SHANGHAI, Nov. 17, 2017 /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
second quarter and six months ended June 30,
2017.
Three Months Ended June 30,
2017 Financial Results
|
|
For the Three
Months Ended June 30,
|
($ millions,
except per share data)
|
|
2017
|
|
2016
|
|
%
Change
|
Revenues
|
|
$26.4
|
|
$23.4
|
|
12.8%
|
Gross
profit
|
|
$3.0
|
|
$2.5
|
|
22.3%
|
Gross
margin
|
|
11.4%
|
|
10.5%
|
|
0.9%
|
Operating
income
|
|
$1.8
|
|
$0.9
|
|
96.9%
|
Operating
margin
|
|
6.9%
|
|
4.0%
|
|
3.0%
|
Net income
attributable to Ossen Innovation
|
|
$1.2
|
|
$0.3
|
|
293.6%
|
EPS
|
|
$0.06
|
|
$0.02
|
|
200.0%
|
|
|
|
|
|
|
|
- Revenues increased by 12.8% to $26.4
million, with strengths across all major product
categories.
- Gross profit increased by 22.3% to $3.0
million, driven by increase in revenues as well as
improvement in gross margin which increased by 0.9 percent
point.
- Operating income almost doubled to $1.8
million for the three months ended June 30, 2017 from $0.9
million for the same period of last year, as a combined
result of increase in gross profit and decrease in general and
administrative expenses.
- Net income was $1.2 million, or
$0.06 per basic and diluted share,
for the three months ended June 30,
2017, compared to $0.3
million, or $0.02 per basic
and diluted share, for the same period of last year.
For the three months ended June 30,
2017, revenues increased by $3.0
million, or 12.8%, to $26.4
million from $23.4 million for
the same period of last year. This increase was across all major
product categories. The sales of coated PC steel materials,
including both rare earth and zinc coated products, were
$23.4 million and accounted for 88%
of total sales for the three months ended June 30, 2017. Sales of rare earth coated
products, zinc coated products, and plain surface and other
products were $22.9 million,
$0.4 million, and $3.1 million for the three months ended
June 30, 2017, respectively.
Gross profit increased by $0.5
million, or 22.3%, to $3.0
million for the three months ended June 30, 2017 from $2.5
million for the same period of last year. Gross margin
increased by 0.9 percentage point to 11.4% for the three months
ended June 30, 2017 from 10.5% for
the same period of last year. Gross margins for rare earth and zinc
coated products were 10.2% and 42.4%, respectively, for the three
months ended June 30, 2017, compared
to 12.2% and 32.4%, respectively, for the same period of last year.
Gross margin for plain surface and other products was 15.8% for the
three months ended June 30, 2017,
compared to -6.3% for the same period of last year.
Selling expenses decreased by $0.06
million, or 32.0%, to $0.13
million for the three months ended June 30, 2017 from $0.19
million for the same period of last year. The decrease was
due to lower transportation cost. General and administrative
expenses decreased by $0.3 million,
or 21.8%, to $1.0 million for the
three months ended June 30, 2017 from
$1.3 million for the same period of
last year. As a result, total operating expenses decreased by
$0.4 million, or 23.1%, to
$1.2 million for the three months
ended June 30, 2017 from $1.5 million for the same period of last
year.
Operating income increased by $0.9
million, or 96.9%, to $1.8
million for the three months ended June 30, 2017 from $0.9
million for the same period of last year. The increase in
operation income was primarily attributable to increase in gross
profit as well as decrease in general and administrative expenses
in 2017. Operating margin was 6.9% for the three months ended
June 30, 2017, compared to 4.0% for
the same period of last year.
Net income increased by $1.0
million, or 316.4%, to $1.3
million for the three months ended June 30, 2017 from $0.3
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 293.6%, to
$1.2 million for the three months
ended June 30, 2017 from $0.3 million for the same period of last year.
Earnings per share, both basic and diluted, were $0.06 for the three months ended June 30, 2017, compared to $0.02 for the same period of last year.
