Nova LifeStyle Announces Second Quarter 2018 Financial Results Highlighted by Substantial Revenue and Earnings Growth Driven ...
August 13 2018 - 7:45AM
Nova LifeStyle, Inc. (NASDAQ: NVFY), a leading
U.S.-based, innovative designer and distributor of modern LifeStyle
home products, today announced solid financial results for the
second quarter ended June 30, 2018.
Second Quarter 2018 Financial Highlights
(all comparisons are to the same period in 2017):
- Net income increased 150% to $1.4 million, or $0.05 per diluted
share, compared to net income of $0.6 million or $0.02 per diluted
share.
- Revenue increased 24% to $24.1 million, compared to $19.5
million.
- Gross profit was $4.2 million, up 21.1%, compared to $3.5
million.
- Average selling prices (ASPs) rose nearly 20% driven by high
margin household products.
- Sofas, TV cabinets and beds were the top selling product lines
at 53%, 20% and 8% of revenues, respectively.
- Entered into proprietarily designed office furniture
markets.
- Anticipate robust sales and earnings growth throughout the
remainder of 2018.
Six Months 2018 Financial Highlights
(all comparisons are to the same period in 2017):
- Net income was $3.0 million, or $0.11 per diluted share,
compared to a net loss of $(0.7) million, or $(0.02) per diluted
share.
- Revenues increased 23.5% to $46.4 million, compared to $37.6
million.
- Gross profit for the first half of 2018 was $9.1 million, up
47.5%, compared to $6.2 million.
- Balance sheet well-positioned with approximately $2.60 per
share in net assets at June 30, 2018.
Management Commentary
Tawny Lam, Chief Executive Officer of Nova
LifeStyle, commented, "Nova Lifestyle is pleased to announce
another quarter of great financial results. Our strategy of
focusing on high-end products continues to validate our growth
strategies, evidenced by a year over year revenue increase of over
23%. In particular, the Company saw gains in both ASPs and volumes
shipped, reflecting that our extensive product offerings through
catalogues are gaining momentum. Our international growth has been
solid, particularly in Australia, where we have leveraged our
relationships and brand recognition to serve customers in the hotel
and hospitality industries.”
“In addition to home furnishing products, Nova
LifeStyle is now offering a proprietarily designed ‘Office’ product
line that greatly complements our existing catalogues. We are
currently experiencing substantial cross-selling demand from
commercial customers as companies look for beautifully designed and
functional office environments to attract and retain employees in
today’s low unemployment economy. Going forward, the Office product
line will become an added sales channel that integrates corporate
apartments and residential furniture adoptions. We anticipate
significant sales and earnings growth to continue in the second
half of 2018.”
About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Market
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
that 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 appeals to middle and upper
middle-income consumers in the U.S., China, Europe, and elsewhere
in the world. Visit Nova LifeStyle’s 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) 836-9606aprior@equityny.com
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOMEFOR THE THREE AND SIX MONTHS ENDED JUNE 30,
2018 AND 2017 (UNAUDITED)
|
Six Months Ended June 30, |
|
Three Months Ended June 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net
Sales |
$ |
46,412,102 |
|
|
$ |
37,590,789 |
|
|
$ |
24,108,630 |
|
|
$ |
19,533,767 |
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
37,305,319 |
|
|
|
31,417,150 |
|
|
|
19,903,389 |
|
|
|
16,061,903 |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
9,106,783 |
|
|
|
6,173,639 |
