Nova LifeStyle Announces Third Quarter 2018 Financial Results
09 November 2018 - 10:05PM
North American Sales Up 11% Versus Prior
Year Period
Nova LifeStyle, Inc. (NASDAQ: NVFY), a leading
U.S.-based, innovative designer and distributor of modern LifeStyle
home products, today announced financial results for the third
quarter and nine months ended September 30, 2018.
Management CommentaryTawny Lam,
Chief Executive Officer of Nova LifeStyle, commented, "Our North
American sales increased by 11%, which was offset by a decrease of
sales to Australia and our sales efforts continue to be focused on
higher margin products following our exit from the low-margin, mass
product segment of the market. We are optimistic that our sales
growth will continue in North American region. Our
largest selling product categories in the three months ended
September 30, 2018 were sofas, cabinets and beds, which accounted
for approximately 64%, 10% and 9% of sales, respectively. Overall,
third quarter sales faced a very challenging comparison with last
year as the prior year period featured very significant orders from
an Australian customer. We are also working diligently with
existing customers to shorten our collection cycle and lower our
receivable amounts, and expect to make great progress in this
regard in the coming fourth quarter. We are looking forward
to a strong year end after solid order activity and significant
indications of interest at the recent High Point Market.”
About Nova LifeStyleNova
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 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.
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 INCOME |
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2018 AND 2017 (UNAUDITED) |
|
|
Nine Months EndedSeptember 30, |
|
|
Three Months Ended September
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
$ |
63,159,929 |
|
|
$ |
70,813,414 |
|
|
$ |
16,747,827 |
|
|
$ |
33,222,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
50,834,321 |
|
|
|
58,741,122 |
|
|
|
13,529,002 |
|
|
|
27,323,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit |
|
12,325,608 |
|
|
|
12,072,292 |
|
|
|
3,218,825 |
|
|
|
5,898,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
2,534,436 |
|
|
|
2,690,342 |
|
|
|
853,378 |
|
|
|
1,003,906 |
|
General and
administrative expenses |
|
7,570,814 |
|
|
|
7,608,323 |
|
|
|
3,722,250 |
|
|
|
2,124,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses |
|
10,105,250 |
|
|
|
10,298,665 |
|
|
|
4,575,628 |
|
|
|
3,128,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
From Operations |
|
2,220,358 |
|
|
|
1,773,627 |
|
|
|
(1,356,803 |
) |
|
|
2,770,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating expense,
net |
|
596 |
|
|
|
797 |
|
|
|
(3,486 |
) |
|
|
-- |
|
Foreign exchange
transaction loss |
|
(430 |
) |
|
|
(324 |
) |
|
|
11 |
|
|
|
(94 |
) |
Interest expense,
net |
|
(92,416 |
) |
|
|
(133,093 |
) |
|
|
(36,630 |
) |
|
|
(40,932 |
) |
Financial expense |
|
(106,889 |
) |
|
|
(86,335 |
) |
|
|
(37,392 |
) |
|
|
(34,508 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expenses, Net |
|
(199,139 |
) |
|
|
(218,955 |
) |
|
|
(77,497 |
) |
|
|
(75,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes |
|
2,021,219 |
|
|
|
1,554,672 |
|
|
|
(1,434,300 |
) |
|
|
2,694,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Benefit |
|
(505,074 |
) |
|
|
(750,037 |
) |
|
|
(942,267 |
) |
|
|
(262,034 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) and Comprehensive Income (Loss) |
$ |
2,526,293 |
|
|
$ |
2,304,709 |
|
|
$ |
(492,033 |
) |
|
$ |
2,956,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
28,349,945 |
|
|
|
27,570,425 |
|
|
|
28,439,977 |
|
|
|
27,846,921 |
|
Diluted weighted
average shares outstanding |
|
28,659,655 |
|
|
|
27,704,406 |
|
|
|
28,439,977 |
|
|
|
27,980,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
(0.02 |
) |
|
$ |
0.11 |
|
Diluted |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
(0.02 |
) |
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31,
2017 |
|
|
September 30, 2018 |
|
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
883,948 |
|
|
$ |
5,722,716 |
|
Accounts receivable,
net |
|
53,718,740 |
|
|
|
54,006,513 |
|
Advance to
suppliers |
|
19,721,445 |
|
|
|
8,580,609 |
|
Inventories |
|
5,787,459 |
|
|
|
6,374,560 |
|
Prepaid expenses and
other receivables |
|
186,400 |
|
|
|
232,935 |
|
|
|
|
|
|
|
|
|
Total Current
Assets |
|
80,297,992 |
|
|
|
74,917,333 |
|
|
|
|
|
|
|
|
|
Noncurrent
Assets |
|
|
|
|
|
|
|
Plant, property and
