SHANGHAI, June
30, 2017 /PRNewswire/ -- Ossen Innovation
Co., Ltd. ("Ossen Innovation" 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,
2017.
Dr. Liang Tang, Chairman of
Ossen Innovation, commented, "The economic headwinds and sluggish
industry demand continued to drag on our business, leading to a 15%
decline in revenues in the first quarter. The decline in revenues
also reflected a further scale-back of our plain surface PC strands
and PC wires business in light of
its gross margin deterioration in recent quarters. Gross and
operating margins also decreased by 3.5 and 3.1 percentage points,
respectively, highlighting continuing pricing pressure.
Looking ahead, we remain cautious on our near-term
outlook."
Three months Ended
March 31, 2017 Financial Results
|
|
For the Three
Months Ended March 31,
|
($ millions,
except per share data)
|
2017
|
|
2016
|
|
%
Change
|
Revenues
|
$25.6
|
|
$30.1
|
|
-15.0%
|
Gross
profit
|
$1.8
|
|
$3.1
|
|
-43.3%
|
Gross
margin
|
6.9%
|
|
10.4%
|
|
-3.5 pp
|
Operating
income
|
$0.5
|
|
$1.5
|
|
-67.2%
|
Operating
margin
|
2.0%
|
|
5.1%
|
|
-3.1 pp
|
Net income
attributable to Ossen Innovation
|
$0.0
|
|
$0.5
|
|
-89.2%
|
EPS
|
$0.00
|
|
$0.02
|
|
-89.2%
|
For the three months ended March
31, 2017, revenues decreased by $4.5
million, or 15.0%, to $25.6
million from $30.1 million for
the same period of last year. This decrease was primarily due to
decreases in sales from both coated products
and plain surface and other products. The sales of
coated PC steel materials, including both rare earth and zinc
coated products, were $22.1 million and accounted for 86% of total
sales for the three months ended March 31,
2017. Sales of rare earth
coated products, zinc coated products, and plain
surface and other products were
$22.0 million,
$0.2 million, and $3.5 million for the three months
ended March 31, 2017,
respectively.
Gross profit decreased by $1.4
million, or 43.3%, to $1.8
million for the three months ended March 31, 2017 from $3.1
million for the same period of last year. Gross margin
decreased by 3.5 percentage points to 6.9% for the three months
ended March 31, 2017 from 10.4% for
the same period of last year. Gross margins for rare earth and zinc
coated products were 4.1% and 55.0%,
respectively, for the three months ended March 31, 2017, compared to
7.6% and 33.6%,
respectively, for the same period of last year. Gross margin for
plain surface and other products was
22.5% for the three months ended March 31, 2017, compared to
20.3% for the same period of last
year.
Selling expenses decreased by $0.1
million, or 34.5%, to $0.15
million for the three months ended March 31, 2017 from $0.23
million for the same period of last year. The decrease was
due to lower transportation cost. General and administrative
expenses decreased by $0.2 million,
or 18.2%, to $1.12 million for the
three months ended March 31, 2017
from $1.37 million for the same
period of last year. As a result, total operating expenses
decreased by $0.3 million, or 20.5%,
to $1.3 million for the three months
ended March 31, 2017 from
$1.6 million for the same period of
last year.
Operating income decreased by $1.0
million, or 67.2%, to $0.5
million for the three months ended March 31, 2017 from $1.5
million for the same period of last year. The decrease in
operation income was primarily attributable to decrease in gross
profit and partially offset by decrease in general and
administrative expenses in 2017. Operating margin was 2.0% for the
three months ended March 31, 2017,
compared to 5.1% for the same period of last year.
Net income decreased by $0.5
million, or 82.3%, to $0.1
million for the three months ended March 31, 2017 from $0.6
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
$0.4 million, or 89.2%, to
$0.05 million for the three months
ended March 31, 2017 from
$0.46 million for the same period of
last year. Earnings per share, both basic and diluted, were
$0.003 for the three months ended
March 31, 2017, compared to
$0.023 for the same period of last
year.
Balance Sheet and Cash Flows
As of March 31, 2017, the
Company had cash and restricted cash of $6.8
million, compared to $6.9
million at December 31, 2016. Notes receivable were
$7.3 million as of March 31, 2017, compared to $15.3 million at December
31, 2016. Accounts receivable were $48.5 million as of March
31, 2017, compared to $37.3
million at December 31, 2016.
The average days of sales of outstanding (DSO) were 151 days for
the three months ended March 31,
2017, compared to 126 days for the year of 2016.
