SHANGHAI, Sept. 20, 2018 /PRNewswire/ -- Ossen Innovation Co., Ltd. ("Ossen Innovation" or the "Company") 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, 2018.

"Our first half of 2018 results exceeded our expectations and provided a strong beginning to the year for Ossen," stated Dr. Liang Tang, Chairman of Ossen Innovation. "During the six months period, we won a few more bridge projects in China that contributed to our sales results and positively impacted our growth, margins and profitability. As the Chinese government continues to reduce the overcapacity in steel industry and push forward on infrastructure projects around the country, we continue to increase our efforts to win multiple infrastructure projects and further solidify our position as a market leader."

For the six months ended June 30, 2018, revenues increased by $18.0 million, or 34.6%, to $70.0 million from $52.0 million for the same period of last year. This increase was mainly attributable to increase in rare earth coated products and plain surfaced and other products and partially offset by decrease in zinc coated products. The sales of rare earth coated PC steel materials were $58.4 million and accounted for 83.4% of total sales for the six months ended June 30, 2018. Sales of plain surface and other products were $11.7 million for the six months ended June 30, 2018. There were no sales of zinc coated products in this period.

Gross profit increased by $5.2 million, or 109.4%, to $10.0 million for the six months ended June 30, 2018 from $4.8 million for the same period of last year. Gross margin increased by 5.1 percentage points to 14.3% for the six months ended June 30, 2018 from 9.2% for the same period of last year. Gross margins for rare earth products were 12.6% for the six months ended June 30, 2018, compared to 7.2% for the same period of last year. Gross margin for plain surface and other products was 22.9% for the six months ended June 30, 2018, compared to19.4% for the same period of last year.

Selling expenses decreased by $0.1 million, or 36.8%, to $0.2 million for the six months ended June 30, 2018 from $0.3 million for the same period of last year. The decrease was due to less freight expenses related to export. General and administrative expenses increased by $0.9 million, or 43.4%, to $3.1 million for the six months ended June 30, 2018 from $2.2 million for the same period of last year. The increase was due to higher research and development expenses.

As a result, total operating expenses increased by $0.8 million, or 34.3%, to $3.3 million for the six months ended June 30, 2018 from $2.4 million for the same period of last year.

Operating income increased by $4.4 million, or 188.2%, to $6.7 million for the six months ended June 30, 2018 from $2.3 million for the same period of last year. The increase in operating income was primarily attributable to increase in gross profit and partially offset by increase in general and administrative expenses. Operating margin was 9.6% for the six months ended June 30, 2018, compared to 4.5% for the same period of last year.

Net income increased by $3.8 million, or 275.1%, to $5.2 million for the six months ended June 30, 2018 from $1.4 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 $3.5 million, or 291.7%, to $4.8 million for the six months ended June 30, 2018from $1.2 million for the same period of last year. Earnings per share, both basic and diluted, were $0.24 for the six months ended June 30, 2018, compared to $0.06 for the same period of last year. Basic and diluted earnings per ADS were $0.72 for the six months ended June 30, 2018, compared with $0.18 for the same period of 2017.

Balance Sheet and Cash Flows

As of June 30, 2018, the Company had cash and restricted cash of $10.0 million, compared to $8.1 million at December 31, 2017. Accounts receivable were $76.8 million as of June 30, 2018, compared to $51.7 million at December 31, 2017. The average days of sales of outstanding (DSO) were 166days for the three months ended June 30, 2018, compared to 123 days for the year of 2017. 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 $56.2 million as of June 30, 2018, compared to $71.3 million at December 31, 2017. The Company had inventories of $13.7 million as of June 30, 2018, compared to $13.5 million at the end of 2017. Total working capital was $118.4 million as of June 30, 2018, compared to $114.7 million at December 31, 2017.

Net cash used in operating activities was $2.7 million for the six months ended June 30, 2018, compared to net cash provided by operating activities of $2.1 million for the same period of last year. Net cash used in investing activities was $67,419 for the six months ended June 30, 2018, compared to nil for the same period of last year. Net cash provided by financing activities was $5.6 million for the six months ended June 30, 2018, compared to net cash used in financing activities of $3.2 million for the same period of last year.

Recent Developments

On May 8, 2018, the Company announced the termination of the Share Exchange Agreement (the "Exchange Agreement"), dated July 19, 2017, among the Company, America-Asia Diabetes Research Foundation (the "Foundation") and the shareholders of the Foundation, as amended, with respect to the acquisition of the Foundation by Ossen. The Foundation and its shareholders failed to satisfy the closing conditions set forth in the Exchange Agreement. As a result, the Company terminated the Exchange Agreement. In connection therewith, the Share Purchase Agreement, dated July 19, 2017, between the Company and an affiliate of Dr. Liang Tang, the Chairman of Ossen, pursuant to which the Company agreed to sell its existing business to an affiliate of Dr. Tang, is deemed terminated.

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  

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SOURCE Ossen Innovation Co., Ltd.