AndhraNews.net
Home » Business News » 2011 » March » March 29, 2011

LJ International Reports Rising Revenues and EPS in Q4 and FY 2010


March 29, 2011 - Hong Kong

LJ International Inc. (LJI) (NASDAQ: JADE)

HIGHLIGHTS:


-- RETAIL DIVISION EXPERIENCES 48% Q4 SALES GAIN AND 155% RISE IN
OPERATING INCOME

-- OVERALL REVENUES RISE 15% FOR Q4 AND 27% FOR 2010, SURPASSING
QUARTERLY AND ANNUAL GUIDANCE

-- Q4 EPS RISES 56% YEAR-OVER-YEAR

-- EQUITY RAISE AND CREDIT LINES ENHANCE BALANCE SHEET - WORKING CAPITAL
EXCEEDS $100M

LJ International Inc. (LJI) (NASDAQ: JADE) today reported financial resultsfor the fourth quarter and fiscal year ended December 31, 2010. Revenues,operating profit, net income, and earnings per share all rose during bothperiods at double-digit percentage rates, spurred by sharply rising salesfrom the Company's ENZO retail chain in China.

Key financial results are summarized as follows:

Overall revenues in the fourth quarter of 2010 were $45.0 million, up 15%from $39.1 million a year earlier. Total revenues for 2010 totaled $140.5million, up 27% from $110.5 million in 2009. Fourth quarter 2010 revenuesexceeded earlier guidance of approximately $42.5 million.

Retail revenues totaled $24.7 million in the fourth quarter of 2010, up 48%from $16.7 million a year earlier. Retail revenues for all of 2010 totaled$78.9 million, up 55% from $50.8 million in 2009.

Wholesale revenues totaled $20.3 million in the fourth quarter of 2010,down 9% from $22.4 million in the fourth quarter of 2009. Wholesalerevenues for all of 2010 were $61.7 million, a 3% increase from $59.7million in 2009.

Overall operating income was $5.6 million in the fourth quarter of 2010, up109% from $2.7 million a year earlier. For all of 2010, overall operatingincome was $14.3 million, a 209% increase from $4.6 million in 2009.

Retail operating income was $4.2 million in the fourth quarter of 2010, up155% from $1.7 million a year earlier. For the full year 2010, operatingincome increased 155%, to $11.6 million from $4.5 million in 2009.

Wholesale operating income was $2.1 million in the fourth quarter of 2010,up 7% year-over-year. For 2010, wholesale operating income continued to beprofitable, increasing 145% to $4.5 million from $1.8 million in 2009.

Please note that overall operating income includes retail and wholesaletotals with an adjustment for corporate expenses.

Net income for LJI in the fourth quarter of 2010 was $4.0 million, or $0.14per fully diluted share, up 56% on a per-share basis from $2.2 million, or$0.09 per share, in 2009. Full-year net income for 2010 was $13 million,or $0.49 per fully diluted share, up from $3.7 million, or $0.15 per share,in 2009. Please note that net income for 2010 excludes a non-recurringgain of $1.6 million on the sale of investment property in the thirdquarter of 2010. EPS for 2010 was $0.43 per share.

2010 Retail Expansion is PayingOff - Management Comments on Accelerated Retail Expansion, Increased BrandMarketing, and Capital Resources

"LIJ's latest financials reflect the major acceleration of ENZO storeopenings," said LJI Chairman and CEO, Yu Chuan Yih. "In 2008, ENZOunderwent an evaluation phase to better streamline operations and increaseefficiencies. Starting in Spring 2010, LJI's ENZO retail division resumedits rapid expansion plan. By year end 2010, a net total of 38 newlocations were opened, bringing ENZO's total count to 133 stores. Retailrevenues have increased accordingly. A gratifying outcome is reflected ingreater retail operating margins and profits as well as companywide netincome. New retail stores are quickly reaching profitability andcontributing to the sharp improvement in LJI's overall operating results."

"In keeping with our efforts to support retail expansion, particular effortwas placed on ENZO'smarketing and branding strategy. Special promotional events, store openingcelebrations, andintegrating ENZO jewelry into fashion and makeup trends were activitiessponsored by LJI to bring ENZO to the forefront of consumers. In October2010, a CBNweekly consumer survey rated ENZO one of the most desired luxurybrands for jewelry. In the categories 'brandrecognition' and 'demonstrated buyer preference,' ENZO placed fourth,preceded only byCartier, Tiffany and Bulgari. We are proud to showcase ENZO and pleasedthat both the industry and consumers continue to respond enthusiastically,"stated Mr. Yih.

