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Nova LifeStyle Reports Outstanding Fourth Quarter and Full Year 2017 Financial Results, Highlighted by Q4 pre-tax EPS of $0.18

LOS ANGELES, March 29, 2018 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ:NVFY), a leading U.S.-based, innovative designer and distributor of modern LifeStyle home products, today announced outstanding financial results for the fourth quarter and twelve months ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights:

  • Fourth quarter revenues were $35.7 million, up 79.3%, compared to $19.9 million in the prior year period.
  • Gross profit for the fourth quarter was $8.3 million, up 186%, compared to $2.9 million in the prior year period.      
  • Fourth quarter Gross Margin was 23.4%, compared to 14.4% in the prior year period due to increased sales from uniquely designed, premium items.
  • Income Before Income Taxes and Discontinuing Operations was $5.0 million, or $0.18 per diluted share.

/EIN News/ -- Full Year 2017 Financial Highlights:

  • Net Sales were $106.5 million, an increase of 14.9% compared to the prior year.
  • Sales from high margin, proprietarily designed, premium products increased 71% in average selling prices.
  • Gross profit was $20.4 million, an increase of 51% versus the prior year period. 
  • Profit margins expanded across nearly all product lines, benefiting from the Company’s adaption to trendy product designs and successful launches of a wide range of high-quality offerings.
  • Income Before Income Taxes and Discontinuing Operations was $6.5 million, or $0.23 per diluted share, compared to a loss before income taxes and discontinuing operations of $(1.1) million, or $(0.04) per diluted share in the prior year.
  • Booked a one-time transition tax charge of $3.3 million (or $0.12 per share) in the fourth quarter for full year 2017 as a result of the recently enacted Tax Cuts and Jobs Act of 2017, based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of its non-U.S. subsidiaries.
  • For the full year 2017, GAAP-Net Income was $3.8 million (after the one-time tax impact of $0.12 per share), or $0.14 per fully diluted share, compared to a net loss of $(1.1) million or $(0.01) per diluted share in the prior year period.

Management Commentary

Tawny Lam, Chief Executive Officer of Nova LifeStyle, commented, "Nova Lifestyle is pleased to announce outstanding 2017 financial results capped off by a fantastic fourth quarter. We anticipate the recently enacted U.S. tax law will bring considerable benefit to the Company going forward as our U.S. domestic sales are expected to expand rapidly.  We have focused on trendy designed, high-end products in our catalogues, which are generating large orders from global customers, including those from as far as in Australia.  Our growth is driven by increased customer interest towards our modern lifestyle furnishing solutions and increased online and mobile marketing efforts launched by the Company. Our drive towards uniquely designed, premium product mix since 2016 started to really pay off in 2017 as we experienced both record revenue growth and expanded profit margins.”

Outlook for 2018: Revenues and Earnings Growth Momentum to Continue
Ms. Lam continued, “Nova LifeStyle entered 2018 with continuing growth momentum.  We had a very successful Las Vegas Market show in late January 2018. The event featured attendance levels and customer interest not seen in many years, which reflects an uptrend for the entire home furnishings industry. We are seeing strong interest in our products such as the ‘Hollywood Glam’ collection, which has generated orders from customers throughout the United States and internationally. Our three-decades of experience learned from designing and marketing products for international markets has enabled us to develop the scale, logistics, marketing efficiency and design expertise that will serve our customers well in 2018 and beyond. We focus on designing and producing furnishing solutions that meet our changing customers’ lifestyles, adopting the latest design innovation and deeper brand penetration for our own Diamond Sofa brand.  We are expecting robust sales and significant earnings growth in 2018.”

$5 Million Share Repurchase Program to Initiate in 2018

The Company anticipates executing on the previously announced $5 million share repurchase program in 2018 through internal funding sources.

