Financial Highlights for the Fourth Quarter 2015:
- Fourth quarter 2015 sales were $8.4 million compared with $7.2 million in the year-ago fourth quarter, an increase of 16%.
- Loose jewel sales were $4.7 million for the quarter, compared with $2.9 million for the year-ago fourth quarter, an increase of 60%.
- Finished jewelry sales were $3.7 million for the quarter, compared with $4.3 million in the year-ago fourth quarter, a 13% decrease.
- The Company's wholesale business revenue increased 4% to $5.5 million, or 66% of sales for the quarter compared with $5.3 million, or 74% of sales in the year-ago fourth quarter.
- The Company's direct-to-consumer e-commerce business, Moissanite.com, increased 41% to $1.9 million, or 22% of sales from the year-ago fourth quarter when it was $1.3 million, or 18% of sales.
- The Company's former direct-to-consumer home party business, Lulu Avenue ®, increased 78% for the quarter to $1.0 million or 12% of sales, compared with $0.6 million or 8% of sales in the fourth quarter of 2014.
- Operating expenses were $4.9 million for the fourth quarter of 2015, compared with $4.2 million in the year-ago fourth quarter.
- Net loss for the fourth quarter was $1.9 million, or $0.09 per share, compared with a net loss of $2.8 million, or $0.14 per share, in the year-ago fourth quarter.
- Sales for the year ended December 31, 2015 were $30.8 million compared with $25.6 million in the year-ago period, an increase of 20%.
- Loose jewel sales were $15.1 million for the year compared with $12.9 million for the year-ago period, an increase of 17%.
- Finished jewelry sales were $15.7 million for the year, compared with $12.7 million in 2014, a 23% increase.
- The Company's wholesale business revenue totaled $20.3 million, or 66% of sales for the year, compared with $20.8 million, or 81% of sales for the year-ago period.
- The Company's direct-to-consumer e-commerce business, Moissanite.com, had revenue of $5.4 million, or 18% of sales for the year, compared with revenue of $3.4 million, or 13% of sales a year ago.
- Lulu Avenue ®, the Company's former direct-to-consumer home party business, had revenue of $5.07 million, or 16% of sales for the year, compared with $1.5 million, or 6% of sales a year ago.
- Operating expenses were $19.8 million for 2015 compared with $16.7 million a year ago.
- Net loss for the year was $9.6 million, or $0.47 per share, compared with a net loss of $13.1 million, or $0.65 per share last year.
Investor Conference CallShareholders and other interested parties may participate in the upcoming investor conference call by dialing 877-270-2148 (international/local participants dial 412-902-6510), and asking to be connected to the "Charles & Colvard, Ltd. Conference Call" a few minutes before 5:00 p.m. EST on March 8, 2016. The call will also be broadcast live on the Internet at https://www.webcaster4.com/Webcast/Page/346/13666. The conference call will be archived for review on the Internet at https://www.webcaster4.com/Webcast/Page/346/13666 and on the Company's website at http://www.charlesandcolvard.com/investor-relations/events until March 15, 2016. About Charles & Colvard, Ltd. Charles & Colvard, Ltd., based in the Research Triangle Park area of North Carolina, is the world's only source of Forever Classic™, Forever Brilliant ®, and Forever One™ moissanite gemstones, which surpass the fire and brilliance of diamonds. Moissanite is unique, available in three color grades (colorless, near-colorless, and faint color), and created from silicon carbide (SiC) crystals for fine jewelry. Charles & Colvard Created Moissanite ® is sold with a Certificate of Authenticity and Limited Lifetime Warranty to wholesale distributors, manufacturers, retailers, TV shopping networks, and designers as loose stones or set in a wide variety of quality metal setting options. Charles & Colvard, Ltd. also sells direct to consumers through its wholly owned operating subsidiary, Moissanite.com, LLC. Charles & Colvard, Ltd.'s common stock is listed on the NASDAQ Global Select Market under the symbol "CTHR." For more information, please visit www.charlesandcolvard.com . Forward-Looking Statement This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations regarding our future and projections relating to products, sales, revenues, and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations, and contentions and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "continue," and similar words, although some forward-looking statements are expressed differently.
