Ossen Innovation Announces Unaudited Financial Results for the Six Months Ended June 30, 2019
SHANGHAI,Aug. 27,2019 -- 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 thesix months ended June 30,2019.
"Because of the lowest Chinese GDP growth rate in recent years during the first half of 2019,our top line decreased slightly. Nonetheless,net income increased by 18.7% as we focused on higher margin products," stated Dr. Liang Tang,Chairman of Ossen Innovation. "Looking ahead,we expect to see an increase in investment in infrastructure construction across China. The successful IPO on the Hong Kong Stock Exchange of Pujiang International Group ('Pujiang'),a Cayman Islands company that indirectly owns 65.9% of the Company's issued and outstanding ordinary shares,has provided an additional resource of capital for us and is expected to enable us to capture additional opportunities to win new infrastructure projects."
Six Months Ended June 30,2019Financial Results
For the Six Months Ended June 30,
($ millions,except per share data)
2019
2018
% Change
Revenues
$65.1
$70.0
-7.1%
Gross profit
$10.1
$10.0
2.0%
Gross margin
15.6%
14.3%
+1.2%
Operating income
$7.3
$6.7
8.9%
Operating margin
11.2%
9.6%
+1.6%
Net income attributable to Ossen Innovation
$5.6
$4.8
18.7%
EPS
$0.29
$0.24
20.8%
For the six months ended June 30,2019,revenues decreasedby $4.9 million,or 7.1%,to $65.1million from $70.0 million for the same period of last year. This decreasewas mainly attributable to decreasein rare earth coated products,partially offset by increasein zinc coated products and plain surface and other products. The sales of rare earth coated PC steel materials were $23.1 million and accounted for 35.6% of total sales for the six months ended June 30,2019.Sales of plain surface and other products were $28.0 million for the six months ended June 30,2019. There were no sales of zinc coated products in the period ended June 30,2018 and Sales of zinc coated products were $13.9 million for the six months ended June 30,2019.
Gross profitincreasedby $0.1million,or 2.0%,to $10.1million for the six months ended June 30,2019 from $10.0million for the same period of last year. Gross margin increasedby 1.3percentage pointsto 15.6% for the six months ended June 30,2019from 14.3% for the same period of last year. Gross margins for rare earth products were 13.4%for the six months ended June 30,compared to 12.6% for the same period of last year. Gross margin for plain surface and other products was 15.5% for the six months ended June 30,compared to 22.9% for the same period of last year. Gross margin for zinc coated PC wires and PC strands was 19.3% for the six months ended June 30,2019.
Selling expenses decreased by $44,862,or 25.5%,to $130,926 for the six months ended June 30,2019from $175,788 for the same period of last year. The decrease was due to less freight expenses,partial offset by higher sales commission. General and administrative expenses decreasedby $0.4million,or 13.8%,to $2.7million for the six months ended June 30,2019 from $3.1million for the same period of last year.
As a result,total operating expenses decreasedby $0.5million,or 14.5%,to $2.8 million for the six months ended June 30,2019from $3.3million for the same period of last year.
Operating income increasedby $0.6 million,or 8.9%,to $7.3million for the six months ended June 30,2019from $6.7 million for the same period of last year. The increasein operatingincome was primarily attributable to increase in gross profitand decreasein SG&A expenses. Operating margin was 11.2% for the six months ended June 30,compared to 9.6% for the same period of last year.
Net income increased by $1.0million,or 19.4%,to $6.2million for the six months ended June 30,2019from $5.2million for the same period of last year.
After deducting net income attributable to non-controlling interest,net income attributable to Ossen Innovation increased by $0.9million,or 18.7%,to $5.6 million for the six months ended June 30,2019 from $4.8million for the same period of last year. Earnings per share,both basic and diluted,were $0.29for the six months ended June 30,2018,compared to $0.24for the same period of last year.Basic and diluted earnings per ADS were $0.87 for the six months ended June 30,compared with $0.72 for the same period of 2018.
Balance Sheet and Cash Flows
As of June 30,the Company had cash and restricted cash of $12.8million,compared to$7.5 millionatDecember 31,2018. Accounts receivable were $55.7million as of June 30,compared to $60.6million at December 31,2018. The average days of sales of outstanding (DSO) were 161 days for the six months ended June 30,compared to 150days for the year of 2018. The increase in average DSO was primarily due to the longer cycle of some of our customers' construction projects. The balance of prepayment to suppliers for raw materials totaled $101.1million as of June 30,compared to $70.0million at December 31,due to the expectation of increasing demand of raw materials in the second half of 2019. The Company had inventories of $9.6 million as of June 30,compared to $17.2 million at the end of 2018. Total working capital was $119.6million as of June 30,compared to $113.1million at December 31,2018.
Net cash used inoperating activities was $13.5 million for the six months ended June 30,compared to net cash used in operating activities of $2.7million for the same period of last year. This was primarily due to the increase in the balance of prepayment to suppliers for raw materials. Net cash used in investing activities was $74,216 for the six months ended June 30,compared to $67,419 for the same period of last year. Net cash provided by financing activities was $18.8million for the six months ended June 30,compared to net cash provided by financing activities of $7.0 million for the same period of last year. This was primarily due to the increase in proceeds from short-term bank loans.
