Attached files
| file | filename |
|---|---|
| EX-32.2 - EXHIBIT 32.2 - KINGOLD JEWELRY, INC. | v466303_ex32-2.htm |
| EX-32.1 - EXHIBIT 32.1 - KINGOLD JEWELRY, INC. | v466303_ex32-1.htm |
| EX-31.2 - EXHIBIT 31.2 - KINGOLD JEWELRY, INC. | v466303_ex31-2.htm |
| EX-31.1 - EXHIBIT 31.1 - KINGOLD JEWELRY, INC. | v466303_ex31-1.htm |
| 10-Q - FORM 10-Q - KINGOLD JEWELRY, INC. | v466303_10q.htm |
Exhibit 99.1
Kingold Jewelry Reports 2017 First Quarter Financial Results
Company to Hold Conference Call with Accompanying Slide Presentation at 5:30 p.m. ET on May 11, 2017
WUHAN CITY, China, May 10, 2017 - Kingold Jewelry, Inc. ("Kingold" or "the Company") (NASDAQ: KGJI), one of China's leading manufacturers and designers of high quality 24-karat gold jewelry, ornaments and investment-oriented products, today announced its unaudited financial results for the first quarter ended March 31, 2017.
2017 First Quarter Financial Highlights (all results compared to prior year period)
| · | Net sales were $292.3 million, an increase of 4% from $282.2 million |
| · | Processed a total of 16.0 metric tons of 24-karat gold products, increased 8.1% from 14.8 metric tons |
| · | Net loss was $21.3 million, or $(0.32) per diluted share, compared to net income of $15.2 million, or $0.23 per diluted share |
Outlook for 2017
| · | Company reiterates guidance of between 70 metric tons and 80 metric tons of 24-karat gold products in 2017 |
Management Commentary
Mr. Zhihong Jia, Chairman and CEO of the Company, commented, “We were pleased to deliver strong operating results in the first quarter of 2017, and continue to increase our production capacity and total gold processed volume. During the quarter, we have witnessed strong growing demand for 24-karat gold products to encourage us to further expand our production. Under this competitive environment our management team continues to focus on establishing new sales channels while seeking sufficient free cash flow to support production volume to remain competitive. However, we have seen challenges from the higher interest rate resulted by our expansion in the gold investment business during the quarter, therefore we should be further observant in balancing the relationship of the market demand and trend with capital needs.”
2017 FIRST QUARTER OPERATIONAL REVIEW
| Metric Tons of Gold Sales | ||||
| Three Months Ended: | ||||
| March 31, 2017 | March 31, 2016 | |||
| Volume | % of Total | Volume | % of Total | |
| Branded* | 8.1 | 50.3% | 8.2 | 55.1% |
| Customized** | 7.9 | 49.7% | 6.6 | 44.9% |
| Total | 16.0 | 100.0% | 14.8 |
100% |
| * | Branded Production: | The Company acquires gold from the Shanghai Gold Exchange to produce branded products. | |
| ** | Customized Production: | Clients who purchase customized products supply gold to the Company for processing. |
For the three months ended March 31, 2017, the Company sold a total of 16 metric tons of gold, of which branded production was 8.1 metric tons, representing 50.3% of total gold sold, and customized production was 7.9 metric tons, representing 49.7% of total gold sold in the first quarter of 2017. In the first quarter of 2016, the Company sold a total of 14.8 metric tons, of which branded production was 8.2 metric tons, or 55.1% of the total gold sold, and customized production was 6.6 metric tons, or 44.9% of total gold sold.
Kingold Jewelry, Inc.
May 10, 2017
2016 FINANCIAL REVIEW
Net Sales
Net sales for the three months ended March 31, 2017 was $292.3 million, representing an increase of $10.1 million, or 4%, from $282.2 million for the same period in 2016. The increase in net sales was primarily driven by the increase in the average selling price for our branded production from RMB 222.24 per gram in the three months ended March 31, 2016 to RMB 245.70 per gram in three months ended March 31, 2017.
Gross Profit
Gross profit for the three months ended March 31, 2017 was $17.1 million, compared to $28.5 million for the same period in 2016.
Gross Margin
The Company’s gross margin was 6% for the three months ended March 31, 2017, compared to 10% in the prior year period. The decrease in gross margin was primarily due to the increased unit cost of our branded production sales. The unit cost of branded production sales was RMB 234.92 per gram for the three months ended March 31, 2017, increased by 16% compared to RMB 202.58 per gram for the same period in 2016.
