SHANGHAI, August 12, 2011 /PRNewswire-Asia-FirstCall/ -- 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 financial results for the six months ended June 30, 2011.
"2011 is a pivotal year for Ossen," stated Dr. Liang Tang, Chairman of Ossen Innovation. "We are running at full capacity this year, which positively impacted our growth, margins and profitability. After completing our initial public offering at the end of 2010, we are preparing to add 30,000 tons of additional coated products capacity, which we expect will come online during the first half of 2012. As the Chinese government continues to push forward on multiple high profile bridge projects around the country, we are well positioned to leverage on our strong competitive advantage in this market."
Financial Summary
(in millions except EPS) | 1H 2011 | 1H 2010 | Chg. | |
Revenue | $60.8 | $58.7 | 4% | |
Gross Profit | $15.9 | $11.6 | 37% | |
Net Income | $9.5 | $7.1 | 34% | |
EPS | $0.47 | $0.47 | - | |
Shares Outstanding * | 20 | 15 | 33% | |
* 20 million shares were outstanding as of June 30, 2011. The number includes the five million shares sold through Company's initial public offering completed in December 2010. | ||||
First Half 2011 Financial Results
Revenue for the first half ended June 30, 2011 was $60.8 million, with $37.8 million or 62% generated from the sale of coated pre-stressed steel materials. This represented an increase of $4.4 million or 13% over the $33.4 million in sales of coated pre-stressed steel products during the same period of 2010. Sales of rare earth coated products increased 7% to $34.1 million.
Six months ended June 30 | |||||||
1H 2011 | 1H 2010 | Change from | |||||
Revenue ($) | % of | Revenue ($) | % of | 2010 to 2011 | |||
Products: | |||||||
Plain surface PC strands | $18,018,742 | 30% | $18,004,460 | 31% | 0% | ||
Zinc coated PC wires and | $3,720,377 | 6% | $1,516,857 | 3% | 145% | ||
Stabilized PC wires | $4,913,533 | 8% | $7,261,189 | 12% | -32% | ||
Rare earth coated PC wires and | $34,129,283 | 36% | $31,926,269 | 54% | 7% | ||
Total | $60,781,935 | $58,708,775 | |||||
Gross profit increased from $11.6 million in the first half of 2010 to $15.9 million, a 37% increase. This increase resulted from our increased revenues, discounts on raw material purchases due to a significant increase in advance payments to suppliers, and a shift in product mix, with a greater portion of sales derived from higher margin coated products. Gross margin expanded from 19.8% to 26.1% as a result of higher contribution from higher-margin coated products, as well as improved overall pricing of raw materials. Coated pre-stressed steel wires and strands on average have generated a gross margin of 28.5% as compared to roughly 22.1% for plain surface products.
Selling expenses increased from $0.2 million to $0.6 million due to higher salaries, marketing and transportation costs. General and administrative expenses increased from $0.5 million to $1.2 million due to costs related to our being a public company. Operating income grew 30% to $14.1 million in the six months ended June 30, 2011. Operating margins were 23.2% in the first half of 2011 compared to 18.5% in the same period a year ago.
Net income attributable to controlling interest increased 34% to $9.5 million in the first half of 2011 from $7.1 million in the year-ago period. Earnings per share were $0.47 for both periods, reflecting an increase of 5 million shares outstanding year-over-year as a result of the December 2010 IPO.
Balance Sheet and Cash Flows
Ossen had approximately $19.3 million of cash and restricted cash at June 30, 2011 compared to $26.1 million at December 31, 2010. Total accounts receivable and notes receivable increased from $31.0 million to $31.7 million as of June 30, 2011. The average accounts receivable days sales outstanding were 68 days in the first six months of 2011.
In the first six months of 2011, the Company had a net cash outflow from operations of approximately $19.1 million. Inventories decreased by approximately $7.7 million. Total advance to suppliers increased to $72.5 million in anticipation of higher sales and as a result of the Company's ability to obtain additional short term working capital loans from local banks.
The Company raised approximately $22 million from its IPO in December 2010. The funds are being used to fund its 30,000-ton rare earth coated production facility expansion. Through June 30, 2011, Ossen has spent $7.7 million for equipment purchases related to this project.
