SHANGHAI, April 10, 2017 /PRNewswire/ -- Ossen Innovation
Co., Ltd. ("Ossen Innovation" or the "Company") (Nasdaq: OSN), a
China-based manufacturer of an
array of plain surface, rare earth and zinc coated pre-stressed
steel materials, today announced its financial results for the
fiscal year ended December 31,
2016.
"We saw slight dip in 2016 revenues as we continued to
scale-back our plain surface PC strands business in light of its
gross margin deterioration in recent quarters. However, revenues
from the coated products snapped back after a down year in 2015 and
grew 14.8% in 2016 as a result of the increase in sales volume that
more than offset the decrease in average selling price for coated
products. We remain cautious on our near-term outlook on the back
of continuing headwinds facing the Chinese economy and our
industry," commented Dr. Liang Tang,
Chairman of Ossen Innovation.
Twelve months Ended December 31,
2016 Financial Results
|
For the Twelve
Months Ended December 31,
|
($ millions,
except per share data)
|
2016
|
|
2015
|
|
%
Change
|
Revenues
|
$117.0
|
|
$117.9
|
|
-0.7%
|
Gross
profit
|
$16.1
|
|
$15.7
|
|
2.5%
|
Gross
margin
|
13.8%
|
|
13.3%
|
|
0.4 pp
|
Operating
income
|
$9.0
|
|
$10.2
|
|
-12.3%
|
Operating
margin
|
7.7%
|
|
8.7%
|
|
-1.0 pp
|
Net income
attributable to Ossen Innovation
|
$4.8
|
|
$5.9
|
|
-18.2%
|
EPS
|
$0.24
|
|
$0.30
|
|
-19.2%
|
For the twelve months ended December 31,
2016, revenues decreased by $0.9
million, or 0.7%, to $117.0
million from $117.9 million
for 2015. This decrease was primarily due to decreases in sales
from zinc coated products and plain surface PC strands and other
products and partially offset by increased sales from rare earth
coated products. The sales of coated PC steel materials, including
both rare earth and zinc coated products, increased by $14.1 million, or 14.8%, to $109.6 million and accounted for 94% of total
sales for the twelve months ended December
31, 2016 from $95.5 million,
or 81% of total sales, for the same period of last year. This
increase in sales of coated PC steel materials was the result of
increase in sales volume for rare earth coated products and
partially offset by decreases in average selling prices for both
rare earth and zinc coated products. Sales of rare earth
coated products increased by $16.4
million, or 19.2%, to $101.4
million for the twelve months ended December 31, 2016 from $85.0 million for the same period of last year.
Sales of zinc coated products decreased by $2.3 million, or 21.6%, to $8.2 million for the twelve months ended
December 31, 2016 from $10.5 million for the same period of last year.
Sales of plain surface PC strands and PC wires decreased by
$11.1 million, or 67.9%, to
$5.3 million for the twelve months
ended December 31, 2016 from
$16.4 million for the same period of
last year. The decrease of sales generated by plain surface PC
strands and PC wires was primarily due to the decline in sales from
wholesale market during the period. Other sales were $2.2 million for the twelve months ended
December 31, 2016, compared to
$6.0 million for the same period of
last year. This decrease was primarily due to less spare raw
materials sold in 2016 compared to 2015.
We generated approximately 4.2% and 6.6%, respectively, of our
revenues during the years ended December 31,
2016 and 2015 from sales to customers in international
markets including primarily Vietnam, South
Korea, Japan, New Zealand, Australia, Bangladesh, Brunei, Costa
Rica, and Chile, primarily
for use in the construction of bridges. The decrease in 2016 was
primarily due to one of our customers in South Korea filed for bankruptcy.
Gross profit increased by $0.4
million, or 2.5%, to $16.1
million for the twelve months ended December 31, 2016 from $15.7 million for the same period of last year.
Gross margin improved by 43 basis points to 13.8% for the twelve
months ended December 31, 2016 from
13.3% for the same period of last year. Gross margins for rare
earth and zinc coated products were 11.3% and 14.7%, respectively,
for the twelve months ended December 31,
2016, compared to 11.8% and 19.7%, respectively, for the
same period of last year. Gross margin for plain surface PC strands
and PC wires was 22.6% for the twelve months ended December 31, 2016, compared to 17.5% for the same
period of last year.