About Nova LifeStyle

Nova LifeStyle, Inc., a NASDAQ Global Market listed company headquartered in California and founded nearly 30 years ago, is a fast growing, innovative designer and distributor of modern LifeStyle residential and commercial furniture products: 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) 836-9606
aprior@equityny.com 

 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
 
  Years Ended December 31,   Three Months Ended December 31,
     2017       2016        2017       2016  
   (audited)    (audited)    (unaudited)    (Unaudited)
               
               
Net Sales $   106,494,132     $   92,648,195     $   35,680,718     $   19,899,223  
Cost of Sales     86,072,895         79,124,451         27,331,773         17,033,016  
Gross Profit     20,421,237         13,523,744         8,348,945         2,866,207  
                               
Operating Expenses              
Selling expenses     4,131,772         5,324,270         1,441,430         966,064  
General and administrative expenses     9,485,595         8,965,566         1,877,272         4,209,448  
Total Operating Expenses     13,617,367         14,289,836         3,318,702         5,175,512  
Income (Loss) From Operations     6,803,870         (766,092 )        5,030,243         (2,309,305 )
                               
Other Income (Expenses)              
Non-operating (income) expense, net     797         46,717         --         5,723  
Foreign exchange transaction loss     (381 )       (6,386 )       (57 )       (808 )
Interest expense     (174,316 )       (283,795 )       (41,223 )       (42,593 )
Financial expense     (105,546 )       (119,100 )       (19,211 )       (31,002 )
Total Other Expenses, Net     (279,446 )       (362,564 )       (60,491 )       (68,680 )
                               
Income (Loss) Before Income Taxes and Discontinuing operations     6,524,424         (1,128,656 )       4,969,752         (2,377,985 )
Income Tax (Benefit) Expense     2,759,813         (836,620 )       3,509,850         (896,683 )
Income (Loss) From Continuing Operations     3,764,611         (292,036 )       1,459,902         (1,481,302 )
Loss from Discontinued Operations, net of tax      --         (826,217 )     --          650,355  
Net Income (Loss)     3,764,611         (1,118,253 )       1,459,902         (830,947 )
               
Other Comprehensive Income (Loss)              
Release of foreign currency translation adjustments upon disposal of subsidiaries   --       836,014       --       836,014  
Foreign currency translation      --         (734,520 )        --         (313,768 )
Comprehensive Income (Loss) $    3,764,611     $   (1,016,759 )   $    1,459,902     $    (308,701 )
                               
Basic weighted average shares outstanding     27,677,935         25,432,037         27,677,935         25,432,037  
Diluted weighted average shares outstanding     27,755,863         25,432,037         27,755,863         25,432,037  
                               
Income (loss) from continuing operations per share of common stock              
Basic $    0.14     $   (0.01 )   $    0.05     $    (0.06 )
Diluted $    0.14     $   (0.01 )   $    0.05     $    (0.06 )
Income (loss) from discontinuing operations per share of common stock                              
Basic $    --     $   (0.03 )   $    --     $   0.03  
Diluted $    --     $   (0.03 )   $    --     $   0.03  
Net Income (loss) per share of common stock                              
Basic $    0.14     $   (0.04 )   $    0.05     $   (0.03 )
Diluted $    0.14     $   (0.04 )   $    0.05     $   (0.03 )


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2017 AND 2016
 
   
    2017     2016  
             
Assets            
             
Current Assets            
Cash and cash equivalents   $ 5,722,716     $ 2,587,743  
Accounts receivable, net     54,006,513       42,102,761  
Advance to suppliers     8,580,609       13,669,752  
Inventories     6,374,560       2,781,123  
Assignment fee receivable (Note 3)     --       1,250,000  
Receivable from an unrelated party (Note 7)     --       7,000,000  
Prepaid expenses and other receivables     232,935       642,891  
Taxes receivable     --       14,893  
                 
Total Current Assets     74,917,333       70,049,163  
                 
Noncurrent Assets                
Plant, property and equipment, net     157,246       171,276  
Lease deposit     43,260       43,260  
Goodwill     218,606       218,606  
Intangible assets, net     4,202,608       5,686,623  
Deferred tax asset     318,961       874,759  
                 
Total Noncurrent Assets     4,940,681       6,994,524  
                 
Total Assets   $ 79,858,014     $ 77,043,687  


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
DECEMBER 31, 2017 AND 2016
 
   
    2017     2016  
Liabilities and Stockholders' Equity            
             
Current Liabilities            
Accounts payable   $ 1,634,554     $ 2,368,775  
Line of credit     -       7,977,841  
Advance from customers     19,826       513,880  
Accrued liabilities and other payables     847,756       780,960  
Income tax payable     178,307       --  
                 
