LJ International Inc. (LJI) (NASDAQ: JADE) today reported that its
revenues in the second quarter ended June 30, 2010 rose 47%
year-over-year to $33.0 million. Net income was $2.3 million and
earnings per fully diluted share rose to $0.09 from $0.01 in the
second quarter of 2009.
The Company, which designs, manufactures and distributes jewelry
to retailers worldwide and owns and operates the ENZO retail
jewelry stores in China, said revenue growth was strong in both
retail and wholesale operations.
Sales at LJI's ENZO retail division continued their rapidly
rising trend from recent quarters. ENZO revenues in the second
quarter of 2010 totaled $16.7 million, up 57% from a year earlier.
A total of 108 ENZO stores were in operation at the end of the
second quarter.
Wholesale revenues derived from international clients continued
to rebuild from the global downturn, totaling $16.3 million, up 38%
from the second quarter of 2009.
Rising Margins Boost Operating and Net
Income
Spurred by rising sales in the higher-margin retail division,
LJI's gross profit in the second quarter of 2010 was 37% of
revenues ($12.1 million), compared to 36% of revenues ($8.1
million) a year earlier. ENZO's gross margin in the second quarter
of 2010 was 54%, compared to the wholesale division's margin of
19%.
Selling, general and administrative expenses (SG&A) totaled
$8.4 million in the second quarter of 2010, compared to $6.8
million a year earlier. As a percentage of revenues, SG&A
dropped year-over-year to 25% from 30%. Other operating expenses
(depreciation and net loss on derivatives), totaled $0.8 million in
the second quarter, down from $0.9 million in the second quarter of
2009. Operating income was $3.0 million, or 9% of revenues, in the
second quarter of 2010 compared to $0.3 million, or 1% of revenues,
a year earlier.
Net income in the second quarter of 2010 totaled $2.3 million,
or $0.09 per fully diluted share, compared to $0.2 million, or
$0.01 per fully diluted share, a year earlier.
Balance Sheet Remains Strong
On the balance sheet, cash and cash equivalents at June 30,
2010, totaled $5.6 million, or approximately $0.22 a share. This
was a nominal change from the end of the first quarter at March 31,
2010 when cash and equivalents totaled $5.3 million. Cash and
equivalents stood at $11.3 million at December 31, 2009, and were
reduced in the first quarter 2010 due primarily to inventory
buildup in anticipation of new ENZO store openings. Long-term debt
at June 30, 2010 totaled $2.0 million, compared to $1.8 million at
the end of the first quarter and $2.3 million at the end of
2009.
CEO: Results Reflect Retail Expansion and
Efficiencies
Yu Chuan Yih, LJI Chairman and CEO, noted that the
second-quarter sales growth was driven in part by expansion of the
ENZO chain, which added a net total of 13 new stores in the
quarter. At the same time, he said, margins reflected improved
efficiency. "The most notable aspect of the second quarter results
was the combination of expansion with very effective controls on
operating costs."
Mr. Yih added, "The pace of ENZO store openings accelerated in
this quarter after a period of consolidation and operational
improvements. This contributed to a sharp rise in retail revenues.
Meanwhile, the internal efficiencies that management implemented
were evident in the sharp year-over-year drop in the percentage of
revenues going to SG&A expenses -- from 30% to 25%. Our retail
division kept its operating expenses to a modest sequential
increase of 10% from the first quarter, even as it substantially
expanded its store count. The wholesale division actually cut its
operating expenses year-over-year, from $1.9 million to $1.7
million, while achieving a 38% increase in revenues, returning
figures to levels experienced before the global downturn."
Revenue Seen Rising 30% in Q3 to $34
Million
In guidance for the third quarter ending September 30, 2010, the
Company projects revenues of approximately $34 million, which would
be approximately 30% above the $26.2 million reported in the third
quarter of 2009. By segment, the projected year-over-year revenue
increase would be approximately 55%, to $18 million, for retail,
and approximately 9%, to $16 million, for wholesale. Net income is
expected to be between $3.8 million to $4.0 million, or about $0.15
per fully diluted share, up from $1.1 million and $0.05 EPS a year
earlier. Excluding an expected one-time gain of about $1.6 million
due to a gain on sale of investment property, projected EPS in the
third quarter of 2010, fully diluted, is expected to be
approximately $0.09.
Half-Year Revenues Approach $60 Million, EPS
Totals $0.16
For the six months ended June 30, 2010, revenues totaled $59.8
million, up 33% from $45.1 million in the first half of 2009. Gross
profit was $23.3 million, or 39% of revenues, compared to $16.8
million, or 37% of revenues, a year earlier. Operating income was
$5.0 million, up from $0.6 million, and net income was $4.2
million, compared to $0.3 million a year earlier. Earnings per
fully diluted share in the first half of 2010 totaled $0.16,
compared to $0.01 in the first half of 2009.
By division, ENZO (retail) revenues in the first half of 2010
totaled $33.1 million, up 47% from $22.5 million in the first half
of 2009. Wholesale revenues rose 18% in the first half of 2010, to
$26.8 million from $22.6 million a year earlier. Gross profit of
the ENZO division was $12.2 million (54% of revenues), while
wholesale gross profit was $5.4 million (20% of revenues). ENZO
reported operating income of $4.3 million (13% of revenues) in the
first half of 2010. The wholesale division operating income was
$1.4 million (5% of revenues) for the same time period.
About LJ International
LJ International Inc. (LJI) (NASDAQ: JADE) is engaged in the
designing, branding, marketing and distribution of a full range of
jewelry. It has built its global business on a vertical integration
strategy and an unwavering commitment to quality and service.
