NIVS IntelliMedia Technology Group, Inc. (NYSE Amex: NIV), a consumer electronics company that designs, manufactures and sells intelligent audio and visual products and mobile phones, announced yesterday that sales for the third quarter ended September 30, 2010 were $84.5 million, an increase of $31.6 million or 59.7%, from $52.9 million in the same period last year. Net sales for the nine months ended September 30, 2010 were $236.3 million, an increase of $113.0 million or 92%, from $123.1 million in the same period last year.
Income from operations for the third quarter ended September 30, 2010 was $8.2 million, an increase of $1 million, or 13.3 %, from $7.2 million in the prior year period. For the nine month period ended September 30, 2010, the Company reported income from operations of $23.9 million, an increase of $7.4 million, or 45.3 %, from $16.4 million in the same period last year.
For the third quarter ended September 30, 2010, the Company reported net income of $6.0 million, or $0.12 per diluted share, an increase of $500 thousand, or 7.6% from $5.5 million in the same period last year. The EPS in the 2009 third quarter was $0.14 per diluted share. The decrease in the September 30, 2010 EPS can be attributed to the increased operating expense in the quarter due to the non-cash cost of amortization, stock based compensation – a new cost to the Company, and to the Company's increase in diluted shares outstanding as a result of the Company completing a common share stock offering in April of this year. For the nine months ended September 30, 2010, the Company reported net income of $17.9 million, or $0.40 per diluted share, an increase of $5.4 million, or 43.0 %, compared to $12.5 million, or $0.31 per diluted share, during the same period last year.
Mr. Tianfu Li, NIVS' Chairman and CEO, said, "We were very busy during the third quarter of this year. Among other things we completed delivery of our 3-G Android mobile phone to the World Expo. We're also awaiting approvals from both China Mobile and China Unicom as approved suppliers and if approved, we expect that such designation will further enhance the overall performance of our mobile phone business. We were also recognized by GOME Electrical Appliances Holding for contributing 12% to their top line from the sales of the NIVS computer peripheral speaker. As a result of these and other developments our sales and net income remained robust and we're confident that for the balance of the year we will achieve the financial results for which we've previously provided guidance."
The Company had an unrestricted cash balance of approximately $23.8 million as of September 30, 2010, as compared to $5.9 million as of December 31, 2009. In addition, the Company also had approximately $2.2 million in restricted cash as of September 30, 2010, as compared to $4.8 million as of December 31, 2009. The Company received $21.9 million of net proceeds from its secondary offering which went effective on April 19, 2010.
The Company had bank loans of approximately $70 million and $51.7 million, as of September 30, 2010 and December 31, 2009.
Net cash provided by operating activities was $4.2 million for the three months ended September 30, 2010, compared to net cash provided by operating activities of $ 3.4 million for the third quarter of 2009.
Accounts receivable increased to $50.0 million for the three months ended September 30, 2010, from $33.2 million at December 31, 2009, while days sales outstanding was 60 days for third quarter 2010 compared to 77 days for third quarter 2009
The Company's financial position remained consistent and strong during the third quarter as the Company's mobile phone products continued to gain acceptance and brand recognition. The Company believes that these and other established Company fundamentals will contribute to the Company's continued rapid growth in 2010.
For the remainder of 2010, the Company intends to continue its strong marketing and new product launch momentum, and will remain focused on executing the goal of becoming China's preeminent integrated consumer electronics company. The Company intends to further enhance its income statement by focusing on cutting operating costs and streamlining operating efficiencies. In addition, the Company will continue to focus on research and development and add to its product portfolio with products such as 3G mobile handsets. As demonstrated by the robust year-over-year revenue growth of its intelligent audio and visual products in the third quarter and nine-month period of 2010, and with the contribution of its mobile phone products lines, the Company believes that the integration of its solid technology, design, manufacturing, distribution, product and marketing continues to be well-received by its customers and end users.
The Company intends to sustain its strong growth across all operating segments and remains confident about the growth of the mobile phone and consumer electronics industry. Management further believes that the Company's integrated strengths should allow it to expand market share within its core market and help to capture opportunities in new markets, enabling sustained strong financial results and greater share value.
The Company expects 20-30% growth in fiscal 2010 for its traditional audio and visual products compared with fiscal 2009, with gross and net profit margin maintained at approximately 22-25% and 10-12%, respectively. The mobile phone business is a new product line for the Company and is expected to contribute $80-100 million of revenue in 2010 and with gross and net profit margins ranging from approximately 10-18% and 5-9%, respectively. The Company hopes to further enhance its margins by incorporating increased product functionality and enhanced product design into its recently acquired mobile phone manufacturing operations.
Overall, the Company anticipates that it will generate $290-340 million of revenue, with gross and net margins estimated to range between 19-21% and 7-10%, respectively, in 2010.
Despite EPS Q3 were a little bit under my expectation because of non-cash cost of amortization, stock based compensation (this is non-recurring). Non-GAAP was $0.16 so in fact is was better than expected. I think the company prospects look promising. A key driver will be the mobile phone business which really can grow in a cash cow for the company. From a valuation standpoint this company is a clear BUY.