Total Current Liabilities     2,680,443       11,641,456  
                 
Noncurrent Liabilities                
Line of credit     4,202,118       -  
Income tax payable     4,527,849       2,136,788  
                 
Total Noncurrent Liabilities     8,729,967       2,136,788  
                 
Total Liabilities     11,410,410       13,778,244  
                 
Contingencies and Commitments                
                 
Stockholders' Equity                
Common stock, $0.001 par value; 75,000,000 shares authorized, 28,191,927 and 27,309,695 shares issued and outstanding as of December 31, 2017 and 2016, respectively     28,192       27,309  
Additional paid-in capital     38,682,377       36,885,462  
Statutory reserves     6,241       6,241  
Retained earnings     29,730,794       26,346,431  
                 
Total Stockholders' Equity     68,447,604       63,265,443  
                 
Total Liabilities and Stockholders' Equity   $ 79,858,014     $ 77,043,687  


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
 
   
    2017     2016  
                 
Cash Flows From Operating Activities            
 Net income (loss) from continuing operations   $ 3,764,611     $ (292,036 )
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation and amortization     1,524,863       603,155  
Deferred tax benefit     555,798       (813,760 )
Stock compensation expense     2,175,973       1,637,362  
Changes in bad debt allowance     305,519
      2,603,745  
Changes in operating assets and liabilities:                
Accounts receivable     (12,209,271 )     (2,022,248 )
Advance to suppliers     5,089,143       (5,733,611 )
Inventories     (3,593,437 )     (266,804 )
Other current assets     16,832
      298,115  
Accounts payable     (734,221 )     (3,856,326 )
Advance from customers     (494,054 )     450,091  
Accrued liabilities and other payables     81,744       (710,327 )
Taxes payable     2,584,262       (30,060 )
Net Cash Used in Continuing Operations     (1,312,486 )     (8,132,704 )
Net Cash Provided by Discontinued Operations     --       1,711,201  
Net Cash Used in Operating Activities     (1,312,486 )     (6,421,503 )
                 
Cash Flows From Investing Activities                
Assignment fee received     1,250,000       -  
Purchase of property and equipment     (26,818 )     (13,494 )
Proceeds from disposal of subsidiaries, net of $43,873 of cash disposed of     --       13,206,127  
Advances to unrelated parties     (8,835,000 )     (7,000,000 )
Repayment from unrelated parties     15,835,000       -  
Net Cash Provided by Continuing Operations     8,223,182       6,192,633  
Net Cash Used in Discontinued Operations     --       (94,231 )
Net Cash Provided by Investing Activities     8,223,182       6,098,402  
                 
Cash Flows From Financing Activities                
Proceeds from line of credit and bank loan     48,674,442       44,405,074  
Repayment to line of credit and bank loan     (52,450,165 )     (43,934,591 )
Proceeds from options and warrants exercised     --       3,093,918  
Net Cash (Used in) Provided by Continuing Operations     (3,775,723 )     3,564,401  
Net Cash Used in Discontinued Operations     -       (1,638,747 )
Net Cash (Used in) Provided by Financing Activities     (3,775,723 )     1,925,654  
                 
Effect of Exchange Rate Changes on Cash and Cash Equivalents     -       (2,839 )
                 
Net increase in cash and cash equivalents     3,134,973       1,599,714  
                 
Cash and cash equivalents, beginning of period     2,587,743       988,029  
                 
Cash and cash equivalents, end of period   $ 5,722,716     $ 2,587,743  


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
 
                 
      2017        2016   
Analysis of cash and cash equivalents                
Included in cash and cash equivalents per consolidated balance sheets   $ 5,722,716     $ 2,587,743  
Included in assets of discontinued operations     -       -  
                 
Cash and cash equivalents, end of period   $ 5,722,716     $ 2,587,743  
                 
Supplemental Disclosure of Cash Flow Information  
Continuing operations:                
Cash paid during the period for:                
Income tax payments   $ --     $ 7,200  
Interest expense   $ 185,860     $ 282,951  
                 
Discontinued operations:                
Cash paid during the period for:                
Income tax payments   $ --     $ --  
Interest paid   $ --     $ 145,645  

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