North American Sales Up 11% Versus Prior Year Period
LOS ANGELES, Nov. 09, 2018 (GLOBE NEWSWIRE) — 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 Commentary
Tawny 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 LifeStyle
Nova 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 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 | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) | |||||||||||||||
| Nine Months Ended September 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 outstanding as 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 Ended September 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 in operating 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 | |||