×

Nova LifeStyle Announces Record 3rd Quarter 2017 Financial Results; Net Income up Nearly 900%, Anticipates Growth Momentum to Continue into 2018

LOS ANGELES, Nov. 13, 2017 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (Nasdaq:NVFY) (“Nova LifeStyle” or the “Company”), a California-based innovative designer and distributor of modern lifestyle household consumer products, is pleased to announce record third quarter financial results for the quarter ended September 30, 2017.

Third Quarter 2017 Financial Results, Significantly Expanded Net Profit Margins

  • Net income $2.96 million or $0.11 per share ($0.11 fully diluted), an increase of nearly 900% compared to $0.3 million or $0.01 per share ($0.01 fully diluted) net income in the third quarter of 2016

  • Increase in net sales of 8.8% to $33.2 million compared to $30.5 million in the same period of 2016

  • Gross profit margin improved to 18% on average, an increase of approximately 3% compared to the third quarter of 2016

  • Over a 200% increase of new product offerings combined with innovative product designs contributed to significant growth in the quarter

  • Growth momentum to continue into 4th quarter 2017 and 2018

  • Strong customer demand across nearly all product lines

  • Healthy balance sheet and cash flow

Management Comment
Tawny Lam, Chief Executive Officer of Nova LifeStyle commented: “We are pleased to have delivered stellar financial results. Nova LifeStyle’s third quarter financial performance reflects the results of our successful transformation from an ‘asset heavy’ furniture-manufacturing business to a ‘light asset,’ high margin, consumer product company focused on innovative product designs and customer-centric marketing. 2017 is Nova LifeStyle’s Diamond Sofa brand's 25th year in business and with a record number of new product SKUs as well as a rapidly expanding, diversified global customer base, Nova LifeStyle is poised for significant growth for years to come.”

Guidance and Outlook
Ms. Lam concluded: “We continue to see consistent growth leading into the 4th quarter as well as 2018. If this continues, we hope to initiate stock buybacks or start paying cash dividends in the near future to reward our long-term shareholders, as a way to maximize customer and shareholder value.”

About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange 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 and 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 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

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
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
Nine Months Ended September 30, Three Months Ended September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited)
Net Sales $70,813,414 $72,748,972 $33,222,625 $30,538,918
Cost of Sales 58,741,122 62,091,435 27,323,972 25,935,832
Gross Profit 12,072,292 10,657,537 5,898,653 4,603,086
Operating Expenses
Selling expenses 2,690,342 4,358,206 1,003,906 2,050,201
General and administrative expenses 7,608,323 4,756,118 2,124,614 1,491,684
Total Operating Expenses 10,298,665 9,114,324 3,128,520 3,541,885
(Loss) Income From Operations 1,773,627 1,543,213 2,770,133 1,061,201
Other Income (Expenses)
Non-operating income (expense), net 797 40,994 -- 16,623
Foreign exchange transaction loss (324) (5,578) (94) (3,281)
Interest expense, net (133,093) (241,202) (40,932) (96,535)
Financial expense (86,335) (88,098) (34,508) (33,733)
Total Other Expenses, Net (218,955) (293,884) (75,534) (116,926)
(Loss) Income Before Income Taxes and Discontinued operations (1,554,672) 1,249,329 2,694,599 944,275
Income Tax (Benefit) Expense (750,037) 60,063 (262,034) (100,656)
(Loss) Income From Continuing Operations 2,304,709 1,189,266 2,956,633 1,044,931
Loss From Discontinued Operations, net of tax -- (1,476,572) -- (743,594)
Net (Loss) Income 2,304,709 (287,306) 2,956,633 301,337
Other Comprehensive Income
Foreign currency translation -- (420,752) -- (98,638)
Comprehensive (Loss) Income $2,304,709 $(708,058) $2,956,633 $202,699
Basic weighted average shares outstanding 27,570,425 24,937,069 27,846,921 25,558,604
Diluted weighted average shares outstanding 27,704,406 24,937,069 27,980,629 25,558,604
Income (loss) from continuing operations per share of common stock
Basic$0.08 $0.05 $0.11 $0.04
Diluted$0.08 $0.05 $0.11 $0.04
Loss from discontinued operations per share of common stock
Basic$-- $(0.06) $-- $(0.03)
Diluted$-- $(0.06) $-- $(0.03)
Net (loss) income per share of common stock
Basic$0.08 $(0.01) $0.11 $0.01
Diluted$0.08 $(0.01) $0.11 $0.01


