SHANGHAI, May 16, 2018 /PRNewswire/ -- Ossen Innovation
Co., Ltd. ("Ossen Innovation" 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
fiscal year ended December 31,
2017.
"We saw the improvement in the past year and we were able to
increase our revenues by 13.1% as a result of the increase in sales
of both coated and plain surface products and net income by 10.8%.
Looking ahead, with the efforts of Chinese government to reduce the
overcapacity of steel industry, we are optimistic about the medium
to long term outlook of the industry," commented Dr. Liang Tang, Chairman of Ossen Innovation.
Twelve months Ended December
31, 2017 Financial Results
|
|
For the Twelve
Months Ended December 31,
|
($ millions,
except per share data)
|
|
2017
|
|
2016
|
|
%
Change
|
Revenues
|
|
$132.4
|
|
$117.0
|
|
13.1%
|
Gross
profit
|
|
$14.7
|
|
$16.1
|
|
-9.0%
|
Gross
margin
|
|
11.1%
|
|
13.8%
|
|
-2.7%
|
Operating
income
|
|
$8.1
|
|
$9.0
|
|
-10.4%
|
Operating
margin
|
|
6.1%
|
|
7.7%
|
|
-1.6%
|
Net income attributable to
Ossen Innovation
|
|
$5.3
|
|
$4.8
|
|
10.8%
|
EPS (per ordinary
share)
|
|
$0.27
|
|
$0.24
|
|
12.5%
|
EPS (per
ADS*)
|
|
$0.81
|
|
$0.72
|
|
12.5%
|
|
|
|
|
|
|
|
* One ADS equals to three
ordinary shares.
|
For the twelve months ended December 31,
2017, revenues increased by $15.4
million, or 13.1%, to $132.4
million from $117.0 million
for 2016. This decrease was primarily due to a 10.9% increase in
sales of rare earth coated PC wires and PC strands, a 46.1%
increase in zinc coated PC wires and PC strands, and a 14.9%
increase in plain surface PC strands, partially offset by a 13.2%
decrease in other products.
The sales of coated PC steel materials, including both rare
earth and zinc coated products, increased by $14.8 million, or 13.6%, to $124.4 million and accounted for 94% of total
sales for the twelve months ended December
31, 2017 from $109.6 million,
or 93.6% of total sales, for the same period of last year. This
increase in sales of coated PC steel materials was the result of
increase in sales for both rare earth coated products and zinc
coated products. Sales of rare earth coated products
increased by $11.1 million, or 10.9%,
to $112.4 million for the twelve
months ended December 31, 2017 from
$101.4 million for the same period of
last year. Sales of zinc coated products increased by $3.8 million, or 46.1%, to $12.0 million for the twelve months ended
December 31, 2017 from $8.2 million for the same period of last year.
Sales of plain surface PC strands and PC wires increased by
$0.8 million, or 14.9%, to
$6.0 million for the twelve months
ended December 31, 2017 from
$5.3 million for the same period of
last year. The increase of sales generated by plain surface PC
strands and PC wires was primarily due to to favorable wholesale
market demand during the period. Other sales were $1.9 million for the twelve months ended
December 31, 2017, compared to
$2.2 million for the same period of
last year. This decrease was primarily due to fewer spare raw
materials sold in 2017 compared to 2016 and the decrease of service
revenue.
The Company generated approximately 4.1% and 4.2%, respectively,
of total revenues during the years ended December 31, 2017 and 2016 from sales to
customers in international markets including primarily Vietnam, South
Korea, Japan, New Zealand, Australia, Bangladesh, Brunei, Costa
Rica, South Africa, and
Chile, primarily for use in the
construction of bridges.
Gross profit decreased by $1.4
million, or 9%, to $14.7
million for the twelve months ended December 31, 2017 from $16.1 million for the same period of last year.
