omniture

Ossen Innovation Announces Third Quarter 2014 Financial Results

To Host Conference Call at 8:30 am ET on December 29, 2014
2014-12-27 05:05 2765

SHANGHAI, December 27, 2014 /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 September 30, 2014.

Dr. Liang Tang, Chairman of Ossen Innovation, commented: "Our business remained challenged on the back of China's GDP growth hitting 5-year low despite stimulus measures by the central government during the third quarter, leading to year-over-year declines in both our revenue and profitability. However, our Rare Earth coated products sales remained strong, growing 7% year-over-year to $24.7 million in the third quarter as we continue to win new contracts and add new customers. Additionally, we used lower grade raw materials for some of our Rare Earth coated products to improve margins without sacrificing product strength or quality. Looking ahead, despite continued economic headwinds, we remain confident in the long-term prospects of our business and believe we are well positioned for an eventual recovery of the steel materials industry."

Three Months Ended September 30, 2014 Financial Results



For the Three Months Ended September 30,

($ millions, expect per share data)


2014


2013


% Change

Revenue


$27.9


$33.1


-16%

Gross profit


$2.4


$3.9


-38%

Gross margin


8.7%


11.7%


-3%

Operating income


$0.9


$2.9


-70%

Operating margin


3.1%


8.7%


-6%

Net income attributable to Ossen Innovation


$0.5


$1.7


-72%

EPS


$0.02


$0.08


-72%

For the three months ended September 30, 2014, revenue decreased by $5.3 million, or 16%, to $27.9 million from $33.1 million for the same period of last year, mainly due to the weaknesses in both Zinc coated products and plain surface pre-stressed ("PC") strands sales and partially offset by strength in Rare Earth coated products sales. The sales of coated PC steel materials, including Rare Earth and Zinc coated products, decreased by $2.9 million, or 11%, to $24.7 million and accounted for 89% of total sales for the three months ended September 30, 2014. The sales of Rare Earth and Zinc coated products were $24.7 million and nil, respectively, for the three months ended September 30, 2014, compared to $23.0 million and $4.6 million for the same period of last year. Zinc coated products, that didn't contribute any revenue during the third quarter of 2014, are expected to generate revenue in future quarters based on current order trends. The sales of plain surface PC strands also decreased by approximately $2.4 million, or 43%, to $3.1 million and accounted for 11% of total sales for the three months ended September 30, 2014 as a result of declines in both sales volume and average selling price.

Gross profit decreased by $1.5 million, or 38%, to $2.4 million for the three months ended September 30, 2014 from $3.9 million for the same period of last year. Gross margin was 8.7% for the three months ended September 30, 2014, compared to 11.7% for the same period of last year. The decline in gross margin was mainly due to lower average selling price and the lack of sales of higher-margin Zinc coated products in the third quarter of this year.

Selling expenses increased by $0.1 million, or 84%, to approximately $0.3 million for the three months ended September 30, 2014, primarily due to higher transportation cost associated with new overseas' customers and higher commission fees. General and administrative expenses increased by $0.4 million, or 49%, to approximately $1.3 million for the three months ended September 30, 2014 mainly due to a $0.3 million increase in research and development expenses and a $0.1 million increase in bad-debt provision. Operating income and operating margin were $0.9 million and 3.1% for the three months ended September 30, 2014, compared to $2.9 million and 8.7% for the same period of last year, respectively.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation decreased by $1.2 million, or 72%, to $0.5 million for the three months ended September 30, 2014 from $1.7 million for the same period of last year. Earnings per share, both basic and diluted, was $0.02 for the three months ended September 30, 2014, versus $0.08 for the same period of last year.

Nine Months Ended September 30, 2014 Financial Results



For the Nine Months Ended September 30,

($ millions, expect per share data)


2014


2013


% Change

Revenue


$91.8


$71.9


28%

Gross profit


$8.8


$8.5


3%

Gross margin


9.6%


11.8%


-2%

Operating income


$4.2


$5.6


-26%

Operating margin


4.6%


7.9%


-3%

Net income attributable to Ossen Innovation


$2.4


$2.5


-1%

EPS


$0.12


$0.12


-1%

For the nine months ended September 30, 2014, revenue increased by $19.9 million, or 28%, to $91.8 million from $71.9 million for the same period of last year as sales of plain surface PC strands, Rare Earth and Zinc coated products all grew on a year-over-year basis. The sales of coated PC steel materials, including Rare Earth and Zinc coated products, increased by $19.1 million, or 31%, to $80.9 million and accounted for 88% of total sales for the nine months ended September 30, 2014. The sales of Rare Earth and Zinc coated products were $71.9 million and $9.0 million, respectively, for the nine months ended September 30, 2014, compared to $54.1 million and $7.7 million for the same period of last year. The sales of plain surface PC strands also increased by $0.8 million, or 8%, to $10.9 million and accounted for 12% of total sales for the nine months ended September 30, 2014.