Selling expenses decreased by $0.3
million, or 25.6%, to $0.7
million for the twelve months ended December 31, 2016 from $1.0 million for the same period of last year.
The decrease was due to lower transportation cost. General and
administrative expenses increased by $1.9
million, or 42.4%, to $6.4
million for the twelve months ended December 31, 2016 from $4.5 million for the same period of last year,
mainly due to higher research and development cost as well as high
bad-debt provision in 2016. As a result, total operating expenses
increased by $1.6 million, or 30.1%,
to $7.1 million for the twelve months
ended December 31, 2016 from
$5.5 million for the same period of
last year.
Operating income decreased by $1.3
million, or 12.3%, to $9.0
million for the twelve months ended December 31, 2016 from $10.2 million for the same period of last year.
The decrease in operation income was primarily attributable to
increases in research and development cost and bad-debt provision
in 2016. Operating margin was 7.7% for the twelve months ended
December 31, 2016, compared to 8.7%
for the same period of last year.
Net income decreased by $1.3
million, or 19.5%, to $5.3
million for the twelve months ended December 31, 2016 from $6.6 million for the same period of last
year.
After deducting net income attributable to non-controlling
interest, net income attributable to Ossen Innovation decreased by
$1.1 million, or 18.2%, to
$4.8 million for the twelve months
ended December 31, 2016 from
$5.9 million for the same period of
last year. Earnings per share, both basic and diluted, were
$0.24 for the twelve months ended
December 31, 2016, compared to
$0.30 for the same period of last
year.
Balance Sheet and Cash Flows
As of December 31, 2016, the
Company had cash and restricted cash of $6.9
million, compared to $9.6
million at December 31, 2015. Notes receivable were
$15.3 million as of December 31, 2016, compared to $8.0 million at December
31, 2015. Accounts receivable were $37.3 million as of December 31, 2016, compared to $43.2 million at December
31, 2015. The average days of sales of outstanding (DSO)
were 126 days for the twelve months ended December 31, 2016, compared to 150 days for the
year 2015. The balance of prepayment to suppliers for raw materials
totaled $46.7 million as of
December 31, 2016, compared to
$55.7 million at December 31, 2015. The Company had inventories of
$26.0 million as of December 31, 2016, compared to $27.3 million at the end of 2015. Total working
capital was $101.6 million as of
December 31, 2016, compared to
$94.7 million at December 31, 2015.
Net cash provided by operating activities was $15.5 million for the twelve months ended
December 31, 2016, compared to
$12.4 million for the same period of
last year. This increase in cash provided by operating activities
was the result of a $1.3 million
decrease in inventories due to higher consumption of raw materials
at the end of 2016, a $9.0 million
decrease in advance to suppliers due to less prepayments for raw
materials of plain surface and zinc coated products, partially
offset by a $1.3 million decrease in
net income due to higher operating expenses and a $7.3 million increase in notes receivable because
our customers used less cash for payment. Net cash used in
investing activities was $17.5
thousand for the twelve months ended December 31, 2016, compared to $29.7 thousand for the same period of last year.
Net cash used in financing activities was $7.5 million for the twelve months ended
December 31, 2016, compared to
$4.4 million for the same period of
last year. The increase in cash used in financing activities was
the result of the repayment of bond, a decrease in proceeds from
notes payable and a decrease in restricted cash, partially offset
by an increase in proceeds from short-term bank loans, an increase
in proceeds from long-term bank loans and a decrease in repayment
of notes payable.
Recent Developments
On January 3, 2017, The Company
announced that the Special Committee of the Board of Directors has
retained Highline Research Advisors LLC ("HRA"), acting through
Corinthian Partners, LLC, as its financial advisor in connection
with the review and evaluation of the Proposed Transactions as
announced on August 4, 2016.
On December 30, 2016, the Company
announced that its Chief Financial Officer ("CFO"), Mr.
Feng Peng, has resigned from the
Company, effective December 31, 2016,
to pursue other opportunities. Mr. Wei
Hua, Chief Executive Officer of the Company will act as
interim CFO during the transition and search period for a new
CFO.
