2014

Ossen Innovation Announces Fourth Quarter and Full Year 2012 Financial Results To Host Conference call at 9:00 am ET on April 30, 2013

SHANGHAI, April 30, 2013 /PRNewswire-FirstCall/ -- Ossen Innovation Co., Ltd. ("Ossen" 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 three months and twelve months ended December 31, 2012.

"We finished 2012 with positive momentum," said Dr. Liang Tang, Chairman of Ossen Innovation. "The year-over-year growth in revenues for the quarter represented our third consecutive quarter of sales growth. This reflects a gradual improvement in demand for our products. Given the shakeout that occurred among suppliers of coated and uncoated steel products over the past two years, we are in a stronger position today to take advantage of the long term growth in this industry."

Financial Summary

(in millions ex- EPS)

Q4 2012

Q4 2011

Chg.

FY 2012

FY 2011

Chg.

Revenue

$27.4

$26.8

+3%

$122.4

$118.6

+3%

Gross Profit

$3.1

$2.0

+56%

$10.8

$22.0

-51%

Net Income*

$1.3

$0.1

+1965%

$2.4

$11.5

-79%

EPS

$0.07

$0.00

+2233%

$0.12

$0.58

-79%

Shares Outstanding

19.9

20.0

-0.3%

19.9

20.0

-0.3%

*Net income attributable to Ossen Innovation Co., Ltd.

Fourth quarter 2012 Financial Results

Revenue for the three months ended December 31, 2012 was $27.4 million, an increase of 3% from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth coated products, were approximately $21.1 million, up 160% compared to approximately $8.1 million in the fourth quarter of 2011 due to overall higher demand of coated pre-stressed steel materials.

Gross profit increased from $2 million to $3.1 million, a 56% year-over-year increase.  Gross margin was 11.1%, up from 7.1% in the third quarter of 2012 and 7.3% in the fourth quarter of 2011. Gross profit and gross margin were up as a result of higher sales of rare earth coated products, which provide 1%-5% higher gross margin than similar zinc coated products.

Selling expenses fell by 30% to $0.3 million due to lower sales commissions. General and administrative expenses were $1.0 million compared to $1.2 million in the fourth quarter of 2011. Operating income was approximately $1.7 million, an increase of $1.4 million from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $1.3 million in the fourth quarter of 2012 compared to $0.1 million in the year-ago period. Earnings per share were $0.07 versus $0.00 a year ago. The weighted average diluted shares outstanding was 19.9 million compared to 20.0 million a year ago as a result of 98,041 shares repurchased by Ossen as of December 31, 2012.  

Fiscal Year 2012 Financial Results

Revenues for the twelve months ended December 31, 2012 were $122.4 million, an increase of approximately 3% compared to $118.6 million in the same period a year ago. Sales of coated products were $92.6 million, an increase of 64% from $56.5 million in 2011. Coated products, including rare earth coated products, accounted for approximately 76% of total sales in 2012.

Gross profit fell 51% in the fiscal 2012 to $10.8 million. Gross margin was 8.8% for the twelve months ended December 31, 2012 compared to 18.6% for fiscal 2011 due to lower selling prices for coated and uncoated products.

Operating expenses were $4.9 million, up 23% from $4 million in the first twelve months of 2011 primarily due to a 44% year-over-year increase in general and administrative expenses. Operating income and operating margin for 2012 was $5.9 million and 4.8% compared to $18.1 million and 15.2%, respectively, for the twelve months ended December 31, 2011.

Net income attributable to Ossen Innovation Co., Ltd. was $2.4 million, down from $11.5 million in the fiscal 2011. Earnings per share was $0.12 for the twelve months ended December 31, 2012.

Balance Sheet and Cash Flows

Ossen had approximately $27.4 million of cash and restricted cash as of December 31, 2012 compared to $21.3 million at December 31, 2011. Total accounts receivable on December 31, 2012 decreased to $45.7 million from $48.0 million on December 31, 2011. The average accounts receivable days sales outstanding were 140 days in the twelve months of 2012 compared to 94 days in the twelve months of 2011. Inventories were down from $17.2 million at December 31, 2011 to $9.8 million at December 31, 2012. Total working capital was $70.8 million at the end of 2012 and 2011.

The Company had cash outflows from operations of $8.8 million in the twelve months ended December 31, 2012 as compared to $20.1 million of outflows in the same period of 2011. The primary reason for the reduction in cash used in operations was improvement in accounts receivable collection during the twelve months of 2012, which was partially offset by increased advances to suppliers.

In November 2011, the Company's Board of Directors approved a share repurchase program for up to 500,000 shares of the Company's American Depositary Receipts ("ADSs") through May 2012. On May 31, 2012 the program was further extended for another 12 months to May 31, 2013. The Board decided to suspend the repurchase program in December 2012 to evaluate the best uses of the Company's capital.

