Nova LifeStyle Reports Second Quarter 2017 Financial Results
07 August 2017 - 1:45PM
Nova LifeStyle, Inc. (NASDAQ:NVFY), a U.S. based
fast-growing, innovative designer, manufacturer and distributor of
modern LifeStyle furniture, today announced financial results for
the second quarter ended June 30, 2017, highlighted by higher gross
margins and a return to profitability.
Second Quarter 2017 Financial
Highlights:
- Second quarter Net Sales were $19.5 million, compared to $19.7
million in the prior year period.
- Gross profit for the second quarter was $3.5 million, compared
to $2.4 million in the prior year period.
- Second quarter Gross Margin was 17.8%, compared to 12.4% in the
prior year period.
- Net Income of approximately $0.56 million or $0.02 per diluted
share based on 27.5 million shares outstanding in the second
quarter of 2017, compared to a net loss of $0.69 million or ($0.03)
per diluted share based on 24.9 million shares outstanding in the
prior year period.
Six Months 2017 Financial
Highlights:
- Six-month Net Sales were $37.6 million, a decrease of 10.9%
compared to $42.2 million in the prior year period.
- Gross profit for the six months ended June 30, 2017 was $6.2
million, compared to $6.1 million in the prior year period.
- Six-month Gross Margin was 16.4%, compared to 14.3% in the
prior year period.
- Net loss of approximately $0.65 million or ($0.02) per diluted
share based on 27.4 million shares outstanding in six months ended
June 30, 2017, compared to a net loss of $0.59 million or ($0.02)
per diluted share based on 24.6 million shares outstanding in the
prior year period.
Operational Overview
Product CategoryNova
LifeStyle’s largest selling product categories in the three months
ended June 30, 2017 were sofas, beds and coffee tables, which
accounted for approximately 74%, 15% and 4% of sales, respectively.
This was compared to the prior year period where the Company’s
largest selling product categories were sofas, dining tables and
beds, which accounted for approximately 62%, 9% and 8% of sales
respectively.
In order to drive growth, the Company is focused
on the adoption of new image standards along with continued
expansion of its product lines. The Company intends to pursue
more opportunities associated with social media and e-commerce as a
way to grow the business.
Geographic BreakdownNorth AmericaSales to North
America were $12.7 million in the three months ended June 30, 2017,
a decrease of 0.5% from $12.8 million in the same period of 2016.
As a percentage of total revenue, North American sales remain
the largest for Nova LifeStyle at 65.1%.
AsiaSales to Asia, excluding Hong Kong, decreased by 37.2% to
$0.88 million in the three months ended June 30, 2017, as compared
to $1.4 million in the same period of 2016. This was due to a
decrease in sales orders from customers in that region.
AustraliaSales to Australia increased to $4.2
million in the three months ended June 30, 2017, an increase of
223% from $1.3 million in the same period of 2016. This was
primarily because of an increase of sales orders from satisfied
customers who decided to purchase more products.
Geographical distribution of sales is set out as follows:
(US$ in millions) |
For three months ended June 30, |
|
|
2017 |
|
2016 |
|
Sales |
% of Total |
Sales |
% of Total |
|
North America |
$ |
12,727,804 |
65.1 |
% |
$ |
12,786,666 |
64.7 |
% |
|
Asia** |
|
876,554 |
4.5 |
% |
|
1,395,321 |
7.1 |
% |
|
Europe |
|
1,193,180 |
6.1 |
% |
|
3,907,954 |
19.8 |
% |
|
Australia |
|
4,248,240 |
21.8 |
% |
|
1,315,280 |
6.7 |
% |
|
Hong Kong |
|
461,943 |
2.4 |
% |
|
277,012 |
1.4 |
% |
|
Other countries |
|
26,046 |
0.1 |
% |
|
58,814 |
0.3 |
% |
|
|
$ |
19,533,767 |
|
$ |
19,741,047 |
|
% |
|
Balance Sheet and Cash Flow Highlights
- Working capital at June 30, 2017 was $58.7 million, compared to
$58.4 million at December 31, 2016.
- The current ratio at June 30, 2017 was 11.95 to 1.0.