Financial Outlook for 2011
Management has reiterated its financial forecast for fiscal 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 | |
Business Updates
Ossen continues to expand its customer base of domestic and international customers. As of the date of this press release, the Company had approximately 126 customers in 25 provinces and five countries, including South Africa, New Zealand, The Philippines, Papua New Guinea and Singapore.
The outlook for new orders remains healthy. Ossen is currently bidding for several bridge and other infrastructure contracts for delivery in 2012.
The Company remains on track and on budget with its 30,000-ton rare earth coated production facility expansion by the first half of 2012. This project, with an estimated cost of approximately $22 million, will increase Ossen's rare earth coated production capacity by approximately 60% to 80,000 tons per year.
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 "Interim 2011 Ossen Innovation Co Ltd Earnings Conference Call" or be prepared to utilize the conference ID.
Conference Call | ||
Date: | Friday, August 12, 2011 | |
Time: | 9:00 am Eastern Time, US | |
Conference Line Dial-In (U.S.): | +1-800-599-9829 | |
International Dial-In: | +1-617-847-8703 | |
Asia Dial-In: | South China toll free / China Telecom - 10 800 130 0399 | |
Conference ID: | 40394378 or "Interim 2011 Ossen Innovation Co Ltd Earnings Conference Call" | |
Webcast link: | http://ir.osseninnovation.com | |
Replay: | Available From 08/12/2011 12:00 PM to 08/19/2011 12:00 PM Dial In # / US Toll Free 1 888 286 8010 International Dial In # 1 617 801 6888 Passcode: 19866501 | |
Please dial in at least 10 minutes before the call to ensure timely participation. The conference call will be live webcast and also archived for 1 year on the Company's IR website.
About Ossen Innovation Co., 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.
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. | |
Alan Jin, Chief Financial Officer | |
Email: alanjin@osseninnovation.com | |
Phone: +86 (21) 6888-8886 | |
Investor Relations | |
MZ-HCI | |
Ted Haberfield, President | |
Phone: +1-760-755-2716 | |
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES | ||||||
June 30, | December 31, | |||||
2011 | 2010 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 5,764,767 | $ | 12,322,982 | ||
Restricted cash | 13,600,707 | 13,799,018 | ||||
Notes receivable - bank acceptance notes | - | 17,636,928 | ||||
Accounts receivable, net of allowance for doubtful accounts of $38,201 and $37,347 at June 30, 2011 and December 31,2010, respectively | 31,730,518 | 13,332,492 | ||||
Inventories | 20,259,098 | 27,949,781 | ||||
Advance to suppliers | 72,499,794 | 25,072,350 | ||||
Other current assets | 140,255 | 3,343,302 | ||||
Notes receivable from related party - bank acceptance notes | - | 3,024,895 | ||||
Account receivable from related party | 1,056,454 | 707,487 | ||||
Total Current Assets | 145,051,593 | 117,189,235 | ||||
Property, plant and equipment, net | 11,744,824 | 12,029,612 | ||||
Land use rights, net | 4,356,880 | 4,306,091 | ||||
Prepayment for plant and equipment | 7,735,148 | 7,562,237 | ||||
TOTAL ASSETS | $ | 168,888,445 | $ | 141,087,175 | ||
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES | ||||||
June 30, | December 31, | |||||
2011 | 2010 | |||||
(Unaudited) | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current Liabilities | ||||||
Notes payable - bank acceptance notes | $ | 25,990,099 | $ | 26,014,096 | ||
Short-term bank loans | 49,350,232 | 38,325,414 | ||||
Accounts payable | 525,047 | 2,493,665 | ||||
Customer deposits | 6,249,746 | 833,768 | ||||
Income tax payable | 738,726 | 662,585 | ||||
Other payables and accrued expenses | 274,035 | 94,510 | ||||
