Enjoy Life in Style

Enjoy Life in Style
Investor Presentation
August 2015
Safe Harbor Statement
This presentation contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the
Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of
the Company to differ materially from the results expressed or implied by such statements, including changes from
anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships
with customers, access to capital, difficulties in developing and marketing new products, marketing existing products,
customer acceptance of existing and new products, and other factors.
Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are
reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation
to update the forward-looking statements contained in this presentation.
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At a Glance – Nova LifeStyle
• Founded in 1996 as a result of a merger between Nova, and
Diamond Sofa
• IPO in 2011
• Rapidly growing designer, manufacturer and distributor of
branded and third party modern LifeStyle furniture
• Industry innovator and niche leader in the U.S. and abroad, ecommerce presence in the U.S. and China.
• Quality OEM manufacturer, with a growing e-commerce
presence in the U.S. and China.
At a Glance
Ticker
(NASDAQ: NVFY)
Stock Price *
$2.50
Shares Outstanding
24.0 million
Market Cap *
$60.1 million
Avg. Daily Trading Volume
(90 days)
259,500
Corporate Headquarters
Commerce, CA
Employees
700
Ownership
• LifeStyle furniture brands include: Diamond Sofa, Colorful
World, Giorgio Mobili, Bright Swallow and others
Shares Outstanding
24.0 million
Insiders
a. 58%
• Products manufactured in the U.S. and Asia and marketed
worldwide
Institutions
a. 9.5%
Free Float
a. 32.5%
Top Institutional Holders
Heights Capital
Hudson bay
Vanguard Group
RBC Capital
Grace & White
SBAuer Fund
Blackrock Fund Advisors
* As of August 2015
3
Global Leadership Team
Nova LifeStyle was formed through the merge of Nova Furniture, which was founded in 1993 by Jeffrey Wong (CEO),
Sammy Ho (CFO) in China and Diamond Sofa, which was founded in 1992 by Tawny Lam (President) in the U.S.
Jeffrey Wong – CEO, Co-Founder
• 22 years of experience in the furniture industry
• Vice-Chairman, Dongguan Furniture Association
• Director, the International Furniture and Decoration (Hong
Kong) Association
• Graduated from Hong Kong Victoria Technical College
Tawny Lam - President, Chairperson of the Board of
Directors
• Joined in 2011
• CEO and co-founder in 1992 of Diamond Sofa in Commerce,
California
• Extensive experience in U.S. furniture product marketing
• Bachelor of Science in Business and Finance from California State
University, Los Angeles
Sammy Ho - CFO, Co-Founder
Mark Chapman - VP, Marketing
• 19 years of experience in the furniture industry
• Bachelor's degree from St. Mary's University
• MBA from The Chinese University of Hong Kong in 1990
• Sales Manager of Diamond Sofa since 2004
• 20 years of experience in the furniture industry
• Previously Director of Purchasing for ACE TV Rentals, Central
Rents and Day Page
• Graduated from Augustan College with a Bachelor of Science
Degree in Business Administration Management and Marketing
Michael Barton - California Sales Director
Chris Steadman - Director of Internet Sales
• 30 years experience in furniture design, owned lighting design and
• Responsible for all internet sales related transactions at Diamond
• Sales team management for Good Companies Inc. from 1984 to
• 13 years of experience at QVC: in areas of Crafts and Leisure,
manufacturer- Pacific Coast Designs from 1982 to 1991
2006
Sofa, with more than 20 years of sales experience
Cooking and Dining, Home Improvement, Home Accents and
Furnishing, Sports and Fitness
• Bachelor’s degree from Temple University
4
Investment Highlights
• Publicly-held home furnishing company with substantial exposure to both Asian and North American
markets
• Distribution channels to fit different market needs:
• B2B (Enterprise clients, wholesale)
• B2C (franchise, E-commerce platform)
• Continuous creativity: Active participant in industry conventions with new design every year
• Low valuation compared to other publicly-traded home furnishing peers
• (Trailing P/E at 3.75)
• Experienced management team
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Who is Nova LifeStyle?
• U.S. Based, Publicly-Held Home Furnishings Company
• Fully Integrated Design-To-Production Business Model: Customizable, Fast and Flexible
• Growing Customer Base: Customers in U.S., Europe and Asia
• Recurring Orders from Well-known Customers: Nebraska Furniture Mart, a Berkshire
Hathaway Company in the U.S.
• Direct Access to China Middle Class through Wholesale and Franchise Store Locations
• Product Variety and Design: NOVA Brands Cover All Aspects of Household Furniture
• Leveraging Manufacturing Capabilities in China to Deliver Globally
6
Our Brands, Products & Innovations
Delivering Modern LifeStyle Solutions to Customers
USA
Europe & UAE
Products:
• Leather upholstered furnishings
• Living room seating, sofas, loveseats, recliners, sectionals and accent chairs
• Urban beds and latex sleep mattresses
• Coffee tables and bar stools
• TV stands, display shelving and room dividers
• Diverse bedroom and dining collections
• QwiK office cabinets and storage (USA only)
• Office furniture: desk, credenzas, cabinets, shelving and storage (Europe, UAE & Asia only)
Asia
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Milestones and Key Events: 2014 - Present
Added to the
Russell
