Ossen Innovation Announces Unaudited Financial Results for the Six Months Ended June 30, 2019

Date : 08/27/2019 @ 10:30AM
Source : PR Newswire (US)
Stock : Ossen Innovation Company Ltd (OSN)
Quote : 2.75  0.0 (0.00%) @ 8:59AM

Ossen Innovation Announces Unaudited Financial Results for the Six Months Ended June 30, 2019

Ossen Innovation (NASDAQ:OSN)
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SHANGHAI, Aug. 27, 2019 /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 six months ended June 30, 2019.

"Because of the lowest Chinese GDP growth rate in recent years during the first half of 2019, our top line decreased slightly. Nonetheless, net income increased by 18.7% as we focused on higher margin products," stated Dr. Liang Tang, Chairman of Ossen Innovation. "Looking ahead, we expect to see an increase in investment in infrastructure construction across China. The successful IPO on the Hong Kong Stock Exchange of Pujiang International Group ('Pujiang'), a Cayman Islands company that indirectly owns 65.9% of the Company's issued and outstanding ordinary shares, has provided an additional resource of capital for us and is expected to enable us to capture additional opportunities to win new infrastructure projects."

Six Months Ended June 30, 2019 Financial Results



For the Six Months Ended June 30,

($ millions, except per share data)


2019


2018


% Change

Revenues


$65.1


$70.0


-7.1%

Gross profit


$10.1


$10.0


2.0%

Gross margin


15.6%


14.3%


+1.2%

Operating income


$7.3


$6.7


8.9%

Operating margin


11.2%


9.6%


+1.6%

Net income attributable to Ossen Innovation


$5.6


$4.8


18.7%

EPS


$0.29


$0.24


20.8%








For the six months ended June 30, 2019, revenues decreased by $4.9 million, or 7.1%, to $65.1 million from $70.0 million for the same period of last year. This decrease was mainly attributable to decrease in rare earth coated products, partially offset by increase in zinc coated products and plain surface and other products. The sales of rare earth coated PC steel materials were $23.1 million and accounted for 35.6% of total sales for the six months ended June 30, 2019. Sales of plain surface and other products were $28.0 million for the six months ended June 30, 2019. There were no sales of zinc coated products in the period ended June 30, 2018 and Sales of zinc coated products were $13.9 million for the six months ended June 30, 2019.

Gross profit increased by $0.1 million, or 2.0%, to $10.1 million for the six months ended June 30, 2019 from $10.0 million for the same period of last year. Gross margin increased by 1.3 percentage points to 15.6% for the six months ended June 30, 2019 from 14.3% for the same period of last year. Gross margins for rare earth products were 13.4% for the six months ended June 30, 2019, compared to 12.6% for the same period of last year. Gross margin for plain surface and other products was 15.5% for the six months ended June 30, 2019, compared to 22.9% for the same period of last year. Gross margin for zinc coated PC wires and PC strands was 19.3% for the six months ended June 30, 2019.

Selling expenses decreased by $44,862, or 25.5%, to $130,926 for the six months ended June 30, 2019 from $175,788 for the same period of last year. The decrease was due to less freight expenses, partial offset by higher sales commission. General and administrative expenses decreased by $0.4 million, or 13.8%, to $2.7 million for the six months ended June 30, 2019 from $3.1 million for the same period of last year.

As a result, total operating expenses decreased by $0.5 million, or 14.5%, to $2.8 million for the six months ended June 30, 2019 from $3.3 million for the same period of last year.

Operating income increased by $0.6 million, or 8.9%, to $7.3 million for the six months ended June 30, 2019 from $6.7 million for the same period of last year. The increase in operating income was primarily attributable to increase in gross profit and decrease in SG&A expenses. Operating margin was 11.2% for the six months ended June 30, 2019, compared to 9.6% for the same period of last year.

Net income increased by $1.0 million, or 19.4%, to $6.2 million for the six months ended June 30, 2019 from $5.2 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 $0.9 million, or 18.7%, to $5.6 million for the six months ended June 30, 2019 from $4.8 million for the same period of last year. Earnings per share, both basic and diluted, were $0.29 for the six months ended June 30, 2018, compared to $0.24 for the same period of last year. Basic and diluted earnings per ADS were $0.87 for the six months ended June 30, 2019, compared with $0.72 for the same period of 2018.

Balance Sheet and Cash Flows

As of June 30, 2019, the Company had cash and restricted cash of $12.8 million, compared to $7.5 million at December 31, 2018. Accounts receivable were $55.7 million as of June 30, 2019, compared to $60.6 million at December 31, 2018. The average days of sales of outstanding (DSO) were 161 days for the six months ended June 30, 2019, compared to 150 days for the year of 2018. The increase in average DSO was primarily due to the longer cycle of some of our customers' construction projects. The balance of prepayment to suppliers for raw materials totaled $101.1 million as of June 30, 2019, compared to $70.0 million at December 31, 2018, due to the expectation of increasing demand of raw materials in the second half of 2019. The Company had inventories of $9.6 million as of June 30, 2019, compared to $17.2 million at the end of 2018. Total working capital was $119.6 million as of June 30, 2019, compared to $113.1 million at December 31, 2018.

