Ossen Innovation Announces Second Quarter 2013 Financial Results

       Ossen Innovation Announces Second Quarter 2013 Financial Results

To Host Conference call at 9:00 am ET on September 30, 2013

PR Newswire

SHANGHAI, Sept. 30, 2013

SHANGHAI, Sept. 30, 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 and six
months ended June 30, 2013.

"Demand for steel materials in China continued to be weak in the first half of
2013," said Dr. Liang Tang, Chairman of Ossen Innovation. "During the first
half of 2013, the Chinese government continued its prudent monetary policy and
there was a temporary shortage of liquidity in the China inter-bank market in
the late second quarter of 2013. Despite a challenging environment, Ossen
achieved significant reductions in SG&A expenses, and coupled with raw
material price declines, resulted in margin improvement and increased earnings
for the second quarter and six months ended June 30, 2013. Although the
domestic market environment remains challenging, with lower demand for high
strength rare earth coated products, we remain optimistic about the
opportunity in the second half of 2013 and 2014 to bid on other infrastructure
projects and will continue to focus on increasing sales and further
improvements in corporate cost controls," concluded Dr. Tang.

Financial Summary

(in millions ex- EPS) Q2 2013 Q2 2012 Chg.   YTD 2013 YTD 2012 Chg.
Revenue               $24.2   $31.6   -23%   $38.8    $53.9    -28%
Gross Profit          $2.9    $2.2    +30%   $4.6     $4.8     -4%
Net Income*           $0.7    $0.1    +970%  $0.8     $0.3     +130%
EPS                   $0.04   $0.003  +1230% $0.04    $0.02    +100%
Shares Outstanding    19.9    20.0    -0.3%  19.9     20.0     -0.4%

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

Second Quarter 2013 Financial Results

Revenue for the three months ended June 30, 2013 was $24.2 million, down 23%
from the same period a year ago. Sales of coated pre-stressed steel materials,
including rare earth and zinc coated products, were approximately $21.3
million, down 7% compared to approximately $22.9 million in the second quarter
of 2012 due to lower demand of coated pre-stressed steel materials because of
a decrease in large scale bridge projects and increased price competition.

Gross profit increased from $2.2 million to $2.9 million, a 30% year-over-year
increase. Gross margin was 12.1%, up from 7.1% in the second quarter of 2012.
Gross profit and gross margin were higher as a result of lower raw material
prices, partially offset by a decrease in product sales prices.

Selling expenses were reduced by 3% to $0.02 million due to lower sales
commissions. General and administrative expenses were $1.0 million, down 25%
compared to $1.3 million in the second quarter of 2012 due to lower R&D
expenses. Operating income was approximately $1.7 million, an increase of 136%
from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $0.7 million in the
second quarter of 2013 compared to $0.1 million in the year-ago period.
Earnings per share were $0.04 versus $0.003 a year ago. The weighted average
diluted shares outstanding were 19.9 million compared to 20.0 million. 

Six Months Ended June 30, 2013 Financial Results

Revenue for the six months ended June 30, 2013 was $38.8 million, down 28%
from the same period a year ago. Sales of coated pre-stressed steel materials,
including rare earth and zinc coated products, were approximately $34.2
million, down 17% compared to approximately $41.3 million in the same period
of 2012 due to lower demand of coated pre-stressed steel materials because of
a decrease in large scale bridge projects and increased price competition.

Gross profit decreased from $4.8 million to $4.6 million, a 4% year-over-year
decrease. Gross margin was 11.9%, up from 8.9% in the same period of 2012.
Gross margin was higher as a result of lower raw material prices and due to
more coated products sold as a percentage of total sales in 2013 compared to
the prior year period, partially offset by a decrease in product sales prices.

Selling expenses were reduced by 16% to $0.03 million due to lower sales
commissions. General and administrative expenses were $1.6 million, down 35%
compared to $2.4 million in the same period of 2012 due to lower audit fees
and R&D expenses. Operating income was approximately $2.8 million, an increase
of 33% from the same period a year ago.

