omniture

Ossen Innovation Announces Second Quarter 2015 Financial Results

Earnings Conference Call is scheduled for 8:30 am EDT on September 28, 2015
2015-09-26 04:30 1875

SHANGHAI, September 26, 2015 /PRNewswire/ -- 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 quarter ended June 30, 2015.

  • Revenues decreased by 28.0% to $25.9 million for the three months ended June 30, 2015, with weakness in both zinc coated PC steel materials and plain surface PC strands and others.
  • Net income attributable to Ossen Innovation decreased by 12.7% to $1.3 million, or $0.07 per share, for the three months ended June 30, 2015, compared to $1.5 million, or $0.07 per share, for the same period of last year.
  • Gross margin improved by 2.3 points to 12.7% for the three months ended June 30, 2015, mainly due to lower raw material costs.
  • Operating margin improved by 1.9 points to 7.8% for the three months ended June 30, 2015 from 5.9% for the same period of last year.

Dr. Liang Tang, Chairman of Ossen Innovation, commented: "The 28% year-over-year decline in our revenues for the second quarter of 2015 highlighted increasing challenges facing our business, as weak investment and trade, combined with high levels of volatility in the domestic stock market, negatively impacted China's already weakening economy during the second quarter. In light of the central government's plan to transform China's growth model from big-ticket project driven to 'more efficient, equitable, and environmentally sustainable' consumer demand driven, we expect China's fixed asset investment, a measure of government spending on infrastructure, continue to expand at a slower pace in coming quarters and thus hinders our ability to grow our business."

Dr. Tang continued: "However, our overall gross margin for the second quarter improved, thanks to lower material costs as Chinese steel prices reached their lowest level in more than 20 years. Heading into the third quarter, we see further slide in steel prices with the composite price index of eight steel products compiled by the China Iron & Steel Association ('CISA') falling to 61.71 last Friday, highlighting ongoing challenges both at the macro level and the industry level."

Three Months Ended June 30, 2015 Financial Results



For the Three Months Ended June 30,

($ millions, expect per share data)


2015


2014


% Change

Revenues


$25.9


$35.9


-28.0%

Gross profit


$3.3


$3.7


-11.7%

Gross margin


12.7%


10.4%


2.3%

Operating income


$2.0


$2.1


-5.1%

Operating margin


7.8%


5.9%


1.9%

Net income attributable to Ossen Innovation

$1.3


$1.5


-12.7%

EPS


$0.065


$0.074


-12.5%

For the three months ended June 30, 2015, revenues decreased by $10.1 million, or 28.0%, to $25.9 million from $35.9 million for the same period of last year, with weakness in both zinc coated products and plain surface PC strands and others. The sales of coated PC steel materials, including both rare earth and zinc coated products, decreased by $7.4 million, or 25.0%, to $22.3 million and accounted for 86% of total sales for the three months ended June 30, 2015. The sales of rare earth and zinc coated products were $19.8 million and $2.5 million, respectively, for the three months ended June 30, 2015, compared to $20.6 million and $9.0 million, respectively, for the same period of last year. The sales of plain surface PC strands and others decreased by approximately $2.6 million, or 42.4%, to $3.6 million and accounted for 14% of total sales for the three months ended June 30, 2015 mainly due to decreased sales volume of plain surface PC strands as well as sales of other products.

Gross profit decreased by approximately $0.4 million, or 11.7%, to $3.3 million for the three months ended June 30, 2015 from $3.7 million for the same period of last year. Gross margin was 12.7% for the three months ended June 30, 2015, compared to 10.4% for the same period of last year. The increase in overall gross margin was mainly due to lower raw material costs. Gross margins for rare earth and zinc coated products were 9.7% and 20.3%, respectively, for the three months ended June 30, 2015, compared to 6.2% and 22.1%, respectively, for the same period of last year. Gross margin for plain surface PC Strands and others was 24.3% for the three months ended June 30, 2015, compared to 7.2% for the same period of last year.