Gross profit increased by $0.3 million, or 3%, to $8.8 million for the nine months ended September 30, 2014 from $8.5 million for the same period of last year. Gross margin was 9.6% for the nine months ended September 30, 2014, compared to 11.8% for the same period of last year. The decline in gross margin was mainly due to a decrease in the average unit selling price in 2014 compared to the prior year period.

Selling expenses increased by $0.1 million, or 29%, to approximately $0.6 million for the nine months ended September 30, 2014. General and administrative expenses increased by $1.6 million, or 68%, to approximately $4.0 million for the nine months ended September 30, 2014 mainly due to increase in research and development expenses. Operating income and operating margin were $4.2 million and 4.6% for the nine months ended September 30, 2014, compared to $5.6 million and 7.9% for the same period of last year, respectively.

After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation decreased by $0.1 million, or 1%, to $2.4 million for the nine months ended September 30, 2014 from $2.5 million for the same period of last year. Earnings per share, both basic and diluted, was $0.12 for the nine months ended September 30, 2014, essentially unchanged from the same period of last year.

Balance Sheet and Cash Flows

The Company had approximately $23.1 million of cash and restricted cash as of September 30, 2014, compared to $32.9 million at December 31, 2013. Accounts receivable were $49.3 million as of September 30, 2014, compared to $48.2 million at December 31, 2013. The days sales of outstanding were 154 days for the three months ended September 30, 2014, compared to 150 days for the year of 2013. The balance of prepayment to suppliers for raw materials totaled $43.3 million as of September 30, 2014, compared to $50.6 million at December 31, 2013. The Company had inventories of $24.1 million as of September 30, 2014, compared to $18.8 million at the end of last year. Total working capital was $98.2 million as of September 30, 2014, compared to $85.7 million at December 31, 2013.

Net cash provided by operating activities was $7.5 million for the nine months ended September 30, 2014, compared to $18.0 million for the same period of last year. Net cash used in investing activities was $7.8 million for the nine months ended September 30, 2014, compared to $14,806 for the same period of last year. Net cash provided by financing activities was $1.4 million for the nine months ended September 30, 2014, compared to net cash used in financing activities of $21.9 million for the same period of last year. The Company's 81% owned subsidiary in Ma'anshan, Ossen Innovation Materials Co., Ltd. ("Ossen Materials") completed a private placement of RMB 100 million (approximately $16.2 million) in aggregate principal amount of bonds to certain accredited investors in China (the "Offering") and received net proceeds of $15.4 million for the purpose to retire it's regular bank loans during the third quarter of 2014. The bonds bear a fixed interest rate of 10.75 per cent per annum, payable annually in arrears, and mature on September 2, 2016. China-based GuoYuan Securities Co., Ltd. acted as sole placement agent for the Offering.

Recent Development

On December 1, 2014, the Company announced that it had been awarded approximately $11.4 million contracts to supply its PC strands/wires, both plain surface and coated, for the construction of three bridges in Jiaozuo, Henan Province, Ji'an, Jiangxi Province, and Zhaoqing, Guangdong Province. The constructions of these bridges are expected to last over a year with product delivery to start in December 2014.

On November 25, 2014, our chairman, Dr. Tang, was recognized as one of the national winners of "National Outstanding Contributors" at the Fourth National Outstanding Contributors Awards Ceremony. Sponsored by four national ministries, the National Outstanding Contributors Award is a flagship national award given every other year to individuals who have made significant contributions to the society.

On October 9, 2014, the Company provided an update on its supply contract to provide 5,000 tons of plain surface products to the 205 National Highway reconstruction project in Anhui Province (the "Project"). The Project, which was originally secured in December 2013 and subsequently suspended due to the delay of a geological survey, had resumed with the delivery of our plain surface products to commence in late 2014 or early 2015.

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 Third Quarter 2014 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation Third Quarter 2014 Conference Call

Date:

Monday, December 29, 2014

Time:

8:30 am Eastern Time, U.S.

