Ostin Technology Group Reports Fiscal Year 2022 Results
NANJING, China, Feb. 16, 2023 /PRNewswire/ -- Ostin Technology Group Co., Ltd. (the "Company") (Nasdaq: OST), a supplier of display modules and polarizers in China, today reported its financial results for the fiscal year ended September 30, 2022.
Fiscal Year 2022 Summary
- Sales decreased by approximately $62.3 million, or 37%, to approximately $105.4 million for the fiscal year ended September 30, 2022 from approximately $167.7 million for the fiscal year ended September 30, 2021.
- Overall gross profit margin was 12% for fiscal year ended September 30, 2022 as compared to 10% for fiscal year ended September 30, 2021. The improvement in gross margin was largely due to the significantly higher gross margin of the Company's new research and development services.
- Net income was approximately $112,227 and $3.3 million in the fiscal years ended September 30, 2022 and 2021, respectively.
- Cash and cash equivalents were $3.8 million as of September 30, 2022, as compared to $0.7 million as of September 30, 2021.
"During the fiscal year ended September 30, 2022, the Company's revenue was primarily impacted by the decrease in sales of display modules resulted from the decline of market demand for display modules and the continuous lockdown in mainland China from late 2021 to 2022. However, based on seasonality in the Company's business and cyclical nature of the Company's industry, we believe that the market demand will gradually recover in the second half of 2023 and give a steady boost to the Company's sales of display modules and polarizers in the next 12 to 18 months," said Mr. Tao Ling, Chairman and CEO of the Company.
"We have transitioned certain product lines from trial to mass production and will further improve the Company's research and development capabilities by leveraging accumulated experience and expertise in new product research and development, specifically catering to the Company's major end-brand clients. Looking ahead, the Company's focus remains on enhancing operating performance and executing the Company's profitable business strategy."
For the Fiscal Years Ended September 30 | |||||||||||
(in $ millions, except earnings per share; differences due to rounding) | 2022 | 2021 | % Change | ||||||||
Revenues | $ |
105.4 | $ | 167.7 |
(37 %) | ||||||
Gross profit | 12.6 | 17.4 | (27 %) | ||||||||
Gross margin | 12 % | 10 % | 2 percentage points | ||||||||
Operating income | 0.5 | 3.2 | (86 %) | ||||||||
Net income | 0.1 | 3.3 | (97 %) | ||||||||
Earnings per share – Basic and Diluted | 0.02 | 0.30 | (93 %) | ||||||||
Results of Operations
Revenues
Sales decreased by approximately $62.3 million, or 37%, to approximately $105.4 million for the fiscal year ended September 30, 2022 from approximately $167.7 million for the fiscal year ended September 30, 2021. The significant decrease in revenues was primarily due to the decrease in sales of display modules resulted from the decline of market demand for display modules and the continuous lockdown in mainland China from late 2021 to 2022.
(in $ millions, differences due to rounding) | September 30, | September 30, | ||||||||||||||
Revenue Category | Sales Amount | As % of | Sales Amount | As % of | ||||||||||||
Sales of display modules | $ | 35.1 | 34 | % | $ | 96.1 | 58 | % | ||||||||
Sales of polarizers | 62.7 | 59 | % | 62.6 | 37 | % | ||||||||||
Research and developments | 5.7 | 5 | % | - | - | % | ||||||||||
Others | 1.9 | 2 | % | 9.0 | 5 | % | ||||||||||
Total | 105.4 | 100 | % | 167.7 | 100 | % | ||||||||||
- Sales of display modules decreased by approximately $61 million or 63%, to approximately $35.1 million for the fiscal year ended September 30, 2022 from approximately $96.1 million for the fiscal year ended September 30, 2021.
- To support mass production of polarizers, the Company invested significant capital and human resources to build and run Chengdu factory during the fiscal year ended September 30, 2022 and discontinued low-margin display modules product lines. For fiscal years ended September 30, 2022 and 2021, demand for polarizers remained stable and revenue generated from sales of polarizers was approximately $62.7 million and $62.6 million, respectively.
- For the fiscal year ended September 30, 2022, revenue generated from the Company's new research and development services was approximately $5.7 million, representing 5% of the Company's total revenues.