Net income attributable to Ossen Innovation Co., Ltd. was $0.8 million in the
six months ended June 30, 2013 compared to $0.3 million in the year-ago
period. Earnings per share were $0.04 versus $0.02 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 $33.5 millionof cash and restricted cash as ofJune
30, 2013compared to$27.4 millionatDecember 31, 2012. Total accounts
receivable on June 30, 2013 increased to $49.8 million from $45.7 million on
December 31, 2012. The average accounts receivable days sales outstanding were
164 days in the second quarter of 2013 compared to 145 days in the second
quarter of 2012. The balance of prepayments to suppliers of raw materials was
$72.8 million as of June 30, 2013, a decrease of $5.2 million compared with
December 31, 2012. The decrease was mainly due to the Company receiving
delivery of raw materials from several major suppliers during the first half
of 2013. Accordingly, inventories increased from $9.8 million at December 31,
2012 to $15.2 million at June 30, 2013. Total working capital was $74.0
million at June 30, 2013. The balance due to related parties was $1.6 million
as of June 30, 2013, and represents a payable to Shanghai Zheng Fang Xing, a
supplier of the Company, for the purchases of raw materials.

The Company generated positive cash flows from operations of $12.4 million in
the six months ended June 30, 2013 as compared to $15.8 million of outflows in
the same period of 2012. The primary reason for the increase in cash generated
in operations was an increase in accounts payable, an increase in customer
deposits, and a decrease in prepayments to suppliers during the first and
second quarters of 2013, which was partially offset by higher inventories and
accounts receivable.

Cash flow used by financing activities was $14.9 million in the six months
ended June 30, 2013 as compared to cash flow provided by financing activities
of $15.4 million in the same period of 2012. The primary reason was an
increase in repayment of short-term bank loans, an increase in restricted cash
and a decrease in proceeds from short-term bank loans due to the Chinese
government's prudent monetary policy and a temporary shortage of liquidity in
Chinese inter-bank market in June 2013.

Business Updates and Outlook

Ossen expects that China will still depend on investment to stimulate its
economy. This time it will probably not be a nationwide stimulus package but
will likely focus on injecting capital into developing regions like central or
western China and will be mainly be for infrastructure development such as
highways and railroads, which could create business opportunities for OSN.
There are also signs that local governments will continue to invest in
infrastructure and it appears that the Chinese central government will
encourage private investment to enter infrastructure building.

For the second half of 2013, Ossen expects to bid on bridge projects in
Jiangxi province and on bridge and highway projects in Guangdong province, all
of which need the Company's plain surface products. In addition, Ossen is one
of three companies to enter the final bidding process for a major bridge
project in Zhejiang province that will need both plain surface products and
rare earth coated products.

With the focus on the developing regions by the new political administration,
combined with several newly launched infrastructure projects on which Ossen
plans to bid, the Company expects Q3 2013 sales will be improved compared to
the first two quarters of 2013. Furthermore,the managementcurrently
anticipatesOssen's 2014 financial results to improve significantly as
compared to 2013, provided that the industry is not impeded by the problemsit
encountered this past year, including government regulation and lack of
liquidity among lending institutions.

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

Conference Call                 Ossen Innovation Second Quarter 2013
                                Conference Call
Date:                           Monday, September 30, 2013
Time:                           9:00 am Eastern Time, US
Conference Line Dial-In (U.S.): +1-845-675-0437
                                United States: +1-866-519-4004
International Toll Free:        China, Domestic Mobile: 4006208038
                                China, Domestic: 8008190121
Conference ID:                  70652577

Please dial in at least 10 minutes before the call to ensure timely
participation. A playback will be available through October 8, 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 70652577 for
the replay.

This call is being webcast and can be accessed by clicking on this link:
http://www.media-server.com/m/p/235ug52a

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, as
amended. 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

FCC Group LLC

Phone: +1-347-850-7098

Email: ir@ossencorp.com



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)


