SHANGHAI, Sept. 20, 2018 /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, 2018.
"Our first half of 2018 results exceeded our expectations and
provided a strong beginning to the year for Ossen," stated
Dr. Liang Tang, Chairman of Ossen Innovation. "During the six
months period, we won a few more bridge projects in China that contributed to our sales results
and positively impacted our growth, margins and profitability. As
the Chinese government continues to reduce the overcapacity in
steel industry and push forward on infrastructure projects around
the country, we continue to increase our efforts to win multiple
infrastructure projects and further solidify our position as a
market leader."
Six Months Ended
June 30, 2018 Financial Results
|
|
|
|
For the Six Months
Ended June 30,
|
($ millions,
except per share data)
|
|
2018
|
|
2017
|
|
%
Change
|
Revenues
|
|
$70.0
|
|
$52.0
|
|
34.6%
|
Gross
profit
|
|
$10.0
|
|
$4.8
|
|
109.4%
|
Gross
margin
|
|
14.3%
|
|
9.2%
|
|
|
Operating
income
|
|
$6.7
|
|
$2.3
|
|
188.2%
|
Operating
margin
|
|
9.6%
|
|
4.5%
|
|
|
Net income
attributable to Ossen Innovation
|
|
$4.8
|
|
$1.2
|
|
291.7%
|
EPS
|
|
$0.24
|
|
$0.06
|
|
300.0%
|
|
|
|
|
|
|
|
For the six months ended June 30,
2018, revenues increased by $18.0
million, or 34.6%, to $70.0
million from $52.0 million for
the same period of last year. This increase was mainly attributable
to increase in rare earth coated products and plain surfaced and
other products and partially offset by decrease in zinc coated
products. The sales of rare earth coated PC steel materials were
$58.4 million and accounted for 83.4%
of total sales for the six months ended June
30, 2018. Sales of plain surface and other products
were $11.7 million for the six months
ended June 30, 2018. There were no
sales of zinc coated products in this period.
Gross profit increased by $5.2
million, or 109.4%, to $10.0
million for the six months ended June
30, 2018 from $4.8 million for
the same period of last year. Gross margin increased by 5.1
percentage points to 14.3% for the six months ended June 30, 2018 from 9.2% for the same period of
last year. Gross margins for rare earth products were 12.6% for the
six months ended June 30, 2018,
compared to 7.2% for the same period of last year. Gross margin for
plain surface and other products was 22.9% for the six months ended
June 30, 2018, compared to19.4% for
the same period of last year.
Selling expenses decreased by $0.1
million, or 36.8%, to $0.2
million for the six months ended June
30, 2018 from $0.3 million for
the same period of last year. The decrease was due to less freight
expenses related to export. General and administrative expenses
increased by $0.9 million, or 43.4%,
to $3.1 million for the six months
ended June 30, 2018 from $2.2 million for the same period of last year.
The increase was due to higher research and development
expenses.
As a result, total operating expenses increased by $0.8 million, or 34.3%, to $3.3 million for the six months ended
June 30, 2018 from $2.4 million for the same period of last
year.
Operating income increased by $4.4
million, or 188.2%, to $6.7
million for the six months ended June
30, 2018 from $2.3 million for
the same period of last year. The increase in operating income was
primarily attributable to increase in gross profit and partially
offset by increase in general and administrative expenses.
Operating margin was 9.6% for the six months ended June 30, 2018, compared to 4.5% for the same
period of last year.
Net income increased by $3.8
million, or 275.1%, to $5.2
million for the six months ended June
30, 2018 from $1.4 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
$3.5 million, or 291.7%, to
$4.8 million for the six months ended
June 30, 2018from $1.2 million for the same period of last year.
Earnings per share, both basic and diluted, were $0.24 for the six months ended June 30, 2018, compared to $0.06 for the same period of last year. Basic and
diluted earnings per ADS were $0.72
for the six months ended June 30,
2018, compared with $0.18 for
the same period of 2017.
Balance Sheet and Cash Flows
As of June 30, 2018, the Company
had cash and restricted cash of $10.0
million, compared to $8.1
million at December 31, 2017. Accounts receivable were
$76.8 million as of June 30, 2018, compared to $51.7 million at December
31, 2017. The average days of sales of outstanding (DSO)
were 166days for the three months ended June
30, 2018, compared to 123 days for the year of 2017. 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 $56.2 million as of June
30, 2018, compared to $71.3
million at December 31, 2017.
The Company had inventories of $13.7
million as of June 30, 2018,
compared to $13.5 million at the end
of 2017. Total working capital was $118.4
million as of June 30, 2018,
compared to $114.7 million at
December 31, 2017.
