SHANGHAI, Aug. 27, 2020 /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, 2020.

“Because of the COVID-19 pandemic and China’s economic slowdown during the first half of 2020, our top line decreased slightly. Nonetheless, our gross margin increased to 18.7% as we managed to lower our cost,” stated Dr. Liang Tang, Chairman of Ossen Innovation. “Looking ahead, with the anticipated recovery of China’s infrastructure investment and economic rebound, we are cautiously optimistic to see recovery in infrastructure investment in the construction industry.”

Six Months Ended June 30, 2020 Financial Results

For the six months ended June 30, 2020, revenues decreased by $10.2 million, or 15.7%, to $54.9 million from $65.1 million for the same period of last year. This decrease was mainly attributable to the decrease in rare earth coated, zinc coated products and other products, partially offset by the increase in plain surface products.

Gross profit increased by $0.2 million, or 1.4%, to $10.3 million for the six months ended June 30, 2020 from $10.1 million for the same period of last year. Gross margin increased by 3.1 percentage points to 18.7% for the six months ended June 30, 2020 from 15.6% for the same period of last year. The increase of gross margin was due to the improvement of the profitability of almost all products in our portfolio.

Selling expenses increased by $38,512, or 29.4%, to $169,438 for the six months ended June 30, 2020 from $130,926 for the same period of last year. The increase was due to higher freight expenses. General and administrative expenses decreased by $0.4 million, or 14.7%, to $2.3 million for the six months ended June 30, 2020 from $2.7 million for the same period of last year.

As a result, total operating expenses decreased by $0.35 million, or 12.6%, to $2.5 million for the six months ended June 30, 2020 from $2.8 million for the same period of last year.

Operating income increased by $0.5 million, or 6.9%, to $7.8 million for the six months ended June 30, 2020 from $7.3 million for the same period of last year. The increase in operating income was primarily attributable to the increase in gross profit and the decrease in general and administrative expenses. Operating margin was 14.3% for the six months ended June 30, 2020, compared to 11.2% for the same period of last year.

Net income decreased by $0.3 million, or 5.2%, to $5.9 million for the six months ended June 30, 2020 from $6.2 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 6.7%, to $5.3 million for the six months ended June 30, 2020 from $5.7 million for the same period of last year. Earnings per share, both basic and diluted, were $0.27 for the six months ended June 30, 2020, compared to $0.29 for the same period of last year. Basic and diluted earnings per ADS were $0.81 for the six months ended June 30, 2020, compared with $0.87 for the same period of 2019.

Balance Sheet and Cash Flows

As of June 30, 2020, the Company had cash and restricted cash of $11.9 million, compared to $8.6 million at December 31, 2019. Accounts receivable were $64.3 million as of June 30, 2020, compared to $72.5 million as of December 31, 2019. The average days of sales of outstanding (“DSO”) were 225 days for the six months ended June 30, 2020, compared to 161 days for the year of 2019. The increase in average DSO was primarily due to the slower payments from our customers during the first half of 2020 as a result of the impact from the pandemic. The balance of prepayment to suppliers for raw materials totaled $75.1 million as of June 30, 2020, compared to $74.4 million at December 31, 2019, due to the expectation of increasing demand of raw materials in the second half of 2020. The Company had inventories of $27.2 million as of June 30, 2020, compared to $15.1 million at the end of 2019. Total working capital was $133.6 million as of June 30, 2020, compared to $130.2 million at December 31, 2019.

Net cash provided by operating activities was $3.4 million for the six months ended June 30, 2020, compared to net cash used in operating activities of $13.5 million for the same period of last year. This was primarily due to the decrease in account receivable and less advance to suppliers, partially offset by the increase in inventories. Net cash used in investing activities was $1,127 for the six months ended June 30, 2020, compared to $74,216 for the same period of last year. Net cash provided by financing activities was $2.9 million for the six months ended June 30, 2020, compared to net cash provided by financing activities of $18.8 million for the same period of last year. This was primarily due to the increase in repayments of short-term bank loans.

Recent Developments

On July 24, 2020, the Company announced that Pujiang International Group Limited (the “Parent”), a Cayman Islands company listed in Hong Kong which indirectly owns 65.9% of the Company, entered into certain facility agreement (the “Agreement”) with two financial institutions (the “Lenders”). Pursuant to the Agreement, the Lenders agreed to make a term loan (the “Loan”) of up to US$40 million (with a green shoe option of up to US$30 million) to the Parent for 24 months for working capital and investment purposes. The Loan may be extended for another 12 months upon approval of the Lenders. The Loan is secured by, among others, the Parent’s 65.9% beneficial ownership in the Company, and guaranteed by the Company, its affiliates and the Parent’s affiliates, including Dr. Liang Tang, chairman of the board of directors of the Company.

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. The Company 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: +1-347-393-4230
Email: info@goldenir.com

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