Six Months Ended June 30, 2017
Financial Results
|
|
For the Six Months
Ended June 30,
|
($ millions,
except per share data)
|
|
2017
|
|
2016
|
|
%
Change
|
Revenues
|
|
$52.0
|
|
$53.5
|
|
-2.8%
|
Gross
profit
|
|
$4.8
|
|
$5.6
|
|
-14.4%
|
Gross
margin
|
|
9.2%
|
|
10.4%
|
|
-1.2%
|
Operating
income
|
|
$2.3
|
|
$2.5
|
|
-5.1%
|
Operating
margin
|
|
4.5%
|
|
4.6%
|
|
-0.1%
|
Net income
attributable to Ossen Innovation
|
|
$1.2
|
|
$0.8
|
|
60.2%
|
EPS
|
|
$0.06
|
|
$0.04
|
|
50.0%
|
|
|
|
|
|
|
|
For the six months ended June 30,
2017, revenues decreased by $1.5
million, or 2.8%, to $52.0
million from $53.5 million for
the same period of last year. This decrease was mainly attributable
to decrease in plain surfaced and other products and partially
offset by increase in coated PC steel materials. The sales of
coated PC steel materials, including both rare earth and zinc
coated products, were $45.4 million
and accounted for 87% of total sales for the six months ended
June 30, 2017. Sales of rare
earth coated products, zinc coated products, and plain surface and
other products were $44.8 million,
$0.6 million, and $6.6 million for the six months ended
June 30, 2017, respectively.
Gross profit decreased by $0.8
million, or 14.4%, to $4.8
million for the six months ended June
30, 2017 from $5.6 million for
the same period of last year. Gross margin decreased by 1.2
percentage point to 9.2% for the six months ended June 30, 2017 from 10.4% for the same period of
last year. Gross margins for rare earth and zinc coated products
were 7.2% and 44.7%, respectively, for the six months ended
June 30, 2017, compared to 9.2% and
33.0%, respectively, for the same period of last year. Gross margin
for plain surface and other products was 19.4% for the six months
ended June 30, 2017, compared to
11.7% for the same period of last year.
Selling expenses decreased by $0.1
million, or 33.4%, to $0.3
million for the six months ended June
30, 2017 from $0.4 million for
the same period of last year. The decrease was due to lower
transportation cost. General and administrative expenses decreased
by $0.5 million, or 20.0%, to
$2.2 million for the six months ended
June 30, 2017 from $2.7 million for the same period of last year. As
a result, total operating expenses decreased by $0.7 million, or 21.8%, to $2.4 million for the six months ended
June 30, 2017 from $3.1 million for the same period of last
year.
Operating income decreased by $0.1
million, or 5.1%, to $2.3
million for the six months ended June
30, 2017 from $2.5 million for
the same period of last year. The decrease in operation income was
primarily attributable increase in general and administrative
expenses and partially offset by increase in gross profit in 2017.
Operating margin was 4.5% for the six months ended June 30, 2017, compared to 4.6% for the same
period of last year.
Net income increased by $0.5
million, or 55.7%, to $1.4
million for the six months ended June
30, 2017 from $0.9 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
$0.5 million, or 60.2%, to
$1.2 million for the six months ended
June 30, 2017 from $0.8 million for the same period of last year.
Earnings per share, both basic and diluted, were $0.06 for the six months ended June 30, 2017, compared to $0.04 for the same period of last year.
Balance Sheet and Cash Flows
As of June 30, 2017, the Company
had cash and restricted cash of $7.6
million, compared to $6.9
million at December 31, 2016. Notes receivable were $nil
as of June 30, 2017, compared to
$15.3 million at December 31, 2016. Accounts receivable were
$33.4 million as of June 30, 2017, compared to $37.3 million at December
31, 2016. The average days of sales of outstanding (DSO)
were 120 days for the three
months ended June 30, 2017, compared
to 126 days for the year of 2016 as a result of lower average accounts receivable in the
second quarter of 2017. The balance
of prepayment to suppliers for raw materials totaled $70.8 million as of June
30, 2017, compared to $46.7
million at December 31, 2016.
The Company had inventories of $19.4
million as of June 30, 2017,
compared to $26.0 million at the end
of 2016. Total working capital was $105.9
million as of June 30, 2017,
compared to $101.6 million at
December 31, 2016.
