TORONTO, May 15, 2019 /CNW/ - Boyuan Construction Group, Inc. ("Boyuan" or the "Company") (TSX: BOY), an established China-based construction and engineering company, today reported its financial results for the three month period ended March 31, 2019. All figures are in U.S. dollars unless otherwise stated.
Third Quarter 2019 Highlights
- Revenue grew 6.7% to $121.3 million;
- Gross profit increased 8.5% to $9.4 million;
- Net income decreased to $1.4 million from $2.9 million; the decrease was largely due to impairment loss on contract assets for long outstanding receivables.
"Our continued revenue growth in the third quarter was the result of our strategic focus on second tier cities and smaller urban clusters, and the number of new construction projects commenced in the past year," said Mr. Cai Liang Shou, Chairman and CEO of Boyuan Construction Group. "While our gross profit improved and our financial position remains strong, our net income for the quarter was impacted by recognizing an impairment loss on contract assets for long outstanding receivables. Nevertheless, we remain focused on further growth in and around Jiaxing, as well as other markets where high quality projects present themselves."
Selected Second Quarter Financial Results
In thousands except share and % data
Gross profit margin
Earnings per share – diluted
In thousands except % data
March 31, 2019
June 30, 2018
Cash, cash equivalents & restricted cash
Review of Third Quarter 2019 Financial Results
Revenue for the third quarter increased 6.7% to $121.3 million compared to $113.6 million for the same period last year. The increase was attributable to the number of new construction projects taken up in the past year, resulting from the Company's continued focus on the relatively robust real estate market in Jiaxing, Zhejiang province. For the nine months period ended March 31, 2019, the Company has commenced construction on seven material new projects with an aggregate contract value of $136 million.
Cost of construction for the quarter was $111.9 million, an increase of 6.6% compared to $105.0 million in the third quarter of 2018. The two major components of the cost of construction are direct material and labour costs. Direct material costs for the quarter were $77.5 million and labor costs were $28.8 million. In comparison, direct material costs and labor costs were $71.5 million and $28.3 million respectively in the same quarter last year.
Gross profit for the quarter was $9.4 million, which represented a margin of 7.7% on revenue. Gross profit for the corresponding period of last year was $8.6 million, which represented a margin of 7.6% on revenue. The higher gross margin for this period was due to the smaller discount amount applied to the non-current contract assets and accounts receivable compared to the same period last year.
Other income for the quarter was $1.1 million, compared to $1.2 million for the same period last year. The major component of other income is the accretion income from the discount on non-current accounts receivable and contract assets.
G&A expenses were $1.0 million this quarter, a decrease of $0.8 million from the same quarter last year. The decrease was mainly attributable to the recovery of deposits relating to construction projects that were written off in the past.
The Company has received some payments this quarter from impairment loss on accounts receivable recognized in prior years, thus making a net impairment loss reversal of $0.4 million. The Company also made additional $6.5 million net impairment loss on contract assets for long outstanding debts.
Interest expense for the quarter was $1.1 million, a decrease of $0.4 million compared to the interest expense of $1.5 million in the third quarter of 2018. The decrease in interest expense was mainly due to the decrease in the bank notes payable amount and the redemption of the Debentures in the period.
The after-tax net income for the quarter was $1.4 million, or $0.05 per diluted share, compared to net income of $2.9 million, or $0.10 per diluted share, for the same period last year.
Boyuan had working capital of $63 million, including cash, cash equivalents, and restricted cash totaling $16.5 million as at March 31, 2019. This compares to $53.3 million and $15.8 million, respectively at June 30, 2018.
Boyuan's consolidated statements for the three-month period and nine-month periods ended March 31, 2019 and related management's discussion and analysis (MD&A) will be filed with securities regulatory authorities within applicable timelines and will be available via SEDAR at www.sedar.com.
1 EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a defined performance measure under IFRS.
Conference Call Notice
A conference call for investors will be held on Tuesday, May 21, 2019 at 9:30 a.m. ET, to discuss the quarterly results. All interested parties can join the conference call by dialing 1-888-231-8191 or 647-427-7450. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until May 28, 2019 at 11:59 PM (ET). To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 5295155.
About Boyuan Construction Group, Inc.
Backed by a longstanding track record, Boyuan Construction Group, Inc. ("Boyuan" or the "Company") has the knowledge and expertise to design and build a wide range of commercial and residential developments, as well as municipal infrastructure and engineering projects. Based in Jiaxing City and with a growing presence in both Zhejiang Province and Hainan Province, Boyuan focuses on construction projects in China's fast-growing regions of the Yangtze River Delta and the Hainan Province. The Company's current project backlog includes residential, commercial, industrial and mixed-use developments. For more information visit www.boyuangroup.com.
Caution Regarding Forward-Looking Information:
Certain information contained in this press release constitutes forward-looking information, which is information relating to future events or the Company's future performance and which is inherently uncertain. All information other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information contained in this press release includes, but is not limited to, management's expectation to comply with the Alternative Information Guidelines. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Company believes the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking information contained in this press release. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking information contained in this press release include, but are not limited to: risk of a general cease trade order bing issued, risk of risk of macro-economy cycle, risk from competition, risk from insufficient marketing to secure new projects, risk in obtaining additional financing, risk involving permits and licences, reliance on key management member, risk from supply of raw materials, risk of financial leverage, risk of bad debts in accounts receivables, risk involved in real estate development, foreign exchange fluctuations, political and economic conditions in China and other risks included in the Company's AIF for the fiscal year ended June 30, 2018 and in the Company's public disclosure documents filed with certain Canadian securities regulatory authorities and available at www.sedar.com. The forward-looking information contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required by law.
SOURCE Boyuan Construction Group, Inc.