Gross margin decreased by 270 basis points to 11.1% for the twelve
months ended December 31, 2017 from
13.8% for the same period of last year. The decrease of gross
margin was primarily due to the increase of the price of raw
materials and due to the fact that the orders for plain surface
products were mainly wholesale orders, which normally have lower
gross profit margin than the retail orders in 2016. Gross margins
for rare earth and zinc coated products were 10.0% and 9.5%,
respectively, for the twelve months ended December 31, 2017, compared to 11.3% and 14.7%,
respectively, for the same period of last year. Gross margin for
plain surface PC strands and PC wires was 7.0% for the twelve
months ended December 31, 2017,
compared to 22.6% for the same period of last year.
Selling expenses decreased by $0.1
million, or 18.4%, to $0.6
million for the twelve months ended December 31, 2017 from $0.7 million for the same period of last year.
The decrease was due to lower sales commission and lower
transportation cost. General and administrative expenses decreased
by $0.4 million, or 5.9%, to
$6.0 million for the twelve months
ended December 31, 2017 from
$6.4 million for the same period of
last year, mainly due to lower bad-debt provision, partially offset
by higher research and development cost in 2017. As a result, total
operating expenses decreased by $0.5
million, or 7.2%, to $6.6
million for the twelve months ended December 31, 2017 from $7.1 million for the same period of last
year.
Operating income decreased by $0.9
million, or 10.4%, to $8.1
million for the twelve months ended December 31, 2017 from $9.0 million for the same period of last year.
This decrease was primarily due to lower gross profit partially
offset by lower operating expenses. Operating margin was 6.1% for
the twelve months ended December 31,
2017, compared to 7.7% for the same period of last year.
Net income increased by $0.6
million, or 10.8%, to $5.9
million for the twelve months ended December 31, 2017 from $5.3 million for the same period of last
year.
After deducting net income attributable
to non-controlling interest, net income attributable to Ossen
Innovation increased by $0.5 million,
or 10.8%, to $5.3 million for the
twelve months ended December 31, 2017
from $4.8 million for the same period
of last year. Earnings per ordinary share, both basic and diluted,
were $0.27 for the twelve months
ended December 31, 2017, compared to
$0.24 for the same period of last
year. Earnings per ADS (one ADS equals to three ordinary shares),
both basic and diluted, were $0.81
and $0.72 for 2017 and 2016,
respectively.
Balance Sheet and Cash Flows
As of December 31, 2017, the
Company had cash and restricted cash of $8.0
million, compared to $6.9
million at December 31, 2016. Notes receivable were nil
as of December 31, 2017, compared to
$15.3 million at December 31, 2016. Accounts receivable were
$51.7 million as of December 31, 2017, compared to $37.3 million at December
31, 2016. The average days of sales of outstanding (DSO)
were 123 days for the twelve months ended December 31, 2017, compared to 126 days for the
year 2016. The balance of prepayment to suppliers for raw materials
totaled $71.3 million as of
December 31, 2017, compared to
$46.7 million at December 31, 2016. The Company had inventories of
$13.5 million as of December 31, 2017, compared to $26.0 million at the end of 2016. Total working
capital was $114.7 million as of
December 31, 2017, compared to
$101.6 million at December 31, 2016.
Net cash used by operating activities was $3.0 million for the twelve months ended
December 31, 2017, compared to
$15.5 million provided by operating
activities for the same period of last year. This was the result of
an increase in accounts receivable, an increase in advance to
suppliers, partially offset by a decrease in inventories and a
decrease in notes receivable. Net cash used in investing activities
was $37,848 for the twelve months
ended December 31, 2017, compared to
$17,537 for the same period of last
year. Net cash used in financing activities was $4.3 million for the twelve months ended
December 31, 2017, compared to
$7.5 million for the same period of
last year. The decrease in cash used in financing activities was
the result of a decrease in proceeds from notes payable, a decrease
in proceeds from short-term bank loans, and a decrease in proceeds
from long-term bank loans, partially offset by a decrease in
repayments of bond payable, a decrease in repayment of notes
payable and a decrease in repayments of short-term bank loans.
