China Infrastructure Construction Announces Second Quarter Fiscal 2011 Financial Results

BEIJING, Jan. 18, 2011 /PRNewswire-Asia-FirstCall/ -- China Infrastructure Construction Corp. (OTC Bulletin Board: CHNC) ("CHNC" or the "Company"), a major U.S.-listed provider of ready-mix concrete headquartered in Beijing, today announced its financial results for the second fiscal quarter ended November 30, 2010. Summary financial data is provided below:

Second Quarter Fiscal 2011 Financial Highlights

• Revenues for the second quarter of fiscal year 2011 increased by 35.4% year-over-year to $25.9 million, up from $19.2 million in the second quarter of fiscal 2010.
• Net income attributable to CHNC for the second quarter increased year-over-year to $4.9 million, compared with a net loss of $24.5 million for the second quarter of fiscal 2010.
• Gross margin for the second quarter increased to 27.9% based on gross profit of $7.2 million, compared with a 23.5% margin in the same period last year.
• Operating income and operating margin for the second quarter were $5.4 million and 20.7%, respectively, up from an operating loss of $24.3 million for the second quarter of fiscal 2010.
• Earnings per diluted share were $0.38 for the quarter, compared with a loss per diluted share of $3.72 reported in the same period a year ago.

Six Months Financial Highlights

• Revenue for the six months ended November 30, 2010 increased by 50.0% year-over-year to $47.1 million, up from $31.4 million for the six months ended November 30, 2009.
• Net income attributable to CHNC for the first half of fiscal 2011 increased to $8.9 million, compared with a net loss of $22.6 million for the six months ended November 30, 2009.
• Gross margin for the six months ended November 30, 2010 was 28.4% based on gross profit of $13.4 million, up from a 22.0% margin and gross profit of $6.9 million in the same period last year.
• Operating income and operating margin for the six months ended November 30, 2010 were $10.1 million and 21.4%, respectively, compared to an operating loss of $22.3 million for the same period last year.
• Earnings per diluted share were $0.68 for the quarter, compared with a loss per diluted share of $5.60 in the same period a year ago.

Mr. Yang Rong, Chairman and CEO of CHNC, stated, "Our growth strategy continues to prove successful, as evidenced by our strong second quarter performance. Our geographic expansion into Xi'an and Tangshan led to robust year-over-year revenue growth, while our introduction of higher-margin technical support services resulted in improved profitability. With the Chinese government ramping up its efforts to modernize the nation's infrastructure and double-digit industry growth expected over the next several years, we are upbeat about our growth potential in 2011."

Second Quarter Results of Operations

Revenues

Revenues for the three months ended November 30, 2010 were $25.9 million as compared to $19.2 million for the three months ended November 30, 2009. The increase of $6.7 million, or 35.4%, was primarily due to the Company's geographic expansion into Xi'an and Tangshan.

Gross Profit

Gross profit for the three months ended November 30, 2010 was $7.2 million as compared to $4.5 million for the three months ended November 30, 2009. The increase of $2.7 million, or 60.6%, was primarily due to an increase in sales due to the geographic expansion and development of the Company's business, China Infrastructure's expansion into technical services, and the Company's vertical integration with a sand and stone vendor. Costs of sales for the three-month period were $18.7 million as compared to $14.7 million for the same period a year ago. The Company's gross margin was 27.9% and 23.5%, for the three months ended November 30, 2010 and 2009, respectively. The increase was primarily attributable to the Company's expansion into technical solution services, which generate a higher margin than the Company's other product and service offerings.

Income from Operations

Operating income for the three months ended November 30, 2010 amounted to $5.4 million, an increase of 71.9% from non-GAAP operating income of $3.1 million in the second quarter of fiscal 2010, adjusted for a one-time, non-cash compensation expense of $27,422,242. The Company reported a GAAP operating loss of $24.3 million for the three months ended November 30, 2009. The increase was primarily due to increased sales generated by the Company's geographic expansion and its shift toward higher-margin business. Operating expenses for the three-month period totaled $1.9 million as compared to $28.8 million for the same period a year ago. The significant year-over-year decline was due to the $27.4 million one-time, non-cash compensation expense in the second quarter of fiscal 2010.

Net Income

Net income attributable to CHNC for the three months ended November 30, 2010 was $4.9 million as compared to adjusted net income attributable to CHNC of $3.0 million, representing a 63.9% increase year-over-year. The Company reported a GAAP net loss of $24.5 million for the three months ended November 30, 2009. The increase was primarily due to greater sales from the Company's geographic expansion and its shift toward higher-margin business, as well as the $27,422,242 one-time non-cash compensation expenses included in the Company's general and administrative expenses for the three months ended November 30, 2009. Earnings per diluted share were $0.38 for the quarter, compared with a loss per diluted share of $3.72 and adjusted EPS of $0.45 for the same period a year ago. The decrease from adjusted EPS in the second quarter of fiscal 2010 was due to the increase in shares outstanding from 6.6 million to 12.9 million.