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

+1-845-675-0437

International Toll Free:

United States: +1-866-519-4004

China, Domestic Mobile: 4006208038

China, Domestic: 8008190121

Conference ID:

58509895

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through January 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 58509895 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://edge.media-server.com/m/p/irvv26je

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









September 30,



December 31,



2014



2013



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

3,320,365


$

1,139,450

Restricted cash


19,822,389



31,783,670

Notes receivable - bank acceptance notes


14,622,971



2,421,581

Accounts receivable, net of allowance for doubtful accounts of
$1,515,522 and $1,336,177 at September 30, 2014 and December
31,2013, respectively


49,301,453



48,200,076

Inventories


24,059,857



18,750,770

Advance to suppliers


43,264,393



50,614,815

Other current assets


770,996



3,447,886

Notes receivable from related party - bank acceptance notes


-



12,915,099

Total Current Assets


155,162,424



169,273,347

Property, plant and equipment, net


7,461,918



8,458,121

Land use rights, net


4,253,533



4,297,849

Prepayment for plant and equipment


7,798,918



-

TOTAL ASSETS

$

174,676,793


$

182,029,317







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable - bank acceptance notes

$

28,758,510


$

50,990,427

Short-term bank loans


23,559,231



27,283,147

Accounts payable


315,343



503,944

Customer deposits


2,894,437



2,908,271

Income tax payable


457,087



232,541

Other payables and accrued expenses


918,959



1,549,748

Due to related party


-



16,911

Due to shareholder


100,000



50,000

Total Current Liabilities


57,003,567



83,534,989

Bond payable


15,927,517



-

TOTAL LIABILITIES


72,931,084



83,534,989





EQUITY




Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized,
20,000,000 shares issued; 19,901,959 shares outstanding as of
September 30, 2014 and December 31, 2013, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


4,868,443



4,615,699

Retained earnings


43,702,367



41,518,259

Treasury stock, at cost: 98,041 shares as of September 30, 2014 and
December 31, 2013, respectively


(96,608)



(96,608)

Accumulated other comprehensive income


8,281,672



7,646,562

TOTAL SHAREHOLDERS' EQUITY


90,927,329



87,855,367

Non-controlling interest


10,818,380



10,638,961

TOTAL EQUITY


101,745,709



98,494,328

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

174,676,793


$

182,029,317

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)






FOR THE THREE MONTHS
ENDED
SEPTEMBER 30,


FOR THE NINE MONTHS
ENDED SEPTEMBER 30,




2014


2013


2014


2013










REVENUES

$

27,854,785

$

33,118,243

$

91,812,445

$

71,897,988

COST OF GOODS SOLD


25,441,673


29,239,480


83,030,331


63,407,366

GROSS PROFIT


2,413,112


3,878,763


8,782,114


8,490,622

Operating Expenses:









Selling and distribution expenses


293,161


159,249


565,957


439,357

General and administrative expenses


1,263,169


848,110


4,032,921


2,406,865

Total Operating Expenses


1,556,330


1,007,359


4,598,878


2,846,222

INCOME FROM OPERATIONS


856,782


2,871,404


4,183,236


5,644,400

Other Income (Expenses):









Financial expenses, net


(484,152)


(727,244)


(1,608,610)


(2,458,130)

Other income, net


244,935


38,232


472,356


134,143

INCOME BEFORE INCOME TAXES


617,565


2,182,392


3,046,982


3,320,413

INCOME TAXES


(89,857)


(333,683)


(430,711)


(577,733)

NET INCOME


527,708


1,848,709


2,616,271


2,742,680

LESS: NET INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST


60,344


172,305


179,419


287,858

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


467,364


1,676,404


2,436,852


2,454,822

OTHER COMPREHENSIVE INCOME









Foreign currency translation gain, net of tax


31,441


591,937


635,110


2,524,920

TOTAL OTHER COMPREHENSIVE
INCOME


31,441


591,937


635,110


2,524,920

COMPREHENSIVE INCOME


498,805


2,268,341


3,071,962


4,979,742

EARNINGS PER ORDINARY SHARE

Basic and diluted

$

0.02

$

0.08

$

0.12

$

0.12

WEIGHTED AVERAGE ORDINARY
SHARES OUTSTANDING

Basic and diluted

$

19,901,959

$

19,901,959

$

19,901,959

$

19,901,959

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

(Unaudited)















Total Ossen Innovation Co., Ltd. Shareholders' Equity








Ordinary Shares

$0.01 Par Value


Treasury Stock



Additional Paid-in

Capital



Accumulated Other
Comprehensive Income



Statutory Reserve



Retained
Earnings



Non Controlling
Interest



Total


Shares

Amount


Shares

Amount













Balance at December 31, 2013

20,000,000


200,000


(98,041)

(96,608)

33,971,455

7,646,562


4,615,699



41,518,259



10,638,961



98,494,328

Net income

-


-


-

-



-



-



-



2,436,852



179,419



2,616,271

Transfer to statutory reserve

-


-


-

-



-



-



252,744



(252,744)



-



-

Foreign currency translation
adjustment

-


-


-

-



-



635,110



-



-



-



635,110

Balance at September 30, 2014

20,000,000

$

200,000


(98,041)

$

(96,608)

$

33,971,455

$

8,281,672


$

4,868,443


$

43,702,367


$

10,818,380


$

101,745,709

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Nine Months Ended September 30,