Business Updates and Outlook

  1. Ossen's plans to add 30,000 tons of annual production capacity for rare earth coated products was delayed due to unfavorable business climate in China in 2011 and 2012. In light of recent favorable policy changes made by China's State Council (see below), the Company will proceed with its expansion plan starting in 2013. Management expects to complete the installation and start operation of its new production lines in the first half of 2014, pending its ability to expand its business and the general business environment in China at that time. Capital expenditures in fiscal year 2013 will be incurred primarily in connection with the purchase of manufacturing equipment for the construction of its new facility in Maanshan City, China, as well as the expansion of existing factory buildings to accommodate new production lines.
  2. On March 10, 2013, China's State Council announced its plan to restructure the Ministry of Railways (MOR) to separate the administrative and supervision function from the commercial arm. The responsibility for planning and policy-making for railway development is to move to the Ministry of Transport (MOT). A newly created National Railways Bureau (NRB) under the MOT will be responsible for setting technical standards of railways and supervising the safety of operations, quality of transport services and quality of railway projects. The MOR's enterprise/commercial responsibilities will be incorporated into China National Railway Co. (CNRC), which was established on March 14, 2013 with registered capital of 1.04 trillion Yuan (USD $166.8 billion) and will be administrated by the central government. These reforms are expected to attract more private investment and much needed efficiencies to the railway industry.

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 "Ossen Innovation 4th Quarter 2012 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation 4th Quarter 2012 Conference Call

Date:

Tuesday, April 30, 2013

Time:

9:00 am Eastern Time, US

Conference Line Dial-In (U.S.):

718-354-1231

International Toll Free:

United States: +1-866-519-4004
China, Domestic Mobile: 4006208038
China, Domestic: 8008190121

Conference ID:

51548431

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 7, 2013. To listen, please call + 1-855-452-5696 within the United States or + 1-646-254-3697 if calling internationally. Utilize the pass code 51548431 for the replay.

This call is being webcast and can be accessed by clicking on this link:  http://www.media-server.com/m/p/h5n84b75

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 Maanshan, 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. 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:




Ossen Innovation Co., Ltd.


Feng Peng, Chief Financial Officer


Email: feng.peng@ossencorp.com  


Phone: +86-138-1227-1616


Web:  www.osseninnovation.com




Investor Relations


MZ North America


Ted Haberfield, President


Phone: +1-760-755-2716


Email: thaberfield@mzgroup.us


Web: www.mzgroup.us






  

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Audited)


December 31,


2012


2011

ASSETS






Current assets






Cash and cash equivalents

$

1,996,764


$

1,568,261

Restricted cash


25,407,499



19,764,900

Note receivable-bank acceptance note


394,079



10,851,616

Accounts receivable, net of allowance for doubtful accounts

of $1,277,091 and $384,311 as of December 31, 2012 and 2011, respectively


45,734,381



48,049,722

Inventories


9,807,044



17,222,664

Advance to suppliers


77,948,496



41,391,174

Other current assets


1,904,626



6,495,241

Notes receivable from related party - bank acceptance notes


1,830,208



-

Accounts receivable from related party


-



20,799

  Total current assets


165,023,097



145,364,377

Property, plant and equipment, net


9,707,587



11,022,916

Land use rights, net


4,317,669



4,380,708

Prepayment for plant and equipment


7,933,361



7,869,529

TOTAL ASSETS

$

186,981,714


$

168,637,530







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable-bank acceptance notes

$

36,933,710


$

24,848,628

Short-term bank loans


50,679,026



47,966,209

Long term bank loans – current portion


4,438,386



-

Accounts payables


572,305



948,475

Customer deposits


384,602



459,915

Taxes payable


391,353



4,792

Other payables and accrued liabilities


805,196



324,423

  Total current liabilities


94,204,578



74,552,442

Long term bank loans


-



4,718,094

TOTAL LIABILITIES


94,204,578



79,270,536







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized; 20,000,000 shares issued; and 19,901,959 and 20,000,000 shares outstanding  as of December 31, 2012 and 2011, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,884,656

Statutory reserve


4,179,027



3,884,808

Retained earnings


38,311,527



36,224,467

Treasury stock, at cost: 98,041 and 0 shares as of as of December 31, 2012 and 2011, respectively


(96,608)



-

Accumulated other comprehensive income


5,999,214



5,295,641

TOTAL SHAREHOLDERS' EQUITY


82,564,615



79,489,572

Non-controlling interest


10,212,521



9,877,422

TOTAL EQUITY


92,777,136



89,366,994







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

186,981,714


$

168,637,530







 

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Audited)