Selling expenses increased by $0.2 million, or 135.1%, to approximately $0.4 million for the three months ended June 30, 2015. General and administrative expenses decreased by $0.5 million, or 38.4%, to $0.9 million for the three months ended June 30, 2015 mainly due to the $0.2 million decrease in R&D and the $0.2 million decrease in the provision for bad debts. As a result, total operating expenses decreased by $0.3 million, or 20.5%, to approximately $1.3 million for the three months ended June 30, 2015 from $1.6 million for the same period of last year.

Operating income was $2.0 million, or 7.8% of total revenues, for the three months ended June 30, 2015, compared to $2.1 million, or 5.9% of total revenues, for the same period of last year.

Net income decreased by approximately $0.2 million, or 13.4%, to $1.4 million for the three months ended June 30, 2015 from $1.6 million for the same period of last year.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation decreased by $0.2 million, or 12.7%, to $1.3 million for the three months ended June 30, 2015 from $1.5 million for the same period of last year. Earnings per share, both basic and diluted, were $0.07 for the three months ended June 30, 2015, essentially unchanged from the same period of last year.

Six Months Ended June 30, 2015 Financial Results



For the Six Months Ended June 30,

($ millions, expect per share data)


2015


2014


% Change

Revenues


$52.6


$64.0


-17.7%

Gross profit


$6.9


$6.4


8.6%

Gross margin


13.1%


10.0%


3.2%

Operating income


$3.7


$3.3


10.9%

Operating margin


7.0%


5.2%


1.8%

Net income attributable to Ossen Innovation

$2.2


$2.0


9.8%

EPS


$0.11


$0.10


9.9%

For the six months ended June 30, 2015, revenues decreased by $11.3 million, or 17.7%, to $52.6 million from $64.0 million for the same period of last year, mainly due to weakness in both rare earth coated and zinc coated products sales. The sales of coated PC steel materials, including both rare earth and zinc coated products, decreased by $11.8 million, or 21.1%, to $44.4 million and accounted for 84% of total sales for the six months ended June 30, 2015. The sales of rare earth and zinc coated products were $38.0 million and $6.4 million, respectively, for the six months ended June 30, 2015, compared to $47.2 million and $9.0 million, respectively, for the same period of last year. The sales of plain surface PC strands and others increased by $0.5 million, or 6.7%, to $8.3 million and accounted for 16% of total sales for the six months ended June 30, 2015.

Gross profit increased by approximately $0.5 million, or 8.6%, to $6.9 million for the six months ended June 30, 2015 from $6.4 million for the same period of last year. Gross margin was 13.1% for the six months ended June 30, 2015, compared to 10.0% for the same period of last year. The increase in gross margin was mainly due to lower raw material costs. Gross margins for rare earth and zinc coated products were 10.5% and 23.9%, respectively, for the six months ended June 30, 2015, compared to 7.7% and 22.1%, respectively, for the same period of last year. Gross margin for plain surface PC Strands and others was 16.8% for the six months ended June 30, 2015, compared to 9.5% for the same period of last year.

Selling expenses increased by $0.2 million, or 87.2%, to $0.5 million for the six months ended June 30, 2015. General and administrative expenses decreased by $0.1 million, or 2.0%, to $2.7 million for the six months ended June 30, 2015. As a result, total operating expenses increased by $0.2 million, or 6.0%, to approximately $3.2 million for the six months ended June 30, 2015 from $3.0 million for the same period of last year.

Operating income was $3.7 million, or 7.0% of total revenues, for the six months ended June 30, 2015, compared to $3.3 million, or 5.2% of total revenues, for the same period of last year.

Net income increased by approximately $0.1 million, or 6.4%, to $2.2 million for the six months ended June 30, 2015 from $2.1 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 $0.2 million, or 9.8%, to $2.2 million for the six months ended June 30, 2015 from $2.0 million for the same period of last year. Earnings per share, both basic and diluted, were $0.11 for the six months ended June 30, 2015, compared to $0.10 for the same period of last year.