Net cash used in operating activities was $2.7 million for the six months ended
June 30, 2018, compared to net cash
provided by operating activities of $2.1
million for the same period of last year. Net cash used in
investing activities was $67,419 for
the six months ended June 30, 2018,
compared to nil for the same period of last year. Net cash provided
by financing activities was $5.6
million for the six months ended June
30, 2018, compared to net cash used in financing activities
of $3.2 million for the same period
of last year.
Recent Developments
On May 8, 2018, the Company
announced the termination of the Share Exchange Agreement (the
"Exchange Agreement"), dated July 19, 2017, among the Company,
America-Asia Diabetes Research Foundation (the "Foundation")
and the shareholders of the Foundation, as amended, with respect to
the acquisition of the Foundation by Ossen. The Foundation and its
shareholders failed to satisfy the closing conditions set forth in
the Exchange Agreement. As a result, the Company terminated the
Exchange Agreement. In connection therewith, the Share Purchase
Agreement, dated July 19, 2017, between the Company and an
affiliate of Dr. Liang Tang, the Chairman of Ossen, pursuant
to which the Company agreed to sell its existing business to an
affiliate of Dr. Tang, is deemed terminated.
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,
|
|
2018
|
|
2017
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,407,108
|
|
$
|
950,225
|
Restricted
cash
|
|
8,613,084
|
|
|
7,192,928
|
Accounts receivable,
net of allowance for doubtful accounts of $1,126,863 and
$868,973 at June 30, 2018 and December 31, 2017,
respectively
|
|
76,824,689
|
|
|
51,699,930
|
Inventories
|
|
13,660,824
|
|
|
13,479,473
|
Advance to
suppliers
|
|
56,197,222
|
|
|
71,280,903
|
Other current
assets
|
|
78,016
|
|
|
37,390
|
Accounts receivable -
RPT
|
|
2,713,815
|
|
|
-
|
Total
Current Assets
|
|
159,494,758
|
|
|
144,640,849
|
Property, plant and
equipment, net
|
|
3,953,509
|
|
|
4,031,534
|
Land use rights,
net
|
|
3,603,094
|
|
|
3,697,012
|
Deferred tax
assets
|
|
187,949
|
|
|
149,511
|
TOTAL
ASSETS
|
$
|
167,051,360
|
|
$
|
152,518,906
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes payable – bank
acceptance notes
|
$
|
11,331,017
|
|
$
|
10,253,742
|
Short-term bank
loans
|
|
19,262,729
|
|
|
13,947,385
|
Accounts
payable
|
|
3,387,075
|
|
|
359,927
|
Customer
deposits
|
|
280,826
|
|
|
316,394
|
Income tax
payable
|
|
662,627
|
|
|
450,711
|
Other payables and
accrued expenses
|
|
4,370,141
|
|
|
4,236,823
|
Customer deposits -
RPT
|
|
1,430,754
|
|
|
-
|
Due to
shareholder
|
|
356,499
|
|
|
351,499
|
Total
Current Liabilities
|
|
41,081,668
|
|
|
29,916,481
|
Long-term bank
loans
|
|
7,554,011
|
|
|
7,652,046
|
TOTAL
LIABILITIES
|
|
48,635,679
|
|
|
37,568,527
|
|
|
|
|
|
|
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,
2018 and December 31, 2017, respectively
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
Statutory
reserve
|
|
7,159,132
|
|
|
6,672,254
|
Retained
earnings
|
|
63,654,265
|
|
|
59,386,668
|
Treasury stock, at
cost: 208,890 shares as both of June 30, 2018 and December 31,
2017
|
|
(192,153)
|
|
|
(192,153)
|
Accumulated other
comprehensive income
|
|
521,416
|
|
|
2,227,334
|
TOTAL
SHAREHOLDERS' EQUITY
|
|
105,314,115
|
|
|
102,265,558
|
Non-controlling
interest
|
|
13,101,566
|
|
|
12,684,821
|
TOTAL
EQUITY
|
|
118,415,681
|
|
|
114,950,379
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$
|
167,051,360
|
|
$
|
152,518,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(Unaudited)
|
|
|
FOR THE SIX MONTHS
ENDED JUNE 30,
|
|
2018
|
|
2017
|
|
|
|
|
|
|
REVENUES
|
$
|
70,022,743
|
|
$
|
52,015,016
|
COST OF GOODS
SOLD
|
|
60,022,694
|
|
|
47,238,355
|
GROSS
PROFIT
|
|
10,000,048
|
