Nova Lifestyle Inc. (NVFY) swung to a net loss for the quarter ended Dec. 31, 2016. The company has made a net loss of $0.83 million, or $ 0.03 a share in the quarter, against a net profit of $0.68 million, or $0.03 a share in the last year period. Revenue during the quarter dropped 14.29 percent to $19.90 million from $23.22 million in the previous year period. Gross margin for the quarter contracted 166 basis points over the previous year period to 14.40 percent. Operating margin for the quarter stood at negative 11.61 percent as compared to a positive 2.57 percent for the previous year period.
Operating loss for the quarter was $2.31 million, compared with an operating income of $0.60 million in the previous year period.
Tawny Lam, chief executive officer of Nova LifeStyle, stated, "Our 2016 results were highlighted by our partnership with Future World Lifestyle and the launch of our www.nova-mart.com website in early 2017, which demonstrate our commitment to expanding our e-commerce channels in order to create the greatest opportunity for consumers to choose Nova Lifestyle products and services. This capped a number of strategic changes we made during the year, including the sale of our Chinese manufacturing operations, in order to best position the Company for future success. In addition to these strategic changes, we also refocused our product line to emphasize higher-margin products. As a result, we saw a marked increase in our average selling prices for the year, although those gains were tempered by an expected reduction in volumes. The net impact was a 3% increase in revenues versus 2015.”
Operating cash flow remains negative
Nova Lifestyle Inc. has spent $6.42 million cash to meet operating activities during the year as against cash outgo of $4.23 million in the last year. Cash flow from investing activities was $6.10 million from investing activities during the year as against cash outgo of $2.47 million in the last year.
Cash flow from financing activities was $1.93 million for the year, down 70.15 percent or $4.53 million, when compared with the last year.
Cash and cash equivalents stood at $2.59 million as on Dec. 31, 2016, up 181.21 percent or $1.67 million from $0.92 million on Dec. 31, 2015.
Working capital increases
Nova Lifestyle Inc. has recorded an increase in the working capital over the last year. It stood at $58.41 million as at Dec. 31, 2016, up 20.11 percent or $9.78 million from $48.63 million on Dec. 31, 2015. Current ratio was at 6.02 as on Dec. 31, 2016, up from 3.83 on Dec. 31, 2015.
Debt moves up
Nova Lifestyle Inc. has witnessed an increase in total debt over the last one year. It stood at $7.98 million as on Dec. 31, 2016, up 6.27 percent or $0.47 million from $7.51 million on Dec. 31, 2015. Total debt was 10.35 percent of total assets as on Dec. 31, 2016, compared with 8.36 percent on Dec. 31, 2015. Debt to equity ratio was almost stable at 0.13 as on Dec. 31, 2016, when compared with the last year.
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