Net cash provided by operating activities was $2.1 million for the six months ended
June 30, 2017, compared to
$7.8 million for the same period of
last year. Net cash used in investing activities was nil for the
six months ended June 30, 2017,
compared to $11,473 for the same
period of last year. Net cash used in financing activities was
$3.2 million for the six months ended
June 30, 2017, compared to
$5.1 million for the same period of
last year.
Recent Developments
On July 20, 2017, the Company
announced that it has entered into a Share Exchange
Agreement (the "Exchange Agreement") with America-Asia
Diabetes Research Foundation (the "Foundation"), a California corporation that owns 90.27% of the
equity interests of San MediTech (Huzhou) Co. Ltd. ("San
MediTech"), a China-based medical
device company engaged in the research, development and marketing
of glucose control products, and the shareholders of the Foundation
(the "Selling Shareholders"). Pursuant to the Exchange
Agreement, the Company has agreed to acquire all of the issued and
outstanding equity interests of the Foundation in exchange for up
to 81,243,000 of the Company's ordinary shares (the
"Acquisition").
On September 6, 2017, the Company
announced the final voting results for each of the proposals
considered at the Company's special meeting that was held on
September 5, 2017 (the "Meeting"). At
the Meeting, the Company's shareholders approved the Company's
proposed acquisition of the Foundation and the sale of the
Company's existing business and operations to an affiliate of the
Company's Chairman, Dr. Liang Tang
(collectively, the "Transactions"). A total of 17,333,601 ordinary
shares, representing approximately 87.6% of the Company's issued
and outstanding ordinary shares, were represented at the Meeting.
Dr. Tang abstained from voting all of the 11,850,000 shares he
holds, as previously disclosed by the Company.
On November 7, 2017, San
MediTech's new mobile dynamic continuous glucose monitoring ("CGM")
system has been approved by the China Food and Drug Administration
(the "CFDA"). As previously disclosed, due to the delay of the
CFDA's approval for the new generation product and the expiration
of the old generation products' CFDA license earlier this year, San
MediTech's sales in 2017 had been adversely affected; thus, the
previously agreed earn-out target was impractical. On November 13, 2017, the Company entered into the
second amendment to the Exchange Agreement with the Foundation (the
"Second Amendment"). Pursuant to the Second Amendment, (a) the
revenue target of $6,470,588 was
changed from year 2017 to year 2018, and (b) in the event that
there is a termination of the Exchange Agreement by the Company
pursuant to certain conditions, Howard Gang
Hao and Ken Yiming Hao,
principle shareholders of the Foundation, shall jointly and
severally, (i) transfer to the Company 3,434 ordinary shares of the
Foundation or (ii) pay to the Company a termination fee in cash
equal to the fair market value of 3,434 ordinary shares of the
Foundation but not less than $5,600,000 (the "Sellers Termination Fee"). The
Company intends to file amended proxy and hold another special
shareholders' meeting for shareholders to vote on the Second
Amendment. The transactions have not yet closed as of the date
hereof.
