Attached files
| file | filename |
|---|---|
| 8-K - Nova Lifestyle, Inc. | novalifestyle8k032912.htm |
Exhibit 99.1
NOVA LIFESTYLE, INC. REPORTS 2011 FISCAL YEAR RESULTS – SALES UP 50%, NET INCOME UP 28%
CALIFORNIA, April 2, 2012 /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 year ended December 31, 2011, as reported on its annual report on Form 10-K filed on March 30, 2012.
2011 HIGHLIGHTS
|
-
|
Net sales of $43.16 million, an increase of 50% year-over-year
|
|
-
|
Gross profit increased 60% to $12.11 million
|
|
-
|
Net income of $5.37 million, an increase of 28% year-over-year
|
|
-
|
Acquired Diamond Sofa (www.diamondsofa.com), an urban contemporary national furniture brand sold to major U.S. furniture companies
|
|
-
|
2012 Guidance: Anticipate net sales of between $50 million and $58 million and net income of between $7 million and $8 million from organic growth
|
|
Year Ended
December 31, 2011
|
Year Ended
December 31, 2010
|
YoY% Change
|
||||||||||
|
Net sales
|
$
|
43,162,026
|
$
|
28,818,982
|
50
|
%
|
||||||
|
Gross profit
|
$
|
12,113,074
|
$
|
7,576,958
|
60
|
%
|
||||||
|
Gross profit margin
|
28
|
%
|
26
|
%
|
||||||||
|
Income from operations
|
$
|
6,939,676
|
$
|
5,266,672
|
32
|
%
|
||||||
|
Operating margin
|
16
|
%
|
18
|
%
|
||||||||
|
Net income
|
$
|
5,365,165
|
$
|
4,203,009
|
28
|
%
|
||||||
|
Net income margin
|
12
|
%
|
15
|
%
|
||||||||
|
Diluted EPS
|
$
|
0.37
|
$
|
0.43
|
(14
|
)%
|
||||||
MANAGEMENT COMMENTS
Tawny Lam, President of Nova LifeStyle, commented: “We are pleased with our strong growth and performance in 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 sales and net income growth demonstrate consumers’ appetite for our modern contemporary products. We look forward to continuing our path of strong sales and earnings growth in 2012.”
NET SALES
Net sales in 2011 were $43.16 million, an increase of 50% from $28.82 million in 2010. The increase in net sales resulted primarily from a 19% increase in sales volume in 2011 and our acquisition of the Diamond Sofa brand in August 2011, which contributed $6.22 million in additional sales for the year. Our largest selling product categories in 2011 were sofas, dining tables and chairs, which accounted for approximately 22%, 17% and 15% of sales, respectively. Sales to international markets increased $12.37 million in 2011 compared to 2010 principally as a result of increased sales in North America. We believe that we can continue to expand our sales in the U.S. and international markets as we integrate the Diamond Sofa brand and increase direct sales as we expand and explore new markets worldwide. Overall sales to China also increased 24% to $10.32 million in 2011 compared to $8.35 million in 2010. Sales from franchisees selling Nova-branded products in China contributed approximately $5.51 million, constituting 53% of total China sales during 2011, compared to $1.69 million or 20% in 2010. We anticipate increasing sales volume in China as our franchise store network continues to expand and we introduce new lines of branded products in 2012.
GROSS PROFIT
Gross profit increased 60% to $12.11 million in 2011. Gross profit margin increased to 28% in 2011 from 26% in the same period last year, primarily as a result of increased sales volume and overall average selling price, 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 we adjust pricing based on rising raw material costs.
OPERATING EXPENSES
Operating expenses, consisting of selling, general and administrative expenses, were $5.17 million in 2011, an increase of 124% compared to 2010, 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 $5.37 million in 2011, an increase of 28% year-over-year. Net profit margin was 12%, a decrease of 3% from the 2010 period due primarily to increased sales and gross profit margin, but offset by increased operating expenses.
