Nova LifeStyle Reports First Quarter 2015 Results
LOS ANGELES, May 13, 2015 /PRNewswire/ -- Nova LifeStyle, Inc. (NASDAQ-GM: NVFY), a U.S.-based fast-growing, innovative designer, manufacturer and distributor of modern LifeStyle furniture, today announced financial results for the first quarter ended March 31, 2015.
First Quarter 2015 Corporate and Financial Highlights:
- Net sales were $22.0 million, an increase of 23% compared to the prior year period.
- Gross profit was $4.1 million, an increase of 25% compared to the prior year period. Gross margin remained at 18%, in line with the prior year period.
- Net income was $1.6 million, or $0.08 per diluted share, compared to $0.3 million or $0.02 per diluted share in the prior year period.
- Repeat purchase orders secured from Nebraska Furniture Mart, a Berkshire Hathaway Company in the U.S.,
- Four additional SKUs added to production agreement with IKEA China.
"We entered 2015 on a solid footing with the launch of our newest luxury furniture collection, which has a unique and elegant design without compromising on comfort," commented Jeffrey Wong, CEO of Nova LifeStyle. "The improved results in the first quarter were driven by success in both North American and Asian markets, where we have significantly intensified our marketing efforts resulting in more direct sales and a diversified customer base. In addition to securing new customers, we made several repeat sales to major, reputable distributors, demonstrating continued demand for our high quality and stylish furniture products and reaffirming our confidence in our strategy to target the growing global middle class," concluded Mr. Wong.
Corporate update for the first quarter ended March 31, 2015:
North America
The Company continued to execute on its growth initiative to increase sales in North America. Sales to North America were $15.12 million in the three months ended March 31, 2015, an increase of 34.6% from $11.23 million in the same period of 2014, driven by increased marketing efforts in the U.S. markets.
During the first quarter 2015, Nova LifeStyle secured additional purchase orders from Nebraska Furniture Mart, an Omaha-based subsidiary of Berkshire Hathaway Inc., to supply furniture to Grandscape in Dallas, Texas. Grandscape is a new real estate development expected to open in the spring of 2015. The development will cover 90 acres, with a 560,000 sq. ft. retail furniture and home wears showroom and a 1.3 million sq. ft. distribution center. Grandscape is expected to attract 8 million visitors its first year.
North America remains Nova LifeStyle's largest, and fastest growing, market.
China and other parts of Asia
In China, overall sales increased by 22.5% to $3.8 million in the three months ended March 31, 2015, as compared to $3.1 million in the same period of 2014.
During the first quarter 2015, Nova LifeStyle secured an agreement with IKEA, the privately owned Swedish furniture seller, to add four additional SKUs to its existing production to continue to supply its China stores. The target for the initial shipment of the four new SKUs is in the second quarter of this year with an estimate of $4-6M in revenue for these SKUs for the first full year of production. IKEA, the world's largest furniture chain with global sales estimated at over $38bn annually, owns and operates 350 stores in 43 countries with eight of IKEA's 10 largest stores located in China.
The Company's sales to other parts of Asia Pacific, including Hong Kong, Australia, and other countries, increased 9.9% to $0.73 million in the three months ended March 31, 2015, as compared to $0.66 million in the same period of 2014.
Europe
Sales to Europe were $2.42 million in the three months ended March 31, 2015, a decrease of 17% from $2.91 million in the same period of 2014 as a result of the slow European economy.
Results for the Fiscal First Quarter Ended March 31, 2015
Net sales for the three months ended March 31, 2015, were $22.03 million, an increase of 23% from $17.88 million in the same period of 2014; this increase in net sales resulted primarily from a 33% increase in average selling price with a 13% decrease in sales volume.
Gross profit increased 25.02% to $4.07 million in the three months ended March 31, 2015, compared to $3.25 million in the same period of 2014. The increase in gross profit resulted primarily from increase of net sales. Gross profit margin remained flat at18% in the three months ended March 31, 2015, compared with the same period of 2014.
Operating income was $0.9 million, compared to $0.55 million in the same period of 2014.
Other income was $925,785 in the three months ended March 31, 2015, compared with other expenses of $78,664 in the same period of 2014, an increase of $1,004,449. The increase in other income was due primarily to change in fair value of warrant liability of $972,645.
Net income was $1.62 million in the three months ended March 31, 2015, an increase of 435% from $0.30 million for the same period of 2014. Net profit margin was 7% in the three months ended March 31, 2015, an increase of 5% from 2% for the same period of 2014. The increase in profit margin resulted primarily from income from the change in fair value of warrant liability, which is a non-cash and non-taxable income.
Cash and cash equivalents were $1.32 million at March 31, 2015, as compared to $1.24 million as of December 31, 2014.
Conference Call
Nova LifeStyle management will host a conference call to discuss the financial results at 8:30 a.m. ET/ 5:30 a.m. PT today, Wednesday, May, 13, 2015.
Investors in the U.S. interested in participating in the call should dial 1-888-389-5988 and reference passcode 8826232. Those calling from outside the U.S. should dial 1-719-785-1753 and reference passcode 8826232. A telephone replay will be available approximately three hours after the call until May 27, 2015 by dialing 1-877-870-5176 from the U.S. or 1-858-384-5517 from international locations, with passcode 8826232.
A simultaneous live webcast will be available on the Investor Relations section of the Company's website at hopto.com and on the Company's Investor Relations mobile app, powered by IRapp™. The webcast will be archived on the Company's website for one year.
About Nova LifeStyle, Inc.