The increase in DSO was mainly because the Chinese New Year delayed the timing of
collections. The balance of prepayment to
suppliers for raw materials totaled $55.5
million as of March 31, 2017,
compared to $46.7 million at
December 31, 2016. The Company had
inventories of $16.4 million as of
March 31, 2017, compared to
$26.0 million at the end of
2016. During the quarter, the Company reduced the
procurement of raw materials due to the rising steel price.
Total working capital was $102.6
million as of March 31, 2017,
compared to $101.6 million at
December 31, 2016.
Net cash used in operating activities was $0.3 million for the three months ended
March 31, 2017, compared to
$0.8 million for the same period of
last year. Net cash used in investing activities was $nil for the
three months ended March 31, 2017,
compared to $3,000 for the same
period of last year. Net cash used in financing activities was
$45,000 for
the three months ended March 31,
2017, compared to $91,000 for the same
period of last year.
Recent Developments
On January 3, 2017, The
Company announced that the Special Committee of the Board of
Directors has retained Highline Research Advisors LLC ("HRA"),
acting through Corinthian Partners, LLC, as its financial advisor
in connection with the review and evaluation of the Proposed
Transactions as announced on August 4,
2016.
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 Ma'anshan, 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:
Tony Tian, CFA
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
742,415
|
|
$
|
217,631
|
Restricted
cash
|
|
6,022,841
|
|
|
6,703,242
|
Notes receivable –
bank acceptance notes
|
|
7,256,367
|
|
|
15,280,381
|
Accounts receivable,
net of allowance for doubtful accounts of $1,053,219 and $985,990
at March 31, 2017 and December 31,2016, respectively
|
|
48,514,649
|
|
|
37,298,465
|
Inventories
|
|
16,403,361
|
|
|
25,999,182
|
Advance to
suppliers
|
|
55,536,112
|
|
|
46,729,285
|
Other current
assets
|
|
216,897
|
|
|
197,319
|
Total
Current Assets
|
|
134,692,642
|
|
|
132,425,505
|
Property, plant and
equipment, net
|
|
4,307,145
|
|
|
4,447,063
|
Land use rights,
net
|
|
3,572,923
|
|
|
3,571,184
|
TOTAL
ASSETS
|
$
|
142,572,710
|
|
$
|
140,443,752
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes payable – bank
acceptance notes
|
$
|
8,925,332
|
|
$
|
9,586,276
|
Short-term bank
loans
|
|
17,030,694
|
|
|
16,916,535
|
Accounts
payable
|
|
3,020,452
|
|
|
1,504,863
|
Customer
deposits
|
|
333,668
|
|
|
135,903
|
Income tax
payable
|
|
382,107
|
|
|
594,795
|
Other payables and
accrued expenses
|
|
2,023,126
|
|
|
1,740,474
|
Due to related
party
|
|
3,912
|
|
|
3,886
|
Due to
shareholder
|
|
347,499
|
|
|
307,499
|
Total
Current Liabilities
|
|
32,066,790
|
|
|
30,790,231
|
Long-term bank
loans
|
|
7,256,367
|
|
|
7,207,727
|
TOTAL
LIABILITIES
|
|
39,323,157
|
|
|
37,997,958
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Ordinary shares,
$0.01par value: 100,000,000 shares authorized, 20,000,000 shares
issued; 19,791,110 shares outstanding as of March 31, 2017 and
December 31, 2016, respectively
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
Statutory
reserve
|
|
6,147,452
|
|
|
6,123,022
|
Retained
earnings
|
|
54,615,873
|
|
|
54,590,589
|
Treasury stock, at
cost: 171,210 shares as of March 31, 2017 and December 31, 2016,
respectively
|
|
(192,153)
|
|
|
(192,153)
|
Accumulated other
comprehensive income
|
|
(3,677,790)
|
|
|
(4,378,873)
|
TOTAL
SHAREHOLDERS' EQUITY
|
|
91,064,837
|
|
|
90,314,040
|
Non-controlling
interest
|
|
12,184,716
|
|
|
12,131,754
|
TOTAL
EQUITY
|
|
103,249,553
|
|
|
102,445,794
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$
|
142,572,710
|
|
$
|
