Ossen Innovation Announces Full Year 2018 Financial Results

Date : 05/14/2019 @ 12:30PM
Source : PR Newswire (US)
Stock : Ossen Innovation Company Ltd (OSN)
Quote : 4.79  0.0 (0.00%) @ 12:03PM

Ossen Innovation Announces Full Year 2018 Financial Results

Ossen Innovation (NASDAQ:OSN)
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SHANGHAI, May 14, 2019 /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, 2018.

"Ossen Innovation had a strong 2018 both in top line and bottom line," commented Dr. Liang Tang, Chairman of Ossen Innovation. "During the year, we focused on zinc coated products, which had higher demand in China market, and contributed to our improved results and overall momentum."

Twelve months Ended December 31, 2018 Financial Results




For the Twelve Months Ended December 31,

($ millions, except per share data)


2018


2017


% Change

Revenues


$136.1


$132.4


2.8%

Gross profit


$20.5


$14.7


40.0%

Gross margin


15.1%


11.1%


4.0%

Operating income


$14.9


$8.1


85.4%

Operating margin


11.0%


6.1%


4.9%

Net income attributable to Ossen Innovation


$10.4


$5.3


94.2%

EPS (per ordinary share)


$0.52


$0.27


92.6%

EPS (per ADS*)


$1.56


$0.81


92.6%


* One ADS equals to three ordinary shares.

For the twelve months ended December 31, 2018, revenues increased by $3.7 million, or 2.8%, to $136.1 million from $132.4 million for 2017. This increase was mainly attributable to a 124.0% increase in sales of zinc coated PC wires and PC strands, partially offset by an 8.1% decrease in rare earth coated products, a 20.3% decrease in plain surface products and a 43.4% decrease in other products.

The sales of coated PC steel materials, including both rare earth and zinc coated products, increased by $5.8 million, or 4.7%, to $130.2 million and accounted for 95.7% of total sales for the twelve months ended December 31, 2018 from $124.4 million, or 94.0% 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 for zinc coated products, partially offset by the decrease in sales of rare earth coated products.  Sales of rare earth coated products decreased by $9.0 million, or 8.1%, to $103.4 million for the twelve months ended December 31, 2018 from $112.4 million for the same period of last year. Sales of zinc coated products increased by $14.8 million, or 124.0%, to $26.8 million for the twelve months ended December 31, 2018 from $12.0 million for the same period of last year. The decrease of sales generated by rare earth coated products was due to decreased market demand and the Company focused on the production and sale of zinc coated products which had increased market demand in 2018. Sales of plain surface PC strands and PC wires decreased by $1.2 million, or 20.3%, to $4.8 million for the twelve months ended December 31, 2018 from $6.0 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 decreased market demand during 2018. Other sales were $1.1 million for the twelve months ended December 31, 2018, compared to $1.9 million for the same period of last year. This decrease was primarily due to fewer scrap materials sold in 2018 compared to 2017 and the decrease of service revenue.

The Company generated approximately 3.3% and 4.1%, respectively, of total revenues during the years ended December 31, 2018 and 2017 from sales to customers in international markets, including primarily Vietnam, South Korea, Japan, New Zealand, Australia, Bangladesh, Brunei, Costa Rica, South Africa, Egypt, and Amman, primarily for use in the construction of bridges.

Gross profit increased by $5.8 million, or 40.0%, to $20.5 million for the twelve months ended December 31, 2018 from $14.7 million for the same period of last year. Gross margin increased by 400 basis points to 15.1% for the twelve months ended December 31, 2018 from 11.1% for the same period of last year. The increase of gross margin was primarily due to the increase of the prices of our prestressed steel products.

Selling expenses decreased by $0.3 million, or 45.3%, to $0.3 million for the twelve months ended December 31, 2018 from $0.6 million for the same period of last year. The decrease was due to lower freight and sales commission for export sales and lower transportation cost for domestic sales as more projects were in closer proximity in 2018. General and administrative expenses decreased by $0.7 million, or 12.3%, to $5.3 million for the twelve months ended December 31, 2018 from $6.0 million for the same period of last year, mainly due to lower research and development cost in 2018. As a result, total operating expenses decreased by $1.0 million, or 15.3%, to $5.6 million for the twelve months ended December 31, 2018 from $6.6 million for the same period of last year.

Operating income increased by $6.8 million, or 85.4%, to $14.9 million for the twelve months ended December 31, 2018 from $8.1 million for the same period of last year. This increase was primarily due to higher gross profit and lower operating expenses. Operating margin was 11.0% for the twelve months ended December 31, 2018, compared to 6.1% for the same period of last year.

