Ossen Innovation Announces Third Quarter 2012 Financial Results

       Ossen Innovation Announces Third Quarter 2012 Financial Results

PR Newswire

SHANGHAI, Nov. 29, 2012

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
                                United States: +1-866-519-4004
International Toll Free:        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,      40,548,065       48,049,722
2012 and
  December 31,2011, respectively
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 ;        200,000           200,000
20,000,000
  shares issued and 20,000,000 shares
outstanding as
  of December 31, 2011, respectively
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                                        (87,733)
  of September 30, 2012 and December 31,                          -
2011, respectively
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   FOR THE NINE MONTHS ENDED
                        SEPTEMBER 30,                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             298,231        251,721       633,325       809,683
distribution expenses
General and
administrative          521,602        329,795       2,916,249     1,507,432
expenses
Total Operating         819,833        581,516       3,549,574     2,317,115
Expenses
INCOME FROM             2,104,736      3,635,645     4,182,321     17,755,948
OPERATIONS
Other Income
(Expenses):
Financial expenses,     (1,143,588)    (1,003,853)   (2,915,253)   (2,611,774)
net
Other income, net       49,374         15,006        383,255       85,692
INCOME BEFORE INCOME    1,010,522      2,646,798     1,650,323     15,229,866
TAXES
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         113,215        272,679       251,927       1,594,126
NONCONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE TO OSSEN
INNOVATION CO.,LTD      741,266        1,999,742     1,079,885     11,484,633

AND SUBSIDIARIES
OTHER COMPREHENSIVE
INCOME (EXPENSES)
Foreign currency
translation gain, net   (174,728)      791,458       446,498       2,589,219
of tax
TOTAL OTHER
COMPREHENSIVE INCOME    (174,728)      791,458       446,498       2,589,219
(EXPENSES)
COMPREHENSIVE INCOME    566,538        2,791,200     1,526,383     14,073,852
 

EARNINGS PER ORDINARY $ 0.04         $ 0.10        $ 0.05        $ 0.57
SHARE

Basic and diluted
WEIGHTED AVERAGE
ORDINARY SHARES
 OUTSTANDING          $ 19,919,613   $ 20,000,000  $ 19,954,867  $ 20,000,000

Basic and diluted

 

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        -               3,024,895
   acceptance notes
 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      59,354,226      34,833,953
notes
 Repayment of notes payable-bank acceptance       (40,677,430)    (32,730,957)
notes
 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              (125,977)       (6,747,106)
EQUIVALENTS
 Effect of exchange rate changes on cash          658,425         1,584,415
 Cash and cash equivalents at beginning of        1,568,261       12,322,982
period
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      19,443,550      8,843,854
notes
 Repayment of notes payable-bank acceptance       (10,744,423)    (6,716,861)
notes
 Repurchase of common shares                      (18,702)        -
Net cash used in financing activities             (2,520,849)     (4,544,629)
INCREASE (DECREASE) IN CASH AND CASH              285,246         909,728
EQUIVALENTS
 Effect of exchange rate changes on cash          (281,630)       485,796
 Cash and cash equivalents at beginning of        2,097,093       5,764,767
period
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.

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