SHANGHAI, Sept. 26, 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 three months and six months ended June 30, 2014.

"I am pleased to report significant quarter over quarter revenue, gross profit and net income increases for the second quarter ended June 30th," said Dr. Liang Tang, Chairman of Ossen Innovation. "Ossen continues to experience an increase in demand for our higher strength and higher quality rare earth coated products. Although our gross margin was impacted due to price competition, we are encouraged by the continued rebound in demand for rare earth products during the first half of 2014. Ossen also added several new customers during the quarter that placed large orders quickly with us, which continues to reaffirm our products' superior quality, performance and durability characteristics," concluded Dr. Tang.

Financial Summary

Second Quarter Ended June 30, 2014 Financial Results

Revenue for the three months ended June 30, 2014 was $35.9 million, up 49% from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth and zinc coated products, were approximately $29.7 million, up 39% compared to approximately $21.3 million in the second quarter of 2013. Sales of plain surface PC strands were $5.9 million for the three months ended June 30, 2014, an increase of $3.4 million, or 136%, compared to the prior year. The overall increase in revenue was primarily due to increased demand for higher strength and higher quality rare earth and zinc coated products and the addition of several new customers.

Gross profit was $3.7 million, up 28% compared to the same period a year ago. Gross margin was 10.4% in the second quarter of 2014, down from 12.1% in the second quarter of 2013. Gross margin was lower primarily due to lower unit pricing of coated products in order to attract new customers in the second quarter of 2014, partially offset by using lower grade raw materials to improve profitability, but without sacrificing product strength or quality.

Selling expenses were reduced by 30% to $0.2 million due to lower transportation costs, partially offset by higher commission fees. General and administrative expenses increased 50% to $1.4 million, primarily due to increased R&D expenses and a higher bad-debt provision. Operating income was approximately $2.1 million, an increase of 23% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $1.5 million in the second quarter of 2014 compared to $0.7 million in the year-ago period. Earnings per share were $0.07 versus $0.04 a year ago. The weighted average diluted shares outstanding were 19.9 million, unchanged from the year-ago period.

Six Months Ended June 30, 2014 Financial Results

Revenue for the six months ended June 30, 2014 was $64.0 million, up 65% from the same period a year ago. Sales of pre-stressed steel rare earth coated PC wires and PC strands were $56.2 million, an increase of $22.0 million, or 64% from the same period of 2013. Sales of plain surface PC strands and PC wires were $7.4 million for the six months ended June 30, 2014, an increase of $3.3 million, or 80%, compared to the prior year, primarily due to increased demand for higher strength and higher quality rare earth and zinc coated products and the addition of several new customers.

Gross profit increased from $4.6 million to $6.4 million, a 38% year-over-year increase. Gross margin was 10.0%, down from 11.9% in the same period of 2013. Gross margin was lower as a result of a decrease in the average unit selling price of coated products in order to attract new customers in 2014 compared to the prior year period.

Selling expenses were reduced by 3% to $0.3 million due to a decrease in transportation costs, partially offset by higher commission and testing fees. General and administrative expenses were $2.8 million, up 78% compared to $1.6 million in the same period of 2013 due to increased R&D expenses, partially offset by lower audit fees. Operating income was approximately $3.3 million, an increase of 20% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $2.0 million in the six months ended June 30, 2014 compared to $0.8 million in the year-ago period. Earnings per share were $0.10 versus $0.04 a year ago. The weighted average diluted shares outstanding were 19.9 million, unchanged from the year-ago period.

Balance Sheet and Cash Flows

Ossen had approximately $15.4 million of cash and restricted cash as of June 30, 2014 compared to $32.9 million at December 31, 2013. The decrease was due to an increase in inventories and repayment of bank loans. Total accounts receivable on June 30, 2014 decreased to $44.0 million from $48.2 million on December 31, 2013. The average accounts receivable days sales outstanding were 112 days for the second quarter of 2014 compared to 150 days for 2013. This decrease was primarily due to improved accounts receivable collection times and increased revenue in the second quarter. The balance of prepayments to suppliers of raw materials was $47.1 million as of June 30, 2014, a decrease of $3.5 million compared with December 31, 2013. The decrease was mainly due to an increased receipt of raw materials compared with prepayments during the second quarter. Inventories increased from $18.8 million at December 31, 2013 to $20.6 million at June 30, 2014, primarily due to anticipation of increased sales during the second half of 2014. Total working capital was $89.1 million at June 30, 2014.

The Company generated positive cash flows from operations of $9.8 million for the six months ended June 30, 2014 as compared to cash flows of $12.4 million for the same period of 2013. The primary reasons for the decrease in cash generated in operations were an increase in notes receivable, partially offset by an increase in net income, a decrease in notes receivable from a related party, and a decrease in accounts receivable.

Cash flow used in financing activities was $11.3 million for the six months ended June 30, 2014 as compared to cash flow used in financing activities of $14.9 million for the same period of 2013. The primary reasons for the decrease in cash used by financing activities were a decrease in proceeds and repayments from short-term bank loans, a decrease of proceeds from bank acceptance notes, partially offset by a decrease in restricted cash and an increase in repayments of bank acceptance notes.

Business Updates and Outlook

We note several positive developments in the second quarter of 2014. Specifically:

• In June 2014, Ossen (Jiujiang) Steel Wire & Cable Co., Ltd. was awarded the Major Scientific and Technological Innovation Title in Jiujiang City for the year 2014. This award was received in recognition of the Company's development of the 5mm series zinc-aluminum rare earth coated bridge cables. Ossen (Jiujiang) will receive a subsidy from the government.
• In August 2014, the Company was awarded the highest honor in product quality, the Jiujiang City Mayor Quality Award of 2014, in recognition of its superior product quality and advanced quality management systems. Furthermore, Ossen's 15.24 mm 1860MPa coated strand research project was been listed as a national key new product project for 2014 by the Chinese government.

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

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through October 6, 2014. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 7681271 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://www.media-server.com/m/p/ego49pva

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
FCC Group LLC
Phone: +1-347-850-7098
Email: ir@ossencorp.com

 

 

 

 

 

 

 

 

SOURCE Ossen Innovation Co., Ltd.