Attached files
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| 8-K - Nova Lifestyle, Inc. | novalifestyle8k111011.htm |
Exhibit 99.1
NOVA LIFESTYLE, INC. REPORTS THIRD QUARTER 2011 REVENUE UP 61%, NET INCOME UP 94%, PROVIDES 2012 FINANCIAL GUIDANCE
CALIFORNIA, November 15, 2011 /PRNewswire/ -- Nova Lifestyle, Inc. (“Nova” or “Nova Lifestyle”) (OTCBB: STVS; website: www.novalifestyle.com), an innovative global designer and modern lifestyle furniture company headquartered in California, today announced its financial results for the third quarter ended September 30, 2011, as reported on its quarterly report on Form 10-Q filed on November 14, 2011.
THIRD QUARTER 2011 HIGHLIGHTS
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Record revenue of $11.2 million, an increase of 61% year-over-year
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Gross profit increased 102% to $3.19 million
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Gross margin increased to 29% from 23% in the same period last year
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Record net income of $1.7 million, an increase of 94% year-over-year
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Net margins increased to 15% from 12% in the same period 2010
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Acquired Diamond Sofa (www.diamondsofa.com), an urban contemporary national furniture brand sold to major U.S. furniture companies
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2012 Guidance: Anticipate revenue of between $73 and $75 million and net income of between $13 and $14 million from organic growth
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Three Months Ended
September 30, 2011
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Three Months Ended
September 30, 2010
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YoY% Change
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Revenue
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$ | 11,187,474 | $ | 6,945,017 | 61 | % | ||||||
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Gross Profit
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$ | 3,192,702 | $ | 1,583,374 | 102 | % | ||||||
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Gross Profit Margin
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29 | % | 23 | % | ||||||||
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Operating Income
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$ | 2,000,388 | $ | 1,057,594 | 89 | % | ||||||
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Operating Margin
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18 | % | 15 | % | ||||||||
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Net Income
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$ | 1,681,589 | $ | 865,218 | 94 | % | ||||||
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Net Income Margin
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15 | % | 12 | % | ||||||||
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Diluted EPS
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$ | 0.10 | $ | 0.09 | 11 | % | ||||||
MANAGEMENT COMMENTS
Tawny Lam, President of Nova Lifestyle, commented: “We are pleased with our strong growth and performance in the third quarter of 2011. Our acquisition of Diamond Sofa, a well-recognized brand in the U.S with a niche in the urban contemporary furniture market, provides us with a strong distribution channel to the top 100 U.S. furniture companies. We look forward to expanding our e-commerce business and continuing to market our Nova-branded products to the international markets. Our strong revenue and net income growth, as well as our increase in margins, demonstrate consumers’ appetite for our modern contemporary products. We look forward to a year of record revenue and earnings in 2011.”
REVENUE
Revenue was $11.19 million in the third quarter 2011, an increase of $4.24 million or 61% year-over-year. The increase in revenue was due to a 66% increase in sales volume as well as our acquisition of the Diamond Sofa brand, which contributed $1.04 million in additional sales for the quarter. Our largest selling product categories for the third quarter 2011 were chairs, sofas and cupboards, which accounted for approximately 19%, 18% and 17% of sales. Sales to international markets increased $4.00 million year-over-year to $8.5 million in the third quarter 2011, principally as a result of our increased sales in North America. Overall sales in China also increased, with sales of $2.69 million in the third quarter 2011 compared to $2.44 million in 2010. Sales from franchisees selling Nova-branded products in China contributed approximately $1.49 million, constituting 58% of total China sales during the third quarter 2011, compared to $0.44 million or 18% in the same period of 2010. Nova commenced sales through branded franchise stores in the first half of 2010 and anticipates increasing sales volume in China as we continue to expand our franchise network.
GROSS PROFIT
Gross profit increased 102% to $3.19 million in the third quarter 2011. Gross profit margin increased to 29% in third quarter 2011 from 23% in the same period last year, primarily as a result of increased sales volume and changes in our sales and marketing strategy to expand in the U.S. and China markets. Management believes that gross profit margin will stabilize at approximately 30% going forward as our product mix broadens, sales volume increases and Nova adjusts pricing based on rising raw material costs.
OPERATING EXPENSES
Operating expenses, consisting of selling, general and administrative expenses, were $1.19 million for the third quarter 2011, an increase of 127% compared to the same period last year, as expected. Selling expense increased as we continued expanding in the China retail market by hiring additional sales staff and increasing advertising and promotional marketing. General and administration expense increased because of costs associated with workforce expansion in China and expense related to our acquisitions in 2011 of Nova Furniture and the Diamond Sofa brand.
NET INCOME
Net income was $1.68 million in the third quarter 2011, an increase of 94% year-over-year. Net profit margin was 15%, an increase of 3% from the 2010 period.
ABOUT NOVA LIFESTYLE, INC.