Results of Operations for the Six Months Ended November 30, 2010

Revenues

Revenues for the six months ended November 30, 2010 were $47.1 million as compared to $31.4 million for the six months ended November 30, 2009. The increase of $15.7 million, or 50.0%, was primarily due to the Company's geographic expansion into Xi'an and Tangshan. The increase was also attributable to technical services the Company provided to a Tianjin concrete producer in March 2010.

Gross Profit

Gross profit for the six months ended November 30, 2010 was $13.4 million as compared to $6.9 million for the six months ended November 30, 2009. The increase of $6.5 million, or 93.4%, was primarily attributable to increased sales from the Company's geographic expansion, as well as the Company's expansion into technical services, which generate a higher margin than the Company's other product and service offerings. The increase was also attributable to the integration with the sand and stone company, which lowered the cost of goods sold. Costs of sales were $33.8 million for the six-month period, up 37.8% from $24.5 million in the same period a year ago. The Company's gross margin was 28.4% for the six months ended November 30, 2010, up from 22.0% for the six months ended November 30, 2009.

Income from Operations

Operating income for the six months ended November 30, 2010 amounted to $10.1 million as compared to an operating loss of $22.3 million and adjusted operating income of $5.1 million for the six months ended November 30, 2009. The increase of 95.6%, or $5.0 million, from adjusted operating income in the previous year period was primarily due to increased sales from the Company's geographic expansion and its shift toward-higher margin business. Operating expenses for the six months ended November 30, 2010 totaled $3.3 million as compared to $29.2 million in the same period a year ago. The decrease was due to the $27,422,242 one-time non-cash compensation expenses included in the Company's general and administrative expenses for the six months ended November 30, 2009.

Net Income

Net income attributable to CHNC for the six months ended November 30, 2010 was $8.9 million as compared to a GAAP net loss of $22.6 million and adjusted net income attributable to CHNC of $4.9 million for the six months ended November 30, 2009, representing an increase of 82.1% or $4.0 million from adjusted net income in the previous year period. Earnings per diluted share were $0.68 for the six months ended November 30, 2010, compared with a GAAP net loss per diluted share of $5.60 and adjusted net income per share of $1.21 for the same period a year ago.  

Liquidity and Capital Resources

As of November 30, 2010, the Company's current assets were $68.6 million and current liabilities were $24.9 million. Cash and cash equivalents totaled $803,470 as of November 30, 2010, compared to $6.5 million as of November 30, 2009. The Company's shareholders' equity at November 30, 2010 was $58.8 million. The Company generated $1.3 million in cash from operating activities for the six months ended November 30, 2010, compared to $3.7 million net cash used in operating activities for the same period last year. The Company used $360,446 for investing activities for the six months ended November 30, 2010, compared to $918,285 net cash used in investing activities for the same period in 2009. Net cash used in financing activities was $1.3 million for the six months ended November 30, 2010, compared to $10.2 million net cash provided by financing activities for the same period a year ago.

Conference Call and Webcast

Management will host a conference call to discuss these financial results on Wednesday, January 19, 2011 at 10:00 a.m. Eastern time (7:00 a.m. Pacific).

To participate in the call please dial (877) 941-4774, or (480) 629-9760 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at http://ViaVid.net.

A replay of the call will be available for two weeks from 1:00 p.m. EST on January 19, 2011, until 11:59 p.m. EST on February 2, 2011. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4403299.

About China Infrastructure Construction Corporation

CHNC was founded in 2002 in Beijing, China. Since then it has developed into one of the top ready-mix concrete producers in Beijing. The Company's products are environmentally friendly, as CHNC is a provider of "green" concrete in China.

Currently, the Company operates four production facilities and eight production lines with a total operating capacity of 3.5 million cubic meters based on its historical utilization rate. CHNC's production facilities are located in Beijing's Nanhaizi area, on the west side of the Yizhuang Economic Development Zone south of Beijing; the Shidu area, within the boundaries of the Zhangfang and Beijing Fangshan district; the Tangshan Development Zone, about 200 kilometers east of Beijing; and Xi'an, Shaanxi Province.

CHNC is a leader in China's "green concrete" movement, referring to the increased use of environmentally friendly and recycled materials in ready-mix concrete by reducing energy and raw material consumption during production, and by mixing and recycling various industrial wastes to create a more sustainable product.

All of CHNC's products have passed the ISO 9001:2005 Certification Quality System and Integrated Certification System, including the Quality Management System Certification, Environmental Management System Certification and Occupational Health and Safety Management System Certification issued by the Beijing Zhong Jian Xie Certification Centre.

CHNC's major projects include the Beijing World Trade Central Business District project and the Beijing Wangjing International Mansion.

Forward-looking Statements

Certain statements made in this news release, may contain forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors may include, but are not limited to, such factors as unanticipated changes in product demand especially in the infrastructure construction industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its products' applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

This information is intended to be reviewed in conjunction with the Company's filings with the Securities and Exchange Commission, which includes the accompanying notes.

SOURCE China Infrastructure Construction Corporation