Press Release
 
/C O R R E C T I O N -- Ossen Innovation Co., Ltd./
06/30/16

In the news release, Ossen Innovation Announces First Quarter 2016 Financial Results, issued 29-Jun-2016 by Ossen Innovation Co., Ltd. over PR Newswire, we are advised by the company that the sencond paragraph, the third pargraph and the fourth paragraph have some incorrect information as originally issued inadvertently. The complete, corrected release follows:

Ossen Innovation Announces First Quarter 2016 Financial Results

Earnings Conference Call is Scheduled for 8:30 am ET on June 30, 2016

SHANGHAI, June 29, 2016 /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 first quarter ended March 31, 2016.

Dr. Liang Tang, Chairman of Ossen Innovation, commented, "In the first quarter, we saw decline in demand for our zinc coated products as a direct result of the continued struggles facing the steel industry. Despite this challenge and macro headwinds, we managed to grow our total revenues by 12.4% in the first quarter while maintaining profitability as we were able to grow sales of rare earth coated products, plain surface PC strands and other products including steel wires and services. Our overall gross margin also decreased from 13.5% to 10.4% for the first quarter of 2016 primarily due to a shift in product mix toward lower margin products and increased pricing pressure for our major products. Looking ahead, with no significant improvement in macro and industry fundamentals in the near term, we remain cautious in our outlook."

Three Months Ended March 31, 2016 Financial Results



For the Three Months Ended December 31,

($ millions, except per share data)


2016


2015


% Change

Revenues


$30.1


$26.8


12.4%

Gross profit


$3.1


$3.6


-13.8%

Gross margin


10.4%


13.5%


-3.2%

Operating income


$1.5


$1.7


-8.4%

Operating margin


5.1%


6.2%


-1.2%

Net income attributable to Ossen Innovation

$0.5


$0.9


-46.5%

EPS


$0.02


$0.04


-46.3%

For the three months ended March 31, 2016, revenues increased by $3.3 million, or 12.4%, to $30.1 million from $26.8 million for the same period of last year. This increase was primarily due to increased revenue contribution from rare earth coated products, plain surface PC strands and other products and partially offset by decrease in sales from zinc coated products. The sales of coated PC steel materials, including both rare earth and zinc coated products, increased by $1.9 million, or 8.8%, to $24.0 million and accounted for 79.7% of total sales for the three months ended March 31, 2016 from $22.1 million, or 82% of total sales, for the same period of last year. Sales of rare earth coated products increased by $5.5 million, or 30.5%, to $23.7 million for the three months ended March 31, 2016 from $18.2 million for the same period of last year.  Sales of zinc coated products decreased by $3.6 million, or 92.6%, to $0.3 million for the three months ended March 31, 2016 from $3.9 million for the same period of last year. Sales of plain surface PC strands and others increased by $1.4 million, or 30.4%, to $6.1 million and accounted for 20.3% of total sales for the three months ended March 31, 2016 from $4.7 million, or 17.6% of total sales, for the same period of last year. This increase was mainly due to increased contribution from other products, including sales of steel wire and services that together contributed $4.6 million in revenues for the three months ended March 31, 2016 versus $0.3 million for the same period of last year.

Gross profit decreased by $0.5 million, or 13.8%, to $3.1 million for the three months ended March 31, 2016 from $3.6 million for the same period of last year. Gross margin decreased to 10.4% for the three months ended March 31, 2016 from 13.5% for the same period of last year. Gross margins for rare earth and zinc coated products were 7.7% and 33.7%, respectively, for the three months ended March 31, 2016, compared to 11.5% and 26.2%, respectively, for the same period of last year. Gross margin for plain surface PC strands and others was 20.4% for the three months ended March 31, 2016, compared to 11.2% for the same period of last year due to higher gross margin of plain surface products in the first quarter of 2016.