The following is a summary of cash provided by or used in each
of the indicated types of activities during the six months ended
June 30, 2017 and 2016:
|
|
June 30,2017 |
|
|
June
30,2016 |
Cash (used in) provided
by: |
|
|
|
|
|
|
Operating
activities |
|
$ |
(1,992,861 |
) |
|
$ |
(1,244,869 |
) |
Investing
activities |
|
|
8,247,868 |
|
|
|
(85,271 |
) |
Financing
activities |
|
|
(3,670,768 |
) |
|
|
993,287 |
|
Net cash used by operating activities was $1.99
million in the six months ended June 30, 2017, compared to a cash
outflow of $1.24 million in the prior year period. This was
primarily due to a reduction in accounts payable along with
advances to suppliers offset by improved collection of accounts
receivable and reduction of inventory.
About Nova LifeStyleNova
LifeStyle, Inc., a NASDAQ Global Market 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. Visit Nova's website:
www.NovaLifeStyle.com.
Safe Harbor StatementAll 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.
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS) |
FOR THE SIX AND THREE MONTHS ENDED JUNE 30,
2017 AND 2016 (UNAUDITED) |
|
|
Six Months Ended June 30, |
|
Three Months Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Net
Sales |
$ |
37,590,789 |
|
|
$ |
42,210,054 |
|
|
$ |
19,533,767 |
|
|
$ |
19,741,047 |
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
31,417,150 |
|
|
|
36,155,603 |
|
|
|
16,061,903 |
|
|
|
17,291,739 |
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
6,173,639 |
|
|
|
6,054,451 |
|
|
|
3,471,864 |
|
|
|
2,449,308 |
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
Selling
expenses |
|
1,686,436 |
|
|
|
2,308,005 |
|
|
|
711,434 |
|
|
|
723,091 |
|
General
and administrative expenses |
|
5,483,709 |
|
|
|
3,264,434 |
|
|
|
2,458,033 |
|
|
|
1,919,137 |
|
|
|
|
|
|
|
|
|
Total Operating
Expenses |
|
7,170,145 |
|
|
|
5,572,439 |
|
|
|
3,169,467 |
|
|
|
2,642,228 |
|
|
|
|
|
|
|
|
|
(Loss) Income
From Operations |
|
(996,506 |
) |
|
|
482,012 |
|
|
|
302,397 |
|
|
|
(192,920 |
) |
|
|
|
|
|
|
|
|
Other Income
(Expenses) |
|
|
|
|
|
|
|
Non-operating income (expense), net |
|
797 |
|
|
|
24,371 |
|
|
|
797 |
|
|
|
11,970 |
|
Foreign
exchange transaction loss |
|
(230 |
) |
|
|
(2,297 |
) |
|
|
(190 |
) |
|
|
(1,248 |
) |
Interest
expense, net |
|
(92,161 |
) |
|
|
(144,667 |
) |
|
|
(37,755 |
) |
|
|
(72,233 |
) |
Financial
expense |
|
(51,827 |
) |
|
|
(54,365 |
) |
|
|
(25,767 |
) |
|
|
(25,928 |
) |
|
|
|
|
|
|
|
|
Total Other
Expenses, Net |
|
(143,421 |
) |
|
|
(176,958 |
) |
|
|
(62,915 |
) |
|
|
(87,439 |
) |
|
|
|
|
|
|
|
|
(Loss) Income
Before Income Taxes and Discontinued operations |
|
(1,139,927 |
) |
|
|
305,054 |
|
|
|
239,482 |
|
|
|
(280,359 |
) |
|
|
|
|
|
|
|
|
Income Tax
(Benefit) Expense |
|
(488,003 |
) |
|
|
160,718 |
|
|
|
(317,984 |
) |
|
|
141,677 |
|
|
|
|
|
|
|
|
|
(Loss) Income
From Continuing Operations |
|
(651,924 |
) |
|
|
144,336 |
|
|
|
557,466 |
|
|
|
(422,036 |
) |
|
|
|
|
|
|
|
|
Loss From
Discontinued Operations, net of tax |
|
-- |
|
|
|
(732,979 |
) |
|
|
-- |
|
|
|
(263,736 |
) |
|
|
|
|
|
|
|
|
Net (Loss)
Income |
|
(651,924 |
) |
|
|
(588,643 |
) |
|
|
557,466 |
|
|
|
(685,772 |
) |
|
|
|
|
|
|
|
|
Other
Comprehensive Income |
|
|
|
|
|
|
|
Foreign
currency translation |
|
-- |
|
|
|
(322,114 |
) |
|
|
-- |
|
|
|
(397,742 |
) |
|
|
|
|
|
|
|
|
Comprehensive
(Loss) Income |
$ |
(651,924 |
) |
|
$ |
(910,757 |
) |
|
$ |
557,466 |
|
|
$ |
(1,083,514 |
) |
