Ostin Technology Group Reports Fiscal Year 2022 Results

Rhea-AI Summary

Ostin Technology Group Co., Ltd. (Nasdaq: OST) reported a 37% decrease in sales for the fiscal year ended September 30, 2022, totaling $105.4 million, down from $167.7 million in 2021. The net income plummeted by 97% to approximately $112,227. Gross profit margin improved to 12%, up from 10%, primarily due to better margins from new R&D services. Cash reserves increased to $3.8 million. Management anticipates gradual recovery in market demand for display modules by late 2023, driven by an enhanced focus on mass production and new product launches in commercial displays and consumer electronics.

Positive

• Improved gross margin to 12%, up from 10% the previous year.
• Increased cash and cash equivalents to $3.8 million from $0.7 million.
• Transition to mass production of high-margin display products like intelligent conference systems.

Negative

• Sales of display modules dropped by approximately $61 million, or 63%.
• Net income declined by 97% to $112,227.
• General and administrative expenses rose by 53% to approximately $7.7 million.

NANJING, China, Feb. 16, 2023 /PRNewswire/ -- Ostin Technology Group Co., Ltd. (the "Company") (Nasdaq: OST), a supplier of display modules and polarizers in China, today reported its financial results for the fiscal year ended September 30, 2022.

Fiscal Year 2022 Summary

-  Sales decreased by approximately $62.3 million, or 37%, to approximately $105.4 million for the fiscal year ended September 30, 2022 from approximately $167.7 million for the fiscal year ended September 30, 2021.

-  Overall gross profit margin was 12% for fiscal year ended September 30, 2022 as compared to 10% for fiscal year ended September 30, 2021. The improvement in gross margin was largely due to the significantly higher gross margin of the Company's new research and development services.

-  Net income was approximately $112,227 and $3.3 million in the fiscal years ended September 30, 2022 and 2021, respectively.

-  Cash and cash equivalents were $3.8 million as of September 30, 2022, as compared to $0.7 million as of September 30, 2021.

"During the fiscal year ended September 30, 2022, the Company's revenue was primarily impacted by the decrease in sales of display modules resulted from the decline of market demand for display modules and the continuous lockdown in mainland China from late 2021 to 2022. However, based on seasonality in the Company's business and cyclical nature of the Company's industry, we believe that the market demand will gradually recover in the second half of 2023 and give a steady boost to the Company's sales of display modules and polarizers in the next 12 to 18 months," said Mr. Tao Ling, Chairman and CEO of the Company.

"We have transitioned certain product lines from trial to mass production and will further improve the Company's research and development capabilities by leveraging accumulated experience and expertise in new product research and development, specifically catering to the Company's major end-brand clients. Looking ahead, the Company's focus remains on enhancing operating performance and executing the Company's profitable business strategy."

		For the Fiscal Years Ended September 30
(in $ millions, except earnings per share; differences due to rounding)		2022				2021				% Change
Revenues		$	105.4			$	167.7			(37 %)
Gross profit			12.6				17.4			(27 %)
Gross margin			12 %				10 %			2 percentage points
Operating income			0.5				3.2			(86 %)
Net income			0.1				3.3			(97 %)
Earnings per share – Basic and Diluted			0.02				0.30			(93 %)

Results of Operations

Revenues

Sales decreased by approximately $62.3 million, or 37%, to approximately $105.4 million for the fiscal year ended September 30, 2022 from approximately $167.7 million for the fiscal year ended September 30, 2021. The significant decrease in revenues was primarily due to the decrease in sales of display modules resulted from the decline of market demand for display modules and the continuous lockdown in mainland China from late 2021 to 2022.

(in $ millions, differences due to rounding)		September 30, 2022								September 30, 2021
Revenue Category		Sales Amount (In USD)				As % of Sales				Sales Amount (In USD)				As % of Sales
Sales of display modules		$	35.1				34	%		$	96.1				58	%
Sales of polarizers			62.7				59	%			62.6				37	%
Research and developments			5.7				5	%			-				-	%
Others			1.9				2	%			9.0				5	%
Total			105.4				100	%			167.7				100	%

 

-  Sales of display modules decreased by approximately $61 million or 63%, to approximately $35.1 million for the fiscal year ended September 30, 2022 from approximately $96.1 million for the fiscal year ended September 30, 2021.

