LOS ANGELES, Nov. 12, 2014 /PRNewswire/ -- Nova LifeStyle,
Inc. (NASDAQ-GM: 'NVFY'), a U.S.-based fast growing, innovative
designer, manufacturer and distributor of modern LifeStyle
furniture, today announced financial results for the third quarter
ended September 30, 2014.
Third Quarter Corporate Highlights and Progress on Growth
Initiatives:
- Rang Closing Bell at NASDAQ
- Agreement to Furnish Ping An Insurance Group's Expansive
Offices
- Purchase Order Fulfilled with IKEA China
- Growth in China Online Sales via
Alibaba's B2C Site, TMall and JD.com
- Expanded Franchise Network in Partnership with Franchise
Builder, Ablejoy
Third Quarter Financial Highlights:
- Third Quarter Net Sales Increased 16% Y-o-Y
- Third Quarter Gross Profit Increase 34% Y-o-Y
- Third Quarter Diluted EPS of $0.15 Y-o-Y
Corporate achievements for the third quarter ended
September 30, 2014:
"We began this quarter with a trip to NASDAQ to ring the opening
bell and continued on to deliver a strong third quarter," stated
Tawny Lam, President of Nova
LifeStyle, Inc. "We were successful on our commitment to grow
sales in China with a signed
agreement with Ping An, number 62 on
Forbes Global 2000 list of the largest companies in the world; in
September, we shipped the first of three monthly shipments to
IKEA's distribution center in Shanghai; and we expanded our franchise
network by partnering with Ablejoy, one of China's largest
franchise builders. We made good on our initiative to grow
eCommerce sales and are thrilled with the 200% increase that we
experienced for the whole of the third quarter via the online sales
venues of Alibaba's B2C site, TMall and JD.com. We stayed
true to our mission to create innovative designs, offer a
diversified product line and maintained a leading-edge, fully
integrated design-to-production business model, which for us, is
the fundamental strength of our business and will allow us to drive
long-term shareholder value."
- The Company continued to execute on its growth initiative to
increase sales in China with the
signing of an agreement with Ping An Insurance Group of China, Ltd.
("Ping An") to furnish their new
offices in China. The first shipment of the initial,
first-year commitment was received during the third quarter of this
year. Ping An is engaged
in providing integrated financial services within three core
businesses of life insurance, property & casualty insurance and
banking, securities and corporate insurance. With over
200,000 employees, Ping An is
publicly traded on both the Hong
Kong and the Shanghai Stock Exchanges and is an industry
leader, posting consolidated total assets of RMB3.36 trillion as at December 31, 2013.
- The Company has commenced production shipments to IKEA under
its supply agreement to manufacture IKEA products for sale in
China and Asia. The first of
three monthly shipments was received in September at IKEA's
distribution center in Shanghai,
China. Production of the furniture is ongoing at the 15,000
square meter production line, which meets IKEA's stringent
manufacturing specifications at Nova's factory in Dongguan, China. In August, the Company
reported beginning production and the samples shipment in
preparation for September purchase order fulfillment.
- The Company continues the development of Nova LifeStyle's
dedicated e-Commerce platform, which will exclusively offer
furniture and home furnishings of many popular major brands to
consumers in China, and still
plans for completion of an initial launch by the end of the fourth
quarter of 2014.
- The Company's plan to launch a new Mobile Device Application
remains on track to launch during the fourth quarter 2014.
Financial results for the third quarter ended September 30, 2014:
- Net sales were $25.9 million, an
increase of 16% compared to $22.3
million from the prior year period, and is primarily the
result of a 6% increase in sales volume and 9% increase in average
selling price. North American sales continued to drive growth
contributing a 45% increase up from a 43% increase the previous
quarter. Sales to China increased marginally to $4.44 million in the three months ended
September 30, 2014 from $4.39 million in the same period of 2013.
Sales to Asia, including
Hong Kong, and other countries,
increased 2.81% to $1.20 million in
the three months ended September 30,
2014 compared to $1.17 million
in the same period of 2013. Sales in Europe were $1.9
million and continued a year over year contraction as result
of the sluggish European economy.
