WUHAN, China, May 15, 2019 /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,
2019.
2019 First Quarter Financial Highlights (all results compared
to prior year period)
- Net sales were approximately $453.5
million, compared to approximately $539.5 million in the prior year period.
- Processed a total of 22 metric tons of 24-karat gold products,
compared to 23.3 tons in the first quarter 2018.
- Net income was approximately $6.4
million, or $0.10 per diluted
share, compared to net income of approximately $13.2 million, or $0.20 per diluted share in the prior year
period.
Outlook for 2019
- The Company reiterates its guidance of processing between 110
metric tons and 120 metric tons of 24-karat gold products in
2019.
Management Commentary
Mr. Zhihong Jia, Chairman and CEO
of the Company, commented, "In the first quarter of 2019, both of
Kingold's operational and financial performances were affected by
China's economic slowdown, which
negatively impacted our customers' purchases of gold products and
it was not until the end of the first quarter that the market
gradually warmed up. Every time when Kingold encounters the impact
from challenging environment, we have always maintained a positive
attitude and focused on our product research and development. We
believe in our ability of providing good quality products to meet
consumer demand once the market picks up, which is a key strength
of Kingold."
2019 FIRST QUARTER OPERATIONAL REVIEW
Metric Tons of Gold Processed
|
|
Three Months Ended:
|
|
March 31, 2019
|
March 31, 2018
|
|
Volume
|
%
of Total
|
Volume
|
%
of Total
|
Branded*
|
11.2
|
50.9%
|
13.0
|
55.8%
|
Customized**
|
10.8
|
49.1%
|
10.3
|
44.2%
|
Total
|
22.0
|
100%
|
23.3
|
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, 2019,
the Company processed a total of 22.0
metric tons
of gold, of which branded production
was 11.2 metric tons, representing 50.9% of total gold processed, and customized
production
was 10.8 metric tons, representing 49.1% of
total gold processed in the first quarter
of 2019. In the first quarter
of 2018, the Company processed a total of 23.3
metric tons, of which
branded production was 13.0 metric tons, or
55.8% of the total gold processed, and customized production was
10.3 metric tons, or 44.2% of
total gold processed.
2019 FIRST QUARTER FINANCIAL REVIEW
Net Sales
Net sales
for the three months ended March 31,
2019 was $453.5 million, a decrease of approximately
$86.0 million, or 15.9%, from net
sales of $539.5 million for the three
months ended March 31, 2018.
The decrease in net sales was mainly due to the decrease in
sales volume of 1.3 metric tons resulting in a revenue decrease of
approximately $73.4 million, the
currency translation loss of approximately $29.5 million, offset by the revenue increase of
approximately $17.0 million as a
result of the increase in average unit selling price. The average
unit selling price for brand production sales increased from
RMB 258.32 per gram in three months
ended March 31, 2018 to RMB 266.65 per gram in three months ended
March 31, 2019. The average unit
selling price for customized production sales increased from
RMB 6.84 per gram in three months
ended March 31, 2018 to RMB 6.96 per gram in three months ended
March 31, 2019.
Gross Profit
Gross profit for the three months ended March 31, 2019 was $55.3
million, compared to $64.2
million for the same period in 2018.
The decrease in gross profit was mainly due to the decrease in
sales volume, and the increase in unit cost of raw materials used
in production reduced gross profit for the three months ended
March 31, 2019 as compared to the
same period of 2018. The unit cost of branded production sales was
RMB 239.7 per gram for the three
months ended March 31, 2019 while the
unit cost of branded production sales was RMB 232.12 per gram for three months ended
March 31, 2018. The unit cost of
customized production sales was RMB
0.34 per gram for the three months ended March 31, 2019 while the unit cost of customized
production sales was RMB 0.31 per
gram for three months ended March 31,
2018.
Gross Margin
The Company's gross margin was 12.2% for the three months ended
March 31, 2019, compared to 11.9% in
the prior year period.