The following table shows the Company's revenues by geographic region for the fiscal years ended September 30, 2022 and 2021. To mitigate impact of the exchange rate fluctuations and shipping disruptions caused by the epidemic, the Company switched focus from overseas to domestic markets. As a result, sales in Hong Kong and Taiwan saw a significant decrease during the fiscal year ended September 30, 2022 as compared to the previous year.
(in $ millions, differences due to rounding) | September 30, 2022 | September 30, 2021 | ||||||||||||||
Country/Region | Sales Amount | As % of | Sales Amount | As % of | ||||||||||||
Mainland China | $ | 96.4 | 91 | % | $ | 133.9 | 80 | % | ||||||||
Hong Kong and Taiwan | 8.9 | 9 | % | 32.2 | 19 | % | ||||||||||
Others | - | - | % | 1.6 | 1 | % | ||||||||||
Total | $ | 105.4 | 100 | % | $ | 167.7 | 100 | % | ||||||||
Cost of revenues
Cost of revenues decreased by approximately $57.6 million or 38%, to approximately $92.8 million for the fiscal year ended September 30, 2022 from approximately $150.4 million for the fiscal year ended September 30, 2021. The decrease in cost of revenues was generally in line with the decrease in revenues.
The following table presents cost of revenues by revenue categories for the fiscal years ended September 30, 2022 and 2021, respectively.
For the Fiscal Years Ended | ||||||||
(in $ millions, differences due to rounding) | September 30, | September 30, | ||||||
Revenue Category | ||||||||
Sales of display modules | $ | 31.9 | $ | 84.1 | ||||
Sales of polarizers | 57.3 | 56.9 | ||||||
Research and development | 2.2 | - | ||||||
Others | 1.4 | 9.4 | ||||||
Total | $ | 92.8 | $ | 150.4 | ||||
Gross Margin | ||||||||
Sales of display modules | 9.2 | % | 12.5 | % | ||||
Sales of polarizers | 8.6 | % | 9.1 | % | ||||
Research and development | 61.7 | % | - | % | ||||
Others | 26.6 | 0.7 | % | (3.6) | % | |||
Total Gross Margin | 12 | % | 10 | % | ||||
Gross profit
The Company's gross profit decreased by approximately $4.8 million, or 27%, to approximately $12.6 million for the fiscal year ended September 30, 2022 from approximately $17.4 million for the fiscal year ended September 30, 2021. Overall gross profit margin was 12% for the fiscal year ended September 30, 2022 as compared to 10% for the fiscal year ended September 30, 2021. The improvement in gross margin was largely due to the significantly higher gross margin of the Company's new research and development services.
The decline in the gross profit margin of display modules and polarizers was primarily due to the substantial rise in logistics costs, electricity, and wages resulting from the prolonged lockdowns in mainland China from late 2021 to 2022. Additionally, the decrease in unit sales price and volume was due to declining market demand and heightened market competition.
Selling and marketing expenses
Selling and marketing expenses decreased by approximately $1.2 million, or 30%, to approximately $2.8 million for the fiscal year ended September 30, 2022 as compared to approximately $4.0 million for the fiscal year ended September 30, 2021. The decrease in selling and marketing expenses was mainly due to the decrease in revenue.
General and administrative expenses
General and administrative ("G&A") expenses increased by approximately $2.7 million, or 53%, to approximately $7.7 million for the fiscal year ended September 30, 2022 as compared to approximately $5.0 million for the fiscal year ended September 30, 2021. The increase in G&A expenses was due to the increase in professional fees after the Company's IPO and the increase in administrative expenses in complying with regulations imposed by local government to control COVID-19.
Research and development expenses
The Company's research and development expenses were approximately $2.5 million and $5.7 million for the fiscal years ended September 30, 2022 and 2021, respectively. The COVID-19 pandemic caused delays in the delivery of research and development materials as well as lockdowns and quarantine measures for the Company's research and development staff in the PRC, leading to some suspended or slowed projects and therefore a decrease in research and development expenses.
Net income
As a result of the foregoing, we recorded a net income of approximately $112,227 and $3.3 million in the fiscal years ended September 30, 2022 and 2021, respectively.
Cash and cash equivalents
Cash and cash equivalents were $3.8 million as of September 30, 2022, as compared to $0.7 million as of September 30, 2021.
Recent Development
During the fiscal year ended September 30, 2022, the Company continued efforts to develop new products and have introduced a protection film to customers. The protection film is currently being tested by the Company's customers and is expected to be put into production at the beginning of 2023.