MicroCap® Index
Began trading
on the
NASDAQ
Began development of ecommerce site aimed at
the
China market
Jan
Initiated development
of Mobile App of
e-commerce site
Jun
Mar
2014
Signed agreement with Ping An Insurance
Group, #62 on Forbes Global 2000 list of
the largest companies in the world
Jul
Fulfilled initial
purchase order with
IKEA China
Aug
Sep
Secured commitment letters
from over 100 quality furniture
brands to be sold on ecommerce site
Raised $8.95m in a
registered direct placement
IKEA
Product
Line
Expansion
Oct
Dec
Jan
Feb
2015
Repeat Purchase
Orders from
Nebraska Furniture
Mart
Established partnership to open new franchise stores in
China with Ablejoy, one of China's largest franchise
operators
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Nova LifeStyle’s Annual Sales by Geography
North America
65%
N. America revenues as
a percentage of total
sales
FY 2014
46%
Sales increase in
N. America
FY 2014 vs. 2013
Europe
12%
20%
Europe revenues as a
percentage of total sales
FY 2014
Sales decrease in
Europe
FY 2014 vs. 2013
Asia
23%
14%
Asia revenues as a
percentage of total sales
FY 2014
Sales increase in
Asia
FY 2014 vs. 2013
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Sales: U.S. and Canada
Growing North American Market Need
• Furniture Today's Top 100 U.S. furniture stores posted a 7.8% increase in furniture, bedding and accessories sales in
2013
• Revenue grew to a combined $34.1 billion, up from $31.7 billion
Nova LifeStyle: US Sales and Distribution
• Wholesale to numerous stores ranked in the top 100 furniture
companies in the U.S. with both storefronts and e-commerce sales
venues
• Showrooms: Los Angeles, CA, Las Vegas, Nevada; & High Point,
North Carolina
• Key North American trade shows and conventions
• Canadian distribution through The Brick.
10
Sales: China and Other Asia Territories
China Market
• Higher profit margins through direct sales in China 100+ franchisees in China since 2010, with a future goal of 200
locations
• Chinese furniture factory orders rose 5% in June with shipments ticking up by 4% according to Furniture
Today August 29, 2014
Nova LifeStyle: China Sales and Distribution
• Profitable and fast-growing franchising model
• Strategic store placement
• Direct design and manufacturing capabilities
• Key international trade shows and conventions
• E-Commerce websites: Tmall and JD.com
Launch of Nova LifeStyle e-Commerce Site –
Only Dedicated Online Furniture Site in China
11
Sales: Europe, U.A.E. and Other Territories
European Market Trends
• According to Euromonitor International’s Aug 2014 report, e-commerce sales growth has soared by 127% in
current value terms over the past five years
• Products compliment consumer preferences for “urban contemporary”, smaller homes and apartments and trend
of loft-style open look
Nova LifeStyle: European / Other Sales and Distribution
• Strong presence in the European markets both in stores and on e-commerce
websites
• Clients are primarily major retailers
• ODM / OEM capabilities
• Urban contemporary style in high demand
12
Global Customer & Sales Channels
13
Strong Manufacturing Capability
• Fully owned 1.1 million square foot manufacturing facilities in Dongguan, China
• Annual production capacity of approximately 316,000 units
• Updated production line, which meets IKEA's stringent specifications
• 60,000 square foot warehouse that houses the QuickShip Program
• Over 700 talented, dedicated and creative staff
• Products and collections designed to appeal to consumer preferences in specific markets
• Flexible logistics, manufacturing and delivery capabilities
14
State-of-the-art Production Facilities
Woodworking
German Schelling Cutting Machines
Powder Coating
Upholstery
Board Sizing
Board Pressing
UV Automation
Warehousing and Distribution
15
Marketing Strategy
• All furniture offerings supported by sample display showrooms, brochures and online marketing
• Franchise network in China to increase brand awareness among middle and upper middle-income
consumer
• Participate in trade key exhibitions globally
• Multiple high profile advertising options to promote modern LifeStyle furniture
Nova Exhibits at the Las Vegas Market
16
Near and Long Term Growth Initiatives (2015-2016)
• Expand Partnerships and Increase Sales Contracts
• Create Innovative Designs Tailored to Each Market
• Launch Dedicated e-commerce Platform to Target the China Market
• Growth through Mergers and Acquisition
• Increase Sales of Higher-Margin Branded Products
•
Leverage e-commerce platform currently in development
•
Grow sales of high-margin “Made in U.S.A.” furnishings and latex mattress in China
•
Grow sales of modern and stylish upholstered beds with American fabric
• Expand Global Distribution
•
Further penetration of “Top 100” furniture stores in the US
•
Increase e-commerce sales in China and the U.S.
•
Increase direct sales of NOVA branded furniture via 200 franchises strategy
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Financial Snapshot – Annual Trends
Revenues ($ in mm)
$120.0
2014 Revenue and Income Growth is a
Result of Recent Investment in Sales and
Marketing Initiatives and the Acquisition
of Bright Swallow
$100.0
$80.0
$60.0
$40.0
$20.0
$2011
2012
2013
2014
Net Income ($ in mm)
Earnings per Share
$10.0
$0.5
$9.0
$0.5
$8.0
$0.4
$7.0
$0.4
$6.0
$0.3
$5.0
$0.3
$4.0
$0.2
$3.0
$0.2
$2.0
$0.1
$1.0
$0.1
$2011
2012
2013
2014
$2011
2012
2013
2014
18
Financial Snapshot – Quarterly Trends
Revenues ($ in mm)
Second Quarter 2015 Corporate and Financial Highlights:
$35.0