Selling expenses increased by $0.1 million, or 86.6%, to $0.2 million for the three months ended March 31, 2016 from $0.1 million for the same period of last year. The increase was due to higher transportation cost and higher commission fees. General and administrative expenses decreased by $0.5 million, or 25.4%, to $1.4 million for the three months ended March 31, 2016 from $1.8 million for the same period of last year, mainly due to the decrease in bad debt provision in the first quarter of 2016. As a result, total operating expenses decreased by $0.4 million, or 18.3%, to $1.6 million for the three months ended March 31, 2016 from $2.0 million for the same period of last year.

Operating income decreased by $0.1 million, or 8.4%, to $1.5 million for the three months ended March 31, 2016 from $1.7 million for the same period of last year. Operating margin was 5.1% for the three months ended March 31, 2016, compared to 6.2% for the same period of last year.

Net income decreased by $0.3 million, or 33.6%, to $0.6 million for the three months ended March 31, 2016 from $0.9 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 46.5%, to $0.5 million for the three months ended March 31, 2016 from $0.9 million for the same period of last year. Earnings per share, both basic and diluted, were $0.02 for the three months ended March 31, 2016, compared to $0.04 for the same period of last year.

Balance Sheet and Cash Flows

As of March 31, 2016, the Company had cash and restricted cash of $12.1 million, compared to $9.6 million at December 31, 2015. Notes receivable were $nil as of March 31, 2016, compared to $8.0 million at December 31, 2015. Accounts receivable were $53.7 million as of March 31, 2016, compared to $43.2 million at December 31, 2015 due to increased sales in the first quarter of 2016. The average days of sales of outstanding (DSO) were 145 days for the three months ended March 31, 2016, compared to 150 days for the twelve months ended December 31, 2015. The balance of prepayment to suppliers for raw materials totaled $62.4 million as of March 31, 2016, compared to $55.7 million at December 31, 2015. The Company had inventories of $20.9 million as of March 31, 2016, compared to $27.3 million at the end of 2015. Total working capital was $96.1 million as of March 31, 2016, compared to $94.7 million at December 31, 2015.

Net cash used in operating activities was $0.8 million for the three months ended March 31, 2016, compared to net cash provided by operating activities of $3.6 million for the same period of last year. This was primarily due to the increase in advance to suppliers. Net cash used in investing activities was $3,031 for the three months ended March 31, 2016, compared to $16,736 for the same period of last year. Net cash used in financing activities was $90,615 for the three months ended March 31, 2016, compared to $4.1 million for the same period of last year. This was primarily due to less repayment of notes payable in the first quarter of 2016.

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 First Quarter 2016 Earnings Conference Call" or be prepared to utilize the conference ID.

Conference Call


Date:

Thursday, June 30, 2016

Time:

8:30 am ET, 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:

30698312

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through July 8, 2016. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 30698312 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://edge.media-server.com/m/p/n9rbnmd2

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:

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


March 31,


December 31,


2016


2015



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

889,484


$

812,277

Restricted cash


11,163,981



8,780,443

Notes receivable – bank acceptance notes


-



8,010,228

Accounts receivable, net of allowance for doubtful accounts of $838,357 and $738,101 at March 31, 2016 and December 31,2015, respectively


53,664,888



43,247,974

Inventories


20,924,578



27,276,221

Advance to suppliers


62,438,218



55,730,089

Other current assets


390,942



915,041

  Total Current Assets


149,472,091



144,772,273

Property, plant and equipment, net


5,379,777



5,557,176

Land use rights, net


3,912,846



3,911,084

TOTAL ASSETS

$

158,764,714


$

154,240,533







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable – bank acceptance notes

$

14,885,106


$

12,477,471

Short-term bank loans


17,830,630



17,714,928

Accounts payable


863,125



1,899,400

Customer deposits


545,710



309,147

Income tax payable


556,618



414,250

Other payables and accrued expenses


2,974,130



1,669,670

Due to related party


-



65,769

Due to shareholder


282,499



282,499

Bond payable


15,411,925



15,273,177

  Total Current Liabilities


53,349,743



50,106,311

TOTAL LIABILITIES


53,349,743



50,106,311







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,828,790 shares outstanding as of March 31, 2016 and December 31, 2015, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