On November 23, 2016, the Company
announced the completion of its 2016 annual general meeting of
shareholders which was held on November
22, 2016 at the Company's headquarters located at 518
Shangcheng Road, Floor 17, Shanghai, China. At the Annual Meeting, the Company's
shareholders elected seven directors, Dr. Liang Tang,
Mr. Wei Hua, Mr. Junhong Li, Mr. Xiaobing Liu,
Ms. Yingli Pan, and Mr. Zhongcai Wu to Board of Directors; and
re-appointed BDO China Shu Lun Pan Certified Public Accountants LLP
as the Company's independent registered accounting firm for the
fiscal year ending December 31, 2016.
Conference Call
To attend the call, please use the information below for either
dial-in access or webcast access. When prompted on dial-in, ask for
"OSN FY2016 Earnings Conference Call" or be prepared to utilize the
conference ID.
Conference
Call
|
|
Date:
|
Tuesday, April 11,
2017
|
Time:
|
8:30 am ET,
U.S.
|
Conference Line
Dial-In (U.S.):
|
+1-845-675-0437
|
International Toll
Free:
|
United States:
+1-866-519-4004
China, Domestic Mobile: 400-620-8038
China, Domestic: 800-819-0121
|
Conference
ID:
|
3120010
|
Please dial in at least 10 minutes before the call to ensure
timely participation. A playback will be available through
April 19, 2017. To listen, please
call +1-646-254-3697 within the United
States or +1-855-452-5696 if calling internationally.
Utilize the pass code 3120010 for the replay.
This call is being webcast and can be accessed by clicking on
this link: http://edge.media-server.com/m/p/oatz365h
About Ossen Innovation Co., Ltd.
Ossen Innovation Co., Ltd. manufactures and sells a wide variety
of plain surface pre-stressed steel materials and rare earth coated
and zinc coated pre-stressed steel materials. The Company's
products are mainly used in the construction of bridges, as well as
in highways and other infrastructure projects. Ossen has two
manufacturing facilities located in Ma'anshan, Anhui Province, and Jiujiang, Jiangxi Province.
Safe Harbor Statements
This press release may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve
inherent risks and uncertainties that could cause actual results to
differ materially from those projected or anticipated, including
risks outlined in the Company's public filings with the Securities
and Exchange Commission, including the Company's annual report on
Form 20-F, as amended. All information provided in this press
release is as of the date hereof. Except as required by law, the
Company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements
are made or to reflect the occurrence of unanticipated
events.
For more information, please contact:
Tony Tian, CFA,
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS
OF DECEMBER 31, 2016 AND 2015
|
|
|
December
31,
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
217,631
|
|
$
|
812,277
|
Restricted
cash
|
|
6,703,242
|
|
|
8,780,443
|
Note receivable-bank
acceptance note
|
|
15,280,381
|
|
|
8,010,228
|
Accounts receivable,
net of allowance for doubtful accounts
of $985,990 and $738,101 at December 31, 2016 and 2015,
respectively
|
|
37,298,465
|
|
|
43,247,974
|
Inventories
|
|
25,999,182
|
|
|
27,276,221
|
Advance to
suppliers
|
|
46,729,285
|
|
|
55,730,089
|
Other current
assets
|
|
197,319
|
|
|
915,041
|
Total
current assets
|
|
132,425,505
|
|
|
144,772,273
|
Property, plant and
equipment, net
|
|
4,447,063
|
|
|
5,557,176
|
Land use rights,
net
|
|
3,571,184
|
|
|
3,911,084
|
TOTAL
ASSETS
|
$
|
140,443,752
|
|
$
|
154,240,533
