Company to Hold Conference Call with
Accompanying Slide Presentation at 8:30 a.m.
ET on May 11, 2018
WUHAN CITY, China, May 10,
2018 /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
for the first quarter ended March 31,
2018.
2018 First Quarter Financial Highlights (all results compared
to prior year period)
- Net sales were $539.5 million, an
increase of 85% from $292.3
million.
- Processed a total of 23.3 metric tons of 24-karat gold
products, increased by 45.6% from 16 metric tons.
- Net income was $13.2 million, or
$0.20 per diluted share, increased by
162% from a net loss $21.3 million,
or $(0.32) per diluted share.
Outlook for 2018
- The Company reiterates its guidance of processing between 100
metric tons and 110 metric tons of 24-karat gold products in
2018.
Management Commentary
Mr. Zhihong Jia, Chairman and CEO
of the Company, commented, "We were pleased to deliver strong
operating results during the first quarter of 2018, which was a
result of Kingold's continuous devotion in production expansion and
achieved good performance from our gold investment after few
quarters of our management's efforts. Our production capacity
expanded based on the support of a significant amount of gold from
our prior investment at favorable terms. We will continue to
enhance shareholder value through consistent expansion in
production, tight risk controls of our investment gold and
continued efforts in improving inventory management."
2018 FIRST QUARTER OPERATIONAL REVIEW
Metric Tons
of Gold Sales
|
|
Three Months
Ended:
|
|
March 31,
2018
|
March 31,
2017
|
|
Volume
|
% of Total
|
Volume
|
% of Total
|
Branded
Production*
|
13
|
55.8%
|
8.1
|
50.3%
|
Customized
Production**
|
10.3
|
44.2%
|
7.9
|
49.7%
|
Total
|
23.3
|
100%
|
16
|
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,
2018, the Company processed a total of 23.3 metric tons of
gold, of which branded production was 13 metric tons, representing
55.8% of total gold processed, and customized production was 10.3
metric tons, representing 44.2% of total gold processed in the
first quarter of 2018. In the first quarter of 2017, the Company
processed a total of 16 metric tons, of which branded production
was 8.1 metric tons, or 50.3% of the total gold processed, and
customized production was 7.9 metric tons, or 49.7% of total gold
processed.
2018 FIRST QUARTER FINANCIAL REVIEW
Net Sales
Net sales for the three months
ended March 31, 2018 was $539.5 million, representing an increase of
$247.3 million, or 85%, from
$292.2 million for the same period in
2017.
The increase in net sales was primarily driven by the higher
sales volume for branded production sales and customized production
sales. In addition, the average selling price for branded
production increased from RMB 245.70
per gram for the three months ended March
31, 2017 to RMB 258.32 per
gram for three months ended March 31,
2018.
Gross Profit
Gross profit for the three months ended
March 31, 2018 was $64.2 million, compared to $17.1 million for the same period in 2017.
Gross Margin
The Company's gross margin was 12% for
the three months ended March 31,
2018, compared to 6% in the prior year period.
The primary reason for the increase in gross margin was due to
the increased average selling price of branded production and the
decreasing unit cost of branded production sales. The average
selling price of our branded production was RMB 258.32 per gram for the three months ended
March 31, 2018, increased by
RMB 12.62, or 5%, from RMB 245.70 per gram for the same period in 2017.
While the unit cost of branded production sales was RMB 232.12 per gram for the three months ended
March 31, 2018, decreased by
RMB 2.8, or 1%, from RMB 234.92 per gram for the same period in 2017.
The decrease of unit cost of branded production was mainly due to
the fact the investment in gold released to the inventory for
production during the three months ended March 31, 2018 was purchased at low price in the
past periods.
