omniture

Ossen Innovation Announces Fourth Quarter and Full Year 2014 Financial Results

Earnings Conference Call is Scheduled for 8:30 am EDT on April 29, 2015
2015-04-29 11:03 1618


SHANGHAI, April 29, 2015 /PRNewswire/ -- 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 quarter and full year ended December 31, 2014. And the 20-F has been filed with the SEC and is available at www.sec.gov.

Dr. Liang Tang, Chairman of Ossen Innovation, commented: "We faced significant headwinds in 2014 on the back of China's economic growth hitting 24 year low as property prices cooled and companies and local government struggled under a heavy debt burdens despite stimulus measures by the central government in the second half of 2014. Additionally, a tightened credit environment throughout the year also limited our ability to borrow funds and thus meet the up-front cash deposit requirement to bid on some of the projects that we believe we otherwise could have won."

"Despite these macro challenges, we grew our overall revenues by 8.5% in 2014 and improved our gross margin by 700 and 65 basis points in the fourth quarter of 2014 and the year of 2014, respectively, as we increased the sales of lower strength rare earth coated products with lower grade raw materials that gave us cost advantage versus our competitors without sacrificing product strength and quality," continued Dr. Tang.

"Looking ahead, with signs pointing to China's economy entering a new stage of a 'new normal' with slower growth on the horizon in 2015 and years to come, we remain cautious in our near-term outlook," concluded Dr. Tang.

Three Months Ended December 31, 2014 Financial Results



For the Three Months Ended December 31,

($ millions, expect per share data)


2014


2013


% Change

Revenues


$31.8


$42.0


-24.4%

Gross profit


$4.5


$3.0


48.9%

Gross margin


14.3%


7.3%


7.0%

Operating income


$2.0


$1.8


13.5%

Operating margin


6.4%


4.2%


2.1%

Net income attributable to Ossen Innovation


$1.4


$1.2


19.6%

EPS


$0.07


$0.06


19.6%

For the three months ended December 31, 2014, revenues decreased by $10.2 million, or 24.4%, to $31.8 million from $42.0 million for the same period of last year, mainly due to the weaknesses in rare earth coated products sales and partially offset by strength in plain surface pre-stressed ("PC") strands and other products. The sales of coated PC steel materials, including rare earth and zinc coated products, decreased by $12.1 million, or 31.2%, to $26.7 million and accounted for 84% of total sales for the three months ended December 31, 2014. The sales of rare earth and zinc coated products were $25.7 million and $1.0 million, respectively, for the three months ended December 31, 2014, compared to $36.5 million and $2.3 million, respectively, for the same period of last year. The sales of plain surface PC strands and others increased by approximately $1.8 million, or 56.6%, to $5.1 million and accounted for 16% of total sales for the three months ended December 31, 2014 mainly due to increase in sales of other products.

Gross profit increased by $1.5 million, or 48.9%, to $4.5 million for the three months ended December 31, 2014 from $3.0 million for the same period of last year. Gross margin was 14.3% for the three months ended December 31, 2014, compared to 7.3% for the same period of last year. The increase in gross margin was mainly due to the decrease in average prices of raw materials.

Selling expenses increased by $0.02 million, or 10.9%, to approximately $0.2 million for the three months ended December 31, 2014. General and administrative expenses increased by $1.2 million, or 114.0%, to approximately $2.3 million for the three months ended December 31, 2014 mainly due to increase in research and development expenses. Operating income and operating margin were $2.0 million and 6.4% for the three months ended December 31, 2014, compared to $1.8 million and 4.2% for the same period of last year, respectively.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation increased by $0.2 million, or 19.6%, to $1.4 million for the three months ended December 31, 2014 from $1.2 million for the same period of last year. Earnings per share, both basic and diluted, was $0.07 for the three months ended December 31, 2014, versus $0.06 for the same period of last year.

