Press Release
 
Ossen Innovation Announces Third Quarter 2015 Financial Results
12/09/15
Earnings Conference Call is scheduled for 8:30 am ET on December 10, 2015

SHANGHAI, Dec. 9, 2015 /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 quarter ended September 30, 2015.

  • Revenues increased by 7.6% to $30.0 million for the three months ended September 30, 2015 compared to the same period in 2014, with strong growth in sales volume for both coated and plain surface PC strands and others that are partially offset by lower average selling price due to lower steel prices.
  • Gross margin, operating margin, and net profit all reached the highest levels since the third quarter of 2011.
  • Net income attributable to Ossen Innovation increased by 601.2% to $3.3 million, or $0.16 per share, for the three months ended September 30, 2015, compared to $0.5 million, or $0.02 per share, for the same period of last year.
  • Gross margin improved by 7.8 percentage points to 16.5% for the three months ended September 30, 2015 compared to the same period in 2014 due to lower steel prices; Operating margin improved by 13.5 percentage points to 16.5% for the three months ended September 30, 2015 from 3.1% for the same period of last year due to the decrease in bad debt provision.

Dr. Liang Tang, Chairman of Ossen Innovation, commented, "We are pleased to report strong financial results for the third quarter of 2015. While our revenues grew by 7.6% year-over-year, gross margin, operating margin and net earnings all reached the highest levels in four years as a result of low material costs and strong sales volume across all major product categories that more than offset decline in average selling prices."

Three Months Ended September 30, 2015 Financial Results



For the Three Months Ended September 30,

($ millions, expect per share data)


2015


2014


% Change

Revenues


$30.0


$27.9


7.6%

Gross profit


$4.9


$2.4


104.7%

Gross margin


16.5%


8.7%


7.8%

Operating income


$5.0


$0.9


478.3%

Operating margin


16.5%


3.1%


13.5%

Net income attributable to Ossen Innovation

$3.3


$0.5


601.2%

EPS


$0.16


$0.02


581.3%

For the three months ended September 30, 2015, revenues increased by $2.1 million, or 7.6%, to $30.0 million from $27.9 million for the same period of last year. This increase was primarily due to increased revenue contribution from plain surface PC strands and others and partially offset by slight revenue decrease in coated PC steel materials. The sales of coated PC steel materials, including both rare earth and zinc coated products, decreased by $0.9 million, or 3.9%, to $23.8 million and accounted for 80% of total sales for the three months ended September 30, 2015 from $24.7 million, or 89% of total sales, for the same period of last year. This decrease was mainly due to 11.2% decrease in average selling price and partially offset by 8.3% increase in sales volume for coated PC steel materials. The sales of rare earth and zinc coated products were $23.8 million and $nil, for the three months ended September 30, 2015, compared to $24.7 million and $nil, respectively, for the same period of last year. The sales of plain surface PC strands and others increased by $3.0 million, or 94.8%, to $6.1 million and accounted for 20% of total sales for the three months ended September 30, 2015 from $3.1 million, or 11% of total sales, for the same period of last year. This increase was mainly due to 25.6% increase in sales volume and partially offset by 14.3% decrease in average selling price for plain surface PC strands and others.

Gross profit increased by $2.5 million, or 104.7%, to $4.9 million for the three months ended September 30, 2015 from $2.4 million for the same period of last year. Gross margin increased to the highest level in four years to 16.5% for the three months ended September 30, 2015 from 8.7% for the same period of last year. The increases in overall gross profit and gross margin were mainly due to lower raw material costs. Gross margins for rare earth and zinc coated products were 16.2% and nil, respectively, for the three months ended September 30, 2015, compared to 8.1% and nil, respectively, for the same period of last year. Gross margin for plain surface PC strands and others was 17.5% for the three months ended September 30, 2015, compared to 12.8% for the same period of last year.

