SHANGHAI, March 7, 2018 /PRNewswire/ -- Acorn
International, Inc. (NYSE: ATV) ("Acorn" or the "Company"), today
announced its preliminary unaudited financial results for the
fourth quarter and year ended December
31, 2017. The Company is completing its final audited
financial statements which will be filed with its Annual Report on
Form 20-F.
In 2017, Acorn experienced a moderate year-over-year decline in
revenues as the Company continued to streamline its business
operations. In August 2017, the
Company announced the partial divestiture of its HJX electronic
learning products business, which reduced revenues but allowed the
Company to lower operating expenses, increase margins and focus on
expanding its already profitable businesses and brands.
Acorn placed a strong emphasis on the e-commerce channel in 2017
with positive results, primarily due to growing momentum in sales
of its proprietary Babaka posture correction products throughout
the year, despite some choppiness at the end of the year.
This drove an improvement in gross margin to 62.1%, as compared to
51.2% in 2016. Total operating expenses decreased 2.9% in
2017 compared with 2016 despite a $6.0
million gain on the sale of non-core real estate assets in
2016 which offset operating expenses in the year ago period.
Operating loss improved to $7.3
million compared to an operating loss of $9.3 million in 2016.
During 2017, the Company received dividends from and recorded
gains from the sale of shares of Yimeng Software Technology Co.,
Ltd. ("Yimeng"), a publicly traded company in China and recorded other income of
approximately $12.2 million. The
Company recorded a net profit of $4.9
million and closed the year with a cash position of
$21.1 million.
Acorn anticipates further liquidation of non-core assets,
including a potential sale or other liquidity generating
transaction involving non-core real property in Shanghai, which has a carrying value of
approximately $16.5 million. The
Company may also sell additional shares of Yimeng from time to time
or sell out its position in Yimeng based on market factors and its
other investment and capital requirements.
In 2018 and beyond, Acorn will continue to emphasize the
e-commerce channel and plans to introduce new products and
product line extensions, as well as incubate new businesses within
the Group. The Company continually evaluates new business
opportunities and is also exploring several other new areas of
potential growth.
Preliminary Financial Results for the Fourth Quarter of
2017:
Total net revenues were $5.6
million in the fourth quarter of 2017, down 8.5% from
$6.1 million in the fourth quarter of
2016. The decrease in sales was primarily due to the partial exit
from the HJX electronic learning device business, partially offset
by an increase in e-commerce sales of posture correction and other
products.
Cost of sales in the fourth quarter of 2017 was $2.1 million, down 29.8% from $3.0 million in the fourth quarter of 2016.
Gross profit in the fourth quarter of 2017 was $3.5 million, up 11.8% from $3.1 million in the fourth quarter of 2016,
despite the lower total net revenues for the period. Gross margin
was 62.5% in the fourth quarter of 2017, up from 51.1% in the
fourth quarter of 2016. The increase in gross margin was due to a
larger proportion of higher margin e-commerce sales and products in
the product mix.
Total operating expenses in the fourth quarter of 2017 were
$5.4 million, down 49.1% from
$10.7 million in the fourth quarter
of 2016. The decrease was attributable to lower selling and
marketing expenses associated with the exit from the HJX business
as well as a reduction in general and administrative expenses due
to lower labor expenses and stock based compensation.
Loss from operations was $2.0
million in the fourth quarter of 2017, as compared to loss
from operations of $7.6 million in
the fourth quarter of 2016.
Other expense was $0.1 million in
the fourth quarter of 2017, as compared to other income of
$0.4 million in the fourth quarter of
2016.
The Company recorded an income tax benefit of $1.8 million in the fourth quarter of 2017, as
compared to income tax benefit of $0.2
million in the fourth quarter of 2016.
Net income was $23,071 in the fourth quarter of 2017, as
compared to net loss of $7.9 million
in the fourth quarter of 2016.
As of December 31, 2017, Acorn's
cash and cash equivalents, with restricted cash, totaled
$21.1 million, as compared to
$25.6 million as of December 31, 2016.
As of December 31, 2017, the
Company had repurchased 1,162 ADSs at an average price $16.84 per ADS under its share repurchase
program, which was approved by the Board of Directors on
December 8, 2017.
Preliminary Full Year 2017 Financial Results
Total net revenues were $22.3
million in 2017, down 9.1% from $24.5
million in 2016. The decrease in revenues was largely
attributable to the partial exit from the HJX electronic learning
device business announced in the third quarter of 2017.
Cost of sales in 2017 was $8.4
million, down 29.5% from $12.0
million in 2016.
Gross profit in 2017 was $13.9
million, up 10.3% from $12.6
million in 2016. Gross margin was 62.1% in 2017, up from
51.2% in 2016. The increase in gross profit was largely
attributable to a larger proportion of higher margin e-commerce
sales and products in the product mix.
Total operating expenses in 2017 were $21.2 million, down slightly from operating
expenses of $21.8 million in 2016.
Operating expenses for 2016 were reduced by the impact of a
$6.0 million gain from the sale of
non-core real estate assets, which partially offset operating
expense for the period. There was no such gain in 2017.