Total Current Liabilities | 83,127,885 | 68,424,038 | ||||
TOTAL LIABILITIES | 83,127,885 | 68,424,038 | ||||
EQUITY | ||||||
Shareholders' Equity | ||||||
Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively | 200,000 | 200,000 | ||||
Additional paid-in capital | 33,831,419 | 33,338,096 | ||||
Statutory reserve | 3,644,837 | 2,674,457 | ||||
Retained earnings | 34,401,626 | 25,887,113 | ||||
Accumulated other comprehensive income | 3,990,757 | 2,192,996 | ||||
TOTAL SHAREHOLDERS' EQUITY | 76,068,639 | 64,292,662 | ||||
Non-controlling interest | 9,691,921 | 8,370,475 | ||||
TOTAL EQUITY | 85,760,560 | 72,663,137 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 168,888,445 | $ | 141,087,175 | ||
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES | ||||||
Six Months Ended June 30, | ||||||
2011 | 2010 | |||||
REVEUNUES | $ | 60,781,935 | $ | 58,708,775 | ||
COST OF GOODS SOLD | 44,926,033 | 47,101,721 | ||||
GROSS PROFIT | 15,855,902 | 11,607,054 | ||||
Selling expenses | 557,961 | 195,706 | ||||
General and administrative expenses | 1,177,638 | 532,276 | ||||
Total Operating Expenses | 1,735,599 | 727,982 | ||||
INCOME FROM OPERATIONS | 14,120,303 | 10,879,072 | ||||
Financial expenses, net | (1,607,920) | (1,069,659) | ||||
Other income, net | 70,686 | 96,720 | ||||
INCOME BEFORE INCOME TAX | 12,583,069 | 9,906,133 | ||||
INCOME TAX | (1,776,730) | (1,370,598) | ||||
NET INCOME | 10,806,339 | 8,535,535 | ||||
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 1,321,446 | 1,430,029 | ||||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | 9,484,893 | 7,105,506 | ||||
OTHER COMPREHENSIVE INCOME | ||||||
Foreign currency translation gain | 1,797,761 | 117,535 | ||||
TOTAL OTHER COMPREHENSIVE INCOME | 1,797,761 | 117,535 | ||||
COMPREHENSIVE INCOME | $ | 11,282,654 | $ | 7,223,041 | ||
EARNINGS PER ORDINARY SHARE | ||||||
Basic and diluted | $ | 0.47 | $ | 0.47 | ||
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING | ||||||
Basic and diluted | 20,000,000 | 15,000,000 | ||||
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Unaudited) | ||||||||||||||||
Ossen Innovation Co., Ltd. Shareholders' Equity | ||||||||||||||||
Ordinary Shares $0.01 Par Value | Additional Paid-in | Accumulated Other | Statutory | Retained | Non Controlling |
| Total | |||||||||
Shares | Amount |
| ||||||||||||||
Balance at December 31, 2010 | 20,000,000 | 200,000 | 33,338,096 | 2,192,996 | 2,674,457 |
| 25,887,113 | 8,370,475 | 72,663,137 | |||||||
Net income | - | - | - | - | - | 9,484,893 | 1,321,446 | 10,806,339 | ||||||||
Transfer to statutory reserve | - | - | - | - | 970,380 | (970,380) | - | - | ||||||||
IPO expenditure refund | - | - | 440,954 | - | - | - | - | 440,954 | ||||||||
Share-based compensation to employee | - | - | 52,369 | - | - | - | - | 52,369 | ||||||||
Foreign currency translation adjustment | - | - | - | 1,797,761 | - | - | - | 1,797,761 | ||||||||
Balance at June 30, 2011 | 20,000,000 | $ | 200,000 | $ | 33,831,419 | $ | 3,990,757 | $ | 3,644,837 | $ | 34,401,626 | $ | 9,691,921 | $ | 85,760,560 | |
OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Six Months Ended June 30, | |||||||
| 2011 | 2010 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 10,806,339 | $ | 8,535,535 | |||
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities: | |||||||
Depreciation and amortization | 887,688 | 727,593 | |||||
Share-based compensation expense | 52,369 | - | |||||
Changes in operating assets and liabilities: | |||||||
(Increase) Decrease In: | |||||||
Accounts receivable | (18,398,026) | (18,624,733) | |||||
Inventories | 7,690,684 | (4,896,230) | |||||
Advance to suppliers | (47,427,444) | 1,890,876 | |||||
Other current assets | 3,203,047 | 298,436 | |||||
Notes receivable - bank acceptance notes | 17,636,928 | 150,208 | |||||
