SOURCE: China ACM

China ACM

September 28, 2010 23:36 ET

China ACM Reports Record Q4 and FY-2010 Results

BEIJING--(Marketwire - September 28, 2010) - China Advanced Construction Materials Group, Inc. (NASDAQ: CADC)

--  FY-10 Non-GAAP Adjusted Net Income to common shareholders up 36% or
    $0.95 Diluted EPS
--  Q4-10 Non-GAAP Adjusted Diluted EPS to common shareholders of $0.30
--  Teleconference begins Wednesday at 8 a.m. EDT

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 audited financial results for the 2010 fiscal fourth quarter and year ended June 30, 2010. The Company will host a conference call to discuss the results Wednesday, at 8:00 a.m. Eastern, 5:00 a.m. Pacific; details are provided below.

Fiscal Year 2010 Financial Highlights

--  Revenue increased 134% year over year to $93.0 million
--  Blended gross margin at 20.8%
--  Non-GAAP EBITDA rose 28.6% YOY to $22.2 million
--  Non-GAAP adjusted net income available to common shareholders increased
    36% YOY to $15.7 million
--  Non-GAAP adjusted fully diluted EPS to common shareholders of $0.95, up
    $0.13 from a year ago
--  Net income available to common shareholders rose 11% YOY to $12.1
    million
--  June 30, 2010 Order Backlog at record $60 million; Pipeline at $33.1
    million
--  $24.3 million in working capital at June 30, 2010

Fourth Quarter FY 2010 Financial Highlights

--  Revenue increased 114% year over year to $30.9 million
--  Gross margin at 21.5%
--  Non-GAAP adjusted net income available to common shareholders at $5.4
    million
--  Non-GAAP adjusted fully diluted EPS to common shareholders at $0.30
--  Net income available to common shareholders rose 32% YOY to $7.1
    million

Year-ago comparisons reflect a fourth quarter and fiscal year 2009 that benefitted from the supply/demand imbalance created by Beijing Olympics era construction projects which drove anomalous, higher market prices for concrete.

Management Commentary

Mr. Xianfu Han, Chairman and Chief Executive Officer of China ACM, commented, "Fiscal Year 2010 was an important year of growth and profitability for China ACM as we achieved record revenue and net income.

"We are successfully growing the company by anticipating market trends and customer requirements, building the chemical and engineering services side of the business and staying focused on strong bottom line results. We have also continued to build the company from a financial and operational perspective.

"Key developments of fiscal 2010 include appointing a new, cross-border CFO to lead the company into its next phase of growth. In the second half of the year we raised $10.6 million in an equity offering which -- combined with available cash flow -- will fully fund our growth plans. In addition, we reinforced our independent board of directors with a strategic mix of accomplished, Chinese and American senior corporate executives.

"The outlook for our markets has never been better. The outlook for high speed rail (HSR) in our Manufacturing Services is strong both near and long term, and our Concrete Sales business mix is diversified and rapidly growing. China's near and long term growth outlook remains strong and infrastructure spending on HSR, real estate, schools, government buildings, utilities and other infrastructures projects in China ACM's sweet spot remains robust."

Jeremy Goodwin, president and chief financial officer of China ACM commented, "China ACM posted record results due to strong growth across our business lines, but led by our highest margin, highest growth segments Manufacturing Services and Technical Services. We generated $22.2 million in 2010 EBITDA which provides the means to internally fund the purchase or lease of a large number of portable plants and fleet vehicles as we continue to ramp up the business, particularly in the Manufacturing Services segment which is highly scalable.

"Over 80 percent of China ACM revenue comes from government funded or state owned enterprise (SOE) sources, which are well funded over the long term. None of our business is dependent, directly or indirectly, on any China export market. In addition to HSR, our businesses today spans subways, highways, sewage lines, airports, utilities, school, public and government buildings, residential, commercial and industrial real estate construction and much more for a well diversified mix.

"Earlier this month," Mr. Goodwin added, "we announced a record $10.7 million HSR contract package, which confirms that we can win and manage large-scale projects. We will be bidding more large, long-term projects in 2011. We also recently announced over $12 million in our Concrete Sales business segment, which is spread across approximately 70 different customers and 92 contracts. With this fiscal year report, we begin reporting our full order backlog and new business pipeline for both of our key segments, all of which stand at record levels."