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange listed company headquartered in California, is a fast growing, innovative designer, manufacturer 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, Colorful World, Giorgio Mobili, 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 or download the NVFY IRapp from the investor page.
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.
Investor Contact:
KCSA Strategic Communication
Julie Silber
Tel: (310) 766-9760
[email protected]
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES |
|||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
|||
| FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 |
|||
| Three Months Ended March 31, |
|||
| 2015 |
2014 |
||
| (Unaudited) |
(Unaudited) |
||
| Net Sales |
$ 22,032,478 |
$ 17,882,892 |
|
| Cost of Sales |
17,965,725 |
14,630,017 |
|
| Gross Profit |
4,066,753 |
3,252,875 |
|
| 18% |
18% |
||
| Operating Expenses |
|||
| Selling expenses |
1,265,856 |
735,345 |
|
| General and administrative expenses |
1,905,610 |
1,962,629 |
|
| Total Operating Expenses |
3,171,466 |
2,697,974 |
|
| Income From Operations |
895,287 |
554,901 |
|
| Other Income (Expenses) |
|||
| Non-operating income, net |
29,576 |
19,658 |
|
| Foreign exchange transaction income |
6,328 |
-- |
|
| Change in fair value of warrant liability |
972,645 |
-- |
|
| Interest expense |
(63,681) |
(63,451) |
|
| Financial expense |
(19,083) |
(34,871) |
|
| Total Other Income (Expenses), Net |
925,785 |
(78,664) |
|
| Income Before Income Tax |
1,821,072 |
476,237 |
|
| Income Tax Expense |
196,209 |
172,685 |
|
| Net Income |
1,624,863 |
303,552 |
|
| Other Comprehensive Income |
|||
| Foreign currency translation |
(68,658) |
(131,499) |
|
| Comprehensive Income |
$ 1,556,205 |
$ 172,053 |
|
| Basic weighted average shares outstanding |
20,912,582 |
19,348,479 |
|
| Diluted weighted average shares outstanding |
20,912,582 |
19,548,665 |
|
| Basic net earnings per share |
$ 0.08 |
$ 0.02 |
|
| Diluted net earnings per share |
$ 0.08 |
$ 0.02 |
|
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| MARCH 31, 2015 (UNAUDITED) AND DECEMBER 31, 2014 |
|||
| March 31, |
December 31, |
||
| 2015 |
2014 |
||
| Assets |
|||
| Current Assets |
|||
| Cash and cash equivalents |
$ 1,318,398 |
$ 1,244,308 |
|
| Accounts receivable, net |
42,541,749 |
42,971,510 |
|
| Advance to suppliers |
5,865,449 |
8,104,312 |
|
| Inventories |
5,870,234 |
3,612,868 |
|
| Prepaid expenses and other receivables |
447,066 |
641,208 |
|
| Deferred tax asset |
118,655 |
118,866 |
|
| Total Current Assets |
56,161,551 |
56,693,072 |
|
| Noncurrent Assets |
|||
| Heritage and cultural assets |
132,012 |
132,513 |
|
| Plant, property and equipment, net |
14,300,274 |
14,377,909 |
|
| Construction in progress |
1,488,712 |
1,378,860 |
|
| Lease deposit |
97,151 |
96,096 |
|
| Deposits for equipment and factory construction |
1,264,459 |
1,264,551 |
|
| Goodwill |
218,606 |
218,606 |
|
| Intangible assets, net |
6,562,230 |
6,493,726 |
|
| Total Noncurrent Assets |
24,063,444 |
23,962,261 |
|
| Total Assets |
$ 80,224,995 |
$ 80,655,333 |
|
| NOVA LIFESTYLE, INC. AND SUBSIDIARIES |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| MARCH 31, 2015 (UNAUDITED) AND DECEMBER 31, 2014 |
|||
| March 31, |
December 31, |
||
| 2015 |
2014 |
||
| Liabilities and Stockholders' Equity |
|||
| Current Liabilities |
|||
| Accounts payable |
$ 8,769,745 |
$ 10,454,485 |
|
| Line of credit |
8,374,908 |
7,592,879 |
|
| Advance from customers |
135,626 |
123,673 |
|
| Accrued liabilities and other payables |
1,880,935 |
2,470,284 |
|
| Warrant derivative liability |
492,374 |
1,465,019 |
|
| Taxes payable |
101,316 |
61,769 |
|
| Total Current Liabilities |
19,754,904 |
22,168,109 |
|
| Noncurrent Liabilities |
|||
| Deferred rent payable |
89,693 |
85,077 |
|
| Deferred tax liability |
12,359 |
12,199 |
|
| Income tax payable |
6,711,880 |
6,607,739 |
|
| Total Noncurrent Liabilities |
6,813,932 |
6,705,015 |
|
| Total Liabilities |
26,568,836 |
28,873,124 |
|
| Contingencies and Commitments |
|||
| Stockholders' Equity |
|||
| Common stock, $0.001 par value; 75,000,000 shares authorized, 20,975,316 and 20,897,316 shares issued and outstanding as of March 31, 2015 and December 31, 2014 |
20,975 |
20,897 |
|
| Additional paid-in capital |
25,069,143 |
24,751,476 |
|
| Statutory reserves |
6,241 |
6,241 |
|
| Accumulated other comprehensive income |
2,506,509 |
2,575,167 |
|
| Retained earnings |
26,053,291 |
24,428,428 |
|
| Total Stockholders' Equity |
53,656,159 |
51,782,209 |
|
| Total Liabilities and Stockholders' Equity |
$ 80,224,995 |
$ 80,655,333 |
|
| - |
- |
||
SOURCE Nova LifeStyle, Inc.
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