LOS ANGELES, Nov. 13, 2017 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (Nasdaq:NVFY) (“Nova LifeStyle” or the “Company”), a California-based innovative designer and distributor of modern lifestyle household consumer products, is pleased to announce record third quarter financial results for the quarter ended September 30, 2017.
Third Quarter 2017 Financial Results, Significantly Expanded Net Profit Margins
- Net income $2.96 million or $0.11 per share ($0.11 fully diluted), an increase of nearly 900% compared to $0.3 million or $0.01 per share ($0.01 fully diluted) net income in the third quarter of 2016
- Increase in net sales of 8.8% to $33.2 million compared to $30.5 million in the same period of 2016
- Gross profit margin improved to 18% on average, an increase of approximately 3% compared to the third quarter of 2016
- Over a 200% increase of new product offerings combined with innovative product designs contributed to significant growth in the quarter
- Growth momentum to continue into 4th quarter 2017 and 2018
- Strong customer demand across nearly all product lines
- Healthy balance sheet and cash flow
Management Comment
Tawny Lam, Chief Executive Officer of Nova LifeStyle commented: “We are pleased to have delivered stellar financial results. Nova LifeStyle’s third quarter financial performance reflects the results of our successful transformation from an ‘asset heavy’ furniture-manufacturing business to a ‘light asset,’ high margin, consumer product company focused on innovative product designs and customer-centric marketing. 2017 is Nova LifeStyle’s Diamond Sofa brand's 25th year in business and with a record number of new product SKUs as well as a rapidly expanding, diversified global customer base, Nova LifeStyle is poised for significant growth for years to come.”
Guidance and Outlook
Ms. Lam concluded: “We continue to see consistent growth leading into the 4th quarter as well as 2018. If this continues, we hope to initiate stock buybacks or start paying cash dividends in the near future to reward our long-term shareholders, as a way to maximize customer and shareholder value.”
About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange listed company headquartered in California, is a fast growing, innovative designer and distributor of modern LifeStyle furniture; primarily sofas, dining rooms, cabinets, office furniture and related components, bedrooms, and various accessories in matching collections. Nova's products are made in the US, Europe, and Asia and include LifeStyle brands such as Diamond Sofa, Nova QwiK, and Bright Swallow International. Nova's products feature urban contemporary styles that integrate comfort and functionality incorporating upscale luxury designs appealing to LifeStyle-conscious middle and upper middle-income consumers in the U.S., China, Europe, and elsewhere in the world. To learn more about Nova LifeStyle, Inc., please visit our website at www.NovaLifeStyle.com
Safe Harbor Statement
All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Nova's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Nova's filings with the Securities and Exchange Commission.
Company Contact:
Investor Relations:
The Equity Group Inc.
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
aprior@equityny.com
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
| FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED) | |||||||||||||||
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Net Sales | $ | 70,813,414 | $ | 72,748,972 | $ | 33,222,625 | $ | 30,538,918 | |||||||
| Cost of Sales | 58,741,122 | 62,091,435 | 27,323,972 | 25,935,832 | |||||||||||
| Gross Profit | 12,072,292 | 10,657,537 | 5,898,653 | 4,603,086 | |||||||||||
| Operating Expenses | |||||||||||||||
| Selling expenses | 2,690,342 | 4,358,206 | 1,003,906 | 2,050,201 | |||||||||||
| General and administrative expenses | 7,608,323 | 4,756,118 | 2,124,614 | 1,491,684 | |||||||||||