Net cash used in operating activities was $13.5 million for the six months ended June 30, 2019, compared to net cash used in operating activities of $2.7 million for the same period of last year. This was primarily due to the increase in the balance of prepayment to suppliers for raw materials. Net cash used in investing activities was $74,216 for the six months ended June 30, 2019, compared to $67,419 for the same period of last year. Net cash provided by financing activities was $18.8 million for the six months ended June 30, 2019, compared to net cash provided by financing activities of $7.0 million for the same period of last year. This was primarily due to the increase in proceeds from short-term bank loans.

Recent Developments

On May 28, 2019, the Company announced a loan of HK$20 million (approximately US$2.6 million) from Pujiang. This loan is a portion of the proceeds received by Pujiang from its initial public offering in Hong Kong Stock Exchange. The annual interest rate of the loan is 8% and it has a one-year term. The Company used the proceeds of approximately $1.7 million to pay off the balance due to Dr. Liang Tang, the chairman of Ossen Innovation and approximately $0.9 million for general corporate purposes.

On June 26, 2019, the Company announced that its subsidiary, Ossen (Jiujiang) Innovation Materials Co., Ltd. ("Ossen Jiujiang"), borrowed funds pursuant to two loans in the aggregate principal amount of RMB 129.5 million (approximately US$18.9 million) from the Bank of Shanghai. Pujiang has provided the guarantees and cash collateral for such loans. The loans carry an annual interest rate of 3.915%. One loan has a term of six months and the other loan a term of one year. The Company anticipates that Ossen Jiujiang will be able to roll over these loans when they become due. Ossen Jiujiang expects to use the proceeds of such loans primarily for planned capital expenditures in the expansion of zinc coated production capacity.

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.

Forward-Looking 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.
Wei Hua, Chief Executive Officer
Email: int.tr@ossengroup.com
Phone: +86-21-6888-8886

Investor Relations
GCI IR
Phone: +1-917-207-2173
Email: info@goldenir.com

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




June 30,



December 31,



2019



2018



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

7,297,004


$

3,444,421

Restricted cash


5,531,393



4,070,655

Accounts receivable, net of allowance for doubtful accounts of
$891,877 and $939,535 at June 30, 2019 and December 31,2018,
respectively


55,689,396



60,586,869

Inventories


9,578,722



17,177,926

Advance to suppliers


101,108,543



69,986,656

Other current assets


23,452



26,496

Accounts receivable - related parties


801,511



-

  Total Current Assets


180,030,021



155,293,023

Property, plant and equipment, net


3,181,398



3,371,387

Land use rights, net


3,381,805



3,422,365

Deferred tax assets


153,321



159,136

TOTAL ASSETS

$

186,746,545


$

162,245,911

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




June 30,



December 31,



2019



2018



(Unaudited)




LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable – bank acceptance notes

$

7,569,275


$

8,722,832

Short-term bank loans


33,333,920



13,593,080

Accounts payable


3,169,501



289,954

Customer deposits


637,496



283,869

Income tax payable


953,735



1,231,411

Other payables and accrued expenses


3,880,725



3,980,565

Customer deposits - related parties


1,059,980



4,800,384

Due to shareholder


-



1,695,259

Due to related parties


2,559,998



-

Long-term bank loans – current portion


7,278,149



7,269,027

  Total Current Liabilities


60,442,779



41,866,381

TOTAL LIABILITIES


60,442,779



41,866,381









Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized,
20,000,000 shares issued; 19,791,110 shares outstanding as of
June 30, 2019 and December 31, 2018, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


8,410,754



7,764,813

Retained earnings


73,957,120



68,959,065

Treasury stock, at cost: 208,890 shares as both of June 30, 2019
and December 31, 2018


 

(192,153)



(192,153)

Accumulated other comprehensive income


(4,309,481)



(4,057,326)

TOTAL SHAREHOLDERS' EQUITY


112,037,695



106,645,854

Non-controlling interest


14,266,071



13,733,676

TOTAL EQUITY


126,303,766



120,379,530

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

186,746,545


$

162,245,911

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)




For The Six Months Ended June 30,



2019


2018






REVENUES

$

65,078,854

$

69,946,885

COST OF GOODS SOLD


54,957,652


60,022,694

GROSS PROFIT


10,121,202


9,924,191

Operating Expenses:





