Nova LifeStyle Announces First Quarter Financial Results

Highlighted By a 237% Increase in Net Income and Significant Profit Margin Expansion, Record Sales from Uniquely Designed, Premium Items

LOS ANGELES, May 14, 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 first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights (all comparisons are to the same period of the prior year):

  • First quarter revenues were $22.3 million, up 23.5%, compared to $18.1 million.
  • Net income in the first quarter of 2018 was $1.6 million, or $0.06 per diluted share, compared with a net loss of $(1.2) million in the first quarter of 2017, resulting in an EPS loss of $(0.04).
  • Gross profit for the first quarter was $4.9 million, up 81.4%, compared to $2.7 million.      
  • First quarter Gross Margin was 22.0%, compared to 15.0% in the prior year period due as the Company continued to drive its sales mix to favor higher-margin, premium products.
  • U.S. domestic sales to major online outlets continue to expand rapidly, benefiting from recent U.S. tax law changes. 
  • Anticipate robust sales and earnings growth throughout 2018.

Management Commentary

Tawny Lam, Chief Executive Officer of Nova LifeStyle, commented, “Nova Lifestyle is pleased to announce fantastic first quarter 2018 financial results.  Since the beginning of 2018, Nova LifeStyle’s focus on marketing trendy designed, high-end products in our catalogues has attracted large orders from global customers. Our outstanding financial results are driven by sales increase across nearly all product categories, with online sales continuing to anchor our growth. This was a well-executed quarter with plenty of growth opportunities going forward.” 

 “Nova LifeStyle entered 2018 with strong growth momentum. We have the latest product designs and deeper brand penetration for our popular Diamond Sofa brand. Since the Company was founded nearly 30 years ago, Diamond sofa has continued to innovate with new product offerings. We anticipate significant earnings growth in 2018.”

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 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)
   
  Three Months Ended March 31,
    2018       2017  
Net Sales $   22,303,472     $   18,057,022  
Cost of Sales     17,401,930         15,355,247  
       
Gross Profit     4,901,542         2,701,775  
       
Operating Expenses      
Selling expenses     631,153         975,002  
General and administrative expenses     2,305,673         3,025,676  
       
Total Operating Expenses     2,936,826         4,000,678  
       
Income (Loss) From Operations     1,964,716         (1,298,903 )
       
Other Income (Expenses)      
Foreign exchange transaction loss     (136 )       (40 )
Interest expense, net     (31,582 )       (54,406 )
Financial expense     (30,720 )       (26,060 )
       
Total Other Expenses, Net     (62,438 )       (80,506 )
       
Income (Loss) Before Income Taxes     1,902,278         (1,379,409 )
Income Tax Expense (Benefit)     247,257         (170,019 )
       
Net Income (Loss) and Comprehensive Income (Loss) $   1,655,021     $   (1,209,390 )
       
Basic weighted average shares outstanding     28,253,115         27,345,106  
Diluted weighted average shares outstanding     28,693,479         27,345,106  
       
Net income (loss) per share of common stock      
Basic $   0.06     $   (0.04 )
Diluted $   0.06     $   (0.04 )

 

NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2018 (UNAUDITED) AND DECEMBER 31, 2017
 
  March 31, 2018   December 31, 2017
Assets      
Current Assets      
Cash and cash equivalents $   1,121,170   $   5,722,716
Accounts receivable, net     54,625,956       54,006,513
Advance to suppliers     10,762,192       8,580,609
Inventories     6,220,820       6,374,560
Prepaid expenses and other receivables     171,197       232,935
Total Current Assets      72,901,335       74,917,333
Noncurrent Assets      
Plant, property and equipment, net     158,405       157,246
Lease deposit     43,260       43,260
Goodwill     218,606       218,606
Intangible assets, net     4,100,932       4,202,608
Deferred tax asset     318,961       318,961
Total Noncurrent Assets     4,840,164       4,940,681
Total Assets  $   77,741,499   $   79,858,014
       
Liabilities and Stockholders’ Equity      
Current Liabilities      
Accounts payable $   1,338,898   $   1,634,554
Advance from customers     43,221       19,826
Accrued liabilities and other payables     733,362       847,756
Income tax payable     393,861       178,307
Total Current Liabilities     2,509,342        2,680,443
Noncurrent Liabilities      
Line of credit         4,202,118
Income tax payable     4,559,553       4,527,849
Total Noncurrent Liabilities     4,559,553       8,729,967
Total Liabilities     7,068,895       11,410,410
Contingencies and Commitments      
Stockholders’ Equity      
Common stock, $0.001 par value; 75,000,000 shares authorized,      
28,301,738 and 27,309,695 shares issued and outstanding;     28,302       28,192
as of March 31, 2018 and December 31, 2017, respectively  
Additional paid-in capital      39,252,246       38,682,377
Statutory reserves     6,241       6,241
Retained earnings      31,385,815       29,730,794
Total Stockholders’ Equity     70,672,604       68,447,604
Total Liabilities and Stockholders’ Equity $   77,741,499   $   79,858,014

 

NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)
 
  Three Months Ended March 31,  
  2018   2017  
     
Cash Flows From Operating Activities        
 Net income (loss) $ 1,655,021   $ (1,209,390 )
Adjustments to reconcile net income to net cash used in
operating activities:
           
Depreciation and amortization   112,017     381,119  
Deferred tax benefit   31,704     (188,117 )
Stock compensation expense   595,677     449,889  
Termination cost on Academic E-commerce platform (Note 6)       800,000  
Changes in bad debt allowance   321,970     324,684  
Changes in operating assets and liabilities:            
Accounts receivable   (941,413 )   16,614,186  
Advance to suppliers   (2,181,584 )   (7,444,924 )
Inventories   153,740     489,152  
Other current assets   35,452     112,991  
Accounts payable   (295,656 )   (1,458,241 )
Advance from customers   23,395     21,529  
Accrued liabilities and other payables   (113,806 )   (151,606 )
Taxes payable   215,554     18,097  
             
Net Cash (Used in) Provided by Operating Activities   (387,929 )   8,759,369  
             
             
Cash Flows From Investing Activities            
Assignment fee received       1,250,000  
Purchase of property and equipment   (11,499 )   (2,132 )
Advances to unrelated parties       (8,835,000 )
             
Net Cash Used in Investing Activities   (11,499 )   (7,587,132 )
             
Cash Flows From Financing Activities            
 Proceeds from line of credit and bank loan   15,923,479     15,469,342  
 Repayment to line of credit and bank loan   (20,125,597 )   (18,939,032 )
             
Net Cash Used in Financing Activities   (4,202,118 )   (3,469,690 )

 

NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)
 
  Three Months Ended March 31, 
   2018     2017 
       
Effect of Exchange Rate Changes on Cash and Cash Equivalents     –       –
Net decrease in cash and cash equivalents     (4,601,546)       (2,297,453)
Cash and cash equivalents, beginning of period     5,722,716       2,587,743
Cash and cash equivalents, end of period $   1,121,170   $   290,290
       
Analysis of cash and cash equivalents      
Included in cash and cash equivalents per consolidated balance sheets     1,121,170       290,290
Cash and cash equivalents, end of period $   1,121,170   $   290,290
       
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:      
 Income tax payments $   —   $   —
  Interest paid $   31,582   $   54,406

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