-  To support mass production of polarizers, the Company invested significant capital and human resources to build and run Chengdu factory during the fiscal year ended September 30, 2022 and discontinued low-margin display modules product lines. For fiscal years ended September 30, 2022 and 2021, demand for polarizers remained stable and revenue generated from sales of polarizers was approximately $62.7 million and $62.6 million, respectively.

-  For the fiscal year ended September 30, 2022, revenue generated from the Company's new research and development services was approximately $5.7 million, representing 5% of the Company's total revenues.

The following table shows the Company's revenues by geographic region for the fiscal years ended September 30, 2022 and 2021. To mitigate impact of the exchange rate fluctuations and shipping disruptions caused by the epidemic, the Company switched focus from overseas to domestic markets. As a result, sales in Hong Kong and Taiwan saw a significant decrease during the fiscal year ended September 30, 2022 as compared to the previous year.

(in $ millions, differences due to rounding)			September 30, 2022							September 30, 2021
Country/Region			Sales Amount				As % of Sales				Sales Amount				As % of Sales
Mainland China		$	96.4				91	%		$	133.9				80	%
Hong Kong and Taiwan			8.9				9	%			32.2				19	%
Others			-				-	%			1.6				1	%
Total		$	105.4				100	%		$	167.7				100	%

 

Cost of revenues

Cost of revenues decreased by approximately $57.6 million or 38%, to approximately $92.8 million for the fiscal year ended September 30, 2022 from approximately $150.4 million for the fiscal year ended September 30, 2021. The decrease in cost of revenues was generally in line with the decrease in revenues.

The following table presents cost of revenues by revenue categories for the fiscal years ended September 30, 2022 and 2021, respectively.

		For the Fiscal Years Ended
(in $ millions, differences due to rounding)		September 30, 2022				September 30, 2021
Revenue Category
Sales of display modules		$	31.9			$	84.1
Sales of polarizers			57.3				56.9
Research and development			2.2				-
Others			1.4				9.4
Total		$	92.8			$	150.4
Gross Margin
Sales of display modules			9.2	%			12.5	%
Sales of polarizers			8.6	%			9.1	%
Research and development			61.7	%			-	%
Others		26.6	0.7	%			(3.6)	%
Total Gross Margin			12	%			10	%

Gross profit

The Company's gross profit decreased by approximately $4.8 million, or 27%, to approximately $12.6 million for the fiscal year ended September 30, 2022 from approximately $17.4 million for the fiscal year ended September 30, 2021. Overall gross profit margin was 12% for the fiscal year ended September 30, 2022 as compared to 10% for the fiscal year ended September 30, 2021. The improvement in gross margin was largely due to the significantly higher gross margin of the Company's new research and development services.

The decline in the gross profit margin of display modules and polarizers was primarily due to the substantial rise in logistics costs, electricity, and wages resulting from the prolonged lockdowns in mainland China from late 2021 to 2022. Additionally, the decrease in unit sales price and volume was due to declining market demand and heightened market competition.

Selling and marketing expenses

Selling and marketing expenses decreased by approximately $1.2 million, or 30%, to approximately $2.8 million for the fiscal year ended September 30, 2022 as compared to approximately $4.0 million for the fiscal year ended September 30, 2021. The decrease in selling and marketing expenses was mainly due to the decrease in revenue.

General and administrative expenses

General and administrative ("G&A") expenses increased by approximately $2.7 million, or 53%, to approximately $7.7 million for the fiscal year ended September 30, 2022 as compared to approximately $5.0 million for the fiscal year ended September 30, 2021. The increase in G&A expenses was due to the increase in professional fees after the Company's IPO and the increase in administrative expenses in complying with regulations imposed by local government to control COVID-19.