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
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
|
2011
|
2010
|
|||||||
|
Assets
|
||||||||
|
Current Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
2,505,179
|
$
|
985,004
|
||||
|
Accounts receivable
|
18,974,612
|
5,921,872
|
||||||
|
Accounts receivable - related party
|
28,289
|
565,170
|
||||||
|
Due from factor
|
203,351
|
--
|
||||||
|
Advance to suppliers
|
349,767
|
326,010
|
||||||
|
Inventory
|
1,848,081
|
1,017,704
|
||||||
|
Prepaid expenses and other receivable
|
113,853
|
126,394
|
||||||
|
Deferred tax asset
|
156,974
|
115,237
|
||||||
|
Total Current Assets
|
24,180,106
|
9,057,391
|
||||||
|
Noncurrent Assets
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||||||||
|
Heritage and cultural assets
|
128,687
|
--
|
||||||
|
Plant, property and equipment, net
|
8,721,186
|
8,192,937
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||||||
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Construction in progress
|
91,466
|
75,498
|
||||||
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Construction deposit
|
634,830
|
--
|
||||||
|
Goodwill
|
218,606
|
--
|
||||||
|
Intangible assets, net
|
724,465
|
471,812
|
||||||
|
Deferred tax asset
|
118,144
|
--
|
||||||
|
Total Noncurrent Assets
|
10,637,384
|
8,740,247
|
||||||
|
Total Assets
|
$
|
34,817,490
|
$
|
17,797,638
|
||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2011 AND 2010
|
2011
|
2010
|
|||||||
|
Liabilities and Stockholders' Equity
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable
|
$
|
6,758,058
|
$
|
1,160,634
|
||||
|
Advance from customers
|
91,021
|
25,016
|
||||||
|
Accrued liabilities and other payables
|
834,128
|
1,065,421
|
||||||
|
Taxes payable
|
198,984
|
197,785
|
||||||
|
Due to related party
|
--
|
197,776
|
||||||
|
Total Current Liabilities
|
7,882,191
|
2,646,632
|
||||||
|
Noncurrent Liabilities
|
||||||||
|
Deferred rent payable
|
58,949
|
43,169
|
||||||
|
Deferred tax liability, net
|
--
|
1,274
|
||||||
|
Income tax payable
|
4,016,266
|
2,368,795
|
||||||
|
Total Noncurrent Liabilities
|
4,075,215
|
2,413,238
|
||||||
|
Total Liabilities
|
11,957,406
|
5,059,870
|
||||||
|
Contingencies and Commitments
|
||||||||
|
Stockholders' Equity
|
||||||||
|
Common stock, $0.001 par value; 75,000,000 shares authorized,
17,898,267 and 9,685,000 shares issued and outstanding
as of December 31, 2011 and 2010, respectively
|
17,898
|
9,685
|
||||||
|
Additional paid-in capital
|
17,074,535
|
10,902,815
|
||||||
|
Subscription receivable
|
(1,950,000
|
)
|
--
|
|||||
|
Statutory reserves
|
6,241
|
6,241
|
||||||
|
Accumulated other comprehensive income
|
2,138,974
|
1,611,756
|
||||||
|
Retained earnings
|
5,572,436
|
207,271
|
||||||
|
Total Stockholders' Equity
|
22,860,084
|
12,737,768
|
||||||
|
Total Liabilities and Stockholders' Equity
|
$
|
34,817,490
|
$
|
17,797,638
|
||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
Years Ended December 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Net Sales
(Including sales to related parties of $902,638 and $1,491,875
during the years ended December 31, 2011 and 2010, respectively)
|
$
|
43,162,026
|
$
|
28,818,982
|
||||
|
Cost of Sales
|
31,048,952
|
21,242,024
|
||||||
|
Gross Profit
|
12,113,074
|
7,576,958
|
||||||
|
Operating Expenses
|
||||||||
|
Selling expenses
|
1,865,086
|
959,673
|
||||||
|
General and administrative expenses
|
3,308,312
|
1,205,881
|
||||||
|
Loss on disposal of plant, property and equipment
|
--
|
144,732
|
||||||
|
Total Operating Expenses
|
5,173,398
|
2,310,286
|
||||||
|
Income From Operations
|
6,939,676
|
5,266,672
|
||||||
|
Other Income (Expenses)
|
||||||||
|
Non-operating income
|
52,043
|
57,844
|
||||||
|
Foreign exchange transaction loss
|
(90,609
|
)
|
(66,419
|
)
|
||||
|
Interest income
|
1,402
|
2,549
|
||||||
|
