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30.06.2017 22:30:00
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Ossen Innovation Announces First Quarter 2017 Financial Results
SHANGHAI, June 30, 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 three months ended March 31, 2017.
Dr. Liang Tang, Chairman of Ossen Innovation, commented, "The economic headwinds and sluggish industry demand continued to drag on our business, leading to a 15% decline in revenues in the first quarter. The decline in revenues also reflected a further scale-back of our plain surface PC strands and PC wires business in light of its gross margin deterioration in recent quarters. Gross and operating margins also decreased by 3.5 and 3.1 percentage points, respectively, highlighting continuing pricing pressure. Looking ahead, we remain cautious on our near-term outlook."
Three months Ended March 31, 2017 Financial Results | |||||
For the Three Months Ended March 31, | |||||
($ millions, except per share data) | 2017 | 2016 | % Change | ||
Revenues | $25.6 | $30.1 | -15.0% | ||
Gross profit | $1.8 | $3.1 | -43.3% | ||
Gross margin | 6.9% | 10.4% | -3.5 pp | ||
Operating income | $0.5 | $1.5 | -67.2% | ||
Operating margin | 2.0% | 5.1% | -3.1 pp | ||
Net income attributable to Ossen Innovation | $0.0 | $0.5 | -89.2% | ||
EPS | $0.00 | $0.02 | -89.2% | ||
For the three months ended March 31, 2017, revenues decreased by $4.5 million, or 15.0%, to $25.6 million from $30.1 million for the same period of last year. This decrease was primarily due to decreases in sales from both coated products and plain surface and other products. The sales of coated PC steel materials, including both rare earth and zinc coated products, were$22.1 million and accounted for 86% of total sales for the three months ended March 31, 2017. Sales of rare earth coated products, zinc coated products, and plain surface and other productswere$22.0 million, $0.2 million, and $3.5 million for the three months ended March 31, 2017, respectively.
Gross profit decreased by $1.4 million, or 43.3%, to $1.8 million for the three months ended March 31, 2017 from $3.1 million for the same period of last year. Gross margin decreased by 3.5 percentage points to 6.9% for the three months ended March 31, 2017 from 10.4% for the same period of last year. Gross margins for rare earth and zinc coated products were 4.1% and 55.0%, respectively, for the three months ended March 31, 2017, compared to 7.6% and 33.6%, respectively, for the same period of last year. Gross margin for plain surface and other products was 22.5% for the three months ended March 31, 2017, compared to 20.3% for the same period of last year.
Selling expenses decreased by $0.1 million, or 34.5%, to $0.15 million for the three months ended March 31, 2017 from $0.23 million for the same period of last year. The decrease was due to lower transportation cost. General and administrative expenses decreased by $0.2 million, or 18.2%, to $1.12 million for the three months ended March 31, 2017 from $1.37 million for the same period of last year. As a result, total operating expenses decreased by $0.3 million, or 20.5%, to $1.3 million for the three months ended March 31, 2017 from $1.6 million for the same period of last year.
Operating income decreased by $1.0 million, or 67.2%, to $0.5 million for the three months ended March 31, 2017 from $1.5 million for the same period of last year. The decrease in operation income was primarily attributable to decrease in gross profit and partially offset by decrease in general and administrative expenses in 2017. Operating margin was 2.0% for the three months ended March 31, 2017, compared to 5.1% for the same period of last year.
Net income decreased by $0.5 million, or 82.3%, to $0.1 million for the three months ended March 31, 2017 from $0.6 million for the same period of last year.
After deducting net income attributable to non-controlling interest, net income attributable to Ossen Innovation decreased by $0.4 million, or 89.2%, to $0.05 million for the three months ended March 31, 2017 from $0.46 million for the same period of last year. Earnings per share, both basic and diluted, were $0.003 for the three months ended March 31, 2017, compared to $0.023 for the same period of last year.
Balance Sheet and Cash Flows
As of March 31, 2017, the Company had cash and restricted cash of $6.8 million, compared to $6.9 million at December 31, 2016. Notes receivable were $7.3 million as of March 31, 2017, compared to $15.3 million at December 31, 2016. Accounts receivable were $48.5 million as of March 31, 2017, compared to $37.3 million at December 31, 2016. The average days of sales of outstanding (DSO) were 151 days for the three months ended March 31, 2017, compared to 126 days for the year of 2016. The increase in DSO was mainly because the Chinese New Year delayed the timing of collections. The balance of prepayment to suppliers for raw materials totaled $55.5 million as of March 31, 2017, compared to $46.7 million at December 31, 2016. The Company had inventories of $16.4 million as of March 31, 2017, compared to $26.0 million at the end of 2016. During the quarter, the Company reduced the procurement of raw materials due to the rising steel price. Total working capital was $102.6 million as of March 31, 2017, compared to $101.6 million at December 31, 2016.
Net cash used in operating activities was $0.3 million for the three months ended March 31, 2017, compared to $0.8 million for the same period of last year. Net cash used in investing activities was $nil for the three months ended March 31, 2017, compared to $3,000 for the same period of last year. Net cash used in financing activities was $45,000 for the three months ended March 31, 2017, compared to $91,000 for the same period of last year.
Recent Developments
On January 3, 2017, The Company announced that the Special Committee of the Board of Directors has retained Highline Research Advisors LLC ("HRA"), acting through Corinthian Partners, LLC, as its financial advisor in connection with the review and evaluation of the Proposed Transactions as announced on August 4, 2016.