Research and development expenses

The Company's research and development expenses were approximately $2.5 million and $5.7 million for the fiscal years ended September 30, 2022 and 2021, respectively. The COVID-19 pandemic caused delays in the delivery of research and development materials as well as lockdowns and quarantine measures for the Company's research and development staff in the PRC, leading to some suspended or slowed projects and therefore a decrease in research and development expenses.

Net income

As a result of the foregoing, we recorded a net income of approximately $112,227 and $3.3 million in the fiscal years ended September 30, 2022 and 2021, respectively.

Cash and cash equivalents

Cash and cash equivalents were $3.8 million as of September 30, 2022, as compared to $0.7 million as of September 30, 2021.

Recent Development

During the fiscal year ended September 30, 2022, the Company continued efforts to develop new products and have introduced a protection film to customers. The protection film is currently being tested by the Company's customers and is expected to be put into production at the beginning of 2023.

In an effort to increase the Company's profits as well as utilizing extensive resources and expertise in the display panel industry, the Company has diversified into the production and sales of display products for end users such as commercial display and consumer electronics, which generally have a higher profit margin than our display module products. The Company has independently developed new technologies that are used in proprietary products, such as the all-in-one intelligent conference system and Pintura® wireless photo transmission system, which are expected to officially launch sales in the United States in early 2023. Sales of Pintura wireless photo transmission system has started in China since October 2023. To boost the Company's marketing efforts for these products, the Company has increased sales force by hiring more sales representatives, providing end-user-focused sales training, and investing in electronics exhibitions and advertisements.

To further diversify the Company's source of revenue, the Company has leveraged strong research and development capabilities and accumulated expertise in the display module field and developed customized solutions for clients. During the fiscal year ended September 30, 2022, the Company began generating revenue from providing such research and development services to branded original design manufacturers.

About Ostin Technology Group Co., Ltd.

Founded in 2010, the Company is a supplier of display modules and polarizers in China. The Company designs, develops and manufactures TFT-LCD display modules in a wide range of sizes and customized sizes which are mainly used in consumer electronics, outdoor LCD displays and automotive displays. The Company also manufactures polarizers used in the TFT-LCD display modules. In 2022, the Company expanded its business into the end-user market, offering display products of different sizes. The Company also is a provider of research and development services to branded original design manufacturers.

For more information, please visit http://www.austinelec.com/.

Forward-Looking Statement

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's forecast on market trend; the Company's future business development; the demand for and market acceptance for new products; changes in technology; risks and uncertainties regarding lingering effects of the Covid-19 pandemic on the Company's businesses, including disruptions to the Company's supply chain; the Company's ability to attract and retain skilled professionals; client concentration; and general economic conditions affecting the Company's industry and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:

Ostin Technology Group Co., Ltd.
ir@austinelec.com

Investor Relations:
Janice Wang
Wealth Financial Services LLC
Phone: +86 13811768599
+1 628 283 9214
Email: services@wealthfsllc.com

 

 

 

OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED BALANCE SHEETS 
AS OF SEPTEMBER 30, 2022 AND 2021
(IN U.S. DOLLARS, EXCEPT FOR NUMBER OF SHARES DATA)

 

