SSLJ.com Limited Reports Fiscal Year 2017 Financial Results

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SSLJ.com Limited Reports Fiscal Year 2017 Financial Results

PR Newswire

WUHAN, China, April 17, 2018 /PRNewswire/ -- SSLJ.com Limited SSLJ (the "Company" or SSLJ), a vertically integrated O2O home decoration service and product provider in China, today announced its financial results for fiscal year ended December 31, 2017.

Mr. Wei Zheng, Chairman and Chief Executive Officer of SSLJ commented, "We are pleased to report strong financial results for the fiscal year ended December 31, 2017. The previous year was a transformative period for SSLJ as we expanded our operations throughout China and added new revenue segments. In 2016, 91% of our home improving and furnishing products revenue came from our Wuhan, Shenzen, and Shanghai offices, as compared to 63% in 2017 as we strengthened our sales teams in all branches throughout mainland China. Further, we started generating revenues from two additional segments, advertising income from merchants and sales of smart home products and materials as we continue to develop our platform. Accounting for the revenue from our home improvement and furnishing projects, as well as the two new revenue segments, SSLJ saw an impressive 201% increase in revenue and a 133% increase in gross profit from the previous year."

Mr. Zheng added, "We have achieved substantial accomplishments in 2017 to expand the influence of our brand, develop our strategy, and integrate smart technology into our service offerings. Overall, we achieved strong operating momentum in the 2017 fiscal year which we hope will continue. We believe that with the launch of our new smart home services and associated online store, and our increased marketing efforts in 2017 including an endorsement agreement with celebrity and online marketing campaigns on third party websites and search engines, we have laid down a solid foundation for growth in 2018. The following events also complement the aforementioned efforts, where we completed our IPO in two closings, on  January 31, 2018 and February 2, 2018, and entered into new cooperation agreements with key partners including JD.com, the largest e-commerce company and retailer in China, Hubei Rural Credit Cooperatives, the largest credit union in Hubei Province, and Tianmen Han Da Tech Co., Ltd., a leading construction and e-commerce platform company in China, as disclosed in previous press releases. Looking ahead, we will continue our mission to develop an optimal experience for our potential customers looking to decorate or redecorate their living spaces."

Fiscal Year 2017 Financial Highlights  



For the Years Ended December 31

($ millions, except per share data)

2017



2016



% Change

Revenue

16.32



5.42



201.1%

Home improving and furnishing projects

10.49



5.42



93.5%

Sales of smart home products and materials

3.91



-



NM

Advertising

1.92



-



NM

Gross profit

1.41



0.61



133.2%

Gross margin

8.7%



11.2%



-2.5%

Income (loss) from operations

-23.54



-12.82



NM

Operating margin

-144%



-236%



NM

Net income (loss) attributable to SSLJ.com

-23.72



-13.18



NM

Earnings (loss) per share

-0.59



-0.32



NM



  • Revenues increased by 201.1% to $16.32 million for the fiscal year ended December 31, 2017 from $5.42 million for the same period of last year, mainly due to increase in contract revenues of home improving and furnishing projects in terms of number of contracts completed and average revenue per contract; and new sales of smart home products and materials as well as advertising services.
  • Gross profit increased by 133.2% to $1.41 million for the fiscal year ended December 31, 2017 from $0.61 million for the same period of last year. Gross margin decreased by 2.5 percentage points to 8.7% from 11.2% for the same period of last year, mainly due to lower margin in home improvement and furnishing projects as we offered more incentives to our subcontractors in the first half of 2017.
  • Net losses attributable to SSLJ were $23.72 million or $0.59 per basic and diluted share, and $13.18 million or $0.32 per basic and diluted share for the fiscal year ended December 31, 2017 and 2016, respectively. The net loss reflects the significant operational costs incurred due to rapid expansion including additional rent paid by new branches and expenses associated with setting up additional sales teams. During the year ended December 31, 2017, a net loss incurred mainly due to significant efforts devoted to advertising activities in the second quarter of 2017 to promote our home furnishing service together with increased effort in building up the research and development department so as to develop more smart home products to widen our products range which are sold through online stores and distributors.