China ACM reported full fiscal year 2010 non-GAAP adjusted net income available to common shareholders increased 36%, year over year, to $15.7 million on $93.0 million in revenue. The non-GAAP adjusted net income available to common shareholders is before non-cash change in fair value of warrants, option and equity-based compensation as well as non-cash accretion discount (but after cash dividends paid) on the Company's 9% redeemable convertible preferred stock issue which matured on June 11, 2010.

FY 2010 Manufacturing Services revenue increased by 122 percent to a record $15.7 million year over year with a 47.2 percent gross margin. Technical Services revenue increased by 154 percent to $4.9 million with a 93.4 percent gross margin. Concrete Sales revenue at our fixed plants in Beijing increased by 151 percent to $70.6 million with a gross margin of 8.4 percent or about double the industry average.

The Company's fiscal year blended gross margin was 20.8 percent, declining from 38.3 percent a year ago as FY 2009 reflected the completion of Beijing Olympics era construction projects contracted under an anomalous supply/demand imbalance that produced far higher concrete prices than normal, the last of which, the Beijing South Railway Station, was completed in the fourth quarter of fiscal 2009.

Since that Olympics era, the concrete industry has experienced significant attrition and ongoing consolidation as the many of the smaller or less experienced businesses that participated in Beijing Olympics era business are marginalized -- creating new opportunity for well positioned companies such as China ACM. The Company's Concrete Sales gross margin increased every quarter, sequentially, in FY 2010.

China ACM fourth quarter fiscal year 2010 reported non-GAAP adjusted net income available to common shareholders of $5.4 million on $30.9 million in revenue. The non-GAAP adjusted net income available to common shareholders is before non-cash change in fair value of warrants, option and equity-based compensation as well as non-cash accretion discount (but after cash dividends paid) on the Company's 9% redeemable convertible preferred stock issue which matured on June 11, 2010.

Fourth quarter fiscal year 2010 Manufacturing Services revenue increased by 193 percent to a record $5.1 million, year over year, with a 45.7 percent gross margin. Technical Services revenue increased by 303 percent to $1.8 million, year over year, with a 94.5 percent gross margin. Concrete Sales revenue at our fixed plants in Beijing increased by 103 percent to $23.8 million, year over year, with a gross margin of 10.35 percent or about double the industry average.

In the fourth quarter, the Manufacturing Services segment increased to 16.6 percent and 35.2% percent of total company revenue and gross profit, respectively. This compares with 12.1 percent and 16.9 percent in the year-ago quarter. Additionally, Technical Services increased to 5.9 percent and 25.9 percent of total company revenue, and gross profit, respectively. This compares with 3.1 percent and 9.1 percent a year ago.

The Company's fourth quarter gross margin was 21.5 percent, which declined from 32.2 percent a year ago, as the year-earlier quarter reflected the completion of the Beijing Olympics era construction projects, and an extraordinary windfall Bad Debt Recovery income credit of $800,000, for the full year's accounts receivable, which was recorded in SG&A.

Chairman and CEO Mr. Xianfu Han concluded, "Increasingly, we are migrating our business toward a specialty, chemical engineering services model that offers healthy gross margins, reflects our core skill set and engineering corporate culture as well as our R&D, intellectual property and patented eco-friendly premium ready mix concrete ("RMC").

"China ACM is well positioned for the future. We nearly doubled our number of portable plants from nine to 16 to meet existing contracts and anticipated demand, and plan to add more portable stations in 2011 and 2012 due to attractive margins and a high return on investment. We finished the year with a diversified record backlog and new business pipeline, an excellent competitive position founded on deep marketplace relationships, enormous addressable markets and high standards of corporate governance."

Backlog

China ACM reported that, on June 30, its fiscal year-end backlog, or bids in house, was $60 million, 82% of which is contracted with Government State Owned Enterprise contractors and 12% contracted with private sector developers. This is comprised of $32 million in contracted unfilled orders for its Concrete Sales segment, and $28 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 six and twelve months for Concrete Services, and 12 to 30 months for Manufacturing Services depending on the scope of the project.

The Company's new business pipeline, or bids outstanding, which is a measure of the value of bids it has submitted for either Concrete Sales and Manufacturing Services business, was $18.33 million and $14.75 million, respectively, or $33.1 million total.

