Ossen Innovation Announces Third Quarter 2012 Financial Results

SHANGHAI, Nov. 29, 2012 /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 and nine months ended September 30, 2012.

"We had positive revenue growth for a second consecutive quarter," said Dr. Liang Tang, Chairman of Ossen Innovation. "More importantly, we generated positive net income. These developments indicate a rebound in the industry and strong execution from our team. As the market demand improves further, we anticipate our margins to gradually return to historical levels."

Financial Summary

(in millions ex- EPS)

Q3 2012

Q3 2011

Chg.

YTD 2012

YTD 2011

Chg.

Revenue

$41.1

$31.1

+32%

$95.0

$91.9

3%

Gross Profit

$2.9

$4.2

-31%

$7.7

$20.1

-62%

Net Income*

$0.7

$2.0

-63%

$1.1

$11.5

-91%

EPS

$0.04

$0.10

-63%

$0.05

$0.57

-91%

Shares Outstanding

19.9

20.0

-0.3%

19.9

20.0

-0.1%

 

*Net income attributable to controlling interest

Third Quarter 2012 Financial Results

Revenue for the three months ended September 30, 2012 was $41.1 million, an increase of $10 million, or 32%, from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth coated products, were $29.7 million, up 178% compared to $10.7 million in the third quarter of 2011 due to overall higher demand of coated pre-stressed steel materials in the market.

Gross profit decreased from $4.2 million to $2.9 million, a 31% year-over-year decline. Gross margin was 7.1%, flat from the second quarter of 2012 and down from 13.6% in the third quarter of 2011. Gross profit and gross margin were down as a result of lower pricing during the market recovery stage.

Gross margin for the third quarter of 2012 were 9.2% and 3.4% for coated pre-stressed steel products and for plain surface pre-stressed steel products, respectively.

Selling expenses increased 19% to $0.3 million due to higher sales. General and administrative expenses increased 58% to $0.5 million mainly due to the increase in R&D expenses. Operating income fell 42% to $2.1 million in the third quarter of 2012 with operating margin of 5.1% compared to $3.6 million and 11.7%, respectively, in the third quarter of 2011.

Net income attributable to controlling interest decreased 63% to $0.7 million in the third quarter of 2012 from $2 million in the year-ago period. Earnings per share were $0.04 versus $0.10 a year ago. The weighted average diluted shares outstanding was 19.9 million compared to 20.0 million a year ago as a result of 88,616 shares repurchased by Ossen as of September 30, 2012.

Nine Months Ended September 30, 2012 Financial Results

Revenues for the nine months ended September 30, 2012 were $95 million, an increase of approximately 3% compared to $91.9 million in the same period a year ago.

Gross profit fell 62% in the first nine months of 2012 to $7.7 million. Gross margin was 8.1% for the nine months ended September 30, 2012 compared to 21.9% in the first nine months of 2011, due to prices decrease as a result of the difficult market conditions.

Operating expenses were $3.5 million, up 53% from $2.3 million in the first nine months of 2011, led by a $1.4 million year-over-year increase in general and administrative expenses. Operating income and operating margin for the year to date of 2012 was $4.2 million and 4.4% compared to $17.8 million and 19.3%, respectively, for the nine months ended September 30, 2011.

Net income attributable to controlling shareholders was $1.1 million, down from $11.5 million in the first nine months of 2011. Earnings per share was $0.05 for the nine months ended September 30, 2012.

Balance Sheet and Cash Flows

Ossen had approximately $24.7 million of cash and restricted cash as of September 30, 2012 compared to $21.3 million at December 31, 2011. Total accounts receivable on September 30, 2012 decreased to $40.5 million from $48.0 million on December 31, 2011. The average accounts receivable days sales outstanding were 101 days in the third quarter of 2012 compared to 118 days in the third quarter of 2011. Advances to suppliers increased to $75.5 million on September 30, 2012 as compared to $62.8 million a quarter ago, as the Company anticipated recovery of the market and purchased larger quantity of raw materials for better pricing. Inventories were down from $17.2 million at December 31, 2011 to 12.4 million at September 30, 2012. Total working capital was $73.5 million at September 30, 2012 compared to $70.8 million at December 31, 2011.

For the nine months ended September 30, 2012, the Company had approximately $13 million of cash outflows from operations as compared to $13.7 million of outflows in the same period of 2011. The primary reason for the reduction in cash used in operations was improvement in accounts receivable collection during the first nine months of 2012, which was partially offset by increased advances to suppliers.

In November 2011, the Company's Board of Directors approved a share repurchase program for up to 500,000 shares of the Company's American Depositary Receipts ("ADSs") through May 2012. On May 31, 2012 the program was further extended for another 12 months to May 31, 2013. As of September 30, 2012, the Company had repurchased 88,616 shares of ADSs from the secondary market at an average price of $0.98 per share.

Business Updates and Outlook

  1. Accounts receivable collection improved during the first three quarters of 2012. The average accounts receivable days sales outstanding in Q1, Q2 and Q3 of 2012 were 201 days, 145 days and 101 days respectively. The Company expects accounts receiveable collection will further improve and return to the historical levels in the near future.
  2. According to recent government announcements, total investments in railway construction in China will reach RMB530 billion (approx. USD84 billion) in 2013. Funding sources to support these constructions include central government support, bond issuance and bank loans. These funding sources have been secured by the Ministry of Railways in China.