| Total Operating Expenses | 10,298,665 | 9,114,324 | 3,128,520 | 3,541,885 | |||||||||||
| (Loss) Income From Operations | 1,773,627 | 1,543,213 | 2,770,133 | 1,061,201 | |||||||||||
| Other Income (Expenses) | |||||||||||||||
| Non-operating income (expense), net | 797 | 40,994 | -- | 16,623 | |||||||||||
| Foreign exchange transaction loss | (324 | ) | (5,578 | ) | (94 | ) | (3,281 | ) | |||||||
| Interest expense, net | (133,093 | ) | (241,202 | ) | (40,932 | ) | (96,535 | ) | |||||||
| Financial expense | (86,335 | ) | (88,098 | ) | (34,508 | ) | (33,733 | ) | |||||||
| Total Other Expenses, Net | (218,955 | ) | (293,884 | ) | (75,534 | ) | (116,926 | ) | |||||||
| (Loss) Income Before Income Taxes and Discontinued operations | (1,554,672 | ) | 1,249,329 | 2,694,599 | 944,275 | ||||||||||
| Income Tax (Benefit) Expense | (750,037 | ) | 60,063 | (262,034 | ) | (100,656 | ) | ||||||||
| (Loss) Income From Continuing Operations | 2,304,709 | 1,189,266 | 2,956,633 | 1,044,931 | |||||||||||
| Loss From Discontinued Operations, net of tax | -- | (1,476,572 | ) | -- | (743,594 | ) | |||||||||
| Net (Loss) Income | 2,304,709 | (287,306 | ) | 2,956,633 | 301,337 | ||||||||||
| Other Comprehensive Income | |||||||||||||||
| Foreign currency translation | -- | (420,752 | ) | -- | (98,638 | ) | |||||||||
| Comprehensive (Loss) Income | $ | 2,304,709 | $ | (708,058 | ) | $ | 2,956,633 | $ | 202,699 | ||||||
| Basic weighted average shares outstanding | 27,570,425 | 24,937,069 | 27,846,921 | 25,558,604 | |||||||||||
| Diluted weighted average shares outstanding | 27,704,406 | 24,937,069 | 27,980,629 | 25,558,604 | |||||||||||
| Income (loss) from continuing operations per share of common stock | |||||||||||||||
| Basic | $ | 0.08 | $ | 0.05 | $ | 0.11 | $ | 0.04 | |||||||
| Diluted | $ | 0.08 | $ | 0.05 | $ | 0.11 | $ | 0.04 | |||||||
| Loss from discontinued operations per share of common stock | |||||||||||||||
| Basic | $ | -- | $ | (0.06 | ) | $ | -- | $ | (0.03 | ) | |||||
| Diluted | $ | -- | $ | (0.06 | ) | $ | -- | $ | (0.03 | ) | |||||
| Net (loss) income per share of common stock | |||||||||||||||
| Basic | $ | 0.08 | $ | (0.01 | ) | $ | 0.11 | $ | 0.01 | ||||||
| Diluted | $ | 0.08 | $ | (0.01 | ) | $ | 0.11 | $ | 0.01 | ||||||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016 | |||||
| September 30, | December 31, | ||||
| 2017 | 2016 | ||||
| Assets | |||||
| Current Assets | |||||
| Cash and cash equivalents | $ | 802,037 | $ | 2,587,743 | |
| Accounts receivable, net | 36,938,819 | 42,102,761 | |||
| Advance to suppliers | 21,951,040 | 13,669,752 | |||
| Inventories | 6,720,649 | 2,781,123 | |||
| Assignment fee receivable | -- | 1,250,000 | |||
| Receivable from an unrelated party | -- | 7,000,000 | |||
| Prepaid expenses and other receivables | 315,833 | 642,891 | |||
| Taxes receivable | 14,094 | 14,893 | |||
| Total Current Assets | 66,742,472 | 70,049,163 | |||
| Noncurrent Assets | |||||
| Plant, property and equipment, net | 158,412 | 171,276 | |||
| Lease deposit | 43,260 | 43,260 | |||
| Goodwill | 218,606 | 218,606 | |||
| Intangible assets, net | 4,573,612 | 5,686,623 | |||
| Deferred tax asset | 1,498,631 | 874,759 | |||
| Total Noncurrent Assets | 6,492,521 | 6,994,524 | |||
| Total Assets | $ | 73,234,993 | $ | 77,043,687 | |
| Liabilities and Stockholders' Equity | |||||
| Current Liabilities | |||||
| Accounts payable | $ | 162,147 | $ | 2,368,775 | |
| Line of credit | - | 7,977,841 | |||
| Advance from customers | 19,298 | 513,880 | |||
| Accrued liabilities and other payables | 726,501 | 780,960 | |||
| Total Current Liabilities | 907,946 | 11,641,456 | |||
| Noncurrent Liabilities | |||||
| Line of Credit | 3,322,040 | - | |||
| Income tax payable | 2,009,825 | 2,136,788 | |||
| Total Noncurrent Liabilities | 5,331,865 | 2,136,788 | |||
| Total Liabilities | 6,239,811 | 13,778,244 | |||
| Contingencies and Commitments | |||||
| Stockholders' Equity | |||||