Both the backlog and new business pipeline are at Company record levels.

Market Opportunity

Urbanization and modernization are the two primary drivers of China ACM's robust long-term growth opportunity. Recent developments support the outlook for accelerated growth across the full range of China ACM's infrastructure markets.

For example, it was recently reported that at the 2010 China International Rail Transit and Urban Development Forum, the government said it wants to add 4,613 kilometers of high speed railways, at a cost of $1 billion, to the 10,000 km lines already under construction. China is also planning a new 10,000 km railway.

The HSR sector is estimated to require at least $15 billion in RMC contracts.

Separately, Bloomberg reported China will spend more than $146 billion to triple the size of its subway system over the next five years, to more than 3,000 kilometers by 2015.

And according to a report published by the Freedonia Group in May 2010, construction expenditures in China are expected to rise 9.1 percent per annum in real terms and reach $1.7 trillion by 2014.


                     Use of Non-GAAP Financial Measures

                                   Year Ended June 30,
                              -------------------------------------------
                                                               Increase
                                  2010             2009       (Decrease)
                              ------------     ------------  ------------
Net Income -GAAP              $ 13,006,395     $ 12,068,489  $    937,906
Subtract:
Dividends and accretion on
 redeemable convertible
 preferred stock              $   (955,557)    $ (1,229,473) $   (273,916)
                              ------------     ------------  ------------
Net Income available to
 Common shareholders -GAAP    $ 12,050,838     $ 10,839,016  $  1,211,822
                              ------------     ------------  ------------
Add Back:
Change in fair value of
 warrants                     $  2,488,959     $          -  $  2,488,959
                              ------------     ------------  ------------
Add Back:
Change in Option and Equity
 Based Compensation           $    595,888     $    107,477  $    488,411
                              ------------     ------------  ------------
Add Back:
Accretion of Discount on
 Redeemable Preferred Stock   $    567,580     $    600,968  $    (33,388)
                              ------------     ------------  ------------
Adjusted Net Income available
 to Common shareholders
 -non-GAAP                    $ 15,703,265     $ 11,547,461  $  4,155,804
                              ------------     ------------  ------------

Basic earnings per share -
 GAAP                         $       0.90     $       1.03  $      (0.13)
Add back:
Change in fair value of
 warrant                      $       0.18     $          -  $       0.18
                              ------------     ------------  ------------
Add back:
Change in Option and
 Equity-Based Compensation    $       0.04     $       0.01  $       0.03
                              ------------     ------------  ------------
Add back:
Accretion of Discount on
 Redeemable Preferred Stock   $       0.04     $       0.06  $      (0.02)
                              ------------     ------------  ------------
Adjusted basic earnings per
 share -Non-GAAP              $       1.16     $       1.10  $       0.06
                              ------------     ------------  ------------

Diluted earnings per
 share-GAAP                   $       0.79     $       0.86  $      (0.07)
Add back:
Change in fair value of
 warrant                      $       0.15 (a) $          -  $       0.15
                              ------------     ------------  ------------
Add back:
Change in Option and
 Equity-Based Compensation    $       0.04 (b) $       0.01  $       0.03
                              ------------     ------------  ------------
Adjusted diluted earnings per
 share -Non-GAAP              $       0.98     $       0.87  $       0.11
                              ------------     ------------  ------------
Subtract:
Cash Dividends Paid on
 Redeemable Preferred Stock   $       0.03 (c) $       0.05  $      (0.02)
                              ------------     ------------  ------------
Adjusted diluted earnings per
 share available to common -
 Non-GAAP                     $        .95     $       0.82  $       0.13
                              ------------     ------------  ------------

Weighted average number of
 shares
Basic                           13,456,134       10,526,719
                              ============     ============
Diluted                         16,521,296       14,032,479
                              ============     ============

FY 2010 Results Summary

Revenue. We generated Fiscal Year 2010 revenue of $93,040,847 compared to $39,714,802 during the same period of 2009, an increase of $53,326,045 or 134%. We increased our production volumes in and outside of Beijing this fiscal year compared to our last fiscal year.

As a result, our concrete sales revenue was $70,579,631 for the year ended June 30, 2010, an increase of $42,461,139 or 151%, despite a decrease in unit sale price, compared to the year ended June 30, 2009. The increase in revenues attributable to concrete sales was principally due to addition of two new fixed plants.

