Nova LifeStyle Reports First Quarter 2017 Financial Results
LOS ANGELES, May 15, 2017 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2017.
First Quarter 2017 Financial Highlights:
- First quarter Net Sales were $18.1 million compared to $22.5 million in the prior year period.
- Gross profit for the first quarter was $2.7 million, compared to $3.6 million in the prior year period.
- First quarter Gross Margin was 15.0%, compared to 16.0% in the prior year period.
Operational Overview
Product Category
Nova LifeStyle’s largest selling product categories in the three months ended March 31, 2017 were sofas, beds and coffee tables, which accounted for approximately 80%, 11% and 5% of sales, respectively. This was compared to the prior year period where the Company’s largest selling product categories were sofas, dining tables and cabinets which accounted for approximately 59%, 9% and 6% 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 Blockchain technology, while simultaneously exploring new ways to grow the furniture business.
Geographic Breakdown
North America
Sales to North America were $12.5 million in the three months ended March 31, 2017, a decrease of 27% from $17.2 million in the same period of 2016, driven by an aggressive change in the product mix. As a percentage of total revenue, North American sales remain the largest for Nova LifeStyle at 69.4%.
Asia
Sales to Asia, excluding China and Hong Kong, overall sales increased by 80% to $815,071 in the three months ended March 31, 2017, as compared to $452,780 in the same period of 2016.
Australia
Sales to Australia increased to $2.5 million in the three months ended March 31, 2017, an increase of 216% from $774,155 in the same period of 2016. This was primarily driven by an increase in sales orders from new customers in that region.
Geographical distribution of sales is set out as follows:
| (US$ in millions) | For three months ended March 31, | ||||||||||
|
2017 |
2016 |
||||||||||
| Sales | % of Total | Sales | % of Total | ||||||||
| North America | 12,529,632 | 69.4 | % | 17,223,375 | 76.7 | % | |||||
| Asia** | 815,071 | 4.5 | % | 452,780 | 2.0 | % | |||||
| Europe | 2,262,865 | 12.5 | % | 3,898,885 | 17.4 | % | |||||
| Australia | 2,449,454 | 13.6 | % | 774,155 | 3.4 | % | |||||
| Hong Kong | - | 0.0 | % | 19,683 | 0.1 | % | |||||
| Other countries | - | 0.0 | % | 100,129 | 0.4 | % | |||||
| $ | 18,057,022 | $ | 22,469,007 | ||||||||
Balance Sheet and Cash Flow Highlights
- Working capital at March 31, 2017 was $57.7 million, compared to $58.4 million at December 31, 2016.
- The current ratio at March 31, 2017 was 9.76 to 1.0.
The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31, 2017 and 2016:
| 2017 | 2016 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating activities | $ | 8,759,369 | $ | (522,964 | ) | |||
| Investing activities | (7,587,132 | ) | (44,777 | ) | ||||
| Financing activities | (3,469,690 | ) | 637,230 | |||||
Net cash provided by operating activities was $8.8 million in the three months ended March 31, 2017, an increase of cash inflow of $9.3 million from $0.5 million of cash used in operating activities in the same period of 2016. The increase in cash inflow was impacted by primarily to the collection on accounts receivable of $16.6 million during the three months ended March 31, 2017.
About Nova LifeStyle
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, 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. In November 2016, Nova LifeStyle announced entry into asset-light e-commerce and service related businesses. 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.