Net Income (Loss)
Net loss for the three months ended March 31, 2017 was $21.3 million, or $(0.32) per diluted share based on 66.0 million weighted average diluted shares outstanding, compared to net income of $15.2 million in the prior year period, or $0.23 per diluted share based on 66.0 million weighted average diluted shares outstanding in the prior-year period.
Balance Sheet Highlights (USD in Millions)
| 3/31/2017 | 12/31/2016 | Percentage Change | |
| Cash and Cash Equivalents | $9.4 | $21.3 | (55.8) % |
| Inventories | $88.8 | $119.4 | (25.6) % |
| Working Capital (Current Assets -- Current Liabilities) | $696.3 | $460.0 | 51.4 % |
| Stockholders’ Equity | $360.7 | $282.5 | 27.7 % |
Net cash used in operating activities was $54.7 million for the three months ended March 31, 2017, compared with net cash used in operating activities of $148 million for the same period in 2016. The increase of net cash used in operating was mainly due to the increase in value added tax receivable of $64.4 million, decrease in other payable and accrued expense of $2.1 million, offset by our decrease in inventories of $31.6 million for the increased production to meet the sales demand.
Kingold’s net cash from operating activities can fluctuate significantly due to changes in inventories (principally gold). Other factors that may vary significantly include the Company’s purchases of gold and income taxes. The Company expects that the net cash it generates from operating activities will continue to fluctuate as the Company’s inventories, receivables, accounts payables, and other factors described above change with increased production and purchase of larger quantities of raw materials (principally gold).
OUTLOOK FOR 2017
Based on its existing resources and capacity along with strong demand for 24-karat gold products in China, the Company reiterates its expectation that gold processed will be between 70 metric tons and 80 metric tons during 2017.
Conference Call Details
Kingold also announced that it will discuss these financial results in a conference call on May 11, 2017, at 5:30 p.m. ET. The dial-in numbers are:
| Live Participant Dial In (Toll Free): | 877-407-9038 |
| Live Participant Dial In (International): | 201-493-6742 |
The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Kingold's website at www.kingoldjewelry.com, or click on the following link: http://kingoldjewelry.equisolvewebcast.com/q1-2017. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.
Kingold Jewelry, Inc.
May 10, 2017
About Kingold Jewelry, Inc.
Kingold Jewelry, Inc. (NASDAQ: KGJI), centrally located in Wuhan City, one of China's largest cities, was founded in 2002 and today is one of China's leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products. The Company sells both directly to retailers as well as through major distributors across China. Kingold has received numerous industry awards and has been a member of the Shanghai Gold Exchange since 2003. For more information, please visit www.kingoldjewelry.com.
Business Risks and Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. You can identify these forward -looking statements by words such as “expects,” “believe,” “project,” “anticipate,” or similar expressions. The forward-looking statements in this release include statements regarding Kingold’s outlook with respect to its 2017 outlook for gold processing, its expectations with respect to completion of construction of the Jewelry Park and planned grand opening, as well as its ability to engage in presales and finance the remaining construction. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. Forward-looking statements are subject to a number of risks, including those contained in Kingold's SEC filings available at www.sec.gov, including Kingold's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Kingold undertakes no obligation to update or revise any forward-looking statements for any reason.
COMPANY CONTACT
Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
bl@kingoldjewelry.com
INVESTOR RELATIONS
The Equity Group Inc.
Katherine Yao, Senior Associate Phone: +86-10-6587-6435 kyao@equityny.com
Kingold Jewelry, Inc.
