Ossen Innovation Announces First Quarter 2014 Financial Results To Host Conference call at 8:30 am ET on June 30, 2014 PR Newswire SHANGHAI, June 27, 2014 SHANGHAI, June 27, 2014 /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, 2014. "I am pleased with Ossen's significant increase in revenue during this quarter," said Dr. Liang Tang, Chairman of Ossen Innovation. "We experienced year over year demand growth for our higher quality and more durable rare earth coated products. Although our margin was impacted by price competition, I am pleased to announce the addition of several new customers who placed large orders in the first quarter of 2014. We are striving to add more customers throughout the year, who continue to be drawn to our products' superior performance, durability and cost effectiveness, compared to our competitors," concluded Dr. Tang. Financial Summary (in millions ex- EPS) Q1 2014 Q1 2013 Chg. Revenue $28.0 $14.6 +92% Gross Profit $2.6 $1.7 +56% Net Income* $0.5 $0.1 +550% EPS $0.02 $0.004 +400% Shares Outstanding 19.9 19.9 0% *Net income attributable to Ossen Innovation Co., Ltd. First Quarter Ended March 31, 2014 Financial Results Revenue for the three months ended March 31, 2014 was $28.0 million, up 92% from the same period a year ago. Sales of coated pre-stressed steel materials, including rare earth and zinc coated products, were approximately $26.5 million, up 105.4% compared to approximately $12.9 million in the first quarter of 2013. Sales of plain surface PC strands were $1.5 million for the three months ended March 31, 2014, a decrease of $0.2 million compared to the prior year. The overall increase in revenue was primarily due to increased demand because of our ability to use lower grade raw material for rare earth coated steel products, enabling us to compete on price, as well as the addition of several new customers. The decrease in sales of plain surface products was due to the Company's strategy to focus more on the sales of rare earth coated products. Gross profit was $2.6 million, a 56% increase from $1.7 million in the year ago period. Gross margin was 9.4% in the first quarter of 2014, down from 11.6% in the first quarter of 2013. Gross margin was lower primarily due to increased price competition and lower unit pricing of its coated products in the first quarter of 2014, in order to attract new customers. Selling expenses increased by 146% to $0.1 million due to an increase in sales. General and administrative expenses increased 122% to $1.3 million, primarily due to increased R&D expenses. Operating income was approximately $1.2 million, an increase of 14.4% from the same period a year ago. Net income attributable to Ossen Innovation Co., Ltd. was $0.5 million in the first quarter of 2014 compared to $0.1 million in the year-ago period. Earnings per share were $0.02 versus $0.00 a year ago. The weighted average diluted shares outstanding were 19.9 million, unchanged from the year-ago period. Balance Sheet and Cash Flows Ossen had approximately $26.4 millionof cash and restricted cash as ofMarch 31, 2014compared to$32.9 millionatDecember 31, 2013. Total accounts receivable on March 31, 2014 decreased to $44.2 million from $48.2 million on December 31, 2013. The average accounts receivable days sales outstanding were 142 days for the first quarter of 2014 compared to 152 days for 2013. This decrease was primarily due to improved accounts receivable collection times and increased revenue in the first quarter.The balance of prepayments to suppliers of raw materials was $54.4 million as of March 31, 2014, an increase of $3.8 million compared with December 31, 2013. The increase was mainly due to prepayment for raw materials due to an anticipated increase in future sales. Inventories increased from $18.8 million at December 31, 2013 to $33.9 million at March 31, 2014, primarily due to an increase in raw materials for coated products. Total working capital was $87.1 million at March 31, 2014. The Company experienced cash outflows from operations of $1.1 million for the three months ended March 31, 2014 as compared to positive cash flows from operations of $9.1 for the same period of 2013. The primary reasons for the cash outflows from operations were an increase in inventories and advances to suppliers, partially offset by an increase in net income and a decrease in accounts receivable. Cash flow used in financing activities was $0.1 million for the three months ended March 31, 2014 as compared to cash flow used in financing activities of $7.8 million for the same period of 2013. The primary reasons for the decrease in cash used in financing activities was a decrease in the repayment of short-term bank loans and an increase in proceeds from short-term bank loans. Business Updates and Outlook On June 16, China's central bank made a targeted cut in the portion of deposits that banks need to keep on reserve. It trimmed the rate by half a percentage