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS
OF DECEMBER 31, 2016 AND 2015 (Continued)
|
|
|
December
31,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes payable-bank
acceptance notes
|
$
|
9,586,276
|
|
$
|
12,477,471
|
Short-term bank
loans
|
|
16,916,535
|
|
|
17,714,928
|
Accounts
payables
|
|
1,504,863
|
|
|
1,899,400
|
Customer
deposits
|
|
135,903
|
|
|
309,147
|
Taxes
payable
|
|
594,795
|
|
|
414,250
|
Other payables and
accrued liabilities
|
|
1,740,474
|
|
|
1,669,670
|
Due to related
party
|
|
3,886
|
|
|
65,769
|
Due to
shareholder
|
|
307,499
|
|
|
282,499
|
Bond payable -
current portion
|
|
-
|
|
|
15,273,177
|
Total
current liabilities
|
|
30,790,231
|
|
|
50,106,311
|
Long-term bank
loans
|
|
7,207,727
|
|
|
-
|
TOTAL
LIABILITIES
|
|
37,997,958
|
|
|
50,106,311
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Ordinary shares,
$0.01 par value: 100,000,000 shares
authorized; 20,000,000 shares issued; 19,791,110 and
19,828,790 shares outstanding as of December 31, 2016 and
2015, respectively
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
Statutory
reserve
|
|
6,123,022
|
|
|
5,631,373
|
Retained
earnings
|
|
54,590,589
|
|
|
50,258,265
|
Treasury stock, at
cost: 208,890 and 171,210 shares as of
December 31, 2016 and 2015, respectively
|
|
(192,153)
|
|
|
(155,343)
|
Accumulated other
comprehensive income/(loss)
|
|
(4,378,873)
|
|
|
2,596,227
|
TOTAL
SHAREHOLDERS' EQUITY
|
|
90,314,040
|
|
|
92,501,977
|
Non-controlling
interest
|
|
12,131,754
|
|
|
11,632,245
|
TOTAL
EQUITY
|
|
102,445,794
|
|
|
104,134,222
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY
|
$
|
140,443,752
|
|
$
|
154,240,533
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER
31, 2016, 2015 AND 2014
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
REVEUNUES
|
$
|
117,029,154
|
|
$
|
117,908,416
|
|
$
|
123,571,455
|
COST OF GOODS
SOLD
|
|
100,932,528
|
|
|
102,197,994
|
|
|
110,250,876
|
GROSS
PROFIT
|
|
16,096,626
|
|
|
15,710,422
|
|
|
13,320,579
|
Selling
expenses
|
|
734,159
|
|
|
986,378
|
|
|
772,383
|
General and
administrative expenses
|
|
6,376,383
|
|
|
4,478,413
|
|
|
6,340,584
|
Total
Operating Expenses
|
|
7,110,542
|
|
|
5,464,791
|
|
|
7,112,967
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
8,986,084
|
|
|
10,245,631
|
|
|
6,207,612
|
Financial expenses,
net
|
|
(2,827,138)
|
|
|
(2,823,952)
|
|
|
(2,401,268)
|
Other income,
net
|
|
90,584
|
|
|
371,894
|
|
|
907,941
|
INCOME BEFORE
INCOME TAX
|
|
6,249,530
|
|
|
7,793,573
|
|
|
4,714,285
|
INCOME
TAX
|
|
(926,048)
|
|
|
(1,180,167)
|
|
|
(578,727)
|
NET
INCOME
|
|
5,323,482
|
|
|
6,613,406
|
|
|
4,135,558
|
LESS: NET
INCOME
ATTRIBUTABLE TO
NONCONTROLLING INTEREST
|
|
499,509
|
|
|
716,602
|
|
|
276,682
|
|
|
NET INCOME
ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD
AND SUBSIDIARIES
|
|
4,823,973
|
|
|
5,896,804
|
|
|
3,858,876
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
|
(6,975,100)
|
|
|
(5,829,470)
|
|
|
779,135
|
TOTAL OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
(6,975,100)
|
|
|
(5,829,470)
|
|
|
779,135
|
COMPREHENSIVE
INCOME/(LOSS)
|
$
|
(2,151,127)
|
|
$
|
67,334
|
|
$
|
4,638,011
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
ORDINARY SHARE
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.24
|
|
$
|
0.30
|
|
$
|
0.19
|
WEIGHTED AVERAGE
ORDINARY SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
19,804,164
|
|
|
19,862,537
|
|
|
19,901,959
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016, 2015
AND 2014
|
|
|
|