May 10, 2017
KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN US DOLLARS)
(UNAUDITED)
For the three months ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| (Restated) | ||||||||
| NET SALES | $ | 292,264,077 | $ | 282,188,057 | ||||
| COST OF SALES | ||||||||
| Cost of sales | (274,909,008 | ) | (253,412,444 | ) | ||||
| Depreciation | (294,443 | ) | (290,682 | ) | ||||
| Total cost of sales | (275,203,451 | ) | (253,703,126 | ) | ||||
| GROSS PROFIT | 17,060,626 | 28,484,931 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling, general and administrative expenses | 3,697,383 | 2,838,593 | ||||||
| Stock compensation expenses | 11,143 | 11,143 | ||||||
| Depreciation | 105,839 | 23,513 | ||||||
| Amortization, other | 2,743 | 2,890 | ||||||
| Total operating expenses | 3,817,108 | 2,876,139 | ||||||
| INCOME FROM OPERATIONS | $ | 13,243,518 | $ | 25,608,792 | ||||
| OTHER INCOME (EXPENSES) | ||||||||
| Other income | 65,365 | - | ||||||
| Interest Income | 686,845 | 59,224 | ||||||
| Interest expense, including amortization of debt issuance costs of $3,287,709 and $430,772 | (37,589,496 | ) | (5,404,125 | ) | ||||
| Total other expenses, net | (36,837,286 | ) | (5,344,901 | ) | ||||
| INCOME (LOSS) FROM OPERATIONS BEFORE TAXES | (23,593,768 | ) | 20,263,891 | |||||
| INCOME TAX PROVISION (BENEFIT) | ||||||||
| Current | - | 4,811,004 | ||||||
| Deferred | (2,287,949 | ) | 255,674 | |||||
| Total income tax provision (benefit) | (2,287,949 | ) | 5,066,678 | |||||
| NET INCOME (LOSS) | (21,305,819 | ) | 15,197,213 | |||||
| Less: net loss attributable to the non-controlling interest | - | (1,197 | ) | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO KINGOLD JEWELRY, INC. | $ | (21,305,819 | ) | $ | 15,198,410 | |||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Change in unrealized gain related to investments in gold | $ | 102,907,389 | $ | 17,564,866 | ||||
| Total foreign currency translation gain (loss) | (3,427,417 | ) | 1,962,694 | |||||
| Less: foreign currency translation loss attributable to non-controlling interest | - | (454 | ) | |||||
| Total other comprehensive income attributable to KINGOLD JEWELRY, INC. | $ | 99,479,972 | $ | 19,528,014 | ||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO: | ||||||||
| KINGOLD JEWELRY, INC. | $ | 78,174,153 | $ | 34,726,424 | ||||
| Non-controlling interest | - | (1,651 | ) | |||||
| 78,174,153 | $ | 34,724,773 | ||||||
| Earnings (Losses) per share | ||||||||
| Basic and diluted | $ | (0.32 | ) | $ | 0.23 | |||
| Weighted average number of shares | ||||||||
| Basic and diluted | 66,018,867 | 65,963,502 | ||||||
Kingold Jewelry, Inc.
May 10, 2017
KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)
(UNAUDITED)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 9,425,086 | $ | 21,333,193 | ||||
| Restricted cash | 64,456,118 | 52,786,257 | ||||||
| Accounts receivable | 320,774 | 670,878 | ||||||
| Inventories | 88,822,115 | 119,435,595 | ||||||
| Investments in gold - current | 1,059,682,318 | 281,895,403 | ||||||
| Other current assets and prepaid expenses | 657,627 | 698,217 | ||||||
| Prepaid income tax | 3,356,372 | 3,330,468 | ||||||
| Value added tax recoverable | 339,336,936 | 272,835,051 | ||||||
| Total current assets | 1,566,057,346 | 752,985,062 | ||||||
| PROPERTY AND EQUIPMENT, NET | 7,415,615 | 7,224,698 | ||||||
| OTHER ASSETS | ||||||||
| Restricted cash | 8,503,599 | 7,558,173 | ||||||
| Investments in gold | 1,254,859,708 | 1,493,938,551 | ||||||
| Other assets | 285,204 | 283,003 | ||||||
| Deferred income tax assets | 1,027,910 | - | ||||||
| Land use right | 414,137 | 413,662 | ||||||
| Total long-term assets | 1,272,506,173 | 1,509,418,087 | ||||||
| TOTAL ASSETS | $ | 2,838,563,519 | $ | 2,262,403,149 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short term loans, less unamortized debt issuance costs of $2,031,821 and $4,480,085 | $ | 528,644,984 | $ | 234,691,670 | ||||
| Third party loan | 29,022,521 | 28,798,526 | ||||||
| Gold leases payable - Bank | 7,223,140 | 7,167,391 | ||||||
| Other payables and accrued expense | 11,672,302 | 13,716,472 | ||||||
| Related parties loan | 29,225,215 | - | ||||||
| Due to related party | 1,680,327 | 7,223,321 | ||||||
| Other taxes payable | 1,338,211 | 1,518,731 | ||||||
