Ossen Innovation Announces Fourth Quarter and Full Year 2013 Financial Results

Ossen Innovation Announces Fourth Quarter and Full Year 2013 Financial Results

To Host Conference call at 8:30 am ET on April 30, 2014

PR Newswire

SHANGHAI, April 29, 2014

SHANGHAI, April 29, 2014 /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, 2013.

"Although Ossen experienced a slight decline in revenue for the full year
ended December 31, 2013, I am pleased to announce that we improved our gross
profit, gross margin and net income for the year by increasing sales of our
higher margin products, namely our rare earth coated PC wires and strands"
said Dr. Liang Tang, Chairman of Ossen Innovation. "The market for steel
materials used in infrastructure projects in China remained challenging in
2013. However, we were able to sell our rare earth coated products at
competitive prices in 2013 as our rare earth coating technology enabled us to
use lower grade raw material, without compromising quality or safety, thereby
lowering overall costs compared to our competitors."

"Ossen also continues to be a leading innovator. We are well known within our
industry in China for providing high quality products in terms of our superior
anti-corrosive characteristics, durability, performance and cost
effectiveness, compared to our competitors' products. Ossen is currently
developing new zinc-aluminum rare earth coatedprestressed steel products
which we believe will gain widespread acceptance in the infrastructure
marketplace based on the fact that a couple of large bridges are being built
using zinc-aluminum coated prestressed steelproducts. If successfully
launched, this product line will be used primarily in large bridge
construction projects due to its longer lifespan, better adhesion, greater
strength and anti-corrosive properties," continued Dr. Tang.

"Finally, we announced several contract wins in the fourth quarter of 2013 and
began delivering finished product in the first quarter of 2014. The Company
remains optimistic that the market for steel materials used in infrastructure
projects in China will improve in 2014, provided that Chinese banks do not
experience a shortage of liquidity as in June 2013, and we believe that Ossen
is well-positioned to take advantage of these opportunities and continue to be
a market leader and innovator," concluded Dr. Tang.

Financial Summary
(in millions ex- EPS) Q4 2013 Q4 2012 Chg. FY 2013 FY 2012 Chg.
Revenue               $42.0   $27.4   +53% $113.9  $122.4  -7%
Gross Profit          $3.0    $3.1    0%   $11.5   $10.8   +7%
Net Income*           $1.2    $1.3    -9%  $3.6    $2.4    +53%
EPS                   $0.06   $0.07   -14% $0.18   $0.12   +50%
Shares Outstanding    19.9    19.9    0%   19.9    19.9    0%
*Net income attributable to Ossen Innovation Co., Ltd.

Fourth Quarter Ended December 31, 2013 Financial Results

Revenue for the three months ended December 31, 2013 was $42.0 million, up 53%
from the same period a year ago. Sales of coated pre-stressed steel materials,
including rare earth and zinc coated products, were approximately $38.8
million, up 83.9% compared to approximately $21.1 million in the fourth
quarter of 2012. Sales of plain surface PC strands were $1.8 million for the
three months ended December 31, 2013, a decrease of $4.5 million compared to
the prior year. The overall increase in revenue was primarily due to our
using lower grade raw material for rare earth coated steel products, enabling
us to compete on price. The decrease in sales of plain surface products was
due to the Company's strategy to focus more on the sales of rare earth coated
products.

Gross profit was unchanged at approximately $3.0 million. Gross margin was
7.3% in the fourth quarter of 2013, down from 11.1% in the fourth quarter of
2012. Gross margin was lower primarily due to lower unit pricing in the fourth
quarter of 2013.

Selling expenses were reduced by 34% to $0.2 million due to lower
transportation costs. General and administrative expenses were unchanged at
approximately $1.1 million. Operating income was approximately $1.8 million,
an increase of 3% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $1.2 million in the
fourth quarter of 2013 compared to $1.3 million in the year-ago period.
Earnings per share were $0.06 versus $0.07 a year ago. The weighted average
diluted shares outstanding were 19.9 million, unchanged from the year-ago
period. 

