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Nov 13, 2019 2:15 AM ET

Kingold Jewelry Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2019


iCrowd Newswire - Nov 13, 2019

WUHAN CITY, China,– 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 unaudited financial results for the third quarter and nine months ended September 30, 2019.

2019 Third Quarter and Subsequent Financial Highlights (all results compared to prior year period)

Outlook for 2019

2019 THIRD QUARTER AND NINE MONTH OPERATIONAL REVIEW

Metric Tons of Gold Processed

 

Three Months Ended:

 

September 30, 2019

September 30, 2018

 

Volume

% of Total

Volume

% of Total

Branded*

9.3

68.0%

16.6

56.1%

Customized**

4.4

32.0%

13.0

43.9%

Total

13.7

100.0%

29.6

100.0%

 

Nine Months Ended:

 

           September 30, 2019

September 30, 2018

 

Volume

% of Total

Volume

% of Total

Branded*

35.3

55.5%

46.5

57.7%

Customized**

28.3

45.5%

34.0

42.3%

Total

63.6

100.0%

80.5

100.0%

 

* 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.

During three months ended September 30, 2019, Kingold processed a total of 13.7 metric tons of gold, of which branded production accounted for 9.3 metric tons (68.0%) and customized production accounted for 4.4 metric tons (32.0%). During the three months ended September 30, 2018, the Company processed a total of 29.6 metric tons of gold, of which branded production accounted for 16.6 metric tons (56.1%) and customized production accounted for 13 metric tons (43.9%).

During the nine months ended September 30, 2019, Kingold processed a total of 63.6 metric tons of gold, of which branded production accounted for 35.3 metric tons (55.5%) and customized production accounted for 28.3 metric tons (45.5%). During the nine months ended September 30, 2018, the Company processed a total of 80.5 metric tons of gold, of which branded production accounted for 46.5 metric tons (57.7%) and customized production accounted for 34.0 metric tons (42.3%).

2019 THIRD QUARTER FINANCIAL REVIEW

Net Sales

Net sales for the three months ended September 30, 2019 were approximately $382.8 million, a decrease of approximately $243.4 million, or 38.9%, from net sales of $626.2 million for the three months ended September 30, 2018. The overall decrease in revenue was mainly the result of the following reason:

The sales volume decrease was offset somewhat by an increase in average per selling unit price for both branded and customized production gold products. 

Gross Profit

Gross profit for the three months ended September 30, 2019 was approximately $15.2 million, a decrease of approximately $46.0 million, or 75.2%, from $61.2 million for the same period in 2018. The decrease in gross profit was primarily due to lower sales volumes for the period, offset by an increase in average unit selling price for branded and customized production sales.

Gross Margin

For the three months ended September 30, 2019 and 2018, gross margin was 4.0% and 9.8%, respectively.

Net Income

The Company reported a net loss of approximately $24.0 million, or $2.18 per diluted share based on weighted average number of common shares outstanding – diluted of 11,018,955 for the three months ended September 30, 2019, as compared to a net income of approximately $13.2 million, or $1.20 per diluted share based on 11,020,225 weighted average number of common shares outstanding – diluted  for the three months ended September 30, 2018. The decrease in our net income was a result of decreased revenue, increased interest expense and decreased taxable income as discussed above. 

2019 NINE MONTH FINANCIAL REVIEW

Net Sales

Net sales for the nine months ended September 30, 2019 were $1.43 billion, compared to net sales of $1.84 billion for the nine months ended September 30, 2018.

Gross Profit

Gross profit for the nine months ended September 30, 2019 was approximately $140.0 million, compared to $189.3 million for the same period in 2018.

Gross Margin

For the nine months ended September 30, 2019 and 2018, gross margin was 9.8% and 10.3%, respectively. The overall decrease in gross profit and gross margin reflected the above combined factors that impacted the Company during the third quarter. 

Net Income

For the foregoing reasons, Kingold reported a net loss of approximately $5.0 million, or $0.46 per diluted share based on 11,018,955 weighted average number of shares – diluted for the nine months ended September 30, 2019, compared to net income of $40.0 million, or $3.62 per diluted share based on 11,051,897 weighted average number of shares – diluted for the nine months ended September 30, 2018.

Balance Sheet Highlights

As of September 30, 2019, Kingold had approximately $0.7 million in cash and approximately $16.3 million restricted cash. The Company also had short-term investments of approximately $195.1 million because it used the excessive cash on hand to purchase interest-bearing wealth management financial products from a Trust company and such short-term investments are redeemable at any time.

These short-term investments are highly liquid and can be used as working capital when needed.  Kingold has financed its operations with cash flow generated from operations and primarily through borrowings from various financial institutions as well as from related parties.

OUTLOOK FOR 2019

Based on its existing resources and capacity along with the shift in demand for 24-karat gold products in China, the Company estimates gold processed will be around 110 metric tons during 2019.

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 24-karat gold jewelry, ornaments, and investment-oriented products. The Company sells both directly to retailers as well as 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 with respect to its 2019 outlook for gold processing. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. 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.



Contact Information:

Kingold Jewelry, Inc.
Bin Liu, CFO
Phone: +1-847-660-3498 (US) / +86-27-6569-4977 (China)
[email protected]
Investor Relations Counsel:
The Equity Group Inc.
Adam Prior (in US)
Phone: +212 836-9606
[email protected]
Lucy Ma (in China)
Phone: 86-10 5661 7012
[email protected]








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