SHANGHAI, June 28, 2013 /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 ended March 31, 2013.
"After a strong second half of 2012, demand for steel materials in China weakened in the first half of 2013" said Dr. Liang Tang, Chairman of Ossen Innovation. "Despite announcements regarding increased funding for major infrastructure projects, funding availability has yet to improve. However, as a result of maintaining strong relationships with many of the governmental organizations responsible for approving these projects, Ossen is well informed of upcoming project bidding opportunities, and we anticipate winning our share once these obtain the necessary funding and approval to proceed. We are also excited about the opportunity in the second half of 2013 to bid on other infrastructure projects, including the Macao, Zhuhai and Hong Kong bridge project and remain optimistic about our chances to win some of these bids."
Financial Summary
(in millions ex- EPS) | Q1 2013 | Q1 2012 | Chg. |
Revenue | $14.6 | $22.3 | -35% |
Gross Profit | $1.7 | $2.6 | -35% |
Net Income* | $0.1 | $0.3 | -67% |
EPS | $0.004 | $0.01 | -60% |
Shares Outstanding | 19.9 | 20.0 | -0.5% |
*Net income attributable to Ossen Innovation Co., Ltd.
First quarter 2013 Financial Results
Revenue for the three months ended March 31, 2013 was $14.6 million, down 35% from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth coated products, were approximately $12.9 million, down 30% compared to approximately $18.4 million in the first quarter of 2012 due to lower demand of coated pre-stressed steel materials and increased price competition.
Gross profit fell from $2.6 million to $1.7 million, a 35% year-over-year decrease. Gross margin was 11.6%, up incrementally from 11.5% in the first quarter of 2012. Gross profits were lower as a result of lower sales.
Selling expenses were reduced by 52% to $0.04 million due to lower sales commissions. General and administrative expenses were $0.6 million, down 46% compared to $1.1 million in the first quarter of 2012 due to lower public company expenses and a bad-debt provision reversal. Operating income was approximately $1.0 million, a decrease of 22% from the same period a year ago.
Net income attributable to Ossen Innovation Co., Ltd. was $0.1 million in the first quarter of 2013 compared to $0.3 million in the year-ago period. Earnings per share were $0.004 versus $0.01 a year ago. The weighted average diluted shares outstanding were 19.9 million compared to 20.0 million.
Balance Sheet and Cash Flows
Ossen had approximately $23.0 million of cash and restricted cash as of March 31, 2013 compared to $27.4 million at December 31, 2012. Total accounts receivable on March 31, 2013 decreased to $38.1 million from $45.7 million on December 31, 2012 as the Company received approximately $6.7 million and $3.6 million from two major customers. The average accounts receivable days sales outstanding were 235 days in the first quarter of 2013 compared to 201 days in the first quarter of 2012. The balance of prepayments to suppliers of raw materials was $72.9 million as of March 31, 2013, a decrease of $5.1 million compared with December 31, 2012. The decrease was mainly due to the Company receiving delivery of raw materials from one supplier during the first quarter of 2013. Accordingly, inventories increased from $9.8 million at December 31, 2012 to $16.2 million at March 31, 2013. Total working capital was $71.7 million at March 31, 2013.
The Company generated positive cash flows from operations of $9.1 million in the three months ended March 31, 2013 as compared to $0.3 million of outflows in the same period of 2012. The primary reason for the increase in cash generated in operations was improvement in accounts receivable collection and decrease in prepayments to suppliers during the first quarter of 2013, which was partially offset by increased inventories.
Business Updates and Outlook
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 First Quarter 2013 Conference Call" or be prepared to utilize the conference ID.
Conference Call | Ossen Innovation First Quarter 2013 Conference Call |
Date: | Friday, June 28, 2013 |
Time: | 9:00 am Eastern Time, US |
Conference Line Dial-In (U.S.): | 845-675-0437 |
International Toll Free: | United States: +1-866-519-4004 |
Conference ID: | 98062986 |
Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through July 5, 2013. To listen, please call + 1-855-452-5696 within the United States or + 1-646-254-3697 if calling internationally. Utilize the pass code 98062986 for the replay.