Mr. Yih summarized, "The year 2010 also included a significantstrengthening to LJI's capital resources and balance sheet. During 2010,LJI raised approximately $38 million of new capital through equity and banklines of credit. With a solid financial foundation and continuedprofitability for both retail and wholesale divisions, LJI remains on trackto reach the previously announced goal of having 200 ENZO stores open byyear end 2011."

Margins Rise Across the Board

LJI's gross profit in the fourth quarter of 2010 was $17.5 million, or 39%of revenues, compared to $12.1 million, or 31% of revenues, in 2009. Themargin increase was due largely to the greater share of revenues from theENZO retail division, which has higher margins than the wholesale division.It should be noted, however, that revenue margins rose within eachdivision. For the ENZO retail division, gross margins for the fourthquarter 2010 rose to 54% from 47% a year earlier. Wholesale gross marginrose to 21% from 19% a year earlier.

For all of 2010, gross profit companywide was $54.8 million, or 39% ofrevenues, compared to $38.4 million, or 35% of revenues, in 2009. Retailgross margins rose in 2010 to 53% from 52% in 2009. Wholesale grossmargins rose to 21% from 20% in 2009.

Operating margins rose year-over-year, spurred by both the increase ingross margins and reductions (relative to revenues) of selling, general andadministrative (SG&A) expenses. For the fourth quarter of 2010, theoperating margin was 12% of revenues, up from an operating margin of 7% ayear earlier. SG&A expenses fell to 14% of revenues from 15% a yearearlier. This drop was offset partially by an increase in rental expensesyear-over-year to 10% of revenues, from 8% a year earlier. For all of 2010,SG&A expenses were 16% of revenues, down from 18% in 2009. Rental expensesheld steady at 10% in both 2009 and 2010.

Balance Sheet Strengthens with New Capital Infusion

Aided by approximately $38 million from two new bank lines of credit and aprivate placement share issue -- all finalized and announced in the fourthquarter of 2010 -- LJI ended 2010 with additional strength to an alreadysolid balance sheet. Cash and equivalents totaled $13 million on December31, 2010, or $0.45 per outstanding share, up from $11.3 million at the endof 2009. Working capital (current assets minus current liabilities) rose to$100.6 million at the end of 2010, up from $77.6 million at the end of 2009.Long-term debt fell to $1.7 million from $2.3 million a year earlier.

Company Projects Over 50% Rise in Revenues and Net Income in Q1 2011

In guidance for the first quarter ending March 31, 2011, LJI said itexpects revenues to total approximately $40 million, an increase of 48%from the first quarter of 2010. Retail revenues are projected to rise 52%year-over-year to approximately $25 million. Wholesale revenues areexpected to rise 44% to approximately $15 million. Net income is expectedto be approximately $3 million or $0.10 per fully diluted share in thefirst quarter of 2011. This figure is an increase of 60% year-over-year.

About LJ International Inc.

LJ International Inc. (LJI) (NASDAQ: JADE) is engaged in the designing,branding, marketing and distribution of a full range of jewelry. It hasbuilt its global business on a vertical integration strategy and anunwavering commitment to quality and service. Through its ENZO stores, LJIis now a major presence in China's fast-growing retail jewelry market. As awholesaler, it distributes to fine jewelers, department stores, nationaljewelry chains and electronic and specialty retailers throughout NorthAmerica and Western Europe. Its product lines incorporate all majorcategories, including earrings, necklaces, pendants, rings and bracelets.

Cautionary Note Regarding Forward-Looking Statements: This press releasemay contain "forward-looking statements" within the meaning of the U.S.Private Securities Litigation Reform Act of 1995. Forward-lookingstatements can be identified by words such as "anticipates," "intends,""plans," "seeks," "believes," "estimates," "expects" and similar referencesto future periods. Forward-looking statements are based on our currentexpectations and assumptions regarding our business, the economy and otherfuture conditions. Because forward-looking statements relate to the future,they are subject to inherent uncertainties, risks and changes incircumstances that are difficult to predict. Our actual results may differmaterially from those contemplated by the forward-looking statements. Theyare neither statements of historical fact nor guarantees or assurances offuture performance. We caution you therefore against relying on any ofthese forward-looking statements. Factors that could cause actual resultsto differ materially from such statements, as well as additional riskfactors, are detailed in the Company's most recent filings with theSecurities and Exchange Commission. Any forward-looking statement made byus in this press release speaks only as of the date on which it is made.We undertake no obligation to publicly update any forward-lookinginformation contained in this press release or with respect to theannouncements described herein, except as may be required by law.