Net income increased by $5.5 million, or 93.0%, to $11.4 million for the twelve months ended December 31, 2018 from $5.9 million for the same period of last year.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation increased by $5.1 million, or 94.2%, to $10.4 million for the twelve months ended December 31, 2018 from $5.3 million for the same period of last year. Earnings per ordinary share, both basic and diluted, were $0.52 for the twelve months ended December 31, 2018, compared to $0.27 for the same period of last year. Earnings per ADS (one ADS equals to three ordinary shares), both basic and diluted, were $1.56 and $0.81 for 2018 and 2017, respectively.

"In 2018, the PRC steel industry completed the process of reducing overcapacity which resulted in the increase of the average steel price," continued Dr. Tang. "We expect to continue being agile in responding to the market development and focusing on high demand products to continue the momentum."

Balance Sheet and Cash Flows

As of December 31, 2018, the Company had cash and restricted cash of $7.5 million, compared to $8.1 million at December 31, 2017. Accounts receivable were $60.6 million as of December 31, 2018, compared to $51.7 million at December 31, 2017. The average days of sales of outstanding (DSO) were 150 days for the twelve months ended December 31, 2018, compared to 123 days for the year 2017. The balance of prepayment to suppliers for raw materials totaled $70.0 million as of December 31, 2018, compared to $71.3 million at December 31, 2017. The Company had inventories of $17.2 million as of December 31, 2018, compared to $13.5 million at the end of 2017. Total working capital was $113.1 million as of December 31, 2018, compared to $114.7 million at December 31, 2017.

Net cash provided by operating activities was $7.6 million for the twelve months ended December 31, 2018, compared to $3.0 million of net cash used by operating activities for the same period of last year. This was mainly due to an increase in net income, an increase in customer deposits, partially offset by an increase in accounts receivable and an increase in inventories at the end of 2018. Net cash used in investing activities was $72,305 for the twelve months ended December 31, 2018, compared to $37,848 for the same period of last year. Net cash used in financing activities was $0.7 million for the twelve months ended December 31, 2018, compared to $3.8 million for the same period of last year. The decrease in cash used in financing activities was the result of an increase in proceeds from short-term bank loans, a decrease in repayment of notes payable, partially offset by a decrease in proceeds from notes payable.

Recent Developments

On August 15, 2018, Effectual Strength Enterprises Limited ("Effectual Strength"), a British Virgin Islands company controlled by the Company's chairman, Liang Tang, purchased 600,000 shares from Fascinating Acme Development Limited, an entity controlled by the spouse of Wei Hua, our Chief Executive Officer, at a price of $2.582 per ADS, each ADS representing three Ordinary Shares; and 600,000 shares from Gross Inspiration Development Limited, an entity controlled by the spouse of Xufeng Zhou, our senior manager, at a price of $2.582 per ADS.

On October 2, 2018, Acme Innovation Limited, a British Virgin Islands company ("Acme") wholly owned by Pujiang International Group Limited, a Cayman Islands company ("Pujiang"), purchased 13,050,000 of our ordinary shares from Effectual Strength in exchange for the issuance of 54,404 shares of Pujiang to a British Virgin Islands Company Elegant Kindness Limited ("Elegant Kindness"), an entity wholly owned by Dr. Liang Tang. Consequently, Acme now holds 13,050,000 of our ordinary shares.

On December 11, 2018, Pujiang, the parent entity of Acme, submitted an application to the Hong Kong Stock Exchange (the "HK Exchange"), seeking approval of a potential listing of Pujiang's shares on the HK Exchange following a proposed initial public offering of Pujiang's shares. Such application is subject to the review of the HK Exchange.

On November 20, 2018, the Company announced the completion of its 2018 annual general meeting of shareholders. At the Annual Meeting, the Company's shareholders re-elected seven directors, Dr. Liang Tang, Mr. Wei Hua, Mr. Junhong Li, Mr. Xiaobing Liu, Ms. Yingli Pan, and Mr. Zhongcai Wu to the 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, 2018.