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 3rd Quarter 2012 Conference Call" or be prepared to utilize the conference ID.

Conference Call


Date:

Friday, November 30, 2012

Time:

9:00 am Eastern Time, US

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

+ 1 718 354 1231

International Toll Free:

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

Conference ID:

74841114

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through December 7, 2012. To listen, please call + 1-855-452-5696 within the United States or + 1-646-254-3697 if calling internationally. Utilize the pass code 74841114 for the replay.

This call is being webcast and can be accessed by clicking on this link: http://www.media-server.com/m/p/xamj5r5g  

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.

Alan Jin, Chief Financial Officer

Email: alanjin@osseninnovation.com  

Phone: +86 (21) 5888-3163

Web:  www.osseninnovation.com


Investor Relations

MZ North America

Ted Haberfield, President

Phone: +1-760-755-2716

Email: thaberfield@mzgroup.us

Web: www.mz-ir.com

 

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




September 30,



December 31,



2012



2011



(Unaudited)




ASSETS






Current Assets






Cash and cash equivalents

$

2,100,709


$

1,568,261

Restricted cash


22,613,666



19,764,900

Notes receivable – bank acceptance notes


7,903,264



10,851,616

Accounts receivable, net of allowance for doubtful accounts
  of $386,255 and $384,311 at September 30, 2012 and
  December 31,2011, respectively


40,548,065



48,049,722

Inventories


12,448,654



17,222,664

Advance to suppliers


75,535,212



41,391,174

Other current assets


3,185,031



6,495,241

Account receivable from related party


534,616



20,799

  Total Current Assets


164,869,217



145,364,377

Property, plant and equipment, net


10,031,284



11,022,916

Land use rights, net


4,329,806



4,380,708

Prepayment for plant and equipment


7,910,914



7,869,529

TOTAL ASSETS

$

187,141,221


$

168,637,530







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities






Notes payable – bank acceptance notes

$

43,626,018


$

24,848,628

Short-term bank loans


45,521,731



47,966,209

Accounts payable


1,199,579



948,475

Customer deposits


608,850



459,915

Income tax payable


42,999



4,792

Other payables and accrued expenses


421,304



324,423

  Total Current Liabilities


91,420,481



74,552,442

Long-term bank loans


4,583,893



4,718,094

TOTAL LIABILITIES


96,004,374



79,270,536





EQUITY




Shareholders' Equity






Ordinary shares, $0.01 par value: 100,000,000 shares
  authorized, 20,000,000 shares issued and 19,911,384
  outstanding as of September 30, 2012 ; 20,000,000
  shares issued and 20,000,000 shares outstanding as
  of December 31, 2011, respectively


200,000



200,000

Additional paid-in capital


33,963,932



33,884,656

Statutory reserve


4,040,105



3,884,808

Retained earnings


37,149,055



36,224,467

Treasury stock, at cost: 88,616 and 0 shares as of as
  of September 30, 2012 and December 31, 2011, respectively


(87,733)



 

-

Accumulated other comprehensive income


5,742,139



5,295,641

TOTAL SHAREHOLDERS' EQUITY


81,007,498



79,489,572

Non-controlling interest


10,129,349



9,877,422

TOTAL EQUITY


91,136,847



89,366,994

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

187,141,221


$

168,637,530

 

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,




2012


2011


2012


2011










REVENUES

$

41,066,144

$

31,084,373

$

94,956,669

$

91,866,308

COST OF GOODS SOLD


38,141,575


26,867,212


87,224,774


71,793,245

GROSS PROFIT


2,924,569


4,217,261


7,731,895


20,073,063

Operating Expenses:









Selling and distribution expenses


298,231


251,721


633,325


809,683

General and administrative expenses


521,602


329,795


2,916,249


1,507,432

Total Operating Expenses


819,833


581,516


3,549,574


2,317,115

INCOME FROM OPERATIONS


2,104,736


3,635,645


4,182,321


17,755,948

Other Income (Expenses):









Financial expenses, net


(1,143,588)


(1,003,853)


(2,915,253)


(2,611,774)

Other income, net


49,374


15,006


383,255


85,692

INCOME BEFORE INCOME TAXES


1,010,522


2,646,798


1,650,323


15,229,866

INCOME TAXES


(156,041)


(374,377)


(318,511)


(2,151,107)

NET INCOME


854,481


2,272,421


1,331,812


13,078,759

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST


113,215


272,679


251,927


1,594,126

NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD

AND SUBSIDIARIES


741,266


1,999,742


1,079,885


11,484,633

OTHER COMPREHENSIVE INCOME (EXPENSES)









Foreign currency translation gain, net of tax


(174,728)


791,458


446,498


2,589,219

TOTAL OTHER COMPREHENSIVE INCOME (EXPENSES)


(174,728)


791,458


446,498


2,589,219

COMPREHENSIVE INCOME


566,538


2,791,200


1,526,383


14,073,852

 