Net Income (Loss)
Net income for the three months
ended March 31, 2018 was $13.2 million, or $0.20 per diluted share based on 66.5 million
weighted average diluted shares outstanding, increased by
$34.5 million, or 162%, from a net
loss of $21.3 million in the prior
year period, or $(0.32) 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)
|
3/31/2018
|
12/31/2017
|
%
Changed
|
Cash
|
$
1.0
|
$
5.0
|
(80.0%)
|
Inventories
(gold)
|
$
306.5
|
$
135.0
|
127%
|
Working
Capital
|
$
806.7
|
$
768.3
|
5.0%
|
Stockholders'
Equity
|
$
398.7
|
$
390.2
|
2.2%
|
Net cash provided by operating activities was $211.4 million for the three months ended
March 31, 2018, compared with net
cash used in operating activities of $54.7
million for the same period in 2017. The increase of net
cash provided by operating activities was mainly due to the
decrease in inventory purchases of 155.3 million because
$319.9 million of gold for investment
was released to inventory during the three months ended
March 31, 2018, a decrease in value
added tax receivable of $37 million
and an increase in income taxable of $2.0
million.
Kingold's net cash from operating activities can fluctuate
significantly due to changes in inventories (principally gold).
Other factors that may vary significantly include our accounts
payable, purchases of gold and income taxes. The Company expect the
net cash it generates from operating activities to 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 or smaller
quantities of raw materials (principally gold). These fluctuations
could cause net cash from operating activities to decrease, even if
the net income grows as the Company continue to expand. Although
the Company expects that net cash from operating activities will
increase over the long term, it cannot predict how these
fluctuations will affect Kingold's cash flow in any particular
accounting period.
OUTLOOK FOR 2018
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 100 metric tons and
110 metric tons during 2018.
Conference Call Details
Kingold also announced that it
will discuss these financial results in a conference call on
May 11, 2018, at 8:30 a.m. ET. The dial-in numbers are:
Live Participant Dial In (Toll Free): +1-877-407-9038
Live Participant Dial In (International): +1-201-493-6742
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/q1-2018. 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 high quality 24-karat gold
jewelry, ornaments, and investment-oriented products. The Company
sells its products both directly to retailers and 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
2018 outlook for gold processing and investment. 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,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
$
|
539,524,055
|
|
|
$
|
292,264,077
|
|
COST OF
SALES
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
(474,965,584)
|
|
|
|
(274,909,008)
|
|
Depreciation
|
|
|
(317,665)
|
|
|
|
(294,443)
|
|
Total
cost of sales
|
|
|
(475,283,249)
|
|
|
|
(275,203,451)
|
|
GROSS
PROFIT
|
|
|
64,240,806
|
|
|
|
17,060,626
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
2,545,354
|
|
|
|
3,697,383
|
|
Stock compensation
expenses
|
|
|
5,364
|
|
|
|
11,143
|
|
Depreciation
|
|
|
108,829
|
|
|
|
105,839
|
|
Amortization,
other
|
|
|
2,973
|
|
|
|
2,743
|
|
Total
operating expenses
|
|
|
2,662,520
|
|
|
|
3,817,108
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
61,578,286
|
|
|
|
13,243,518
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
-
|
|
|
|
65,365
|
|
Interest
Income
|
|
|
376,001
|
|
|
|
686,845
|
|
Interest expense,
including amortization of debt issuance costs of $2,255,066 and
$3,287,709
|
|
|
(44,116,880)
|
|
|
|
(37,589,496)
|
|
Total
other expenses, net
|
|
|
(43,740,879)
|
|
|
|
(36,837,286)
|
|
INCOME (LOSS) FROM
OPERATIONS BEFORE TAXES
|
|
|
17,837,407
|
|
|
|
(23,593,768)
|
|
INCOME TAX
PROVISION (BENEFIT)
|
|
|
|
|
|
|
|
|
Current
|
|
|
3,257,474
|
|
|
|
-
|
|
Deferred
|
|
|
1,345,009
|
|
|
|
(2,287,949)
|
|
Total
income tax provision (benefit)
|
|
|
4,602,483
|
|
|
|
(2,287,949)
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
|
|
13,234,924
|
|
|
|
(21,305,819)
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
Unrealized gain
(loss) related to investments in gold, net of tax
|
|
$
|
(18,622,697)
|
|
|
$
|
102,907,389
|
|
Total foreign
currency translation gain (loss)
|
|
|
13,819,701
|
|
|
|
(3,427,417)
|
|
Total Other
comprehensive gain (loss)
|
|
$
|
(4,802,996)
|
|
|
$
|
99,479,972
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$
|
8,431,928
|
|
|
$
|
78,174,153
|
|
Earnings (Loss) per
share
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.20
|
|
|
$
|
(0.32)
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
|
Basic
|
|
|
66,113,502
|
|
|
|
66,018,867
|
|
Diluted
|
|
|
66,541,351
|
|
|
|
66,018,867
|
|
KINGOLD JEWELRY,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(IN U.S.