Twelve Months Ended December 31, 2013 Financial Results

Revenue for the twelve months ended December 31, 2013 was $113.9 million, down
7% from the same period a year ago. Sales of pre-stressed steel rare earth
coated PC wires and PC strands were $90.6 million, an increase of $8.7
million, or 10.5% from the same period of 2012, primarily due to more
favorable pricing compared to the Company's competitors due to lower raw
material costs. Sales of zinc coated PC wires and PC strands were $10.0
million in 2013, a decrease of $0.7 million or 6% compared to the prior year,
primarily due to overall low demand and high inventory in the marketplace.
Sales of plain surface PC strands and PC wires were $11.9 million for the
twelve months ended December 31, 2013, a decrease of $7.7 million compared to
the prior year, primarily due to the Company's strategy to focus more on the
sales of rare earth coated products.

Gross profit increased from $10.8 million to $11.5 million, a 7%
year-over-year increase. Gross margin was 10.1%, up from 8.8% in the same
period of 2012. Gross margin was higher as a result of a decrease in the
average price of raw materials, partially offset by the decrease in the
average unit price in 2013 compared to the prior year period.

Selling expenses were reduced by 32% to $0.6 million due to a decrease in
total sales and lower transportation costs. General and administrative
expenses were $3.5 million, down 12% compared to $4.0 million in the same
period of 2012 due to a decrease in bad debt expense, partially offset by an
increase in R&D expenses. Operating income was approximately $7.4 million, an
increase of 25% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $3.6 million in the
twelve months ended December 31, 2013 compared to $2.4 million in the year-ago
period. Earnings per share were $0.18 versus $0.12 a year ago. The weighted
average diluted shares outstanding were 19.9 million, unchanged from the
year-ago period. 

Balance Sheet and Cash Flows

Ossen had approximately $32.9 millionof cash and restricted cash as
ofDecember 31, 2013compared to$27.4 millionatDecember 31, 2012. Total
accounts receivable on December 31, 2013 increased to $48.2 million from $45.7
million on December 31, 2012. The average accounts receivable days sales
outstanding were 150 days for the full year 2013 compared to 140 days for the
full year 2012. This increase was primarily due to delayed payments from
customers as a result of conservative monetary policy maintained by the
Chinese government and a temporary shortage of liquidity in the Chinese
inter-bank market in mid-2013. The balance of prepayments to suppliers of raw
materials was $50.6 million as of December 31, 2013, a decrease of $27.3
million compared with December 31, 2012. The decrease was mainly due to the
Company receiving delivery of raw materials from suppliers during 2013.
Accordingly, inventories increased from $9.8 million at December 31, 2012 to
$18.8 million at December 31, 2013. Total working capital was $85.7 million at
December 31, 2013.

The Company generated positive cash flows from operations of $10.0 million for
the twelve months ended December 31, 2013 as compared to $8.8 million of
outflows for the same period of 2012. The primary reasons for the increase in
cash generated in operations were an increase in net income and a decrease in
advances to suppliers in 2013, partially offset by higher inventories and
accounts receivable.

Cash provided by investing activities was $8.1 million in 2013, as compared to
$0.03 million of net cash used in investing activities in 2012. The increase
in cash provided by investing activities was the result of an $8.1 million
withdrawal for prepayment for expansion plan related equipment.

Cash flow used by financing activities was $22.1 million for the twelve months
ended December 31, 2013 as compared to cash flow provided by financing
activities of $8.2 million for the same period of 2012. The primary reasons
for the increase in cash used by financing activities were increases in
repayments of long-term bank loans and notes payable and a decrease in
proceeds from short-term bank loans due to the Chinese government's prudent
monetary policy, partially offset by an increase in proceeds from notes
payable.

Business Updates and Outlook

Ossen believes that the Chinese central government will continue to fund new
infrastructure projects. While Ossen does not believe that the Chinese
government will initiate another large scale, comprehensive capital injection,
the Company believes that infrastructure spending will be selectively targeted
at developing regions in Central or Western China. Furthermore, Ossen expects
continued spending by local governments on regional infrastructure
development, all of which should create additional bidding opportunities for
the Company in 2014 and beyond.

Although China's economic growth slowed in recent years, there is still much
room for growth in China's infrastructure construction, especially in West
China. We believe that 200 new bridges will be built on dozens of rivers in
the PRC, in addition to projects to reinforce or extend existing bridges in
China. The China National Nuclear Industry Group has estimated that the PRC
government will invest approximately $60 billion by 2020 for nuclear power
construction, which would require approximately two million tons of
prestressed materials. Further, the ongoing building of a large number of
rural roads, highways and buildings should continue to generate significant
demands for prestressed materials.

