China ACM (CADC) Announces Preliminary Fourth Quarter of FY-10 Results

BEIJING–(Marketwire – 08/30/10) – China Advanced Construction Materials Group, Inc. (NASDAQ:CADC – News) (“China ACM”), a leading provider of ready-mix concrete and related technical services in China, today announced that based on preliminary estimates it expects revenue for the fourth quarter of Fiscal Year 2010, ended June 30, to be in the range of $30 million to $31 million, or double the year-ago quarter’s revenue of $14.5 million.

Accelerating fourth quarter sales growth spanned all three primary business segments. Manufacturing Services revenue, which includes the Company’s high speed rail (HSR) business, will approximately triple from $1.7 million a year ago; the Company previously announced it targets gross margins of 40 to 60 percent for this segment. Technical Service Consulting revenue will approximately quadruple from $425,000 a year ago; the Company targets gross margins of 80 to 90 percent. Concrete Sales will approximately double from $11.7 million a year ago; the Company targets gross margins of about ten percent. Margins in the Company’s three primary segments’ margins are expected to be within or near its targets in the fourth quarter of Fiscal Year 2010.

Based on its preliminary estimated financial results, the Company expects to report 2010 fourth quarter adjusted net income available to common shareholders (non GAAP) of $5.1 million to $5.5 million, or corresponding EPS of $0.28 to $0.30. The non-GAAP adjusted net income available to common shareholders estimate 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 redeemable convertible preferred stock issue which matured on June 11, 2010.

Adjusted net income available to common shareholders (non GAAP) compares with $5.55 million of non GAAP adjusted net income available to common shareholders in the year-ago quarter. The fourth quarter of 2009 included an anomalous fixed-plant Concrete Sales segment gross margin of 28 percent reflecting the completion of Beijing Olympics era projects, such as the Beijing South Railway Station, which held unusually high pricing and margins due to an RMC supply imbalance. In that year-ago quarter, Concrete Sales were 81 percent of revenue; since that time the growth in Manufacturing Services revenue has greatly outpaced that of Concrete Sales shifting the revenue and, particularly the earnings mix, toward Manufacturing Services. Beginning with the first quarter of Fiscal Year 2010, the Concrete Sales gross margin has increased sequentially each quarter of the year to current levels which are about double the industry average. China ACM expects that trend will continue into this fourth quarter as the business scales.

Additionally, the 2009 fourth quarter included an extraordinary windfall Bad Debt Recovery income credit of $800,000, for the full year’s accounts receivable, which was recorded in SG&A and had a substantial impact on that quarter’s earnings.

China ACM plans to announce the details of its audited Fiscal Year 2010 results in September. It will host an investor teleconference, with a full Q&A session, in conjunction with that report.

The projected and unaudited financial results discussed in this news release are preliminary only and are subject to change as a result of the completion of the Company’s annual full year audit. GAAP results are anticipated to be different than projected non-GAAP results and those differences may be material.

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 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 which houses the trendy Beijing Hyatt 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.

Forward-Looking Statements
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.