Exhibit 99.1
China Architectural Engineering Reports Significant Gains in
Revenues and Earnings for First Quarter 2008
International Expansion Strategy Drives 76% Year-over-Year Rise in Sales and
Tripling of Net Income; Gross Margins Widen to 33% from 20%
ZHUHAI, China & LOS ANGELES--(BUSINESS WIRE)--China Architectural Engineering, Inc. (CAE) (AMEX:RCH - News), a leader in the design, engineering, fabrication and installation of high-end building envelope systems, today reported record financial results for the Company’s first quarter ended March 31, 2008. Revenues, gross margins, net income and earnings per share all rose substantially, driven primarily by the Company’s expansion into higher-margin markets outside of China.
Revenues for the first quarter ended March 31, 2008 totaled $25.35 million, an increase of 76% from $14.43 million reported in the first quarter of 2007. The Company attributed the increase largely to the ongoing success of its international expansion strategy. Net income for the first quarter of 2008 was $5.17 million, or $0.09 per fully diluted share, up 205% (200% on a per-share basis) from $1.70 million, or $0.03 cents per fully diluted share, in the first quarter of 2007.
Gross profit for the first quarter of 2008 was $8.45 million, up 190% from $2.90 million in the first quarter of 2007. Gross margin rose to 33% in the latest quarter from 20% a year earlier. CAE attributed the rise to the growth in higher-margin projects outside of China.
Sales, general and administrative (SG&A) expenses rose to $3.00 million in the first quarter of 2008 from $874,375 in the first quarter of 2007. As with revenues and margins, the rise in SG&A was due largely to the Company’s international expansion strategy, which led to increased expenses related to new staff, offices and other costs related to the initial start-up of CAE’s new international operations. Despite the higher SG&A, operating income in the first quarter of 2008 rose by 169%, to $5.45 million from $2.02 million in the first quarter of 2007.
Ken Yi Luo, China Architectural Engineering’s Chairman and CEO, commented, “Our results for the first quarter of 2008 confirm that CAE is now a company of true global reach, capable of serving the world’s most vibrant construction markets. In addition to China, we have established ongoing operations in the Persian Gulf region and the United States - where we were just awarded our first contract, for $11.6 million, to build a curtain-wall system at a luxury condominium project in Manhattan. Our China business also remains strong, as was evidenced by our recent announcement of a $15 million contract award for work at the ‘Silicon Valley’ project in the city of Guangzhou.”
Conference Call and Webcast Information
The Company will host a conference call at 11:00 a.m. ET today, May 14, 2008, to discuss today’s financial results. To listen to the call live, please tune into the webcast via the investor relations section of Company’s website at www.caebuilding.com or by dialing 877-407-8035 or 201-689-8035 for international callers and asking for the China Architectural Engineering, Inc. earnings call. Please call at least 10 minutes prior to the start time.
To be added to China Architectural Engineering’s investor lists, please contact Haris Tajyar at htajyar@irintl.com or at 818-382-9702.
About China Architectural Engineering
China Architectural Engineering, Inc. (CAE) (AMEX:RCH - News), which began operations in 1992, has maintained a leading position in the global commercial construction industry by providing timely, high-quality, reliable, fully integrated and cost-effective service solutions to its clients utilizing specialized technical expertise in the design, engineering, fabrication and construction of structural exterior cladding systems. It specializes in high-end curtain wall systems (including glass, stone & metal curtain walls), roofing systems, steel construction systems, eco-energy saving building conservation systems and related products, for public works and commercial real estate projects.
CAE has worked with world-renowned architects and building engineers from China and other countries and has completed over 100 large, complex and unique projects throughout China, Hong Kong, Macau, Australia and Southeast Asia, including numerous award-winning landmark buildings in many of Asia's major cities. It is now capitalizing on its industry-leading expertise by expanding aggressively beyond China into some of the most active construction markets in the world, including the Middle East, Central Asia, United States and Eastern Europe. For further information on China Architectural Engineering please visit www.caebuilding.com.
Forward Looking Statements: In addition to historical information, the statements set forth above include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, uncertainty of contract negotiations and payments under existing contracts, the Company’s dependence on government contracts, changes in the laws of the PRC that affect the Company’s operations, fluctuation and unpredictability of costs related to the Company’s products and services, the Company’s dependence on the steel and aluminum markets, reduction or reversal of the Company’s recorded revenue or profits due to “percentage of completion” method of accounting and expenses and costs associated with the issuance of convertible bonds. The forward-looking statements are also identified through use of the words “believe,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including regulatory approval requirements and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company’s reports and other filings with the Securities and Exchange Commission.
