Nova LifeStyle Reports Outstanding Fourth Quarter and Full Year 2017 Financial Results, Highlighted by Q4 pre-tax EPS of $0.18

LOS ANGELES, March 29, 2018 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ:NVFY), a leading U.S.-based, innovative designer and distributor of modern LifeStyle home products, today announced outstanding financial results for the fourth quarter and twelve months ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights:

• Fourth quarter revenues were $35.7 million, up 79.3%, compared to $19.9 million in the prior year period.
• Gross profit for the fourth quarter was $8.3 million, up 186%, compared to $2.9 million in the prior year period.      
• Fourth quarter Gross Margin was 23.4%, compared to 14.4% in the prior year period due to increased sales from uniquely designed, premium items.
• Income Before Income Taxes and Discontinuing Operations was $5.0 million, or $0.18 per diluted share.

Full Year 2017 Financial Highlights:

• Net Sales were $106.5 million, an increase of 14.9% compared to the prior year.
• Sales from high margin, proprietarily designed, premium products increased 71% in average selling prices.
• Gross profit was $20.4 million, an increase of 51% versus the prior year period. 
• Profit margins expanded across nearly all product lines, benefiting from the Company’s adaption to trendy product designs and successful launches of a wide range of high-quality offerings.
• Income Before Income Taxes and Discontinuing Operations was $6.5 million, or $0.23 per diluted share, compared to a loss before income taxes and discontinuing operations of $(1.1) million, or $(0.04) per diluted share in the prior year.
• Booked a one-time transition tax charge of $3.3 million (or $0.12 per share) in the fourth quarter for full year 2017 as a result of the recently enacted Tax Cuts and Jobs Act of 2017, based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of its non-U.S. subsidiaries.
• For the full year 2017, GAAP-Net Income was $3.8 million (after the one-time tax impact of $0.12 per share), or $0.14 per fully diluted share, compared to a net loss of $(1.1) million or $(0.01) per diluted share in the prior year period.

Management Commentary

Tawny Lam, Chief Executive Officer of Nova LifeStyle, commented, "Nova Lifestyle is pleased to announce outstanding 2017 financial results capped off by a fantastic fourth quarter. We anticipate the recently enacted U.S. tax law will bring considerable benefit to the Company going forward as our U.S. domestic sales are expected to expand rapidly.  We have focused on trendy designed, high-end products in our catalogues, which are generating large orders from global customers, including those from as far as in Australia.  Our growth is driven by increased customer interest towards our modern lifestyle furnishing solutions and increased online and mobile marketing efforts launched by the Company. Our drive towards uniquely designed, premium product mix since 2016 started to really pay off in 2017 as we experienced both record revenue growth and expanded profit margins.”

Outlook for 2018: Revenues and Earnings Growth Momentum to Continue
Ms. Lam continued, “Nova LifeStyle entered 2018 with continuing growth momentum.  We had a very successful Las Vegas Market show in late January 2018. The event featured attendance levels and customer interest not seen in many years, which reflects an uptrend for the entire home furnishings industry. We are seeing strong interest in our products such as the ‘Hollywood Glam’ collection, which has generated orders from customers throughout the United States and internationally. Our three-decades of experience learned from designing and marketing products for international markets has enabled us to develop the scale, logistics, marketing efficiency and design expertise that will serve our customers well in 2018 and beyond. We focus on designing and producing furnishing solutions that meet our changing customers’ lifestyles, adopting the latest design innovation and deeper brand penetration for our own Diamond Sofa brand.  We are expecting robust sales and significant earnings growth in 2018.”

$5 Million Share Repurchase Program to Initiate in 2018

The Company anticipates executing on the previously announced $5 million share repurchase program in 2018 through internal funding sources.

About Nova LifeStyle

Nova LifeStyle, Inc., a NASDAQ Global Market listed company headquartered in California and founded nearly 30 years ago, is a fast growing, innovative designer and distributor of modern LifeStyle residential and commercial furniture products: 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.