The increase in gross margin was mainly due to the increased
average selling price of branded production and customized
production sales. The average selling price of branded production
was RMB 266.65 per gram for the three
months ended March 31, 2019,
increased by RMB 8.33 or 3.2%, from
RMB 258.32 per gram for the same
period in 2018. The average selling price of customized production
sales was RMB 6.96 per gram for the
three months ended March 31, 2019,
increased by RMB 0.12, or 1.7%, from
RMB 6.84 per gram for the three
months ended March 31, 2018 to
RMB 6.96 per gram for the three
months ended March 31, 2019.
Net Income
Net income for the three months ended March 31, 2018 was $6.4
million, or $0.10 per diluted
share based on 66.1 million weighted average diluted shares
outstanding, compared to net income of $13.2
million, or $0.20 per diluted
share based on 66.5 million weighted average diluted shares
outstanding in the prior-year period.
Balance Sheet and Cash Flow
(in millions except for
percentages)
|
3/31/2019
|
12/31/2018
|
% Changed
|
Cash
|
$
1.0
|
$
0.23
|
335%
|
Inventories
|
$
163.8
|
$
127.0
|
29%
|
Working Capital
|
$
919.8
|
$
837.3
|
9.9%
|
Stockholders' Equity
|
$
632.0
|
$
638.3
|
(1%)
|
Net cash used in operating activities was $96.7 million for the year ended March 31, 2019, compared with net cash provided
by operating activities of $211.4
million for the same period in 2018. The decrease of
operating cash flows was mainly due to the increase in gold
purchases of approximately $33.5
million in order to meet the production demand, the
increased gold purchases of approximately $55.8 million in order to pledge such gold as
collateral with various financial institutions to obtain additional
loans, and the increase in value added tax receivable of
$11.7 million and a decrease in
income tax payable of approximately $1.2
million and decrease in other tax payable by approximately
$2.6 million.
Kingold's net cash from operating activities can fluctuate
significantly due to changes in inventories. Other factors that may
vary significantly include accounts payable, purchases of gold and
income taxes. Looking forward, the Company expects the net cash
that 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. These fluctuations could cause net
cash from operating activities to decrease, even if Kingold's 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 its cash flow in any particular
quarter.
OUTLOOK FOR 2019
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 110 metric tons and 120
metric tons during 2019.
Conference Call Details
Kingold also announced that it will discuss these financial
results in a conference call on May 16,
2019, 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:
https://78449.themediaframe.com/dataconf/productusers/kgji/mediaframe/30429/indexl.html. 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 for gold processing
and investment in 2019. 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,
|
|
2019
|
|
2018
|
|
|
|
|
NET
SALES
|
$
|
453,539,100
|
|
$
|
539,524,055
|
COST OF
SALES
|
|
|
|
|
|
Cost of
sales
|
|
(397,991,894)
|
|
|
(474,965,584)
|
Depreciation
|
|
(245,740)
|
|
|
(317,665)
|
Total cost of
sales
|
|
(398,237,634)
|
|
|
(475,283,249)
|
GROSS
PROFIT
|
|
55,301,466
|
|
|
64,240,806
|
OPERATING
EXPENSES
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
2,618,192
|
|
|
2,477,788
|
Stock compensation
expenses
|
|
5,364
|
|
|
5,364
|
Depreciation
|
|
82,941
|
|
|
108,829
|
Amortization,
other
|
|
2,801
|
|
|
2,973
|
Lease
expense
|
|
21,338
|
|
|
67,566
|
Total operating
expenses
|
|
2,730,636
|
|
|
2,662,520
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
52,570,830
|
|
|
61,578,286
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
Interest
Income
|
|
338,613
|
|
|
376,001
|
Interest expense,
including amortization of financing costs of $2,322,964 and
$2,255,066
|
|
(44,300,105)
|
|
|
(44,116,880)
|
Total other expenses,
net
|
|
(43,961,492)
|
|
|
(43,740,879)
|
INCOME FROM
OPERATIONS BEFORE TAXES
|
|
8,609,338
|
|
|
17,837,407
|
INCOME TAX
PROVISION (BENEFIT)
|
|
|
|
|
|
Current
|
|
3,762,171
|
|
|
3,257,474
|
Deferred
|
|
(1,533,412)
|
|
|
1,345,009
|
Total income tax
provision
|
|
2,228,759
|
|
|
4,602,483
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
|
6,380,579
|
|
|
13,234,924
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
Unrealized loss
related to investments in gold, net of tax
|
$
|
(29,416,040)
|
|
$
|
(18,622,697)
|
Total foreign
currency translation gain
|
|
16,651,738
|
|
|
13,819,701
|
Total Other
comprehensive loss
|
$
|
(12,764,302)
|
|
$
|
(4,802,996)
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME (LOSS)
|
$
|
(6,383,723)
|
|
$
|
8,431,928
|
Earnings per
share
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.10
|
|
$
|
0.20
|
Weighted average
number of shares
|
|
|
|
|
|
Basic
|
|
66,113,502
|
|
|
66,113,502
|
Diluted
|
|
66,113,502
|
|
|
66,541,351
|
KINGOLD JEWELRY,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(IN U.S.