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2017 | 2016 | |||||||||||
| Net Sales | $ | 18,057,022 | $ | 22,469,007 | ||||||||
| Cost of Sales | 15,355,247 | 18,863,864 | ||||||||||
| Gross Profit | 2,701,775 | 3,605,143 | ||||||||||
| Operating Expenses | ||||||||||||
| Selling expenses | 975,002 | 1,584,914 | ||||||||||
| General and administrative expenses | 3,025,676 | 1,345,297 | ||||||||||
| Total Operating Expenses | 4,000,678 | 2,930,211 | ||||||||||
| (Loss) Income From Operations | (1,298,903 | ) | 674,932 | |||||||||
| Other Income (Expenses) | ||||||||||||
| Non-operating (income) expense, net | -- | 12,401 | ||||||||||
| Foreign exchange transaction loss | (40 | ) | (1,049 | ) | ||||||||
| Interest expense | (54,406 | ) | (72,434 | ) | ||||||||
| Financial expense | (26,060 | ) | (28,437 | ) | ||||||||
| Total Other Expenses, Net | (80,506 | ) | (89,519 | ) | ||||||||
| (Loss) Income Before Income Taxes and Discontinued operations | (1,379,409 | ) | 585,413 | |||||||||
| Income Tax (Benefit) Expense | (170,019 | ) | 19,041 | |||||||||
| (Loss) Income From Continuing Operations | (1,209,390 | ) | 566,372 | |||||||||
| Loss From Discontinued Operations, net of tax | -- | (469,243 | ) | |||||||||
| Net (Loss) Income | (1,209,390 | ) | 97,129 | |||||||||
| Other Comprehensive Income | ||||||||||||
| Foreign currency translation | -- | 75,628 | ||||||||||
| Comprehensive (Loss) Income | $ | (1,209,390 | ) | $ | 172,757 | |||||||
| Basic weighted average shares outstanding | 27,345,106 | 24,333,971 | ||||||||||
| Diluted weighted average shares outstanding | 27,345,106 | 24,333,971 | ||||||||||
| (Loss) income from continuing operations per share of common stock | ||||||||||||
| Basic | $ | (0.04 | ) | $ | 0.02 | |||||||
| Diluted | $ | (0.04 | ) | $ | 0.02 | |||||||
| Income (loss) from discontinued operations per share of common stock | ||||||||||||
| Basic | $ | -- | $ | (0.02 | ) | |||||||
| Diluted | $ | -- | $ | (0.02 | ) | |||||||
| Net (loss) income per share of common stock | ||||||||||||
| Basic | $ | (0.04 | ) | $ | 0.00 | |||||||
| Diluted | $ | (0.04 | ) | $ | 0.00 | |||||||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016 | ||||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 290,290 | $ | 2,587,743 | ||||
| Accounts receivable, net | 25,163,891 | 42,102,761 | ||||||
| Advance to suppliers | 21,114,676 | 13,669,752 | ||||||
| Inventories | 2,291,971 | 2,781,123 | ||||||
| Assignment fee receivable | -- | 1,250,000 | ||||||
| Receivable from an unrelated party | 13,035,000 | 7,000,000 | ||||||
| Prepaid expenses and other receivables | 2,345,289 | 642,891 | ||||||
| Taxes receivable | 23,367 | 14,893 | ||||||
| Total Current Assets | 64,264,484 | 70,049,163 | ||||||
| Noncurrent Assets | ||||||||
| Plant, property and equipment, net | 163,292 | 171,276 | ||||||
| Lease deposit | 43,260 | 43,260 | ||||||
| Goodwill | 218,606 | 218,606 | ||||||
| Intangible assets, net | 5,315,620 | 5,686,623 | ||||||
| Deferred tax asset | 1,096,029 | 874,759 | ||||||
| Total Noncurrent Assets | 6,836,807 | 6,994,524 | ||||||
| Total Assets | $ | 71,101,291 | $ | 77,043,687 | ||||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016 | ||||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 910,534 | $ | 2,368,775 | ||||
| Line of credit | 4,508,151 | 7,977,841 | ||||||
| Advance from customers | 535,409 | 513,880 | ||||||
| Accrued liabilities and other payables | 629,354 | 780,960 | ||||||
| Total Current Liabilities | 6,583,448 | 11,641,456 | ||||||
| Noncurrent Liabilities | ||||||||
| Income tax payable | 2,196,512 | 2,136,788 | ||||||
| Total Noncurrent Liabilities | 2,196,512 | 2,136,788 | ||||||
| Total Liabilities | 8,779,960 | 13,778,244 | ||||||
| Contingencies and Commitments | ||||||||
| Stockholders' Equity | ||||||||
| Common stock, $0.001 par value; 75,000,000 shares authorized, | ||||||||
| 27,417,742 and 27,309,695 shares issued and outstanding; | ||||||||
