SHANGHAI, June 24, 2011 /PRNewswire-Asia-FirstCall/ -- Ossen Innovation Co., Ltd. ("Ossen" or the "Company") (Nasdaq: OSN), a China-based manufacturer of galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed steel materials, today announced audited financial results for the year ended December 31, 2010.
Highlights:
Financial Summary | |||||||
(in millions except EPS) | 2H 2010 | 2H 2009 | Chg. | FY 2010 | FY 2009 | Chg. | |
Revenue | $58.7 | $60.7 | (3%) | $117.5 | $101.1 | 16% | |
Gross Profit | $13.0 | $8.8 | 48% | $24.6 | $13.4 | 83% | |
Net Income | $7.5 | $5.8 | 31% | $14.6 | $8.0 | 83% | |
EPS | $0.38 | $0.38 | - | $0.73 | $0.53 | 37% | |
Shares Outstanding* | 20.0 | 15.0 | 33% | 20.0 | 15.0 | 33% | |
*20 million shares were outstanding as of December 31, 2010. The number includes the five | |||||||
Second Half 2010 Financial Results
Revenue for the second half of fiscal year 2010 totaled $58.7 million, with $27.3 million, or 46% generated from the sale of coated pre-stressed steel materials that are used in the construction of bridges. This represented an increase of $9.4 million, or 53% over $17.8 million in sales of coated pre-stressed steel products during the same period of 2009. In addition, among the $27.3 million sales of coated pre-stressed steel materials, $25.8 million, or 95% of the sales were contributed by sales of rare earth coated pre-stressed steel wires and strands.
Gross profit increased $4.2 million to $13.0 million, representing a gross margin of 22.0%. The primary reason for the increases in both gross profits and gross margin was increased sales of higher margin coated pre-stressed steel wires and strands, which on average generate a gross margin around 29.1% as compared to roughly 12.2% for the plain surface products.
Operating income was $11.8 million in the last six months of 2010, up from $8.0 million in the comparable period in 2009, with associated operating margins of 20.1% and 13.2%, for each respective period. Net income and EPS were $7.5 million and $0.38 for the second half of 2010 compared to $5.8 million and $0.38, respectively, in the second half of 2009.
"2010 was a key inflection point for Ossen." stated Dr. Liang Tang, Chairman of Ossen Innovation. "We dramatically increased production of our coated products, which positively impacted our growth, margins and profitability. As the Chinese government continues to push forward on multiple high profile bridge projects around the country, demand for our products remain strong. We believe that once we complete our new coated products capacity expansion, we will further solidify our position as a market leader."
Full Year 2010 Financial Results
Revenue for the year ended December 31, 2010 totaled $117.5 million, an increase of 16% year-over-year as compared to $101.1 million in 2009.
Year ended December 31, | |||||||
2010 | 2009 | ||||||
Revenue ($) | % of Total Revenue | Revenue ($) | % of Total Revenue | Change From 2009 to 2010 | |||
Products: | |||||||
Plain surface PC strands | 40,247,880 | 34% | 30,081,890 | 32% | 34% | ||
Zinc coated PC wires and | 2,964,414 | 3% | 2,225,113 | 2% | 33% | ||
PC strands | |||||||
Stabilized PC wires | 16,322,560 | 14% | 52,179,268 | 51% | (69%) | ||
Rare earth coated PC wires and | 57,729,470 | 49% | 16,601,524 | 15% | 248% | ||
PC strands | |||||||
Others | 188,701 | 0.2% | - | - | - | ||
Total | 117,453,024 | 100% | 101,087,795 | 100% | |||
Sales of rare earth coated PC wires and PC strands increased by $41.1 million to $57.7 million due to high demand and management's deliberate strategy to increase sales of this high margin product. These products accounted for approximately 49% of sales in 2010 compared to 15% in 2009.
Sales of stabilized PC wires were $16.3 million compared to $52.2 million in 2009 as a result of the Company allocating production capacity away from commodity products to rare earth coated products, which commenced production in the second half of 2009.
For the fiscal year 2010, cost of goods sold was $92.9 million, with gross profit of $24.6 million. Gross margin was 20.9% for 2010 compared to 13.3% in 2009.
Operating expenses for fiscal year 2010 were approximately $1.9 million, consisting of $0.7 million in selling expenses and $1.2 million in general and administrative expenses. Operating income totaled $22.7 million, with operating margins of approximately 19.3%, compared to $11.8 million and 11.7% in fiscal year 2009.
Net income attributable to common stockholders for the full year 2010 was $14.6 million with corresponding earnings per share of $0.73 based on 20 million shares outstanding. The Company generated $8.0 million of net income and $0.53 earnings per share in fiscal year 2009.
Balance Sheet and Cash Flows
Ossen had approximately $26.1 million of cash and restricted cash as of December 31, 2010 compared to $20.2 million as of December 31, 2009. Total net accounts receivable declined from $15.2 million at the end of 2009 to $13.3 million as of December 31, 2010. The Company has collected approximately 96% of the $13.3 million year-end receivables. The average accounts receivable days sales outstanding were 44 days and 36 days in 2010 and 2009, respectively.
