SHANGHAI, Aug. 27, 2019 /PRNewswire/ -- 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
the six 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,
2019 Financial 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 decreased by $4.9
million, or 7.1%, to $65.1 million from $70.0 million for the same period of last year.
This decrease was mainly attributable to decrease in rare
earth coated products, partially offset by increase in 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 profit increased by $0.1 million, or 2.0%, to $10.1 million for the six months ended
June 30, 2019 from $10.0 million for the same period of last
year. Gross margin increased by 1.3 percentage
points to 15.6% for the six months ended June 30, 2019 from 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,
2019, 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, 2019,
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, 2019 from $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
decreased by $0.4 million,
or 13.8%, to $2.7 million for
the six months ended June 30, 2019
from $3.1 million for the same
period of last year.
As a result, total operating expenses decreased by
$0.5 million, or 14.5%, to
$2.8 million for the six months ended
June 30, 2019 from $3.3 million for the same period of last
year.
Operating income increased by $0.6
million, or 8.9%, to $7.3 million for the six months ended
June 30, 2019 from $6.7 million for the same period of last year.
The increase in operating income was primarily
attributable to increase in gross profit and decrease in
SG&A expenses. Operating margin was 11.2% for the six months
ended June 30, 2019, compared to 9.6%
for the same period of last year.
Net income increased by $1.0 million, or 19.4%, to $6.2 million for the six months ended
June 30, 2019 from $5.2 million for the same period of last
year.
After deducting net income attributable to non-controlling
interest, net income attributable to Ossen Innovation increased by
$0.9 million, or 18.7%, to
$5.6 million for the six months ended
June 30, 2019 from $4.8 million for the same period of last
year. Earnings per share, both basic and diluted, were $0.29 for the six months ended June 30, 2018, compared to $0.24 for the same period of last
year. Basic and diluted earnings per ADS were $0.87 for the six months ended June 30, 2019, compared with $0.72 for the same period of 2018.
Balance Sheet and Cash Flows
As of June 30, 2019, the Company
had cash and restricted cash of $12.8 million, compared to $7.5
million at December 31, 2018. Accounts receivable were
$55.7 million as of June 30, 2019, compared to $60.6 million at December 31, 2018. The average days of sales of
outstanding (DSO) were 161 days for the six months ended
June 30, 2019, compared to
150 days 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 $101.1 million as of June 30, 2019, compared to $70.0 million at December 31, 2018, 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, 2019,
compared to $17.2 million at the end
of 2018. Total working capital was $119.6 million as of June 30, 2019, compared to $113.1 million at December 31, 2018.
Net cash used in operating activities was $13.5 million for the six months ended
June 30, 2019, compared to net cash
used in operating activities of $2.7 million 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, 2019,
compared to $67,419 for the same
period of last year. Net cash provided by financing activities was
$18.8 million for the six months
ended June 30, 2019, 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, 2019, the Company
announced a loan of HK$20 million (approximately
US$2.6 million)
from Pujiang. This loan is a
portion of the proceeds received by Pujiang from its
initial public offering in Hong 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
million to pay off the balance due to Dr. Liang Tang, the
chairman of Ossen Innovation and approximately $0.9
million for general corporate purposes.
On June 26, 2019, 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 of RMB
129.5 million (approximately US$18.9 million) from
the Bank 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.
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 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, 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.