Year Ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
CASH FLOWS FROM
OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
5,323,482
|
|
$
|
6,613,406
|
|
$
|
4,135,558
|
Adjustments to
reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
883,755
|
|
|
1,416,060
|
|
|
1,531,278
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
-
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
5,949,508
|
|
|
10,516,441
|
|
|
(5,564,338)
|
Inventories
|
|
|
1,277,040
|
|
|
(7,138,320)
|
|
|
(1,387,131)
|
Advance to
suppliers
|
|
|
9,000,804
|
|
|
597,301
|
|
|
(5,712,575)
|
Other current
assets
|
|
|
717,722
|
|
|
31,278
|
|
|
2,501,567
|
Notes
receivable - bank acceptance notes
|
|
|
(7,270,152)
|
|
|
1,914,927
|
|
|
(7,503,574)
|
Notes
receivable from related party - bank acceptance
notes
|
|
|
-
|
|
|
-
|
|
|
12,915,099
|
Increase
(Decrease) In:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(394,537)
|
|
|
(1,317,676)
|
|
|
2,713,132
|
Customer
deposits
|
|
|
(173,243)
|
|
|
(278,858)
|
|
|
(2,320,266)
|
Income tax
payable
|
|
|
180,545
|
|
|
(138,209)
|
|
|
319,918
|
Other payables
and accrued expenses
|
|
|
70,804
|
|
|
46,712
|
|
|
73,209
|
Due to related
party
|
|
|
(61,883)
|
|
|
(3,700)
|
|
|
52,558
|
Due to
shareholder
|
|
|
25,000
|
|
|
182,499
|
|
|
50,000
|
Net cash provided
by operating activities
|
|
|
15,528,845
|
|
|
12,441,861
|
|
|
1,804,435
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
|
(17,537)
|
|
|
(29,687)
|
|
|
(81,441)
|
Disposal of
property, plant and equipment
|
|
|
-
|
|
|
-
|
|
|
456
|
Net cash used in
investing activities
|
|
|
(17,537)
|
|
|
(29,687)
|
|
|
(80,985)
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016, 2015
AND 2014 (Continued)
|
|
|
|
Year Ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Decrease in
restricted cash
|
|
|
2,077,201
|
|
|
8,792,289
|
|
|
14,210,938
|
Proceeds from
short-term bank loans
|
|
|
20,422,885
|
|
|
18,462,625
|
|
|
28,475,194
|
Repayments of
short-term bank loans
|
|
|
(20,068,975)
|
|
|
(18,462,625)
|
|
|
(37,261,825)
|
Proceeds from
long-term bank loans
|
|
|
7,530,007
|
|
|
-
|
|
|
-
|
Proceeds from
notes payable-bank acceptance notes
|
|
|
17,846,117
|
|
|
36,202,800
|
|
|
55,811,380
|
Repayment of
notes payable-bank acceptance notes
|
|
|
(20,029,819)
|
|
|
(49,367,454)
|
|
|
(80,682,428)
|
Repurchase of
common share
|
|
|
(36,810)
|
|
|
(58,735)
|
|
|
-
|
Proceeds from
bond payable
|
|
|
|
|
|
-
|
|
|
15,946,109
|
Repayments of
bond payable
|
|
|
(15,273,177)
|
|
|
-
|
|
|
-
|
Net cash used in
financing activities
|
|
|
(7,532,571)
|
|
|
(4,431,100)
|
|
|
(3,500,632)
|
|
|
|
|
|
|
|
|
|
|
INCREASE
(DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
|
7,978,737
|
|
|
7,981,074
|
|
|
(1,777,182)
|
Effect of
exchange rate changes on cash
|
|
|
(8,573,384)
|
|
|
(7,853,389)
|
|
|
1,322,324
|
Cash and cash
equivalents at beginning of period
|
|
|
812,277
|
|
|
684,592
|
|
|
1,139,450
|
CASH AND CASH
EQUIVALENTS AT END OF
PERIOD
|
|
$
|
217,630
|
|
$
|
812,277
|
|
$
|
684,592
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW
INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
|
740,873
|
|
$
|
1,301,687
|
|
$
|
722,948
|
Interest
paid
|
|
$
|
2,311,039
|
|
$
|
3,353,344
|
|
$
|
1,977,014
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
|
Appropriation to
statutory reserve
|
|
$
|
491,649
|
|
$
|
609,621
|
|
$
|
406,053
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-full-year-2016-financial-results-300436975.html
SOURCE Ossen Innovation Co., Ltd.