For fiscal year 2010, the Company had a net cash outflow from operations of approximately $25 million. Inventories increased by approximately $18 million to $27.9 million as a result of increasing demand and higher sales. Total advances to suppliers were $25.1 million, 98% of which were within 60 days. The Company raised approximately $20.3 million from its initial public offering in December 2010, which is being used to fund its additional 30,000-ton rare earth coated production facility expansion. Through December 31, 2010, Ossen has spent $7.6 million for equipment purchases related to this expansion.
Financial Outlook for 2011
Management has reiterated its financial forecast for fiscal year 2011 as follows:
Revenue: | $138.5 million to $144.6 million | |
Net Income: | $18.0 to $18.8 million | |
EPS: | $0.90 to $0.94 | |
Conference Call
The Company will conduct a conference call at 11:00 a.m. ET on June 24, 2011. Interested participants should call 1-800-706-7748 when calling within the United States or 1-617-614-3473 when calling internationally (passcode 11055479).
This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on this link: http://ir.osseninnovation.com
About Ossen Innovation Co., Ltd.
Ossen Innovation Co., Ltd. manufactures and sells galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed materials. The Company's products are mainly used in the construction of bridges and other infrastructure projects. Ossen has two manufacturing facilities located in Maanshan, Anhui Province, and Jiujiang, Jiangxi Province in China.
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.
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009 | ||||||
December 31, | ||||||
2010 | 2009 | |||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 12,322,982 | $ | 8,409,467 | ||
Restricted cash | 13,799,018 | 11,824,214 | ||||
Notes receivable - bank acceptance notes | 17,636,928 | 150,208 | ||||
Accounts receivable, net of allowance for doubtful | 13,332,492 | 15,157,087 | ||||
Inventories | 27,949,781 | 10,206,861 | ||||
Advance to suppliers | 25,072,350 | 19,833,561 | ||||
Other current assets | 3,343,302 | 964,876 | ||||
Notes receivable from related party - bank acceptance | 3,024,895 | 1,828,234 | ||||
Account receivable from related party | 707,487 | - | ||||
Total Current Assets | 117,189,235 | 68,374,508 | ||||
Property, plant and equipment, net | 12,029,612 | 13,088,809 | ||||
Land use rights, net | 4,306,091 | 4,254,270 | ||||
Prepayment for plant and equipment | 7,562,237 | - | ||||
TOTAL ASSETS | $ | 141,087,175 | $ | 85,717,587 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current Liabilities | ||||||
Notes payable - bank acceptance notes | $ | 26,014,096 | $ | 19,744,925 | ||
Short-term bank loans | 38,325,414 | 27,350,377 | ||||
Accounts payable | 2,493,665 | 240,275 | ||||
Customer deposits | 833,768 | 5,189,759 | ||||
Income tax payable | 662,585 | 110,493 | ||||
Other payables and accrued expenses | 94,510 | 32,473 | ||||
Due to shareholder | - | 12,869,939 | ||||
Total Current Liabilities | 68,424,038 | 65,538,241 | ||||
TOTAL LIABILITIES | 68,424,038 | 65,538,241 | ||||
EQUITY | ||||||
Shareholders' Equity | ||||||
Ordinary shares, $0.01 par value: 100,000,000 shares | 200,000 | 150,000 | ||||
Additional paid-in capital | 33,338,096 | 100,000 | ||||
Statutory reserve | 2,674,457 | 1,093,331 | ||||
Retained earnings | 25,887,113 | 12,819,901 | ||||
Accumulated other comprehensive income | 2,192,996 | 543,036 | ||||
TOTAL SHAREHOLDERS' EQUITY | 64,292,662 | 14,706,268 | ||||
Non-controlling interest | 8,370,475 | 5,473,078 | ||||
TOTAL EQUITY | 72,663,137 | 20,179,346 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 141,087,175 | $ | 85,717,587 | ||
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 | |||||||||
Year Ended December 31, | |||||||||
2010 | 2009 | 2008 | |||||||
REVEUNUES | $ | 117,453,024 | $ | 101,087,796 | $ | 82,742,310 | |||
COST OF GOODS SOLD | 92,893,796 | 87,659,925 | 70,532,733 | ||||||
GROSS PROFIT | 24,559,228 | 13,427,871 | 12,209,577 | ||||||
Selling expenses | 660,934 | 503,724 | 4,326,491 | ||||||
General and administrative expenses | 1,201,518 | 1,143,672 | 1,316,606 | ||||||
Total Operating Expenses | 1,862,452 | 1,647,396 | 5,643,097 | ||||||
INCOME FROM OPERATIONS | 22,696,776 | 11,780,475 | 6,566,480 | ||||||
Financial expenses, net | (2,437,426) | (1,496,712) | (1,891,671) | ||||||
Other income, net | 151,757 | 183,495 | 380,766 | ||||||