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:

Wei Hua, Chief Executive Officer
Email: int.tr@ossengroup.com


Phone: +86-21-6888-8886
Web: www.osseninnovation.com

Investor Relations
GIC IR
Phone: +1-917-207-2173
Email: info@goldenir.com

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2018 AND 2017



December 31,


2018


2017

ASSETS






Current assets






Cash and cash equivalents

$

3,444,421


$

950,225

Restricted cash


4,070,655



7,192,928

Accounts receivable, net of allowance for doubtful accounts of $939,535 and $868,973 at December 31, 2018 and 2017, respectively


60,586,869



51,699,930

Inventories


17,177,926



13,479,473

Advance to suppliers


69,986,656



71,280,903

Other current assets


26,496



37,390

  Total current assets


155,293,023



144,640,849

Property, plant and equipment, net


3,371,387



4,031,534

Land use rights, net


3,422,365



3,697,012

Deferred tax assets


159,136



149,511

TOTAL ASSETS

$

162,245,911


$

152,518,906







 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2018 AND 2017 (Continued)



December 31,


2018


2017







Current Liabilities






Notes payable-bank acceptance notes

$

8,722,832


$

10,253,742

Short-term bank loans


13,593,080



13,947,385

Accounts payables


289,954



359,927

Customer deposits


283,869



316,394

Taxes payable


1,547,882



450,711

Other payables and accrued liabilities


3,980,565



4,236,823

Customer deposits – related parties


4,800,384



-

Due to shareholder


1,695,259



351,499

Long-term bank loans – current portion


7,269,027



-

  Total current liabilities


42,182,852



29,916,481

Long-term bank loans


-



7,652,046

TOTAL LIABILITIES


42,182,852



37,568,527







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized; 20,000,000 shares issued; 19,791,110 shares outstanding as both of December 31, 2018 and 2017


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


7,764,813



6,672,254

Retained earnings


68,673,562



59,386,668

Treasury stock, at cost: 208,890 shares as both of December 31, 2018 and 2017


(192,153)



(192,153)

Accumulated other comprehensive income/(loss)


(4,044,969)



2,227,334

TOTAL SHAREHOLDERS' EQUITY


106,372,708



102,265,558

Non-controlling interest


13,690,351



12,684,821

TOTAL EQUITY


120,063,059



114,950,379

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

162,245,911


$

152,518,906

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016



Year Ended December 31,


2018


2017


2016










REVENUES

$

136,104,867


$

132,375,915


$

117,029,154

COST OF GOODS SOLD


115,585,803



117,721,799



100,932,528

GROSS PROFIT


20,519,064



14,654,116



16,096,626

Selling expenses


327,365



598,832



734,159

General and administrative expenses


5,263,914



6,002,121



6,376,383

  Total Operating Expenses


5,591,279



6,600,953



7,110,542










INCOME FROM OPERATIONS


14,927,785



8,053,163



8,986,084

Financial expenses, net


(1,621,486)



(1,610,337)



(2,827,138)

Other income, net


208,071



147,108



90,584

INCOME BEFORE INCOME TAX


13,514,370



6,589,934



6,249,530

INCOME TAX


(2,129,387)



(691,556)



(926,048)

NET INCOME


11,384,983



5,898,378



5,323,482

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST









1,005,530


553,067


499,509

NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD
AND SUBSIDIARIES









10,379,453


5,345,311


4,823,973










OTHER COMPREHENSIVE INCOME (LOSS)









Foreign currency translation gain (loss)


(6,272,303)



6,606,207



(6,975,100)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)


(6,272,303)



6,606,207



(6,975,100)

COMPREHENSIVE INCOME/(LOSS)

$

4,107,150


$

11,951,518


$

(2,151,127)










EARNINGS PER ORDINARY SHARE









Basic and diluted

$

0.52


$

0.27


$

0.24

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING









Basic and diluted


19,791,110



19,791,110



19,804,164

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016



Total Ossen Innovation Co., Ltd. Shareholders' Equity


Ordinary Shares



Additional Paid-in








Accumulated Other






Retained



Non Controlling



Total


$0.01 Par Value



Capital


Treasury stock



Comprehensive Income/(loss)



Statutory Reserve



Earnings



 Interest





Shares


Amount





Shares


Amount
















Balance at January 1, 2016 

20,000,000



200,000



33,971,455


(171,210)



(155,343)



2,596,227



5,631,373



50,258,265



11,632,245



104,134,222

Net income

-



-



-


-



-



-



-



4,823,973



499,509



5,323,482

Transfer to statutory reserve

-



-



-


-



-



-



491,649



(491,649)






-

Common shares repurchase

-



-



-


(37,680)



(36,810)



-



-



-






(36,810)

Foreign currency translation adjustment

-



-



-


-



-



(6,975,100)



-



-






(6,975,100)

Balance at December 31, 2016

20,000,000


$

200,000


$

33,971,455


(208,890)


$

(192,153)


$

(4,378,873)