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.
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:
Tony Tian, CFA
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com
OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2017 2016 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 742,415 $ 217,631 Restricted cash 6,022,841 6,703,242 Notes receivable – bank acceptance notes 7,256,367 15,280,381 Accounts receivable, net of allowance for doubtful accounts of $1,053,219 and $985,990 at March 31, 2017 and December 31,2016, respectively 48,514,649 37,298,465 Inventories 16,403,361 25,999,182 Advance to suppliers 55,536,112 46,729,285 Other current assets 216,897 197,319 Total Current Assets 134,692,642 132,425,505 Property, plant and equipment, net 4,307,145 4,447,063 Land use rights, net 3,572,923 3,571,184 TOTAL ASSETS $ 142,572,710 $ 140,443,752 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable – bank acceptance notes $ 8,925,332 $ 9,586,276 Short-term bank loans 17,030,694 16,916,535 Accounts payable 3,020,452 1,504,863 Customer deposits 333,668 135,903 Income tax payable 382,107 594,795 Other payables and accrued expenses 2,023,126 1,740,474 Due to related party 3,912 3,886 Due to shareholder 347,499 307,499 Total Current Liabilities 32,066,790 30,790,231 Long-term bank loans 7,256,367 7,207,727 TOTAL LIABILITIES 39,323,157 37,997,958 EQUITY Shareholders' Equity Ordinary shares, $0.01par value: 100,000,000 shares authorized, 20,000,000 shares issued; 19,791,110 shares outstanding as of March 31, 2017 and December 31, 2016, respectively 200,000 200,000 Additional paid-in capital 33,971,455 33,971,455 Statutory reserve 6,147,452 6,123,022 Retained earnings 54,615,873 54,590,589 Treasury stock, at cost: 171,210 shares as of March 31, 2017 and December 31, 2016, respectively (192,153) (192,153) Accumulated other comprehensive income (3,677,790) (4,378,873) TOTAL SHAREHOLDERS' EQUITY 91,064,837 90,314,040 Non-controlling interest 12,184,716 12,131,754 TOTAL EQUITY 103,249,553 102,445,794 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 142,572,710 $ 140,443,752 OSSEN INNOVATION CO., LTD AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, 2017 2016 REVEUNUES $ 25,582,538 $ 30,087,939 COST OF GOODS SOLD 23,809,907 26,960,453 GROSS PROFIT 1,772,631 3,127,486 Selling expenses 152,018 232,226 General and administrative expenses 1,119,428 1,367,866 Total Operating Expenses 1,271,446 1,600,092 INCOME FROM OPERATIONS 501,185 1,527,394 Financial expenses, net (406,513) (837,473) Other income, net 7,254 33,179 INCOME BEFORE INCOME TAX 101,926 723,100 INCOME TAX BENEFIT (EXPENSES) 750 (144,214) NET INCOME 102,676 578,886 LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST 52,962 116,882 NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST 49,714 462,004 OTHER COMPREHENSIVE INCOME Foreign currency translation gain 701,083 701,863 TOTAL OTHER COMPREHENSIVE INCOME 701,083 701,863 COMPREHENSIVE INCOME $ 750,797 $ 1,163,867 EARNINGS PER ORDINARY SHARE Basic and diluted $ 0.003 $ 0.02 WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING Basic and diluted 19,791,110 19,828,790 OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 102,676 $ 578,886 Adjustments to reconcile net income to net cash provided by/ (used in) operating activities: Depreciation and amortization 183,562 237,148 Changes in operating assets and liabilities: (Increase) Decrease In: Accounts receivable (11,216,183) (10,416,914) Inventories 9,595,821 6,351,643 Advance to suppliers (8,806,827) (6,708,129) Other current assets (19,578) 524,099 Notes receivable - bank acceptance notes 8,024,013 8,010,228 Increase (Decrease) In: Accounts payable 1,515,589 (1,036,275) Customer deposits 197,764 236,563 Income tax payable (212,688) 142,367 Other payables and accrued expenses 282,652 1,304,460 Due to related party - (65,769) Due to shareholder 40,000 - Net cash used in operating activities (313,199) (841,693) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and equipment - (3,031) Net cash used in investing activities - (3,031) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease / (Increase) in restricted cash 680,400 (2,383,538) Proceeds from short-term bank loans 722,976 530,540 Repayments of short-term bank loans (722,976) (531,020) Proceeds from notes payable-bank acceptance notes 4,645,626 8,714,930 Repayment of notes payable-bank acceptance notes (5,371,505) (6,421,527) Net cash used in financing activities (45,479) (90,615) DECREASE IN CASH AND CASH EQUIVALENTS (358,677) (935,339) Effect of exchange rate changes on cash 883,461 1,012,546 Cash and cash equivalents at beginning of period 217,631 812,277 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 742,415 $ 889,484 SUPPLEMENTARY CASH FLOW INFORMATION Cash paid during the periods: Income taxes paid $ 225,114 $ 195,274 Interest paid $ 359,529 $ 674,865 Non-cash transactions: Appropriation to statutory reserve $ 19,502 $ 69,344
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ossen-innovation-announces-first-quarter-2017-financial-results-300482454.html
SOURCE Ossen Innovation Co., Ltd.
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