Fiscal Year 2017 Financial Results

Revenues

Revenues for the fiscal year ended December 31, 2017 increased by $10.90 million, or 201.1%, to $16.32 million from $5.42 million for the same period of last year, mainly due to increase in contract revenues of home improving and furnishing projects and new sales of smart home products and materials as well as advertising services.



For the Years Ended December 31







2017



2016



Y/Y Change

($ millions)

Revenues



% of

Total



Revenues



% of

Total



Amount



% of

Change

Home improving and furnishing projects

10.49



64.3%



5.42



100%



5.07



93.5%

Sales of smart home products and materials

3.91



23.9%



-



0%



3.91



NM

Advertising

1.92



11.8%



-



0%



1.92



NM

Total

16.32



100%



5.42



100%



10.90



201.1%

Revenue from home improving and furnishing projects increased by $5.07 million, or 93.5%, to $10.49 million for the fiscal year ended December 31, 2017 from $5.42 million for the same period of last year, mainly due to (i) more projects were completed in fiscal 2017; and (ii) increase in average revenue per contract.

Prior to June 2017, the Company was solely in the business of providing home improvement and home furnishing services and starting from June 2017, the Company started selling smart home products and materials as well as provides advertising service to merchants. Revenues from sales of smart home products and materials as well as advertising services were $3.91 million and $1.92 million, respectively, for the fiscal year ended December 31, 2017.

Cost of sales

Total cost of sales increased by $10.09 million, or 209.3%, to $14.91 million for the fiscal year ended December 31, 2017 from $4.82 million for the same period of last year, mainly due to the significant expansion of business in 2017. Cost of revenues of home improving and furnishing projects increased by $4.79 million, or 99.4%, to $9.61 million for the fiscal year ended December 31, 2017 from $4.82 million for the same period of last year, mainly due to more contracts being completed in fiscal 2017 compared to last year. Cost of smart home products and materials as well as advertising services were $3.40 million and $1.90 million for the fiscal year ended December 31, 2017.

Gross profit and Gross Margin

Gross profit increased by $0.81 million, or 133.2%, to $1.41 million for the fiscal year ended December 31, 2017 from $0.61 million for the same period of last year. Overall gross margin decreased by 2.5 percentage points to 8.7% for the fiscal year ended December 31, 2017, compared to 11.2% for the same period of last year, due to lower margin in home improvement and furnishing projects as we offered more incentives to our subcontractors in the first half of 2017.

Gross margin for home improving and furnishing projects was 8.4% for the fiscal year ended December 31, 2017, compared to 11.2% for the same period of last year. Gross margins for smart home products and materials as well as advertising services were 13.1% and 1.3%, respectively, for the fiscal year ended December 31, 2017.

Operating expense

General and administrative expenses increased by $2.25 million, or 95.3%, to $4.61 million for the fiscal year ended December 31, 2017 from $2.36 million for the same period of last year. The increase in general and administrative expenses was primarily attributable to significant business expansion, including opening new branches and expanding operations of existing branches. In fiscal 2016, 8 branches were opened with 4 branches just in a trial operating period starting in the second half of fiscal 2016, while there were 9 operating branches in fiscal 2017. As a result, the associated salaries and benefits, rental expenses, office expenses, recruitment expenses and depreciation almost doubled from last year.

Selling expenses increased by $8.56 million, or 81.2%, to $19.10 million for the fiscal year ended December 31, 2017 from $10.54 million for the same period of last year, primarily due to significant business expansion starting from the second half of 2016, in connection with which, more new branches and more showrooms were opened, intense advertising activities were conducted, and more sales personnel were hired. More showrooms and sales teams were set up to expand the home improvement service sector.

Research and development expenses increased by $0.73 million, or 140.4%, to $1.25 million for the fiscal year ended December 31, 2017 from $0.52 million for the same period of last year. Our research and development department was set up in the second half of fiscal 2016 and is mainly engaged in research and development activities on improvement of our mobile applications, software systems and development of new smart home products.  Less research and development expense in fiscal 2016 was due to limited operating period.

Loss from operations

Loss from operations was $23.54 million for the fiscal year ended December 31, 2017, compared to $12.82 million for the same period of last year.