- Gross profit was $5.9 million, an
increase of 34% compared to the prior year. Gross profit
margin increased to 23% in the three months ended September 30, 2014, compared to 20% in the same
period of 2013. The increase in gross profit margin resulted
primarily from decreased cost of sales as a percentage of net
sales, which was due primarily to increased sales and decreased
cost of direct materials for self-produced products.
Additionally, the Company attracted more sales orders from large
trading company customers by conducting trade shows in United States.
- Operating income was $2.6 million
compared to $1.7 million in the prior
year period, primarily reflecting higher general and administrative
expenses including research and development expenses to advance the
Company's growth initiatives and amortization associated with the
acquisition of Bright Swallow. This was partially offset by a 100
basis point improvement in selling expenses as a percentage of net
sales. Overall SG&A expenses as a percentage of net sales
declined by 170 basis points.
- Net income was $3.1 million, an
increase of 156% from $1.22 million
for the same period of 2013, or $0.15
per diluted share, based on a weighted average diluted share count
of 20.9 million shares.
Results for the first nine months ended September 30, 2014:
- Net sales were $69.7 million, an
increase of 23% from $56.5 million
the prior year period. This growth was primarily driven by a 34%
increase in sales volume due to a 9% decrease in average selling
price. The increased sales volume of low price products in both the
China domestic market and worldwide was a key factor.
- Gross profit was $14.1 million,
an increase of 23% compared to the prior year period's gross profit
of $11.5 million. The increase
in gross profit was primarily the result of increase of net sales.
Our gross profit margin stayed the same at 20% in the nine months
ended September 30, 2014, compared
with the same period of 2013.
- Operating income was $4.7 million
and was relatively unchanged compared to $4.7 million in the prior year period.
- Net income was $6.8 million, or
$0.33 per diluted share, based on a
weighted average diluted share count of 20.3 million shares, and
included a non-cash, pre-tax gain of $2.8
million due to the change in the fair value of warrant
liability. This compares to net income of $3.9 million, or $0.19 per diluted share, on 19.0 million weighted
average shares outstanding in the prior year period.
About Nova LifeStyle, Inc.
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange listed
company headquartered in California, is a fast growing, innovative
designer, manufacturer 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, Colorful World, Giorgio
Mobili, 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.
Investor Contact:
KCSA Strategic Communication
Julie Silber
Tel: (310) 766-9760
jsilber@kcsa.com
NOVA LIFESTYLE,
INC. AND SUBSIDIARIES
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
SEPTEMBER 30, 2014
(UNAUDITED) AND DECEMBER 31, 2013
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2014
|
|
2013
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$ 1,867,461
|
|
$ 2,323,338
|
Accounts receivable,
net
|
37,730,838
|
|
27,967,831
|
Advance to
suppliers
|
6,368,879
|
|
3,535,100
|
Inventories
|
6,095,466
|
|
3,353,634
|
Prepaid expenses and
other receivables
|
1,018,799
|
|
648,620
|
Income tax
receivable
|
--
|
|
38,654
|
Deferred tax
asset
|
242,403
|
|
243,682
|
|
|
|
|
Total Current
Assets
|
53,323,846
|
|
38,110,859
|
|
|
|
|
Noncurrent
Assets
|
|
|
|
Heritage and
cultural assets
|
131,791
|
|
132,993
|
Plant, property