Balance Sheet and Cash Flows

The Company had approximately $17.1 million of cash and restricted cash as of June 30, 2015, compared to $18.3 million at December 31, 2014. Accounts receivable were $52.1 million as of June 30, 2015, compared to $53.8 million at December 31, 2014. The days of sales of outstanding (DSO) were 178 days for the six months ended June 30, 2015, compared to 151 days for the year of 2014 as a result of higher accounts receivable. The increase in accounts receivable was primarily due to the longer cycle of some of our customers' construction projects. Based on our historical experience, most of these projects are government sponsored programs and we are confident that we will be able to collect the balance when the projects are completed. The balance of prepayment to suppliers for raw materials totaled $63.4 million as of June 30, 2015, compared to $56.3 million at December 31, 2014. The Company had inventories of $19.6 million as of June 30, 2015, compared to $20.1 million at the end of 2014. Total working capital was $111.3 million as of June 30, 2015, compared to $108.0 million at December 31, 2014.

Net cash provided by operating activities was $5.4 million for the six months ended June 30, 2015, compared to $9.8 million for the same period of last year. Net cash used in investing activities was $18,048 for the six months ended June 30, 2015, compared to $2,509 for the same period of last year. Net cash used in financing activities was $4.2 million for the six months ended June 30, 2015, compared to $11.3 million for the same period of last 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 "Ossen Innovation Second Quarter 2015 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation Second Quarter 2015 Conference Call

Date:

September 28, 2015

Time:

8:30 am EDT, U.S.

Conference Line Dial-In (U.S.):

+1-845-675-0437

International Toll Free:

United States: +1-866-519-4004

China, Domestic Mobile: 400-620-8038

China, Domestic: 800-819-0121

Conference ID:

47015366

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through October 6, 2015. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 47015366 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://edge.media-server.com/m/p/3dzd46mx

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, 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:

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
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS









June 30,



December 31,



2015



2014



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

2,495,405


$

684,592

Restricted cash


14,611,544



17,572,732

Notes receivable - bank acceptance notes


3,265,093



9,925,155

Accounts receivable, net of allowance for doubtful accounts of $2,081,704 and $1,874,330 at June 30, 2015 and December 31,2014, respectively


52,058,370



53,764,414

Inventories


19,565,604



20,137,901

Advance to suppliers


63,443,001



56,327,390

Other current assets


1,459,691



946,319

Total Current Assets


156,898,708



159,358,503

Property, plant and equipment, net


6,530,224



7,174,646

Land use rights, net


4,195,273



4,231,348

TOTAL ASSETS

$

167,624,205


$

170,764,497







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable - bank acceptance notes

$

21,957,750


$

26,521,315

Short-term bank loans


16,325,464



18,711,357

Accounts payable


3,517,241



3,217,076

Customer deposits


585,261



588,005

Income tax payable


469,762



552,459

Other payables and accrued expenses


2,495,197



1,622,958

Due to related party


-



69,469

Due to shareholder


232,499



100,000

Total Current Liabilities


45,583,174



51,382,639

Bond payable


16,112,212



15,972,837

TOTAL LIABILITIES


61,695,386



67,355,476







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,840,696 and 19,901,959 shares outstanding as of June 30, 2015 and December 31, 2014, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


5,242,849



5,021,752

Retained earnings


46,913,050



44,971,082

Treasury stock, at cost: 159,304 and 98,041 shares as of June 30, 2015 and December 31, 2014, respectively


(144,132)



(96,608)

Accumulated other comprehensive income


8,770,272



8,425,697

TOTAL SHAREHOLDERS' EQUITY


94,953,494



92,493,378

Non-controlling interest


10,975,325



10,915,643

TOTAL EQUITY


105,928,819



103,409,021

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

167,624,205


$

170,764,497


OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)