Net loss

Net losses were $23.72 million and $13.18 for the fiscal year ended December 31, 2017 and 2016, respectively. After the taking into account of the non-controlling interests, net losses attributable to SSLJ were $23.72 million or $0.59 per basic and diluted share, and $13.18 or $0.32 per basic and diluted share for the fiscal year ended December 31, 2017 and 2016, respectively. The net loss reflects the significant operational costs incurred due to rapid expansion including additional rent paid by new branches and expenses associated with setting up additional sales teams. During the year ended December 31, 2017, a net loss incurred mainly due to significant efforts devoted to advertising activities in the second quarter of 2017 to promote our home furnishing service together with increased effort in building up the research and development department so as to develop more smart home products to widen our products range which are sold through online stores and distributors.

Financial Condition

As of December 31, 2017, the Company had cash and cash equivalents of $1.01 million, compared to $0.08 million as of December 31, 2016. Net cash used in operating activities was $22.04 million for the fiscal year ended December 31, 2017 which was primarily attributable to a net loss of approximately $23.7 million, compared to $13.18 million for the same period of last year. Net cash used in investing activities was $3.26 million for the fiscal year ended December 31, 2017 which was primarily attributable to $2.6 million spending on leasehold improvements for the office building and new branches, compared to $6.19 million for the same period of last year. Net cash provided by financing activities was $25.83 million for the fiscal year ended December 31, 2017, compared $15.61 million for the same period of last year.  The increase in mainly due to capital contribution from shareholders in fiscal 2017.

Recent Updates

On February 22, 2018, the Company announced that it has entered into a strategic cooperation agreement with Tianmen Han Da Technology Co., Ltd. ("Han Da"), a leading construction and e-commerce platform company in China, on February 22, 2018 (the "Effective Date"). Han Da also awarded the Company a RMB110 million (approximately US$17.3 million) contract for the decoration design and construction of Han Da's Tianmen commercial project. Pursuant to this strategic cooperation agreement, SSLJ is now the featured contractor to handle the decoration design and construction of Han Da's projects including the Tianmen commercial project. The total construction and decoration area of the Tianmen commercial project of up to 110,000 square meters includes 724 luxury residential units, 30 ground floor stores as well as an 8,000-square-meter-large Agricultural Products Exhibition Center. The Tianmen commercial project is tentatively scheduled to commence prior to June 30, 2018.

On February 12, 2018, the Company announced that it has entered into a strategic cooperation framework agreement with Hubei Rural Credit Cooperatives ("HBRCC"). HBRCC is the largest federal credit union located in the Hubei province of China. HBRCC is responsible for establishing financing platforms to enhance cooperation between parties in investment and financing to support business development and improve both parties' overall competitiveness. It is comprised of 68 individual credit unions and has more than 27,000 employees, 70 million accounts, and 2,103 outlets. HBRCC has more than 30 million customers, it has extended loans to over 3 million farmers, and it provides clearing and settlement services to around 70% of the rural areas in the province.

On February 6, 2018, the Company announced that it has entered into a strategic cooperation agreement with JD.com JD ("JD"), the largest e-commerce company and largest retailer in China, through JD's subsidiary Beijing JD Century Trading Co., Ltd.

On February 5, 2018, the Company announced that its Class A ordinary shares would commence trading on The Nasdaq Capital Market on February 5, 2018 under the ticker symbol "SSLJ." To celebrate the Company's Nasdaq listing, the Company  participated in the Opening Bell Ceremony at the Nasdaq MarketSite at Times Square in New York City on February 5, 2018.

In two closings, on January 31, 2018 and February 2, 2018, the Company completed its initial public offering ("IPO") of

4,000,000 of its Class A ordinary shares at $5 per share for a total of $20,000,000 in gross proceeds before expenses and

underwriting commissions. The Company's Class A ordinary shares began trading on February 5, 2018 on the NASDAQ Capital Market under the ticker symbol "SSLJ".

