively similar level of fixed costs.
Recovery of (Provision for) doubtful accounts. We had recovery of doubtful accounts of approximately $4.7 million for the three months ended March 31, 2015; while for the three months ended March 31, 2014, we incurred $0.3 million of provision for doubtful accounts. As compared to the balances of December 31, 2014, through the improved collection efforts and agreements to offset customer receivables with vendor payables, we effectively reduced balances aged from one to two years by approximately $2.0 million, balances aged from two years to three years by approximately $2.1 million and balances aged beyond three years by approximately $2.2 million.
Selling, General and Administrative Expenses. We incurred selling, general and administrative expenses of approximately $2.7 million for the three months ended March 31, 2015, a decrease of approximately $0.3 million, or 10%, as compared to approximately $3.1 million for the three months ended March 31, 2014. The decrease was principally due to decreases of approximately $0.1 million in business development expenses, $0.1 million in consulting expense, $0.1 million in board expense and $0.1 million in conference expense, offset by an increase of approximately $0.2 million in stock-based compensation.
Research and Development Expenses. Research and development expenses for the three months ended March 31, 2015 was $0.2 million, a decrease of approximately $0.2 million, or 58%, as compared to approximately $0.4 million for the three months ended March 31, 2014. The Company's research and development expenditure was maintained at a certain percentage of revenue and adjusted by outside consultants on certain projects based on economic outlook, plus discretionary spending on projects that helped to improve our competitive advantage.
Net Income (Loss) We recognized net income of approximately $1.0 million for the three months ended March 31, 2015, as compared to net loss of approximately $5.0 million for the three months ended March 31, 2014. Such change of approximately $6.0 million from net loss to net income was the result of the combination of the changes as discussed above.
Balance Sheet Overview
China ACM had working capital of $28.9 million at March 31, 2015, including $7.4 million in cash and equivalents, $11.2 million in restricted cash, $5.7 million in short term investment, $40.8 million in accounts receivable, $49.6 million in prepayments and advances, $1.5 million in other receivables and $91.0 million in current liabilities. Shareholders' equity was $41.6 million compared with $40.4 million at June 30, 2014. The total number of shares outstanding as of May 10, 2015 was approximately 2.1 million.
Fourth Quarter and Full Year Guidance of Fiscal Year 2015
For the fourth quarter ended on June 30, 2015, we expect to earn revenue of between $10 million and $15 million, net loss of between $2 million and $3 million, and EPS of between $(0.95) and $(1.43) based on fully diluted shares of 2.1 million as of May 13, 2015.
For the full fiscal year ended on June 30, 2015, we expect to earn revenue of between $54 million and $59 million, net loss of between $3.5 million and $4.5 million, and EPS of between $(1.67) and $(2.14) based on fully diluted shares of 2.1 million as of May 13, 2015.
Conference call
The company will host a conference call with a live webcast and a full Q&A session on Thursday May 14, 2015, at 8:00 a.m., Eastern Time, to discuss financial results for the third quarter of the 2015 Fiscal Year.
Individuals interested in participating in the conference call may do so by dialing 877-407-8031 from the United States, or +1 201-689-8031 from outside the United States and referencing conference ID number 13609429.
To pre-check system compatibility prior to the call, visit http://www.investorcalendar.com/aboutus/HelpDesk.asp
A webcast replay will be available until June 14, 2015 at 11:59 PM.
Replay Number (Toll Free): 1-877-660-6853
Replay Number (International): 1-201-612-7415
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, 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 in China. More information about the Company is available at www.china-acm.com, the Company routinely updates information in its website.
