LJ International, Inc. (MM) (NASDAQ:JADE)
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LJ International Reports Sales Increases of Over 30% for Fourth
Quarter and Full Year 2004
EPS Rises 16% for Quarter and Year;
Company Discusses China Expansion Plans for 2005
HONG KONG and LOS ANGELES, March 24 /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 fourth
quarter and full year ending December 31, 2004.
Following are highlights of the report:
-- Revenue for both the fourth quarter and full year 2004 increased more
than 30% above year-ago levels.
-- Net income rose 23% in the fourth quarter, year-over-year, and 48% for
the full year 2004. EPS, despite an increase in shares from private
placement, was up 16% for both the fourth quarter and the full year.
-- The Company recorded its fourth consecutive quarter in which year-over-
year revenue growth exceeded 20%.
-- First-quarter 2005 guidance indicates continued sales growth, spurred
by orders from existing markets and new China retail operations.
For the fourth quarter ended December 31, 2004, revenue totaled $25 million, an
increase of 35% over the fourth quarter of 2003. This was the fourth
consecutive quarter in which LJI has recorded sales gains of more than 20% year
over year. Net income in the fourth quarter of 2004 was $728,000, or $0.06 per
fully diluted share, up 23% from $593,000, or $0.05 per share, a year earlier.
For the full year ended December 31, 2004, revenue totaled $77.4 million, an
increase of 33% over 2003. This represents an acceleration of sales growth
from 2003, when revenue increased 26%. Net income in 2004 was $2.7 million, or
$0.22 per fully diluted share, up 16% from $1.8 million, or $0.19 per share, in
2003.
EPS comparisons reflect the increase number of fully diluted shares by
2,401,000 in 2004 mainly due to a private placement in September 2004.
Excluding the effect of this share increase, EPS for the full year 2004 would
have been $0.28, or 50% above the 2003 levels and in line with the 50% increase
in net income. Fourth quarter 2004 EPS remained at $0.06, up 20%
year-over-year.
LJI Chairman and CEO Yu Chuan Yih commented, 'The results for 2004 are
gratifying not only because they show strong growth, but also because they show
that LJI is continuing to expand sales sharply in its established markets even
as it moves into new ones. We continue to enjoy solid relationships with our
major customers, most of whom are continuing to expand their business with us.
These include the three largest U.S. home-shopping networks, two-thirds of the
largest U.S. jewelry chains as well as some of the world's largest retailers.
Each of these new customers has the potential to match or exceed our top
customer as a buyer of our products. And, of course, there's China. As we
build upon our longstanding sales base, we will open new outlets in China,
where we will see new revenue contributions for the first time in 2005.'
The Company maintained its strong balance sheet as of December 31, 2004 with
cash and cash equivalents of approximately $3.2 million, up 18% from $2.72
million on December 31, 2003. With restricted cash included, cash and
equivalents were $9.6 million, up from $8.7 million a year earlier. During
2004, LJI saw some tightening of gross margins, to 20.8% from 22.7%, as a
result of its expansion into China and increased sales of its lower margin
diamond business. However, these were offset by continued improvement in its
cost controls. Operating expenses were 16.9% of sales in 2004, down from 18.5%
in 2003 and 28% in 2002. The Company's net profit margin improved in 2004 to
3.5%, from 3.1% in 2003 and a loss of 15.7% in 2002.
Sales, general and administrative (SG&A) expenses decreased year-over-year as a
percentage of revenues. They totaled $3.1 million, or 12.3% of revenues, in
the fourth quarter of 2004, compared to $2.7 million, or 14.5% of revenues, in
the fourth quarter of 2003. For the twelve months of 2004, SG&A expenses were
$11.6 million, or 15% of revenues, compared to $9.1 million, or 16% of
revenues, a year earlier.
Guidance, China Plans Detailed
For the first quarter of 2005, LJI projects revenue between $14.5 and $16
million. At the bottom of that range, sales would be roughly even with the
first quarter of 2004; at the upper end, they would be 10% higher. The Company
is projecting net income of $375,000, or $0.03 per fully diluted share for the
first quarter of 2005, compared to $421,000, or $0.04 per share, a year
earlier.
In China, LJI opened three stores in 2004 -- one in Hong Kong and two in
Shanghai. It expects to open three more by the end of April and an additional
by the end of October, bringing its total to seven. Of the four new stores,
one will be in Shanghai, two will be in Beijing and one will be in Harbin.
Sales Show Sharpest Gains in Europe, Hong Kong
During 2004, The U.S. continued to be the dominant market for LJI's products,
as it has been since the Company's founding. At the same time, sales have been
trending overseas. The U.S. share decreased from 73.7% in 2003 to 72.6% in
2004, while European sales rose to 16.8% from 13.6%. Hong Kong sales rose to
4.9% from 3.4%.