In an effort to increase the Company's profits as well as utilizing extensive resources and expertise in the display panel industry, the Company has diversified into the production and sales of display products for end users such as commercial display and consumer electronics, which generally have a higher profit margin than our display module products. The Company has independently developed new technologies that are used in proprietary products, such as the all-in-one intelligent conference system and Pintura® wireless photo transmission system, which are expected to officially launch sales in the United States in early 2023. Sales of Pintura wireless photo transmission system has started in China since October 2023. To boost the Company's marketing efforts for these products, the Company has increased sales force by hiring more sales representatives, providing end-user-focused sales training, and investing in electronics exhibitions and advertisements.
To further diversify the Company's source of revenue, the Company has leveraged strong research and development capabilities and accumulated expertise in the display module field and developed customized solutions for clients. During the fiscal year ended September 30, 2022, the Company began generating revenue from providing such research and development services to branded original design manufacturers.
About Ostin Technology Group Co., Ltd.
Founded in 2010, the Company is a supplier of display modules and polarizers in China. The Company designs, develops and manufactures TFT-LCD display modules in a wide range of sizes and customized sizes which are mainly used in consumer electronics, outdoor LCD displays and automotive displays. The Company also manufactures polarizers used in the TFT-LCD display modules. In 2022, the Company expanded its business into the end-user market, offering display products of different sizes. The Company also is a provider of research and development services to branded original design manufacturers.
For more information, please visit http://www.austinelec.com/.
Forward-Looking Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's forecast on market trend; the Company's future business development; the demand for and market acceptance for new products; changes in technology; risks and uncertainties regarding lingering effects of the Covid-19 pandemic on the Company's businesses, including disruptions to the Company's supply chain; the Company's ability to attract and retain skilled professionals; client concentration; and general economic conditions affecting the Company's industry and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
Ostin Technology Group Co., Ltd.
[email protected]
Investor Relations:
Janice Wang
Wealth Financial Services LLC
Phone: +86 13811768599
+1 628 283 9214
Email: [email protected]
OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022 AND 2021
(IN U.S. DOLLARS, EXCEPT FOR NUMBER OF SHARES DATA)
September 30, | September 30, | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 3,655,947 | $ | 684,335 | ||||
Restricted cash | 150,973 | - | ||||||
Accounts receivable, net of allowance for doubtful accounts | 6,270,505 | 25,551,527 | ||||||
Notes receivable | - | 101,361 | ||||||
Inventories, net | 15,432,712 | 18,686,680 | ||||||
Advances to suppliers, net | 6,097,833 | 7,300,770 | ||||||
Tax receivables | 92,749 | 443,173 | ||||||
Prepaid expenses and other receivables | 207,584 | 1,426,790 | ||||||
Total Current Assets | 31,908,303 | 54,194,636 | ||||||
Property, plant and equipment, net | 19,415,829 | 19,368,333 | ||||||
Land use rights, net | 1,284,591 | 1,497,579 | ||||||
Intangible assets, net | 2,968,745 | 127,129 | ||||||
Deferred tax assets, net | 566,404 | 673,179 | ||||||
Long-term investment | 210,867 | - | ||||||
Right-of-use lease assets | 5,571 | 105,625 | ||||||
Other long-term receivables | 823,116 | - | ||||||
TOTAL ASSETS | $ | 57,183,426 | $ | 75,966,481 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 6,279,484 | $ | 17,618,986 | ||||