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016
September 30, December 31,
2017 2016
Assets
Current Assets
Cash and cash equivalents$802,037 $2,587,743
Accounts receivable, net 36,938,819 42,102,761
Advance to suppliers 21,951,040 13,669,752
Inventories 6,720,649 2,781,123
Assignment fee receivable -- 1,250,000
Receivable from an unrelated party -- 7,000,000
Prepaid expenses and other receivables 315,833 642,891
Taxes receivable 14,094 14,893
Total Current Assets 66,742,472 70,049,163
Noncurrent Assets
Plant, property and equipment, net 158,412 171,276
Lease deposit 43,260 43,260
Goodwill 218,606 218,606
Intangible assets, net 4,573,612 5,686,623
Deferred tax asset 1,498,631 874,759
Total Noncurrent Assets 6,492,521 6,994,524
Total Assets$73,234,993 $77,043,687
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable$162,147 $2,368,775
Line of credit - 7,977,841
Advance from customers 19,298 513,880
Accrued liabilities and other payables 726,501 780,960
Total Current Liabilities 907,946 11,641,456
Noncurrent Liabilities
Line of Credit 3,322,040 -
Income tax payable 2,009,825 2,136,788
Total Noncurrent Liabilities 5,331,865 2,136,788
Total Liabilities 6,239,811 13,778,244
Contingencies and Commitments
Stockholders' Equity
Common stock, $0.001 par value; 75,000,000 shares authorized; 27,909,843 and 27,309,695 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 27,910 27,309
Additional paid-in capital 38,309,891 36,885,462
Statutory reserves 6,241 6,241
Retained earnings 28,651,140 26,346,431
Total Stockholders' Equity 66,995,182 63,265,443
Total Liabilities and Stockholders' Equity$73,234,993 $77,043,687


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
Nine Months Ended September 30,
2017 2016
(Unaudited)
Cash Flows From Operating Activities
Net (loss) income from continuing operations$2,304,709 $1,189,266
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 1,143,319 462,194
Deferred tax benefit (623,872) --
Stock compensation expense 1,773,537 1,216,765
Changes in bad debt allowance 203,905 33,818
Changes in operating assets and liabilities:
Accounts receivable 4,960,037 (558,573)
Advance to suppliers (8,281,288) (3,613,765)
Inventories (3,939,526) 241,611
Other current assets (21,452) (711,727)
Accounts payable (2,206,628) 129,278
Advance from customers (494,582) 584,968
Accrued expenses and other payables (54,458) (325,799)
Taxes payable (126,163) 52,864
Net Cash Used in Continuing Operations (5,362,462) (1,299,100)
Net Cash Used in Discontinued Operations -- (166,148)
Net Cash Used in Operating Activities (5,362,462) (1,465,248)
Cash Flows From Investing Activities
Assignment fee received 1,250,000 --
Purchase of property and equipment (17,443) (7,272)
Cash received from buyer -- 5,500,000
Advances to unrelated parties (8,835,000) --
Repayment from unrelated parties 15,835,000 --
Net Cash Provided by (Used in) Continuing Operations 8,232,557 5,492,728
Net Cash Used in Discontinued Operations -- (218,170)
Net Cash Provided by (Used in) Investing Activities 8,232,557 5,274,558
Cash Flows From Financing Activities
Proceeds from line of credit and bank loan 36,881,842 29,828,074
Repayment to line of credit and bank loan (41,537,643) (29,301,699)
Proceeds from warrants exercised -- 203,250
Net Cash (Used in) Provided by Continuing Operations (4,655,801) 729,625
Net Cash Provided by Discontinued Operations -- 319,762
Net Cash (Used in) Provided by Financing Activities (4,655,801) 1,049,387
Effect of Exchange Rate Changes on Cash and Cash Equivalents -- (3,128)
Net increase (decrease) in cash and cash equivalents (1,785,706) 4,855,569
Cash and cash equivalents, beginning of period 2,587,743 988,029
Cash and cash equivalents, end of period$802,037 $5,843,598


NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)
Nine Months Ended September 30,
2017 2016
(Unaudited)
Analysis of cash and cash equivalents
Included in cash and cash equivalents per consolidated balance sheets$802,037 $5,718,601
Included in assets of discontinued operations - 124,997
Cash and cash equivalents, end of period$802,037 $5,843,598
Supplemental Disclosure of Cash Flow Information
Continuing operations:
Cash paid during the period for:
Income tax payments$-- $7,200
Interest expense$159,686 $371,036
Discontinued operations:
Cash paid during the period for:
Income tax payments$-- $--
Interest expense$-- $--


Source:Nova LifeStyle, Inc.