DOLLARS)
|
(UNAUDITED)
|
|
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
ASSETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Cash
|
$
|
926,028
|
|
$
|
233,391
|
Restricted
cash
|
|
15,705,478
|
|
|
4,798,185
|
Accounts
receivable
|
|
-
|
|
|
451,059
|
Inventories
|
|
163,848,955
|
|
|
127,034,673
|
Investments in
gold
|
|
2,174,076,950
|
|
|
1,593,557,391
|
Value added tax
recoverable
|
|
277,741,555
|
|
|
259,582,324
|
Prepaid expenses and
other current assets
|
|
381,376
|
|
|
87,590
|
Total current
assets
|
|
2,632,680,342
|
|
|
1,985,744,613
|
|
|
|
|
|
|
Property and
equipment, net
|
|
5,104,757
|
|
|
5,395,330
|
Restricted
cash
|
|
1,660,633
|
|
|
7,766,372
|
Investments in
gold
|
|
232,428,147
|
|
|
700,225,896
|
Land use
right
|
|
402,673
|
|
|
395,719
|
Other noncurrent
assets
|
|
519,295
|
|
|
285,768
|
Total long-term
assets
|
|
240,115,505
|
|
|
714,069,085
|
TOTAL
ASSETS
|
$
|
2,872,795,847
|
|
$
|
2,699,813,698
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Short term
loans
|
$
|
1,600,320,041
|
|
$
|
1,034,947,774
|
Related party
loan
|
|
74,494,554
|
|
|
72,699,779
|
Due to related
party
|
|
4,164,872
|
|
|
3,976,742
|
|
|
|
|
|
|
Income tax
payable
|
|
15,443,613
|
|
|
18,504,197
|
Other taxes
payable
|
|
2,008,975
|
|
|
2,577,102
|
Accrued expenses and
other payables
|
|
16,457,625
|
|
|
15,749,564
|
Total current
liabilities
|
|
1,712,889,680
|
|
|
1,148,455,158
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
12,809,830
|
|
|
24,218,911
|
Other long-term
liability
|
|
163,887
|
|
|
-
|
Related party
loans
|
|
348,912,801
|
|
|
373,327,862
|
Long term
loans
|
|
166,063,261
|
|
|
515,477,020
|
TOTAL
LIABILITIES
|
$
|
2,240,839,459
|
|
$
|
2,061,478,951
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 500,000 shares authorized, none issued
or outstanding as of March 31,
2019 and December 31,
2018
|
|
-
|
|
|
-
|
Common stock $0.001
par value, 100,000,000 shares authorized, 66,113,502 shares issued
and outstanding
as of March 31, 2019 and December 31,
2018
|
|
66,113
|
|
|
66,113
|
Additional paid-in
capital
|
|
224,298,271
|
|
|
224,292,907
|
Retained
earnings
|
|
|
|
|
|
Unappropriated
|
|
359,593,904
|
|
|
353,213,325
|
Appropriated
|
|
967,543
|
|
|
967,543
|
Accumulated other
comprehensive income, net of tax
|
|
47,030,557
|
|
|
59,794,859
|
Total Shareholders'
Equity
|
|
631,956,388
|
|
|
638,334,747
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
2,872,795,847
|
|
$
|
2,699,813,698
|
KINGOLD JEWELRY,
INC.