|
|
|
4,205,241 |
|
|
|
3,471,864 |
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
Selling expenses |
|
1,681,058 |
|
|
|
1,686,436 |
|
|
|
1,049,905 |
|
|
|
711,434 |
|
General and
administrative expenses |
|
3,848,564 |
|
|
|
5,483,709 |
|
|
|
1,542,891 |
|
|
|
2,458,033 |
|
|
|
|
|
|
|
|
|
Total Operating
Expenses |
|
5,529,622 |
|
|
|
7,170,145 |
|
|
|
2,592,796 |
|
|
|
3,169,467 |
|
|
|
|
|
|
|
|
|
Income From
Operations |
|
3,577,161 |
|
|
|
(996,506 |
) |
|
|
1,612,445 |
|
|
|
302,397 |
|
|
|
|
|
|
|
|
|
Other Income
(Expenses) |
|
|
|
|
|
|
|
Non-operating expense,
net |
|
4,082 |
|
|
|
797 |
|
|
|
4,082 |
|
|
|
797 |
|
Foreign exchange
transaction loss |
|
(441 |
) |
|
|
(230 |
) |
|
|
(305 |
) |
|
|
(190 |
) |
Interest expense,
net |
|
(55,786 |
) |
|
|
(92,161 |
) |
|
|
(24,204 |
) |
|
|
(37,755 |
) |
Financial expense |
|
(69,497 |
) |
|
|
(51,827 |
) |
|
|
(38,777 |
) |
|
|
(25,767 |
) |
|
|
|
|
|
|
|
|
Total Other
Expenses, Net |
|
(121,642 |
) |
|
|
(143,421 |
) |
|
|
(59,204 |
) |
|
|
(62,915 |
) |
|
|
|
|
|
|
|
|
Income Before
Income Taxes |
|
3,455,519 |
|
|
|
(1,139,927 |
) |
|
|
1,553,241 |
|
|
|
239,482 |
|
|
|
|
|
|
|
|
|
Income Tax
Expense (Benefit) |
|
437,193 |
|
|
|
(488,003 |
) |
|
|
189,936 |
|
|
|
(317,984 |
) |
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
3,018,326 |
|
|
|
(651,924 |
) |
|
|
1,363,305 |
|
|
|
557,466 |
|
|
|
|
|
|
|
|
|
Other
Comprehensive (Loss) |
|
|
|
|
|
|
|
Release of foreign
currency translation adjustments upon disposal of subsidiaries |
|
|
|
|
|
|
|
Foreign currency
translation |
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
Comprehensive
Income (Loss) |
$ |
3,018,326 |
|
|
$ |
(651,924 |
) |
|
$ |
1,363,305 |
|
|
$ |
557,466 |
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
28,304,183 |
|
|
|
27,429,885 |
|
|
|
28,043,687 |
|
|
|
27,513,733 |
|
Diluted weighted
average shares outstanding |
|
28,650,857 |
|
|
|
27,429,885 |
|
|
|
28,524,134 |
|
|
|
27,516,902 |
|
|
|
|
|
|
|
|
|
Net income (loss) per
share of common stock |
|
|
|
|
|
|
|
Basic |
$ |
0.11 |
|
|
$ |
(0.02 |
) |
|
$ |
0.05 |
|
|
$ |
0.02 |
|
Diluted |
$ |
0.11 |
|
|
$ |
(0.02 |
) |
|
$ |
0.05 |
|
|
$ |
0.02 |
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETSJUNE 30, 2018
(UNAUDITED) AND DECEMBER 31, 2017
|
June 30, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
|
|
|
|
Current
Assets |
|
|
|
Cash and cash
equivalents |
$ |
7,803,679 |
|
$ |
5,722,716 |
Accounts receivable,
net |
|
55,274,251 |
|
|
54,006,513 |
Advance to
suppliers |
|
15,205,316 |
|
|
8,580,609 |
Inventories |
|
5,882,945 |
|
|
6,374,560 |
Prepaid expenses and
other receivables |
|
245,233 |
|
|
232,935 |
|
|
|
|
Total Current
Assets |
|
84,411,424 |
|
|
74,917,333 |
|
|
|
|
Noncurrent
Assets |
|
|
|
Plant, property and
equipment, net |
|
149,357 |
|
|
157,246 |
Lease deposit |
|
43,260 |
|
|
43,260 |
Goodwill |
|
218,606 |
|
|
218,606 |
Intangible assets,
net |
|
3,999,256 |
|
|
4,202,608 |
Deferred tax asset |
|
318,961 |
|
|
318,961 |
|
|
|
|
Total
Noncurrent Assets |
|
4,729,440 |
|
|
4,940,681 |
|
|
|
|
Total
Assets |
$ |
89,140,864 |
|
$ |
79,858,014 |
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS –
CONTINUEDJUNE 30, 2018 (UNAUDITED) AND DECEMBER
31, 2017
|
June 30, 2018 |
|
December 31, 2017 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
Accounts payable |
$ |
3,944,397 |
|
$ |
1,634,554 |
Line of credit |
|
7,306,830 |
|
|
- |
Advance from
customers |
|
48,808 |
|
|
19,826 |
Accrued liabilities and
other payables |
|
640,769 |
|
|
847,756 |
Income tax payable |
|
324,892 |
|
|
178,307 |
|
|
|
|
Total Current
Liabilities |
|
12,265,696 |
|
|
2,680,443 |
|
|
|
|
Noncurrent
Liabilities |
|
|
|
Line of credit |
|
- |
|
|
4,202,118 |
Income tax payable |
|
4,591,257 |
|
|
4,527,849 |
|
|
|
|