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 31,2018,
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,
net
|
|
3,381,805
|
|
|
3,422,365
|
Deferred tax
assets
|
|
153,321
|
|
|
159,136
|
TOTAL
ASSETS
|
$
|
186,746,545
|
|
$
|
162,245,911
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
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
|
|
60,442,779
|
|
|
41,866,381
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Ordinary shares,
$0.01 par value: 100,000,000 shares authorized,
20,000,000 shares issued; 19,791,110 shares outstanding as of
June 30, 2019 and December 31, 2018, respectively
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
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
|
$
|
186,746,545
|
|
$
|
162,245,911
|
OSSEN INNOVATION
CO., 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
|
|
54,957,652
|
|
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
|
|
3,108,386
|
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)
|
|
(1,705,918)
|
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
|
$
|
19,791,110
|
$
|
19,791,110
|
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
|
|
Accumulated
Other
Comprehensive
|
|
Statutory
|
|
Retained
|
|
Non Controlling
|
|
|
|
Shares
|
|
|
Amount
|
|
Shares
|
|
|
Amount
|
|
Capital
|
|
Income
|
|
Reserve
|
|
Earnings
|
|
Interest
|
|
Total
|
Balance at
December 31, 2018
|
20,000,000
|
|
|
200,000
|
|
(208,890)
|
|
|
(192,153)
|
|
|
33,971,455
|
|
|
(4,057,326)
|
|
|
7,764,813
|
|
|
68,959,065
|
|
|
13,733,676
|
|
|
120,379,530
|
Net income
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,643,996
|
|
|
532,395
|
|
|
6,176,391
|
Transfer to statutory
reserve
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
645,941
|
|
|
(645,941)
|
|
|
-
|
|
|
-
|
Foreign currency
translation
adjustment
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(252,155)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(252,155)
|
Balance at June
30, 2019
|
20,000,000
|
|
$
|
200,000
|
|
(208,890)
|
|
$
|
(192,153)
|
|
$
|
33,971,455
|
|
$
|
(4,309,481)
|
|
$
|
8,410,754
|
|
$
|
73,957,120
|
|
$
|
14,266,071
|
|
$
|
126,303,766
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
Six
Months Ended June
30,
|
|
|
|
2019
|
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
income
|
|
$
|
6,176,391
|
|
$
|
5,171,220
|
Adjustments to
reconcile net income to net cash provided by/
(used in) operating activities:
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
309,983
|
|
|
339,233
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
4,897,473
|
|
|
(25,124,759)
|
Inventories
|
|
|
7,599,204
|
|
|
(181,351)
|
Advance to
suppliers
|
|
|
(31,704,863)
|
|
|
15,083,682
|
Other current
assets
|
|
|
3,043
|
|
|
(40,627)
|
Accounts
receivable - related parties
|
|
|
(801,511)
|
|
|
(2,713,815)
|
Deferred tax
assets
|
|
|
5,814
|
|
|
(38,438)
|
Increase
(Decrease) In:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
2,879,547
|
|
|
3,027,148
|
Customer
deposits
|
|
|
353,627
|
|
|
(35,567)
|
Income tax
payable
|
|
|
(277,676)
|
|
|
211,916
|
Other payables
and accrued expenses
|
|
|
(99,840)
|
|
|
133,318
|
Customer
deposits - related parties
|
|
|
(3,740,404)
|
|
|
1,430,728
|
Due to related
parties
|
|
|
2,559,998
|
|
|
-
|
Due to
shareholder
|
|
|
(1,695,259)
|
|
|
5,000
|
Net cash used in
operating activities
|
|
|
(13,534,473)
|
|
|
(2,732,312)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
|
(74,216)
|
|
|
(67,419)
|
Net cash used in
investing activities
|
|
|
(74,216)
|
|
|
(67,419)
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
Six
Months Ended June
30,
|
|
|
|
2019
|
|
|
2018
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from
short-term bank loans
|
|
|
28,495,089
|
|
|
10,467,990
|
Repayments of
short-term bank loans
|
|
|
(8,489,469)
|
|
|
(4,743,652)
|
Proceeds from
notes payable-bank acceptance notes
|
|
|
1,476,429
|
|
|
2,833,441
|
Repayment of
notes payable-bank acceptance notes
|
|
|
(2,657,573)
|
|
|
(1,574,134)
|
Net cash provided
by financing activities
|
|
|
18,824,476
|
|
|
6,983,645
|
|
|
|
|
|
|
|
INCREASE
(DECREASE) IN CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH
|
|
|
5,215,785
|
|
|
4,183,914
|
Effect of
exchange rate changes on cash, cash equivalents, and
restricted cash
|
|
|
(485,440)
|
|
|
(2,306,875)
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
8,098,052
|
|
|
8,143,153
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
AT END OF PERIOD
|
|
$
|
12,828,397
|
|
$
|
10,020,192
|
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW INFORMATION
|
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
|
1,102,556
|
|
$
|
575,057
|
Interest
paid
|
|
$
|
735,675
|
|
$
|
648,484
|
Non-cash
transactions:
|
|
|
|
|
|
|
Appropriation to
statutory reserve
|
|
$
|
645,941
|
|
$
|
486,878
|
View original
content:http://www.prnewswire.com/news-releases/ossen-innovation-announces-unaudited-financial-results-for-the-six-months-ended-june-30-2019-300906842.html
SOURCE Ossen Innovation Co., Ltd.