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)
	Years Ended December 31,								Three Months Ended December 31,
		2017				2016				2017				2016
	(audited)				(audited)				(unaudited)				(Unaudited)
Net Sales	$	106,494,132			$	92,648,195			$	35,680,718			$	19,899,223
Cost of Sales		86,072,895				79,124,451				27,331,773				17,033,016
Gross Profit		20,421,237				13,523,744				8,348,945				2,866,207
Operating Expenses
Selling expenses		4,131,772				5,324,270				1,441,430				966,064
General and administrative expenses		9,485,595				8,965,566				1,877,272				4,209,448
Total Operating Expenses		13,617,367				14,289,836				3,318,702				5,175,512
Income (Loss) From Operations		6,803,870				(766,092	)			5,030,243				(2,309,305	)
Other Income (Expenses)
Non-operating (income) expense, net		797				46,717				--				5,723
Foreign exchange transaction loss		(381	)			(6,386	)			(57	)			(808	)
Interest expense		(174,316	)			(283,795	)			(41,223	)			(42,593	)
Financial expense		(105,546	)			(119,100	)			(19,211	)			(31,002	)
Total Other Expenses, Net		(279,446	)			(362,564	)			(60,491	)			(68,680	)
Income (Loss) Before Income Taxes and Discontinuing operations		6,524,424				(1,128,656	)			4,969,752				(2,377,985	)
Income Tax (Benefit) Expense		2,759,813				(836,620	)			3,509,850				(896,683	)
Income (Loss) From Continuing Operations		3,764,611				(292,036	)			1,459,902				(1,481,302	)
Loss from Discontinued Operations, net of tax		--				(826,217	)			--				650,355
Net Income (Loss)		3,764,611				(1,118,253	)			1,459,902				(830,947	)
Other Comprehensive Income (Loss)
Release of foreign currency translation adjustments upon disposal of subsidiaries		--				836,014				--				836,014
Foreign currency translation		--				(734,520	)			--				(313,768	)
Comprehensive Income (Loss)	$	3,764,611			$	(1,016,759	)		$	1,459,902			$	(308,701	)
Basic weighted average shares outstanding		27,677,935				25,432,037				27,677,935				25,432,037
Diluted weighted average shares outstanding		27,755,863				25,432,037				27,755,863				25,432,037
Income (loss) from continuing operations per share of common stock
Basic	$	0.14			$	(0.01	)		$	0.05			$	(0.06	)
Diluted	$	0.14			$	(0.01	)		$	0.05			$	(0.06	)
Income (loss) from discontinuing operations per share of common stock
Basic	$	--			$	(0.03	)		$	--			$	0.03
Diluted	$	--			$	(0.03	)		$	--			$	0.03
Net Income (loss) per share of common stock
Basic	$	0.14			$	(0.04	)		$	0.05			$	(0.03	)
Diluted	$	0.14			$	(0.04	)		$	0.05			$	(0.03	)

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2016
		2017				2016
Assets
Current Assets
Cash and cash equivalents		$	5,722,716			$	2,587,743
Accounts receivable, net			54,006,513				42,102,761
Advance to suppliers			8,580,609				13,669,752
Inventories			6,374,560				2,781,123
Assignment fee receivable (Note 3)			--				1,250,000
Receivable from an unrelated party (Note 7)			--				7,000,000
Prepaid expenses and other receivables			232,935				642,891
Taxes receivable			--				14,893
Total Current Assets			74,917,333				70,049,163
Noncurrent Assets
Plant, property and equipment, net			157,246				171,276
Lease deposit			43,260				43,260
Goodwill			218,606				218,606
Intangible assets, net			4,202,608				5,686,623
Deferred tax asset			318,961				874,759
Total Noncurrent Assets			4,940,681				6,994,524
Total Assets		$	79,858,014			$	77,043,687