Year Ended December 31,


2012


2011


2010










REVEUNUES

$

122,397,886


$

118,616,971


$

117,453,024

COST OF GOODS SOLD


111,611,457



96,588,172



92,298,319

GROSS PROFIT


10,786,429



22,028,799



25,154,705

Selling expenses


917,074



1,216,504



660,934

General and administrative expenses


3,950,934



2,747,514



1,796,995

  Total Operating Expenses


4,868,008



3,964,018



2,457,929










INCOME FROM OPERATIONS


5,918,421



18,064,781



22,696,776

Financial expenses, net


(3,556,045)



(3,480,766)



(2,437,426)

Other income, net


911,430



609,666



151,757

INCOME BEFORE INCOME TAX


3,273,806



15,193,681



20,411,107

INCOME TAX


(557,428)



(2,139,029)



(2,865,372)

NET INCOME


2,716,378



13,054,652



17,545,735

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST









335,099


1,506,947


2,897,397

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









2,381,279


11,547,705


14,648,338










OTHER COMPREHENSIVE INCOME









Foreign currency translation gain


703,573



3,102,645



1,649,960

TOTAL OTHER COMPREHENSIVE INCOME


703,573



3,102,645



1,649,960

COMPREHENSIVE INCOME

$

3,084,852


$

14,650,350


$

16,298,298










EARNINGS PER ORDINARY SHARE               









Basic and diluted

$

0.12


$

0.58


$

0.97

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING









Basic and diluted


19,942,333



20,000,000



15,150,685

 

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Audited)

 

 



Year Ended December 31,




2012



2011



2010

CASH FLOWS FROM OPERATING ACTIVITIES:










    Net income


$

2,716,378


$

13,054,652


$

17,545,735

    Adjustments to reconcile net income to net cash

      provided by/ (used in) operating activities:










    Depreciation and amortization



1,601,197



2,007,263



1,838,794

    Share-based compensation expense



86,799



105,605



19,096

Changes in operating assets and liabilities:










(Increase) Decrease In:










    Accounts receivable



2,315,342



(34,717,230)



1,824,595

    Inventories



7,415,620



10,727,118



(17,742,920)

    Advance to suppliers



(36,557,323)



(16,318,824)



(5,238,789)

    Other current assets



4,590,616



3,151,939



(2,378,426)

    Notes receivable - bank acceptance notes



10,457,537



6,785,312



(17,486,720)

    Notes receivable from related party - bank acceptance notes



(1,830,208)



3,024,895



(1,196,661)

    Account receivable from related party



20,799



686,688



(707,487)

Increase (Decrease) In:










    Accounts payable



(376,169)



(1,545,190)



2,253,390

    Customer deposits



(75,312)



(373,853)



(4,355,991)

    Income tax payable



386,561



(657,793)



552,092

    Other payables and accrued expenses



480,773



229,913



62,037

Net cash used in operating activities



(8,767,390)



(20,143,383)



(25,011,255)











CASH FLOWS FROM INVESTING ACTIVITIES:










    Purchases of plant and equipment



(32,856)



(156,288)



(73,466)

    Prepayment for purchases of plant and equipment



(1,584)



(5,941)



(7,562,237)

    Disposal of property, plant and equipment



1,458



-



-

Net cash used in investing activities



(32,982)



(162,229)



(7,635,703)











CASH FLOWS FROM FINANCING ACTIVITIES:










    Increase in restricted cash



(5,642,598)



(5,965,883)



(1,974,804)

    Proceeds from short-term bank loans



68,716,602



75,184,567



57,578,620

    Repayments of short-term bank loans



(66,384,299)



(65,543,772)



(46,603,583)

    Proceeds from long-term bank loans



-



4,718,094



-

    Repayments of long-term bank loans



(316,877)



-



-

    Proceeds from notes payable-bank acceptance notes



76,842,639



50,433,168



50,216,280

    Repayment of notes payable-bank acceptance notes



(64,959,757)



(51,598,637)



(43,947,109)

    Repurchase of common share



(96,608)



-



-

    Proceeds from issuance of ordinary shares to public,

      net of issuance cost



-



-



20,345,000

    IPO compensation



-



440,955



-

Net cash provided by financing activities



8,159,102



7,668,492



35,614,404











INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



(641,270)



(12,637,120)



2,967,446

    Effect of exchange rate changes on cash



1,069,773



1,882,399



946,069

    Cash and cash equivalents at beginning of period



1,568,261



12,322,982



8,409,467

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

1,996,764


$

1,568,261


$

12,322,982











SUPPLEMENTARY CASH FLOW INFORMATION










Cash paid during the periods:










    Income taxes paid


$

310,355


$

2,863,026


$

2,355,451

    Interest paid


$

3,676,992


$

2,998,929


$

1,949,982

Non-cash transactions:










Appropriation to statutory reserve


$

294,219


$

1,210,351


$

1,581,126

Debt forgiven by shareholder


$

-


$

-


$

12,924,000

 

 

SOURCE Ossen Innovation Co., Ltd.



RELATED LINKS
http://www.osseninnovation.com

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