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Post Earnings Coverage as Ossen Innovation's Coated PC Steel Materials Sales Increased 14.5%

Upcoming AWS Coverage on ArcelorMittal

LONDON, UK / ACCESSWIRE / January 6, 2017 / Active Wall St. announces its post-earnings coverage on Ossen Innovation Co., Ltd. (NASDAQ: OSN) ("Ossen"). The Company released its third quarter fiscal 2016 financial results on December 23, 2016. The China-based manufacturer of plain surface, rare earth and zinc coated pre-stressed steel materials posted a drop in sales and steep decline in earnings. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Ossen's competitors within the Steel & Iron space, ArcelorMittal (NYSE: MT), is estimated to report earnings on February 03, 2017. AWS will be initiating a research report on ArcelorMittal following the release of its earnings numbers.

Today, AWS is promoting its earnings coverage on OSN; touching on stock like MT. Get our free coverage by signing up to:



Earnings Reviewed

For the three months ended September 30, 2016, Ossen's revenues decreased by $1.4 million, or 4.8%, to $28.5 million from $30.0 million in the year ago same period. The decline was primarily attributed to a drop in sales from plain surface PC strands and other products and partially offset by increased sales from coated PC steel materials.

The Company's gross profit decreased by $1.7 million, or 35.0%, to $3.2 million for Q3 2016 compared to $4.9 million for the same period of last year. Ossen's gross margin decreased to 11.2% for the reported quarter compared to gross margin of 16.5% for Q3 2015. The Company's operating income decreased by $2.9 million, or 57.9%, to $2.1 million for Q3 2016 from operating income of $5.0 million in the year earlier quarter. In Q3 2016, the Company's operating margin was 7.3% compared to 16.5% for the same period of last year.

For Q3 2016, Ossen reported that net income slumped by $2.5 million, or 64.4%, to $1.4 million from $3.8 million for Q3 2015. Net income attributed to Ossen decreased by $1.9 million, or 59.1%, to $1.3 million for Q3 2016 from $3.3 million for the same period of last year. Earnings per share, both basic and diluted, were $0.07 for the reported quarter, compared to $0.16 for Q3 2015.

Segment Details

During Q3 2016, sales of Ossen's coated PC steel materials, including both rare earth and zinc coated products, increased by $3.5 million, or 14.5%, to $27.2 million from $23.8 million for the same period of last year and accounted for 95% of total sales during the reported quarter from $23.8 million, or 79% of total sales, for the year earlier corresponding period. The increase in sales of coated PC steel materials was mainly due to the increase in sales volume of rare earth coated products and partially offset by decrease in average selling price for rare earth coated products.

During the reported quarter, sales of zinc coated products were $25.5 thousand compared to nil for the same period of last year. In Q3 2016, sales of plain surface PC strands and others decreased by $4.9 million, or 79.3%, to $1.3 million and accounted for 5% of total sales for the reported quarter compared to $6.2 million, or 21% of total sales, in the year earlier same quarter.

Balance Sheet

As of September 30, 2016, Ossen had cash and restricted cash of $6.7 million compared to $9.6 million at December 31, 2015. The Company's notes receivable were $7.5 million as of September 30, 2016, compared to $8.0 million at December 31, 2015, while accounts receivable were $34.1 million as of September 30, 2016, compared to $43.2 million at December 31, 2015. For Q3 2016, Ossen's average days of sales of outstanding (DSO) were 118 days compared to 129 days for Q3 2015.

As of September 30, 2016, Ossen's balance of prepayment to suppliers for raw materials totaled $67.5 million, compared to $55.7 million at December 31, 2015. The Company had inventories of $21.8 million as of September 30, 2016, compared to $27.3 million at the end of 2015.Total working capital was $102.5 million as of September 30, 2016, compared to $94.7 million at December 31, 2015.

Recent Activities

CFO Resigns: On December 27, 2016, Ossen announced that its Chief Financial Officer, Mr. Feng Peng, has resigned from the Company, effective December 31, 2016, to pursue other opportunities. The Company stated that Mr. Peng's resignation is not related to any issues regarding financial disclosures or accounting matters. Mr. Wei Hua, Chief Executive Officer of the Company, will act as interim CFO during the transition and search period for a new CFO.

Retains Financial Advisor: On August 4, 2016, Ossen's Board of Directors formed a special committee of the Board to evaluate a non-binding term sheet pursuant to which the Company would:

  1. acquire all of the equity of American-Asia Diabetes Research Foundation;
  2. and spin off the current assets of the Company to a buyer group led by Dr. Liang Tang, Chairman of the Company.

On January 03, 2017, the Company announced that the Special Committee has retained Highline Research Advisors LLC, acting through Corinthian Partners, LLC, as its financial advisor in connection with the review and evaluation of the Proposed Transactions.

Stock Performance

On Thursday, January 05, 2017, Ossen's shares rose 4.31%, finishing the day at $2.18 with volume of 7.08 thousand shares exchanging hands by the close of the trading session. Shares of the company have a PE ratio of 1.07 and currently have a market cap of $43.19 million.

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SOURCE: Active Wall Street