Nova Lifestyle, Inc., a U.S. company headquartered in California, is an innovative designer and modern lifestyle furniture company. Nova’s products are made in the U.S. and Asia, and marketed worldwide. Nova’s collections of lifestyle furniture brands include Diamond Sofa (www.diamondsofa.com), Colorful World, Giorgio Mobili and others. Nova’s products feature urban contemporary styles with comfort and functionality in matching furniture collections and upscale luxury designs appealing to lifestyle-conscious middle and upper middle-income consumers. To learn more about Nova Lifestyle, Inc., please visit 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.
CORPORATE CONTACT:
Tawny Lam
President, Nova Lifestyle, Inc.
Tel: (323) 888-9999
Email: info@novalifestyle.com
www.novalifestyle.com
www.diamondsofa.com
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2011 (UNAUDITED) AND DECEMBER 31, 2010
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September 30, 2011
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December 31, 2010
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(Unaudited)
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Assets
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Current Assets
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Cash and cash equivalents
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$ | 4,175,068 | $ | 985,004 | ||||
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Accounts receivable
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12,070,744 | 5,921,872 | ||||||
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Accounts receivable - related party
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263,678 | 565,170 | ||||||
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Advance to suppliers
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352,201 | 277,081 | ||||||
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Inventory
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1,513,444 | 1,017,704 | ||||||
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Other current assets
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246,479 | 175,323 | ||||||
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Deferred tax asset
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120,093 | 115,237 | ||||||
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Total Current Assets
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18,741,707 | 9,057,391 | ||||||
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Noncurrent Assets
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Heritage and cultural assets
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127,859 | -- | ||||||
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Plant, property and equipment, net
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8,659,805 | 8,192,937 | ||||||
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Construction in progress
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-- | 75,498 | ||||||
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Other assets
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631,772 | -- | ||||||
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Goodwill
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218,606 | -- | ||||||
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Intangible assets, net
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730,685 | 471,812 | ||||||
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Total Noncurrent Assets
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10,368,727 | 8,740,247 | ||||||
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Total Assets
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$ | 29,110,434 | $ | 17,797,638 | ||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 2011 (UNAUDITED) AND DECEMBER 31, 2010
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September 30, 2011
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December 31, 2010
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(Unaudited)
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Liabilities and Stockholders' Equity
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Current Liabilities
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Accounts payable
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$ | 4,377,464 | $ | 1,160,634 | ||||
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Advance from customers
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-- | 25,016 | ||||||
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Accrued expenses and other payables
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780,423 | 1,065,421 | ||||||
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Taxes payable
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635,349 | 197,785 | ||||||
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Due to related party
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-- | 197,776 | ||||||
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Total Current Liabilities
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5,793,236 | 2,646,632 | ||||||
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Noncurrent Liabilities
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Deferred rent payable
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55,083 | 43,169 | ||||||
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Deferred tax liability, net
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18,329 | 1,274 | ||||||
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Income tax payable
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2,586,224 | 2,368,795 | ||||||
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Total Noncurrent Liabilities
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2,659,636 | 2,413,238 | ||||||
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Total Liabilities
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8,452,872 | 5,059,870 | ||||||
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Contingencies and Commitments
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Stockholders' Equity
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Common stock, $0.001 par value; 75,000,000 shares authorized,
17,898,267 and 11,920,000 shares issued and outstanding
as of September 30, 2011, and December 31, 2010, respectively
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17,898 | 11,920 | ||||||
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Additional paid-in capital
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17,074,535 | 10,900,580 | ||||||
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Subscription receivable
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(1,950,000 | ) | -- | |||||
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Statutory reserves
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6,241 | 6,241 | ||||||
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Accumulated other comprehensive income
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2,034,960 | 1,611,756 | ||||||
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Retained earnings
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3,473,928 | 207,271 | ||||||
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Total Stockholders' Equity
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20,657,562 | 12,737,768 | ||||||
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Total Liabilities and Stockholders' Equity
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$ | 29,110,434 | $ | 17,797,638 | ||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
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Nine Months Ended September 30,
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Three Months Ended September 30,
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2011
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2010
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2011
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2010
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Net Sales
(Including sales to related party of $902,638 and
$1,154,971 during the nine months ended September
30, 2011 and 2010; and $277,056 and $414,335
during the three months ended September 30, 2011
and 2010, respectively)
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$ | 26,079,694 | $ | 22,040,134 | $ | 11,187,474 | $ | 6,945,017 | ||||||||
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Cost of Sales
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18,645,205 | 16,856,588 | 7,994,772 | 5,361,643 | ||||||||||||
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Gross Profit
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7,434,489 | 5,183,546 | 3,192,702 | 1,583,374 | ||||||||||||
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Operating Expenses
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Selling expenses
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1,216,546 | 722,119 | 421,437 | 246,354 | ||||||||||||
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General and administrative expenses
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2,187,875 | 795,379 | 770,877 | 279,426 | ||||||||||||
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Total Operating Expenses
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3,404,421 | 1,517,498 | 1,192,314 | 525,780 | ||||||||||||
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Income From Operations
