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 /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 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.
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.
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.
|
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.
|
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.
|
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
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/kingold-jewelry-reports-2017-first-quarter-financial-results-300455623.html
SOURCE Kingold Jewelry, Inc.