WUHAN CITY, China, May 17, 2016 /PRNewswire/ -- 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 financial results the first quarter ended March 31, 2016, highlighted by considerable increases in net sales and net income.
2016 First Quarter Financial Highlights (all results are compared to prior year period)
Outlook for 2016
Mr. Zhihong Jia, Chairman and CEO of the Company, commented, "We were pleased to deliver solid financial and operating results for the first quarter of 2016 as we continued to improve our manufacturing capacity and distribution network. During the first quarter, our management team made adjustments on our sales go-to-market strategy and successfully achieved double-digit growth in our sales and gold processed volume."
2016 FIRST QUARTER OPERATIONAL REVIEW
Metric Tons of Gold Sales |
||||
Three Months Ended: |
||||
March 31, 2016 |
March 31, 2015 |
|||
Volume |
% of Total |
Volume |
% of Total |
|
Branded* |
8.2 |
55.1% |
5.6 |
45.5% |
Customized** |
6.6 |
44.9% |
6.7 |
54.5% |
Total |
14.8 |
100% |
12.3 |
100% |
* Branded Production: The Company acquires gold from the Shanghai Gold Exchange to produce branded products. |
||||
UPDATE ON Kingold Jewelry cultural industry Park
Kingold also announced today that it anticipates finishing construction of the Kingold Jewelry Cultural Industry Park by the end of May 2016.
Previously, the Company signed several supplemental agreements with the construction company Wuhan Wansheng which Wuhan Wansheng agreed to complete the construction and deliver the completed real estate property to us in April 2016. However, due to the cold weather condition in January and February 2016 and the construction worker leave during the Chinese Spring Festival holiday season, the final construction work of the Jewelry Park resumed in the middle of February 2016 and the landscaping, building decoration and road construction did not fully complete as of March 31, 2016. Due to the construction work delay, the inspection application with local government was also delayed until mid-April 2016 when the construction work was fully completed. Therefore, in April 2016, both parties signed an additional supplemental agreement to extend the final property delivery time to May 30, 2016 when the certificate of occupancy is expected to be obtained from local government.
Chairman Jia continued, "We are very excited about the anticipated completion of the Jewelry Park at the end of this month. We look forward to the Jewelry Park becoming a bridge between upstream and downstream companies within the jewelry industry. We expect increased sales upon the opening of the Jewelry Park, as well as a greater level of collaboration and exchanging of ideas amongst our jewelry industry tenants, which will increase Kingold's brand awareness and expansion and diversification of our customer base."
CONSOLIDATED FINANCIAL AND OPERATING REVIEW
Net Sales
Net sales for the three months ended March 31, 2016 increased 37% to $282.2 million from $206.2 million for the same period in 2015, primarily due to an increase in sales volume.
The average unit selling price for the Company's customized production decreased from RMB7.05 per gram in the three months ended March 31, 2015 to RMB4.25 per gram in three months ended March 31, 2016. This decrease was primarily a result of Kingold's sales strategy to encourage customers to purchase more customized production of its gold products during the holiday season. This resulted in an approximately $3.07 million decrease in customized production revenue, which was partially offset by an increase in branded production revenue.
Gross Profit
Gross profit for the three months ended March 31, 2016 increased 165% to $28.5 million from $10.8 million for the same period in 2015.
Gross Margin
The Company's gross margin was 10.1% for the three months ended March 31, 2016, compared to 5.2% in the prior year period. The substantial increase was due to the decreased unit cost and the increased unit price of branded production sales.
Net Income
Net income for the three months ended March 31, 2016 was $15.2 million, or $0.23 per diluted share based on 66.0 million weighted average diluted shares outstanding, increased 131% from net income of $6.6 million, or $0.10 per diluted share based on 66.0 million weighted average diluted shares outstanding in the prior-year period.
Balance Sheet and Cash Flow
(in millions except for percentages) |
3/31/2016 |
12/31/2015 |
% Changed |
||
Cash |
$ |
13.3 |
$ |
3.1 |
335.0% |
Inventories (gold) |
$ |
503.9 |
$ |
298.3 |
68.9% |
Working Capital |
$ |
490.4 |
$ |
174.9 |
180.4% |
Stockholders' Equity |
$ |
282.9 |
$ |
265.6 |
6.5% |
Book Value Per Share (in $) |
$ |
4.29 |
$ |
4.03 |
6.5% |
Net cash used in operating activities was $214.1 million for the three months ended March 31, 2016, compared with net cash provided by operating activities of $9.4 million for the same period in 2015. The significant increase in net cash used in operating activities was mainly due to $201 million in inventory purchases in anticipation of increased production/sales demand following the completion of the Jewelry Park, with sales expected to increase beginning the second quarter of 2016. In addition, due to Kingold's bank borrowings during the quarter ended March 31, 2016, the Company was required to pledge a significant amount of gold as collateral to the banks, further increasing the Company's inventory purchases and stockpile.
