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.
*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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