Conference Call Information
The Company will conduct a conference call today, March 24, 2005 at 11:00 a.m.
EST to review the fourth quarter and full year 2004 financial results and for a
Q&A session. The call will be hosted by Betty Ho, Vice President of Corporate
Development. The conference call is accessible live via phone by dialing
888-338-6461, or 973-935-8509 for international callers, and asking for the LJ
International 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/ .
If you would like to be added to LJI's investor email lists please contact
Haris Tajyar with Investor Relations International .
About LJ International
LJ International, Inc. (LJI) is a publicly-owned company, based in Hong Kong
and the U.S., engaged in designing, branding, marketing and distributing 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 stores and e-shopping sites. Its product
lines incorporate all major categories sought by major retailers, including
earrings, necklaces, pendants, rings and bracelets. It trades on the Nasdaq
National Market under the symbol JADE.
For more information on LJI, go to its Web Site at 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 sales. 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 sales 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.
Consolidated Statement of Operations
(all numbers in thousands and in US Dollars, except per share data)
Year Year
Three Months Three Months Ended Ended
Ended Ended December December
December 31, December 31, 31, 31,
2004 2003 2004 2003
Audited Audited
Operating revenue $ 25,010 $ 18,486 $ 77,379 $ 58,167
Cost of goods sold (20,846) (14,376) (61,265) (44,947)
Gross profit 4,164 4,110 16,114 13,220
Operating expenses
Selling, general and
administrative
expenses (3,078) (2,676) (11,578) (9,133)
Unrealized gain (loss)
on derivatives (539) -- (482) (162)
Depreciation (180) (289) (1,032) (1,184)
Impairment on PPE -- (84) -- (84)
Amortization and
impairment loss on
goodwill -- (200) -- (200)
Operating income (loss) 367 861 3,022 2,457
Other revenue and
expense
Other revenues 731 290 844 453
Interest expenses (257) (232) (902) (753)
Income before income
taxes and
minority interests 841 919 2,964 2,157
Income tax credit
(expense) (113) (326) (277) (352)
Income before minority
interests 728 593 -- 1,805
Minority interests in
consolidated
subsidiaries -- -- -- 8
Net income $ 728 $ 593 $ 2,687 $ 1,813
Net income per share
Basic $ 0.06 $ 0.06 $ 0.24 $ 0.21
Diluted $ 0.06 $ 0.05 $ 0.22 $ 0.19
Weighted average number
of shares
Basic 12,293 9,601 11,119 8,757
Diluted 12,918 11,483 12,107 9,706
LJ International, Inc.
Consolidated Balance Sheet
(all numbers in thousands and in US Dollars)
December 31, December 31,
2004 2003
ASSETS
Current assets
Cash and cash equivalents $ 3,228 $ 2,722
Restricted cash 6,393 5,931
Trade receivables, net of allowance for
doubtful accounts 15,653 15,243
Derivative contracts -- 651
Inventories 36,629 21,487
Prepayments and other current assets 2,539 3,726
Total current assets 64,442 49,760
Properties held for lease, net 1,452 1,506
Property, plant and equipment, net 4,673 4,931
Due from related parties 491 508
Goodwill, net 1,521 1,521
Investment securities, net 2,460 2,460
Total assets $ 75,039 $ 60,686
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdrafts $ 607 $ 1,312
Notes payable 2,487 1,516
Capitalized lease obligation, current
portion 19 18
Letters of credit, gold and others 21,911 16,737
Derivatives 1,462 1,430
Trade payables 9,553 8,417
Accrued expenses and other payables 4,631 2,864
Income taxes payable 68 326
Deferred taxation 87 87
Total current liabilities 40,825 32,707
Capitalized lease obligation, non-current 58 77
Total liabilities $ 40,883 $ 32,784
Minority interest -- --
CAPITAL AND RESERVES
Common stocks 123 99
Additional paid-in capital 23,382 19,802
Accumulated other comprehensive loss (151) (151)
Unearned compensation (37) --
Retained earnings 10,839 8,152
Total shareholders' equity 34,156 27,902
Total liabilities and shareholders' equity $ 75,039 $ 60,686
For further information:
AT LJI:
Betty Ho
Vice President, Corporate Development
Tel: +852-2170-0001
Email:
AT INVESTOR RELATIONS INTL:
Haris Tajyar
Managing Partner
Tel: +1-818-382-9702
Email:
DATASOURCE: LJ International, Inc.
CONTACT: Betty Ho, Vice President, Corporate Development of LJI,
+852-2170-0001, or ; or Haris Tajyar of INVESTOR RELATIONS
INTL, +1-818-382-9702, or , for LJI
Web Site: http://www.ljintl.com/