Nova LifeStyle Announces Second Quarter 2018 Financial Results Highlighted by Substantial Revenue and Earnings Growth Driven by New Products, Higher Selling Prices and Unit Volumes

 

LOS ANGELES...August 13, 2018 -- Nova LifeStyle, Inc. (NASDAQ: NVFY), a leading U.S.-based, innovative designer and distributor of modern LifeStyle home products, today announced solid financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Highlights (all comparisons are to the same period in 2017):

  • Net income increased 150% to $1.4 million, or $0.05 per diluted share, compared to net income of $0.6 million or $0.02 per diluted share.
  • Revenue increased 24% to $24.1 million, compared to $19.5 million.
  • Gross profit was $4.2 million, up 21.1%, compared to $3.5 million.
  • Average selling prices (ASPs) rose nearly 20% driven by high margin household products.
  • Sofas, TV cabinets and beds were the top selling product lines at 53%, 20% and 8% of revenues, respectively. 
  • Entered into proprietarily designed office furniture markets.
  • Anticipate robust sales and earnings growth throughout the remainder of 2018.

Six Months 2018 Financial Highlights (all comparisons are to the same period in 2017):

  • Net income was $3.0 million, or $0.11 per diluted share, compared to a net loss of $(0.7) million, or $(0.02) per diluted share.
  • Revenues increased 23.5% to $46.4 million, compared to $37.6 million.
  • Gross profit for the first half of 2018 was $9.1 million, up 47.5%, compared to $6.2 million.     
  • Balance sheet well-positioned with approximately $2.60 per share in net assets at June 30, 2018.

Management Commentary

Tawny Lam, Chief Executive Officer of Nova LifeStyle, commented, "Nova Lifestyle is pleased to announce another quarter of great financial results. Our strategy of focusing on high-end products continues to validate our growth strategies, evidenced by a year over year revenue increase of over 23%. In particular, the Company saw gains in both ASPs and volumes shipped, reflecting that our extensive product offerings through catalogues are gaining momentum. Our international growth has been solid, particularly in Australia, where we have leveraged our relationships and brand recognition to serve customers in the hotel and hospitality industries." 

"In addition to home furnishing products, Nova LifeStyle is now offering a proprietarily designed 'Office' product line that greatly complements our existing catalogues. We are currently experiencing substantial cross-selling demand from commercial customers as companies look for beautifully designed and functional office environments to attract and retain employees in today's low unemployment economy. Going forward, the Office product line will become an added sales channel that integrates corporate apartments and residential furniture adoptions. We anticipate significant sales and earnings growth to continue in the second half of 2018."

About Nova LifeStyle

Nova LifeStyle, Inc., a NASDAQ Global Market 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 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.


NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (UNAUDITED)

  Six Months Ended June 30,   Three Months Ended June 30,
    2018       2017       2018       2017  
               
Net Sales  $   46,412,102     $   37,590,789     $   24,108,630     $   19,533,767  
               
Cost of Sales   37,305,319        31,417,150        19,903,389        16,061,903   
               
Gross Profit   9,106,783        6,173,639        4,205,241        3,471,864   
               
Operating Expenses              
Selling expenses     1,681,058         1,686,436         1,049,905         711,434  
General and administrative expenses   3,848,564        5,483,709        1,542,891        2,458,033   
               
Total Operating Expenses   5,529,622        7,170,145        2,592,796        3,169,467   
               
Income From Operations   3,577,161        (996,506 )     1,612,445        302,397   
               
Other Income (Expenses)              
Non-operating expense, net     4,082         797         4,082         797  
Foreign exchange transaction loss     (441 )       (230 )       (305 )       (190 )
Interest expense, net     (55,786 )       (92,161 )       (24,204 )       (37,755 )
Financial expense   (69,497 )     (51,827 )     (38,777 )     (25,767 )
               
Total Other Expenses, Net   (121,642 )     (143,421 )     (59,204 )     (62,915 )
               
Income Before Income Taxes     3,455,519         (1,139,927 )       1,553,241         239,482  
               
Income Tax Expense (Benefit)   437,193        (488,003 )     189,936        (317,984 )
               
Net Income (Loss)     3,018,326         (651,924 )       1,363,305         557,466  
               
Other Comprehensive (Loss)              
Release of foreign currency translation adjustments upon disposal of subsidiaries              
Foreign currency translation     --          --          --          --   
               
Comprehensive Income (Loss) $   3,018,326      $   (651,924 )   $   1,363,305      $   557,466  
               
Basic weighted average shares outstanding     28,304,183          27,429,885          28,043,687          27,513,733   
Diluted weighted average shares outstanding     28,650,857          27,429,885          28,524,134          27,516,902   
               