This call is being webcast and can be accessed by clicking on this link: http://www.media-server.com/m/p/7v3ig52a
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. 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
MZ North America
Ted Haberfield, President
Phone: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||
March 31, | December 31, | ||||
2013 | 2012 | ||||
(Unaudited) | |||||
ASSETS | |||||
Current Assets | |||||
Cash and cash equivalents | $ | 4,105,527 | $ | 1,996,764 | |
Restricted cash | 18,846,155 | 25,407,499 | |||
Notes receivable - bank acceptance notes | - | 394,079 | |||
Accounts receivable, net of allowance for doubtful accounts of $1,045,470 and $1,277,091 at March 31, 2013 and December 31,2012, respectively | 38,135,590 | 45,734,381 | |||
Inventories | 16,153,829 | 9,807,044 | |||
Advance to suppliers | 72,887,065 | 77,948,496 | |||
Other current assets | 1,864,958 | 1,904,626 | |||
Notes receivable from related party - bank acceptance notes | - | 1,830,208 | |||
Accounts receivable from related party | 2,625,082 | - | |||
Total Current Assets | 154,618,206 | 165,023,097 | |||
Property, plant and equipment, net | 9,413,271 | 9,707,587 | |||
Land use rights, net | 4,316,855 | 4,317,669 | |||
Prepayment for plant and equipment | 7,976,985 | 7,933,361 | |||
TOTAL ASSETS | $ | 176,325,317 | $ | 186,981,714 | |
March 31, | December 31, | ||||
2013 | 2012 | ||||
(Unaudited) | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current Liabilities | |||||
Notes payable - bank acceptance notes | $ | 28,848,759 | $ | 36,933,710 | |
Short-term bank loans | 44,822,350 | 50,679,026 | |||
Long term bank loans - current portion | 4,462,792 | 4,438,386 | |||
Accounts payable | 598,127 | 572,305 | |||
Customer deposits | 3,643,902 | 384,602 | |||
Income tax payable | 53,446 | 391,353 | |||
Other payables and accrued expenses | 508,176 | 805,196 | |||
Total Current Liabilities | 82,937,552 | 94,204,578 | |||
TOTAL LIABILITIES | 82,937,552 | 94,204,578 | |||
EQUITY | |||||
Shareholders' Equity | |||||
Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively | 200,000 | 200,000 | |||
Additional paid-in capital | 33,971,455 | 33,971,455 | |||
Statutory reserve | 4,224,733 | 4,179,027 | |||
Retained earnings | 38,339,860 | 38,311,527 | |||
Treasury stock, at cost: 98,041 shares as both of March 31, 2013 and December 31, 2012 |
(96,608) | (96,608) | |||
Accumulated other comprehensive income | 6,509,661 | 5,999,214 | |||
TOTAL SHAREHOLDERS' EQUITY | 83,149,101 | 82,564,615 | |||
Non-controlling interest | 10,238,664 | 10,212,521 | |||
TOTAL EQUITY | 93,387,765 | 92,777,136 | |||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 176,325,317 | $ | 186,981,714 | |
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
| |||||
Three Months Ended March 31, | |||||
2013 | 2012 | ||||
REVEUNUES | $ | 14,592,753 | $ | 22,287,288 | |
COST OF GOODS SOLD | 12,900,737 | 19,725,350 | |||
GROSS PROFIT | 1,692,016 | 2,561,938 | |||
Selling expenses | 44,075 | 92,361 | |||
General and administrative expenses | 602,707 | 1,125,491 | |||
Total Operating Expenses | 646,782 | 1,217,852 | |||
INCOME(EXPENSE) FROM OPERATIONS | 1,045,234 | 1,344,086 | |||
Financial expenses, net | (904,173) | (933,230) | |||
Other income, net | 44,391 | 20,543 | |||
INCOME BEFORE INCOME TAX | 185,452 | 431,399 | |||
INCOME TAX | (85,270) | (108,478) | |||
NET INCOME | 100,182 | 322,921 | |||
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST |
26,143 |
50,141 | |||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST |
74,039 |
272,780 | |||
OTHER COMPREHENSIVE INCOME | |||||
Foreign currency translation gain | 510,447 | 560,900 | |||
TOTAL OTHER COMPREHENSIVE INCOME |
510,447 |
560,900 | |||
COMPREHENSIVE INCOME | $ | 584,486 | $ | 833,680 | |
EARNINGS PER ORDINARY SHARE | |||||
Basic and diluted | $ | 0.004 | $ | 0.01 | |
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING | |||||
Basic and diluted | 19,901,959 | 19,987,441 | |||
OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| ||||||
Three Months Ended March 31, | ||||||
2013 | 2012 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income | $ | 100,182 | $ | 322,921 | ||
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities: | ||||||
Depreciation and amortization | 384,490 | 439,492 | ||||
Share-based compensation expense | - | 26,329 | ||||
Changes in operating assets and liabilities: | ||||||
(Increase) Decrease In: | ||||||
Accounts receivable | 7,598,791 | (2,113,267) | ||||
Inventories | (6,346,785) | 2,105,263 | ||||
Advance to suppliers | 5,061,431 | (12,416,621) | ||||
Other current assets | 39,668 | 2,232 | ||||
Notes receivable - bank acceptance notes | 394,079 | 10,851,616 | ||||
Notes receivable from related party - bank acceptance notes | 1,830,208 | - | ||||
Accounts receivable from related party | (2,625,082) | |||||
Increase (Decrease) In: | ||||||
Accounts payable | 25,822 | 236,030 | ||||
Customer deposits | 3,259,299 | (58,844) | ||||
Income tax payable | (337,907) | 1,193 | ||||
Other payables and accrued expenses | (297,020) | (183,119) | ||||
Due to related party | - | 498,007 | ||||
Net cash provided by/(used in) operating activities | 9,087,176 | (288,768) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchases of plant and equipment | (12,671) | (3,522) | ||||
Net cash used in investing activities | (12,671) | (3,522) | ||||
Three Months Ended March 31, | ||||||
2013 | 2012 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Decrease in restricted cash | 6,561,343 | 349,427 | ||||
Proceeds from short-term bank loans | 6,049,607 | 10,223,587 | ||||
Repayments of short-term bank loans | (12,177,826) | (15,374,261) | ||||
Repayments of long-term bank loans | - | (158,509) | ||||
Proceeds from notes payable-bank acceptance notes | 14,487,216 | 14,107,279 | ||||
Repayment of notes payable-bank acceptance notes | (22,765,625) | (8,876,490) | ||||
Repurchase of common shares | - | (13,715) | ||||
Net cash provided by/(used in) financing activities | (7,845,285) | 257,318 | ||||
DECREASE IN CASH AND CASH EQUIVALENTS | 1,229,220 | (34,972) | ||||
Effect of exchange rate changes on cash | 879,543 | 849,798 | ||||
Cash and cash equivalents at beginning of period | 1,996,764 | 1,568,261 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 4,105,527 | $ | 2,383,087 | ||
SUPPLEMENTARY CASH FLOW INFORMATION | ||||||
Cash paid during the periods: | ||||||
Income taxes paid | $ | 389,179 | $ | 107,314 | ||
Interest paid | $ | 899,973 | $ | 937,179 | ||
Non-cash transactions: | ||||||
Appropriation to statutory reserve | $ | 45,706 | $ | 56,457 | ||