Notes receivable from related party - bank acceptance notes | 3,024,895 | 1,828,234 | |||||
Due from and advance to related party | - | (8,311,343) | |||||
Account receivable from related party | (348,967) | - | |||||
Increase (Decrease) In: | |||||||
Accounts payable | (1,968,618) | 490,544 | |||||
Customer deposits | 5,415,978 | 1,241,074 | |||||
Income tax payable | 76,140 | 777,886 | |||||
Other payables and accrued expenses | 179,525 | (19,731) | |||||
Net cash used in operating activities | (19,169,462) | (15,911,651) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of plant and equipment | (127,460) | (96,887) | |||||
Net cash used in investing activities | (127,460) | (96,887) | |||||
OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Six Months Ended June 30, | |||||||
2011 | 2010 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
(Increase)/Decrease in restricted cash | 198,311 | (325,492) | |||||
Proceeds from short-term bank loans | 38,985,133 | 29,815,234 | |||||
Repayments of short-term bank loans | (27,960,315) | (20,887,962) | |||||
Proceeds from notes payable-bank acceptance notes | 25,990,099 | 22,030,961 | |||||
Repayment of notes payable-bank acceptance notes | (26,014,096) | (19,744,925) | |||||
.IPO expenditure refund | 440,954 | - | |||||
Net cash provided by financing activities | 11,640,086 | 10,887,816 | |||||
DECREASE IN CASH AND CASH EQUIVALENTS | (7,656,836) | (5,120,722) | |||||
Effect of exchange rate changes on cash | 1,098,621 | 171,596 | |||||
Cash and cash equivalents at beginning of period | 12,322,982 | 8,409,467 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 5,764,767 | $ | 3,460,341 | |||
SUPPLEMENTARY CASH FLOW INFORMATION | |||||||
Cash paid during the periods: | |||||||
Income taxes paid | $ | 1,716,523 | $ | 792,774 | |||
Interest paid | $ | 1,336,592 | $ | 846,614 | |||
Non-cash transactions: | |||||||
Appropriation to statutory reserve | $ | 970,380 | $ | 955,754 | |||
RELATED PARTY TRANSACTIONS | ||||||
(a) Names and Relationship of Related Parties: | ||||||
Existing Relationship with the Company | ||||||
Dr. Tang | Chairman and controlling | |||||
Shanghai Zhengfangxing Steel Co., Ltd. ("SZS") | Under common control of Dr. Tang | |||||
Shanghai Ossen Investment Co., Ltd. ("SOI") | Under common control of Dr. Tang | |||||
Shanghai Ossen Investment Holdings (Group) Co., Ltd. ("Ossen Shanghai) | Dr. Tang is the President | |||||
Shanghai Zhaoyang New Metal Material Co., Ltd. ("Zhaoyang") | Zhaoyang owns a 30% interest in Ossen Shanghai | |||||
Shanghai Pujiang Cable Co., Ltd. ("Shanghai Pujiang") | Subsidiary of Ossen Shanghai since September 2010 | |||||
(b) Summary of Balances with Related Party: | ||||||
June 30, | December | |||||
2011 | 2010 | |||||
(unaudited) | ||||||
Notes receivable from related party: | ||||||
SZS, due April 20, 2011, subsequently | $ | - | $ | 1,512,448 | ||
SZS, due February 15, 2011, subsequently | - | 1,512,447 | ||||
$ | - | $ | 3,024,895 | |||
The interest-free, unsecured notes were provided to a related party to assist with their working capital need. | ||||||
June 30, | December | |||||
2011 | 2010 | |||||
(unaudited) | ||||||
Account receivable from related party: | ||||||
Zhaoyang | $ | 119,936 | $ | - | ||
Shanghai Pujiang | 936,518 | 707,487 | ||||
$ | 1,056,454 | $ | 707,487 | |||
Zhaoyang and Shanghai Pujiang are customers of the Company. For the six months ended June 30, 2011, Zhaoyang and Shanghai Pujiang purchased $5,400,949 and $7,678,450 of products from the Company, respectively. The balance of account receivable from related party arises from the sales of our products to Zhaoyang and Shanghai Pujiang. The balance of account receivable from related party was all collected subsequently. | ||||||