Selling and distribution expenses


130,926


175,788

General and administrative expenses


2,678,356


3,108,386

     Total Operating Expenses


2,809,282


3,284,174

INCOME FROM OPERATIONS 


7,311,920


6,640,017

Other Income (Expenses):





Financial expenses, net


(731,974)


(705,603)

Other income, net


45,226


147,625

INCOME BEFORE INCOME TAXES


6,625,172


6,082,039

INCOME TAXES


(448,781)


(910,819)

NET INCOME 


6,176,391


5,171,220

LESS: NET INCOME ATTRIBUTABLE TO





  NONCONTROLLING INTEREST


532,394


416,745

NET INCOME ATTRIBUTABLE TO OSSEN





  INNOVATION CO.,LTD





  AND SUBSIDIARIES


5,643,997


4,754,475

OTHER COMPREHENSIVE INCOME 





  (LOSS)





Foreign currency translation gain (loss), net of tax


(252,155)


(1,705,918)

TOTAL OTHER COMPREHENSIVE INCOME
   (LOSS)


(252,155)


(1,705,918)

COMPREHENSIVE INCOME (LOSS)


5,391,842


3,048,557

EARNINGS PER ORDINARY SHARE





  Basic and diluted

$

0.29

$

0.24

WEIGHTED AVERAGE ORDINARY SHARES  





  OUTSTANDING





  Basic and diluted

$

19,791,110

$

19,791,110

 

 

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


Accumulated
Other

Comprehensive


Statutory


Retained


Non
Controlling




Shares



Amount


Shares



Amount


Capital


Income


Reserve


Earnings


Interest


Total

Balance at December 31, 2018

20,000,000



200,000


(208,890)



(192,153)



33,971,455



(4,057,326)



7,764,813



68,959,065



13,733,676



120,379,530

Net income

-



-


-



-



-



-



-



5,643,996



532,395



6,176,391

Transfer to statutory reserve

-



-


-



-



-



-



645,941



(645,941)



-



-

Foreign currency translation
  adjustment

-



-


-



-



-



(252,155)



-



-



-



(252,155)

Balance at June 30, 2019

20,000,000


$

200,000


(208,890)


$

(192,153)


$

33,971,455


$

(4,309,481)


$

8,410,754


$

73,957,120


$

14,266,071


$

126,303,766

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Six Months Ended June 30,




2019



2018

CASH FLOWS FROM OPERATING ACTIVITIES:







 Net income


$

6,176,391


$

5,171,220

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







 Depreciation and amortization



309,983



339,233

Changes in operating assets and liabilities:







(Increase) Decrease In:







 Accounts receivable



4,897,473



(25,124,759)

 Inventories



7,599,204



(181,351)

 Advance to suppliers



(31,704,863)



15,083,682

 Other current assets



3,043



(40,627)

 Accounts receivable - related parties



(801,511)



(2,713,815)

 Deferred tax assets



5,814



(38,438)

Increase (Decrease) In:







 Accounts payable



2,879,547



3,027,148

 Customer deposits



353,627



(35,567)

 Income tax payable



(277,676)



211,916

 Other payables and accrued expenses



(99,840)



133,318

 Customer deposits - related parties



(3,740,404)



1,430,728

 Due to related parties



2,559,998



-

 Due to shareholder



(1,695,259)



5,000

Net cash used in operating activities



(13,534,473)



(2,732,312)








CASH FLOWS FROM INVESTING ACTIVITIES:







 Purchases of plant and equipment



(74,216)



(67,419)

Net cash used in investing activities



(74,216)



(67,419)

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Six Months Ended June 30,




2019



2018

CASH FLOWS FROM FINANCING ACTIVITIES:







 Proceeds from short-term bank loans



28,495,089



10,467,990

 Repayments of short-term bank loans



(8,489,469)



(4,743,652)

 Proceeds from notes payable-bank acceptance notes



1,476,429



2,833,441

 Repayment of notes payable-bank acceptance notes



(2,657,573)



(1,574,134)

Net cash provided by financing activities



18,824,476



6,983,645








INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH



5,215,785



4,183,914

 Effect of exchange rate changes on cash, cash equivalents, and
restricted cash



(485,440)



(2,306,875)

 Cash, cash equivalents and restricted cash at beginning of period



8,098,052



8,143,153

CASH, CASH EQUIVALENTS AND RESTRICTED CASH
AT END OF PERIOD


$

12,828,397


$

10,020,192








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







 Income taxes paid


$

1,102,556


$

575,057

 Interest paid


$

735,675


$

648,484

Non-cash transactions:







Appropriation to statutory reserve


$

645,941


$

486,878

 

Cision View original content:http://www.prnewswire.com/news-releases/ossen-innovation-announces-unaudited-financial-results-for-the-six-months-ended-june-30-2019-300906842.html

SOURCE Ossen Innovation Co., Ltd.

Copyright 2019 PR Newswire

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