We believe that our industry will grow significantly for at least the next ten
years, subject to improvement in the PRC economy and government intervention
in the infrastructure industry. Specifically, we expect the market for
premium rare earth coated products, including rare earth coated prestressed PC
strands and PC wires, which are used primarily in the construction of bridges,
to grow in the PRC during this period. We expect the market of zinc-aluminum
coated prestressed steel products will be used widely on large bridges in next
10 years because large bridges require longer lasting materials and the
anti-corrosion property of zinc-aluminum coated products is 10 times stronger
than traditional zinc coated products.

We saw improvements in the fourth quarter of 2013 and are optimistic that
conditions will continue to improve going forward. Specifically:

  oIn October 2013, we were awarded a Japanese Industrial Standards (JIS)
    certificate. This certification allows us to sell our SWPR7BL prestressed
    concrete strands in Japan. Thus far, we have exported two shipments of
    plain surface products to Japan and plan to increase our selling efforts
    into Japan, a market with high barriers to entry.
  oIn October 2013, we were awarded a contract to supply 15,000 tons of plain
    surface steel strands to a construction company responsible for building
    the new Jiujiang express loop highway in Jiujiang City, Jiangxi Province,
    China. We began delivery of these plain surface steel strands in the first
    quarter of 2014.
  oIn November 2013, we were awarded two contracts to supply plain surface
    steel strands for new infrastructure projects in Anhui Province. We began
    delivery of these plain surface steel strands for use in the construction
    of a new highway and a highway bridge in the first quarter of 2014.

Our capacity expansion to add 30,000 tons of annual production capacity for
rare earth coated products was further delayed in 2013 due to an extended
unfavorable business climate in China. We intend to execute our expansion
plan once the market for our products stabilizes. In addition, we envision
that our planned expansion would include a new type of product, rare earth
zinc-aluminum alloy coated wires and strands, pending the outcome of our
ongoing research and development activities.

Finally, several major bridges and infrastructure projects will commence
construction in 2014 and 2015. Most of these projects will require higher
strength PC wires and PC strands and we expect the demand of our higher
strength rare earth coated PC wires and PC strands will benefit from these
approved projects. Ossen expects Q1 2014 sales and net income will be higher
than the first quarter of 2013 and the Company remains optimistic regarding
full year 2014 results, provided that the industry is not impeded by the
problemsit encountered in the past, and barring any significant slowdown in
Chinese economic growth or shortages of liquidity among Chinese banks.

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 and Full Year 2013 Conference Call" or be prepared to utilize the
conference ID.

Conference Call                 Ossen Innovation Fourth Quarter and Full Year
                                2013 Conference Call
Date:                           Wednesday, April 30, 2014
Time:                           8:30 am Eastern Time, US
Conference Line Dial-In (U.S.): +1-845-675-0437
                                United States: +1-866-519-4004
International Toll Free:        China, Domestic Mobile: 4006208038
                                China, Domestic: 8008190121
Conference ID:                  33446222

Please dial in at least 10 minutes before the call to ensure timely
participation. A playback will be available through May 8, 2014. To listen,
please call +1-855-452-5696 within the United States or +1-646-254-3697 if
calling internationally. Utilize the pass code 33446222 for the replay.

This call is being webcast and can be accessed by clicking on this
link:http://edge.media-server.com/m/p/6awzsdds/lan/en

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
FCC Group LLC
Phone: +1-347-850-7098
Email: ir@ossencorp.com



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2013 AND 2012
                                                  December 31,
                                                  2013           2012
ASSETS
Current assets
Cash and cash equivalents                         $ 1,139,450    $ 1,996,764
Restricted cash                                     31,783,670     25,407,499
Note receivable-bank acceptance note                2,421,581      394,079
Accounts receivable, net of allowance for
doubtful accounts

of $1,336,177 and $1,277,091 at December 31, 2013   48,200,076     45,734,381
and