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 the other factors described above change with increased production and the purchase of larger quantities of raw materials (principally gold).
OUTLOOK FOR 2016
Based on its existing resources and capacity, the Company reiterates its expectation that gold processed will be between 50 metric tons and 60 metric tons during 2016.
Conference Call Details
Kingold also announced that it will discuss these financial results in a conference call on May 16, 2016, 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/q1-2016. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.
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 2016 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 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN U.S. DOLLARS) (UNAUDITED)
|
|||
For three months ended March 31, |
|||
2016 |
2015 |
||
NET SALES |
$ 282,188,057 |
$ 206,195,220 |
|
COST OF SALES |
|||
Cost of sales |
(253,412,444) |
(195,120,956) |
|
Depreciation |
(290,682) |
(309,001) |
|
Total cost of sales |
(253,703,126) |
(195,429,957) |
|
GROSS PROFIT |
28,484,931 |
10,765,263 |
|
OPERATING EXPENSES |
|||
Selling, general and administrative expenses |
3,269,365 |
1,678,366 |
|
Stock compensation expenses |
11,143 |
212,783 |
|
Depreciation |
23,513 |
25,191 |
|
Amortization |
2,890 |
3,075 |
|
Total operating expenses |
3,306,911 |
1,919,415 |
|
INCOME FROM OPERATIONS |
$ 25,178,020 |
$ 8,845,848 |
|
OTHER INCOME (EXPENSES) |
|||
Interest Income |
59,224 |
17,270 |
|
Interest expense |
(4,973,353) |
(297,537) |
|
Total other expenses, net |
(4,914,129) |
(280,267) |
|
INCOME FROM OPERATIONS BEFORE TAXES |
20,263,891 |
8,565,581 |
|
INCOME TAX PROVISION (BENEFIT) |
|||
Current |
4,811,004 |
2,728,902 |
|
Deferred |
255,674 |
(744,525) |
|
Total income tax provision |
5,066,678 |
1,984,377 |
|
NET INCOME |
15,197,213 |
6,581,204 |
|
Less: net loss attribute to the noncontrolling interest |
(1,197) |
- |
|
NET INCOME ATTRIBUTABLE TO KINGOLD JEWELRY, INC. |
$ 15,198,410 |
$ 6,581,204 |
|
OTHER COMPREHENSIVE INCOME (LOSS) |
|||
Total foreign currency translation gains (loss) |
$ 1,962,694 |
$ 1,099,665 |
|
Add: foreign currency translation loss attributable to noncontrolling interest |
(454) |
- |
|
Foreign currency translation gain (loss) attributable to KINGOLD JEWELRY, INC. |
1,963,148 |
1,099,665 |
|
COMPREHENSIVE INCOME ATTRIBITABLE TO: |
|||
KINGOLD JEWELRY, INC. |
$ 17,161,558 |
$ 7,680,869 |
|
Non-controlling interest |
(1,651) |
- |
|
Total |
$ 17,159,907 |
$ 7,680,869 |
|
Earnings per share |
|||
Basic and diluted |
$ 0.23 |
$ 0.10 |
|
Weighted average number of shares |
|||
Basic and diluted |
65,963,502 |
65,963,502 |
|
KINGOLD JEWELRY, INC CONDENSED CONSOLIDATED BALANCE SHEETS (IN U.S. DOLLARS) (UNAUDITED)
|
||||
March 31, 2016 |
March 31, 2015 |
|||
ASSETS |
||||
CURRENT ASSETS |
||||
Cash |
$ 13,266,877 |
$ 3,100,569 |
||
Restricted cash |
42,599,678 |
26,649,687 |
||
Accounts receivable |
887,683 |
1,624,323 |
||
Inventories |
503,893,855 |
298,303,185 |
||
Other current assets and prepaid expenses |
3,119,680 |
1,046,032 |
||
Value added tax recoverable |
44,907,520 |
15,526,002 |
||
Total current assets |
608,675,293 |
346,249,798 |
||
PROPERTY AND EQUIPMENT, NET |
7,396,378 |
7,622,509 |
||
OTHER ASSETS |
||||
Deposit on land use right - Jewelry Park |
9,357,810 |
9,296,763 |
||
Construction in progress - Jewelry Park |
132,262,641 |
105,844,259 |
||
Other assets |
149,690 |
148,713 |
||
Land use right |
454,232 |
454,180 |
||
Total long-term assets |
149,620,751 |
123,366,424 |
||
TOTAL ASSETS |
$ 758,296,044 |
$ 469,616,222 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
||||
Short term loans |
$ 49,927,512 |
$ 55,455,428 |
||
Debts payable, net |
- |
61,471,962 |
||
Construction payables - Jewelry Park |
36,437,781 |
23,876,642 |
||
Deposits payable - Jewelry Park |
22,327,831 |
22,182,171 |
||
Other payables and accrued expenses |
3,995,749 |
6,355,979 |
||
Due to related party |
450,025 |
200,059 |
||
Income tax payable |
4,878,962 |