About SSLJ.com Limited

SSLJ.com Limited is a pioneer in the vertically integrated O2O home decoration service and product market with one of the largest market shares in China. The Company provides customers with a convenient, full-service, one-stop solution for their homes' interior decoration and improvement needs by offering consulting, design, construction, and furnishing services as well as modern, high-quality and high-tech products. The Company has 9 branch companies and 12 sales offices in 10 cities, which are Beijing, Shanghai, Shenzhen, Wuhan, Suzhou, Hefei, Zhengzhou, Tianjin, Chengdu, Xi'an. For more information, please visit http://www.sslj.com/

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results.

For more information, please contact:

Company Contact:

Ms. Wing Chuen Rhoda Lau, CFO

SSLJ.com Limited

Phone: +8627-8366-8638

Email: ir@sslj.com

Investor Contact:

Ms. Tina Xiao, President

Ascent Investor Relations LLC

Phone: +1-917-609-0333

Email: tina.xiao@ascent-ir.com

SSLJ.COM LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



December 31, 2017



December 31, 2016

ASSETS











CURRENT ASSETS:











Cash

$

1,007,269



$

76,048

Accounts receivable, net



367,935





89,587

Inventories



2,375,607





3,043,242

Advances to suppliers



781,321





630,369

Prepaid rent



915,990





595,116

Other receivables



559,226





191,647

Short-term deposits



116,855





150,131

Refundable value added tax credits



966,310





-

Other current assets



747,248





111,483

TOTAL CURRENT ASSETS



7,837,761





4,887,623













Property and equipment at cost, net of accumulated depreciation



11,099,501





8,666,441

Long-term deposits



496,098





653,401

Other long-term assets



16,915





118,138













TOTAL ASSETS

$

19,450,275



$

14,325,603













LIABILITIES AND SHAREHOLDERS' EQUITY























CURRENT LIABILITIES:











Accounts payable

$

2,352,077



$

922,260

Advance from customers



37,141





-

Advance from customers – related party



38,422





-

Deferred revenue



4,880,481





5,081,609

Taxes payable



99,673





10,062

Deferred rent



76,492





38,108

Accrued expenses and other current liabilities



1,754,773





1,084,282

TOTAL CURRENT LIABILITIES



9,239,059





7,136,321













Long-term shareholders loan



9,981,686





6,988,023

Deferred rent



109,002





79,444













TOTAL LIABILITIES



19,329,747





14,203,788













COMMITMENTS























EQUITY:











Class A ordinary shares, $0.00125 par value; 60,000,000 shares authorized; 4,361,360 shares issued and outstanding as of December 31, 2017 and 2016 *



5,452





5,452

Class B ordinary shares, $0.00125 par value; 39,000,000 shares authorized; 35,638,640 shares issued and outstanding as of December 31, 2017 and 2016 *



44,548





44,548

Additional paid in capital



38,145,250





14,762,408

Accumulated deficit



(38,819,083)





(15,096,775)

Accumulated other comprehensive income



726,543





406,182

TOTAL SHAREHOLDERS' EQUITY



102,710





121,815

Non - controlling interest



17,818





-

TOTAL EQUITY



120,528





121,815

TOTAL LIABILITIES AND EQUITY

$

19,450,275



$

14,325,603



* Retrospectively restated for effect of stock reverse split and reclassification of ordinary shares



SSLJ.COM LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS



For The Years Ended December 31,



2017



2016



2015













REVENUE

$

16,323,597



$

5,421,288



$

444,169



















COST OF REVENUE

















Cost of product and services



14,874,211





4,731,226





367,600

Business and sales related taxes



36,035





84,031





27,805



















GROSS PROFIT



1,413,351





606,031





48,764



















OPERATING EXPENSES

















General and administrative expenses



4,610,024





2,363,945





1,261,980

Selling expenses



19,095,391





10,539,153





656,113

Research and development expenses



1,246,615





520,415





-

Total operating expenses



24,952,030





13,423,513





1,918,093



















LOSS FROM OPERATIONS



(23,538,679)





(12,817,482)





(1,869,329)



















OTHER INCOME (EXPENSE)

















Subsidy income



-





-





44,432

Other income



30,591





5,462





463

Other expense



(201,365)





(364,748)





(8,677)

Total other income (expense)



(170,774)





(359,286)





36,218



















LOSS BEFORE INCOME TAXES



(23,709,453)