5,700,717



5,631,373

Retained earnings


50,650,925



50,258,265

Treasury stock, at cost: 171,210 shares as of March 31, 2016 and December 31, 2015, respectively





(155,343)

(155,343)

Accumulated other comprehensive income


3,298,090



2,596,227

TOTAL SHAREHOLDERS' EQUITY


93,665,844



92,501,977

Non-controlling interest


11,749,127



11,632,245

TOTAL EQUITY


105,414,971



104,134,222

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

158,764,714


$

154,240,533

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 

(Unaudited)

 


Three Months Ended March 31,



2016



2015







REVENUES

$

30,087,939


$

26,768,356

COST OF GOODS SOLD


26,960,453



23,141,983

GROSS PROFIT


3,127,486



3,626,373

Selling expenses


232,226



124,435

General and administrative expenses


1,367,866



1,833,670

  Total Operating Expenses


1,600,092



1,958,105







INCOME FROM OPERATIONS


1,527,394



1,668,268

Financial expenses, net


(837,473)



(753,917)

Other income, net


33,179



139,314

INCOME BEFORE INCOME TAX


723,100



1,053,665

INCOME TAX


(144,214)



(182,357)

NET INCOME


578,886



871,308

LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST


116,882



7,164

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST


462,004



864,144

OTHER COMPREHENSIVE INCOME






Foreign currency translation gain


701,863



436,796

TOTAL OTHER COMPREHENSIVE INCOME


701,863



436,796

COMPREHENSIVE INCOME

$

1,163,867


$

1,300,940







EARNINGS PER ORDINARY SHARE






Basic and diluted

$

0.02


$

0.04

WEIGHTED AVERAGE ORDINARY SHARES  OUTSTANDING






Basic and diluted


19,828,790



19,901,959

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)








Three Months Ended March 31,


2016


2015

CASH FLOWS FROM OPERATING ACTIVITIES:






 Net income

$

578,886


$

871,308

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






 Depreciation and amortization


237,148



387,371

Changes in operating assets and liabilities:






(Increase) Decrease In:






 Accounts receivable


(10,416,914)



(14,908,029)

 Inventories


6,351,643



4,154,569

 Advance to suppliers


(6,708,129)



2,212,830

 Other current assets


524,099



(66,632)

 Notes receivable - bank acceptance notes


8,010,228



9,925,155

Increase (Decrease) In:






 Accounts payable


(1,036,275)



302,949

 Customer deposits


236,563



94,199

 Income tax payable


142,367



245,782

 Other payables and accrued expenses


1,304,460



415,285

 Due to related party


(65,769)



(69,469)

 Due to shareholder


-



30,000

Net cash provided by/(used in) operating activities


(841,693)



3,595,318







CASH FLOWS FROM INVESTING ACTIVITIES:






 Purchases of plant and equipment


(3,031)



(16,736)

Net cash used in investing activities


(3,031)



(16,736)







CASH FLOWS FROM FINANCING ACTIVITIES:






 Decrease / (Increase) in restricted cash


(2,383,538)



7,522,356

 Proceeds from short-term bank loans


530,540



-

 Repayments of short-term bank loans


(531,020)



(3,254,996)

 Proceeds from notes payable-bank acceptance notes


8,714,930



6,428,618

 Repayment of notes payable-bank acceptance notes


(6,421,527)



(14,810,234)

Net cash used in financing activities


(90,615)



(4,114,256)







DECREASE IN CASH AND CASH EQUIVALENTS


(935,339)



(535,674)

 Effect of exchange rate changes on cash


1,012,546



635,722

 Cash and cash equivalents at beginning of period


812,277



684,592

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

889,484


$

784,640







SUPPLEMENTARY CASH FLOW INFORMATION






Cash paid during the periods:






 Income taxes paid

$

195,274


$

67,249

 Interest paid

$

674,865


$

359,116

Non-cash transactions:






Appropriation to statutory reserve

$

69,344


$

102,327

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-first-quarter-2016-financial-results-300292121.html

SOURCE Ossen Innovation Co., Ltd.

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