Ossen Innovation Announces First Half 2011 Financial Results; Earnings Conference Call Scheduled for Friday, August 12, 2011 at 9:00 am ET

Net revenue increased 4% to $60.8 million in first six months of 2011

Gross profit grew 37% to $15.9 million; gross margin expanded 632 bps to 26.1%

Net income up 34% to $9.5 million in the first six months of 2011

Reaffirmed FY 2011 Guidance: $138.5-$144.6 million revenue; $18.0-$18.8 million net income; and $0.90-$0.94 EPS

11 Aug, 2011, 16:05 ET from Ossen Innovation Co., Ltd.

SHANGHAI, Aug. 11, 2011 /PRNewswire-Asia-FirstCall/ -- Ossen Innovation Co., Ltd. ("Ossen" or the "Company") (Nasdaq: OSN), a China-based manufacturer of galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed steel materials, today announced financial results for the six months ended June 30, 2011.

"2011 is a pivotal year for Ossen," stated Dr. Liang Tang, Chairman of Ossen Innovation. "We are running at full capacity this year, which positively impacted our growth, margins and profitability. After completing our initial public offering at the end of 2010, we are preparing to add 30,000 tons of additional coated products capacity, which we expect will come online during the first half of 2012. As the Chinese government continues to push forward on multiple high profile bridge projects around the country, we are well positioned to leverage on our strong competitive advantage in this market."

Financial Summary

(in millions except EPS)

1H 2011

1H 2010

Chg.

Revenue

$60.8

$58.7

4%

Gross Profit

$15.9

$11.6

37%

Net Income

$9.5

$7.1

34%

EPS

$0.47

$0.47

-

Shares Outstanding *

20

15

33%

* 20 million shares were outstanding as of June 30, 2011. The number includes the five million shares sold through Company's initial public offering completed in December 2010.

First Half 2011 Financial Results

Revenue for the first half ended June 30, 2011 was $60.8 million, with $37.8 million or 62% generated from the sale of coated pre-stressed steel materials. This represented an increase of $4.4 million or 13% over the $33.4 million in sales of coated pre-stressed steel products during the same period of 2010. Sales of rare earth coated products increased 7% to $34.1 million.

Six months ended June 30

1H 2011

1H 2010

Change from

Revenue ($)

% of Total Revenue

Revenue ($)

% of Total Revenue

2010 to 2011

Products:

Plain surface PC strands

$18,018,742

30%

$18,004,460

31%

0%

Zinc coated PC wires and PC strands

$3,720,377

6%

$1,516,857

3%

145%

Stabilized PC wires

$4,913,533

8%

$7,261,189

12%

-32%

Rare earth coated PC wires and PC strands

$34,129,283

36%

$31,926,269

54%

7%

Total

$60,781,935

$58,708,775

Gross profit increased from $11.6 million in the first half of 2010 to $15.9 million, a 37% increase. This increase resulted from our increased revenues, discounts on raw material purchases due to a significant increase in advance payments to suppliers, and a shift in product mix, with a greater portion of sales derived from higher margin coated products. Gross margin expanded from 19.8% to 26.1% as a result of higher contribution from higher-margin coated products, as well as improved overall pricing of raw materials. Coated pre-stressed steel wires and strands on average have generated a gross margin of 28.5% as compared to roughly 22.1% for plain surface products.

Selling expenses increased from $0.2 million to $0.6 million due to higher salaries, marketing and transportation costs. General and administrative expenses increased from $0.5 million to $1.2 million due to costs related to our being a public company. Operating income grew 30% to $14.1 million in the six months ended June 30, 2011. Operating margins were 23.2% in the first half of 2011 compared to 18.5% in the same period a year ago.

Net income attributable to controlling interest increased 34% to $9.5 million in the first half of 2011 from $7.1 million in the year-ago period. Earnings per share were $0.47 for both periods, reflecting an increase of 5 million shares outstanding year-over-year as a result of the December 2010 IPO.