point for banks that lend to the rural sector and smaller companies. It is consistent with the Chinese central bank's objective of avoiding big stimulus that had been used in the past. We believe it is a positive signal in support of the economy and we expect that infrastructure spending will be selectively targeted at developing regions in Central and Western China. The CPC Committee Political Bureau held a meeting on April 25 and discussed the current Chinese economic situation and development. The meeting announced that the government will accelerate the development of railroad in Central and Western China. In addition, currently a number of Development and Reform Commission departments in Western provinces are studying a number of new high speed rail projects, including high speed rail projects from Guiyang to Zhengzhou, from Guiyang to Nanning, from Lanzhou to Yinchuan, from Lanzhou to Xi'an, and from Lanzhou to Taiyuan. We expect these projects should create additional bidding opportunities for us if they are successfully launched by the government. We note several positive developments in the first part of 2014. Specifically: oIn February 2014, Ossen was awarded the national title of 'outstanding foreign-invested enterprise.' This prestigious recognition is awarded by the China Association of Enterprises with Foreign Investment, a division of the Ministry of Commerce of the PRC. Separately, Ossen's two new products, 15.24 mm 1860 MPa coated steel strand and 7.0 mm 1670 MPa high performance zinc coated steel wire, received key new products identification from the Jiangxi Provincial Department of Science and Technology. oIn March 2014, we announced that the Company's Jiujiang subsidiary, Ossen (Jiujiang) Steel Wire & Cable Co., Ltd., was recently honored as an 'Innovative Enterprise' in Jiangxi province. This recognition is awarded by the Jiangxi provincial government. In addition, Ossen (Jiujiang) Steel Wire & Cable Co., Ltd. was recognized as a 'First Class Export Enterprise' in Jiangxi province by the Jiangxi government agency. oIn June 2014, we received new sales contracts to supply our coated steel wire for cables used for the construction of five bridges in South Korea, including the Saecheonnyeon bridge, Jangja bridge, Bubal bridge, Daedeok 2nd bridge and Gujeuk bridge. Product delivery is expected in June 2014. oIn June 2014, Ossen (Jiujiang) Steel Wire & Cable Co., Ltd. applied for Major Scientific and Technological Innovation Title in Jiujiang City for the year 2014. It is to develop 5mm series zinc-aluminum rare earth coated bridge cables. Currently Science and Technology Bureau of Jiujiang City has recommended this project to Science and Technology Department of Jiangxi province. If this project is recognized as Major Scientific and Technological Innovation by the Science and Technology Department of Jiangxi province, Ossen (Jiujiang) will receive tax incentives and subsidy from the government. 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 2014 Conference Call" or be prepared to utilize the conference ID. Conference Call Ossen Innovation First Quarter 2014 Conference Call Date: Monday, June 30, 2014 Time: 8:30 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: 64623766 Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through July 8, 2014. To listen, please call +1-855-452-5696 within the United States or +1-646-254-3697 if calling internationally. Utilize the pass code 64623766 for the replay. This call is being webcast and can be accessed by clicking on this link:http://www.media-server.com/m/p/rxairs2g 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: firstname.lastname@example.org Phone: +86 (21) 6888-8886 Web: www.osseninnovation.com Investor Relations FCC Group LLC Phone: +1-347-850-7098 Email: email@example.com OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2014 2013 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 762,242 $ 1,139,450 Restricted cash 25,683,669 31,783,670 Notes receivable – bank acceptance notes 4,867,601 2,421,581 Accounts receivable, net of allowance for doubtful accounts of $1,251,115 and $1,336,177 at March 31, 2014 and 44,208,748 48,200,076 December 31,2013, respectively Inventories 33,863,234 18,750,770 Advance to suppliers 54,426,353 50,614,815 Other current assets 2,633,153 3,447,886 Notes receivable from related party – bank - 12,915,099 acceptance notes Total Current Assets 166,445,000 169,273,347 Property, plant and equipment, net 8,141,594 8,458,121 Land use rights, net 4,294,538 4,297,849 TOTAL ASSETS $ 178,881,132 $ 182,029,317 OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2014 2013 (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable – bank acceptance notes $ 43,459,566 $ 50,990,427 Short-term bank loans 29,043,354 27,283,147 Accounts payable 347,889 503,944 Customer deposits 4,970,260 2,908,271 Income tax payable 409,198 232,541 Other payables and accrued expenses 937,303 