Twelve Months Ended December 31, 2014 Financial Results



For the Twelve Months Ended December 31,

($ millions, expect per share data)


2014


2013


% Change

Revenues


$123.6


$113.9


8.5%

Gross profit


$13.3


$11.5


15.4%

Gross margin


10.8%


10.1%


0.6%

Operating income


$6.2


$7.4


-16.4%

Operating margin


5.0%


6.5%


-1.5%

Net income attributable to Ossen Innovation


$3.9


$3.6


5.9%

EPS


$0.19


$0.18


5.9%

For the twelve months ended December 31, 2014, revenues increased by $9.7 million, or 8.5%, to $123.6 million from $113.9 million for the year of 2013. The increase in revenues was mainly from sales of rare earth coated pre-stressed ("PC") wires and PC strands. The sales of coated steel materials, including rare earth and zinc coated products, increased by $7.0 million, or 7.0%, to $107.6 million and accounted for 87% of total sales for the twelve months ended December 31, 2014. The sales of rare earth and zinc coated products were $97.6 million and $16.0 million, respectively, for the twelve months ended December 31, 2014, compared to $90.6 million and $10.0 million for the year of 2013. The sales of plain surface PC strands and others also increased by $2.7 million, or 20.1%, to $16.0 million and accounted for 13% of total sales for the twelve months ended December 31, 2014.

Gross profit increased by $1.8 million, or 15.4%, to $13.3 million for the twelve months ended December 31, 2014 from $11.5 million for the year of 2013. Gross margin was 10.8% for the twelve months ended December 31, 2014, compared to 10.1% for the year of 2013. The increase in gross margin was mainly due to the decrease of average price of raw materials and sales in new international market, especially Japan, which had higher gross margin compared to domestic market.

Selling expenses increased by $0.1 million, or 23.5%, to approximately $0.8 million for the twelve months ended December 31, 2014. General and administrative expenses increased by $2.9 million, or 81.9%, to approximately $6.3 million for the twelve months ended December 31, 2014 mainly due to increase in research and development expenses associated with the development of products for new customers and rare earth zinc-aluminum coated products. Operating income and operating margin were $6.2 million and 5.0% for the twelve months ended December 31, 2014, compared to $7.4 million and 6.5% for the year of 2013, respectively. The decrease in operating income and operating margin were mainly due to the above-mentioned $2.7 million increase in research and development expenses and a $0.5 million increase in bad-debt provision.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation increased by $0.2 million, or 5.9%, to $3.9 million for the twelve months ended December 31, 2014 from $3.6 million for the year of 2013. Earnings per share, both basic and diluted, was $0.19 for the twelve months ended December 31, 2014, compared to $0.18 for the year of 2013.

Balance Sheet and Cash Flows

The Company had approximately $18.3 million of cash and restricted cash as of December 31, 2014, compared to $32.9 million at December 31, 2013. Accounts receivable were $53.8 million as of December 31, 2014, compared to $48.2 million at December 31, 2013. The days of sales of outstanding were 151 days for the year of 2014, essentially unchanged from the year of 2013. The balance of prepayment to suppliers for raw materials totaled $56.3 million as of December 31, 2014, compared to $50.6 million at December 31, 2013. The Company had inventories of $20.1 million as of December 31, 2014, compared to $18.8 million at the end of 2013. Total working capital was $108.0 million as of December 31, 2014, compared to $85.7 million at December 31, 2013.

The major sources of our liquidity for fiscal years 2013 and 2012 were bank borrowings, including loans from banks and bank acceptance notes. In 2014, in addition to bank borrowings, our subsidiary in Maanshan, Ossen Materials, completed a private placement of approximately $16.2 million in aggregate principal amount of notes to certain accredited investors in China. The notes bear a fixed interest rate of 10.75% per annum, payable annually in arrears, and mature on September 2, 2016. After deducting placement agent fees and other offering expenses, Ossen Materials received net proceeds of approximately $15.4 million. We expect to finance our operations and working capital needs in the near future from cash generated from operations and short-term borrowings.

Net cash provided by operating activities was $1.8 million for the twelve months ended December 31, 2014, compared to $10.0 million for the year of 2013. Net cash used in investing activities was $0.1 million for the twelve months ended December 31, 2014, compared to net cash provided by investing activities of $8.1 million for the year of 2013. Net cash used in financing activities was $3.5 million for the twelve months ended December 31, 2014, compared to $22.1 million for the year of 2013.

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 Fourth Quarter 2014 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation Fourth Quarter 2014 Conference Call

Date:

April 29, 2015

Time:

8:30 am EDT

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:

32910052

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 7, 2015. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 32910052 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://edge.media-server.com/m/p/y2kxdhvn

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, 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:


Ossen Innovation Co., Ltd.