FOR THE THREE MONTHS
ENDED JUNE 30,


FOR THE SIX MONTHS
ENDED JUNE 30,



2015


2014


2015


2014










REVENUES

$

25,864,478

$

35,920,752

$

52,632,834

$

63,957,660

COST OF GOODS SOLD


22,575,884


32,195,742


45,717,867


57,588,658

GROSS PROFIT


3,288,594


3,725,010


6,914,967


6,369,002

Operating Expenses:









Selling and distribution expenses


386,358


164,358


510,793


272,796

General and administrative expenses


880,686


1,430,221


2,714,356


2,769,752

Total Operating Expenses


1,267,044


1,594,579


3,225,149


3,042,548

INCOME FROM OPERATIONS


2,021,550


2,130,431


3,689,818


3,326,454

Other Income (Expenses):









Financial expenses, net


(846,325)


(423,723)


(1,600,242)


(1,124,458)

Other income, net


524,566


59,156


663,880


227,421

INCOME BEFORE INCOME TAXES


1,699,791


1,765,864


2,753,456


2,429,417

INCOME TAXES


(348,352)


(205,582)


(530,709)


(340,854)

NET INCOME


1,351,439


1,560,282


2,222,747


2,088,563

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST


52,518


73,246


59,682


119,075

NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD AND SUBSIDIARIES


1,298,921


1,487,036


2,163,065


1,969,488

OTHER COMPREHENSIVE INCOME (LOSS)









Foreign currency translation gain (loss), net of tax


(92,221)


108,349


344,575


603,699

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)


(92,221)


108,349


344,575


603,699

COMPREHENSIVE INCOME


1,206,700


1,595,385


2,507,640


2,573,187

EARNINGS PER ORDINARY SHARE









Basic and diluted

$

0.07

$

0.07

$

0.11

$

0.10

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING









Basic and diluted

$

19,875,492

$

19,901,959

$

19,888,653

$

19,901,959

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)







Six Months Ended June 30,



2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income

$

2,222,747

$

2,088,563

Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:





Depreciation and amortization


738,858


771,122

Changes in operating assets and liabilities:





(Increase) Decrease In:





Accounts receivable


1,706,045


4,213,932

Inventories


572,297


(1,872,559)

Advance to suppliers


(7,115,612)


3,531,652

Other current assets


(513,372)


2,519,739

Notes receivable - bank acceptance notes


6,660,062


(14,633,564)

Notes receivable from related party - bank acceptance notes


-


12,915,099

Increase (Decrease) In:





Accounts payable


300,165


(121,774)

Customer deposits


(2,744)


838,985

Income tax payable


(82,697)


197,698

Other payables and accrued expenses


872,241


(720,304)

Due to related party


(69,469)


59,333

Due to shareholder


132,499


50,000

Net cash provided by operating activities


5,421,020


9,837,922






CASH FLOWS FROM INVESTING ACTIVITIES:





Purchases of plant and equipment


(18,048)


(2,509)

Net cash used in investing activities


(18,048)


(2,509)






CASH FLOWS FROM FINANCING ACTIVITIES:





Decrease in restricted cash


2,961,188


17,153,670

Proceeds from short-term bank loans


3,273,965


11,397,125

Repayments of short-term bank loans


(5,729,439)


(14,490,630)

Proceeds from notes payable-bank acceptance notes


22,017,417


29,306,892

Repayment of notes payable-bank acceptance notes


(26,682,818)


(54,681,776)

Repurchase of common share


(47,524)


-

Net cash used in financing activities


(4,207,211)


(11,314,719)






INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


1,195,761


(1,479,306)

Effect of exchange rate changes on cash


615,052


1,071,629

Cash and cash equivalents at beginning of period


684,592


1,139,450

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

2,495,405

$

731,773






SUPPLEMENTARY CASH FLOW INFORMATION





Cash paid during the periods:





Income taxes paid

$

777,718

$

446,210

Interest paid

$

613,558

$

1,205,954

Non-cash transactions:





Appropriation to statutory reserve

$

221,097

$

207,981

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-second-quarter-2015-financial-results-300149235.html

Source: Ossen Innovation Co., Ltd.
Keywords: Mining/Metals
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