2014



2013

CASH FLOWS FROM OPERATING ACTIVITIES:







Net income


$

2,616,271


$

2,742,680

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







Depreciation and amortization



1,160,345



1,152,788

Share-based compensation expense






-

Changes in operating assets and liabilities:







(Increase) Decrease In:







Accounts receivable



(1,101,377)



(5,359,744)

Inventories



(5,309,087)



(6,765,517)

Advance to suppliers



7,350,422



22,390,059

Other current assets



2,676,891



(301,259)

Notes receivable - bank acceptance notes



(12,201,390)



394,079

Notes receivable from related party - bank acceptance notes



12,915,099



1,830,208

Increase (Decrease) In:







Accounts payable



(188,602)



(163,724)

Customer deposits



(13,834)



1,443,528

Income tax payable



224,545



(304,130)

Other payables and accrued expenses



(630,789)



449,408

Due to related party



(16,911)



467,252

Due to shareholders



50,000




Net cash provided by operating activities



7,531,583



17,975,628








CASH FLOWS FROM INVESTING ACTIVITIES:







Purchases of plant and equipment



(36,984)



(14,806)

Prepayment for plant and equipment



(7,807,417)



-

Net cash used in investing activities



(7,844,401)



(14,806)


CASH FLOWS FROM FINANCING ACTIVITIES:







(Increase) Decrease in restricted cash



11,961,281



(7,287,207)

Proceeds from short-term bank loans



17,078,725



28,766,506

Repayments of short-term bank loans



(20,982,433)



(49,171,458)

Repayments of long-term bank loans



-



(4,503,563)

Proceeds from notes payable-bank acceptance notes



44,079,375



62,406,511

Repayment of notes payable-bank acceptance notes



(66,663,956)



(52,112,653)

Proceeds from bond payable



15,940,143



-

Net cash provided by/(used in) financing activities



1,413,135



(21,901,864)








DECREASE IN CASH AND CASH EQUIVALENTS



1,100,317



(3,941,042)

Effect of exchange rate changes on cash



1,080,598



4,242,895

Cash and cash equivalents at beginning of period



1,139,450



1,996,764

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

3,320,365


$

2,298,617








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







Income taxes paid


$

528,663


$

884,946

Interest paid


$

1,568,976


$

2,428,135

Non-cash transactions:







Appropriation to statutory reserve


$

252,744


$

298,596






Three Months Ended September 30,




2014



2013

CASH FLOWS FROM OPERATING ACTIVITIES:







Net income


$

527,708


$

1,848,709

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







Depreciation and amortization



389,223



383,139

Share-based compensation expense






-

Changes in operating assets and liabilities:







(Increase) Decrease In:







Accounts receivable



(5,315,309)



(1,290,529)

Inventories



(3,436,528)



(1,343,507)

Advance to suppliers



3,818,770



17,239,266

Other current assets



157,152



(294,734)

Notes receivable - bank acceptance notes



2,432,174



-

Increase (Decrease) In:







Accounts payable



(66,827)



(6,694,566)

Customer deposits



(852,819)



(3,370,578)

Income tax payable



26,847



(69,176)

Other payables and accrued expenses



89,514



330,731

Due to related party



(76,245)



(1,121,686)

Net cash provided by/(used in) operating activities



(2,306,340)



5,617,069








CASH FLOWS FROM INVESTING ACTIVITIES:







Purchases of plant and equipment



(34,475)



(493)

Prepayment for plant and equipment



(7,807,417)



-

Net cash used in investing activities



(7,841,892)



(493)


CASH FLOWS FROM FINANCING ACTIVITIES:







Increase in restricted cash



(5,192,389)



(1,974,345)

Proceeds from short-term bank loans



5,681,600



14,215,839

Repayments of short-term bank loans



(6,491,803)



(16,544,377)

Repayments of long-term bank loans



-



(4,503,563)

Proceeds from notes payable-bank acceptance notes



14,772,483



16,600,338

Repayment of notes payable-bank acceptance notes



(11,982,180)



(14,795,037)

Proceeds from bond payable



15,940,143



-

Net cash provided by/(used in) financing activities



12,727,854



(7,001,145)








INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS



2,579,622



(1,384,569)

Effect of exchange rate changes on cash



8,970



949,486

Cash and cash equivalents at beginning of period



731,773



2,733,700

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

3,320,365


$

2,298,617








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







Income taxes paid


$

82,453


$

402,645

Interest paid


$

363,022


$

682,581

Non-cash transactions:







Appropriation to statutory reserve


$

44,763


$

171,856

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-third-quarter-2014-financial-results-300013938.html

Source: Ossen Innovation Co., Ltd.
collection