Balance Sheet and Cash Flows

Ossen had approximately $19.3 million of cash and restricted cash at June 30, 2011 compared to $26.1 million at December 31, 2010. Total accounts receivable and notes receivable increased from $31.0 million to $31.7 million as of June 30, 2011. The average accounts receivable days sales outstanding were 68 days in the first six months of 2011.

In the first six months of 2011, the Company had a net cash outflow from operations of approximately $19.1 million. Inventories decreased by approximately $7.7 million. Total advance to suppliers increased to $72.5 million in anticipation of higher sales and as a result of the Company's ability to obtain additional short term working capital loans from local banks.

The Company raised approximately $22 million from its IPO in December 2010. The funds are being used to fund its 30,000-ton rare earth coated production facility expansion. Through June 30, 2011, Ossen has spent $7.7 million for equipment purchases related to this project.

Financial Outlook for 2011

Management has reiterated its financial forecast for fiscal 2011 as follows:

Revenue:

$138.5 million to $144.6 million

Net Income:

$18.0 to $18.8 million

EPS:

$0.90 to $0.94

Business Updates

Ossen continues to expand its customer base of domestic and international customers. As of the date of this press release, the Company had approximately 126 customers in 25 provinces and five countries, including South Africa, New Zealand, The Philippines, Papua New Guinea and Singapore.

The outlook for new orders remains healthy. Ossen is currently bidding for several bridge and other infrastructure contracts for delivery in 2012.

The Company remains on track and on budget with its 30,000-ton rare earth coated production facility expansion by the first half of 2012. This project, with an estimated cost of approximately $22 million, will increase Ossen's rare earth coated production capacity by approximately 60% to 80,000 tons per 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 "Interim 2011 Ossen Innovation Co Ltd Earnings Conference Call" or be prepared to utilize the conference ID.

Conference Call

Date:

Friday, August 12, 2011

Time:

9:00 am Eastern Time, US

Conference Line Dial-In (U.S.):

+1-800-599-9829

International Dial-In:

+1-617-847-8703

Asia Dial-In:

South China toll free / China Telecom - 10 800 130 0399 North China toll free / China Telecom - 10 800 152 1490 South China toll free / China Netcom - 10 800 852 1490 China Toll: 4008811629 / 4008811630

Conference ID:

40394378 or "Interim 2011 Ossen Innovation Co Ltd Earnings Conference Call"

Webcast link:

http://ir.osseninnovation.com

Replay:

Available From 08/12/2011 12:00 PM to 08/19/2011 12:00 PM

Dial In # / US Toll Free 1 888 286 8010

International Dial In #  1 617 801 6888

Passcode:  19866501

Please dial in at least 10 minutes before the call to ensure timely participation. The conference call will be live webcast and also archived for 1 year on the Company's IR website.

About Ossen Innovation Co., Ltd.

Ossen Innovation Co., Ltd. manufactures and sells galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed materials. The Company's products are mainly used in the construction of bridges 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. 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.

Alan Jin, Chief Financial Officer

Email: alanjin@osseninnovation.com

Phone: +86 (21) 6888-8886

Web: www.osseninnovation.com

Investor Relations

MZ-HCI

Ted Haberfield, President

Phone: +1-760-755-2716

Email: thaberfield@hcinternational.net

Web: www.hcinternational.net

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSULIDATED BALANCE SHEETS

June 30,

December 31,

2011

2010

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

5,764,767

$

12,322,982

Restricted cash

13,600,707

13,799,018

Notes receivable bank acceptance notes

-

17,636,928

Accounts receivable, net of allowance for doubtful accounts of $38,201 and $37,347 at June 30, 2011 and December 31,2010, respectively