During the year ended June 30, 2010, we continued to supply concrete products to thirteen railway projects throughout China through our portable plants, specifically the projects located in Shaanxi Province, Jiangsu Province, Hebei Province, Guangxi Province, Zhejiang Province, Guangdong Province, Liaoning Province, and Beijing. These thirteen projects contributed $15,654,659 to our total revenue for the year ended June 30, 2010, an increase of $8,600,931 or 122%, compared to the year ended June 30, 2009. The increase in revenues attributable to our manufacturing services was principally due to addition of seven new portable plants to service a growing business pipeline. For these railway projects, the general contractors generally supplied their own raw materials while we provided manufacturing and transportation services.

In addition, revenue generated through our technical consulting services was $4,889,460 during the year ended June 30, 2010, an increase of $2,965,371 or 154% compared to the same fiscal quarter in 2009. During the year ended June 30, 2010, we also rented our mixer trucks to mixture stations which generated mixer rental revenues of $1,208,618, a decrease of $1,409,875 or 54%, as we experienced greater overall fleet capacity utilization as the business expands and we also generated marketing cooperation revenue of $422,356.

Gross Profit. Gross profit was $19,336,146 for the fiscal year ended June 30, 2010, as compared to $15,196,760 for the year ended June 30, 2009. Our gross profit for sale of concrete was $5,955,497, or 8.4% of revenue, for the year ended June 30, 2010, compared to $7,461,180, or 27% of revenue, for the same period last year, a decrease of $1,505,683. The lower gross margin for concrete sales for the year ended June 30, 2010, compared with the same period in 2009, reflects exceptionally high demand, and much higher industry prices, for capacity constrained premium concrete blends within unusually tight and convergent project timelines for many large Beijing Olympic era projects completed in the first half of calendar 2009 with the last installment of Olympic-era projects, namely the Beijing South Railway Station which was completed by the 4th fiscal quarter of 2009.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist of sales commissions, advertising and marketing costs, office rent and expenses, costs associated with staff and support personnel who manage our business activities, and professional and legal fees paid to third parties. We incurred selling, general and administrative expenses of $5,439,579 for the year ended June 30, 2010, an increase of $3,721,785, or 216%, as compared to $1,717,794 for the year ended June 30, 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, accretion of discount on redeemable preferred stock and stock and option-based compensation, our net income available to Common shareholders would be $15,703,265 for the year ended June 30, 2010, an increase of $4,155,804 or 36%,as compared to net income after cash dividends paid of $11,547,461 for the same period in 2009. See the section "Use of Non-GAAP Financial Measures" above for a discussion regarding the presentation of net income excluding non-cash gain (loss).

Balance Sheet Overview

China ACM had working capital of $24.3 million at the June 30, 2010 fiscal year. Shareholders' equity was $61.2 million compared with $30.0 million on June 30, 2009. The total number of shares outstanding as of September 24 is 17,572,104.

Conference Call

The company will host a corresponding conference call with a live webcast and a full Q&A session on Wednesday, September 29 at 8:00 a.m. Eastern time/5:00 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 #14145706. 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. Please visit the website at least 15 minutes early to register for the web cast and download any necessary audio software.

A telephone replay will be available through October 13, 2010, by dialing 800-642-1687 from the United States, or 706-645-9291 from outside the United States, and entering conference ID 14145706. 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 Birds' 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 five ready-mix concrete plants covering the Beijing metropolitan area. Of those five plants, it owns one and leases four. It also has technical services and preferred procurement agreements with five other independently-owned plants across China. Additionally, the Company presently owns 16 portable plants deployed in 10 provinces across China. Currently, its total RMC production designed capacity is in excess of 11 million cubic meters annually. Additional 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. Management believes that investors may find it useful to review our financial results that exclude the non-cash expenses of change in fair value of warrants and management owned options as a result of the adoption of a Financial Accounting Standards Board's ("FASB") ASC 815 (EITF 07-05) accounting standard effective from January 1, 2010.

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.