| Common stock, $0.001 par value; 75,000,000 shares authorized; 27,909,843 and 27,309,695 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 27,910 | 27,309 | |||
| Additional paid-in capital | 38,309,891 | 36,885,462 | |||
| Statutory reserves | 6,241 | 6,241 | |||
| Retained earnings | 28,651,140 | 26,346,431 | |||
| Total Stockholders' Equity | 66,995,182 | 63,265,443 | |||
| Total Liabilities and Stockholders' Equity | $ | 73,234,993 | $ | 77,043,687 | |
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED) | |||||||
| Nine Months Ended September 30, | |||||||
| 2017 | 2016 | ||||||
| (Unaudited) | |||||||
| Cash Flows From Operating Activities | |||||||
| Net (loss) income from continuing operations | $ | 2,304,709 | $ | 1,189,266 | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
| Depreciation and amortization | 1,143,319 | 462,194 | |||||
| Deferred tax benefit | (623,872 | ) | -- | ||||
| Stock compensation expense | 1,773,537 | 1,216,765 | |||||
| Changes in bad debt allowance | 203,905 | 33,818 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 4,960,037 | (558,573 | ) | ||||
| Advance to suppliers | (8,281,288 | ) | (3,613,765 | ) | |||
| Inventories | (3,939,526 | ) | 241,611 | ||||
| Other current assets | (21,452 | ) | (711,727 | ) | |||
| Accounts payable | (2,206,628 | ) | 129,278 | ||||
| Advance from customers | (494,582 | ) | 584,968 | ||||
| Accrued expenses and other payables | (54,458 | ) | (325,799 | ) | |||
| Taxes payable | (126,163 | ) | 52,864 | ||||
| Net Cash Used in Continuing Operations | (5,362,462 | ) | (1,299,100 | ) | |||
| Net Cash Used in Discontinued Operations | -- | (166,148 | ) | ||||
| Net Cash Used in Operating Activities | (5,362,462 | ) | (1,465,248 | ) | |||
| Cash Flows From Investing Activities | |||||||
| Assignment fee received | 1,250,000 | -- | |||||
| Purchase of property and equipment | (17,443 | ) | (7,272 | ) | |||
| Cash received from buyer | -- | 5,500,000 | |||||
| Advances to unrelated parties | (8,835,000 | ) | -- | ||||
| Repayment from unrelated parties | 15,835,000 | -- | |||||
| Net Cash Provided by (Used in) Continuing Operations | 8,232,557 | 5,492,728 | |||||
| Net Cash Used in Discontinued Operations | -- | (218,170 | ) | ||||
| Net Cash Provided by (Used in) Investing Activities | 8,232,557 | 5,274,558 | |||||
| Cash Flows From Financing Activities | |||||||
| Proceeds from line of credit and bank loan | 36,881,842 | 29,828,074 | |||||
| Repayment to line of credit and bank loan | (41,537,643 | ) | (29,301,699 | ) | |||
| Proceeds from warrants exercised | -- | 203,250 | |||||
| Net Cash (Used in) Provided by Continuing Operations | (4,655,801 | ) | 729,625 | ||||
| Net Cash Provided by Discontinued Operations | -- | 319,762 | |||||
| Net Cash (Used in) Provided by Financing Activities | (4,655,801 | ) | 1,049,387 | ||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | -- | (3,128 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (1,785,706 | ) | 4,855,569 | ||||
| Cash and cash equivalents, beginning of period | 2,587,743 | 988,029 | |||||
| Cash and cash equivalents, end of period | $ | 802,037 | $ | 5,843,598 | |||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | |||||
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED) | |||||
| Nine Months Ended September 30, | |||||
| 2017 | 2016 | ||||
| (Unaudited) | |||||
| Analysis of cash and cash equivalents | |||||
| Included in cash and cash equivalents per consolidated balance sheets | $ | 802,037 | $ | 5,718,601 | |
| Included in assets of discontinued operations | - | 124,997 | |||
| Cash and cash equivalents, end of period | $ | 802,037 | $ | 5,843,598 | |
| Supplemental Disclosure of Cash Flow Information | |||||
| Continuing operations: | |||||
| Cash paid during the period for: | |||||
| Income tax payments | $ | -- | $ | 7,200 | |
| Interest expense | $ | 159,686 | $ | 371,036 | |
| Discontinued operations: | |||||
| Cash paid during the period for: | |||||
| Income tax payments | $ | -- | $ | -- | |
| Interest expense | $ | -- | $ | -- | |