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) DECEMBER 31, 2017 AND 2016
		2017				2016
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable		$	1,634,554			$	2,368,775
Line of credit			-				7,977,841
Advance from customers			19,826				513,880
Accrued liabilities and other payables			847,756				780,960
Income tax payable			178,307				--
Total Current Liabilities			2,680,443				11,641,456
Noncurrent Liabilities
Line of credit			4,202,118				-
Income tax payable			4,527,849				2,136,788
Total Noncurrent Liabilities			8,729,967				2,136,788
Total Liabilities			11,410,410				13,778,244
Contingencies and Commitments
Stockholders' Equity
Common stock, $0.001 par value; 75,000,000 shares authorized, 28,191,927 and 27,309,695 shares issued and outstanding as of December 31, 2017 and 2016, respectively			28,192				27,309
Additional paid-in capital			38,682,377				36,885,462
Statutory reserves			6,241				6,241
Retained earnings			29,730,794				26,346,431
Total Stockholders' Equity			68,447,604				63,265,443
Total Liabilities and Stockholders' Equity		$	79,858,014			$	77,043,687

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
		2017				2016
Cash Flows From Operating Activities
Net income (loss) from continuing operations		$	3,764,611			$	(292,036	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			1,524,863				603,155
Deferred tax benefit			555,798				(813,760	)
Stock compensation expense			2,175,973				1,637,362
Changes in bad debt allowance			305,519				2,603,745
Changes in operating assets and liabilities:
Accounts receivable			(12,209,271	)			(2,022,248	)
Advance to suppliers			5,089,143				(5,733,611	)
Inventories			(3,593,437	)			(266,804	)
Other current assets			16,832				298,115
Accounts payable			(734,221	)			(3,856,326	)
Advance from customers			(494,054	)			450,091
Accrued liabilities and other payables			81,744				(710,327	)
Taxes payable			2,584,262				(30,060	)
Net Cash Used in Continuing Operations			(1,312,486	)			(8,132,704	)
Net Cash Provided by Discontinued Operations			--				1,711,201
Net Cash Used in Operating Activities			(1,312,486	)			(6,421,503	)
Cash Flows From Investing Activities
Assignment fee received			1,250,000				-
Purchase of property and equipment			(26,818	)			(13,494	)
Proceeds from disposal of subsidiaries, net of $43,873 of cash disposed of			--				13,206,127
Advances to unrelated parties			(8,835,000	)			(7,000,000	)
Repayment from unrelated parties			15,835,000				-
Net Cash Provided by Continuing Operations			8,223,182				6,192,633
Net Cash Used in Discontinued Operations			--				(94,231	)
Net Cash Provided by Investing Activities			8,223,182				6,098,402
Cash Flows From Financing Activities
Proceeds from line of credit and bank loan			48,674,442				44,405,074
Repayment to line of credit and bank loan			(52,450,165	)			(43,934,591	)
Proceeds from options and warrants exercised			--				3,093,918
Net Cash (Used in) Provided by Continuing Operations			(3,775,723	)			3,564,401
Net Cash Used in Discontinued Operations			-				(1,638,747	)
Net Cash (Used in) Provided by Financing Activities			(3,775,723	)			1,925,654
Effect of Exchange Rate Changes on Cash and Cash Equivalents			-				(2,839	)
Net increase in cash and cash equivalents			3,134,973				1,599,714
Cash and cash equivalents, beginning of period			2,587,743				988,029
Cash and cash equivalents, end of period		$	5,722,716			$	2,587,743

NOVA LIFESTYLE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016
			2017				2016
Analysis of cash and cash equivalents
Included in cash and cash equivalents per consolidated balance sheets		$	5,722,716			$	2,587,743
Included in assets of discontinued operations			-				-
Cash and cash equivalents, end of period		$	5,722,716			$	2,587,743
Supplemental Disclosure of Cash Flow Information
Continuing operations:
Cash paid during the period for:
Income tax payments		$	--			$	7,200
Interest expense		$	185,860			$	282,951
Discontinued operations:
Cash paid during the period for:
Income tax payments		$	--			$	--
Interest paid		$	--			$	145,645