Through its ENZO stores, LJI is now a major presence in China's
fast-growing retail jewelry market. As a wholesaler, it distributes
to fine jewelers, department stores, national jewelry chains and
electronic and specialty retailers throughout North America and
Western Europe. Its product lines incorporate all major categories,
including earrings, necklaces, pendants, rings and bracelets.
Forward-looking statements: This press
release contains "forward-looking statements" within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as
"anticipates," "intends," "plans," "believes," "estimates,"
"projects," "expects" and similar references to future periods.
Examples of forward-looking statements include, but are not limited
to, statements we make regarding our guidance relating to our
operating results for the third quarter ending September 30, 2010,
including total revenues and earnings per fully diluted share. The
foregoing is not an exclusive list of all forward-looking
statements we make.
Forward-looking statements are based on our current expectations
and assumptions regarding our business, the global economy and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Our
actual results may differ materially from those contemplated by the
forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
We caution you therefore against relying on any of these
forward-looking statements. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include global political, economic,
business, competitive, market and regulatory conditions and the
following: the current global financial crisis and economic
conditions; changes in consumer spending patterns and consumer
preferences; the effects of political and economic events and
conditions in the U.S., China and worldwide; the impact of
competition and pricing; market price of key raw materials;
political instability; currency and exchange risks and changes in
existing or potential duties, tariffs or quotas; availability of
attractive store locations; our ability to develop new merchandise;
and our ability to hire, train and retain associates. The risk
factors that are presented in Item 3.D. of our Report on Form 20-F
for the fiscal year ended December 31, 2009, as well as the
disclosures contained in our other public filings which we have
filed with the Securities and Exchange Commission.
Any forward-looking statement made by us in this press release
speaks only as of the date on which it is made. Factors or events
that could cause our actual results to differ may emerge from time
to time, and it is not possible for us to predict all of them. We
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
[FINANCIAL TABLES FOLLOW]
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
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
US$ US$ US$ US$
Operating revenue 32,978 22,435 59,831 45,124
Costs of goods sold (20,834) (14,357) (36,578) (28,321)
----------- ----------- ----------- -----------
Gross profit 12,144 8,078 23,253 16,803
Operating expenses
Selling, general and
administrative expenses (8,364) (6,841) (16,904) (14,708)
Net loss on derivatives (238) (411) (203) (214)
Depreciation (589) (515) (1,183) (1,220)
----------- ----------- ----------- -----------
Operating income 2,953 311 4,963 661
Other revenue and
expense
Interest income 19 76 25 94
Gain on sales of
securities - - 258 -
Interest expenses (217) (186) (424) (425)
----------- ----------- ----------- -----------
Income before income
taxes and
noncontrolling
interests 2,755 201 4,822 330
Income taxes expense (452) (15) (658) (15)
----------- ----------- ----------- -----------
Net Income 2,303 186 4,164 315
Net (income) loss
attributable to
noncontrolling interest (2) 6 (3) 7
----------- ----------- ----------- -----------
Net income attributable
to LJ International
Inc. common
shareholders 2,301 192 4,161 322
=========== =========== =========== ===========
Earnings per share:
Basic 0.09 0.01 0.17 0.01
Diluted 0.09 0.01 0.16 0.01
Weighted average
number of shares used
in calculating
diluted earnings per
share 25,966,517 23,966,495 25,630,325 23,617,587
=========== =========== =========== ===========
LJ INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
As of As of
June 30, December 31,
2010 2009
------------ ------------
(Unaudited)
US$ US$
ASSETS
Current assets
Cash and cash equivalents 5,590 11,282
Restricted cash 9,369 6,425
Trade receivables, net of allowance for doubtful
accounts 24,017 21,679
Available-for-sale securities 2,292 2,360
Inventories 91,456 81,401
Prepayments and other current assets 4,141 1,861
------------ ------------
Total current assets 136,865 125,008
Properties held for lease, net 700 717
Property, plant and equipment, net 6,341 6,400
Deferred tax assets 111 111
Goodwill, net 1,521 1,521
------------ ------------
Total assets 145,538 133,757
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdrafts 2,935 2,908
Notes payable 8,331 5,551
Capitalized lease obligation, current portion 81 98
Letters of credit, gold loan and others 18,680 13,481
Derivatives 237 -
Trade payables 17,525 18,545
Accrued expenses and other payables 6,053 5,354
Income taxes payable 888 1,147
Deferred taxation 310 310
------------ ------------
Total current liabilities 55,040 47,394
Notes payable, non-current portion 1,978 2,244
Capitalized lease obligation, non-current portion 45 78
------------ ------------
Total liabilities 57,063 49,716
------------ ------------
Equity
Common stocks, par value US$0.01 each,
Authorized 100 million shares; Issued
24,682,172 shares as of June 30, 2010 and
23,768,672 shares as of December 31, 2009 247 238
Additional paid-in capital 57,275 56,675
Accumulated other comprehensive (loss) gain (237) 102
Retained earnings 31,018 26,857
------------ ------------
Total LJ International Inc. shareholders' equity 88,303 83,872
Noncontrolling interest 172 169
------------ ------------
Total equity 88,475 84,041
------------ ------------
Total liabilities and equity 145,538 133,757
============ ============
Contact: Corporate: Mr. Ringo Ng Chief Financial Officer
LJ International Inc. Tel: 011-852-2170-0018 Email Contact
www.ljintl.com Investor Relations: Ms. Jennifer K. Zimmons/Mr.
Richard Cooper Managing Director/Chairman Strategic Growth
International, Inc. Tel: 212-838-1444 Email Contact / Email Contact
www.sgi-ir.com
LJ International, Inc. (MM) (NASDAQ:JADE)
Historical Stock Chart
From Sep 2024 to Oct 2024
LJ International, Inc. (MM) (NASDAQ:JADE)
Historical Stock Chart
From Oct 2023 to Oct 2024