Total
Noncurrent Liabilities |
|
4,591,257 |
|
|
8,729,967 |
|
|
|
|
Total
Liabilities |
|
16,856,953 |
|
|
11,410,410 |
|
|
|
|
Contingencies
and Commitments |
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
Common stock, $0.001
par value; 75,000,000 shares authorized, |
|
|
|
28,399,610 and
28,191,927 shares issued and outstanding; |
|
28,400 |
|
|
28,192 |
as of June 30, 2018 and
2017, respectively |
|
Additional paid-in
capital |
|
39,500,150 |
|
|
38,682,377 |
Statutory reserves |
|
6,241 |
|
|
6,241 |
Retained earnings |
|
32,749,120 |
|
|
29,730,794 |
|
|
|
|
Total
Stockholders' Equity |
|
72,283,911 |
|
|
68,447,604 |
|
|
|
|
Total
Liabilities and Stockholders' Equity |
$ |
89,140,864 |
|
$ |
79,858,014 |
NOVA LIFESTYLE, INC. AND
SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWSFOR
THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(UNAUDITED)
|
Six Months Ended June 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
Cash Flows From
Operating Activities |
|
|
|
Net income
(loss) |
$ |
3,018,326 |
|
|
$ |
(651,924 |
) |
Adjustments to
reconcile net income to net cash used in |
|
|
|
operating
activities: |
|
|
|
Depreciation and
amortization |
|
222,741 |
|
|
|
762,150 |
|
Deferred tax
benefit |
|
-- |
|
|
|
(648,961 |
) |
Stock compensation
expense |
|
843,296 |
|
|
|
913,264 |
|
Changes in bad debt
allowance |
|
169,909 |
|
|
|
504,324 |
|
Changes in operating
assets and liabilities: |
|
|
|
Accounts
receivable |
|
(1,437,646 |
) |
|
|
9,997,317 |
|
Advance to
suppliers |
|
(624,708 |
) |
|
|
0,922,714 |
) |
Inventories |
|
491,615 |
|
|
|
768,120 |
|
Other current
assets |
|
(69,820 |
) |
|
|
(267,052 |
) |
Accounts payable |
|
2,309,843 |
|
|
|
(2,296,941 |
) |
Advance from
customers |
|
28,982 |
|
|
|
(497,484 |
) |
Accrued liabilities and
other payables |
|
(206,281 |
) |
|
|
186,081 |
|
Taxes payable |
|
209,993 |
|
|
|
160,959 |
|
|
|
|
|
Net Cash Used
in Operating Activities |
|
(1,043,750 |
) |
|
|
(1,992,861 |
) |
|
|
|
|
Cash Flows From
Investing Activities |
|
|
|
Assignment fee
received |
|
-- |
|
|
|
1,250,000 |
|
Purchase of property
and equipment |
|
(11,499 |
) |
|
|
(2,132 |
) |
Advances to unrelated
parties |
|
-- |
|
|
|
(8,835,000 |
) |
Repayment from
unrelated parties |
|
-- |
|
|
|
15,835,000 |
|
|
|
|
|
Net Cash (Used
in) provided by Investing Activities |
|
(11,499 |
) |
|
|
8,247,868 |
|
|
|
|
|
Cash Flows From
Financing Activities |
|
|
|
Proceeds from
line of credit and bank loan |
|
39,802,918 |
|
|
|
23,094,342 |
|
Repayment to
line of credit and bank loan |
|
(36,698,206 |
) |
|
|
(26,765,110 |
) |
Proceeds from
the exercise of options for common stocks |
|
31,500 |
|
|
|
-- |
|
|
|
|
|
Net Cash
provided by (Used in) Financing Activities |
|
3,136,212 |
|
|
|
(3,670,768 |
) |
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)FOR THE SIX MONTHS ENDED MARCH 31,
2018 AND 2017 (UNAUDITED)
|
Six Months Ended June 30, |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Effect of Exchange Rate
Changes on Cash and Cash Equivalents |
|
-- |
|
|
-- |
|
|
|
|
Net (decrease) increase
in cash and cash equivalents |
|
2,080,963 |
|
|
2,584,239 |
|
|
|
|
Cash and cash
equivalents, beginning of period |
|
5,722,716 |
|
|
2,587,743 |
|
|
|
|
Cash and cash
equivalents, ending of period |
$ |
803,679 |
|
$ |
5,171,982 |
|
|
|
|
Analysis of cash and
cash equivalents |
|
|
|
Included in cash and
cash equivalents per consolidated balance sheets |
|
7,803,679 |
|
|
5,171,982 |
|
|
|
|
Cash and cash
equivalents, end of period |
$ |
7,803,679 |
|
$ |
5,171,982 |
|
|
|
|
Supplemental Disclosure of Cash Flow Information |
Cash paid during the
period for: |
|
|
|
Income tax
payments |
$ |
227,200 |
|
$ |
-- |
Interest expense |
$ |
55,828 |
|
$ |
118,753 |
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