Recent Developments
On July 19, 2017, Ossen entered
into a Share Exchange Agreement (the "SEA") with the shareholders
(the "Selling Shareholders") of America-Asia Diabetes Research
Foundation (the "Foundation"), a California corporation that owns 90.27% of the
equity interests of San MediTech (Huzhou) Co. Ltd. ("San
MediTech"), a China-based medical
device company engaged in the research, development and marketing
of glucose control products. Pursuant to the SEA, Ossen agreed to
acquire all of the issued and outstanding equity interests of the
Foundation in exchange for 81,243,000 of Ossen's ordinary shares
(the "Acquisition"). Upon completion of the Acquisition, Ossen
would indirectly own 90.27% of San MediTech. San MediTech's
proprietary Dynamic Glucose Monitoring System ("DGMS") provides
continuous, real-time monitoring of glucose level in diabetes
patients, with two patents granted in China and several patents pending both in
China and the U.S. DGMS has been
approved by the China Food and Drug Administration and has entered
into clinical trials in the U.S. for DGMS.
In connection with the Acquisition, Ossen agreed to sell its
existing pre-stressed steel manufacturing business, including all
existing liabilities, immediately following the completion of the
Acquisition. An entity affiliated with Dr. Liang Tang, the Chairman of the board of Ossen,
agreed to acquire all of the equity of Ossen's wholly-owned
subsidiary, which indirectly owns all of Ossen's existing operating
subsidiaries, in exchange for the forfeiture and cancellation of
all 11,850,000 ordinary shares currently held by Dr. Tang (the
"Sale Transaction").
On May 8, 2018, Ossen announced
the termination of the SEA. The Foundation and its shareholders
failed to satisfy the closing conditions set forth in the SEA. As a
result, the Company terminated the SEA. In connection therewith,
the sale transaction is deemed terminated.
On December 12, 2017, the Company
announced the completion of its 2017 annual general meeting of
shareholders. At the Annual Meeting, the Company's shareholders
re-elected seven directors, Dr. Liang Tang, Mr. Wei Hua,
Mr. Junhong Li, Mr. Xiaobing Liu, Ms. Yingli Pan,
and Mr. Zhongcai Wu to the Board of Directors and re-appointed BDO
China Shu Lun Pan Certified Public Accountants LLP as the Company's
independent registered accounting firm for the fiscal year
ending December 31, 2017.
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 Ma'anshan, 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:
Wei Hua, Chief Executive
Officer
Email: int.tr@ossengroup.com
Phone: +86-21-6888-8886
Web: www.osseninnovation.com
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS AS OF DECEMBER 31, 2017 AND 2016
|
|
|
December
31,
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
950,225
|
|
$
|
217,631
|
Restricted
cash
|
|
7,192,928
|
|
|
6,703,242
|
Note receivable-bank
acceptance note
|
|
-
|
|
|
15,280,381
|
Accounts receivable,
net of allowance for doubtful accounts
of $868,973 and $985,990 at December 31, 2017 and 2016,
respectively
|
|
51,699,930
|
|
|
37,298,465
|
Inventories
|
|
13,479,473
|
|
|
25,999,182
|
Advance to
suppliers
|
|
71,280,903
|
|
|
46,729,285
|
Other current
assets
|
|
37,390
|
|
|
31,368
|
Total
current assets
|
|
144,640,849
|
|
|
132,259,554
|
Property, plant and
equipment, net
|
|