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
27,429,885 |
|
|
|
24,622,887 |
|
|
|
27,513,733 |
|
|
|
24,911,803 |
|
Diluted weighted
average shares outstanding |
|
27,429,885 |
|
|
|
24,622,887 |
|
|
|
27,516,902 |
|
|
|
24,911,803 |
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations per share of common stock |
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
Diluted |
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
Loss from discontinued
operations per share of common stock |
|
|
|
|
|
|
|
Basic |
$ |
-- |
|
|
$ |
(0.03 |
) |
|
$ |
-- |
|
|
$ |
(0.01 |
) |
Diluted |
$ |
-- |
|
|
$ |
(0.03 |
) |
|
$ |
-- |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
Net (loss) income per
share of common stock |
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
(0.03 |
) |
Diluted |
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
(0.03 |
) |
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
JUNE 30, 2017 (UNAUDITED) AND DECEMBER 31,
2016 |
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
|
2016 |
Assets |
|
|
|
|
|
|
|
Current Assets |
|
|
|
Cash and
cash equivalents |
$ |
5,171,982 |
|
$ |
2,587,743 |
Accounts
receivable, net |
|
31,601,120 |
|
|
42,102,761 |
Advance
to suppliers |
|
24,592,466 |
|
|
13,669,752 |
Inventories |
|
2,013,003 |
|
|
2,781,123 |
Assignment fee receivable |
|
-- |
|
|
1,250,000 |
Receivable from an unrelated party |
|
-- |
|
|
7,000,000 |
Prepaid
expenses and other receivables |
|
710,929 |
|
|
642,891 |
Taxes
receivable |
|
14,894 |
|
|
14,893 |
|
|
|
|
Total Current
Assets |
|
64,104,394 |
|
|
70,049,163 |
|
|
|
|
Noncurrent
Assets |
|
|
|
Plant,
property and equipment, net |
|
153,265 |
|
|
171,276 |
Lease
deposit |
|
43,260 |
|
|
43,260 |
Goodwill |
|
218,606 |
|
|
218,606 |
Intangible assets, net |
|
4,944,616 |
|
|
5,686,623 |
Deferred
tax asset |
|
1,523,720 |
|
|
874,759 |
|
|
|
|
Total
Noncurrent Assets |
|
6,883,467 |
|
|
6,994,524 |
|
|
|
|
Total
Assets |
$ |
70,987,861 |
|
$ |
77,043,687 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
Liabilities |
|
|
|
Accounts
payable |
$ |
71,834 |
|
$ |
2,368,775 |
Line of
credit |
|
4,307,073 |
|
|
7,977,841 |
Advance
from customers |
|
16,396 |
|
|
513,880 |
Accrued
liabilities and other payables |
|
967,041 |
|
|
780,960 |
|
|
|
|
Total Current
Liabilities |
|
5,362,344 |
|
|
11,641,456 |
|
|
|
|
Noncurrent
Liabilities |
|
|
|
Income
tax payable |
|
2,297,748 |
|
|
2,136,788 |
|
|
|
|
Total
Noncurrent Liabilities |
|
2,297,748 |
|
|
2,136,788 |
|
|
|
|
Total
Liabilities |
|
7,660,092 |
|
|
13,778,244 |
|
|
|
|
Contingencies
and Commitments |
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
Common
stock, $0.001 par value; 75,000,000 shares |
|
|
|
authorized; 27,767,905 and 27,309,695 shares issued and |
|
|
|
outstanding as of June 30, 2017 and December 31, 2016, |
|
|
|
respectively |
|
27,768 |
|
|
27,309 |
Additional paid-in capital |
|
37,599,253 |
|
|
36,885,462 |
Statutory
reserves |
|
6,241 |
|
|
6,241 |
Retained
earnings |
|
25,694,507 |
|
|
26,346,431 |
|
|
|
|
Total
Stockholders' Equity |
|
63,327,769 |
|
|
63,265,443 |
|
|
|
|
Total
Liabilities and Stockholders' Equity |
$ |
70,987,861 |
|
$ |
77,043,687 |
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND
2016 (UNAUDITED) |
|
|
Six Months Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Cash Flows From
Operating Activities |
|
|
|
Net (loss) income
from continuing operations |
$ |
(651,924 |
) |
|
$ |
144,336 |
|
Adjustments to