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, 2014. 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 | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited) | ||
| March 31, | June 30, | |
| ASSETS | 2015 | 2014 |
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 7,423,170 | $ 15,431,110 |
| Restricted cash | 11,193,053 | 13,413,264 |
| Accounts and notes receivable, net of allowance for doubtful accounts of $27,171,569 and $31,667,803, as of March 31, 2015 and June 30, 2014, respectively | 40,760,363 | 49,367,452 |
| Inventories | 1,617,108 | 1,562,309 |
| Short term investment | 5,675,916 | 14,716,023 |
| Other receivables | 1,471,532 | 4,121,550 |
| Prepayments and advances | 49,598,596 | 35,699,065 |
| Deferred tax assets | 2,202,163 | 2,585,902 |
| Total current assets | 119,941,901 | 136,896,675 |
| PROPERTY PLANT AND EQUIPMENT, net | 10,660,717 | 12,878,263 |
| ADVANCES ON EQUIPMENT PURCHASES, net | 1,978,672 | 2,855,937 |
| Total assets | $ 132,581,290 | $ 152,630,875 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Short term loans, banks and bank guarantees | $ 33,497,000 | $ 54,396,713 |
| Short term loans - other | 6,536,000 | 3,250,000 |
| Notes payable | 21,977,300 | 9,750,000 |
| Accounts payable | 19,172,268 | 32,501,363 |
| Customer deposits | 1,262,342 | 1,072,998 |
| Other payables | 2,055,564 | 2,059,739 |
| Other payables - shareholders | 83,678 | 925,385 |
| Accrued liabilities | 1,860,996 | 2,241,208 |
| Capital lease obligations - current | 4,543,337 | 4,659,756 |
| Taxes payable | 16,010 | 192,205 |
| Total current liabilities | 91,004,495 | 111,049,367 |
| OTHER LIABILITIES | ||
| Capital lease obligations - non current | -- | 1,177,586 |
| Total liabilities | 91,004,495 | 112,226,953 |
| 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, 2,080,799 and 1,486,871 shares issued and outstanding as of March 31, 2015 and June 30, 2014, respectively | 2,081 | 1,487 |
| Additional paid-in-capital | 37,993,684 | 35,233,305 |
| Accumulated deficit | (13,075,020) | (11,234,705) |
| Statutory reserves | 6,248,357 | 6,248,357 |
| Accumulated other comprehensive income | 10,407,693 | 10,155,478 |
| Total shareholders' equity | 41,576,795 | 40,403,922 |
| Total liabilities and shareholders' equity | $ 132,581,290 | $ 152,630,875 |
| CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
| (Unaudited) | ||||
| For the three months ended | For the nine months ended | |||
| March 31, | March 31, | |||
| 2015 | 2014 | 2015 | 2014 | |
| REVENUE | ||||
| Sales of concrete | 5,136,819 | 6,925,301 | 43,675,925 | 28,020,724 |
| Manufacturing services | 193 | 103,005 | 313,835 | 999,334 |
| Total revenue | 5,137,012 | 7,028,306 | 43,989,760 | 29,020,058 |
| COST OF REVENUE | ||||
| Concrete | 5,300,176 | 6,861,157 | 40,395,403 | 25,422,000 |
| Manufacturing services | 176 | 245,692 | 285,270 | 1,031,447 |
| Total cost of revenue | 5,300,352 | 7,106,849 | 40,680,673 | 26,453,447 |
| GROSS (LOSS) PROFIT | (163,340) | (78,543) | 3,309,087 | 2,566,611 |
| RECOVERY OF (PROVISION FOR) DOUBTFUL ACCOUNTS | 4,729,017 | (311,911) | 4,329,048 | (8,416,932) |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | (2,737,190) | (3,057,335) | (8,303,995) | (8,703,235) |
| RESEARCH AND DEVELOPMENT EXPENSES | (159,475) | (375,330) | (1,008,523) | (826,892) |
| LOSS REALIZED FROM DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT | (9,067) | (291,727) | (90,383) | (1,665,410) |
| INCOME (LOSS) FROM OPERATIONS | 1,659,945 | (4,114,846) | (1,764,766) | (17,045,858) |
| OTHER (EXPENSE) INCOME, NET | ||||
| Subsidy income | 154,116 | 401,971 | 1,329,108 | 1,721,476 |
| Non-operating (expense) income, net | (220,996) | (16,179) | (517,783) | 56,755 |
| Interest income | 124,978 | 900,871 | 1,026,764 | 2,084,952 |
| Interest expense | (360,546) | (844,635) | (1,187,254) | (2,024,316) |