and equipment, net
|
14,517,939
|
|
13,146,638
|
Construction in
progress
|
613,367
|
|
1,024,645
|
Lease
deposit
|
92,550
|
|
103,122
|
Deposits
|
795,490
|
|
-
|
Goodwill
|
218,606
|
|
1,027,124
|
Intangible
assets, net
|
6,608,218
|
|
6,976,991
|
Deferred tax
asset, net
|
--
|
|
44,334
|
|
|
|
|
Total Noncurrent
Assets
|
22,977,961
|
|
22,455,847
|
|
|
|
|
Total
Assets
|
$
76,301,807
|
|
$
60,566,706
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$ 8,353,551
|
|
$ 6,895,254
|
Line of
credit
|
7,167,715
|
|
820,089
|
Advance from
customers
|
102,055
|
|
43,077
|
Accrued liabilities
and other payables
|
1,426,931
|
|
1,458,157
|
Warrant derivative
liability
|
2,818,689
|
|
--
|
Taxes
payable
|
87,140
|
|
-
|
|
|
|
|
Total Current
Liabilities
|
19,956,081
|
|
9,216,577
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
Line of
credit
|
-
|
|
6,602,258
|
Deferred rent
payable
|
79,685
|
|
74,152
|
Deferred tax
liability
|
10,978
|
|
--
|
Income tax
payable
|
6,458,094
|
|
5,944,424
|
|
|
|
|
Total Noncurrent
Liabilities
|
6,548,757
|
|
12,620,834
|
|
|
|
|
Total
Liabilities
|
26,504,838
|
|
21,837,411
|
|
|
|
|
Contingencies and
Commitments
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock, $0.001
par value; 75,000,000 shares authorized,
|
|
|
|
20,887,316 and
19,206,024 shares issued and outstanding
|
20,787
|
|
19,206
|
as of September 30,
2014 and December 31, 2013
|
|
Additional paid-in
capital
|
24,183,997
|
|
20,977,058
|
Subscription
receivable
|
--
|
|
(750,000)
|
Shares to be
issued
|
462,000
|
|
--
|
Statutory
reserves
|
6,241
|
|
6,241
|
Accumulated other
comprehensive income
|
2,473,274
|
|
2,603,010
|
Retained
earnings
|
22,650,670
|
|
15,873,780
|
|
|
|
|
Total
Stockholders' Equity
|
49,796,969
|
|
38,729,295
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
76,301,807
|
|
$
60,566,706
|
NOVA LIFESTYLE,
INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
FOR THE NINE AND
THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
Three Months Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net
Sales
|
$ 69,708,982
|
|
$ 56,471,241
|
|
$ 25,892,872
|
|
$ 22,310,842
|
|
|
|
|
|
|
|
|
Cost of
Sales
|
55,592,993
|
|
44,973,299
|
|
20,001,433
|
|
17,911,859
|
|
|
|
|
|
|
|
|
Gross
Profit
|
14,115,989
|
|
11,497,942
|
|
5,891,439
|
|
4,398,983
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
Selling
expenses
|
2,798,329
|
|
2,386,646
|
|
1,174,658
|
|
812,574
|
General and
administrative expenses
|
5,799,195
|
|
4,381,147
|
|
2,128,469
|
|
1,880,448
|
Goodwill
impairment
|
808,518
|
|
--
|
|
--
|
|
--
|
Loss on
disposal fixed assets
|
28,963
|
|
--
|
|
6,437
|
|
--
|
|
|
|
|
|
|
|
.
|
Total Operating
Expenses
|
9,435,005
|
|
6,767,793
|
|
3,309,564
|
|
2,693,022
|
|
|
|
|
|
|
|
|
Income From
Operations
|
4,680,984
|
|
4,730,149
|
|
2,581,875
|
|
1,705,961
|
|
|
|
|
|
|
|
|
Other Income
(Expenses)
|
|
|
|
|
|
|
|
Non-operating income
(expenses), net
|
164,280
|
|
(46,497)
|
|
(2,721)
|
|
(9,571)
|
Change in fair value
of warrant liability
|
2,841,177
|
|
--
|
|
630,264
|
|
--
|
Interest income
(expense)
|
(100,917)
|
|
(218,815)
|
|
38,548
|
|
(76,349)
|
Financial
expense
|
(56,323)
|
|
(106,229)
|
|
(49,458)
|
|
(39,883)
|
|
|
|
|
|
|
|
|
Total Other Income
(Expenses), Net
|
2,848,217
|
|
(371,541)
|
|
616,633
|
|
(125,803)
|
|
|
|
|
|
|
|
|
Income Before
Income Tax
|
7,529,201
|
|
4,358,608
|
|
3,198,508
|
|
1,580,158
|
|
|
|
|
|
|
|
|
Income Tax
Expense
|
752,311
|
|
772,135
|
|
77,825
|
|
359,232
|
|
|
|
|
|
|
|
|
Net
Income
|
6,776,890
|
|
3,586,473
|
|
3,120,683
|
|
1,220,926
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income
|
|
|
|