Accrued expenses and other current liabilities | 1,950,122 | 2,632,370 | ||||||
Advances from customers | 1,415,175 | 4,506,016 | ||||||
Due to related parties | 477,964 | 3,197,070 | ||||||
Short-term borrowings | 21,292,963 | 32,417,418 | ||||||
Operating lease liabilities – current | 89,917 | 193,161 | ||||||
Total Current Liabilities | 31,505,625 | 60,565,021 | ||||||
Operating lease liabilities – non-current | - | 5,583 | ||||||
Long-term liability | - | 194,022 | ||||||
Other long-term payables | 52,590 | - | ||||||
TOTAL LIABILITIES | 31,558,215 | 60,764,626 | ||||||
COMMITMENTS AND CONTINGENCIES | - | - | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Common stock, $0.0001 par value, 500,000,000 shares | 1,401 | 1,013 | ||||||
Additional paid-in capital | 23,256,219 | 10,856,169 | ||||||
Statutory surplus reserves | 1,496,314 | 1,033,653 | ||||||
Retained earnings | 2,484,385 | 2,748,068 | ||||||
Accumulated other comprehensive loss | (1,902,108) | (316,017 | ) | |||||
Total Equity Attributable to Ostin Technology Group Co., Ltd. | 25,336,211 | 14,322,886 | ||||||
Equity attributable to non-controlling interests | 289,000 | 878,969 | ||||||
Total Shareholders' Equity | 25,625,211 | 15,201,855 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 57,183,426 | $ | 75,966,481 | ||||
OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020
(IN U.S. DOLLARS, EXCEPT SHARES DATA)
For the fiscal years ended September 30, | |||||||||||
2022 | 2021 | 2020 | |||||||||
Sales | $ | 105,416,746 | $ | 167,744,801 | $ | 140,073,917 | |||||
Cost of sales | (92,804,431) | (150,385,723 | ) | (128,489,255 | ) | ||||||
Gross profit | 12,612,315 | 17,359,078 | 11,584,662 | ||||||||
Operating expenses: | |||||||||||
Selling and marketing expenses | (2,793,197) | (3,965,790 | ) | (2,172,393 | ) | ||||||
General and administrative expenses | (7,649,241) | (4,990,951 | ) | (3,123,219 | ) | ||||||
Research and development costs | (2,515,239) | (5,712,792 | ) | (2,828,718 | ) | ||||||
Gain from disposal of property, plant and equipment | 795,783 | 527,818 | - | ||||||||
Total operating expenses | (12,161,894) | (14,141,715 | ) | (8,124,330 | ) | ||||||
Operating income | 450,421 | 3,217,363 | 3,460,332 | ||||||||
Other income (expenses): | |||||||||||
Interest income (expense), net | (1,290,811) | (1,112,045 | ) | (688,401 | ) | ||||||
Other income (expenses), net | 1,279,559 | 1,133,103 | (67,370 | ) | |||||||
Total other expenses, net | (11,252) | 21,058 | (755,771 | ) | |||||||
Income before income taxes | 439,169 | 3,238,421 | 2,704,561 | ||||||||
Income tax provision | (326,942) | 57,086 | 126,725 | ||||||||
Net income | 112,227 | 3,295,507 | 2,831,286 | ||||||||
Net income (loss) attributable to non-controlling | (86,751) | 196,564 | 117,175 | ||||||||
Net income attributable to Ostin Technology Group | 198,978 | 3,098,943 | 2,714,111 | ||||||||
Net income | 112,227 | 3,295,507 | 2,831,286 | ||||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustment | (1,716,150) | 272,591 | 415,403 | ||||||||
Comprehensive (loss) income | (1,603,923) | 3,568,098 | 3,246,689 | ||||||||
Comprehensive (loss) income attributable to non- | (216,810) | 219,497 | 126,444 | ||||||||
Comprehensive (loss) income attributable to Ostin | (1,387,113) | 3,348,601 | 3,120,245 | ||||||||
Earnings per ordinary share | |||||||||||
Basic and diluted | $ | 0.02 | $ | 0.30 | $ | 0.27 | |||||
Weighted average number of ordinary shares outstanding | |||||||||||
Basic and diluted | 11,773,202 | 10,125,000 | 10,125,000 | ||||||||
OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020
(IN U.S. DOLLARS)
For the years ended | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income (loss) | $ | 112,227 | $ | 3,295,507 | $ | 2,831,286 | ||||||
Adjustments to reconcile net income to net cash (used | ||||||||||||
Depreciation expense | 2,309,263 | 1,841,250 | 1,080,675 | |||||||||
Amortization expense of land use rights | 78,926 | 85,842 | 18,447 | |||||||||
