Company's ENZO Retail Division Reached $4.4 Million in Revenues for
First Six Months of 2006, Moving Closer to Profitability HONG KONG
and LOS ANGELES, Aug. 10 /Xinhua-PRNewswire-FirstCall/ -- LJ
International Inc. ("LJI") (NASDAQ:JADE), one of the
fastest-growing jewelry companies in the world, today announced
financial results for the second quarter and six months ended June
30, 2006. Highlights of the report include: -- Second quarter 2006
revenues were up 36% year-over-year -- Second quarter EPS was
$0.04, up 100% from $0.02 in year-ago quarter -- Revenues of ENZO
Retail Division reached $2.69 million in second quarter, up 53%
sequentially from first quarter -- ENZO net loss narrowed to
$328,000 in second quarter from $550,000 in first quarter --
Excluding ENZO loss, overall EPS was $0.05 for second quarter 2006,
$0.10 for first six months -- Gross margin widened year-over-year
to 28% from 24%, reflecting ENZO's progressively positive impact --
Company expects continued growth in third quarter of 2006 with
annual increases of 24% and 20%, respectively, in revenues and EPS
Revenues for the second quarter ended June 30, 2006 rose to a
record $25.95 million, up 36% from $19.08 million in the second
quarter of 2005. Revenues in the Company's core wholesale business
totaled $23.26 million in the second quarter of 2006, up
approximately 25% from a year earlier. Revenues at the ENZO chain
of retail stores in China, Hong Kong and Macau totaled $2.69
million in the second quarter of 2006; they were not yet
contributing significant revenue in the year-earlier quarter. On a
sequential basis, ENZO revenues were up 53% from $1.76 million in
the first quarter of 2006. For the first six months of 2006,
revenues totaled a record $50.10 million, up 37.2% from $36.51
million in the first six months of 2005. Core wholesale revenues
were $45.66 million, while ENZO revenues totaled $4.44 million. Net
income for the second quarter of 2006 was $630,000, or $0.04 per
fully diluted share, up 100% on an EPS basis from $303,000, or
$0.02 per fully diluted share, in the second quarter of 2005.
Excluding the net loss of the ENZO Division (see below), net income
in the latest quarter was $958,000, or $0.05 per fully diluted
share. For the first six months of 2006, net income was $952,000,
or $0.05 per fully diluted share, compared to $552,000, or $0.04
per fully diluted share, in the first six months of 2005. Excluding
ENZO's losses, net income for the first six months of 2006 was
$1.83 million, or $0.10 per fully diluted share. On the balance
sheet, LJI's cash and cash equivalents was at $8.83 million as of
June 30, 2006 and the company continues to operate with zero
long-term debt. Chairman Notes Positive ENZO Impact LJI Chairman
and CEO Yu Chuan Yih said, "I'm pleased to report another strong
quarter for LJI, with robust revenues expansion in both the
wholesale and retail segments of the company. ENZO, which now has
32 stores in operation throughout China as well as 2 in Hong Kong
and 1 in Macau, is starting to contribute to the company's overall
revenues and its margins, which are up significantly
year-over-year. In addition, ENZO is making rapid progress towards
division-level profitability, with a second-quarter net loss just
over half the size of its loss in the first quarter. Our updated
information indicates that 15 ENZO stores are now profitable on a
store-by- store basis." Gross margins in the ENZO unit, at 63%,
contributed to an increase in overall gross margins to 28% in the
latest quarter from 24% a year earlier. Taken separately, in the
second quarter of 2006 ENZO reported negative EBITDA of $209,000,
less than half the negatives EBITDA of $455,000 in the first
quarter. The division's net loss declined to $328,000 in the second
quarter from $550,000 in the first quarter. Revenues of $33
million, EPS of $0.12 Expected in Third Quarter 2006 The Company
today also provided guidance for the third quarter ending September
30, 2006. LJI expects overall revenues of approximately $33.0
million, up approximately 24% from the third quarter of 2005. Net
income is projected to be approximately $2.1 million, or $0.12 per
fully diluted share, up 20% from a year earlier. Conference Call
Information The Company will conduct a conference call today,
August 10, 2006 at 11:00 a.m. Eastern Time to discuss this second
quarter earnings results. The call will be hosted by Betty Ho, Vice
President of Corporate Development. The conference call is
accessible live via phone by dialing 877-407-8031, or 201- 689-8031
for international callers, and asking for the LJ International Inc.