31,730,518

13,332,492

Inventories

20,259,098

27,949,781

Advance to suppliers

72,499,794

25,072,350

Other current assets

140,255

3,343,302

Notes receivable from related party bank acceptance notes

-

3,024,895

Account receivable from related party

1,056,454

707,487

 Total Current Assets

145,051,593

117,189,235

Property, plant and equipment, net

11,744,824

12,029,612

Land use rights, net

4,356,880

4,306,091

Prepayment for plant and equipment

7,735,148

7,562,237

TOTAL ASSETS

$

168,888,445

$

141,087,175

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSULIDATED BALANCE SHEETS

June 30,

December 31,

2011

2010

(Unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Notes payable bank acceptance notes

$

25,990,099

$

26,014,096

Short-term bank loans

49,350,232

38,325,414

Accounts payable

525,047

2,493,665

Customer deposits

6,249,746

833,768

Income tax payable

738,726

662,585

Other payables and accrued expenses

274,035

94,510

 Total Current Liabilities

83,127,885

68,424,038

TOTAL LIABILITIES

83,127,885

68,424,038

EQUITY

Shareholders' Equity

Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively

200,000

200,000

Additional paid-in capital

33,831,419

33,338,096

Statutory reserve

3,644,837

2,674,457

Retained earnings

34,401,626

25,887,113

Accumulated other comprehensive income

3,990,757

2,192,996

TOTAL SHAREHOLDERS' EQUITY

76,068,639

64,292,662

Non-controlling interest

9,691,921

8,370,475

TOTAL EQUITY

85,760,560

72,663,137

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

168,888,445

$

141,087,175

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSULIDATED BALANCE SHEETS

Six Months Ended June 30,

2011

2010

REVEUNUES

$

60,781,935

$

58,708,775

COST OF GOODS SOLD

44,926,033

47,101,721

GROSS PROFIT

15,855,902

11,607,054

Selling expenses

557,961

195,706

General and administrative expenses

1,177,638

532,276

 Total Operating Expenses

1,735,599

727,982

INCOME FROM OPERATIONS

14,120,303

10,879,072

Financial expenses, net

(1,607,920)

(1,069,659)

Other income, net

70,686

96,720

INCOME BEFORE INCOME TAX

12,583,069

9,906,133

INCOME TAX

(1,776,730)

(1,370,598)

NET INCOME

10,806,339

8,535,535

LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST

1,321,446

1,430,029

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

9,484,893

7,105,506

OTHER COMPREHENSIVE INCOME

Foreign currency translation gain

1,797,761

117,535

TOTAL OTHER COMPREHENSIVE INCOME

1,797,761

117,535

COMPREHENSIVE INCOME

$

11,282,654

$

7,223,041

EARNINGS PER ORDINARY SHARE

Basic and diluted

$

0.47

$

0.47

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING

Basic and diluted

20,000,000

15,000,000

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Unaudited)

Ossen Innovation Co., Ltd. Shareholders' Equity

Ordinary Shares

$0.01 Par Value

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Statutory Reserve

Retained Earnings

Non Controlling Interest

 

Total

Shares

Amount

 

Balance at December 31, 2010

20,000,000

200,000

33,338,096

2,192,996

2,674,457

 

25,887,113

8,370,475

72,663,137

Net income

-

-

-

-

-

9,484,893

1,321,446

10,806,339

Transfer to statutory reserve

-

-

-

-

970,380

(970,380)

-

-

IPO expenditure refund

-

-

440,954

-

-

-

-

440,954

Share-based compensation to employee

-

-

52,369

-

-

-

-

52,369

Foreign currency translation adjustment

-

-

-

1,797,761

-

-

-

1,797,761

Balance at June 30, 2011

20,000,000

$

200,000

$

33,831,419

$

3,990,757

$

3,644,837

$

34,401,626

$

9,691,921

$

85,760,560

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,

 

2011

2010

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

10,806,339

$

8,535,535

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

Depreciation and amortization

887,688

727,593

Share-based compensation expense

52,369

-

Changes in operating assets and liabilities:

(Increase) Decrease In:

Accounts receivable

(18,398,026)

(18,624,733)

Inventories

7,690,684

(4,896,230)

Advance to suppliers

(47,427,444)

1,890,876

Other current assets

3,203,047

298,436

Notes receivable - bank acceptance notes

17,636,928

150,208

Notes receivable from related party - bank acceptance notes

3,024,895

1,828,234

Due from and advance to related party

-

(8,311,343)

Account receivable from related party

(348,967)

-

Increase (Decrease) In:

Accounts payable

(1,968,618)

490,544

Customer deposits

5,415,978

1,241,074

Income tax payable

76,140

777,886

Other payables and accrued expenses

179,525

(19,731)

Net cash used in operating activities

(19,169,462)

(15,911,651)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of plant and equipment

(127,460)

(96,887)

Net cash used in investing activities

(127,460)

(96,887)

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,

2011

2010

CASH FLOWS FROM FINANCING ACTIVITIES:

(Increase)/Decrease in restricted cash

198,311

(325,492)

Proceeds from short-term bank loans

38,985,133

29,815,234

Repayments of short-term bank loans

(27,960,315)

(20,887,962)

Proceeds from notes payable-bank acceptance notes

25,990,099

22,030,961

Repayment of notes payable-bank acceptance notes

(26,014,096)

(19,744,925)

.IPO expenditure refund

440,954

-

Net cash provided by financing activities

11,640,086

10,887,816

DECREASE IN CASH AND CASH EQUIVALENTS

(7,656,836)

(5,120,722)

Effect of exchange rate changes on cash

1,098,621

171,596

Cash and cash equivalents at beginning of period

12,322,982

8,409,467

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

5,764,767

$

3,460,341

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid during the periods:

Income taxes paid

$

1,716,523

$

792,774

Interest paid

$

1,336,592

$

846,614

Non-cash transactions:

Appropriation to statutory reserve

$

970,380

$

955,754

RELATED PARTY TRANSACTIONS

(a)  Names and Relationship of Related Parties:

Existing Relationship with the Company

Dr. Tang

Chairman and controlling shareholder of the Company

Shanghai Zhengfangxing Steel Co., Ltd. ("SZS")

Under common control of Dr. Tang

Shanghai Ossen Investment Co., Ltd. ("SOI")

Under common control of Dr. Tang

Shanghai Ossen Investment Holdings (Group) Co., Ltd. ("Ossen Shanghai)

Dr. Tang is the President

Shanghai Zhaoyang New Metal Material Co., Ltd. ("Zhaoyang")

Zhaoyang owns a 30% interest in Ossen Shanghai

Shanghai Pujiang Cable Co., Ltd. ("Shanghai Pujiang")

Subsidiary of Ossen Shanghai since September 2010

(b) Summary of Balances with Related Party:

June 30,

December 31,

2011

2010

(unaudited)

Notes receivable from related party:

SZS, due April 20, 2011, subsequently settled on due date

$

-

$

1,512,448

SZS, due February 15, 2011, subsequently settled on due date

-

1,512,447

$

-

$

3,024,895

The interest-free, unsecured notes were provided to a related party to assist with their working capital need.

June 30,

December 31,

2011

2010

(unaudited)

Account receivable from related party:

Zhaoyang

$

119,936

$

-

Shanghai Pujiang

936,518

707,487

$

1,056,454

$

707,487

Zhaoyang and Shanghai Pujiang are customers of the Company. For the six months ended June 30, 2011, Zhaoyang and Shanghai Pujiang purchased $5,400,949 and $7,678,450 of products from the Company, respectively. The balance of account receivable from related party arises from the sales of our products to Zhaoyang and Shanghai Pujiang. The balance of account receivable from related party was all collected subsequently.

SOURCE Ossen Innovation Co., Ltd.



RELATED LINKS

http://ir.osseninnovation.com


http://www.osseninnovation.com


http://www.hcinternational.net