$

6,123,022


$

54,590,589


$

12,131,754


$

102,445,794

Net income

-



-



-


-



-



-



-



5,345,311



553,067



5,898,378

Transfer to statutory reserve

-



-



-


-



-



-



549,232



(549,232)






-

Foreign currency translation adjustment

-



-



-


-



-



6,606,207



-



-






6,606,207

Balance at December 31, 2017

20,000,000


$

200,000


$

33,971,455


(208,890)


$

(192,153)


$

2,227,334


$

6,672,254


$

59,386,668


$

12,684,821


$

114,950,379

Net income

-



-



-


-



-



-



-



10,379,453



1,005,530



11,384,983

Transfer to statutory reserve

-



-



-


-



-



-



1,092,559



(1,092,559)






-

Foreign currency translation adjustment

-



-



-


-



-



(6,272,303)



-



-






(6,272,303)

Balance at December 31, 2018

20,000,000


$

200,000


$

33,971,455


(208,890)


$

(192,153)


$

(4,044,969)


$

7,764,813


$

68,673,562


$

13,690,351


$

120,063,059

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016




Year Ended December 31,




2018



2017



2016

CASH FLOWS FROM OPERATING ACTIVITIES:










 Net income


$

11,384,983


$

5,898,378


$

5,323,482

 Adjustments to reconcile net income to net cash provided by operating activities:










 Depreciation and amortization



641,647



796,566



883,755

Changes in operating assets and liabilities:










(Increase) Decrease In:










 Accounts receivable



(8,886,939)



(14,401,465)



5,949,508

 Inventories



(3,698,453)



12,519,709



1,277,040

 Advance to suppliers



1,294,247



(24,551,618)



9,000,804

 Other current assets



10,894



(6,023)



745,284

Deferred tax assets



(9,625)



16,440



(27,562)

 Notes receivable - bank acceptance notes



-



15,280,381



(7,270,152)

Increase (Decrease) In:










 Accounts payable



(69,973)



(1,144,936)



(394,537)

 Customer deposits



(32,524)



180,490



(173,243)

 Income tax payable



1,097,171



(144,084)



180,545

 Other payables and accrued expenses



(256,258)



2,496,349



70,804

Customer deposits - RPT



4,800,384



-



-

Due to related party



-



(3,912)



(61,883)

Due to shareholder



1,343,760



44,000



25,000

Net cash provided by/ (used in) operating activities



7,619,314



(3,019,725)



15,528,845











CASH FLOWS FROM INVESTING ACTIVITIES:










 Purchases of plant and equipment



(72,305)



(37,848)



(17,537)

Net cash used in investing activities



(72,305)



(37,848)



(17,537)











 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016 (Continued)




Year Ended December 31,




2018



2017



2016

CASH FLOWS FROM FINANCING ACTIVITIES:










 Proceeds from short-term bank loans



17,900,302



13,497,882



20,422,885

 Repayments of short-term bank loans



(17,543,051)



(17,380,550)



(20,068,975)

 Proceeds from long-term bank loans



-



-



7,530,007

 Proceeds from notes payable-bank acceptance notes



9,063,444



14,662,757



17,846,117

 Repayment of notes payable-bank acceptance notes



(10,120,846)



(14,588,702)



(20,029,819)

 Repurchase of common share



-



-



(36,810)

 Repayments of bond payable



-



-



(15,273,177)

Net cash used in financing activities



(700,151)



(3,808,613)



(9,609,772)











INCREASE (DECREASE) IN CASH, CASH

EQUIVALENTS, AND RESTRICTED CASH



6,846,858



(6,866,186)



5,901,536

 Effect of exchange rate changes on cash,

cash equivalents, and restricted cash



(7,474,935)



8,088,466



(8,573,383)

 Cash, cash equivalents and restricted cash

at beginning of period



8,143,153



6,920,873



9,592,720

CASH, CASH EQUIVALENTS AND

RESTRICTED CASH AT END OF PERIOD


$

7,515,076


$

8,143,153


$

6,920,873











SUPPLEMENTARY CASH FLOW INFORMATION










Cash paid during the periods:










 Income taxes paid


$

1,019,270


$

840,670


$

740,873

 Interest paid


$

1,388,283


$

1,397,635


$

2,311,039

Non-cash transactions:










Appropriation to statutory reserve


$

1,092,559


$

549,232


$

491,649

 

Cision View original content:http://www.prnewswire.com/news-releases/ossen-innovation-announces-full-year-2018-financial-results-300848759.html

SOURCE Ossen Innovation Co., Ltd.

Copyright 2019 PR Newswire

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