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
                        CONSOLIDATED BALANCE SHEETS
                       AS OF JUNE 30, 2010 AND 2009



                      ASSETS                        2010          2009
                                                ------------- ------------

CURRENT ASSETS:
 Cash                                           $   3,300,820 $  3,634,805
 Restricted cash                                       57,580      453,192
 Marketable securities                                      -       71,880
 Notes receivable                                           -       10,799
 Accounts receivable, net of allowance for
  doubtful accounts of $456,085 and $120,986,
  respectively                                     36,072,691   11,815,402
 Inventories                                        2,164,769    1,216,014
 Other receivables                                  1,416,653    3,845,186
 Prepayments                                        2,821,687    4,255,326
                                                ------------- ------------
  Total current assets                             45,834,200   25,302,604
                                                ------------- ------------

PLANT AND EQUIPMENT, net                           26,488,354   22,089,717
                                                ------------- ------------

OTHER ASSETS:
 Accounts receivable (non-current), net of
  allowance for doubtful accounts of $4,607
  and $328,563 respectively                           364,371    4,132,706
 Deferred tax assets                                  127,741            -
 Advances on equipment purchases                    8,382,383            -
 Long term prepayments                              4,414,391    4,794,746
                                                ------------- ------------
Total other assets                                 13,288,886    8,927,452
                                                ------------- ------------

Total assets                                    $  85,611,440 $ 56,319,773
                                                ============= ============

      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
 Short term loans                               $           - $  4,512,200
 Accounts payable                                  16,473,080   10,722,741
 Customer deposits                                    711,219            -
 Other payables                                       329,136      352,880
 Other payables - shareholders                        772,644      806,946
 Accrued liabilities                                1,652,751      593,057
 Taxes payable                                      1,569,914    3,048,179
                                                ------------- ------------
Total current liabilities                          21,508,744   20,036,003

OTHER LIABILITIES
 Warrants liabilities                               2,920,520            -
                                                ------------- ------------
Total liabilities                                  24,429,264   20,036,003
                                                ------------- ------------

COMMITMENTS AND CONTINGENCIES (Note 19)

REDEEMABLE CONVERTIBLE PREFERRED STOCK ($0.001
 par value, no share outstanding as of June 30,
 2010 and  851,125 shares issued and
 outstanding as of June 30, 2009), net of
 discount for the amount of $0 and $567,581 as
 of June 30, 2010 and 2009, respectively                    -    6,241,419
                                                ------------- ------------

SHAREHOLDERS' EQUITY:

 Preferred stock $0.001 par value, 1,000,000
  shares authorized, no share outstanding as of
  June 30, 2010 and 851,125 issued and
  outstanding as of June 30, 2009, and
  classified outside shareholders' equity (see
  above), liquidation preference of $8.00 per
  share and accrued dividends as of June 30,
  2010 and 2009                                             -            -

 Common stock, $0.001 par value, 74,000,000
  shares authorized, 17,467,104  and 10,595,500
  shares issued and outstanding as of June 30,
  2010 and 2009, respectively                          17,467       10,596
 Paid-in-capital                                   33,720,762   12,987,417
 Contribution receivable                                    -   (1,210,000)
 Retained earnings                                 19,912,444   12,783,892
 Statutory reserves                                 4,511,520    2,765,179
 Accumulated other comprehensive income             3,019,983    2,705,267
                                                ------------- ------------
Total shareholders' equity                         61,182,176   30,042,351
                                                ------------- ------------
Total liabilities, redeemable preferred stock
 and shareholders' equity                       $  85,611,440 $ 56,319,773
                                                ============= ============






    CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE (LOSS) INCOME
                FOR THE YEARS ENDED JUNE 30, 2010 AND 2009



                                                    2010          2009
                                                ------------  ------------
REVENUE
 Sales of concrete                              $ 70,579,631  $ 28,118,492
 Manufacturing services                           15,654,659     7,053,728
 Technical services                                4,889,460     1,924,089
 Mixer rental                                      1,208,618     2,618,493
 Others                                              708,479             -
                                                ------------  ------------
Total revenue                                     93,040,847    39,714,802
                                                ------------  ------------

COST OF REVENUE
 Concrete                                         64,624,134    20,657,312
 Manufacturing services                            8,261,407     2,768,255
 Technical services                                  320,835       147,418
 Mixer rental                                        151,456       945,057
 Others                                              346,869             -
                                                ------------  ------------
  Total cost of revenue                           73,704,701    24,518,042
                                                ------------  ------------

GROSS PROFIT                                      19,336,146    15,196,760

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       5,439,579     1,717,794
                                                ------------  ------------