1,119,918 |
||
Other taxes payable |
262,059 |
710,104 |
||
Total current liabilities |
118,279,919 |
171,372,263 |
||
Deferred income tax liability - Non-Current |
2,045,934 |
1,774,993 |
||
Long term loans |
355,074,542 |
30,808,571 |
||
TOTAL LIABILITIES |
475,400,395 |
203,955,827 |
||
COMMITMENTS AND CONTINGENCIES |
||||
EQUITY |
||||
Preferred stock, $0.001 par value, 500,000 shares authorized, none issued or outstanding as of March 31, 2016 and March 31, 2016 |
- |
- |
||
Common stock $0.001 par value, 100,000,000 shares authorized, |
65,963 |
65,963 |
||
Additional paid-in capital |
80,066,064 |
79,990,717 |
||
Retained earnings |
||||
Unappropriated |
199,762,557 |
184,564,147 |
||
Appropriated |
967,543 |
967,543 |
||
Accumulated other comprehensive income (deficit) |
1,961,899 |
(1,249) |
||
TOTAL STOCKHOLDER'S EQUITY |
282,824,026 |
265,587,121 |
||
Noncontrolling interest |
71,623 |
73,274 |
||
TOTAL EQUITY |
282,895,649 |
265,660,395 |
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 758,296,044 |
$ 469,616,222 |
||
KINGOLD JEWELRY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN U.S. DOLLARS) (UNAUDITED) |
|||||||||||
For three months ended March 31, |
|||||||||||
2016 |
2015 |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||||||
Net income |
$ 15,197,213 |
$ 6,581,204 |
|||||||||
Adjustments to reconcile net income to cash (used in) provided by |
|||||||||||
operating activities: |
|||||||||||
Depreciation |
314,195 |
334,192 |
|||||||||
Amortization of intangible assets |
2,890 |
3,075 |
|||||||||
Amortization of deferred financing costs |
144,097 |
- |
|||||||||
Share based compensation for services |
75,347 |
212,783 |
|||||||||
Inventory valuation allowance |
- |
2,978,101 |
|||||||||
Deferred tax provision (benefit) |
255,674 |
(744,525) |
|||||||||
Changes in operating assets and liabilities |
|||||||||||
(Increase) decrease in: |
|||||||||||
Accounts receivable |
736,891 |
503,537 |
|||||||||
Inventories |
(200,793,983) |
(2,360,577) |
|||||||||
Other current assets and prepaid expenses |
(2,037,978) |
(48,362) |
|||||||||
Deferred financing costs |
- |
(488,249) |
|||||||||
Value added tax recoverable |
(28,871,518) |
158,617 |
|||||||||
Increase (decrease) in: |
|||||||||||
Other payables and accrued expenses |
(2,362,754) |
442,050 |
|||||||||
Customer deposits |
- |
687,386 |
|||||||||
Income tax payable |
3,252,855 |
1,749,934 |
|||||||||
Other taxes payable |
151 |
(652,139) |
|||||||||
Net cash (used in) provided by operating activities |
(214,086,920) |
9,357,027 |
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||||||||
Purchase of property and equipment |
(42,449) |
- |
|||||||||
Cash deposit for land use right-Jewelry Park |
- |
(26,586) |
|||||||||
Cash payment in construction in progress-Jewelry Park |
(13,101,275) |
(5,561,161) |
|||||||||
Net cash used in investing activities |
(13,143,724) |
(5,587,747) |
|||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||||||
Repayments of bank loans-short term |
(6,115,740) |
- |
|||||||||
Proceeds from long term loan |
319,547,435 |
- |
|||||||||
Restricted cash |
(15,555,150) |
(10,839) |
|||||||||
Proceeds from related party loan |
250,226 |
- |
|||||||||
Proceeds from (repayment of) debt financing instruments-private placement |
(61,157,404) |
65,099,928 |
|||||||||
Net cash provided by financing activities |
236,969,367 |
65,089,089 |
|||||||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
427,585 |
269,714 |
|||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
10,166,308 |
69,128,083 |
|||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
3,100,569 |
1,331,658 |
|||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ 13,266,877 |
$ 70,459,741 |
|||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|||||||||||
Cash paid for interest expense |
$ 3,951,608 |
$ 1,332,444 |
|||||||||
Cash paid for income tax |
$ 1,111,571 |
$ 978,968 |
|||||||||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kingold-jewelry-reports-financial-results-for-the-first-quarter-ended-march-31-2016-300269361.html