Feng Peng, Chief Financial Officer

Email: feng.peng@ossencorp.com

Phone: +86-21-6888-8886

Web: www.osseninnovation.com

Investor Relations

Weitian Group LLC

Phone: +1-917-609-0333

Email: tina.xiao@weitian-ir.com

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2014 AND 2013


December, 31


2014


2013

ASSETS






Current assets






Cash and cash equivalents

$

684,592


$

1,139,450

Restricted cash


17,572,732



31,783,670

Note receivable-bank acceptance note


9,925,155



2,421,581

Accounts receivable, net of allowance for doubtful accounts of $1,874,330 and $1,336,177 at December 31, 2014 and 2013, respectively


53,764,414



48,200,076

Inventories


20,137,901



18,750,770

Advance to suppliers


56,327,390



50,614,815

Other current assets


946,319



3,447,886

Notes receivable from related party - bank acceptance notes


-



12,915,099

Total current assets


159,358,503



169,273,347

Property, plant and equipment, net


7,174,646



8,458,121

Land use rights, net


4,231,348



4,297,849

TOTAL ASSETS

$

170,764,497


$

182,029,317







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable-bank acceptance notes

$

26,521,315


$

50,990,427

Short-term bank loans


18,711,357



27,283,147

Accounts payables


3,217,076



503,944

Customer deposits


588,005



2,908,271

Taxes payable


552,459



232,541

Other payables and accrued liabilities


1,622,958



1,549,748

Due to related party


69,469



16,911

Due to shareholder


100,000



50,000

Total current liabilities


51,382,639



83,534,989

Bond payable


15,972,837



-

TOTAL LIABILITIES


67,355,476



83,534,989







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized; 20,000,000 shares issued; 19,901,959 shares outstanding as of December 31, 2014 and 2013, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


5,021,752



4,615,699

Retained earnings


44,971,082



41,518,259

Treasury stock, at cost: 98,041 shares as of December 31, 2014 and 2013, respectively


(96,608)



(96,608)

Accumulated other comprehensive income


8,425,697



7,646,562

TOTAL SHAREHOLDERS' EQUITY


92,493,378



87,855,367

Non-controlling interest


10,915,643



10,638,961

TOTAL EQUITY


103,409,021



98,494,328

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

170,764,497


$

182,029,317

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012


Year Ended December 31,


2014


2013


2012










REVEUNUES

$

123,571,455


$

113,891,989


$

122,397,886

COST OF GOODS SOLD


110,250,876



102,353,957



111,611,457

GROSS PROFIT


13,320,579



11,538,032



10,786,429

Selling expenses


772,383



625,500



917,074

General and administrative expenses


6,340,584



3,485,118



3,950,934

Total Operating Expenses


7,112,967



4,110,618



4,868,008










INCOME FROM OPERATIONS


6,207,612



7,427,414



5,918,421

Financial expenses, net


(2,401,268)



(2,696,966)



(3,556,045)

Other income, net


907,941



558,426



911,430

INCOME BEFORE INCOME TAX


4,714,285



5,288,874



3,273,806

INCOME TAX


(578,727)



(1,219,030)



(557,428)

NET INCOME


4,135,558



4,069,844



2,716,378

LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST


276,682



426,440



35,099

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


3,858,876



3,643,404



2,381,279










OTHER COMPREHENSIVE INCOME









Foreign currency translation gain


779,135



1,647,348



703,573

TOTAL OTHER COMPREHENSIVE INCOME


779,135



1,647,348



703,573

COMPREHENSIVE INCOME

$

4,638,011


$

5,290,752


$

3,084,852










EARNINGS PER ORDINARY SHARE









Basic and diluted

$

0.19


$

0.18


$

0.12

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING









Basic and diluted


19,901,959



19,901,959



19,942,333

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012


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



Statutory Reserve



Earnings



Interest





Shares


Amount





Shares


Amount
















Balance at January 1, 2012

20,000,000


$

200,000


$

33,884,656


-


$

-


$

5,295,641


$

3,884,808


$

36,224,467


$

9,877,422


$

89,366,994

Net income

-



-



-


-



-



-



-



2,381,279



335,099



2,716,378

Transfer to statutory reserve

-



-



-


-



-



-



294,219



(294,219)



-



-

Common shares repurchase

-



-



-


(98,041)



(96,608)



-



-



-



-



(96,608)

Share-based compensation to employee

-



-



86,799


-



-



-



-



-



-



86,799

Foreign currency translation adjustment

-



-



-


-



-



703,573






-



-



703,573

Balance at December 31, 2012

20,000,000



200,000



33,971,455


(98,041)



