2014

Ossen Innovation Announces First Quarter 2013 Financial Results Company To Host Conference Call at 9:00 am ET on Friday, June 28, 2013

SHANGHAI, June 27, 2013 /PRNewswire-FirstCall/ -- 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 ended March 31, 2013.

"After a strong second half of 2012, demand for steel materials in China weakened in the first half of 2013" said Dr. Liang Tang, Chairman of Ossen Innovation. "Despite announcements regarding increased funding for major infrastructure projects, funding availability has yet to improve. However, as a result of maintaining strong relationships with many of the governmental organizations responsible for approving these projects, Ossen is well informed of upcoming project bidding opportunities, and we anticipate winning our share once these obtain the necessary funding and approval to proceed. We are also excited about the opportunity in the second half of 2013 to bid on other infrastructure projects, including the Macao, Zhuhai and Hong Kong bridge project and remain optimistic about our chances to win some of these bids."

Financial Summary

(in millions ex- EPS)

Q1 2013

Q1 2012

Chg.

Revenue

$14.6

$22.3

-35%

Gross Profit

$1.7

$2.6

-35%

Net Income*

$0.1

$0.3

-67%

EPS

$0.004

$0.01

-60%

Shares Outstanding

19.9

20.0

-0.5%

*Net income attributable to Ossen Innovation Co., Ltd.

First quarter 2013 Financial Results

Revenue for the three months ended March 31, 2013 was $14.6 million, down 35% from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth coated products, were approximately $12.9 million, down 30% compared to approximately $18.4 million in the first quarter of 2012 due to lower demand of coated pre-stressed steel materials and increased price competition. 

Gross profit fell from $2.6 million to $1.7 million, a 35% year-over-year decrease.  Gross margin was 11.6%, up incrementally from 11.5% in the first quarter of 2012. Gross profits were lower as a result of lower sales.

Selling expenses were reduced by 52% to $0.04 million due to lower sales commissions. General and administrative expenses were $0.6 million, down 46% compared to $1.1 million in the first quarter of 2012 due to lower public company expenses and a bad-debt provision reversal. Operating income was approximately $1.0 million, a decrease of 22% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $0.1 million in the first quarter of 2013 compared to $0.3 million in the year-ago period. Earnings per share were $0.004 versus $0.01 a year ago. The weighted average diluted shares outstanding were 19.9 million compared to 20.0 million.  

Balance Sheet and Cash Flows

Ossen had approximately $23.0 million of cash and restricted cash as of March 31, 2013 compared to $27.4 million at December 31, 2012. Total accounts receivable on March 31, 2013 decreased to $38.1 million from $45.7 million on December 31, 2012 as the Company received approximately $6.7 million and $3.6 million from two major customers. The average accounts receivable days sales outstanding were 235 days in the first quarter of 2013 compared to 201 days in the first quarter of 2012. The balance of prepayments to suppliers of raw materials was $72.9 million as of March 31, 2013, a decrease of $5.1 million compared with December 31, 2012. The decrease was mainly due to the Company receiving delivery of raw materials from one supplier during the first quarter of 2013. Accordingly, inventories increased from $9.8 million at December 31, 2012 to $16.2 million at March 31, 2013. Total working capital was $71.7 million at March 31, 2013. 

The Company generated positive cash flows from operations of $9.1 million in the three months ended March 31, 2013 as compared to $0.3 million of outflows in the same period of 2012. The primary reason for the increase in cash generated in operations was improvement in accounts receivable collection and decrease in prepayments to suppliers during the first quarter of 2013, which was partially offset by increased inventories.

Business Updates and Outlook

  1. Due to Chinese government's prudent monetary policy and increased competition in the steel industry, Ossen's Q1 2013 sales were lower than same period last year. Although some new infrastructure projects were launched in the first quarter, due to lack of funding resources, these projects were slow to develop and the amount steel materials purchased were at reduced levels. Most bridge projects so far in 2013 have been smaller projects that don't require higher strength coated products.
  2. According to recent Chinese Ministry of Transport announcements, total investments in highway construction in China will reach RMB4.7 trillion (approx. USD760 billion) between 2013 and 2030. Funding sources to support these construction projects include central government support, provincial government support, and private investments.

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 2013 Conference Call" or be prepared to utilize the conference ID.

Conference Call

Ossen Innovation First Quarter 2013 Conference Call

Date:

Friday, June 28, 2013

Time:

9:00 am Eastern Time, US

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

845-675-0437

International Toll Free:

United States: +1-866-519-4004
China, Domestic Mobile: 4006208038
China, Domestic: 8008190121

Conference ID:

98062986

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through July 5, 2013. To listen, please call + 1-855-452-5696 within the United States or + 1-646-254-3697 if calling internationally. Utilize the pass code 98062986 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://www.media-server.com/m/p/7v3ig52a

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. 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
MZ North America
Ted Haberfield, President
Phone: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us  


OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



March 31,



December 31,



2013



2012



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

4,105,527


$

1,996,764

Restricted cash


18,846,155



25,407,499

Notes receivable – bank acceptance notes


-



394,079

Accounts receivable, net of allowance for doubtful accounts of $1,045,470 and $1,277,091 at March 31, 2013 and December 31,2012, respectively