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4,030,068 | 3,666,048 | 2,000,388 | 1,057,594 | ||||||||||||
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Other Income (Expenses)
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Non-operating income
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21,719 | 12,654 | 11,245 | 11,950 | ||||||||||||
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Foreign exchange transaction gain (loss)
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(79,450 | ) | 16,890 | (18,721 | ) | 19,029 | ||||||||||
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Financial expense
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(49,821 | ) | (15,849 | ) | (33,499 | ) | (4,085 | ) | ||||||||
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Total Other Expenses, Net
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(107,552 | ) | 13,695 | (40,975 | ) | 26,894 | ||||||||||
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Income Before Income Tax
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3,922,516 | 3,679,743 | 1,959,413 | 1,084,488 | ||||||||||||
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Income Tax Expense
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655,859 | 732,108 | 277,824 | 219,270 | ||||||||||||
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Net Income
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3,266,657 | 2,947,635 | 1,681,589 | 865,218 | ||||||||||||
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Other Comprehensive Income
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Foreign currency translation
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423,204 | 201,567 | 187,219 | 135,480 | ||||||||||||
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Comprehensive Income
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$ | 3,689,861 | $ | 3,149,202 | $ | 1,868,808 | $ | 1,000,698 | ||||||||
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Basic weighted average shares outstanding
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13,451,350 | 9,685,000 | 16,431,723 | 9,685,000 | ||||||||||||
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Diluted weighted average shares outstanding
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13,522,150 | 9,685,000 | 16,641,815 | 9,685,000 | ||||||||||||
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Basic net earnings per share
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$ | 0.24 | $ | 0.30 | $ | 0.10 | $ | 0.09 | ||||||||
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Diluted net earnings per share
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$ | 0.24 | $ | 0.30 | $ | 0.10 | $ | 0.09 | ||||||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)
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2011
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2010
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Cash Flows From Operating Activities
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Net Income
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$ | 3,266,657 | $ | 2,947,635 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
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Depreciation and amortization
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477,996 | 273,056 | ||||||
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Changes in operating assets and liabilities:
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Accounts receivable
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(4,903,096 | ) | (3,378,842 | ) | ||||
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Accounts receivable - related party
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250,573 | 6,940 | ||||||
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Advance to suppliers
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(62,051 | ) | (1,178,648 | ) | ||||
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Inventory
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325,593 | 1,474,721 | ||||||
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Other current assets
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(68,076 | ) | 87,429 | |||||
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Accounts payable
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1,412,664 | 721,682 | ||||||
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Advance from customers
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(25,498 | ) | 61,647 | |||||
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Accrued expenses and other payables
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(457,172 | ) | 119,352 | |||||
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Deferred rent payable
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9,873 | 3,607 | ||||||
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Taxes payable
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539,340 | 832,587 | ||||||
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Net Cash Provided by Operating Activities
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766,803 | 1,971,166 | ||||||
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Cash Flows From Investing Activities
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Deposit on factory construction
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(617,906 | ) | -- | |||||
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Cash received from acquired subsidiary
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141,231 | -- | ||||||
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Acquisition of Diamond Bar Outdoors, Inc.
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(450,000 | ) | -- | |||||
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Acquisition of intangible assets
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(200,000 | ) | -- | |||||
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Acquisition of heritage and cultural assets
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(125,053 | ) | -- | |||||
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Acquisition of property and equipment
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(348,488 | ) | (632,280 | ) | ||||
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Construction in progress
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-- | (2,783,614 | ) | |||||
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Net Cash Used in Investing Activities
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(1,600,216 | ) | (3,415,894 | ) | ||||
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Cash Flows From Financing Activities
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Advance to related parties
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(1,556,901 | ) | (759,814 | ) | ||||
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Proceeds from subscription receivable
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450,000 | -- | ||||||
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Repayment from related parties
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1,355,314 | 830,243 | ||||||
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Proceeds from private placement
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3,859,933 | -- | ||||||
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Payment for note payable
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(80,000 | ) | -- | |||||
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Contribution by cash
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-- | 500,000 | ||||||
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Dividend paid
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-- | (712,370 | ) | |||||
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Net Cash Provided by (Used in) Financing Activities
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$ | 4,028,346 | $ | (141,941 | ) | |||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)
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2011
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2010
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Effect of Exchange Rate Changes on Cash and Cash Equivalents
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$ | (4,869 | ) | $ | 14,178 | |||
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Net increase (decrease) in cash and cash equivalents
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3,190,064 | (1,572,491 | ) | |||||
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Cash and cash equivalents, beginning of the period
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985,004 | 2,172,266 | ||||||
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Cash and cash equivalents, ending of the period
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$ | 4,175,068 | $ | 599,775 | ||||
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Supplemental Disclosure of Cash Flow Information
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Cash paid during the period for:
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Income tax payments
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$ | 122,746 | $ | 61,210 | ||||
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Supplemental Disclosure of Non-Cash Financing Activities
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Subscription receivable from sales of common stock
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$ | 2,400,000 | $ | -- | ||||