INCOME FROM OPERATIONS                            13,896,567    13,478,966
                                                ------------  ------------

OTHER (EXPENSE) INCOME, NET
 Other subsidy income                              4,881,152     2,109,290
 Realized gain from sales of marketable
  securities                                          27,079             -
 Non-operating (expense) income, net                (120,060)     (602,020)
 Change in fair value of warrant liability        (2,488,959)            -
 Interest income                                       9,001             -
 Interest expense                                    (23,834)     (802,650)
                                                ------------  ------------
TOTAL OTHER INCOME, NET                            2,284,379       704,620
                                                ------------  ------------

INCOME BEFORE PROVISION FOR INCOME TAXES          16,180,946    14,183,586

PROVISION FOR INCOME TAXES                         3,174,551     2,115,097
                                                ------------  ------------

NET INCOME                                        13,006,395    12,068,489

DIVIDENDS AND ACCRETION ON REDEEMABLE
 CONVERTIBLE PREFERRED STOCK                        (955,557)   (1,229,473)
                                                ------------  ------------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS       12,050,838    10,839,016
                                                ------------  ------------

RECONCILIATION OF COMPREHENSIVE INCOME:
 Net Income                                       13,006,395    12,068,489
 Unrealized loss from marketable securities                -        20,605
 Foreign currency translation adjustment             335,321        86,196
                                                ------------  ------------

COMPREHENSIVE INCOME                            $ 13,341,716  $ 12,175,290
                                                ============  ============

EARNING PER COMMON SHARE ALLOCATED TO COMMON
 SHAREHOLDERS
 Weighted average number of shares:
  Basic                                           13,456,134    10,526,719
                                                ============  ============
  Diluted                                         16,521,296    14,032,479
                                                ============  ============

 Earnings per share:
  Basic                                         $       0.90  $       1.03
                                                ============  ============
  Diluted                                       $       0.79  $       0.86
                                                ============  ============






    CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE (LOSS) INCOME
                    FOR THE QUARTER ENDED JUNE 30, 2010



                                                               3 months
                                                            June 30, 2010
                                                            --------------
REVENUE
 Sales of concrete                                          $   23,820,255
 Manufacturing services                                          5,125,647
 Technical services                                              1,822,298
 Mixer rental                                                       50,242
 Others                                                            126,191
                                                            --------------
Total revenue                                                   30,944,633
                                                            --------------

COST OF REVENUE
 Concrete                                                       21,354,431
 Manufacturing services                                          2,783,306
 Technical services                                                100,716
 Mixer rental                                                       15,475
 Others                                                             38,713
                                                            --------------
  Total cost of revenue                                         24,292,641
                                                            --------------

GROSS PROFIT                                                     6,651,992

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                     1,848,409
                                                            --------------

INCOME FROM OPERATIONS                                           4,803,583
                                                            --------------

OTHER (EXPENSE) INCOME, NET
 Other subsidy income                                            1,735,974
 Realized gain from sales of marketable securities                      71
 Non-operating (expense) income, net                               (29,173)
 Change in fair value of warrant liability                       1,900,988
 Interest income                                                     2,995
 Interest expense                                                      (69)
                                                            --------------
TOTAL OTHER INCOME, NET                                          3,610,786
                                                            --------------

INCOME BEFORE PROVISION FOR INCOME TAXES                         8,414,369

PROVISION FOR INCOME TAXES                                       1,221,918
                                                            --------------

NET INCOME                                                       7,192,451

DIVIDENDS AND ACCRETION ON REDEEMABLE CONVERTIBLE PREFERRED
 STOCK                                                             (86,323)
                                                            --------------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS                      7,106,128
                                                            --------------






    CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE (LOSS) INCOME
                    FOR THE QUARTER ENDED JUNE 30, 2009


                                                                3 Months
                                                                June 30,
                                                                  2009
                                                              ------------

REVENUE
    Sales of concrete                                         $ 11,736,443
    Manufacturing services                                       1,752,574
    Technical services                                             452,506
    Mixer rental                                                   531,806
                                                              ------------
      Total revenue                                             14,473,329
                                                              ------------

COST OF SALES
    Concrete                                                     8,510,245
    Manufacturing services                                         964,899
    Technical services                                              27,676
    Mixer rental                                                   303,852
                                                              ------------
      Total cost of revenue                                      9,806,672
                                                              ------------