140,443,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
|
|
REVEUNUES
|
$
|
25,582,538
|
|
$
|
30,087,939
|
COST OF GOODS
SOLD
|
|
23,809,907
|
|
|
26,960,453
|
GROSS
PROFIT
|
|
1,772,631
|
|
|
3,127,486
|
Selling
expenses
|
|
152,018
|
|
|
232,226
|
General and
administrative expenses
|
|
1,119,428
|
|
|
1,367,866
|
Total
Operating Expenses
|
|
1,271,446
|
|
|
1,600,092
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
501,185
|
|
|
1,527,394
|
Financial expenses,
net
|
|
(406,513)
|
|
|
(837,473)
|
Other income,
net
|
|
7,254
|
|
|
33,179
|
INCOME BEFORE
INCOME TAX
|
|
101,926
|
|
|
723,100
|
INCOME TAX BENEFIT
(EXPENSES)
|
|
750
|
|
|
(144,214)
|
NET
INCOME
|
|
102,676
|
|
|
578,886
|
LESS: NET INCOME
ATTRIBUTABLE TO NON-CONTROLLING INTEREST
|
|
|
|
|
|
|
|
52,962
|
|
|
116,882
|
NET INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST
|
|
|
|
|
|
|
|
49,714
|
|
|
462,004
|
OTHER
COMPREHENSIVE INCOME
|
|
|
|
|
|
Foreign currency
translation gain
|
|
701,083
|
|
|
701,863
|
TOTAL OTHER
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
701,083
|
|
|
701,863
|
COMPREHENSIVE
INCOME
|
$
|
750,797
|
|
$
|
1,163,867
|
|
|
|
|
|
|
EARNINGS PER
ORDINARY SHARE
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.003
|
|
$
|
0.02
|
WEIGHTED AVERAGE
ORDINARY SHARES OUTSTANDING
|
|
|
|
|
|
Basic and
diluted
|
|
19,791,110
|
|
|
19,828,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
income
|
$
|
102,676
|
|
$
|
578,886
|
Adjustments to
reconcile net income to net cash provided by/ (used in) operating
activities:
|
|
|
|
|
|
Depreciation
and amortization
|
|
183,562
|
|
|
237,148
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
Accounts
receivable
|
|
(11,216,183)
|
|
|
(10,416,914)
|
Inventories
|
|
9,595,821
|
|
|
6,351,643
|
Advance to
suppliers
|
|
(8,806,827)
|
|
|
(6,708,129)
|
Other current
assets
|
|
(19,578)
|
|
|
524,099
|
Notes
receivable - bank acceptance notes
|
|
8,024,013
|
|
|
8,010,228
|
Increase
(Decrease) In:
|
|
|
|
|
|
Accounts
payable
|
|
1,515,589
|
|
|
(1,036,275)
|
Customer
deposits
|
|
197,764
|
|
|
236,563
|
Income tax
payable
|
|
(212,688)
|
|
|
142,367
|
Other payables
and accrued expenses
|
|
282,652
|
|
|
1,304,460
|
Due to related
party
|
|
-
|
|
|
(65,769)
|
Due to
shareholder
|
|
40,000
|
|
|
-
|
Net cash used in
operating activities
|
|
(313,199)
|
|
|
(841,693)
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
-
|
|
|
(3,031)
|
Net cash used in
investing activities
|
|
-
|
|
|
(3,031)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Decrease /
(Increase) in restricted cash
|
|
680,400
|
|
|
(2,383,538)
|
Proceeds from
short-term bank loans
|
|
722,976
|
|
|
530,540
|
Repayments of
short-term bank loans
|
|
(722,976)
|
|
|
(531,020)
|
Proceeds from
notes payable-bank acceptance notes
|
|
4,645,626
|
|
|
8,714,930
|
Repayment of
notes payable-bank acceptance notes
|
|
(5,371,505)
|
|
|
(6,421,527)
|
Net cash used in
financing activities
|
|
(45,479)
|
|
|
(90,615)
|
|
|
|
|
|
|
DECREASE IN CASH
AND CASH EQUIVALENTS
|
|
(358,677)
|
|
|
(935,339)
|
Effect of
exchange rate changes on cash
|
|
883,461
|
|
|
1,012,546
|
Cash and cash
equivalents at beginning of period
|
|
217,631
|
|
|
812,277
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
742,415
|
|
$
|
889,484
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW INFORMATION
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
Income taxes
paid
|
$
|
225,114
|
|
$
|
195,274
|
Interest
paid
|
$
|
359,529
|
|
$
|
674,865
|
Non-cash
transactions:
|
|
|
|
|
|
Appropriation to
statutory reserve
|
$
|
19,502
|
|
$
|
69,344
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-first-quarter-2017-financial-results-300482454.html
SOURCE Ossen Innovation Co., Ltd.