CHINA ARCHITECTURAL ENGINEERING, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2008 AND 2007 (STATED IN US DOLLARS) (UNAUDITED) |
| | | Three Months Ended March 31, | |
| | | 2008 | | 2007 | |
| | | | | | |
| | | | | | |
| Contract revenues earned | | $ | 25,349,306 | | $ | 14,430,092 | |
| | | | | | | | |
| Cost of contract revenues earned | | | (16,903,754 | ) | | (11,532,607 | ) |
| | | | | | | | |
| Gross profit | | $ | 8,445,552 | | $ | 2,897,485 | |
| | | | | | | | |
| Selling, general and administrative expenses | | | (3,000,425 | ) | | (874,375 | ) |
| | | | | | | | |
| Income from operations | | $ | 5,445,127 | | $ | 2,023,110 | |
| | | | | | | | |
| Interest income | | | 6,963 | | | 3,637 | |
| Interest expense | | | (334,137 | ) | | (4,080 | ) |
| Other income | | | 111,162 | | | | |
| | | | | | | | |
| Income before taxation | | $ | 5,229,115 | | $ | 2,022,667 | |
| | | | | | | | |
| Income tax | | | (47,367 | ) | | (327,048 | ) |
| Equity loss and minority interests | | | (8,030 | ) | | - | |
| | | | | | | | |
| Net income | | $ | 5,173,718 | | $ | 1,695,619 | |
| | | | | | | | |
| Earnings per share: | | | | | | | |
| Basic | | $ | 0.10 | | $ | 0.03 | |
| Diluted | | $ | 0.09 | | $ | 0.03 | |
| | | | | | | | |
| Weighted average shares outstanding: | | | | | | | |
| Basic | | | 51,783,416 | | | 50,000,000 | |
| Diluted | | | 55,489,023 | | | 50,000,000 | |
Note: The notes in the Company’s Form 10-Q are an integral part of these financial statements. |
CHINA ARCHITECTURAL ENGINEERING, INC. |
| |
CONSOLIDATED BALANCE SHEETS |
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007 |
(STATED IN US DOLLARS) |
| | | March 31, 2008 | | December 31, 2007 | |
| | | (unaudited) | | (audited) | |
ASSETS | | | | | |
Current assets | | | | | |
| Cash and cash equivalents | | $ | 5,950,336 | | $ | 4,040,168 | |
| Restricted cash | | | 661,340 | | | 595,016 | |
| Contract receivables, net | | | 31,867,941 | | | 13,047,559 | |
| Costs and earnings in excess of billings | | | 49,507,336 | | | 57,488,693 | |
| Job disbursements advances | | | 2,218,256 | | | 2,454,106 | |
| Tender and other site deposits | | | 341,950 | | | 83,046 | |
| Other receivables | | | 7,850,316 | | | 6,640,865 | |
| Inventories | | | 342,088 | | | 528,743 | |
| Other current assets | | | - | | | 109,533 | |
| Total current assets | | | 98,739,563 | | | 84,987,729 | |
| | | | | | | | |
Non-current assets | | | | | | | |
| Plant and equipment, net | | | 2,859,357 | | | 2,582,554 | |
| Intangible Assets | | | 54,231 | | | 70,386 | |
| Organization cost | | | - | | | 92,741 | |
| Goodwill | | | 7,995,896 | | | 7,995,896 | |
| Other non-current asset | | | 7,527 | | | 7,505 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 109,656,574 | | $ | 95,736,811 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
Current liabilities | | | | | | | |
| Short-term bank loans | | $ | 2,327,595 | | $ | 2,578,550 | |
| Accounts payable | | | 22,841,062 | | | 18,737,771 | |
| Amount due to shareholder | | | 1,953,804 | | | 1,334,856 | |
| Other payables | | | 10,633,862 | | | 9,193,186 | |
| Income tax payable | | | 2,639,710 | | | 2,673,643 | |
| Business and other taxes payable | | | 3,503,438 | | | 3,538,336 | |
| Customers’ deposits | | | 67,110 | | | 757,079 | |
| Other Accrual | | | 360,270 | | | 499,684 | |
| Total current liabilities | | | 44,326,851 | | | 39,313,105 | |
Note: The notes in the Company’s Form 10-Q are an integral part of these financial statements. |
| | | March 31, 2008 | | December 31, 2007 | |
| | | | | | |
Non-current liabilities | | | | | |
| Long term bank loans | | $ | 1,977,700 | | $ | 443,881 | |
| Convertible bond payable, net | | | 5,871,428 | | | 3,465,741 | |
| Minority interest | | | 37,264 | | | 49,482 | |
| | | | | | | | |
TOTAL LIABILITIES | | $ | 52,213,243 | | $ | 43,272,209 | |
| | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | |
| Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2008 and December 31, 2007; Common stock, $0.001 par value, 100,000,000 shares authorized, 51,783,416 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively | | $ | 51,784 | | $ | 51,784 | |
| Additional paid in capital | | | 21,594,712 | | | 23,665,558 | |
| Statutory reserves | | | 3,040,595 | | | 3,040,595 | |
| Accumulated other comprehensive income | | | 3,768,686 | | | 1,892,829 | |
| Retained earnings | | | 28,987,554 | | | 23,813,836 | |
| | | | 57,443,331 | | | 52,464,602 | |
TOTAL LIABILITIES AND | | | | | | | |
STOCKHOLDERS’ EQUITY | | $ | 109,656,574 | | $ | 95,736,811 | |
Note: The notes in the Company’s Form 10-Q are an integral part of these financial statements. |
Contact:
At Investor Relations Intl:
Haris Tajyar, Managing Partner
818-382-9702
htajyar@irintl.com