Loss from operations was $7.3
million in 2017, as compared to a loss from operations of
$9.3 million in 2016. The loss from
operations for 2016 benefited from the $6.0
million gain from the sale of real estate assets.
Share-based compensation was $25,000 in 2017, as compared to $658,000 in 2016.
Other income was $12.2 million in
2017, primarily due to dividends and gains from sales of Yimeng
shares. This compares to other income of $18.1 million in 2016, which was also primarily
attributable to gains from sales of Yimeng shares.
Net income was $4.9 million in
2017 as compared to net income of $3.4
million in 2016.
Conference Call
The Company will host a conference call at 8:30 a.m.
ET (5:30 a.m. PT), March 7,
2018, to discuss financial results. Dial-in details for the
earnings conference call are as follows:
US/Canada:
|
+1-877‑856‑1969
|
International:
|
+1-719‑457‑2647
|
Please dial in 10 minutes before the call is scheduled to begin
and provide the passcode 5585857 to join the call. A replay will be
available approximately two hours following the conclusion of the
conference call through March 14,
2018, and can be accessed by dialing (888) 203-1112, or
(719) 457-0820, passcode 5585857. An archived audio file of the
call will be available on the Company's website
http://www.acorninternationalir.com/home/news-and-events/webcasts-and-presentations/.
About Acorn International, Inc.
Co-founded in 1998 by Executive Chairman Robert Roche, Acorn is a marketing and branding
company in China with a proven
track record of developing, promoting and selling a diverse
portfolio of proprietary-branded products, as well as
well-established and promising new products from third parties. Its
business is currently comprised of two main divisions, its direct
sales platforms and its nationwide distribution network. For more
information visit www.acorninternationalir.com.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995
This press release contains forward-looking statements. These
statements constitute "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "anticipates," "believes,"
"estimates," "strives," "expects," "future," "going forward,"
"intends," "outlook," "plans," "target," "will," and similar
statements and include statements with respect to the Company's
ability to increase revenue, maintain margins, manage expenses and
generate additional cash flow; the Company's ability to grow
sales of its proprietary-branded products as
well as third-party products and brands through e-commerce,
its other direct sales platforms as well as its distribution
network; and the Company's ability to sell its non-core assets as
planned. The Company's efforts to implement its proposed business
plans, reduction of operating expenses or sale of any assets may
not succeed as anticipated or at all. Such statements are
based on management's current expectations and current market and
operating conditions, and relate to events that involve known or
unknown risks, uncertainties, and other factors, all of which are
difficult to predict and many of which are beyond the Company's
control, which may cause the Company's actual results, performance,
or achievements to differ materially from those in these
preliminary financial results and the forward-looking statements.
Further information regarding these and other risks, uncertainties,
or factors is included in the Company's filings with the U.S.
Securities and Exchange Commission. The Company does not undertake
any obligation to update any forward-looking statement as a result
of new information, future events, or otherwise, except as required
by law.
Other factors that could cause forward-looking statements to
differ materially from actual future events or results include
risks and uncertainties related to: the Company's ability to
successfully improve or introduce new products and services,
including to offset declines in sales of existing products and
services; the Company's ability to stay abreast of consumer market
trends and maintain the Company's reputation and consumer
confidence; the Company's ability to execute and maintain a
successful market strategy; potential unauthorized use of the
Company's intellectual property; potential disruption of the
Company's manufacturing processes; increasing competition in
China's consumer market; the
Company's U.S. tax status as a passive foreign investment company;
and general economic and business conditions in China. The
financial information contained in this release should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's 2016 annual report on Form 20-F
filed with SEC on May 15, 2017. For a discussion of other
important factors that could adversely affect the Company's
business, financial condition, results of operations and prospects,
see "Risk Factors" beginning on page 9 of the Company's Form 20-F
for the fiscal year ended December 31, 2016. The Company's
actual results of operations for the fourth quarter of 2017 are not
necessarily indicative of its operating results for any future
periods. Any projections in this release are based on limited
information currently available to the Company, which is subject to
change. Although such projections and the factors influencing them
will likely change, the Company will not necessarily update the
information. Such information speaks only as of the date of this
release.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is
preliminary and subject to potential adjustments. Adjustments to
the consolidated financial statements may be identified when audit
work has been performed for the Company's year-end audit, which
could result in significant differences from this preliminary
unaudited condensed financial information.
Acorn
International, Inc.