DOLLARS)
|
(UNAUDITED)
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
999,156
|
|
|
$
|
4,997,125
|
|
Restricted
cash
|
|
|
6,691,929
|
|
|
|
5,534,551
|
|
Accounts
receivable
|
|
|
-
|
|
|
|
768,167
|
|
Inventories
|
|
|
306,512,889
|
|
|
|
135,042,713
|
|
Investments in
gold
|
|
|
1,177,796,726
|
|
|
|
1,562,943,153
|
|
Other current assets
and prepaid expenses
|
|
|
719,778
|
|
|
|
100,592
|
|
Value added tax
recoverable
|
|
|
328,973,748
|
|
|
|
353,732,758
|
|
Total
current assets
|
|
|
1,821,694,226
|
|
|
|
2,063,119,059
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
7,148,280
|
|
|
|
7,299,643
|
|
Restricted
cash
|
|
|
8,928,941
|
|
|
|
7,392,721
|
|
Investments in
gold
|
|
|
1,085,565,622
|
|
|
|
957,124,267
|
|
Other
assets
|
|
|
312,927
|
|
|
|
302,072
|
|
Deferred income tax
assets
|
|
|
12,953,934
|
|
|
|
6,677,675
|
|
Land use
right
|
|
|
442,355
|
|
|
|
429,915
|
|
Total
long-term assets
|
|
|
1,115,352,059
|
|
|
|
979,226,293
|
|
TOTAL
ASSETS
|
|
$
|
2,937,046,285
|
|
|
$
|
3,042,345,352
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term
loans
|
|
$
|
906,862,905
|
|
|
$
|
962,101,746
|
|
Other payables and
accrued expenses
|
|
|
19,844,109
|
|
|
|
18,913,863
|
|
Related party
loan
|
|
|
79,608,961
|
|
|
|
307,389,647
|
|
Due to related
party
|
|
|
3,102,653
|
|
|
|
2,630,301
|
|
Income tax
payable
|
|
|
3,297,669
|
|
|
|
1,208,742
|
|
Other taxes
payable
|
|
|
2,264,914
|
|
|
|
2,615,463
|
|
Total
current liabilities
|
|
|
1,014,981,211
|
|
|
|
1,294,859,762
|
|
Related party
loans
|
|
|
632,751,640
|
|
|
|
567,843,066
|
|
Long term
loans
|
|
|
890,643,755
|
|
|
|
789,410,137
|
|
TOTAL
LIABILITIES
|
|
|
2,538,376,606
|
|
|
|
2,652,112,965
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 500,000 shares authorized, none issued
or outstanding as of March
31, 2018 and December 31, 2017
|
|
|
-
|
|
|
|
-
|
|
Common stock $0.001
par value, 100,000,000 shares authorized, 66,113,502 shares issued
and
outstanding as of March 31, 2018 and December 31, 2017
|
|
|
66,113
|
|
|
|
66,113
|
|
Additional paid-in
capital
|
|
|
80,382,813
|
|
|
|
80,377,449
|
|
Retained
earnings
|
|
|
|
|
|
|
|
|
Unappropriated
|
|
|
316,901,535
|
|
|
|
303,666,611
|
|
Appropriated
|
|
|
967,543
|
|
|
|
967,543
|
|
Accumulated other
comprehensive income, net of tax
|
|
|
351,675
|
|
|
|
5,154,671
|
|
Total
Equity
|
|
|
398,669,679
|
|
|
|
390,232,387
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
|
2,937,046,285
|
|
|
$
|
3,042,345,352
|
|
KINGOLD JEWELRY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(IN US
DOLLARS)
|
(UNAUDITED)
|
|
|
|
For the three
months ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
13,234,924
|
|
|
$
|
(21,305,819)
|
|
Adjusted to reconcile
net income (loss) to cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
426,494
|
|
|
|
400,282
|
|
Amortization of intangible assets
|
|
|
2,973
|
|
|
|
2,743
|
|
Share
based compensation for services and warrants expense
|
|
|
5,364
|
|
|
|