2012, respectively
Inventories                                         18,750,770     9,807,044
Advance to suppliers                                50,614,815     77,948,496
Other current assets                                3,447,886      1,904,626
Notes receivable from related party – bank          12,915,099     1,830,208
acceptance notes
 Total current assets                              169,273,347    165,023,097
Property, plant and equipment, net                  8,458,121      9,707,587
Land use rights, net                                4,297,849      4,317,669
Prepayment for plant and equipment                  -              7,933,361
TOTAL ASSETS                                      $ 182,029,317  $ 186,981,714
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable-bank acceptance notes               $ 50,990,427   $ 36,933,710
Short-term bank loans                               27,283,147     50,679,026
Long term bank loans – current portion              -              4,438,386
Accounts payables                                   503,944        572,305
Customer deposits                                   2,908,271      384,602
Taxes payable                                       232,541        391,353
Other payables and accrued liabilities              1,549,748      805,196
Due to related party                                16,911         -
Due to shareholder                                  50,000         -
 Total current liabilities                         83,534,989     94,204,578
TOTAL LIABILITIES                                   83,534,989     94,204,578
EQUITY
Shareholders' Equity
Ordinary shares, $0.01 par value: 100,000,000
shares

authorized; 20,000,000 shares issued; 19,901,959    200,000        200,000
shares

outstanding as of December 31, 2013 and 2012,
respectively
Additional paid-in capital                          33,971,455     33,971,455
Statutory reserve                                   4,615,699      4,179,027
Retained earnings                                   41,518,259     38,311,527
Treasury stock, at cost: 98,041 shares as of
December 31,                                        (96,608)       (96,608)

2013 and 2012, respectively
Accumulated other comprehensive income              7,646,562      5,999,214
TOTAL SHAREHOLDERS' EQUITY                          87,855,367     82,564,615
Non-controlling interest                            10,638,961     10,212,521
TOTAL EQUITY                                        98,494,328     92,777,136

                                                  $ 182,029,317  $ 186,981,714
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS
ENDED DECEMBER 31, 2013, 2012 AND 2011
                          Year Ended December 31,
                          2013               2012              2011
REVEUNUES                 $   113,891,989    $  122,397,886    $  118,616,971
COST OF GOODS SOLD            102,353,957       111,611,457       96,588,172
GROSS PROFIT                  11,538,032        10,786,429        22,028,799
Selling expenses              625,500           917,074           1,216,504
General and
administrative                3,485,118         3,950,934         2,747,514

expenses
 Total Operating             4,110,618         4,868,008         3,964,018
Expenses
INCOME FROM OPERATIONS        7,427,414         5,918,421         18,064,781
Financial expenses, net       (2,696,966)       (3,556,045)       (3,480,766)
Other income, net             558,426           911,430           609,666
INCOME BEFORE INCOME TAX      5,288,874         3,273,806         15,193,681
INCOME TAX                    (1,219,030)       (557,428)         (2,139,029)
NET INCOME                    4,069,844         2,716,378         13,054,652
LESS: NET INCOME
ATTRIBUTABLE TO               426,440           335,099           1,506,947
NONCONTROLLING INTEREST
NET INCOME ATTRIBUTABLE
TO OSSEN INNOVATION
CO.,LTD                       3,643,404         2,381,279         11,547,705
AND SUBSIDIARIES
OTHER COMPREHENSIVE
INCOME
Foreign currency              1,647,348         703,573           3,102,645
translation gain
TOTAL OTHER COMPREHENSIVE     1,647,348         703,573           3,102,645
INCOME
COMPREHENSIVE INCOME      $   5,290,752      $  3,084,852      $  14,650,350
EARNINGS PER ORDINARY
SHARE
Basic and diluted         $   0.18           $  0.12           $  0.58
WEIGHTED AVERAGE ORDINARY
SHARES OUTSTANDING
Basic and diluted             19,901,959        19,942,333        20,000,000



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
             Total Ossen Innovation Co., Ltd. Shareholders' Equity
             Ordinary Shares          Additional                          Accumulated                   Retained       Non            Total
                                      Paid-in                             Other                                        Controlling
             $0.01 Par Value          Capital     Treasury stock          Comprehensive    Statutory    Earnings       Interest
                                                                          Income           Reserve
             Shares      Amount                   Shares    Amount
Balance at
January 1,   20,000,000    200,000    33,338,096  -           -           2,192,996        2,674,457    25,887,113     8,370,475      72,663,137
2011
Net income   -             -          -           -           -           -                -            11,547,705     1,506,947      13,054,652
Transfer to
statutory    -             -          -           -           -           -                1,210,351    (1,210,351)    -              -
reserve
Share-based
compensation
to           -             -          105,605     -           -           -                -            -              -              105,605