call. Please call at least 10 minutes prior to the start time, or
live over the Internet by logging on to the Company's website at
http://www.ljintl.com/ . The call can also be accessed via the
Internet at http://www.investorcalendar.com/ by entering the
Company's name or ticker symbol. To be added to LJI's investor
lists, please contact Haris Tajyar at or at 818-382-9700. About LJ
International Inc. LJ International Inc. ("LJI") (NASDAQ:JADE),
based in Hong Kong and the U.S., is engaged in the designing,
branding, marketing and distribution of a full range of jewelry. It
has built its global business, currently one of the fastest-growing
in the jewelry industry, on a vertical integration strategy and an
unwavering commitment to quality and service. LJI distributes to
fine jewelers, department stores, national jewelry chains and
electronic and specialty retailers throughout North America and
Western Europe, with a growing retail presence in China through its
ENZO stores. Its product lines incorporate all major categories
sought by major retailers, including earrings, necklaces, pendants,
rings and bracelets. For more information on LJI, please visit
http://www.ljintl.com/ . Forward looking statement: Except for the
historical information, the matters discussed in this news release
may contain forward-looking statements, including, but not limited
to, factors relating to future revenues. These forward-looking
statements may involve a number of risks and uncertainties. Actual
results may vary significantly based on a number of factors
including, but not limited to, uncertainties in product demand, the
impact of competitive products and pricing, changing economic
conditions around the world, release and revenues of new products
and other risk factors detailed in the company's most recent annual
report and other filings with the Securities and Exchange
Commission. LJ INTERNATIONAL INC CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA) Three months ended Six months ended June 30 June 30 2006 2005
2006 2005 US$ US$ US$ US$ Operating revenue 25,946 19,074 50,101
36,513 Costs of goods sold (18,669) (14,454) (37,001) (28,243)
Gross profit 7,277 4,620 13,100 8,270 Selling, general and
administrative expenses (6,095) (3,936) (10,904) (7,555) Operating
income 1,182 684 2,196 715 Other revenue and expense Other revenues
234 72 346 108 Share of results of investment securities -- -- --
215 Interest expenses (683) (402) (1,404) (726) Income before
income taxes, minority interest and extraordinary gain 733 354
1,138 312 Income taxes (102) (48) (176) (150) Income before
minority interest and extraordinary gain 631 306 962 162 Minority
interest (1) (3) (10) (3) Income before extraordinary gain 630 303
952 159 Extraordinary gain in negative goodwill -- -- -- 393 Net
income 630 303 952 552 Earnings per share: Basic 0.04 0.02 0.06
0.04 Diluted 0.04 0.02 0.05 0.04 Weighted average number of shares
used in calculating diluted earnings per share 17,778,968
13,463,017 17,490,110 13,599,965 LJ INTERNATIONAL INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) As of
As of June 30, December 31, 2006 2005 (Unaudited) ASSETS US$ US$
Current assets: Cash and cash equivalents 3,078 4,796 Restricted
cash 5,755 5,839 Trade receivables, net of allowance for doubtful
accounts (US$212 as of June 30, 2006 and December 31, 2005) 17,731
24,960 Derivatives 2,470 2,034 Investment in capital guaranteed
fund 2,496 2,496 Inventories 63,144 55,941 Prepayments and other
current assets 3,605 2,538 Total current assets 98,279 98,604
Properties held for lease, net 1,373 1,400 Property, plant and
equipment, net 6,527 6,221 Due from related parties 139 484
Goodwill, net 1,521 1,521 Total assets 107,839 108,230 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Bank overdrafts 3,335
2,028 Notes payable 3,585 3,079 Capitalized lease obligation,
current portion 75 20 Letters of credit, gold and other loans
28,037 32,643 Derivatives 5,436 3,567 Trade payables 11,016 12,168
Accrued expenses and other payables 5,096 7,280 Due to related
parties -- 1,910 Income taxes payable 350 201 Deferred taxation 154
154 Total current liabilities 57,084 63,050 Long-term debts -- --
Other payables, non-current 328 43 Total liabilities 57,412 63,093
Minority interest 139 129 Stockholders' equity Common stocks, par
value US$0.01 each, Authorized - 100 million shares, Issued -
17,263,203 shares as of June 30, 2006; 15,521,203 shares as of
December 31, 2005 173 155 Additional paid-in capital 35,729 31,419
Accumulated other comprehensive loss (156) (156) Unearned
compensation (19) (19) Retained earnings 14,561 13,609 Total
stockholders' equity 50,288 45,008 Total liabilities and
stockholders' equity 107,839 108,230 For further information: AT
LJI: AT INVESTOR RELATIONS INTL: Betty Ho Haris Tajyar Vice
President, Corporate Development Managing Partner Ph:
011-852-2170-0001 Ph: 818-382-9702 DATASOURCE: LJ International
Inc. CONTACT: Betty Ho of LJ International, +852-2170-001, or ;
Haris Tajyar of Investor Relations Intl for LJ International,
+1-818-382-9702 or Web site: http://www.ljintl.com/
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