INCOME BEFORE INCOME TAX | 20,411,107 | 10,467,258 | 5,055,575 | ||||||
INCOME TAX | (2,865,372) | (740,053) | (291,520) | ||||||
NET INCOME | 17,545,735 | 9,727,205 | 4,764,055 | ||||||
LESS: NET INCOME ATTRIBUTABLE | |||||||||
2,897,397 | 1,714,670 | 809,437 | |||||||
NET INCOME ATTRIBUTABLE TO | |||||||||
14,648,338 | 8,012,535 | 3,954,618 | |||||||
OTHER COMPREHENSIVE INCOME | |||||||||
Foreign currency translation gain | 1,649,960 | 31,146 | 420,883 | ||||||
TOTAL OTHER COMPREHENSIVE | |||||||||
1,649,960 | 31,146 | 420,883 | |||||||
COMPREHENSIVE INCOME | $ | 16,298,298 | $ | 8,043,681 | $ | 4,375,501 | |||
EARNINGS PER ORDINARY SHARE | |||||||||
Basic and diluted | $ | 0.97 | $ | 0.53 | $ | 0.29 | |||
WEIGHTED AVERAGE ORDINARY | |||||||||
Basic and diluted | 15,150,685 | 15,000,000 | 15,000,000 | ||||||
OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 | ||||||||||
Year Ended December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 17,545,735 | $ | 9,727,205 | $ | 4,764,055 | ||||
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities: | ||||||||||
Depreciation and amortization | 1,838,794 | 1,457,784 | 1,555,624 | |||||||
Share-based compensation expense | 19,096 | - | - | |||||||
Changes in operating assets and liabilities: | ||||||||||
(Increase) Decrease In: | ||||||||||
Accounts receivable | 1,824,595 | (10,443,599) | 1,002,464 | |||||||
Inventories | (17,742,920) | (906,600) | (2,112,944) | |||||||
Advance to suppliers | (5,238,789) | (562,867) | (12,408,746) | |||||||
Other current assets | (2,378,426) | (671,517) | 9,504 | |||||||
Notes receivable - bank acceptance notes | (17,486,720) | (150,208) | - | |||||||
Notes receivable from related party - bank acceptance notes | (1,196,661) | (1,828,234) | - | |||||||
Account receivable from related party | (707,487) | - | - | |||||||
Due from and advance to related party | - | - | 3,846,600 | |||||||
Increase (Decrease) In: | ||||||||||
Accounts payable | 2,253,390 | (188,166) | (35,011) | |||||||
Customer deposits | (4,355,991) | 2,253,492 | 2,749,301 | |||||||
Income tax payable | 552,092 | 104,028 | (134,501) | |||||||
Other payables and accrued expenses | 62,037 | (1,442,999) | (1,616,329) | |||||||
Due to shareholder | - | (117,649) | 145,896 | |||||||
Net cash used in operating activities | (25,011,255) | (2,769,330) | (2,234,087) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Purchases of plant and equipment | (73,466) | (209,511) | (2,666,665) | |||||||
Prepayment for purchases of plant and equipment | (7,562,237) | - | - | |||||||
Net cash used in investing activities | (7,635,703) | (209,511) | (2,666,665) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Increase in restricted cash | (1,974,804) | (1,847,122) | (5,465,258) | |||||||
Proceeds from short-term bank loans | 57,578,620 | 35,687,123 | 22,322,080 | |||||||
Repayments of short-term bank loans | (46,603,583) | (27,789,153) | (21,446,704) | |||||||
Proceeds from notes payable-bank acceptance notes | 50,216,280 | 50,771,789 | 18,236,993 | |||||||
Repayment of notes payable-bank acceptance notes | (43,947,109) | (49,263,858) | (10,937,778) | |||||||
Cash dividend paid to a shareholder | - | - | (2,364,274) | |||||||
Proceeds from issuance of ordinary shares to public, net of issuance cost | 20,345,000 | - | - | |||||||
Net cash provided by financing activities | 35,614,404 | 7,558,779 | 345,059 | |||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 2,967,446 | 4,579,938 | (4,555,693) | |||||||
Effect of exchange rate changes on cash | 946,069 | 68,214 | 1,581,392 | |||||||
Cash and cash equivalents at beginning of period | 8,409,467 | 3,761,315 | 6,735,616 | |||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 12,322,982 | $ | 8,409,467 | $ | 3,761,315 | ||||
SUPPLEMENTARY CASH FLOW INFORMATION | ||||||||||
Cash paid during the periods: | ||||||||||
Income taxes paid | $ | 2,355,451 | $ | 637,267 | $ | 441,029 | ||||
Interest paid | $ | 1,949,982 | $ | 1,492,404 | $ | 1,514,114 | ||||
Non-cash transactions: | ||||||||||
Appropriation to statutory reserve | $ | 1,581,126 | $ | 431,734 | $ | 422,921 | ||||
Debt forgiven by shareholder | $ | 12,924,000 | $ | - | $ | - | ||||
For more information, please contact:
Ossen Innovation Co., Ltd.
Alan Jin, Chief Financial Officer
Email: alanjin@osseninnovation.com
Phone: +86 (21) 6888-8886
Web: www.osseninnovation.com
Investor Relations
HC International
Ted Haberfield, Executive Vice President
Phone: +1-760-755-2716
Email: thaberfield@hcinternational.net
Web: www.hcinternational.net