Financial expense
|
(76,836
|
)
|
(22,556
|
)
|
||||
|
Total Other Expenses, Net
|
(114,000
|
)
|
(28,582
|
)
|
||||
|
Income Before Income Tax
|
6,825,676
|
5,238,090
|
||||||
|
Income Tax Expense
|
1,460,511
|
1,035,081
|
||||||
|
Net Income
|
5,365,165
|
4,203,009
|
||||||
|
Other Comprehensive Income
|
||||||||
|
Foreign currency translation
|
527,218
|
294,871
|
||||||
|
Comprehensive Income
|
$
|
5,892,383
|
$
|
4,497,880
|
||||
|
Basic weighted average shares outstanding
|
14,506,915
|
9,685,000
|
||||||
|
Diluted weighted average shares outstanding
|
14,697,206
|
9,685,000
|
||||||
|
Basic net earnings per share
|
$
|
0.37
|
$
|
0.43
|
||||
|
Diluted net earnings per share
|
$
|
0.37
|
$
|
0.43
|
||||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
|
2011
|
2010
|
|||||||
|
Cash Flows From Operating Activities
|
||||||||
|
Net Income
|
$
|
5,365,165
|
$
|
4,203,009
|
||||
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
663,031
|
374,123
|
||||||
|
Loss on fixed assets disposal
|
--
|
144,732
|
||||||
|
Changes in deferred tax
|
(172,474
|
)
|
(42,407
|
)
|
||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
(11,784,975
|
)
|
(2,448,235
|
)
|
||||
|
Accounts receivable - related party
|
536,881
|
80,336
|
||||||
|
Advance to suppliers
|
(13,609
|
)
|
(156,830
|
)
|
||||
|
Inventory
|
4,383
|
1,322,444
|
||||||
|
Note receivable
|
--
|
16,763
|
||||||
|
Other current assets
|
18,365
|
45,123
|
||||||
|
Accounts payable
|
3,754,075
|
149,571
|
||||||
|
Advance from customers
|
65,266
|
(96,590
|
)
|
|||||
|
Accrued expenses and other payables
|
(412,246
|
)
|
304,174
|
|||||
|
Deferred rent payable
|
13,243
|
4,049
|
||||||
|
Taxes payable
|
1,497,129
|
995,422
|
||||||
|
Net Cash (Used in) Provided by Operating Activities
|
(465,766
|
)
|
4,895,684
|
|||||
|
Cash Flows From Investing Activities
|
||||||||
|
Deposit on factory construction
|
(619,310
|
)
|
--
|
|||||
|
Cash received from acquired Diamond Bar Outdoors, Inc.
|
141,231
|
--
|
||||||
|
Acquisition of Diamond Bar Outdoors, Inc.
|
(450,000
|
)
|
--
|
|||||
|
Acquisition of intangible assets
|
(200,000
|
)
|
--
|
|||||
|
Purchase of heritage and cultural assets
|
(125,541
|
)
|
--
|
|||||
|
Purchase of property and equipment
|
(589,185
|
)
|
(4,742,229
|
)
|
||||
|
Cash paid for construction in progress
|
(11,840
|
)
|
--
|
|||||
|
Net Cash Used in Investing Activities
|
(1,854,645
|
)
|
(4,742,229
|
)
|
||||
|
Cash Flows From Financing Activities
|
||||||||
|
Advance to related parties
|
(1,560,085
|
)
|
--
|
|||||
|
Repayment from related parties
|
1,357,289
|
332,373
|
||||||
|
Proceeds from subscription receivable
|
450,000
|
--
|
||||||
|
Proceeds from private placement, net
|
3,859,933
|
--
|
||||||
|
Payment for note payable
|
(80,000
|
)
|
--
|
|||||
|
Due from factor
|
(203,351
|
)
|
--
|
|||||
|
Contribution by cash
|
--
|
500,000
|
||||||
|
Dividend paid
|
--
|
(2,172,590
|
)
|
|||||
|
Net Cash Provided by (Used in) Financing Activities
|
$
|
3,823,786
|
$
|
(1,340,217
|
)
|
|||
NOVA LIFESTYLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
|
2011
|
2010
|
|||||||
|
Effect of Exchange Rate Changes on
|
||||||||
|
Cash and Cash Equivalents
|
$
|
16,800
|
$
|
(500
|
)
|
|||
|
Net increase (decrease) in cash and cash equivalents
|
1,520,175
|
(1,187,262
|
)
|
|||||
|
Cash and cash equivalents, beginning of year
|
985,004
|
2,172,266
|
||||||
|
Cash and cash equivalents, end of year
|
$
|
2,505,179
|
$
|
985,004
|
||||
|
Supplemental Disclosure of Cash Flow Information
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Income tax payments
|
$
|
126,702
|
$
|
78,936
|
||||
|
Supplemental Disclosure of Non-Cash Financing Activities
|
||||||||
|
Subscription receivable from sales of common stock
|
$
|
2,400,000
|
$
|
--
|
||||
|
Transfer from construction in progress to fixed assets
|
$
|
--
|
$
|
527,839
|
||||