		September 30, 2022				September 30, 2021
ASSETS
Current Assets
Cash and cash equivalents		$	3,655,947			$	684,335
Restricted cash			150,973				-
Accounts receivable, net of allowance for doubtful accounts of $31,997 and $94,166, respectively			6,270,505				25,551,527
Notes receivable			-				101,361
Inventories, net			15,432,712				18,686,680
Advances to suppliers, net			6,097,833				7,300,770
Tax receivables			92,749				443,173
Prepaid expenses and other receivables			207,584				1,426,790
Total Current Assets			31,908,303				54,194,636
Property, plant and equipment, net			19,415,829				19,368,333
Land use rights, net			1,284,591				1,497,579
Intangible assets, net			2,968,745				127,129
Deferred tax assets, net			566,404				673,179
Long-term investment			210,867				-
Right-of-use lease assets			5,571				105,625
Other long-term receivables			823,116				-
TOTAL ASSETS		$	57,183,426			$	75,966,481
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable		$	6,279,484			$	17,618,986
Accrued expenses and other current liabilities			1,950,122				2,632,370
Advances from customers			1,415,175				4,506,016
Due to related parties			477,964				3,197,070
Short-term borrowings			21,292,963				32,417,418
Operating lease liabilities – current			89,917				193,161
Total Current Liabilities			31,505,625				60,565,021
Operating lease liabilities – non-current			-				5,583
Long-term liability			-				194,022
Other long-term payables			52,590				-
TOTAL LIABILITIES			31,558,215				60,764,626
COMMITMENTS AND CONTINGENCIES			-				-
SHAREHOLDERS' EQUITY
Common stock, $0.0001 par value, 500,000,000 shares authorized, 14,006,250 and 10,250,000 shares issued and outstanding as of September 30, 2022 and 2021			1,401				1,013
Additional paid-in capital			23,256,219				10,856,169
Statutory surplus reserves			1,496,314				1,033,653
Retained earnings			2,484,385				2,748,068
Accumulated other comprehensive loss			(1,902,108)				(316,017	)
Total Equity Attributable to Ostin Technology Group Co., Ltd.			25,336,211				14,322,886
Equity attributable to non-controlling interests			289,000				878,969
Total Shareholders' Equity			25,625,211				15,201,855
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	57,183,426			$	75,966,481

 

 

OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020 
(IN U.S. DOLLARS, EXCEPT SHARES DATA)

		For the fiscal years ended September 30,
		2022			2021				2020
Sales		$	105,416,746		$	167,744,801			$	140,073,917
Cost of sales			(92,804,431)			(150,385,723	)			(128,489,255	)
Gross profit			12,612,315			17,359,078				11,584,662
Operating expenses:
Selling and marketing expenses			(2,793,197)			(3,965,790	)			(2,172,393	)
General and administrative expenses			(7,649,241)			(4,990,951	)			(3,123,219	)
Research and development costs			(2,515,239)			(5,712,792	)			(2,828,718	)
Gain from disposal of property, plant and equipment			795,783			527,818				-
Total operating expenses			(12,161,894)			(14,141,715	)			(8,124,330	)
Operating income			450,421			3,217,363				3,460,332
Other income (expenses):
Interest income (expense), net			(1,290,811)			(1,112,045	)			(688,401	)
Other income (expenses), net			1,279,559			1,133,103				(67,370	)
Total other expenses, net			(11,252)			21,058				(755,771	)
Income before income taxes			439,169			3,238,421				2,704,561
Income tax provision			(326,942)			57,086				126,725
Net income			112,227			3,295,507				2,831,286
Net income (loss) attributable to non-controlling interests			(86,751)			196,564				117,175
Net income attributable to Ostin Technology Group Co., Ltd.			198,978			3,098,943				2,714,111
Net income			112,227			3,295,507				2,831,286
Other comprehensive income (loss):
Foreign currency translation adjustment			(1,716,150)			272,591				415,403
Comprehensive (loss) income			(1,603,923)			3,568,098				3,246,689
Comprehensive (loss) income attributable to non- controlling interests			(216,810)			219,497				126,444
Comprehensive (loss) income attributable to Ostin Technology Group Co., Ltd.			(1,387,113)			3,348,601				3,120,245
Earnings per ordinary share
Basic and diluted		$	0.02		$	0.30			$	0.27
Weighted average number of ordinary shares outstanding
Basic and diluted			11,773,202			10,125,000				10,125,000

 

 

OSTIN TECHNOLOGY GROUP CO., LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2022, 2021 AND 2020 
(IN U.S. DOLLARS) 