Amortization expense of intangible assets | 214,703 | 199,913 | 327,636 | |||||||||
Amortization expense of right-of-use assets | 53,627 | 114,387 | - | |||||||||
Bad debt (recovery) expense for accounts receivable | (60,982 | ) | 94,166 | 233,824 | ||||||||
Bad debt expense for advances to suppliers | 228,251 | 311,811 | - | |||||||||
Inventory provision | 21,962 | 780,366 | 288,411 | |||||||||
Deferred tax assets, net | 106,775 | 208,832 | (299,996 | ) | ||||||||
Gain from disposal of property, plant and equipment | (795,783 | ) | (527,818 | ) | - | |||||||
Imputed interest for short-term borrowings from third parties | - | 370,847 | 228,291 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 18,373,339 | (15,163,687 | ) | (6,710,021 | ) | |||||||
Notes receivable | 99,663 | 2,129,820 | (1,887,698 | ) | ||||||||
Inventories | 1,599,407 | (559,724 | ) | (5,752,729 | ) | |||||||
Advances to suppliers | 330,995 | 1,378,929 | (2,130,279 | ) | ||||||||
Prepaid expenses and other receivables | 1,177,551 | (854,448 | ) | 50,864 | ||||||||
Other long-term receivables | (893,493) | - | - | |||||||||
Accounts payable | (10,507,396 | ) | (6,781,879 | ) | 11,538,662 | |||||||
Accrued expenses and other current liabilities | (194,934) | (3,614,350 | ) | 5,192,485 | ||||||||
Advances from customers | (2,894,344 | ) | (1,542,196 | ) | 2,945,080 | |||||||
Income tax payable | 335,069 | 590,588 | (230,257 | ) | ||||||||
Operating lease liabilities | (53,629 | ) | (22,415 | ) | - | |||||||
Other long-term payables | 57,086 | - | - | |||||||||
Net cash (used in) provided by operating activities | 9,698,283 | (17,664,259 | ) | 7,724,681 | ||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of property, plant and equipment | (5,122,095 | ) | (6,211,335 | ) | (3,701,172 | ) | ||||||
Disposal of property, plant and equipment | 1,515,045 | 1,024,990 | - | |||||||||
Purchases of intangible assets | (3,060,601 | ) | (11,568 | ) | (1,475,783 | ) | ||||||
Long-term investment | (210,867 | ) | - | - | ||||||||
Net cash used in investing activities | (6,878,518 | ) | (5,197,913 | ) | (5,176,956 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Proceeds received from stock issuance | 12,409,022 | - | 98,494 | |||||||||
Repayment of notes payable | - | - | (1,070,573 | ) | ||||||||
Proceeds from (Repayments to) long-term liability | (873,401 | ) | 93,928 | - | ||||||||
Proceeds from short-term bank borrowings | 15,706,830 | 17,850,026 | 9,335,389 | |||||||||
Repayments on short-term bank borrowings | (16,243,972 | ) | (12,569,361 | ) | (8,007,879 | ) | ||||||
Proceeds from short-term borrowings from third party individuals | 1,290,972 | 16,872,476 | 5,838,187 | |||||||||
Repayments on short-term borrowings from third party individuals | (9,652,990 | ) | (5,890,252 | ) | (6,254,364 | ) | ||||||
Proceeds from related parties | 2,746,749 | 9,092,860 | 3,004,804 | |||||||||
Repayments to related parties | (5,371,422 | ) | (6,885,557 | ) | (2,733,592 | ) | ||||||
Net cash provided by financing activities | 11,788 | 18,564,120 | 210,464 | |||||||||
Effect of changes in currency exchange rates | 291,032 | (379,135 | ) | 133,202 | ||||||||
Net (decrease) increase in cash and cash equivalents | 3,122,585 | (4,677,187 | ) | 2,891,392 | ||||||||
Cash, cash equivalents and restricted cash at the beginning of year | 684,335 | 5,361,522 | 2,470,130 | |||||||||
Cash and cash equivalents and restricted cash at the end of year | $ | 3,806,920 | $ | 684,335 | $ | 5,361,522 | ||||||
Reconciliation of cash, cash equivalents and restricted | ||||||||||||
Cash and cash equivalents | $ | 3,655,947 | $ | 684,335 | $ | 5,343,434 | ||||||
Restricted cash | 150,973 | - | 18,088 | |||||||||
Total cash, cash equivalents and restricted cash | $ | 3,806,920 | $ | 684,335 | $ | 5,361,522 | ||||||
Supplemental disclosures of cash flows information: | ||||||||||||
Cash paid for income taxes | $ | 241,697 | $ | 374,951 | $ | 268,724 | ||||||
Cash paid for interest | $ | 1,010,897 | $ | 751,658 | $ | 527,027 | ||||||
SOURCE Ostin Technology
Share this article