Ossen Innovation Announces Fourth Quarter and Full Year 2012 Financial Results To Host Conference call at 9:00 am ET on April 30, 2013 PR Newswire SHANGHAI, 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 millionof cash and restricted cash as ofDecember 31, 2012compared to$21.3 millionatDecember 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 4^th 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 United States: +1-866-519-4004 International Toll Free: 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: email@example.com Phone: +86-138-1227-1616 Web: www.osseninnovation.com Investor Relations MZ North America Ted Haberfield, President Phone: +1-760-755-2716 Email: firstname.lastname@example.org 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 45,734,381 48,049,722 of $1,277,091 and $384,311 as of December 31, 2012 and 2011, respectively 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 1,830,208 - acceptance notes 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 200,000 200,000 19,901,959 and 20,000,000 shares outstanding as of December 31, 2012 and 2011, respectively 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, (96,608) - respectively 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 ATTRIBUTABLETO OSSEN INNOVATION CO.,LTD 2,381,279 11,547,705 14,648,338 AND SUBSIDIARIES OTHER COMPREHENSIVE INCOME Foreigncurrencytranslationgain 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 EARNINGSPERORDINARYSHARE Basic and diluted $ 0.12 $ 0.58 $ 0.97 WEIGHTEDAVERAGEORDINARYSHARESOUTSTANDING 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 1,601,197 2,007,263 1,838,794 amortization Share-based compensation 86,799 105,605 19,096 expense 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 10,457,537 6,785,312 (17,486,720) acceptance notes Notes receivable from related party - bank (1,830,208) 3,024,895 (1,196,661) acceptance notes Account receivable from 20,799 686,688 (707,487) related party 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 480,773 229,913 62,037 expenses Net cash used in operating (8,767,390) (20,143,383) (25,011,255) activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and (32,856) (156,288) (73,466) equipment Prepayment for purchases (1,584) (5,941) (7,562,237) of plant and equipment Disposal of property, 1,458 - - plant and equipment Net cash used in investing (32,982) (162,229) (7,635,703) activities CASH FLOWS FROM FINANCING ACTIVITIES: Increase in restricted (5,642,598) (5,965,883) (1,974,804) cash Proceeds from short-term 68,716,602 75,184,567 57,578,620 bank loans Repayments of short-term (66,384,299) (65,543,772) (46,603,583) bank loans Proceeds from long-term - 4,718,094 - bank loans Repayments of long-term (316,877) - - bank loans Proceeds from notes 76,842,639 50,433,168 50,216,280 payable-bank acceptance notes Repayment of notes (64,959,757) (51,598,637) (43,947,109) payable-bank acceptance notes Repurchase of common share (96,608) - - Proceeds from issuance of ordinary shares to public, - - 20,345,000 net of issuance cost IPO compensation - 440,955 - Net cash provided by financing 8,159,102 7,668,492 35,614,404 activities INCREASE (DECREASE) IN CASH (641,270) (12,637,120) 2,967,446 AND CASH EQUIVALENTS Effect of exchange rate 1,069,773 1,882,399 946,069 changes on cash Cash and cash equivalents 1,568,261 12,322,982 8,409,467 at beginning of period CASH AND CASH EQUIVALENTS AT $ 1,996,764 $ 1,568,261 $ 12,322,982 END OF PERIOD SUPPLEMENTARY CASH FLOWINFORMATION 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 $ 294,219 $ 1,210,351 $ 1,581,126 reserve Debt forgiven by shareholder $ - $ - $ 12,924,000 SOURCE Ossen Innovation Co., Ltd. Website: http://www.osseninnovation.com
Ossen Innovation Announces Fourth Quarter and Full Year 2012 Financial Results
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