$30.0
Net sales were $29.2 million, an increase of 13% compared to the prior
year period.
$25.0
$20.0

$15.0
Gross profit was $5.2 million, an increase of 4% compared to the prior
year period.
$10.0
$5.0
$Jun-13
Sep-13
Dec-13 Mar-14
Jun-14
Sep-14
Dec-14 Mar-15
Jun-15

Gross margin was 18%, compared to 19% in the prior year period.

Adjusted net income*, which excludes the change in fair value of
warrant liability, increased to $1.6 million, or adjusted diluted EPS of
Adjusted Net Income ($ in mm)*
$0.07 per share, compared to $1.1 million, or adjusted diluted EPS of
$3.5
$0.06 per share, in the prior year period.
$3.0

$2.5
In April 2015, the Company completed a $4.0 million registered direct
placement of common stock.
$2.0
$1.5
$1.0
* The Company reported a change in fair value of warrant liability of ($1.7 million), which impacted net income for the
second quarter despite a 14.0% increase in operating income.
$0.5
$Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
* Net loss was $0.1 million, or $0.01 per diluted share based on 22.0 million shares outstanding, compared to net income of
$3.4 million or $0.16 per diluted share based on 20.5 million shares outstanding in the prior year period.
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Peer Data – NVFY Performance / Valuation
Full Peer List of Furniture Makers
Source: Company Filings / Bloomberg
Ticker Name
LZB
La-Z-Boy Inc
LEG
Leggett & Platt Inc
BSET
Bassett Furniture Inds
HNI
Hni Corp
MLHR Herman Miller Inc
FLXS
Flexsteel Inds
ETH
Ethan Allen Interiors Inc
STLY
Stanley Furniture Co Inc
HOFT Hooker Furniture Corp
Minimum
Average
Median
Maximum
NVFY Nova Lifestyle Inc
Comparison to Average
Price
25.08
47.7
31.89
49.28
28.48
39.74
30.59
2.97
24.42
2.97
31.13
30.59
49.28
Mkt Cap
$ 1,274
$ 6,527
$
347
$ 2,186
$ 1,704
$
296
$
886
$
44
$
264
$
44
$ 1,503
$
886
$ 6,527
2.54 $
Net Sales TTM Net Sales - 1 Yr Growth %
$
1,425.4
5.0
$
3,914.2
8.8
$
384.3
6.1
$
2,353.1
7.9
$
2,142.2
13.8
$
456.7
13.6
$
754.6
1.1
$
59.8
3.5
$
243.9
7.0
$
59.8
1.1
$
1,303.8
7.4
$
754.6
7.0
$
3,914.2
13.8
61 $
99.0
NI TTM
$ 70.8
$ 218.2
$ 16.4
$ 73.0
$ 97.4
$ 22.2
$ 37.1
$
(1.5)
$ 13.3
$
(1.5)
$ 60.8
$ 37.1
$ 218.2
25.98 $
Above
EPS EPS - 1 Yr Growth %
$ 1.35
17.1
$ 1.52
23.6
$ 1.54
83.3
$ 1.61
-2.8
$ 1.62
NA
$ 2.89
10.7
$ 1.28
-12.8
$ (0.12)
-30.2
$ 1.23
58.1
$ (0.12)
-30.2
$ 1.44
18.38
$ 1.52
13.9
$ 2.89
83.3
8.2 $ 0.40 61.5
Above
P/E
19.61
23.98
20.14
23.95
16.3
13.77
20.99
13.92
19.85
13.77
19.17
19.85
23.98
7.34
Lowest in Peer Group
20
Investment Conclusions
• Publicly-held home furnishing company
with substantial exposure to both Asian and
North American markets
• Various distribution channel to fit different
market needs: B2B (Enterprise Clients,
Wholesale) B2C (Franchise, E-commerce
Platform)
Company Showroom at 2015 Las Vegas Market
• Low valuation compared to other publiclytraded home furnishing peers (Trailing P/E
at 7.3X)
21
Contacts
NASDAQ: NVFY
Corporate Headquarters
IR Contact:
6565 E. Washington Blvd.
The Equity Group Inc.
Commerce, CA 90040 USA
Adam Prior
Tel: (323) 888-9999
Tel: (212) 836-9606
www.novalifestyle.com
Email: [email protected]
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