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. Furthermore, there can be no
assurance that the conditions to close the transactions will be
satisfied or waived. 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
Web: www.osseninnovation.com
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
2017
|
|
|
2016
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,163,063
|
|
$
|
217,631
|
Restricted
cash
|
|
5,459,378
|
|
|
6,703,242
|
Notes receivable –
bank acceptance notes
|
|
-
|
|
|
15,280,381
|
Accounts receivable,
net of allowance for doubtful accounts of $910,732 and $985,990 at
June 30, 2017 and December 31,2016, respectively
|
|
33,401,672
|
|
|
37,298,465
|
Inventories
|
|
19,377,322
|
|
|
25,999,182
|
Advance to
suppliers
|
|
70,813,394
|
|
|
46,729,285
|
Other current
assets
|
|
208,090
|
|
|
197,319
|
Total
Current Assets
|
|
131,422,919
|
|
|
132,425,505
|
Property, plant and
equipment, net
|
|
4,202,522
|
|
|
4,447,063
|
Land use rights,
net
|
|
3,609,815
|
|
|
3,571,183
|
TOTAL
ASSETS
|
$
|
139,235,256
|
|
$
|
140,443,752
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes payable – bank
acceptance notes
|
$
|
8,410,305
|
|
$
|
9,586,276
|
Short-term bank
loans
|
|
14,238,499
|
|
|
16,916,535
|
Accounts
payable
|
|
394,033
|
|
|
1,504,863
|
Customer
deposits
|
|
162,820
|
|
|
135,903
|
Income tax
payable
|
|
264,639
|
|
|
594,795
|
Other payables and
accrued expenses
|
|
1,750,098
|
|
|
1,740,474
|
Due to related
party
|
|
-
|
|
|
3,886
|
Due to
shareholder
|
|
347,499
|
|
|
307,499
|
Total
Current Liabilities
|
|
25,567,893
|
|
|
30,790,231
|
Long-term bank
loans
|
|
7,377,460
|
|
|
7,207,727
|
TOTAL
LIABILITIES
|
|
32,945,353
|
|
|
37,997,958
|
|
|
|
|
|
|
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, 2017 and
December 31, 2016, respectively
|
|
200,000
|
|
|
200,000
|
Additional paid-in
capital
|
|
33,971,455
|
|
|
33,971,455
|
Statutory
reserve
|
|
6,259,060
|
|
|
6,123,022
|
Retained
earnings
|
|
55,668,343
|
|
|
54,590,589
|
Treasury stock, at
cost: 171,210 shares as of June 30, 2017 and December 31, 2016,
respectively
|
|
(192,153)
|
|
|
(192,153)
|
Accumulated other
comprehensive income
|
|
(1,913,240)
|
|
|
(4,378,873)
|
TOTAL
SHAREHOLDERS' EQUITY
|
|
93,993,465
|
|
|
90,314,040
|
Non-controlling
interest
|
|
12,296,438
|
|
|
12,131,754
|
TOTAL
EQUITY
|
|
106,289,903
|
|
|
102,445,794
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$
|
139,235,256
|
|
$
|
140,443,752
|
OSSEN INNOVATION
CO., LTD AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
|
|
|
|
FOR THE
THREE MONTHS
ENDED JUNE 30,
|
|
FOR THE SIX
MONTHS
ENDED JUNE 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
REVENUES
|
$
|
26,432,478
|
$
|
23,431,553
|
$
|
52,015,016
|
$
|
53,519,492
|
COST OF GOODS
SOLD
|
|
23,428,448
|
|
20,975,585
|
|
47,238,355
|
|
47,936,038
|
GROSS
PROFIT
|
|
3,004,030
|
|
2,455,968
|
|
4,776,661
|
|
5,583,454
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Selling and
distribution expenses
|
|
126,007
|
|
185,410
|
|
278,025
|
|
417,636
|
General and
administrative expenses
|
|
1,048,539
|
|
1,341,587
|
|
2,167,966
|
|
2,709,453
|
Total
Operating Expenses
|
|
1,174,546
|
|
1,526,997
|
|
2,445,991
|
|
3,127,089
|
INCOME FROM
OPERATIONS
|
|
1,829,484
|
|
928,971
|
|
2,330,670
|
|
2,456,365
|
Other Income
(Expenses):
|
|
|
|
|
|
|
|
|
Financial expenses,
net
|
|
(395,972)
|
|
(803,050)
|
|
(802,485)
|
|
(1,640,523)
|
Other income (loss),
net
|
|
(1,106)
|
|
239,564
|
|
6,148
|
|
272,743
|
INCOME BEFORE
INCOME TAXES
|
|
1,432,405
|
|
365,485
|
|
1,534,332
|
|
1,088,585
|