employee
IPO expense  -             -          440,955     -           -           -                -            -              -              440,955
compensation
Foreign
currency     -             -          -           -           -           3,102,645        -            -              -              3,102,645
translation
adjustment
Balance at
December 31, 20,000,000    200,000    33,884,656  -           -           5,295,641        3,884,808    36,224,467     9,877,422      89,366,994
2011
Net income   -             -          -           -           -           -                -            2,381,279      335,099        2,716,378
Transfer to
statutory    -             -          -           -           -           -                294,219      (294,219)      -              -
reserve
Common
shares       -             -          -           (98,041)    (96,608)    -                -            -              -              (96,608)
repurchase
Share-based
compensation -             -          86,799      -           -           -                -            -              -              86,799
to employee
Foreign
currency     -             -          -           -           -           703,573                       -              -              703,573
translation
adjustment
Balance at
December 31, 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
2012
Net income   -             -          -           -           -           -                -            3,643,404      426,440        4,069,844
Transfer to
statutory    -             -          -           -           -           -                436,672      (436,672)      -              -
reserve
Foreign
currency     -             -          -           -           -           1,647,348                     -              -              1,647,348
translation
adjustment
Balance at
December 31, 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
2013



OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
                                Year Ended December 31,
                                  2013            2012            2011
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income                     $ 4,069,844     $ 2,716,378     $ 13,054,652
Adjustments to reconcile net
income to net cash

provided by/ (used in)
operating activities:
Depreciation and amortization    1,564,973       1,601,197       2,007,263
Share-based compensation         -               86,799          105,605
expense
Changes in operating assets
and liabilities:
(Increase) Decrease In:
Accounts receivable              (2,465,695)     2,315,342       (34,717,230)
Inventories                      (8,943,726)     7,415,620       10,727,118
Advance to suppliers             27,333,681      (36,557,323)    (16,318,824)
Other current assets             (1,543,260)     4,590,616       (3,151,939)
Notes receivable - bank          (2,027,502)     10,457,537      6,785,312
acceptance notes
Notes receivable from related
party - bank                      (11,084,891)    (1,830,208)     3,024,895

acceptance notes
Account receivable from          -               20,799          686,688
related party
Increase (Decrease) In:
Accounts payable                 (68,361)        (376,169)       (1,545,190)
Customer deposits                2,523,669       (75,312)        (373,853)
Income tax payable               (158,812)       386,561         (657,793)
Other payables and accrued       744,552         480,773         229,913
expenses
Due to related party              16,911          -               -
Due to shareholder                50,000          -               -
Net cash provided by (used in)
operating                         10,011,383      (8,767,390)     (20,143,383)

activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of plant and           (16,361)        (32,856)        (156,288)
equipment
Withdraw (Prepayment) for
purchases of plant                8,071,937       (1,584)         (5,941)

and equipment
Disposal of property, plant      -               1,458           -
and equipment
Net cash provided by (used in)
investing                         8,055,576       (32,982)        (162,229)

activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in restricted cash      (6,376,171)     (5,642,598)     (5,965,883)
Proceeds from short-term bank    41,531,691      68,716,602      75,184,567
loans
Repayments of short-term bank    (66,189,540)    (66,384,299)    (65,543,772)
loans
Proceeds from long-term bank     -               -               4,718,094
loans
Repayments of long-term bank     (4,581,002)     (316,877)       -
loans
Proceeds from notes              98,467,000      76,842,639      50,433,168
payable-bank acceptance notes
Repayment of notes               (84,912,143)    (64,959,757)    (51,598,637)
payable-bank acceptance notes
Repurchase of common share       -               (96,608)        -
IPO compensation                 -               -               440,955
Net cash provided by (used in)    (22,060,165)    8,159,102       7,668,492
financing activities
INCREASE (DECREASE) IN CASH       (3,993,206)     (641,270)       (12,637,120)
AND CASH EQUIVALENTS
Effect of exchange rate          3,135,892       1,069,773       1,882,399
changes on cash
Cash and cash equivalents at     1,996,764       1,568,261       12,322,982
beginning of period
CASH AND CASH EQUIVALENTS AT    $ 1,139,450     $ 1,996,764     $ 1,568,261
END OF PERIOD
SUPPLEMENTARY CASH FLOW
INFORMATION
Cash paid during the periods:
Income taxes paid              $ 1,095,357     $ 310,355       $ 2,863,026
Interest paid                  $ 2,865,902     $ 3,676,992     $ 2,998,929
Non-cash transactions:
Appropriation to statutory      $ 436,672       $ 294,219       $ 1,210,351
reserve



SOURCE Ossen Innovation Co., Ltd.

Website: http://www.osseninnovation.com
 
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