EARNINGS PER ORDINARY SHARE

Basic and diluted

$

0.04

$

0.10

$

0.05

$

0.57

WEIGHTED AVERAGE ORDINARY SHARES  OUTSTANDING

Basic and diluted

$

19,919,613

$

20,000,000

$

19,954,867

$

20,000,000

 

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Nine Months Ended September 30,




2012



2011

CASH FLOWS FROM OPERATING ACTIVITIES:







 Net income


$

1,331,812


$

13,078,759

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







 Depreciation and amortization



1,190,589



1,566,548

 Share-based compensation expense



79,276



78,987

Changes in operating assets and liabilities:







(Increase) Decrease In:







 Accounts receivable



7,501,657



(35,660,081)

 Inventories



4,774,010



3,820,667

 Advance to suppliers



(34,144,039)



(23,514,812)

 Other current assets



3,310,212



2,895,266

 Notes receivable - bank acceptance notes



2,948,352



17,636,928

Notes receivable from related party - bank
   acceptance notes



-



3,024,895

 Account receivable from related party



(513,817)



(1,374,570)

Increase (Decrease) In:







 Accounts payable



251,104



2,134,674

 Customer deposits



148,935



50,453

 Income tax payable



38,206



(255,258)

 Other payables and accrued expenses



96,882



18,089

 Due to related party



-



2,811,709

Net cash used in operating activities



(12,986,821)



(13,687,746)








CASH FLOWS FROM INVESTING ACTIVITIES:







 Purchases of plant and equipment



(28,882)



(154,820)

 Prepayment for plant and equipment



(1,583)



-

Net cash used in investing activities



(30,465)



(154,820)















CASH FLOWS FROM FINANCING ACTIVITIES:







 (Increase) in restricted cash



(2,848,766)



(1,328,323)

 Proceeds from short-term bank loans



41,784,077



57,482,746

 Repayments of short-term bank loans



(44,474,787)



(51,602,914)

 Repayments of long-term bank loans



(158,278)



-

 Proceeds from notes payable-bank acceptance notes



59,354,226



34,833,953

 Repayment of notes payable-bank acceptance notes



(40,677,430)



(32,730,957)

 Repurchase of common shares



(87,733)



-

 IPO compensation



-



440,955

Net cash provided by financing activities



12,891,309



7,095,460








INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



(125,977)



(6,747,106)

 Effect of exchange rate changes on cash



658,425



1,584,415

 Cash and cash equivalents at beginning of period



1,568,261



12,322,982

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

2,100,709


$

7,160,291








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







 Income taxes paid


$

280,278


$

2,424,113

 Interest paid


$

2,778,438


$

2,177,824

Non-cash transactions:







Appropriation to statutory reserve


$

155,297


$

1,173,410















CASH FLOWS FROM OPERATING ACTIVITIES:







 Net income


$

854,481


$

2,272,421

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







 Depreciation and amortization



361,743



678,860

 Share-based compensation expense



26,618



26,618

Changes in operating assets and liabilities:







(Increase) Decrease In:







 Accounts receivable



9,404,698



(17,262,055)

 Inventories



2,555,970



(3,870,017)

 Advance to suppliers



(12,743,803)



23,912,632

 Other current assets



2,766,985



(307,780)

 Notes receivable - bank acceptance notes



15,270



-

 Account receivable from related party



(513,817)



(1,025,603)

Increase (Decrease) In:







 Accounts payable



54,347



4,103,291

 Customer deposits



257,450



(5,365,525)

 Income tax payable



(3,057)



(331,398)

 Other payables and accrued expenses



86,437



(161,436)

 Due to related party



(316,741)



2,811,709

Net cash provided by operating activities



2,806,581



5,481,717








CASH FLOWS FROM INVESTING ACTIVITIES:







 Purchases of plant and equipment



(486)



(27,360)

Net cash used in investing activities



(486)



(27,360)















CASH FLOWS FROM FINANCING ACTIVITIES:







 (Increase) in restricted cash



(5,500,566)



(1,526,634)

 Proceeds from short-term bank loans



9,317,286



18,497,612

 Repayments of short-term bank loans



(15,017,994)



(23,642,600)

 Proceeds from notes payable-bank acceptance notes



19,443,550



8,843,854

 Repayment of notes payable-bank acceptance notes



(10,744,423)



(6,716,861)

 Repurchase of common shares



(18,702)



-

Net cash used in financing activities



(2,520,849)



(4,544,629)








INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



285,246



909,728

 Effect of exchange rate changes on cash



(281,630)



485,796

 Cash and cash equivalents at beginning of period



2,097,093



5,764,767

CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

2,100,709


$

7,160,291








SUPPLEMENTARY CASH FLOW INFORMATION







Cash paid during the periods:







 Income taxes paid


$

159,038


$

707,589

 Interest paid


$

928,937


$

841,232

Non-cash transactions:







Appropriation to statutory reserve


$

77,102


$

230,030

 

SOURCE Ossen Innovation Co., Ltd.



RELATED LINKS
http://www.osseninnovation.com
http://www.media-server.com/m/p/xamj5r5g
http://www.mz-ir.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.