(13,176,768)





(1,833,111)



















PROVISION FOR INCOME TAXES



10,496





-





16,563



















NET LOSS

$

(23,719,949)



$

(13,176,768)



$

(1,849,674)

Less: net income attributable to non - controlling interest



2,359





-





-

NET LOSS ATTRIBUTABLE TO SSLJ.COM



(23,722,308)





(13,176,768)





(1,849,674)



















OTHER COMPREHENSIVE LOSS

















Foreign currency translation gain (loss)



320,752





508,048





(94,639)

COMPREHENSIVE LOSS

$

(23,399,197)



$

(12,668,720)



$

(1,944,313)

Less: comprehensive income attributable to non - controlling interest



2,750





-





-





(23,401,947)





(12,668,720)





(1,944,313)

Losses Per Share Attributable to SSLJ.com Shareholders

















Basic and diluted

$

(0.59)



$

(0.32)



$

(0.05)



















Weighted Average Number of Shares

















Basic and diluted*



40,000,000





40,000,000





40,000,000



* Retrospectively restated for effect of stock reverse split and reclassification of ordinary shares



SSLJ.COM LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



For The Years Ended December 31,



2017



2016



2015

CASH FLOWS FROM OPERATING ACTIVITIES:

















Net loss

$

(23,719,949)



$

(13,176,768)



$

(1,849,674)



















Adjustments to reconcile net loss to net cash provided by operating activities:

















Depreciation and amortization



1,474,064





721,839





76,210

Bad debt provision



31,454





3,829





-

Provision for inventory



-





7,276





-

Changes in operating assets and liabilities:

















Accounts receivable



(274,102)





(91,407)





(6,468)

Advances to suppliers



(124,080)





(462,182)





(209,832)

Inventories



840,241





(2,942,395)





(262,247)

Other receivables, net



(377,871)





(59,118)





(94,402)

Prepaid rent



392,844





(463,125)





(169,520)

Short-term deposits



41,779





(130,668)





(28,009)

Long-term deposits



(469,409)





(510,273)





(184,214)

Refundable value added tax credits



(930,544)





-





-

Other current assets



(509,131)





66,656





(195,399)

Accounts payable



1,317,096





866,571





103,925

Advances from customers



35,766





-





-

Advances from customers- related parties



37,000





-





-

Deferred revenue



(523,166)





4,765,294





582,723

Deferred rent



57,805





122,772





107

Taxes payable



85,641





(76,245)





91,147

Accrued expenses and other current liabilities



575,370





778,042





358,949

NET CASH USED IN OPERATING ACTIVITIES



(22,039,190)





(10,579,902)





(1,786,704)



















CASH FLOWS FROM INVESTING ACTIVITIES:

















Acquisition of property and equipment



(3,255,146)





(6,076,036)





(4,035,354)

Payments for construction in progress



-





(115,897)





-

NET CASH USED IN INVESTING ACTIVITIES



(3,255,146)





(6,191,933)





(4,035,354)



















CASH FLOWS FROM FINANCING ACTIVITIES:

















Proceeds from shareholders' loan



9,626,917





4,105,698





6,573,785

Repayment of shareholders' loan



(7,182,456)





-





-

Capital contribution from shareholders



23,382,842





11,501,028





-

NET CASH PROVIDED BY FINANCING ACTIVITIES



25,827,303





15,606,726





6,573,785



















EFFECT OF EXCHANGE RATE CHANGE ON CASH



398,254





519,740





(30,451)



















NET INCREASE (DECREASE) IN CASH



931,221





(645,369)





721,276



















CASH-beginning of year



76,048





721,417





141



















CASH-end of year



1,007,269



$

76,048



$

721,417



















SUPPLEMENTAL CASH FLOW DISCLOSURES:

















Cash paid during the year for:

















Income tax

$

10,496



$

-



$

16,563

Non-cash investing activities:

















Transfer from prepayment on property and equipment to fixed assets

$

-



$

2,714,422



$

-

Cision View original content:http://www.prnewswire.com/news-releases/ssljcom-limited-reports-fiscal-year-2017-financial-results-300631647.html

SOURCE SSLJ.com Limited

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