		For the years ended September 30,
		2022				2021				2020
Cash Flows from Operating Activities:
Net income (loss)		$	112,227			$	3,295,507			$	2,831,286
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation expense			2,309,263				1,841,250				1,080,675
Amortization expense of land use rights			78,926				85,842				18,447
Amortization expense of intangible assets			214,703				199,913				327,636
Amortization expense of right-of-use assets			53,627				114,387				-
Bad debt (recovery) expense for accounts receivable			(60,982	)			94,166				233,824
Bad debt expense for advances to suppliers			228,251				311,811				-
Inventory provision			21,962				780,366				288,411
Deferred tax assets, net			106,775				208,832				(299,996	)
Gain from disposal of property, plant and equipment			(795,783	)			(527,818	)			-
Imputed interest for short-term borrowings from third parties			-				370,847				228,291
Changes in operating assets and liabilities:
Accounts receivable			18,373,339				(15,163,687	)			(6,710,021	)
Notes receivable			99,663				2,129,820				(1,887,698	)
Inventories			1,599,407				(559,724	)			(5,752,729	)
Advances to suppliers			330,995				1,378,929				(2,130,279	)
Prepaid expenses and other receivables			1,177,551				(854,448	)			50,864
Other long-term receivables			(893,493)				-				-
Accounts payable			(10,507,396	)			(6,781,879	)			11,538,662
Accrued expenses and other current liabilities			(194,934)				(3,614,350	)			5,192,485
Advances from customers			(2,894,344	)			(1,542,196	)			2,945,080
Income tax payable			335,069				590,588				(230,257	)
Operating lease liabilities			(53,629	)			(22,415	)			-
Other long-term payables			57,086				-				-
Net cash (used in) provided by operating activities			9,698,283				(17,664,259	)			7,724,681
Cash Flows from Investing Activities:
Purchases of property, plant and equipment			(5,122,095	)			(6,211,335	)			(3,701,172	)
Disposal of property, plant and equipment			1,515,045				1,024,990				-
Purchases of intangible assets			(3,060,601	)			(11,568	)			(1,475,783	)
Long-term investment			(210,867	)			-				-
Net cash used in investing activities			(6,878,518	)			(5,197,913	)			(5,176,956	)
Cash Flows from Financing Activities:
Proceeds received from stock issuance			12,409,022				-				98,494
Repayment of notes payable			-				-				(1,070,573	)
Proceeds from (Repayments to) long-term liability			(873,401	)			93,928				-
Proceeds from short-term bank borrowings			15,706,830				17,850,026				9,335,389
Repayments on short-term bank borrowings			(16,243,972	)			(12,569,361	)			(8,007,879	)
Proceeds from short-term borrowings from third party individuals			1,290,972				16,872,476				5,838,187
Repayments on short-term borrowings from third party individuals			(9,652,990	)			(5,890,252	)			(6,254,364	)
Proceeds from related parties			2,746,749				9,092,860				3,004,804
Repayments to related parties			(5,371,422	)			(6,885,557	)			(2,733,592	)
Net cash provided by financing activities			11,788				18,564,120				210,464
Effect of changes in currency exchange rates			291,032				(379,135	)			133,202
Net (decrease) increase in cash and cash equivalents			3,122,585				(4,677,187	)			2,891,392
Cash, cash equivalents and restricted cash at the beginning of year			684,335				5,361,522				2,470,130
Cash and cash equivalents and restricted cash at the end of year		$	3,806,920			$	684,335			$	5,361,522
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets
Cash and cash equivalents		$	3,655,947			$	684,335			$	5,343,434
Restricted cash			150,973				-				18,088
Total cash, cash equivalents and restricted cash		$	3,806,920			$	684,335			$	5,361,522
Supplemental disclosures of cash flows information:
Cash paid for income taxes		$	241,697			$	374,951			$	268,724
Cash paid for interest		$	1,010,897			$	751,658			$	527,027

 

 

 

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SOURCE Ostin Technology

FAQ

What were Ostin Technology Group's total revenues for fiscal year 2022?

Ostin Technology Group reported total revenues of approximately $105.4 million for the fiscal year ended September 30, 2022.

How much did Ostin Technology Group's net income decline in fiscal year 2022?

The net income declined by approximately 97%, down to $112,227 in fiscal year 2022.

What is the future outlook for Ostin Technology Group's sales?

The company expects market demand for display modules to gradually recover in the second half of 2023.

What was the gross profit margin for Ostin Technology Group in fiscal year 2022?

The gross profit margin improved to 12% for the fiscal year ended September 30, 2022.

What are some new products Ostin Technology Group is focusing on?

The company is focusing on new products like intelligent conference systems and the Pintura wireless photo transmission system.