|
|
4,776,661
|
Operating
Expenses:
|
|
|
|
|
|
Selling and
distribution expenses
|
|
175,788
|
|
|
278,025
|
General and
administrative expenses
|
|
3,108,386
|
|
|
2,167,966
|
Total Operating
Expenses
|
|
3,284,174
|
|
|
2,445,991
|
INCOME FROM
OPERATIONS
|
|
6,715,874
|
|
|
2,330,670
|
Other Income
(Expenses):
|
|
|
|
|
|
Financial expenses,
net
|
|
(705,603)
|
|
|
(802,485)
|
Other income,
net
|
|
71,768
|
|
|
6,147
|
INCOME BEFORE
INCOME TAXES
|
|
6,082,039
|
|
|
1,534,332
|
INCOME
TAXES
|
|
(910,819)
|
|
|
(155,856)
|
NET
INCOME
|
|
5,171,220
|
|
|
1,378,476
|
LESS: NET INCOME
ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
416,745
|
|
|
164,684
|
NET INCOME
ATTRIBUTABLE TO OSSEN INNOVATION CO., LTD AND
SUBSIDIARIES
|
|
4,754,475
|
|
|
1,213,792
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
Foreign currency
translation gain (loss), net of tax
|
|
(1,705,918)
|
|
|
2,465,633
|
TOTAL OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
(1,705,918)
|
|
|
2,465,633
|
COMPREHENSIVE
INCOME (LOSS)
|
|
3,048,558
|
|
|
3,679,425
|
|
|
|
|
|
|
EARNINGS PER
ORDINARY SHARE
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.24
|
|
$
|
0.06
|
WEIGHTED AVERAGE
ORDINARY SHARES OUTSTANDING
|
|
|
|
|
|
Basic and
diluted
|
$
|
19,791,110
|
|
$
|
19,791,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
income
|
$
|
5,171,220
|
|
$
|
1,378,476
|
Adjustments to
reconcile net income to net cash
provided by/ (used in) operating
activities:
|
|
|
|
|
|
Depreciation
and amortization
|
|
339,233
|
|
|
390,662
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
Accounts
receivable
|
|
(25,124,759)
|
|
|
3,896,793
|
Inventories
|
|
(181,351)
|
|
|
6,621,860
|
Advance to
suppliers
|
|
15,083,682
|
|
|
(24,084,109)
|
Other current
assets
|
|
(40,627)
|
|
|
(10,771)
|
Notes
receivable - bank acceptance notes
|
|
-
|
|
|
15,280,381
|
Accounts
receivable - RPT
|
|
(2,713,815)
|
|
|
-
|
Deferred tax
assets
|
|
(38,438)
|
|
|
-
|
Increase
(Decrease) In:
|
|
|
|
|
|
Accounts
payable
|
|
3,027,148
|
|
|
(1,110,830)
|
Customer
deposits
|
|
(35,567)
|
|
|
26,917
|
Income tax
payable
|
|
211,916
|
|
|
(330,156)
|
Other payables
and accrued expenses
|
|
133,318
|
|
|
9,624
|
Customer
deposits - RPT
|
|
1,430,728
|
|
|
-
|
Due to related
party
|
|
-
|
|
|
(3,912)
|
Due to
shareholder
|
|
5,000
|
|
|
40,000
|
Net cash provided
by/(used in) operating activities
|
|
(2,732,312)
|
|
|
2,104,935
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
(67,419)
|
|
|
-
|
Net cash used in
investing activities
|
|
(67,419)
|
|
|
-
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Decrease/(increase) in restricted
cash
|
|
(1,420,156)
|
|
|
1,243,864
|
Proceeds from
short-term bank loans
|
|
10,467,990
|
|
|
1,477,061
|
Repayments of
short-term bank loans
|
|
(4,743,652)
|
|
|
(4,515,711)
|
Proceeds from
notes payable-bank acceptance notes
|
|
2,833,441
|
|
|
6,121,021
|
Repayment of
notes payable-bank acceptance notes
|
|
(1,574,134)
|
|
|
(7,505,538)
|
Net cash provided
by/(used in) financing activities
|
|
5,563,489
|
|
|
(3,179,303)
|
|
|
|
|
|
|
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
2,763,758
|
|
|
(1,074,369)
|
Effect of
exchange rate changes on cash
|
|
(2,306,875)
|
|
|
3,019,801
|
Cash and cash
equivalents at beginning of period
|
|
950,225
|
|
|
217,631
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
1,407,108
|
|
$
|
2,163,063
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW INFORMATION
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
Income taxes
paid
|
$
|
575,057
|
|
$
|
481,205
|
Interest
paid
|
$
|
648,484
|
|
$
|
776,257
|
Non-cash
transactions:
|
|
|
|
|
|
Appropriation to
statutory reserve
|
$
|
486,878
|
|
$
|
136,038
|
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SOURCE Ossen Innovation Co., Ltd.