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(IN US
DOLLARS)
|
(UNAUDITED)
|
|
|
For the three
months ended March 31,
|
|
2019
|
|
2018
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income
|
$
|
6,380,579
|
|
$
|
13,234,924
|
Adjusted to reconcile
net income to cash provided by (used in) operating
activities:
|
|
|
|
|
|
Depreciation
|
|
484,271
|
|
|
426,494
|
Amortization of
intangible assets
|
|
2,801
|
|
|
2,973
|
Share based
compensation for services and warrants expense
|
|
5,364
|
|
|
5,364
|
Amortization of debt
origination costs included in interest expense
|
|
2,322,964
|
|
|
2,255,066
|
Deferred tax
provision (benefit)
|
|
(1,533,412)
|
|
|
1,345,009
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
Accounts
receivable
|
|
459,688
|
|
|
786,072
|
Inventories
|
|
(89,285,287)
|
|
|
155,338,325
|
Prepaid expenses and
other current assets
|
|
(515,299)
|
|
|
(608,086)
|
Value added tax
recoverable
|
|
(11,687,064)
|
|
|
37,013,840
|
Accrued expenses and
other payables
|
|
491,789
|
|
|
63,818
|
Income tax
payable
|
|
(1,213,932)
|
|
|
2,020,558
|
Other taxes
payable
|
|
(2,626,402)
|
|
|
(439,118)
|
Net cash provided by
(used in) operating activities
|
|
(96,713,940)
|
|
|
211,445,239
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(62,800)
|
|
|
(375,289)
|
Net cash used in
investing activities
|
|
(62,800)
|
|
|
(375,289)
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds from short
term loans
|
|
238,565,607
|
|
|
-
|
Repayments of short
term loans
|
|
(168,037,342)
|
|
|
(239,183,259)
|
Proceeds from long
term loans
|
|
105,890,198
|
|
|
220,188,104
|
Repayments of related
party loan – short term
|
|
-
|
|
|
(235,915,825)
|
Proceeds from related
party loan – long term
|
|
10,076,313
|
|
|
335,000,472
|
Repayments of related
party loan – long term
|
|
(43,525,506)
|
|
|
(290,176,465)
|
Payment of debt
origination fees
|
|
(2,200,489)
|
|
|
-
|
Borrowings from
related party
|
|
196,771
|
|
|
485,179
|
Net cash provided by
(used in) financing activities
|
|
140,965,552
|
|
|
(209,601,794)
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATES ON CASH AND RESTRICTED CASH
|
|
(38,694,621)
|
|
|
(2,772,527)
|
NET INCREASE
(DECREASE) IN CASH AND RESTRICTED CASH
|
|
5,494,191
|
|
|
(1,304,371)
|
CASH AND
RESTRICTED CASH, BEGINNING OF PERIOD
|
|
12,797,948
|
|
|
17,924,397
|
CASH AND
RESTRICTED CASH, END OF PERIOD
|
$
|
18,292,139
|
|
$
|
16,620,026
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
Cash paid for
interest expense
|
$
|
41,921,367
|
|
$
|
43,192,416
|
Cash paid for income
tax
|
$
|
6,974,183
|
|
$
|
1,236,915
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES
|
|
|
|
|
|
Investments in gold
transferred to inventories
|
$
|
176,670,960
|
|
$
|
333,328,678
|
Inventories
transferred to investments in gold
|
$
|
271,682,171
|
|
$
|
303,391,045
|
Unrealized loss on
investments in gold
|
$
|
(29,416,040)
|
|
$
|
(18,622,697)
|
Right-of-use assets
obtained in exchange for operating lease obligations
|
$
|
226,472
|
|
$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/kingold-jewelry-reports-financial-results-for-the-first-quarter-2019-300850843.html
SOURCE Kingold Jewelry, Inc.