INCOME
TAXES
|
|
(156,606)
|
|
(59,088)
|
|
(155,856)
|
|
(203,302)
|
NET
INCOME
|
|
1,275,799
|
|
306,397
|
|
1,378,476
|
|
885,283
|
LESS: NET INCOME
ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
|
111,722
|
|
10,658
|
|
164,684
|
|
127,540
|
NET INCOME
ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD
AND SUBSIDIARIES
|
|
1,164,077
|
|
295,739
|
|
1,213,792
|
|
757,743
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain (loss), net of tax
|
|
1,764,550
|
|
(3,136,552)
|
|
2,465,633
|
|
(2,434,689)
|
TOTAL OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
1,764,550
|
|
(3,136,552)
|
|
2,465,633
|
|
(2,434,689)
|
COMPREHENSIVE
INCOME (LOSS)
|
|
2,928,626
|
|
(2,840,813)
|
|
3,679,425
|
|
(1,676,946)
|
|
EARNINGS PER
ORDINARY SHARE Basic and
diluted
|
$
|
0.06
|
$
|
0.02
|
$
|
0.06
|
$
|
0.04
|
WEIGHTED AVERAGE
ORDINARY SHARES OUTSTANDING Basic and diluted
|
$
|
19,791,110
|
$
|
19,805,934
|
$
|
19,791,110
|
$
|
19,817,362
|
OSSEN INNOVATION
CO., LTD. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net
income
|
$
|
1,378,477
|
|
$
|
885,283
|
Adjustments to
reconcile net income to net cash provided by/ (used in) operating
activities:
|
|
|
|
|
|
Depreciation
and amortization
|
|
390,662
|
|
|
472,630
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
(Increase)
Decrease In:
|
|
|
|
|
|
Accounts
receivable
|
|
3,896,793
|
|
|
4,242,725
|
Inventories
|
|
6,621,860
|
|
|
(2,907,190)
|
Advance to
suppliers
|
|
(24,084,109)
|
|
|
(3,469,259)
|
Other current
assets
|
|
(10,771)
|
|
|
535,750
|
Notes
receivable - bank acceptance notes
|
|
15,280,381
|
|
|
8,010,228
|
Increase
(Decrease) In:
|
|
|
|
|
|
Accounts
payable
|
|
(1,110,830)
|
|
|
(1,043,280)
|
Customer
deposits
|
|
26,917
|
|
|
232,071
|
Income tax
payable
|
|
(330,156)
|
|
|
(77,156)
|
Other payables
and accrued expenses
|
|
9,624
|
|
|
963,277
|
Due to related
party
|
|
(3,912)
|
|
|
(61,712)
|
Due to
shareholder
|
|
40,000
|
|
|
20,000
|
Net cash provided
by operating activities
|
|
2,104,935
|
|
|
7,803,367
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of
plant and equipment
|
|
0
|
|
|
(11,473)
|
Net cash used in
investing activities
|
|
0
|
|
|
(11,473)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Decrease in
restricted cash
|
|
1,243,864
|
|
|
1,029,291
|
Proceeds from
short-term bank loans
|
|
1,477,061
|
|
|
6,365,889
|
Repayments of
short-term bank loans
|
|
(4,515,711)
|
|
|
(6,114,357)
|
Proceeds from
notes payable-bank acceptance notes
|
|
6,121,021
|
|
|
10,938,743
|
Repayment of
notes payable-bank acceptance notes
|
|
(7,505,538)
|
|
|
(17,287,804)
|
Repurchase of
common share
|
|
-
|
|
|
(36,810)
|
Net cash used in
financing activities
|
|
(3,179,303)
|
|
|
(5,105,048)
|
|
|
|
|
|
|
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
(1,074,369)
|
|
|
2,686,846
|
Effect of
exchange rate changes on cash
|
|
3,019,801
|
|
|
(3,082,086)
|
Cash and cash
equivalents at beginning of period
|
|
217,631
|
|
|
812,277
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
2,163,064
|
|
$
|
417,037
|
|
|
|
|
|
|
SUPPLEMENTARY CASH
FLOW INFORMATION
|
|
|
|
|
|
Cash paid during
the periods:
|
|
|
|
|
|
Income taxes
paid
|
$
|
481,205
|
|
$
|
480,567
|
Interest
paid
|
$
|
776,257
|
|
$
|
1,351,278
|
Non-cash
transactions:
|
|
|
|
|
|
Appropriation to
statutory reserve
|
$
|
136,038
|
|
$
|
91,444
|
View original
content:http://www.prnewswire.com/news-releases/ossen-innovation-announces-unaudited-financial-results-for-the-second-quarter-and-six-months-ended-june-30-2017-300558312.html
SOURCE Ossen Innovation Co., Ltd.