SOURCE: Cavico Corp.

Cavico Corp.

August 23, 2010 16:15 ET

Cavico Announces Financial Results for Second Quarter Ended, June 30, 2010

HANOI, VIETNAM--(Marketwire - August 23, 2010) -  Cavico Corp. ("Cavico") (NASDAQ: CAVO), a leading infrastructure development company based in Vietnam, today announced its unaudited financial results for the second quarter ended June 30, 2010. Total revenue for the second quarter ended June 30, 2010 increased by $1.1 million, or 7.9% to $14.7 million from $13.6 million in the second quarter of 2009. The Company's income before interest, depreciation and amortization, income tax and non-controlling interest for the periods ended June 30, 2010 was $884,393.

Second Quarter Revenues of 2010 Compared to 2009

  Three Months Ended
  June, 30
  2010     2009   % Change
Civil Construction $11,833,191     $11,936,686   -0.9%
Mining Construction $575,512     -   N/A
Commercial Activities $2,287,272     $1,679,044   36.2%
Total Revenues $14,695,975     $13,615,730   7.9%

Revenue from the Civil Construction segment for the second quarter of 2010 was $11.8 million compared to $11.9 million in the same period of 2009. This slight decrease in revenue is due to the early stages of Company's hydropower construction projects. As the projects progress, we will be able to recognize more revenues associated with each project as we complete the future phases and therefore, expect revenues to increase. Revenue from the Mining Construction segment during the second quarter of 2010 was $575,512. There is no comparison to 2009 as the mining construction segment, solely from revenues from Cavico Mining and Construction JCS ("Cavico Mining"). The financial results for 2010 include Cavico Mining as this subsidiary's financial information is consolidated in 2010. Revenues from other Commercial Activities, which includes leasing machinery and equipment and selling raw materials and steel fabrication increased in the second quarter of 2010 by $608,228, or 36.2% to $2.3 million from $1.7 million a year ago. The revenue increase in Commercial Activities is primarily attributable to an increase in demand for construction materials as Vietnam continues its economic recovery.

Mr. Ha Quang Bui, chairman and chief executive officer of Cavico Corp. stated, "We are very optimistic of Cavico's short- and long-term growth prospects as Vietnam continues to find ways to focus its efforts on improvements and developing world-class infrastructure in order to fuel growth and attract foreign investments. As Vietnam's largest non-state-owned engineering and construction contractor, we have the expertise and sufficient equipment and are extremely well-positioned to become a significant contributor to the growth within the country as it emerges from the global economic crisis."

For the second quarter ended June 30, 2010, Cavico had a net loss before non-controlling interest of $2.5 million compared to a net profit of $255,772 for the same period in 2009. The Company's gross profit in the second quarter of 2010 decreased by $2.3 million compared to the same quarter in 2009. Gross profit for the second quarter 2010 was $458,763 or 3.1% of sales compared to $2.8 million for the same quarter 2009. This reduction of gross profit was caused by lower margins from higher costs of goods sold recorded for several projects in their early stages during the second quarter of 2010 as the costs are normally higher at the early stage, write-off of aged work-in-process and recording of project loss on certain projects. The Company anticipates that gross profit will increase during 2010 as a result of higher revenue and lower costs of revenues on continuing projects leading to higher margins. Another factor for the decrease in net income for the second quarter ended June 30, 2010 compared to 2009 was bad debt expenses of $683,460 in the second quarter of 2010 compared to $108,904 recorded in the same period of 2009. Net loss attributable to Cavico Corp. for the second quarter of 2010 was $1.8 million, or ($0.59) per share, compared to a net income of $37,445 or $0.01 per share in the same period of 2009. 

Financial Position
The Company's cash balance as of June 30, 2010 was $3.6 million as compared to $3.7 million at June 30, 2009, accounts receivable of $15.6 million and current work in progress of $30.1 million. Total current liabilities were $101.4 million, which included short-term construction loans and advances from our customers. As of June 30, 2010, total shareholders' equity was $12.5 million.

As of June 30, 2010, Cavico had a loan balance of $69.5 million with interest rates ranging from 10.5% to 18.0% and recorded $1.9 million of interest expense in the second quarter of 2010. The Company would like to repay outstanding debt and lower interest expense in 2010.

Backlog
The Company's backlog as of June 30, 2010 was $304.6 million compared to $227.7 million as of June 30, 2009. The backlog amount at June 30, 2010 is derived from the backlog at the end of the first quarter minus work completed plus new contracts signed during the second quarter of 2010. Cavico will continue to provide periodic updates when additional major contracts are confirmed.

2010 Guidance Update
Mr. Bui stated, "While we continued to see growth in our business in the second quarter compared to the levels we reported in the first quarter of this year, we anticipate that the remainder of calendar 2010 will be challenging as our customers re-evaluate spending and prioritize projects. Based on our current 2010 operating activities and backlog forecast, we are revising our guidance for total revenues for 2010 to be in the range of $65 million to $70 million, which is approximately 10% growth and we estimate our net loss will be in the range of $4 million to $5 million. We continue to believe that our market leadership position and talented workforce will enable us pursue strategic projects and capitalize on key opportunities once the Vietnamese market fully recovers."

About Cavico Corp.
Cavico Corp. is focused on large infrastructure projects, which include the construction of hydropower facilities, dams, bridges, tunnels, roads, mines and urban buildings. Cavico is also making investments in hydropower facilities, cement production plants and urban developments in Vietnam. The company employs more than 3,500 full-time, part-time, and seasonal workers on projects worldwide, with offices throughout Vietnam and a satellite office in Australia.

Founded in 2000, Cavico is a major infrastructure construction, infrastructure investment and natural resources conglomerate headquartered in Hanoi, Vietnam. Cavico is highly respected for its core competency in the construction of mission-critical infrastructure including hydroelectric plants, highways, bridges, tunnels, ports and urban community developments. One of the Company's primary competitive advantages is its ability to nurture a project "from concept through completion" with a vertical portfolio of interrelated investment, permitting, design, construction management and facility maintenance services. Cavico's project partners include top multi-national corporations and government organizations. For more information, visit http://www.cavicocorp.com. Information on the Company's Web site or any other Web site does not constitute a portion of this release.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its construction services in new markets and to offer construction services at competitive pricing, the Company's ability to complete projects in the time frame specified; anticipated revenue from the projects to attract and retain management, and to integrate and maintain technical information and management information systems; the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. These statements include, without limitation, statements regarding our ability to prepare the Company for growth; the Company's planned expansions, and predictions and guidance relating to the Company's future financial performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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