4,031,534
|
|
|
4,447,063
|
Land use rights,
net
|
|
3,697,012
|
|
|
3,571,184
|
Deferred tax
assets
|
|
149,511
|
|
|
165,951
|
TOTAL
ASSETS
|
$
|
152,518,906
|
|
$
|
140,443,752
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes payable-bank
acceptance notes
|
$
|
10,253,742
|
|
$
|
9,586,276
|
Short-term bank
loans
|
|
13,947,385
|
|
|
16,916,535
|
Accounts
payables
|
|
359,927
|
|
|
1,504,863
|
Customer
deposits
|
|
316,394
|
|
|
135,903
|
Taxes
payable
|
|
450,711
|
|
|
594,795
|
Other payables and
accrued liabilities
|
|
4,236,823
|
|
|
1,740,474
|
Due to related
party
|
|
-
|
|
|
3,886
|
Due to
shareholder
|
|
351,499
|
|
|
307,499
|
Total
current liabilities
|
|
29,916,481
|
|
|
30,790,231
|
Long-term bank
loans
|
|
7,652,046
|
|
|
7,207,727
|
TOTAL
LIABILITIES
|
|
37,568,527
|
|
|
37,997,958
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Ordinary shares,
$0.01 par value: 100,000,000 shares
authorized; 20,000,000 shares issued; 19,791,110 shares
outstanding as both of December 31, 2017 and 2016
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
Statutory
reserve
|
|
6,672,254
|
|
|
6,123,022
|
Retained
earnings
|
|
59,386,668
|
|
|
54,590,589
|
Treasury stock, at
cost: 208,890 shares as both of December 31, 2017 and
2016
|
|
(192,153)
|
|
|
(192,153)
|
Accumulated other
comprehensive income/(loss)
|
|
2,227,334
|
|
|
(4,378,873)
|
TOTAL
SHAREHOLDERS' EQUITY
|
|
102,265,558
|
|
|
90,314,040
|
Non-controlling
interest
|
|
12,684,821
|
|
|
12,131,754
|
TOTAL
EQUITY
|
|
114,950,379
|
|
|
102,445,794
|
|
$
|
152,518,906
|
|
$
|
140,443,752
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR
THE
|
YEARS ENDED
DECEMBER 31, 2017, 2016 AND 2015
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
REVEUNUES
|
$
|
132,375,915
|
|
$
|
117,029,154
|
|
$
|
117,908,416
|
COST OF GOODS
SOLD
|
|
117,721,799
|
|
|
100,932,528
|
|
|
102,197,994
|
GROSS
PROFIT
|
|
14,654,116
|
|
|
16,096,626
|
|
|
15,710,422
|
Selling
expenses
|
|
598,832
|
|
|
734,159
|
|
|
986,378
|
General and
administrative expenses
|
|
6,002,121
|
|
|
6,376,383
|
|
|
4,478,413
|
Total
Operating Expenses
|
|
6,600,953
|
|
|
7,110,542
|
|
|
5,464,791
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
8,053,163
|
|
|
8,986,084
|
|
|
10,245,631
|
Financial expenses,
net
|
|
(1,610,337)
|
|
|
(2,827,138)
|
|
|
(2,823,952)
|
Other income,
net
|
|
147,108
|
|
|
90,584
|
|
|
371,894
|
INCOME BEFORE
INCOME TAX
|
|
6,589,934
|
|
|
6,249,530
|
|
|
7,793,573
|
INCOME
TAX
|
|
(691,556)
|
|
|
(926,048)
|
|
|
(1,180,167)
|
NET
INCOME
|
|
5,898,378
|
|
|
5,323,482
|
|
|
6,613,406
|
LESS: NET INCOME
ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
|
|
|
|
|
|
|
553,067
|
|
499,509
|
|
716,602
|
NET INCOME
ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
5,345,311
|
|
4,823,973
|
|
5,896,804
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss)
|
|
6,606,207
|
|
|
(6,975,100)
|
|
|
(5,829,470)
|
TOTAL OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
6,606,207
|
|
|
(6,975,100)
|
|
|
(5,829,470)
|
COMPREHENSIVE
INCOME/(LOSS)
|
$
|
11,951,518
|
|
$
|
(2,151,127)
|
|
$
|
67,334
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
ORDINARY SHARE
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.27
|
|
$
|
0.24
|
|
$
|
0.30
|
WEIGHTED AVERAGE
ORDINARY SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