1,549,748 Due to related party 95,633 16,911 Due to shareholder 100,000 50,000 Total Current Liabilities 79,363,203 83,534,989 TOTAL LIABILITIES 79,363,203 83,534,989 EQUITY Shareholders' Equity Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,901,959 shares 200,000 200,000 outstanding as of March 31, 2014 and December 31, 2013, respectively Additional paid-in capital 33,971,455 33,971,455 Statutory reserve 4,680,101 4,615,699 Retained earnings 41,936,309 41,518,259 Treasury stock, at cost: 98,041 shares as of March 31, 2014 and (96,608) December 31, 2013, respectively (96,608) Accumulated other comprehensive income 8,141,882 7,646,562 TOTAL SHAREHOLDERS' EQUITY 88,833,139 87,855,367 Non-controlling interest 10,684,790 10,638,961 TOTAL EQUITY 99,517,929 98,494,328 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 178,881,132 $ 182,029,317 OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, 2014 2013 REVEUNUES $ 28,036,908 $ 14,592,753 COST OF GOODS SOLD 25,392,916 12,900,737 GROSS PROFIT 2,643,992 1,692,016 Selling expenses 108,438 44,075 General and administrative expenses 1,339,531 602,707 Total Operating Expenses 1,447,969 646,782 INCOME FROM OPERATIONS 1,196,023 1,045,234 Financial expenses, net (700,735) (904,173) Other income, net 168,265 44,391 INCOME BEFORE INCOME TAX 663,553 185,452 INCOME TAX (135,272) (85,270) NET INCOME 528,281 100,182 LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING 45,829 26,143 INTEREST NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST 482,452 74,039 OTHER COMPREHENSIVE INCOME Foreign currency translation gain 495,320 510,447 TOTAL OTHER COMPREHENSIVE INCOME 495,320 510,447 COMPREHENSIVE INCOME $ 977,772 $ 584,486 EARNINGS PER ORDINARY SHARE Basic and diluted $ 0.02 $ 0.004 WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING Basic and diluted 19,901,959 19,901,959 OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (Unaudited) Total Ossen Innovation Co., Ltd. Shareholders' Equity Ordinary Shares Additional AccumulatedOther Non Treasury Stock Paid-in Comprehensive Statutory Retained Controlling Total $0.01 Par Value Capital Income Reserve Earnings Interest Shares Amount Shares Amount Balance at December 31, 2013 20,000,000 200,000 (98,041) (96,608) 33,971,455 7,646,562 4,615,699 41,518,259 10,638,961 98,494,328 Netincome - - - - - - - 482,452 45,829 528,281 Transfertostatutoryreserve - - - - - - 64,402 (64,402) - - Foreign currency translation adjustment - - - 495,320 - - 495,320 - - - Balance atMarch 31, 2014 20,000,000 $ 200,000 (98,041) $ (96,608) $ 33,971,455 $ 8,141,882 $ 4,680,101 $ 41,936,309 $ 10,684,790 $ 99,517,929 OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 528,281 $ 100,182 Adjustments to reconcile net income to net cash provided by / (used in) operating activities: Depreciation and amortization 388,213 384,490 Share-based compensation expense - Changes in operating assets and liabilities: (Increase) Decrease In: Accounts receivable 3,991,328 7,598,791 Inventories (15,112,464) (6,346,785) Advance to suppliers (3,811,538) 5,061,431 Other current assets 814,733 39,668 Notes receivable - bank acceptance notes (2,446,020) 394,079 Notes receivable from related party - bank 12,915,099 1,830,208 acceptance notes Accounts receivable from related party - (2,625,082) Increase (Decrease) In: Accounts payable (156,056) 25,822 Customer deposits 2,061,988 3,259,299 Income tax payable 176,656 (337,907) Other payables and accrued expenses (612,444) (297,020) Due to related party 78,722 - Due to shareholder 50,000 - Net cash provided by/(used in) operating (1,133,502) 9,087,176 activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and equipment (1,150) (12,671) Net cash used in investing activities (1,150) (12,671) OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2014 2013 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in restricted cash 6,100,001 6,561,343 Proceeds from short-term bank loans 8,336,466 6,049,607 Repayments of short-term bank loans (6,701,865) (12,177,826) Proceeds from notes payable-bank acceptance 15,365,252 14,487,216 notes Repayment of notes payable-bank acceptance (23,211,338) (22,765,625) notes Net cash used in financing activities (111,484) (7,845,285) INCREASE/(DECREASE) IN CASH AND CASH (1,246,136) 1,229,220 EQUIVALENTS Effect of exchange rate changes on cash 868,927 879,543 Cash and cash equivalents at beginning of 1,139,451 1,996,764 period CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 762,242 $ 4,105,527 SUPPLEMENTARY CASH FLOW INFORMATION Cash paid during the periods: Income taxes paid $ 241,679 $ 389,179 Interest paid $ 572,627 $ 899,973 Non-cash transactions: Appropriation to statutory reserve $ 64,402 $ 45,706 SOURCE Ossen Innovation Co., Ltd. Website: http://www.media-server.com/m/p/rxairs2g Website: http://www.osseninnovation.com
Ossen Innovation Announces First Quarter 2014 Financial Results
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