Recent Developments
On May 28,the Company announced a loan ofHK$20 million(approximately US$2.6 million) fromPujiang. This loan is a portion of the proceeds received byPujiangfrom its initial public offering inHong Kong Stock Exchange. The annual interest rate of the loan is 8% and it has a one-year term. The Company used the proceeds of approximately$1.7 millionto pay off the balance due to Dr.Liang Tang,the chairman ofOssen Innovationand approximately$0.9 millionfor general corporate purposes.
On June 26,the Company announced that its subsidiary,Ossen (Jiujiang) Innovation Materials Co.,Ltd.("Ossen Jiujiang"),borrowed funds pursuant to two loans in the aggregate principal amount ofRMB 129.5 million(approximatelyUS$18.9 million) from theBank of Shanghai. Pujiang has provided the guarantees and cash collateral for such loans. The loans carry an annual interest rate of 3.915%. One loan has a term of six months and the other loan a term of one year. The Company anticipates that Ossen Jiujiang will be able to roll over these loans when they become due. Ossen Jiujiang expects to use the proceeds of such loans primarily for planned capital expenditures in the expansion of zinc coated production capacity.
AboutOssen 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.
Forward-Looking 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,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 theSecurities 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.
Wei Hua,Chief Executive Officer
Email: int.tr@ossengroup.com
Phone: +86-21-6888-8886
Investor Relations
GCI IR
Phone: +1-917-207-2173
Email: info@goldenir.com
OSSEN INNOVATION CO.,LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
December 31,
2019
2018
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
7,297,004
$
3,444,421
Restricted cash
5,531,393
4,070,655
Accounts receivable,net of allowance for doubtful accounts of
$891,877 and $939,535 at June 30,2019 and December 31,
respectively
55,689,396
60,586,869
Inventories
9,578,722
17,177,926
Advance to suppliers
101,108,543
69,986,656
Other current assets
23,452
26,496
Accounts receivable - related parties
801,511
-
Total Current Assets
180,030,021
155,293,023
Property,plant and equipment,net
3,181,398
3,371,387
Land use rights,381,805
3,422,365
Deferred tax assets
153,321
159,136
TOTAL ASSETS
$
186,746,545
$
162,245,911
OSSEN INNOVATION CO.,
2019
2018
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable – bank acceptance notes
$
7,569,275
$
8,722,832
Short-term bank loans
33,333,920
13,593,080
Accounts payable
3,169,501
289,954
Customer deposits
637,496
283,869
Income tax payable
953,735
1,231,411
Other payables and accrued expenses
3,880,725
3,980,565
Customer deposits - related parties
1,059,980
4,800,384
Due to shareholder
-
1,695,259
Due to related parties
2,559,998
-
Long-term bank loans – current portion
7,278,149
7,269,027
Total Current Liabilities
60,442,779
41,866,381
TOTAL LIABILITIES
60,381
Shareholders' Equity
Ordinary shares,$0.01 par value: 100,000,000 shares authorized,
20,000 shares issued; 19,791,110 shares outstanding as of
June 30,respectively
200,000
200,000
Additional paid-in capital
33,971,455
33,455
Statutory reserve
8,410,754
7,764,813
Retained earnings
73,957,120
68,959,065
Treasury stock,at cost: 208,890 shares as both of June 30,2019
and December 31,2018
(192,153)
(192,153)
Accumulated other comprehensive income
(4,309,481)
(4,057,326)
TOTAL SHAREHOLDERS' EQUITY
112,037,695
106,645,854
Non-controlling interest
14,266,071
13,733,676
TOTAL EQUITY
126,303,766
120,379,530
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
186,LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For The Six Months Ended June 30,
2019
2018
REVENUES
$
65,078,854
$
69,946,885
COST OF GOODS SOLD
54,652
60,022,694
GROSS PROFIT
10,121,202
9,924,191
Operating Expenses:
Selling and distribution expenses
130,926
175,788
General and administrative expenses
2,678,356
3,386
Total Operating Expenses
2,809,282
3,284,174
INCOME FROM OPERATIONS
7,311,920
6,640,017
Other Income (Expenses):
Financial expenses,net
(731,974)
(705,603)
Other income,net
45,226
147,625
INCOME BEFORE INCOME TAXES
6,625,172
6,082,039
INCOME TAXES
(448,781)
(910,819)
NET INCOME
6,176,391
5,171,220
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
532,394
416,745
NET INCOME ATTRIBUTABLE TO OSSEN
INNOVATION CO.,LTD
AND SUBSIDIARIES
5,643,997
4,754,475
OTHER COMPREHENSIVE INCOME
(LOSS)
Foreign currency translation gain (loss),net of tax
(252,155)
(1,705,918)
TOTAL OTHER COMPREHENSIVE INCOME
(LOSS)
(252,155)
(1,918)
COMPREHENSIVE INCOME (LOSS)
5,391,842
3,048,557
EARNINGS PER ORDINARY SHARE
Basic and diluted
$
0.29
$
0.24
WEIGHTED AVERAGE ORDINARY SHARES
OUTSTANDING
Basic and diluted
$
19,110
$
19,110
OSSEN INNOVATION CO.,LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(Unaudited)
Total Ossen Innovation Co.,Ltd. Shareholders' Equity
Ordinary Shares
$0.01 Par Value
Treasury Stock
Additional
Paid-in
Tags: Banking/Financial Service Machine Tools Metalworking and metallurgy Mining/Metals
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