equipment, net |
|
141,719 |
|
|
|
157,246 |
|
Lease deposit |
|
43,260 |
|
|
|
43,260 |
|
Goodwill |
|
218,606 |
|
|
|
218,606 |
|
Intangible assets,
net |
|
3,897,580 |
|
|
|
4,202,608 |
|
Deferred tax asset |
|
318,961 |
|
|
|
318,961 |
|
|
|
|
|
|
|
|
|
Total
Noncurrent Assets |
|
4,620,126 |
|
|
|
4,940,681 |
|
|
|
|
|
|
|
|
|
Total
Assets |
$ |
84,918,118 |
|
|
$ |
79,858,014 |
|
|
|
|
|
|
|
|
|
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS –
CONTINUED |
SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31,
2017 |
|
|
September 30, 2018 |
|
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
3,449,481 |
|
|
$ |
1,634,554 |
|
Line of credit |
|
4,851,825 |
|
|
|
- |
|
Advance from
customers |
|
99,402 |
|
|
|
19,826 |
|
Accrued liabilities and
other payables |
|
594,536 |
|
|
|
847,756 |
|
Income tax payable |
|
394,562 |
|
|
|
178,307 |
|
|
|
|
|
|
|
|
|
Total Current
Liabilities |
|
9,389,806 |
|
|
|
2,680,443 |
|
|
|
|
|
|
|
|
|
Noncurrent
Liabilities |
|
|
|
|
|
|
|
Line of credit |
|
- |
|
|
|
4,202,118 |
|
Income tax payable |
|
3,579,320 |
|
|
|
4,527,849 |
|
|
|
|
|
|
|
|
|
Total
Noncurrent Liabilities |
|
3,579,320 |
|
|
|
8,729,967 |
|
|
|
|
|
|
|
|
|
Total
Liabilities |
|
12,969,126 |
|
|
|
11,410,410 |
|
|
|
|
|
|
|
|
|
Contingencies
and Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
|
|
Common stock, $0.001
par value; 75,000,000 shares authorized,28,474,490 and 28,191,927
shares issued and outstandingas of September 30, 2018 and December
31, 2017, respectively |
|
28,474 |
|
|
|
28,192 |
|
Additional paid-in
capital |
|
39,657,190 |
|
|
|
38,682,377 |
|
Statutory reserves |
|
6,241 |
|
|
|
6,241 |
|
Retained earnings |
|
32,257,087 |
|
|
|
29,730,794 |
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity |
|
71,948,992 |
|
|
|
68,447,604 |
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
$ |
84,918,118 |
|
|
$ |
79,858,014 |
|
|
|
|
|
|
|
|
|
|
NOVA LIFESTYLE, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
AND 2017 (UNAUDITED) |
|
|
Nine Months EndedSeptember 30, |
|
|
2018 |
|
|
2017 |
|
Cash Flows From
Operating Activities |
|
|
|
|
|
|
|
Net income |
$ |
2,526,293 |
|
|
$ |
2,304,709 |
|
Adjustments to
reconcile net income to net cash used inoperating activities: |
|
|
|
|
|
|
|
Depreciation and
amortization |
|
333,516 |
|
|
|
1,143,319 |
|
Deferred tax
benefit |
|
-- |
|
|
|
(623,872 |
) |
Stock compensation
expense |
|
1,004,470 |
|
|
|
1,773,537 |
|
Changes in bad debt
allowance |
|
2,298,488 |
|
|
|
203,905 |
|
Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable |
|
(2,010,715 |
) |
|
|
4,960,037 |
|
Advance to
suppliers |
|
(11,140,836 |
) |
|
|
(8,281,288 |
) |
Inventories |
|
587,101 |
|
|
|
(3,939,526 |
) |
Other current
assets |
|
(14,694 |
) |
|
|
(21,452 |
) |
Accounts payable |
|
1,814,927 |
|
|
|
(2,206,628 |
) |
Advance from
customers |
|
79,576 |
|
|
|
(494,582 |
) |
Accrued liabilities and
other payables |
|
(252,867 |
) |
|
|
(54,458 |
) |
Taxes payable |
|
(732,274 |
) |
|
|
(126,163 |
) |
|
|
|
|
|
|
|
|
Net Cash Used
in Operating Activities |
|
(5,507,015 |
) |
|
|
(5,362,462 |
) |
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities |
|
|
|
|
|
|
|
Assignment fee
received |
|
-- |
|
|
|
1,250,000 |
|
Purchase of property
and equipment |
|
(12,960 |
) |
|
|
(17,443 |
) |
Advances to unrelated
parties |
|
-- |
|
|
|
(8,835,000 |
) |
Repayment from
unrelated parties |
|
-- |
|
|
|
15,835,000 |
|
|
|
|
|
|
|
|
|
Net Cash (Used
in) Provided by Investing Activities |
|
(12,960 |
) |
|
|
8,232,557 |
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities |
|
|
|
|
|
|
|
Proceeds from line of
credit and bank loan |
|
56,063,918 |
|
|
|
36,881,842 |
|
Repayment to line of
credit and bank loan |
|
(55,414,211 |
) |
|
|
(41,537,643 |
) |
Proceeds from the
exercise of options for common stocks |
|
31,500 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
Net Cash
Provided by (Used in) Financing Activities |
|
681,207 |
|
|
|
(4,655,801 |
) |
Net
decrease in cash and cash equivalents |
|
(4,838,768 |
) |
|
|
(1,785,706 |
) |
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period |
|
5,722,716 |
|
|
|
2,587,743 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, ending of period |
$ |
883,948 |
|
|
$ |
802,037 |
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow
Information |
|
Cash paid during the
period for: |
|
|
|
|
|
|
|
Income tax
payments |
$ |
227,200 |
|
|
$ |
-- |
|
Interest expense |
$ |
87,110 |
|
|
$ |
159,686 |
|
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