LOS ANGELES, Nov. 13, 2017 (GLOBE NEWSWIRE) — Nova LifeStyle, Inc. (Nasdaq:NVFY) (“Nova LifeStyle” or the “Company”), a California-based innovative designer and distributor of modern lifestyle household consumer products, is pleased to announce record third quarter financial results for the quarter ended September 30, 2017. 

Third Quarter 2017 Financial Results, Significantly Expanded Net Profit Margins

  • Net income $2.96 million or $0.11 per share ($0.11 fully diluted), an increase of nearly 900% compared to $0.3 million or $0.01 per share ($0.01 fully diluted) net income in the third quarter of 2016
  • Increase in net sales of 8.8% to $33.2 million compared to $30.5 million in the same period of 2016
  • Gross profit margin improved to 18% on average, an increase of approximately 3% compared to the third quarter of 2016
  • Over a 200% increase of new product offerings combined with innovative product designs contributed to significant growth in the quarter
  • Growth momentum to continue into 4th quarter 2017 and 2018
  • Strong customer demand across nearly all product lines
  • Healthy balance sheet and cash flow

Management Comment
Tawny Lam, Chief Executive Officer of Nova LifeStyle commented: “We are pleased to have delivered stellar financial results. Nova LifeStyle’s third quarter financial performance reflects the results of our successful transformation from an ‘asset heavy’ furniture-manufacturing business to a ‘light asset,’ high margin, consumer product company focused on innovative product designs and customer-centric marketing. 2017 is Nova LifeStyle’s Diamond Sofa brand’s 25th year in business and with a record number of new product SKUs as well as a rapidly expanding, diversified global customer base, Nova LifeStyle is poised for significant growth for years to come.”

Guidance and Outlook
Ms. Lam concluded: “We continue to see consistent growth leading into the 4th quarter as well as 2018. If this continues, we hope to initiate stock buybacks or start paying cash dividends in the near future to reward our long-term shareholders, as a way to maximize customer and shareholder value.”

About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange 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 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. 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.

Company Contact:
Investor Relations:
The Equity Group Inc.
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
[email protected]

 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
       
  Nine Months Ended September 30,   Three Months Ended September 30,
   2017   2016    2017   2016
  (Unaudited)   (Unaudited)
               
Net Sales $ 70,813,414     $ 72,748,972     $ 33,222,625     $ 30,538,918  
               
Cost of Sales   58,741,122       62,091,435       27,323,972       25,935,832  
                               
Gross Profit   12,072,292       10,657,537       5,898,653       4,603,086  
                               
Operating Expenses                              
Selling expenses   2,690,342       4,358,206       1,003,906       2,050,201  
General and administrative expenses   7,608,323       4,756,118       2,124,614       1,491,684  
                               
Total Operating Expenses   10,298,665       9,114,324       3,128,520       3,541,885  
                               
(Loss) Income From Operations   1,773,627       1,543,213       2,770,133       1,061,201  
                               
Other Income (Expenses)                              
Non-operating income (expense), net   797       40,994             16,623  
Foreign exchange transaction loss   (324 )     (5,578 )     (94 )     (3,281 )
Interest expense, net   (133,093 )     (241,202 )     (40,932 )     (96,535 )
Financial expense   (86,335 )     (88,098 )     (34,508 )     (33,733 )
                               
Total Other Expenses, Net   (218,955 )     (293,884 )     (75,534 )     (116,926 )
                               
(Loss) Income Before Income Taxes and Discontinued operations   (1,554,672 )     1,249,329       2,694,599       944,275  
                               
Income Tax (Benefit) Expense   (750,037 )     60,063       (262,034 )     (100,656 )
                               
(Loss) Income From Continuing Operations   2,304,709       1,189,266       2,956,633       1,044,931  
                               
Loss From Discontinued Operations, net of tax         (1,476,572 )           (743,594 )
                               
Net (Loss) Income   2,304,709       (287,306 )     2,956,633       301,337  
                               
Other Comprehensive Income                              
Foreign currency translation         (420,752 )           (98,638 )
                               
Comprehensive (Loss) Income $ 2,304,709     $ (708,058 )   $ 2,956,633     $ 202,699  
                               
Basic weighted average shares outstanding   27,570,425       24,937,069       27,846,921       25,558,604  
Diluted weighted average shares outstanding   27,704,406       24,937,069       27,980,629       25,558,604  
                               
Income (loss) from continuing operations per share of common stock                              
Basic $ 0.08     $ 0.05     $ 0.11     $ 0.04  
Diluted $ 0.08     $ 0.05     $ 0.11     $ 0.04  
                               
Loss from discontinued operations per share of common stock                              
Basic $     $ (0.06 )   $     $ (0.03 )
Diluted $     $ (0.06 )   $     $ (0.03 )
                               
Net (loss) income per share of common stock                              
Basic $ 0.08     $ (0.01 )   $ 0.11     $ 0.01  
Diluted $ 0.08     $ (0.01 )   $ 0.11     $ 0.01  
                               