                                                   June 30,       December 31,
                                                   2013           2012
                                                   (Unaudited)
ASSETS
Current Assets
Cash and cash equivalents                        $ 2,733,700    $ 1,996,764
Restricted cash                                    30,720,361     25,407,499
Notes receivable – bank acceptance notes           -              394,079
Accounts receivable, net of allowance for
doubtful accounts
 of $1,287,695 and $1,277,091 at June 30, 2013    49,803,596     45,734,381
and
 December 31,2012, respectively
Inventories                                        15,229,054     9,807,044
Advance to suppliers                               72,797,704     77,948,496
Other current assets                               1,911,151      1,904,626
Notes receivable from related party – bank         -              1,830,208
acceptance notes
 Total Current Assets                             173,195,566    165,023,097
Property, plant and equipment, net                 9,195,290      9,707,587
Land use rights, net                               4,357,161      4,317,669
Prepayment for plant and equipment                 8,097,529      7,933,361
TOTAL ASSETS                                     $ 194,845,546  $ 186,981,714
                                                   June 30,       December 31,
                                                   2013           2012
                                                   (Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable – bank acceptance notes            $ 46,273,076   $ 36,933,710
Short-term bank loans                              33,467,083     50,679,026
Long term bank loans – current portion             4,530,231      4,438,386
Accounts payable                                   7,103,147      572,305
Customer deposits                                  5,198,709      384,602
Income tax payable                                 156,399        391,353
Other payables and accrued expenses                923,873        805,196
Due to related party                               1,588,938      -
 Total Current Liabilities                        99,241,456     94,204,578
TOTAL LIABILITIES                                  99,241,456     94,204,578
EQUITY
Shareholders' Equity
Ordinary shares, $0.01 par value: 100,000,000
shares
authorized, 20,000,000 shares issued and          200,000        200,000
outstanding as of
June 30, 2013 and December 31, 2012,
respectively
Additional paid-in capital                         33,971,455     33,971,455
Statutory reserve                                  4,305,767      4,179,027
Retained earnings                                  38,963,205     38,311,527
Treasury stock, at cost: 98,041 shares as both     
of June 30, 2013                                                  (96,608)
and December 31, 2012                             (96,608)
Accumulated other comprehensive income             7,932,197      5,999,214
TOTAL SHAREHOLDERS' EQUITY                         85,276,016     82,564,615
Non-controlling interest                           10,328,074     10,212,521
TOTAL EQUITY                                       95,604,090     92,777,136
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 194,845,546  $ 186,981,714

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)


                        FOR THE THREE MONTHS ENDED   FOR THE SIX MONTHS ENDED
                        JUNE 30,                     JUNE 30,
                        2013           2012          2013          2012
REVENUES              $ 24,186,992  $  31,603,237  $ 38,779,745  $ 53,890,525
COST OF GOODS SOLD      21,267,149     29,357,849    34,167,886    49,083,199
GROSS PROFIT            2,919,843      2,245,388     4,611,859     4,807,326
Operating Expenses:
Selling and             236,033        242,733       280,108       335,094
distribution expenses
General and
administrative          956,048        1,269,156     1,558,755     2,394,647
expenses
Total Operating         1,192,081      1,511,889     1,838,863     2,729,741
Expenses
INCOME FROM             1,727,762      733,499       2,772,996     2,077,585
OPERATIONS
Other Income
(Expenses):
Financial expenses,     (826,713)      (838,435)     (1,730,886)   (1,771,665)
net
Other income, net       51,520         313,339       95,911        333,881
INCOME BEFORE INCOME    952,569        208,403       1,138,021     639,801
TAXES
INCOME TAXES            (158,780)      (53,992)      (244,050)     (162,470)
NET INCOME              793,789        154,411       893,971       477,331
LESS: NET INCOME
ATTRIBUTABLE TO
                        89,410         88,571        115,553       138,712
 NONCONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE TO OSSEN
 INNOVATION CO., LTD   704,379        65,840        778,418       338,619

AND SUBSIDIARIES
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation gain,       1,422,536      60,327        1,932,983     621,227

 net of tax
TOTAL OTHER
COMPREHENSIVE           1,422,536      60,327        1,932,983     621,227

INCOME
COMPREHENSIVE INCOME    2,216,915      126,167       2,711,401     959,846


EARNINGS PER ORDINARY $ 0.04        $  0.003       $ 0.04        $ 0.02
SHARE

Basic and diluted
WEIGHTED AVERAGE
ORDINARY SHARES
OUTSTANDING          $ 19,901,959  $  19,957,935  $ 19,901,959  $ 19,972,688

Basic and diluted



OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(Unaudited)