GROSS PROFIT                                                     4,666,657

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES                     (361,463)
                                                              ------------

INCOME FROM OPERATIONS                                           5,028,120
                                                              ------------

OTHER INCOME (EXPENSE), NET
    Other subsidy income                                           808,298
    Non-operating expense, net                                    (400,489)
    Interest expense, net                                         (166,883)
                                                              ------------
TOTAL OTHER INCOME, NET                                            240,926
                                                              ------------

INCOME BEFORE PROVISION FOR INCOME TAXES                         5,269,046

PROVISION FOR INCOME TAXES                                        (401,610)
                                                              ------------

NET INCOME                                                       5,670,656

DIVIDENDS AND ACCRETION ON REDEEMABLE CONVERTIBLE PREFERRED
 STOCK                                                             305,898
                                                              ------------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS                      5,364,758
                                                              ------------

RECONCILIATION OF COMPREHENSIVE INCOME:
    Net Income                                                   5,670,656
    Unrealized gain (loss) from marketable securities               23,921
    Foreign currency translation adjustment                        (12,643)
                                                              ------------

COMPREHENSIVE INCOME                                          $  5,681,934
                                                              ============






    CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 2010 AND 2009



                                                   2010           2009
                                               ------------   ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                    $ 13,006,395     12,068,489
 Adjustments to reconcile net income to cash
  provided by (used in) operating activities:
   Depreciation                                   2,924,616      2,184,462
   Stock-based compensation expense                 595,888        107,477
   Bad debt expense                                   8,651       (189,052)
   Change in fair value of warrants               2,488,959              -
   Realized gain on sale of marketable
    securities                                      (27,079)             -
  Changes in operating assets and liabilities
   Note receivable                                   10,811              -
   Accounts receivable                          (28,605,681)   (13,681,007)
   Inventories                                     (938,086)      (977,200)
   Other receivables                              2,439,020     (3,347,936)
   Prepayments                                    1,450,571        419,258
   Deferred tax assets                             (127,194)             -
   Long term prepayments                            370,275        179,463
   Accounts payable                               5,633,766      4,403,314
   Customer deposits                                708,177       (166,114)
   Other payables                                   148,264         97,849
   Accrued liabilities                            1,208,647        291,597
   Taxes payable                                 (1,488,516)     1,970,528
                                               ------------   ------------
 Net cash (used in) provided by operating
  activities                                       (192,516)     3,361,128
                                               ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sale of marketable securities         78,413              -
 Advanced for equipment purchase                 (4,495,436)             -
 Purchase of property, plant and equipment       (2,682,293)    (1,771,915)
                                               ------------   ------------
 Net cash used in investing activities           (7,099,316)    (1,771,915)
                                               ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from short term loan                      190,670      8,247,950
 Payments of short term loan                     (4,699,119)    (8,024,538)
 Payment to shareholder for rent                   (207,906)       (73,889)
 Restricted cash                                    395,612        459,900
 Payment to redeem preferred stock                  (75,000)             -
 Proceeds from issuance of options                  187,500              -
 Proceeds from issuance of warrants                 571,351              -
 Proceeds from issuance of common stock, net
  of offering costs                              11,117,094              -
 Preferred dividends paid                          (543,631)      (472,851)
                                               ------------   ------------
 Net cash provided by financing activities        6,936,571        136,572
                                               ------------   ------------

EFFECTS OF EXCHANGE RATE CHANGE IN CASH              21,276         (1,475)
                                               ------------   ------------

NET (DECREASE) INCREASE IN CASH                    (333,985)     1,724,310

CASH, beginning of year                           3,634,805      1,910,495
                                               ------------   ------------

CASH, end of year                              $  3,300,820      3,634,805
                                               ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH
 TRANSACTIONS
Advances on equipment purchase offset by
 Accounts Payable                              $   (628,946)  $          -
                                               ============   ============
Advances on equipment purchase paid by
 transferring of Accounts Receivable           $ (4,113,869)  $          -
                                               ============   ============
Fixed assets additions paid by transferring of
 Accounts Receivable                           $ (4,168,188)  $ (5,703,245)
                                               ============   ============
Accretion of discount on redeemable preferred
 stock                                         $    567,580   $    600,968
                                               ============   ============


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