19,791,110
|
|
|
19,804,164
|
|
|
19,862,537
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
FOR THE YEARS
ENDED DECEMBER 31, 2017, 2016 AND 2015
|
|
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
5,898,378
|
|
$
|
5,323,482
|
|
$
|
6,613,406
|
Adjustments to
reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
796,566
|
|
|
883,755
|
|
|
1,416,060
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(14,401,465)
|
|
|
5,949,508
|
|
|
10,516,441
|
Inventories
|
|
|
12,519,709
|
|
|
1,277,040
|
|
|
(7,138,320)
|
Advance to
suppliers
|
|
|
(24,551,618)
|
|
|
9,000,804
|
|
|
597,301
|
Other current
assets
|
|
|
(6,023)
|
|
|
745,284
|
|
|
220,047
|
Deferred tax
assets
|
|
|
16,440
|
|
|
(27,562)
|
|
|
(188,769)
|
Notes
receivable - bank acceptance notes
|
|
|
15,280,381
|
|
|
(7,270,152)
|
|
|
1,914,927
|
Increase
(Decrease) In:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(1,144,936)
|
|
|
(394,537)
|
|
|
(1,317,676)
|
Customer
deposits
|
|
|
180,490
|
|
|
(173,243)
|
|
|
(278,858)
|
Income tax
payable
|
|
|
(144,084)
|
|
|
180,545
|
|
|
(138,209)
|
Other payables
and accrued expenses
|
|
|
2,496,349
|
|
|
70,804
|
|
|
46,712
|
Due to related
party
|
|
|
(3,912)
|
|
|
(61,883)
|
|
|
(3,700)
|
Due to
shareholder
|
|
|
44,000
|
|
|
25,000
|
|
|
182,499
|
Net cash provided
by/ (used in) operating activities
|
|
|
(3,019,725)
|
|
|
15,528,845
|
|
|
12,441,861
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
|
(37,848)
|
|
|
(17,537)
|
|
|
(29,687)
|
Net cash used in
investing activities
|
|
|
(37,848)
|
|
|
(17,537)
|
|
|
(29,687)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Decrease/
(increase) in restricted cash
|
|
|
(489,686)
|
|
|
2,077,201
|
|
|
8,792,289
|
Proceeds from
short-term bank loans
|
|
|
13,497,882
|
|
|
20,422,885
|
|
|
18,462,625
|
Repayments of
short-term bank loans
|
|
|
(17,380,550)
|
|
|
(20,068,975)
|
|
|
(18,462,625)
|
Proceeds from
long-term bank loans
|
|
|
0
|
|
|
7,530,007
|
|
|
-
|
Proceeds from
notes payable-bank acceptance
notes
|
|
|
14,662,757
|
|
|
17,846,117
|
|
|
36,202,800
|
Repayment of
notes payable-bank acceptance
notes
|
|
|
(14,588,702)
|
|
|
(20,029,819)
|
|
|
(49,367,454)
|
Repurchase of
common share
|
|
|
-
|
|
|
(36,810)
|
|
|
(58,735)
|
Repayments of
bond payable
|
|
|
-
|
|
|
(15,273,177)
|
|
|
-
|
Net cash used in
financing activities
|
|
|
(4,298,299)
|
|
|
(7,532,571)
|
|
|
(4,431,100)
|
|
|
|
|
|
|
|
|
|
|
INCREASE
(DECREASE) IN CASH AND
CASH EQUIVALENTS
|
|
|
(7,355,872)
|
|
|
7,978,737
|
|
|
7,981,074
|
Effect of
exchange rate changes on cash
|
|
|
8,088,466
|
|
|
(8,573,383)
|
|
|
(7,853,389)
|
Cash and cash
equivalents at beginning of
period
|
|
|
217,631
|
|
|
812,277
|
|
|
684,592
|
CASH AND CASH
EQUIVALENTS AT END
OF PERIOD
|
|
$
|
950,225
|
|
$
|
217,631
|
|
$
|
812,277
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW
INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
|
840,670
|
|
$
|
740,873
|
|
$
|
1,301,687
|
Interest
paid
|
|
$
|
1,397,635
|
|
$
|
2,311,039
|
|
$
|
3,353,344
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
|
Appropriation to
statutory reserve
|
|
$
|
549,232
|
|
$
|
491,649
|
|
$
|
609,621
|
View original
content:http://www.prnewswire.com/news-releases/ossen-innovation-announces-full-year-2017-financial-results-300649081.html
SOURCE Ossen Innovation Co., Ltd.