 LJ INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Three months ended Year ended December 31 December 31 ---------------------- ---------------------- 2010 2009 2010 2009 ---------- ---------- ---------- ---------- US$ US$ US$ US$ Operating revenue 45,046 39,166 140,548 110,523Costs of goods sold (27,505) (27,017) (85,737) (72,173) ---------- ---------- ---------- ----------Gross profit 17,541 12,149 54,811 38,350 Operating expensesSelling, general and administrative expenses (11,065) (9,013) (37,303) (31,039)Net loss on derivatives (178) - (476) (503)Depreciation (748) (484) (2,779) (2,197) ---------- ---------- ---------- ---------- Operating income 5,550 2,652 14,253 4,611 Other revenue and expenseInterest income 23 5 69 147Gain on currency translation 482 - 643 -Gain on sales of securities - - 258 -Gain on disposal of property held for lease - - 1,635 -Interest expenses (292) (202) (978) (842) ---------- ---------- ---------- ---------- Income before income taxes and noncontrolling interests 5,763 2,455 15,880 3,916Income taxes expense (1,765) (205) (2,877) (231) ---------- ---------- ---------- ---------- Net Income 3,998 2,250 13,003 3,685Net (income) loss attributable to noncontrolling interest (1) (9) (9) 4 ---------- ---------- ---------- ----------Net income attributable to LJ International Inc. common shareholders 3,997 2,241 12,994 3,689 ========== ========== ========== ========== Earnings per share: Basic 0.14 0.09 0.51 0.16 Diluted 0.14 0.09 0.49 0.15 Weighted average number of shares used in calculating diluted earnings per share 29,293,340 24,734,382 26,656,995 24,101,854 ========== ========== ========== ========== LJ INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) As of As of December 31, December 31, 2010 2009 ------------- ------------- US$ US$ASSETSCurrent assetsCash and cash equivalents 13,048 11,282Restricted cash 11,009 6,425Trade receivables, net of allowance for doubtful accounts 25,889 21,679Available-for-sale securities 2,344 2,360Inventories 107,666 81,401Prepayments and other current assets 3,635 1,861 ------------- ------------- Total current assets 163,591 125,008Properties held for lease, net 419 717Property, plant and equipment, net 10,115 6,400Deferred tax assets 111 111Goodwill, net 1,521 1,521 ------------- ------------- Total assets 175,757 133,757 ============= ============= Liabilities and shareholders' equityCurrent liabilities Bank overdrafts 2,879 2,908 Notes payable 10,720 5,551 Capitalized lease obligation, current portion 48 98 Letters of credit, gold loan and others 21,539 13,481Derivatives 571 - Trade payables 19,172 18,545 Accrued expenses and other payables 5,555 5,354 Income taxes payable 2,255 1,147 Deferred taxation 268 310 ------------- ------------- Total current liabilities 63,007 47,394Notes payable, non-current portion 1,621 2,244Capitalized lease obligation, non-current portion 30 78 ------------- ------------- Total liabilities 64,658 49,716 ------------- ------------- EquityCommon stocks, par value US$0.01 each, Authorized 100 million shares; Issued 29,153,672 shares as of December 31, 2010 and 23,768,672 shares as of December 31, 2009 292 238Additional paid-in capital 69,941 56,675Accumulated other comprehensive income 837 102Retained earnings 39,851 26,857 ------------- ------------- Total LJ International Inc. shareholders' equity 110,921 83,872Noncontrolling interest 178 169 ------------- ------------- Total equity 111,099 84,041 ------------- ------------- Total liabilities and equity 175,757 133,757 ============= =============

Contacts
Corporate:
Mr. Ringo Ng
Chief Financial Officer
LJ International Inc.
Tel: 011-852-2170-0018
ringong@ljintl.com

Investor Relations
Ms. Jennifer K. Zimmons / Richard Cooper
Managing Director/President
Cooper Global Communications
Tel: 212-317-1400
jzimmons@cgc-us.com
rcooper@cgc-us.com

MarketWire

Comment on this story

Share