Net income (loss) per share of common stock              
Basic $   0.11      $   (0.02 )   $   0.05      $   0.02   
Diluted $   0.11      $   (0.02 )   $   0.05      $   0.02   



NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017

  June 30, 2018   December 31, 2017
Assets      
       
Current Assets        
Cash and cash equivalents $   7,803,679   $   5,722,716
Accounts receivable, net     55,274,251       54,006,513
Advance to suppliers     15,205,316       8,580,609
Inventories     5,882,945       6,374,560
Prepaid expenses and other receivables     245,233        232,935 
       
Total Current Assets       84,411,424        74,917,333 
       
Noncurrent Assets      
Plant, property and equipment, net     149,357       157,246
Lease deposit     43,260       43,260
Goodwill     218,606       218,606
Intangible assets, net     3,999,256       4,202,608
Deferred tax asset     318,961        318,961 
       
Total Noncurrent Assets     4,729,440        4,940,681 
       
Total Assets   $   89,140,864    $   79,858,014 

NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS – CONTINUED
JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017

  June 30, 2018   December 31, 2017
       
Liabilities and Stockholders' Equity      
       
Current Liabilities      
Accounts payable $   3,944,397   $   1,634,554
Line of credit     7,306,830       -
Advance from customers     48,808       19,826
Accrued liabilities and other payables     640,769       847,756
Income tax payable     324,892        178,307 
       
Total Current Liabilities     12,265,696        2,680,443 
       
Noncurrent Liabilities      
Line of credit     -       4,202,118
Income tax payable     4,591,257        4,527,849 
       
Total Noncurrent Liabilities     4,591,257        8,729,967 
       
Total Liabilities     16,856,953        11,410,410 
       
Contingencies and Commitments      
       
Stockholders' Equity      
Common stock, $0.001 par value; 75,000,000 shares authorized,      
28,399,610 and 28,191,927 shares issued and outstanding;     28,400       28,192
as of June 30, 2018 and 2017, respectively  
Additional paid-in capital     39,500,150       38,682,377
Statutory reserves     6,241       6,241
Retained earnings     32,749,120        29,730,794 
       
Total Stockholders' Equity     72,283,911        68,447,604 
       
Total Liabilities and Stockholders' Equity $   89,140,864    $   79,858,014 

NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (UNAUDITED)

  Six Months Ended June 30,
    2018       2017  
   
Cash Flows From Operating Activities      
 Net income (loss) $   3,018,326     $   (651,924 )
Adjustments to reconcile net income to net cash used in      
operating activities:      
Depreciation and amortization    222,741         762,150  
Deferred tax benefit     --       (648,961 )
Stock compensation expense     843,296         913,264  
Changes in bad debt allowance     169,909         504,324  
Changes in operating assets and liabilities:      
Accounts receivable   (1,437,646 )       9,997,317  
Advance to suppliers   (624,708 )     0,922,714 )
Inventories     491,615         768,120  
Other current assets     (69,820 )       (267,052 )
Accounts payable   2,309,843       (2,296,941 )
Advance from customers     28,982         (497,484 )
Accrued liabilities and other payables    (206,281 )       186,081  
Taxes payable   209,993        160,959   
       
Net Cash Used in Operating Activities   (1,043,750 )     (1,992,861 )
       
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 )
Repayment from unrelated parties   --        15,835,000   
       
Net Cash (Used in) provided by Investing Activities   (11,499 )     8,247,868   
       
Cash Flows From Financing Activities      
  Proceeds from line of credit and bank loan     39,802,918         23,094,342  
  Repayment to line of credit and bank loan   (36,698,206 )       (26,765,110 )
  Proceeds from the exercise of options for common stocks   31,500        --   
       
Net Cash provided by (Used in) Financing Activities   3,136,212        (3,670,768 )

NOVA LIFESTYLE, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)

  Six Months Ended June 30,
    2018     2017
       
       
Effect of Exchange Rate Changes on Cash and Cash Equivalents   --      -- 
       
Net (decrease) increase in cash and cash equivalents     2,080,963       2,584,239
       
Cash and cash equivalents, beginning of period   5,722,716      2,587,743 
       
Cash and cash equivalents, ending of period $   803,679    $   5,171,982 
       
Analysis of cash and cash equivalents      
Included in cash and cash equivalents per consolidated balance sheets   7,803,679      5,171,982 
       
Cash and cash equivalents, end of period $   7,803,679   $   5,171,982
       
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:      
Income tax payments $   227,200    $   -- 
Interest expense $   55,828    $   118,753 


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