EX-99.1 2 v470427_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

Ossen Innovation Announces First Quarter 2017 Financial Results

 

SHANGHAI, June 30, 2017 /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 three months ended March 31, 2017.

 

Dr. Liang Tang, Chairman of Ossen Innovation, commented, "The economic headwinds and sluggish industry demand continued to drag on our business, leading to a 15% decline in revenues in the first quarter. The decline in revenues also reflected a further scale-back of our plain surface PC strands and PC wires business in light of its gross margin deterioration in recent quarters. Gross and operating margins also decreased by 3.5 and 3.1 percentage points, respectively, highlighting continuing pricing pressure.  Looking ahead, we remain cautious on our near-term outlook."

 

Three months Ended March 31, 2017 Financial Results
   For the Three Months Ended March 31,
($ millions, except per share data)  2017  2016  % Change
Revenues  $25.6   $30.1    -15.0%
Gross profit  $1.8   $3.1    -43.3%
Gross margin   6.9%   10.4%   -3.5pp
Operating income  $0.5   $1.5    -67.2%
Operating margin   2.0%   5.1%   -3.1pp
Net income attributable to Ossen Innovation  $0.0   $0.5    -89.2%
EPS  $0.00   $0.02    -89.2%

 

For the three months ended March 31, 2017, revenues decreased by $4.5 million, or 15.0%, to $25.6 million from $30.1 million for the same period of last year. This decrease was primarily due to decreases in sales from both coated products and plain surface and other products. The sales of coated PC steel materials, including both rare earth and zinc coated products, were $22.1 million and accounted for 86% of total sales for the three months ended March 31, 2017. Sales of rare earth coated products, zinc coated products, and plain surface and other products were $22.0 million, $0.2 million, and $3.5 million for the three months ended March 31, 2017, respectively.

 

Gross profit decreased by $1.4 million, or 43.3%, to $1.8 million for the three months ended March 31, 2017 from $3.1 million for the same period of last year. Gross margin decreased by 3.5 percentage points to 6.9% for the three months ended March 31, 2017 from 10.4% for the same period of last year. Gross margins for rare earth and zinc coated products were 4.1% and 55.0%, respectively, for the three months ended March 31, 2017, compared to 7.6% and 33.6%, respectively, for the same period of last year. Gross margin for plain surface and other products was 22.5% for the three months ended March 31, 2017, compared to 20.3% for the same period of last year.

 

Selling expenses decreased by $0.1 million, or 34.5%, to $0.15 million for the three months ended March 31, 2017 from $0.23 million for the same period of last year. The decrease was due to lower transportation cost. General and administrative expenses decreased by $0.2 million, or 18.2%, to $1.12 million for the three months ended March 31, 2017 from $1.37 million for the same period of last year. As a result, total operating expenses decreased by $0.3 million, or 20.5%, to $1.3 million for the three months ended March 31, 2017 from $1.6 million for the same period of last year.

 

Operating income decreased by $1.0 million, or 67.2%, to $0.5 million for the three months ended March 31, 2017 from $1.5 million for the same period of last year. The decrease in operation income was primarily attributable to decrease in gross profit and partially offset by decrease in general and administrative expenses in 2017. Operating margin was 2.0% for the three months ended March 31, 2017, compared to 5.1% for the same period of last year.

 

 

 

 

Net income decreased by $0.5 million, or 82.3%, to $0.1 million for the three months ended March 31, 2017 from $0.6 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 89.2%, to $0.05 million for the three months ended March 31, 2017 from $0.46 million for the same period of last year. Earnings per share, both basic and diluted, were $0.003 for the three months ended March 31, 2017, compared to $0.023 for the same period of last year.

 

Balance Sheet and Cash Flows

 

As of March 31, 2017, the Company had cash and restricted cash of $6.8 million, compared to $6.9 million at December 31, 2016. Notes receivable were $7.3 million as of March 31, 2017, compared to $15.3 million at December 31, 2016. Accounts receivable were $48.5 million as of March 31, 2017, compared to $37.3 million at December 31, 2016. The average days of sales of outstanding (DSO) were 151 days for the three months ended March 31, 2017, compared to 126 days for the year of 2016. The increase in DSO was mainly because the Chinese New Year delayed the timing of collections.  The balance of prepayment to suppliers for raw materials totaled $55.5 million as of March 31, 2017, compared to $46.7 million at December 31, 2016. The Company had inventories of $16.4 million as of March 31, 2017, compared to $26.0 million at the end of 2016. During the quarter, the Company reduced the procurement of raw materials due to the rising steel price. Total working capital was $102.6 million as of March 31, 2017, compared to $101.6 million at December 31, 2016.

 

Net cash used in operating activities was $0.3 million for the three months ended March 31, 2017, compared to $0.8 million for the same period of last year. Net cash used in investing activities was $nil for the three months ended March 31, 2017, compared to $3,000 for the same period of last year. Net cash used in financing activities was $45,000 for the three months ended March 31, 2017, compared to $91,000 for the same period of last year.

 

Recent Developments

 

On January 3, 2017, The Company announced that the Special Committee of the Board of Directors has retained Highline Research Advisors LLC ("HRA"), acting through Corinthian Partners, LLC, as its financial advisor in connection with the review and evaluation of the Proposed Transactions as announced on August 4, 2016.

