Kingold Jewelry Reports Financial Results For the Third Quarter Ended September 30, 2015

WUHAN CITY, China, Nov. 16, 2015 /PRNewswire/ -- Kingold Jewelry, Inc. ("Kingold" or "the Company") (NASDAQ: KGJI), one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced its unaudited financial results for the third quarter ended September 30, 2015.  

2015 THIRD QUARTER FINANCIAL HIGHLIGHTS (ALL RESULTS ARE COMPARED TO PRIOR YEAR PERIOD)

• Net sales were $263.8 million, an increase of $12.8 million, or 5.1%, compared to $251.0 million. The increase in net sales was primarily due to increased sales volume in the Company's branded gold product production.
• Processed a total of 13.5 metric tons of gold, compared to 14.5 metric tons, a decrease of 6.9%.
• Gross profit increased to $15.6 million, an increase of $5.6 million, or 56.3%, compared to $10.0 million, and gross margin was 5.9% compared to 4.0% for the same period in 2014.
• Net income increased 67.5% to $8.8 million, or $0.13 per diluted share, compared to $5.2 million, or $0.08 per diluted share.

Mr. Zhihong Jia, Chairman and CEO of the Company, commented, "We were pleased with our operating results for the third quarter of 2015, as both our gross profit and net income achieved double digit growth. Kingold faced a wide range of challenges during the first half of 2015, but we remained focused on continuing to create innovative designs in order to provide our customers with a wide variety of products from which to choose. In the third quarter, we have been able to increase our net sales by taking full advantage of our existing sales network and our online retail platform. We believe that our continuous efforts in expanding both online and offline sales channels should positively affect Kingold's business prospects in the future."

UPDATE ON Kingold Jewelry cultural industry Park ("Jewelry park")

Mr. Jia stated, "The Kingold team and the construction company are making progress in the construction of our Jewelry Park, and we still anticipate construction to be completed in January 2016. We have postponed the grand opening of the Jewelry Park until the first quarter of 2016 to provide additional time for refinements to the building interior, landscaping, and finishing work. This was a large endeavor for our Company and we have been pleased with its progress. We look forward to announcing a successful grand opening in the coming months."

Mr. Jia continued, "In August 2015, we started the pre-sale of certain real estate property in the Jewelry Park. Approximately 433,000 square feet of office space has already been pre-sold to various buyers and received approximately RMB 144 million (approximately $22.7 million) from the buyers. Kingold expects to deliver these properties to the customers in January 2016 when the Jewelry Park construction is completed. We will keep our investors apprised with our developments."

2015 THIRD QUARTER OPERATIONAL REVIEW

• In the third quarter of 2015, the Company processed a total of 13.5 metric tons of gold, of which branded production was 7.8 metric tons, representing 58.0% of total gold processed, and customized production was 5.7 metric tons, representing 42.0% of total gold processed. In the third quarter of 2014, the Company processed a total of 14.5 metric tons, of which branded production was 6.5 metric tons, or 44.6% of the total gold processed, and customized production was 8.0 metric tons, or 55.4 % of total gold processed.

 * Branded Production: The Company acquires gold from the Shanghai Gold Exchange to produce branded products.
** Customized Production: Clients who purchase customized products supply gold to the Company for processing.  

2015 THIRD QUARTER FINANCIAL REVIEW

Net Sales

Net sales for the three months ended September 30, 2015 were $263.8 million, an increase of $12.8 million, or 5.1%, from net sales of $251.0 million for the three months ended September 30, 2014. The increase in net sales was primarily due to increased sales volume in our branded production products of 1.35 metric tons.

Net sales for the nine months ended September 30, 2015 were $719.4 million, a decrease of $178.8 million, or 19.9%, from net sales of $898.2 million compared to the nine months ended September 30, 2014. The decrease was due to decreased sales volume by 6.6 metric tons.

Gross Profit

Gross profit for the three months ended September 30, 2015 was $15.6 million, an increase of $5.6 million, or 56.3%, from $10.0 million for the same period in 2014.

Gross profit for the nine months ended September 30, 2015 was $28.8 million, a decrease of $33.6 million, or 53.9%, from $62.3 million for the same period in 2014.

Gross Margin

Gross margin for the three months ended September 30, 2015 was 5.9%, compared to 4.0% for the same period in 2014.

Gross margin for the nine months ended September 30, 2015 was 4.0%, compared to 6.9% for the same period in 2014.

Net Income

For the three months ended September 30, 2015, net income increased $3.5 million, or 67.5% to $8.8 million, or $0.13 per diluted share, based on 66.0 million weighted average diluted shares outstanding, compared to $5.2 million, or $0.08 per diluted share, based on 66.1 million weighted average diluted shares outstanding in the prior-year period.

Net income for the nine months ended September 30, 2014 was $15.9 million, or $0.24 per basic and diluted share, compared to $39.2 million, or $0.59 per basic and diluted share, in the same period of 2014.  

Balance Sheet Highlights

Net cash used in operating activities was $34.0 million for the nine months ended September 30, 2015, compared with net cash provided by operating activities of $6.5 million for the same period in 2014. The change was mainly because of the decrease in net income, and the increased inventory purchase when the market price of gold was low.  

Kingold's net cash from operating activities can fluctuate significantly due to changes in inventories (principally gold). Other factors that may vary significantly include the Company's purchases of gold and income taxes. The Company expects that the net cash it generates from operating activities will continue to fluctuate as the Company's inventories, receivables, accounts payables, and other factors described above change with increased production and purchase of larger quantities of raw materials (principally gold).

OUTLOOK FOR 2015

Based on its existing resources and capacity (which includes the Company's recent proceeds from its previously announced financing and gold lease agreements), the Company reiterates that it expects its gold processed will be between 45 metric tons and 55 metric tons during 2015.  

Conference Call Details

Kingold also announced that it will discuss its financial results in a conference call on Monday, November 16, 2015, at 5:00 PM ET.

The dial-in numbers are:

The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Kingold's website at www.kingoldjewelry.com, or click on the following link: http://kingoldjewelry.equisolvewebcast.com/q3-2015. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.

About Kingold Jewelry, Inc.

Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, one of China's largest cities, was founded in 2002 and today is one of China's leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. For more information, please visit www.kingoldjewelry.com.

Business Risks and Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as "expects," "believe," "project," "anticipate," or similar expressions. The forward-looking statements in this release include, but are not limited to, statements regarding Kingold's outlook with respect to its 2015 gold processing, expectations with respect to expansion into a higher margin, direct retail business through the online retail store, expectations with respect to completion of construction of the Jewelry Park and planned grand opening, as well as its ability to engage in presales and finance the remaining construction, and its expectations with respect to a long-term partnership with Fosun. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. Forward-looking statements are subject to a number of risks, including those contained in Kingold's SEC filings available at www.sec.gov, including Kingold's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements for any reason.

Company Contact
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
[email protected]  

INVESTOR RELATIONS
The Equity Group Inc.
Katherine Yao, Senior Associate
Phone:+86 10-6587-6435
[email protected]

SOURCE Kingold Jewelry, Inc.