(96,608)



5,999,214



4,179,027



38,311,527



10,212,521



92,777,136

Net income

-



-



-


-



-



-



-



3,643,404



426,440



4,069,844

Transfer to statutory reserve

-



-



-


-



-



-



436,672



(436,672)



-



-

Foreign currency translation adjustment

-



-



-


-



-



1,647,348






-



-



1,647,348

Balance at December 31, 2013

20,000,000



200,000



33,971,455


(98,041)



(96,608)



7,646,562



4,615,699



41,518,259



10,638,961



98,494,328

Net income

-



-



-


-



-



-



-



3,858,876



276,682



4,135,558

Transfer to statutory reserve

-



-



-


-



-



-



406,053



(406,053)



-



-

Foreign currency translation adjustment

-



-



-


-



-



779,135






-



-



779,135

Balance at December 31, 2014

20,000,000


$

200,000


$

33,971,455


(98,041)


$

(96,608)


$

8,425,697


$

5,021,752


$

44,971,082


$

10,915,643


$

103,409,021


OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012



Year Ended December 31,




2014



2013



2012

CASH FLOWS FROM OPERATING ACTIVITIES:










Net income


$

4,135,558


$

4,069,844


$

2,716,378

Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:










Depreciation and amortization



1,531,278



1,564,973



1,601,197

Share-based compensation expense



-



-



86,799

Changes in operating assets and liabilities:










(Increase) Decrease In:










Accounts receivable



(5,564,338)



(2,465,695)



2,315,342

Inventories



(1,387,131)



(8,943,726)



7,415,620

Advance to suppliers



(5,712,575)



27,333,681



(36,557,323)

Other current assets



2,501,567



(1,543,260)



4,590,616

Notes receivable - bank acceptance notes



(7,503,574)



(2,027,502)



10,457,537

Notes receivable from related party - bank acceptance notes



12,915,099



(11,084,891)



(1,830,208)

Account receivable from related party



-



-



20,799

Increase (Decrease) In:










Accounts payable



2,713,132



(68,361)



(376,169)

Customer deposits



(2,320,266)



2,523,669



(75,312)

Income tax payable



319,918



(158,812)



386,561

Other payables and accrued expenses



73,209



744,552



480,773

Due to related party



52,558



16,911



-

Due to shareholder



50,000



50,000



-

Net cash provided by (used in) operating activities



1,804,435



10,011,383



(8,767,390)











CASH FLOWS FROM INVESTING ACTIVITIES:










Purchases of plant and equipment



(81,441)



(16,361)



(32,856)

Withdraw (Prepayment) for purchases of plant and equipment



-



8,071,937



(1,584)

Disposal of property, plant and equipment



456



-



1,458

Net cash provided by (used in) investing activities



(80,985)



8,055,576



(32,982)

CASH FLOWS FROM FINANCING ACTIVITIES:










Decrease (Increase) in restricted cash



14,210,938



(6,376,171)



(5,642,598)

Proceeds from short-term bank loans



28,475,194



41,531,691



68,716,602

Repayments of short-term bank loans



(37,261,825)



(66,189,540)



(66,384,299)

Repayments of long-term bank loans



-



(4,581,002)



(316,877)

Proceeds from notes payable-bank acceptance notes



55,811,380



98,467,000



76,842,639

Repayment of notes payable-bank acceptance notes



(80,682,428)



(84,912,143)



(64,959,757)

Repurchase of common share



-



-



(96,608)

Proceeds from bond payable



15,946,109



-



-

Net cash provided by (used in) financing activities



(3,500,632)



(22,060,165)



8,159,102











INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



(1,777,182)



(3,993,206)



(641,270)

Effect of exchange rate changes on cash



1,322,324



3,135,892



1,069,773

Cash and cash equivalents at beginning of period



1,139,450



1,996,764



1,568,261

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

684,592



1,139,450


$

1,996,764













SUPPLEMENTARY CASH FLOW INFORMATION












Cash paid during the periods:












Income taxes paid


$

722,948



1,095,357


$

310,355

Interest paid


$

1,977,014



2,865,902


$

3,676,992

Non-cash transactions:












Appropriation to statutory reserve


$

406,053



436,672


$

294,219

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-fourth-quarter-and-full-year-2014-financial-results-300074005.html

Source: Ossen Innovation Co., Ltd.
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