                                                Six Months Ended June 30,
                                                  2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                     $ 893,971       $ 477,331
Adjustments to reconcile net income to net
cash
 provided by/ (used in) operating
activities:
Depreciation and amortization                    769,649         828,846
Share-based compensation expense                 -               52,658
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable                              (4,069,215)     (1,903,041)
Inventories                                      (5,422,010)     2,218,040
Advance to suppliers                             5,150,793       (21,400,236)
Other current assets                             (6,525)         543,227
Notes receivable - bank acceptance notes         394,079         2,933,082
Notes receivable from related party - bank
acceptance                                        1,830,208       -
 notes
Increase (Decrease) In:
Accounts payable                                 6,530,842       196,757
Customer deposits                                4,814,106       (108,515)
Income tax payable                               (234,954)       41,263
Other payables and accrued expenses              118,677         10,445
Due to related party                             1,588,938       316,741
Net cash provided by/(used in) operating          12,358,559      (15,793,402)
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment                 (14,313)        (28,412)
Prepayment for plant and equipment               -               (1,584)
Net cash used in investing activities             (14,313)        (29,996)
                                                Six Months Ended June 30,
                                                  2013            2012
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase)/Decrease in restricted cash           (5,312,862)     2,651,800
Proceeds from short-term bank loans              14,550,667      32,466,791
Repayments of short-term bank loans              (32,627,081)    (29,456,793)
Repayments of long-term bank loans               -               (158,376)
Proceeds from notes payable-bank acceptance      45,806,173      39,910,676
notes
Repayment of notes payable-bank acceptance       (37,317,616)    (29,933,007)
notes
Repurchase of common shares                      -               (69,031)
Net cash provided by/(used in) financing          (14,900,719)    15,412,060
activities
DECREASE IN CASH AND CASH EQUIVALENTS             (2,556,473)     (411,338)
Effect of exchange rate changes on cash          3,293,409       940,170
Cash and cash equivalents at beginning of        1,996,764       1,568,261
period
CASH AND CASH EQUIVALENTS AT END OF PERIOD      $ 2,733,700     $ 2,097,093
SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid                              $ 482,301       $ 121,240
Interest paid                                  $ 1,799,554     $ 1,849,501
Non-cash transactions:
Appropriation to statutory reserve              $ 126,740       $ 78,195

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(Unaudited)


                                                Three Months Ended June 30,
                                                  2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                     $ 793,789       $ 154,410
Adjustments to reconcile net income to net
cash
 provided by/ (used in) operating
activities:
Depreciation and amortization                    385,159         389,354
Share-based compensation expense                 -               26,329
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable                              (11,668,005)    210,226
Inventories                                      924,775         112,777
Advance to suppliers                             89,361          (8,983,615)
Other current assets                             (46,193)        540,995
Notes receivable - bank acceptance notes         -               (7,918,534)
Account receivable from related party            2,625,082       -
Increase (Decrease) In:
Accounts payable                                 6,505,020       (39,272)
Customer deposits                                1,554,806       (49,671)
Income tax payable                               102,953         40,070
Other payables and accrued expenses              415,697         193,564
Due to related party                             1,588,938       (181,266)
Net cash used in operating activities             3,271,382       (15,504,633)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment                 (1,642)         (24,890)
Prepayment for plant and equipment               -               (1,584)
Net cash used in investing activities             (1,642)         (26,474)
                                                Three Months Ended June 30,
                                                  2013            2012
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase)/Decrease in restricted cash           (11,874,205)    2,302,373
Proceeds from short-term bank loans              8,501,060       22,243,204
Repayments of short-term bank loans              (20,449,255)    (14,082,532)
Proceeds from notes payable-bank acceptance      31,318,956      25,803,397
notes
Repayment of notes payable-bank acceptance       (14,551,991)    (21,056,517)
notes
Repurchase of common shares                      -               (55,316)
Net cash provided by/(used in) financing          (7,055,435)     15,154,609
activities
DECREASE IN CASH AND CASH EQUIVALENTS             (3,785,695)     (376,498)
Effect of exchange rate changes on cash          2,413,868       90,504
Cash and cash equivalents at beginning of        4,105,527       2,383,087
period
CASH AND CASH EQUIVALENTS AT END OF PERIOD      $ 2,733,700     $ 2,097,093
SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid                              $ 93,121        $ 13,926
Interest paid                                  $ 899,581       $ 911,872
Non-cash transactions:
Appropriation to statutory reserve              $ 81,034        $ 21,738



SOURCE Ossen Innovation Co., Ltd.

Website: http://www.osseninnovation.com
 
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