Selling expenses decreased by $0.1 million, or 47.2%, to $0.2 million for the three months ended September 30, 2015 from $0.3 million for the same period of last year. General and administrative expenses decreased by $1.4 million, or 113.5%, to negative $0.2 million for the three months ended September 30, 2015 from $1.3 million for the same period of last year, due to the decrease in bad debt provision in the quarter. The decrease in general and administrative expenses was due to the $0.14 million decrease in R&D and the $1.34 million decrease in the provision for bad debts. As a result, total operating expenses decreased by $1.6 million, or 101.0%, to negative $15,517 for the three months ended September 30, 2015 from $1.6 million for the same period of last year.

Operating income was $5.0 million, or 16.5% of total revenues, for the three months ended September 30, 2015, compared to $0.9 million, or 3.1% of total revenues, for the same period of last year.

Net income increased by $3.3 million, or 623.7%, to $3.8 million for the three months ended September 30, 2015 from $0.5 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 $2.8 million, or 601.2%, to $3.3 million for the three months ended September 30, 2015 from $0.5 million for the same period of last year. Earnings per share, both basic and diluted, were $0.16 for the three months ended September 30, 2015, compared to $0.02 for the same period of last year.

Nine Months Ended September 30, 2015 Financial Results



For the Nine Months Ended September 30,

($ millions, expect per share data)


2015


2014


% Change

Revenues


$82.6


$91.8


-10.0%

Gross profit


$11.9


$8.8


35.0%

Gross margin


14.3%


9.6%


4.8%

Operating income


$8.6


$4.2


106.6%

Operating margin


10.5%


4.6%


5.9%

Net income attributable to Ossen Innovation

$5.4


$2.4


123.2%

EPS


$0.27


$0.12


123.6%

For the nine months ended September 30, 2015, revenues decreased by $9.2 million, or 10.0%, to $82.6 million from $91.8 million for the same period of last year, mainly due to weakness in both rare earth coated and zinc coated products sales.  The sales of coated PC steel materials, including both rare earth and zinc coated products, decreased by $12.8 million, or 15.8%, to $68.1 million and accounted for 82% of total sales for the nine months ended September 30, 2015 from $80.9 million, or 88% of total sales, for the same period of last year. The sales of rare earth and zinc coated products were $61.9 million and $6.2 million, respectively, for the nine months ended September 30, 2015, compared to $71.9 million and $9.0 million, respectively, for the same period of last year. The sales of plain surface PC strands and others increased by $3.6 million, or 33.1%, to $14.5 million and accounted for 18% of total sales for the nine months ended September 30, 2015 from $10.9 million, or 12% of total sales, for the same period of last year.  

Gross profit increased by $3.1 million, or 35.0%, to $11.9 million for the nine months ended September 30, 2015 from $8.8 million for the same period of last year. Gross margin was 14.35% for the nine months ended September 30, 2015, compared to 9.57% for the same period of last year. The increase in gross profit and gross margin were mainly due to lower raw material costs. Gross margins for rare earth and zinc coated products were 12.6% and 23.6%, respectively, for the nine months ended September 30, 2015, compared to 7.7% and 22.1%, respectively, for the same period of last year. Gross margin for plain surface PC Strands and others was 17.7% for the nine months ended September 30, 2015, compared to 10.4% for the same period of last year.

Selling expenses increased by $0.1 million, or 17.6%, to $0.7 million for the nine months ended September 30, 2015 from $0.6 million for the same period of last year. General and administrative expenses decreased by $1.5 million, or 36.9%, to $2.5 million for the nine months ended September 30, 2015 from $4.0 million for the same period of last year, due to the decrease in bad debt provision. As a result, total operating expenses decreased by $1.4 million, or 30.2%, to $3.2 million for the nine months ended September 30, 2015 from $4.6 million for the same period of last year.

Operating income was $8.6 million, or 10.5% of total revenues, for the nine months ended September 30, 2015, compared to $4.2 million, or 4.6% of total revenues, for the same period of last year.

Net income increased by $3.4 million, or 130.9%, to $6.0 million for the nine months ended September 30, 2015 from $2.6 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 $3.0 million, or 123.2%, to $5.4 million for the nine months ended September 30, 2015 from $2.4 million for the same period of last year. Earnings per share, both basic and diluted, were $0.27 for the nine months ended September 30, 2015, compared to $0.12 for the same period of last year.