|
Unaudited
Consolidated Statement of Operations
|
(In US
Dollars)
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2016
|
2017
|
|
2016
|
2017
|
|
|
|
|
|
|
Net
revenues
|
6,071,764
|
5,553,123
|
|
24,527,876
|
22,295,628
|
|
|
|
|
|
|
Cost of
revenues
|
(2,968,832)
|
(2,083,090)
|
|
(11,972,293)
|
(8,444,650)
|
|
|
|
|
|
|
Gross
profit
|
3,102,932
|
3,470,033
|
|
12,555,583
|
13,850,978
|
|
|
|
|
|
|
Operating (expenses)
income
|
|
|
|
|
|
Advertising
expenses
|
-
|
-
|
|
(23,701)
|
-
|
Other selling and
marketing expenses
|
(4,103,127)
|
(2,901,314)
|
|
(12,970,090)
|
(11,446,425)
|
G&A
expenses
|
(6,896,845)
|
(3,041,833)
|
|
(16,437,112)
|
(11,212,542)
|
Other operating
income, net
|
346,595
|
521,066
|
|
7,607,334
|
1,473,055
|
Total operating (expenses)
income
|
(10,653,377)
|
(5,422,081)
|
|
(21,823,569)
|
(21,185,912)
|
Loss from
operations
|
(7,550,445)
|
(1,952,048)
|
|
(9,267,986)
|
(7,334,934)
|
|
|
|
|
|
|
Other income
(expenses)
|
(412,454)
|
137,928
|
|
18,137,553
|
12,170,452
|
Income (loss)
before income taxes and
equity in losses of affiliates
|
(7,962,899)
|
(1,814,120)
|
|
8,869,567
|
4,835,518
|
|
|
|
|
|
|
Income tax -
current
|
616,163
|
1,836,003
|
|
(4,169,360)
|
61,718
|
Income tax -
deferred
|
(423,423)
|
-
|
|
(423,423)
|
-
|
Income (loss) from
continuing operations
|
(7,770,159)
|
21,883
|
|
4,276,784
|
4,897,236
|
|
|
|
|
|
|
Equity in losses of
affiliates
|
(150,000)
|
-
|
|
(868,121)
|
-
|
|
|
|
|
|
|
Net income
(loss)
|
(7,920,159)
|
21,883
|
|
3,408,663
|
4,897,236
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
5,129
|
1,188
|
|
29,707
|
4,457
|
Net income (loss)
attributable to Acorn
International, Inc.
|
(7,915,030)
|
23,071
|
|
3,438,370
|
4,901,693
|
Acorn
International, Inc.
|
Consolidated
Balance Sheet
|
(in US
dollars)
|
|
|
|
|
2016/12/31
|
2017/12/31
|
|
|
(unaudited)
|
|
|
|
Cash and cash
equivalents
|
25,505,731
|
21,017,803
|
Restricted
cash
|
72,077
|
78,051
|
Accounts receivable,
net
|
1,271,209
|
1,395,810
|
Inventory
|
3,977,336
|
1,345,353
|
Prepaid advertising
expenses
|
10,689
|
-
|
Other prepaid
expenses and current assets, net
|
2,667,930
|
3,913,442
|
Current portion of
convertible loan
|
-
|
3,587,204
|
Deferred tax assets,
net
|
588,493
|
624,771
|
Current
assets
|
34,093,465
|
31,962,434
|
|
|
|
Prepaid land use
right
|
6,578,765
|
6,818,040
|
Property and
equipment, net
|
13,885,079
|
13,765,948
|
Acquired intangible
assets, net
|
575,273
|
353,691
|
Available-for-sale
securities
|
74,666,865
|
50,881,233
|
Convertible
loan
|
3,218,665
|
-
|
Loan to related
party
|
-
|
3,628,415
|
Other long-term
assets
|
301,752
|
181,843
|
Total
assets
|
133,319,864
|
107,591,604
|
|
|
|
|
|
|
Accounts
payable
|
2,614,118
|
2,100,933
|
Accrued expenses and
other current liabilities
|
9,132,166
|
7,978,839
|
Income taxes
payable
|
3,665,757
|
313,435
|
Deferred
revenue
|
380,526
|
512,009
|
Current
liabilities
|
15,792,567
|
10,905,216
|
|
|
|
Deferred tax
liability
|
18,017,610
|
12,090,614
|
Total
liabilities
|
33,810,177
|
22,995,830
|
|
|
|
Ordinary
shares
|
918,185
|
918,844
|
Additional paid-in
capital
|
161,938,330
|
161,962,670
|
Statutory
reserve
|
8,351,153
|
8,350,141
|
Retained
earnings
|
(131,262,029)
|
(126,359,324)
|
Beginning
balance
|
(123,287,249)
|
(126,382,395)
|
Net income
attributable to Acorn
|
(7,915,030)
|
23,071
|
Appropriation of
statutory reserve fund
|
(59,750)
|
-
|
Accumulated other
comprehensive income
|
80,865,261
|
65,703,299
|
Treasury stock, at
cost
|
(21,640,346)
|
(26,335,296)
|
Total Acorn
International, Inc. shareholders' equity
|
99,170,554
|
84,240,334
|
|
|
|
Noncontrolling
interests
|
339,133
|
355,440
|
Total
equity
|
99,509,687
|
84,595,774
|
Total liabilities
and equity
|
133,319,864
|
107,591,604
|
Contact:
|
Acorn International,
Inc.
|
Compass Investor
Relations
|
Ms. Margaret
Zhao
|
Ms. Elaine Ketchmere,
CFA
|
Phone
+86-21-5151-2677
|
Phone:
+1-310-528-3031
|
Email:
zhaoxiaojie@chinadrtv.com
|
Email:
Eketchmere@compass-ir.com
|
www.chinadrtv.com
|
www.compassinvestorrelations.com
|
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SOURCE Acorn International, Inc.