Beijing-based China Advanced Construction Materials Group Inc. (China ACM) is a leading producer of advanced construction materials for large scale commercial, residential and infrastructure developments. The company today announced its fourth-quarter and fiscal results for the three months ended June 30, 2009, posting a quarter of proven growth and profitability.
The company posted revenue for the quarter at $14.5 million, as compared to $7.7 million for the three months ended June 30, 2008. Net income for the three months ended June 30 2009, was $5.7 million, or $0.40 per diluted share, compared to net income of $1.4 million, or $0.12 per diluted share, for the same quarter last year.
Xianfu Han, chairman and CEO of China ACM, said the results reflect the company’s efforts to secure and execute additional contracts.
“We are pleased to report that careful strategic planning and aggressive bidding for new projects has resulted in another quarter of substantial growth and increased profitability for China ACM. In our fiscal fourth quarter, revenue increased to $14.5 million from $7.7 million in the comparable quarter of last year. The substantial increase in revenue was the result of a number of contract wins for China’s national rail network, a major focus of China ACM, given the government’s goal to add 41,000 kilometers of track through the year 2020 requiring approximately 120 million tons of cement,” Han stated in the press release. “Gross profit increased by 89.5 percent to $4.7 million in the fourth quarter as we continued to expand both our manufacturing and technical services. At the same time, we resumed growth in our traditional concrete sales in the Beijing area. Net income in the fourth quarter was $5.7 million, up 311 percent from $1.4 million in the fourth quarter of 2008.”
For the fiscal year ended June 30, 2009, China ACM posted revenue at $39.7 million, up from $27.6 million in fiscal 2008; gross profit increased by 124.6 percent to $15.2 million; and net income for the 12 months rose to $12.1 million, or $0.86 per diluted share, compared to net income of $5.2 million, or $0.56 per diluted share, for fiscal 2008.
“A number of factors contributed to the substantial improvement in our bottom line. First, we continued to alter our revenue mix so that a greater percentage of our revenue is now derived from manufacturing and technical services which provide higher profit margins than the production of concrete. As of June 30, 2009, approximately 22.6 percent of our revenue was derived from these services compared to 0% at fiscal year-end 2008,” Han stated.
The company also attributed its higher net income to a reduction in corporate tax, which now stands at 15 percent, down from 25 percent. The company received the three-year tax rate as various government entities recognized China ACM’s involvement in producing high-tech products, its ongoing research and development, and its technical services. Additionally, the company was granted a two-year extension on its 6 percent value added tax credit since its concrete is produced using 30 percent recycled materials.
China ACM also increased its number of portable plants, positioning the company to obtain new projects.
“In support of our long-term strategy to participate in building out China’s railway system, we invested in five portable concrete plants subsequent to our fiscal fourth quarter, bringing the total number of portable plants to nine. Our continued investment in these plants has proven to be a successful strategy and places us in a strong competitive position to win new business going forward,” Han stated. “With the addition of four new contracts totaling $8 million since our fiscal year end, and a strong pipeline of upcoming projects, we are encouraged by the near and long-term outlook for the business. Additionally, we have strengthened our balance sheet and now have over $3 million in cash, more than $5 million of working capital, and no long-term debt.”