| TOTAL OTHER (EXPENSE) INCOME, NET | (302,448) | 442,028 | 650,835 | 1,838,867 |
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | 1,357,497 | (3,672,818) | (1,113,931) | (15,206,991) |
| PROVISION FOR INCOME TAXES | (380,071) | (1,372,068) | (726,384) | (1,372,068) |
| NET INCOME (LOSS) | $ 977,426 | $ (5,044,886) | $ (1,840,315) | $ (16,579,059) |
| COMPREHENSIVE INCOME (LOSS): | ||||
| Net income (loss) | 977,426 | (5,044,886) | (1,840,315) | (16,579,059) |
| Foreign currency translation adjustment | 95,801 | (357,665) | 252,215 | 352,899 |
| COMPREHENSIVE INCOME (LOSS) | $ 1,073,227 | $ (5,402,551) | $ (1,588,100) | $ (16,226,160) |
| EARNING (LOSS) PER COMMON SHARE | ||||
| Weighted average number of shares: | ||||
| Basic | 2,080,799 | 1,486,871 | 1,888,332 | 1,486,871 |
| Diluted | 2,080,799 | 1,486,871 | 1,888,332 | 1,486,871 |
| Income (loss) per share: | ||||
| Basic | $ 0.47 | $ (3.39) | $ (0.97) | $ (11.15) |
| Diluted | $ 0.47 | $ (3.39) | $ (0.97) | $ (11.15) |
| CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (Unaudited) | ||
| For the nine months ended | ||
| March 31, | ||
| 2015 | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net loss | $ (1,840,315) | $ (16,579,059) |
| Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||
| Depreciation | 1,605,580 | 1,420,242 |
| Stock-based compensation expense | 355,793 | -- |
| Deferred tax provision | 396,355 | 1,372,068 |
| (Recovery of) provision for doubtful accounts | (4,329,048) | 8,416,932 |
| Loss realized from disposal of property, plant and equipment | 90,383 | 1,665,410 |
| Imputed interest on other receivable from termination of leases | -- | (708,996) |
| Changes in operating assets and liabilities | ||
| Accounts and notes receivable | 8,349,571 | 13,057,519 |
| Inventories | (45,950) | (274,435) |
| Other receivables | 2,784,803 | 1,925,723 |
| Other receivable from termination of lease | -- | 13,083,021 |
| Prepayments and advances | (13,423,906) | (2,500,580) |
| Accounts payable | (7,239,429) | (7,315,865) |
| Customer deposits | 182,616 | (664,646) |
| Other payables | (15,149) | 114,003 |
| Accrued liabilities | (388,322) | 402,738 |
| Taxes payable | (176,500) | (46,790) |
| Net cash (used in) provided by operating activities | (13,693,518) | 13,367,285 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Redemption (acquisition) of short-term investments, net | 9,082,534 | (21,082,697) |
| Proceeds from disposal of property, plant and equipment | 56,945 | 400,336 |
| Purchase of property, plant and equipment | (40,651) | (325,006) |
| Net cash provided by (used in) investing activities | 9,098,828 | (21,007,367) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from short term loans and bank guarantees | 39,698,800 | 61,858,500 |
| Payments of short term loans and bank guarantees | (60,808,962) | (63,407,000) |
| Proceeds from short term loans - shareholders | -- | 2,934,000 |
| Payments of short term loan - shareholders | -- | (2,934,000) |
| Proceeds from short term loans - other | 16,514,050 | 11,410,000 |
| Payments of short term loan - other | (13,260,050) | (3,912,000) |
| Proceeds from notes payable | 39,048,000 | 13,040,000 |
| Payments of notes payable | (26,926,850) | (3,260,000) |
| Payable to shareholder | 118,302 | 100,699 |
| Principal payments on capital lease obligations | (1,320,654) | (1,794,045) |
| Restricted cash | 2,284,670 | (4,244,004) |
| Proceeds from issuance of common stock | 1,167,552 | -- |
| Net cash (used in) provided by financing activities | (3,485,142) | 9,792,150 |
| EFFECTS OF EXCHANGE RATE CHANGE IN CASH | 71,892 | 6,436 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (8,007,940) | 2,158,504 |
| CASH AND CASH EQUIVALENTS, beginning of period | 15,431,110 | 3,949,939 |
| CASH AND CASH EQUIVALENTS, end of period | $ 7,423,170 | $ 6,108,443 |