Press Release
 
Ossen Innovation Announces 2010 Audited Financial Results
06/24/11

SHANGHAI, June 24, 2011 /PRNewswire via COMTEX/ --

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:

  • Revenue increased 16% to $117.5 million
  • Net income increased 83% to $14.6 million, with EPS of $0.73 based on 20 million shares outstanding
  • FY 2011 Guidance: Revenue of $138.5-$144.6 million, represents 18%-23% YOY growth, Net Income of $18.0-$18.8 million, represents 22%-28% YOY growth, with EPS of $0.90-$0.94 based on 20 million shares outstanding
  • Management will host a conference call to discuss results at 11:00 am ET on Friday, June 24th

Financial Summary

(inmillionsexceptEPS)

2H2010

2H2009

Chg.

FY2010

FY2009

Chg.

Revenue

$58.7

$60.7

(3%)

$117.5

$101.1

16%

GrossProfit

$13.0

$8.8

48%

$24.6

$13.4

83%

NetIncome

$7.5

$5.8

31%

$14.6

$8.0

83%

EPS

$0.38

$0.38

-

$0.73

$0.53

37%

SharesOutstanding*

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
million shares sold through Company's initial public offering completed in December 2010.

SecondHalf2010FinancialResults

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."

FullYear2010FinancialResults

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.

BalanceSheetandCashFlows

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.

FinancialOutlookfor2011

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

ConferenceCall

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

AboutOssenInnovationCo.,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.

SafeHarborStatements

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
accounts of $37,347 and $42,487 at December 31,
2010 and 2009, respectively


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
notes


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
authorized, 20,000,000 and 15,000,000 shares issued
and outstanding as of December 31, 2010 and 2009,
respectively


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 INCOMEFOR 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
TO NON-CONTROLLING INTEREST









2,897,397

1,714,670


809,437

NET INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST









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
INCOME









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
SHARES OUTSTANDING









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

SOURCE Ossen Innovation Co., Ltd.

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