Nova LifeStyle, Inc. Reports 2011 Fiscal Year Results - Sales Up 50%, Net Income Up 28%

News provided by

Nova LifeStyle, Inc.

Apr 02, 2012, 06:55 ET

COMMERCE, Calif., 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: [email protected]
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







Heritage and cultural assets

128,687


--

Plant, property and equipment, net

8,721,186


8,192,937

Construction in progress

91,466


75,498

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

SOURCE Nova LifeStyle, Inc.

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