Balance Sheet and Cash Flows

The Company had $16.7 million of cash and restricted cash as of September 30, 2015, compared to $18.3 million at December 31, 2014. Notes receivable were $18.8 million as of September 30, 2015, compared to $9.9 million at December 31, 2014. This increase was mainly due to the increase in revenue in the third quarter of 2015 compared to the second quarter of this year and the decrease in accounts receivable. Accounts receivable were $32.3 million as of September 30, 2015, compared to $53.8 million at December 31, 2014. The days of sales of outstanding (DSO) were 106 days for the nine months ended September 30, 2015, compared to 158 days for the year of 2014. The decrease was mainly due to the decrease in accounts receivable, including approximately $9 million of accounts receivables aged over 1 year we collected from five customers in the third quarter of 2015. The balance of prepayment to suppliers for raw materials totaled $63.9 million as of September 30, 2015, compared to $56.3 million at December 31, 2014. The Company had inventories of $22.0 million as of September 30, 2015, compared to $20.1 million at the end of 2014. Total working capital was $111 million as of September 30, 2015, compared to $108.0 million at December 31, 2014.

Net cash provided by operating activities was $12.5 million for the nine months ended September 30, 2015, compared to $7.5 million for the same period of last year. Net cash used in investing activities was $18,820 for the nine months ended September 30, 2015, compared to $7.8 million for the same period of last year. Net cash used in financing activities was $7.6 million for the nine months ended September 30, 2015, compared to net cash provided by financing activities of $1.4 million for the same period of last year.

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 Third Quarter 2015 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation Third Quarter 2015 Conference Call

Date:

December 10, 2015

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:

99838324

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through December 18, 2015. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 99838324 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://edge.media-server.com/m/p/h5fyqs94 

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
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS




September 30,



December 31,



2015



2014



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

678,443


$

684,592

Restricted cash


16,046,019



17,572,732

Notes receivable – bank acceptance notes


18,783,035



9,925,155

Accounts receivable, net of allowance for doubtful accounts of $506,712 and $1,874,330 at September 30, 2015 and December 31,2014, respectively

32,320,260



53,764,414

Inventories


22,028,549



20,137,901

Advance to suppliers


63,877,330



56,327,390

Other current assets


986,498



946,319

  Total Current Assets


154,720,134



159,358,503

Property, plant and equipment, net


5,988,248



7,174,646

Land use rights, net


4,018,319



4,231,348

TOTAL ASSETS

$

164,726,701


$

170,764,497







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable – bank acceptance notes

$

23,124,843


$

26,521,315

Short-term bank loans


11,798,389



18,711,357

Accounts payable


3,597,428



3,217,076

Customer deposits


3,003,350



588,005

Income tax payable


473,993



552,459

Other payables and accrued expenses


1,156,063



1,622,958

Due to related party


-



69,469

Due to shareholder


232,499



100,000

  Total Current Liabilities


43,386,565



51,382,639

Bond payable


15,570,993



15,972,837

TOTAL LIABILITIES


58,957,558



67,355,476







EQUITY






Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,840,696 and 19,901,959 shares outstanding as of September 30, 2015 and December 31, 2014, respectively

200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


5,573,199



5,021,752

Retained earnings


49,859,848



44,971,082

Treasury stock, at cost: 159,304 and 98,041 shares as of September 30, 2015 and December 31, 2014, respectively

(144,132)



(96,608)

Accumulated other comprehensive income


4,791,816



8,425,697

TOTAL SHAREHOLDERS' EQUITY


94,252,186



92,493,378

Non-controlling interest


11,516,957



10,915,643

TOTAL EQUITY


105,769,143



103,409,021

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

164,726,701


$

170,764,497

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)




FOR THE THREE MONTHS
ENDED SEPTEMBER 30,



FOR THE NINE MONTHS
ENDED SEPTEMBER 30,



2015



2014



2015



2014













REVENUES

$

29,979,478


$

27,854,785


$

82,612,312


$

91,812,445

COST OF GOODS SOLD


25,040,516



25,441,673



70,758,383



83,030,331

GROSS PROFIT


4,938,962



2,413,112



11,853,929



8,782,114

Operating Expenses:












Selling and distribution expenses


154,924



293,161



665,717



565,957

General and administrative expenses


(170,441)



1,263,169



2,543,915



4,032,921

    Total Operating Expenses


(15,517)



1,556,330



3,209,632



4,598,878

INCOME FROM OPERATIONS 


4,954,479



856,782



8,644,297



4,183,236

Other Income (Expenses):












Financial expenses, net


(718,113)



(484,152)



(2,318,355)



(1,608,610)

Other income, net


58,096



244,935



721,976



472,356

INCOME BEFORE INCOME TAXES


4,294,462



617,565



7,047,918



3,046,982

INCOME TAXES


(475,682)



(89,857)



(1,006,391)



(430,711)

NET INCOME 


3,818,780



527,708



6,041,527



2,616,271

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

541,632



60,344



601,314



179,419

NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO., LTD 


3,277,148



467,364



5,440,213



2,436,852

AND SUBSIDIARIES












OTHER COMPREHENSIVE INCOME (LOSS)












Foreign currency translation gain (loss), net of tax


(3,978,456)



31,441



(3,633,881)



635,110

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)


(3,978,456)



31,441



(3,633,881)



635,110

COMPREHENSIVE INCOME (LOSS)


(701,308)



498,805



1,806,332



3,071,962













EARNINGS PER ORDINARY SHARE












Basic and diluted

$

0.16


$

0.02


$

0.27


$

0.12

WEIGHTED AVERAGE ORDINARY SHARES  OUTSTANDING












Basic and diluted

$

19,840,696


$

19,901,959


$

19,872,491


$

19,901,959

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)




Nine Months Ended September 30,



2015



2014

CASH FLOWS FROM OPERATING ACTIVITIES:






 Net income

$

6,041,527


$

2,616,271

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






 Depreciation and amortization


1,070,322



1,160,345

Changes in operating assets and liabilities:






(Increase) Decrease In:






 Accounts receivable


21,444,154



(1,101,377)

 Inventories


(1,890,648)



(5,309,087)

 Advance to suppliers


(7,549,941)



7,350,422

 Other current assets


(40,178)



2,676,891

 Notes receivable - bank acceptance notes


(8,857,881)



(12,201,390)

 Notes receivable from related party - bank acceptance notes





12,915,099

Increase (Decrease) In:






 Accounts payable


380,352



(188,602)

 Customer deposits


2,415,345



(13,834)

 Income tax payable


(78,466)



224,545

 Other payables and accrued expenses


(466,893)



(630,789)

 Due to related party


(69,469)



(16,911)

 Due to shareholder


132,499



50,000

Net cash provided by operating activities


12,530,723



7,531,583







CASH FLOWS FROM INVESTING ACTIVITIES:






 Purchases of plant and equipment


(18,820)



(36,984)

 Prepayment for plant and equipment


-



(7,807,417)

Net cash used in investing activities


(18,820)



(7,844,401)







CASH FLOWS FROM FINANCING ACTIVITIES:






 Decrease in restricted cash


1,526,712



11,961,281

 Proceeds from short-term bank loans


3,239,234



17,078,725

 Repayments of short-term bank loans


(9,717,701)



(20,982,433)

 Proceeds from notes payable-bank acceptance notes


30,205,853



44,079,375

 Repayment of notes payable-bank acceptance notes


(32,797,240)



(66,663,956)

 Proceeds from bond payable





15,940,143

 Repurchase of common share


(47,524)



-

Net cash provided by/(used in) financing activities


(7,590,666)



1,413,135







INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


4,921,237



1,100,317

 Effect of exchange rate changes on cash


(4,927,386)



1,080,598

 Cash and cash equivalents at beginning of period


684,592



1,139,450

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

678,443


$

3,320,365







SUPPLEMENTARY CASH FLOW INFORMATION






Cash paid during the periods:






 Income taxes paid

$

1,151,507


$

528,663

 Interest paid

$

2,751,332


$

1,568,976

Non-cash transactions:






 Appropriation to statutory reserve

$

551,447


$

252,744

  

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SOURCE Ossen Innovation Co., Ltd.

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