11,143
|
|
Amortization of debt issuance costs included in
interest expense
|
|
|
2,255,066
|
|
|
|
3,287,709
|
|
Deferred
tax provision (benefit)
|
|
|
1,345,009
|
|
|
|
(2,287,949)
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
786,072
|
|
|
|
355,430
|
|
Inventories
|
|
|
155,338,325
|
|
|
|
31,552,069
|
|
Other
current assets and prepaid expenses
|
|
|
(608,086)
|
|
|
|
46,031
|
|
Value
added tax recoverable
|
|
|
37,013,840
|
|
|
|
(64,399,390)
|
|
Other
payables and accrued expenses
|
|
|
(1,288,349)
|
|
|
|
(2,147,164)
|
|
Customer
deposit
|
|
|
1,352,167
|
|
|
|
-
|
|
Income
tax payable
|
|
|
2,020,558
|
|
|
|
-
|
|
Other
taxes payable
|
|
|
(439,118)
|
|
|
|
(192,391)
|
|
Net cash provided by
(used in) operating activities
|
|
|
211,445,239
|
|
|
|
(54,677,306)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(375,289)
|
|
|
|
(506,991)
|
|
Investments in
gold
|
|
|
-
|
|
|
|
(422,116,819)
|
|
Net cash used in
investing activities
|
|
|
(375,289)
|
|
|
|
(422,623,810)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from other
loans – short term
|
|
|
-
|
|
|
|
29,031,368
|
|
Repayments of other
loans – short term
|
|
|
(239,183,259)
|
|
|
|
(145,157)
|
|
Proceeds from other
loans – long term
|
|
|
220,188,104
|
|
|
|
95,803,516
|
|
Repayments of other
loans – long term
|
|
|
-
|
|
|
|
(29,031,368)
|
|
Proceeds from related
party loan – short term
|
|
|
-
|
|
|
|
284,507,410
|
|
Repayments of related
party loan – short term
|
|
|
(235,915,825)
|
|
|
|
-
|
|
Proceeds from related
party loan – long term
|
|
|
335,000,472
|
|
|
|
479,017,578
|
|
Repayments of related
party loan – long term
|
|
|
(290,176,465)
|
|
|
|
(374,504,652)
|
|
Payment of loan
origination fees
|
|
|
-
|
|
|
|
(1,990,977)
|
|
(Repayments of)
borrowings from related party
|
|
|
485,179
|
|
|
|
(5,586,376)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(209,601,794)
|
|
|
|
477,101,342
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATES ON CASH AND RESTRICTED CASH
|
|
|
(2,772,527)
|
|
|
|
906,954
|
|
NET INCREASE
(DECREASE) IN CASH AND RESTRICTED CASH
|
|
|
(1,304,371)
|
|
|
|
707,180
|
|
CASH AND
RESTRICTED CASH, BEGINNING OF PERIOD
|
|
|
17,924,397
|
|
|
|
81,677,623
|
|
CASH AND
RESTRICTED CASH, END OF PERIOD
|
|
$
|
16,620,026
|
|
|
$
|
82,384,803
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid for
interest expense
|
|
$
|
43,192,416
|
|
|
$
|
27,688,571
|
|
Cash paid for income
tax
|
|
$
|
1,236,915
|
|
|
$
|
-
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Investments in gold
obtained in a lease from a related party and fully
repaid
|
|
$
|
-
|
|
|
$
|
131,117,303
|
|
Investments in gold
transferred to inventories
|
|
$
|
333,328,678
|
|
|
$
|
-
|
|
Unrealized gain
(loss) on investments in gold
|
|
$
|
(25,171,194)
|
|
|
$
|
102,907,389
|
|
View original
content:http://www.prnewswire.com/news-releases/kingold-jewelry-reports-financial-results-for-the-first-quarter-2018-300646496.html
SOURCE Kingold Jewelry, Inc.