| as of March 31, 2017 and December 31, 2016, respectively | 27,418 | 27,309 | ||||||
| Additional paid-in capital | 37,150,631 | 36,885,462 | ||||||
| Statutory reserves | 6,241 | 6,241 | ||||||
| Retained earnings | 25,137,041 | 26,346,431 | ||||||
| Total Stockholders' Equity | 63,321,331 | 63,265,443 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 71,101,291 | $ | 77,043,687 | ||||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2017 | 2016 | ||||||||
| Cash Flows From Operating Activities | |||||||||
| Net income (loss) from continuing operations | $ | (1,209,390 | ) | $ | 566,372 | ||||
| Adjustments to reconcile net income to net cash | |||||||||
| provided by (used in) operating activities: | |||||||||
| Depreciation and amortization | 381,119 | 156,065 | |||||||
| Deferred tax benefit | (188,117 | ) | -- | ||||||
| Stock compensation expense | 449,889 | 295,596 | |||||||
| Termination cost on Academic E-commerce platform | 800,000 | -- | |||||||
| Changes in bad debt allowance | 324,684 | (26,702 | ) | ||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | 16,614,186 | 2,382,552 | |||||||
| Advance to suppliers | (7,444,924 | ) | (6,794,470 | ) | |||||
| Inventories | 489,152 | 70,326 | |||||||
| Other current assets | 112,991 | 234,730 | |||||||
| Accounts payable | (1,458,241 | ) | 2,065,979 | ||||||
| Advance from customers | 21,529 | 633,875 | |||||||
| Accrued expenses and other payables | (151,606 | ) | (503,022 | ) | |||||
| Taxes payable | 18,097 | 11,841 | |||||||
| Net Cash Provided by (Used in) Continuing Operations | 8,759,369 | (906,858 | ) | ||||||
| Net Cash Provided by Discontinued Operations | -- | 383,894 | |||||||
| Net Cash Provided by (Used in) Operating Activities | 8,759,369 | (522,964 | ) | ||||||
| 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 | ) | -- | ||||||
| Net Cash Used in Continuing Operations | (7,587,132 | ) | (3,544 | ) | |||||
| Net Cash Used in Discontinued Operations | -- | (41,233 | ) | ||||||
| Net Cash Used in Investing Activities | (7,587,132 | ) | (44,777 | ) | |||||
| Cash Flows From Financing Activities | |||||||||
| Proceeds from line of credit and bank loan | 15,469,342 | 10,563,074 | |||||||
| Repayment to line of credit and bank loan | (18,939,032 | ) | (10,247,496 | ) | |||||
| Net Cash (Used in) Provided by Continuing Operations | (3,469,690 | ) | 315,578 | ||||||
| Net Cash Provided by Discontinued Operations | - | 321,652 | |||||||
| Net Cash (Used in) Provided by Financing Activities | $ | (3,469,690 | ) | $ | 637,230 | ||||
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) | ||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016 (UNAUDITED) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2017 | 2016 | |||||||||||
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
$ | -- | $ | 2,668 | ||||||||
| Net (decrease) increase in cash and cash equivalents | (2,297,453 | ) | 72,157 | |||||||||
| Cash and cash equivalents, beginning of period | 2,587,743 | 988,029 | ||||||||||
| Cash and cash equivalents, end of period | $ | 290,290 | $ | 1,060,186 | ||||||||
| Analysis of cash and cash equivalents | ||||||||||||
| Included in cash and cash equivalents per consolidated balance sheets | 290,290 | 775,488 | ||||||||||
| Included in assets of discontinued operations | - | 284,698 | ||||||||||
| Cash and cash equivalents, end of period | $ | 290,290 | $ | 1,060,186 | ||||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||||||
| Continuing operations: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Income tax payments | $ | -- | $ | 7,200 | ||||||||
| Interest paid | $ | 54,406 | $ | 72,434 | ||||||||
| Discontinued operations: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Income tax payments | $ | -- | $ | -- | ||||||||
| Interest paid | $ | -- | $ | 42,211 | ||||||||
Company Contact: Investor Relations: The Equity Group Inc. In U.S. Adam Prior, Senior Vice President +1 (212) 836-9606 aprior@equityny.com In China Katherine Yao, Senior Associate +86-10-6587-6435 kyao@equityny.com