| Total current liabilities | 869,806,700 | 293,116,111 | ||||||
| Deferred income tax liability | - | 1,249,622 | ||||||
| Related parties loan | 568,841,421 | 460,776,408 | ||||||
| Long term loans, less unamortized debt issuance costs of $5,570,959 and $4,350,348 | 1,039,239,815 | 1,224,770,721 | ||||||
| TOTAL LIABILITIES | 2,477,887,936 | 1,979,912,862 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Preferred stock, $0.001 par value, 500,000 shares authorized, none issued or outstanding as of March 31, 2017 and December 31, 2016 | - | - | ||||||
| Common stock $0.001 par value, 100,000,000 shares authorized, 66,018,867 shares issued and outstanding as of March 31, 2017 and December 31, 2016 | 66,018 | 66,018 | ||||||
| Additional paid-in capital | 80,242,111 | 80,230,968 | ||||||
| Retained earnings | ||||||||
| Unappropriated | 256,168,140 | 277,473,959 | ||||||
| Appropriated | 967,543 | 967,543 | ||||||
| Accumulated other comprehensive income (deficit) | 23,231,770 | (76,248,201 | ) | |||||
| Total stockholders' equity | 360,675,583 | 282,490,287 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,838,563,519 | $ | 2,262,403,149 | ||||
Kingold Jewelry, Inc.
May 10, 2017
KINGOLD JEWELRY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN US DOLLARS)
(UNAUDITED)
| For the three months ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| (Restated) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (21,305,819 | ) | $ | 15,197,213 | |||
| Adjusted to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation | 400,282 | 314,195 | ||||||
| Amortization of intangible assets | 2,743 | 2,890 | ||||||
| Share based compensation for services and warrants expense | 11,143 | 75,347 | ||||||
| Amortization of debt issuance costs included in interest expense | 3,287,709 | 430,772 | ||||||
| Deferred tax provision (benefit) | (2,287,949 | ) | 255,674 | |||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | 355,430 | 736,891 | ||||||
| Inventories | 31,552,069 | 161,022,459 | ||||||
| Other current assets and prepaid expenses | 46,031 | (2,037,978 | ) | |||||
| Value added tax recoverable | (64,399,390 | ) | (28,871,518 | ) | ||||
| Increase (decrease) in: | ||||||||
| Other payables and accrued expenses | (2,147,164 | ) | (2,362,754 | ) | ||||
| Income tax payable | - | 3,252,855 | ||||||
| Other taxes payable | (192,391 | ) | 151 | |||||
| Net cash provided by (used in) operating activities | (54,677,306 | ) | 148,016,197 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (506,991 | ) | (42,449 | ) | ||||
| Investments in gold | (422,116,819 | ) | (361,816,442 | ) | ||||
| Construction in progress-Jewelry Park | - | (13,101,275 | ) | |||||
| Net cash used in investing activities | (422,623,810 | ) | (374,960,166 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from bank loans – short term | 29,031,368 | - | ||||||
| Repayments of bank loans – short term | (145,157 | ) | (6,115,740 | ) | ||||
| Proceeds from bank loans - long term | 95,803,516 | 319,547,435 | ||||||
| Repayments of bank loans - long term | (29,031,368 | ) | - | |||||
| Proceeds from related party loan – short term | 284,507,410 | |||||||
| Proceeds from related party loan – long term | 479,017,578 | - | ||||||
| Repayments of related party loan – long term | (374,504,652 | ) | - | |||||
| Payment of loan origination fees | (1,990,977 | ) | - | |||||
| Restricted cash | (12,149,628 | ) | (15,555,150 | ) | ||||
| Due to related party | (5,586,376 | ) | 250,226 | |||||
| Proceeds from (repayment of) debt financing instruments-private placement | - | (61,157,404 | ) | |||||
| Net cash provided by financing activities | 464,951,714 | 236,969,367 | ||||||
| EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 441,295 | 140,910 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (11,908,107 | ) | 10,166,308 | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 21,333,193 | 3,100,569 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 9,425,086 | $ | 13,266,877 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest expense | $ | 27,688,571 | $ | 3,951,608 | ||||
| Cash paid for income tax | $ | - | $ | 1,111,571 | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Investments in gold obtained in a lease from a related party and fully repaid | $ | 131,117,303 | $ | 138,287,308 | ||||