 

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:

 

Tony Tian, CFA
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com  

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS         

 

   March 31,  December 31,
   2017  2016
    (Unaudited)      
ASSETS          
Current Assets          
Cash and cash equivalents  $742,415   $217,631 
Restricted cash   6,022,841    6,703,242 
Notes receivable – bank acceptance notes   7,256,367    15,280,381 
Accounts receivable, net of allowance for doubtful accounts of $1,053,219 and $985,990 at March 31, 2017 and December 31,2016, respectively   48,514,649    37,298,465 
Inventories   16,403,361    25,999,182 
Advance to suppliers   55,536,112    46,729,285 
Other current assets   216,897    197,319 
 Total Current Assets   134,692,642    132,425,505 
Property, plant and equipment, net   4,307,145    4,447,063 
Land use rights, net   3,572,923    3,571,184 
TOTAL ASSETS  $142,572,710   $140,443,752 
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current Liabilities          
Notes payable – bank acceptance notes  $8,925,332   $9,586,276 
Short-term bank loans   17,030,694    16,916,535 
Accounts payable   3,020,452    1,504,863 
Customer deposits   333,668    135,903 
Income tax payable   382,107    594,795 
Other payables and accrued expenses   2,023,126    1,740,474 
Due to related party   3,912    3,886 
Due to shareholder   347,499    307,499 
 Total Current Liabilities   32,066,790    30,790,231 
Long-term bank loans   7,256,367    7,207,727 
TOTAL LIABILITIES   39,323,157    37,997,958 
           
EQUITY          
Shareholders' Equity          
Ordinary shares, $0.01par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,791,110 shares outstanding as of March 31, 2017 and December 31, 2016, respectively   200,000    200,000 
Additional paid-in capital   33,971,455    33,971,455 
Statutory reserve   6,147,452    6,123,022 
Retained earnings   54,615,873    54,590,589 
Treasury stock, at cost: 171,210 shares as of March 31, 2017 and December 31, 2016, respectively   (192,153)   (192,153)
Accumulated other comprehensive income   (3,677,790)   (4,378,873)
TOTAL SHAREHOLDERS' EQUITY   91,064,837    90,314,040 
Non-controlling interest   12,184,716    12,131,754 
TOTAL EQUITY   103,249,553    102,445,794 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $142,572,710   $140,443,752 

  

 

 

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 

(Unaudited)

            

   Three Months Ended March 31,
   2017  2016
       
REVEUNUES  $25,582,538   $30,087,939 
COST OF GOODS SOLD   23,809,907    26,960,453 
GROSS PROFIT   1,772,631    3,127,486 
Selling expenses   152,018    232,226 
General and administrative expenses   1,119,428    1,367,866 
Total Operating Expenses   1,271,446    1,600,092 
           
INCOME FROM OPERATIONS   501,185    1,527,394 
Financial expenses, net   (406,513)   (837,473)
Other income, net   7,254    33,179 
INCOME BEFORE INCOME TAX   101,926    723,100 
INCOME TAX BENEFIT (EXPENSES)   750    (144,214)
NET INCOME   102,676    578,886 
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST          
    52,962    116,882 
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST          
    49,714    462,004 
OTHER COMPREHENSIVE INCOME          
Foreign currency translation gain   701,083    701,863 
TOTAL OTHER COMPREHENSIVE INCOME          
    701,083    701,863 
COMPREHENSIVE INCOME  $750,797   $1,163,867 
           
EARNINGS PER ORDINARY SHARE          
Basic and diluted  $0.003   $0.02 
WEIGHTED AVERAGE ORDINARY SHARES  OUTSTANDING          
Basic and diluted   19,791,110    19,828,790 

 

 

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

            

   Three Months Ended March 31,
   2017  2016
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $102,676   $578,886 
Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:          
Depreciation and amortization   183,562    237,148 
Changes in operating assets and liabilities:          
(Increase) Decrease In:          
Accounts receivable   (11,216,183)   (10,416,914)
Inventories   9,595,821    6,351,643 
Advance to suppliers   (8,806,827)   (6,708,129)
Other current assets   (19,578)   524,099 
Notes receivable - bank acceptance notes   8,024,013    8,010,228 
Increase (Decrease) In:          
Accounts payable   1,515,589    (1,036,275)
Customer deposits   197,764    236,563 
Income tax payable   (212,688)   142,367 
Other payables and accrued expenses   282,652    1,304,460 
Due to related party   —      (65,769)
Due to shareholder   40,000    —   
Net cash used in operating activities   (313,199)   (841,693)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of plant and equipment   —      (3,031)
Net cash used in investing activities   —      (3,031)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Decrease / (Increase) in restricted cash   680,400    (2,383,538)
Proceeds from short-term bank loans   722,976    530,540 
Repayments of short-term bank loans   (722,976)   (531,020)
Proceeds from notes payable-bank acceptance notes   4,645,626    8,714,930 
Repayment of notes payable-bank acceptance notes   (5,371,505)   (6,421,527)
Net cash used in financing activities   (45,479)   (90,615)
           
DECREASE IN CASH AND CASH EQUIVALENTS   (358,677)   (935,339)
Effect of exchange rate changes on cash   883,461    1,012,546 
Cash and cash equivalents at beginning of period   217,631    812,277 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $742,415   $889,484 
           
SUPPLEMENTARY CASH FLOW INFORMATION          
Cash paid during the periods:          
Income taxes paid  $225,114   $195,274 
Interest paid  $359,529   $674,865 
Non-cash transactions:          
Appropriation to statutory reserve  $19,502   $69,344