|
|
|
|
Foreign currency
translation
|
(129,736)
|
|
313,811
|
|
(1,359)
|
|
69,909
|
|
|
|
|
|
|
|
|
Comprehensive
Income
|
$
6,647,154
|
|
$
3,900,284
|
|
$
3,119,324
|
|
$
1,290,835
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
20,133,976
|
|
18,778,902
|
|
20,861,990
|
|
19,026,934
|
Diluted weighted
average shares outstanding
|
20,274,325
|
|
19,038,815
|
|
20,943,076
|
|
19,276,153
|
|
|
|
|
|
|
|
|
Basic net earnings
per share
|
$
0.34
|
|
$
0.19
|
|
$
0.15
|
|
$
0.06
|
Diluted net earnings
per share
|
$
0.33
|
|
$
0.19
|
|
$
0.15
|
|
$
0.06
|
NOVA LIFESTYLE,
INC. AND SUBSIDIARIES
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 (UNAUDITED)
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2014
|
|
2013
|
|
(Unaudited)
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
Net
Income
|
$ 6,776,890
|
|
$ 3,586,473
|
Adjustments to
reconcile net income to net cash provided by
|
|
|
|
(used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
1,244,376
|
|
923,347
|
Deferred tax expense
(benefit)
|
55,317
|
|
(17,179)
|
Stock compensation
expense
|
462,895
|
|
449,490
|
Warrants
expense
|
76,629
|
|
48,747
|
Change in fair value of warrant liability
|
(2,841,177)
|
|
--
|
Changes in bad debt
allowance
|
76,438
|
|
22,947
|
Goodwill
impairment
|
808,518
|
|
--
|
Loss on disposal of
fixed assets
|
28,963
|
|
--
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(9,886,758)
|
|
(1,594,509)
|
Advance to
suppliers
|
(2,839,808)
|
|
1,083,200
|
Inventories
|
(2,761,204)
|
|
31,344
|
Other current
assets
|
(127,273)
|
|
(434,290)
|
Accounts
payable
|
1,486,895
|
|
(2,034,541)
|
Advance from
customers
|
59,882
|
|
(209,094)
|
Accrued expenses and
other payables
|
(64,664)
|
|
(37,491)
|
Deferred rent
payable
|
6,211
|
|
6,142
|
Taxes
payable
|
678,640
|
|
413,876
|
|
|
|
|
Net Cash (Used in)
Provided By Operating Activities
|
(6,759,230)
|
|
2,238,462
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
Deposit on acquisition of Bright Swallow Int'l Group
Ltd.
|
--
|
|
(3,500,000)
|
Cash acquired from acquisition of Bright Swallow
|
--
|
|
342,029
|
Deposits on plant construction
|
(786,378)
|
|
--
|
Purchase
of property and equipment
|
(1,371,816)
|
|
(467,964)
|
Cash
received from disposition of fixed assets
|
11,998
|
|
--
|
Construction in progress
|
(640,501)
|
|
(319,309)
|
|
|
|
|
Net Cash Used in
Investing Activities
|
(2,786,697)
|
|
(3,945,244)
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
Repayment to related
parties
|
--
|
|
(1,987)
|
Proceeds from line of credit
and bank loan
|
21,417,000
|
|
12,081,000
|
Repayment to line of credit
and bank loan
|
(21,664,221)
|
|
(12,762,396)
|
Proceeds from subscription
receivable
|
750,000
|
|
--
|
Cash received from warrants exercised
|
448,841
|
|
795,848
|
Proceeds from equity financing, net of expenses of
$831,000
|
8,139,000
|
|
--
|
|
|
|
|
Net Cash Provided
by Financing Activities
|
$ 9,090,620
|
|
$ 112,465
|
|
|
|
|
Effect of Exchange
Rate Changes on
|
|
|
|
Cash and
Cash Equivalents
|
$
(570)
|
|
$ 24,221
|
|
|
|
|
Net decrease in
cash and cash equivalents
|
(455,877)
|
|
(1,570,096)
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
2,323,338
|
|
3,150,492
|
|
|
|
|
Cash and cash
equivalents, ending of period
|
$
1,867,461
|
|
$
1,580,396
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
Cash paid during the
year for:
|
|
|
|
Income tax
payments
|
$
21,485
|
|
$
358,957
|
Interest expense
|
$
227,285
|
|
$
210,303
|
|
|
|
|
Supplemental
Disclosure of Non-Cash Financing Activities
|
|
|
|
|
Construction in
progress transfer to fixed assets
|
$
1,044,015
|
|
$
4,747,359
|
SOURCE Nova LifeStyle, Inc.