reconcile net income (loss) to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
762,150 |
|
|
|
310,851 |
|
Deferred
tax benefit |
|
(648,961 |
) |
|
|
-- |
|
Stock
compensation expense |
|
913,264 |
|
|
|
938,501 |
|
Changes
in bad debt allowance |
|
504,324 |
|
|
|
(18,477 |
) |
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
|
9,997,317 |
|
|
|
1,602,326 |
|
Advance
to suppliers |
|
(10,922,714 |
) |
|
|
(6,761,289 |
) |
Inventories |
|
768,120 |
|
|
|
(75,326 |
) |
Other
current assets |
|
(267,052 |
) |
|
|
152,260 |
|
Accounts
payable |
|
(2,296,941 |
) |
|
|
2,162,024 |
|
Advance
from customers |
|
(497,484 |
) |
|
|
926,231 |
|
Accrued
expenses and other payables |
|
186,081 |
|
|
|
(538,652 |
) |
Taxes
payable |
|
160,959 |
|
|
|
153,520 |
|
|
|
|
|
Net Cash Used
in Continuing Operations |
|
(1,992,861 |
) |
|
|
(1,003,695 |
) |
Net Cash Used
in Discontinued Operations |
|
-- |
|
|
|
(241,174 |
) |
|
|
|
|
Net Cash Used
in Operating Activities |
|
(1,992,861 |
) |
|
|
(1,244,869 |
) |
|
|
|
|
Cash Flows From
Investing Activities |
|
|
|
Assignment fee received |
|
1,250,000 |
|
|
|
-- |
|
Purchase
of property and equipment |
|
(2,132 |
) |
|
|
(3,544 |
) |
Advances
to unrelated parties |
|
(8,835,000 |
) |
|
|
-- |
|
Repayment
from unrelated parties |
|
15,835,000 |
|
|
|
-- |
|
|
|
|
|
Net Cash
Provided by (Used in) Continuing Operations |
|
8,247,868 |
|
|
|
(3,544 |
) |
Net Cash Used
in Discontinued Operations |
|
-- |
|
|
|
(81,727 |
) |
|
|
|
|
Net Cash
Provided by (Used in) Investing Activities |
|
8,247,868 |
|
|
|
(85,271 |
) |
|
|
|
|
Cash Flows From
Financing Activities |
|
|
|
Proceeds from
line of credit and bank loan |
|
23,094,342 |
|
|
|
19,758,074 |
|
Repayment to
line of credit and bank loan |
|
(26,765,110 |
) |
|
|
(19,086,365 |
) |
|
|
|
|
Net Cash (Used
in) Provided by Continuing Operations |
|
(3,670,768 |
) |
|
|
671,709 |
|
Net Cash
Provided by Discontinued Operations |
|
-- |
|
|
|
321,578 |
|
|
|
|
|
Net Cash (Used
in) Provided by Financing Activities |
|
(3,670,768 |
) |
|
|
993,287 |
|
|
|
|
|
Effect of
Exchange Rate Changes on Cash and Cash Equivalents |
|
-- |
|
|
|
(1,746 |
) |
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
2,584,239 |
|
|
|
(338,599 |
) |
Cash and cash
equivalents, beginning of period |
|
2,587,743 |
|
|
|
988,029 |
|
|
|
|
|
Cash and cash
equivalents, end of period |
$ |
5,171,982 |
|
|
$ |
649,430 |
|
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED) |
FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND
2016 (UNAUDITED) |
|
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Analysis of
cash and cash equivalents |
|
|
|
Included in cash and
cash equivalents per consolidated balance sheets |
$ |
5,171,982 |
|
$ |
584,339 |
Included in assets of
discontinued operations |
|
- |
|
|
65,091 |
|
|
|
|
Cash and cash
equivalents, end of period |
$ |
5,171,982 |
|
$ |
649,430 |
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information |
Continuing
operations: |
|
|
|
Cash paid
during the period for: |
|
|
|
Income
tax payments |
$ |
-- |
|
$ |
7,200 |
Interest
expense |
$ |
118,753 |
|
$ |
144,668 |
|
|
|
|
Discontinued
operations: |
|
|
|
Cash paid
during the period for: |
|
|
|
Income
tax payments |
$ |
-- |
|
$ |
-- |
Interest
expense |
$ |
-- |
|
$ |
86,164 |
|
|
|
|
|
|
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 (NASDAQ:NVFY)
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Nova Lifestyle (NASDAQ:NVFY)
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