 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016
       
  September 30,   December 31,
  2017   2016
Assets      
Current Assets      
Cash and cash equivalents $ 802,037   $ 2,587,743
Accounts receivable, net   36,938,819     42,102,761
Advance to suppliers   21,951,040     13,669,752
Inventories   6,720,649     2,781,123
Assignment fee receivable       1,250,000
Receivable from an unrelated party       7,000,000
Prepaid expenses and other receivables   315,833     642,891
Taxes receivable   14,094     14,893
       
Total Current Assets   66,742,472     70,049,163
       
Noncurrent Assets      
Plant, property and equipment, net   158,412     171,276
Lease deposit   43,260     43,260
Goodwill   218,606     218,606
Intangible assets, net   4,573,612     5,686,623
Deferred tax asset   1,498,631     874,759
       
Total Noncurrent Assets   6,492,521     6,994,524
       
Total Assets $ 73,234,993   $ 77,043,687
       
Liabilities and Stockholders’ Equity      
Current Liabilities      
Accounts payable $ 162,147   $ 2,368,775
Line of credit       7,977,841
Advance from customers   19,298     513,880
Accrued liabilities and other payables   726,501     780,960
       
Total Current Liabilities   907,946     11,641,456
       
Noncurrent Liabilities      
Line of Credit   3,322,040    
Income tax payable   2,009,825     2,136,788
       
Total Noncurrent Liabilities   5,331,865     2,136,788
       
Total Liabilities   6,239,811     13,778,244
       
Contingencies and Commitments      
       
Stockholders’ Equity      
Common stock, $0.001 par value; 75,000,000 shares authorized; 27,909,843 and 27,309,695 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively   27,910     27,309
Additional paid-in capital   38,309,891     36,885,462
Statutory reserves   6,241     6,241
Retained earnings   28,651,140     26,346,431
       
Total Stockholders’ Equity   66,995,182     63,265,443
       
Total Liabilities and Stockholders’ Equity $ 73,234,993   $ 77,043,687
           

 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
   
  Nine Months Ended September 30,
  2017   2016
  (Unaudited)
Cash Flows From Operating Activities      
 Net (loss) income from continuing operations $ 2,304,709     $ 1,189,266  
Adjustments to reconcile net income (loss) to net cash used in operating activities:      
Depreciation and amortization   1,143,319     462,194  
Deferred tax benefit   (623,872 )    
Stock compensation expense   1,773,537     1,216,765  
Changes in bad debt allowance   203,905     33,818  
Changes in operating assets and liabilities:      
Accounts receivable   4,960,037     (558,573 )
Advance to suppliers   (8,281,288 )   (3,613,765 )
Inventories   (3,939,526 )   241,611  
Other current assets   (21,452 )   (711,727 )
Accounts payable   (2,206,628 )   129,278  
Advance from customers   (494,582 )   584,968  
Accrued expenses and other payables   (54,458 )   (325,799 )
Taxes payable   (126,163 )   52,864  
       
Net Cash Used in Continuing Operations   (5,362,462 )   (1,299,100 )
Net Cash Used in Discontinued Operations       (166,148 )
       
Net Cash Used in Operating Activities   (5,362,462 )   (1,465,248 )
       
Cash Flows From Investing Activities      
Assignment fee received   1,250,000      
Purchase of property and equipment   (17,443 )   (7,272 )
Cash received from buyer       5,500,000  
Advances to unrelated parties   (8,835,000 )    
Repayment from unrelated parties   15,835,000      
       
Net Cash Provided by (Used in) Continuing Operations   8,232,557     5,492,728  
Net Cash Used in Discontinued Operations       (218,170 )
       
Net Cash Provided by (Used in) Investing Activities   8,232,557     5,274,558  
       
Cash Flows From Financing Activities      
Proceeds from line of credit and bank loan   36,881,842     29,828,074  
Repayment to line of credit and bank loan   (41,537,643 )   (29,301,699 )
Proceeds from warrants exercised       203,250  
       
Net Cash (Used in) Provided by Continuing Operations   (4,655,801 )   729,625  
Net Cash Provided by Discontinued Operations       319,762  
       
Net Cash (Used in) Provided by Financing Activities   (4,655,801 )   1,049,387  
       
Effect of Exchange Rate Changes on Cash and Cash Equivalents         (3,128 )
       
Net increase (decrease) in cash and cash equivalents   (1,785,706 )     4,855,569  
Cash and cash equivalents, beginning of period   2,587,743       988,029  
       
Cash and cash equivalents, end of period $ 802,037     $ 5,843,598  
           

 
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
   
  Nine Months Ended September 30,
  2017   2016
       
  (Unaudited)
Analysis of cash and cash equivalents      
Included in cash and cash equivalents per consolidated balance sheets $ 802,037   $ 5,718,601
Included in assets of discontinued operations       124,997
       
Cash and cash equivalents, end of period $ 802,037   $ 5,843,598
       
           
Supplemental Disclosure of Cash Flow Information          
Continuing operations:      
Cash paid during the period for:      
Income tax payments $   $ 7,200
Interest expense $ 159,686   $ 371,036
       
Discontinued operations:      
Cash paid during the period for:      
Income tax payments $   $
Interest expense $   $