38,135,590



45,734,381

Inventories


16,153,829



9,807,044

Advance to suppliers


72,887,065



77,948,496

Other current assets


1,864,958



1,904,626

Notes receivable from related party – bank acceptance notes


-



1,830,208

Accounts receivable from related party


2,625,082



-

  Total Current Assets


154,618,206



165,023,097

Property, plant and equipment, net


9,413,271



9,707,587

Land use rights, net


4,316,855



4,317,669

Prepayment for plant and equipment


7,976,985



7,933,361

TOTAL ASSETS

$

176,325,317


$

186,981,714



 

March 31,



December 31,



2013



2012



(Unaudited)




LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable – bank acceptance notes

$

28,848,759


$

36,933,710

Short-term bank loans


44,822,350



50,679,026

Long term bank loans – current portion


4,462,792



4,438,386

Accounts payable


598,127



572,305

Customer deposits


3,643,902



384,602

Income tax payable


53,446



391,353

Other payables and accrued expenses


508,176



805,196

  Total Current Liabilities


82,937,552



94,204,578

TOTAL LIABILITIES


82,937,552



94,204,578






EQUITY





Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively


200,000



200,000

Additional paid-in capital


33,971,455



33,971,455

Statutory reserve


4,224,733



4,179,027

Retained earnings


38,339,860



38,311,527

Treasury stock, at cost: 98,041 shares as both of March 31, 2013 and December 31, 2012


 

(96,608)



(96,608)

Accumulated other comprehensive income


6,509,661



5,999,214

TOTAL SHAREHOLDERS' EQUITY


83,149,101



82,564,615

Non-controlling interest


10,238,664



10,212,521

TOTAL EQUITY


93,387,765



92,777,136

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

176,325,317


$

186,981,714

 

 

 


OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

 


Three Months Ended March 31,



2013



2012







REVEUNUES

$

14,592,753


$

22,287,288

COST OF GOODS SOLD


12,900,737



19,725,350

GROSS PROFIT


1,692,016



2,561,938

Selling expenses


44,075



92,361

General and administrative expenses


602,707



1,125,491

  Total Operating Expenses


646,782



1,217,852







INCOME(EXPENSE) FROM OPERATIONS


1,045,234



1,344,086

Financial expenses, net


(904,173)



(933,230)

Other income, net


44,391



20,543

INCOME BEFORE INCOME TAX


185,452



431,399

INCOME TAX


(85,270)



(108,478)

NET INCOME


100,182



322,921

LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST


 

26,143



 

50,141

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST


 

74,039



 

272,780

OTHER COMPREHENSIVE INCOME






Foreign currency translation gain


510,447



560,900

TOTAL OTHER COMPREHENSIVE INCOME


 

510,447



 

560,900

COMPREHENSIVE INCOME

$

584,486


$

833,680







EARNINGS PER ORDINARY SHARE






Basic and diluted

$

0.004


$

0.01

WEIGHTED AVERAGE ORDINARY SHARES  OUTSTANDING






Basic and diluted


19,901,959



19,987,441

 

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 



Three Months Ended March 31,




2013



2012

CASH FLOWS FROM OPERATING ACTIVITIES:







 Net income


$

100,182


$

322,921

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







 Depreciation and amortization



384,490



439,492

 Share-based compensation expense



-



26,329

Changes in operating assets and liabilities:







(Increase) Decrease In:







 Accounts receivable



7,598,791



(2,113,267)

 Inventories



(6,346,785)



2,105,263

 Advance to suppliers



5,061,431



(12,416,621)

 Other current assets



39,668



2,232

 Notes receivable - bank acceptance notes



394,079



10,851,616

 Notes receivable from related party - bank acceptance notes



1,830,208



-

 Accounts receivable from related party



(2,625,082)




Increase (Decrease) In:







 Accounts payable



25,822



236,030

 Customer deposits



3,259,299



(58,844)

 Income tax payable



(337,907)



1,193

 Other payables and accrued expenses



(297,020)



(183,119)

 Due to related party



-



498,007

Net cash provided by/(used in) operating activities



9,087,176



(288,768)








CASH FLOWS FROM INVESTING ACTIVITIES:







 Purchases of plant and equipment



(12,671)



(3,522)

Net cash used in investing activities



(12,671)



(3,522)



 

Three Months Ended March 31,




2013



2012

CASH FLOWS FROM FINANCING ACTIVITIES:







 Decrease in restricted cash



6,561,343



349,427

 Proceeds from short-term bank loans



6,049,607



10,223,587

 Repayments of short-term bank loans



(12,177,826)



(15,374,261)

 Repayments of long-term bank loans



-



(158,509)

 Proceeds from notes payable-bank acceptance notes



14,487,216



14,107,279

 Repayment of notes payable-bank acceptance notes



(22,765,625)



(8,876,490)

 Repurchase of common shares



-



(13,715)

Net cash provided by/(used in) financing activities



(7,845,285)



257,318








DECREASE IN CASH AND CASH EQUIVALENTS



1,229,220



(34,972)

 Effect of exchange rate changes on cash



879,543



849,798

 Cash and cash equivalents at beginning of period



1,996,764



1,568,261

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

4,105,527


$

2,383,087








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







 Income taxes paid


$

389,179


$

107,314

 Interest paid


$

899,973


$

937,179

Non-cash transactions:







Appropriation to statutory reserve


$

45,706


$

56,457

 

SOURCE Ossen Innovation Co., Ltd.



RELATED LINKS
http://www.osseninnovation.com

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