All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You should be aware that although the forward-looking statements included herein represent management's current judgment and expectations, our actual results may differ materially from those projected, stated, or implied in these forward-looking statements as a result of many factors including, but not limited to, our dependence on consumer acceptance and growth of sales of our products resulting from our strategic initiatives; dependence on a limited number of customers; the impact of the execution of our business plans on our liquidity; our ability to fulfill orders on a timely basis; the financial condition of our major customers and their willingness and ability to market our products; dependence on Cree, Inc. as the sole supplier of the raw material; intense competition in the worldwide jewelry industry; our ability to successfully manage the transition of our President and Chief Executive Officer and other organizational change; our ability to meet the continued listing requirements of The Nasdaq Stock Market LLC; our current wholesale customers' potential perception of us as a competitor in the finished jewelry business; quality control challenges from time to time that can result in lost revenue and harm to our brands and reputation; general economic and market conditions, including the current economic environment; risks of conducting business in foreign countries; the pricing of precious metals, which is beyond our control; the potential impact of seasonality on our business; our ability to protect our intellectual property; the risk of a failure of our information technology infrastructure to protect confidential information and prevent security breaches; our ability to maintain and utilize e-commerce platforms for our sales strategy; the failure to evaluate and integrate strategic opportunities; possible adverse effects of governmental regulation and oversight; and the impact of anti-takeover provisions included in our charter documents, in addition to the other risks and uncertainties described in our filings with the Securities and Exchange Commission, or the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and subsequent reports filed with the SEC. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by the federal securities laws, and you are urged to review and consider disclosures that we make in the reports that we file with the SEC that discuss other factors relevant to our business.
-Financial Tables Follow-
|CHARLES & COLVARD, LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)|
|Three Months Ended December 31,||Year Ended December 31,|
|Costs and expenses:|
|Cost of goods sold||5,356,476||5,756,509||20,552,707||18,013,335|
|Sales and marketing||2,862,437||2,967,020||12,362,511||9,853,671|
|General and administrative||2,041,055||1,246,005||7,384,119||6,789,274|
|Research and development||2,340||2,706||17,795||18,070|
|Loss on abandonment of assets||-||8,322||-||10,523|
|Total costs and expenses||10,262,308||9,980,562||40,317,132||34,684,873|
|Loss from operations||(1,867,191||)||(2,771,007||)||(9,550,015||)||(9,044,224||)|
|Other income (expense):|
|Gain on sale of long-term assets||-||-||125||-|
|Total other expense||(9,558||)||14||(10,223||)||(836|
|Loss before income taxes||(1,876,749||)||(2,770,993||)||(9,560,238||)||(9,045,060||)|
|Income tax net expense||(3,242||)||(3,093||)||(12,821||)||(4,051,963||)|
|Net loss per common share:|
|Weighted average number of shares used incomputing net loss per common share:|
|CHARLES & COLVARD, LTD. CONSOLIDATED BALANCE SHEETS (unaudited)|
|Cash and cash equivalents||$||5,274,305||$||4,007,341|
|Accounts receivable, net||3,852,651||5,510,253|
|Prepaid expenses and other assets||784,105||602,850|
|Total current assets||20,650,859||23,441,083|
|Property and equipment, net||1,615,683||1,859,355|
|Intangible assets, net||71,086||216,947|
|Total long-term assets||23,489,979||27,985,314|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Accrued cooperative advertising||58,000||220,000|
|Accrued expenses and other liabilities||1,100,187||684,577|
|Total current liabilities||4,621,335||4,190,663|
|Accrued expenses and other liabilities||710,223||809,879|
|Accrued income taxes||420,503||407,682|
|Total long-term liabilities||1,130,726||1,217,561|
|Commitments and contingencies|
|Common stock, no par value; 50,000,000 shares authorized;21,111,585 and 20,382,333 shares issued and outstanding atDecember 31, 2015 and 2014, respectively||54,240,247||53,949,001|
|Additional paid-in capital - stock-based compensation||13,280,920||11,628,503|
|Total shareholders' equity||38,388,777||46,018,173|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||44,140,838||$||51,426,397|
|CHARLES & COLVARD, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)|
|Year Ended December 31,|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net loss to net cash provided by operatingactivities:|
|Depreciation and amortization||863,353||1,107,955|
|Provision for uncollectible accounts||89,462||734,243|
|Provision for sales returns||(179,000||)||(276,000||)|
|Provision for inventory reserves||436,000||295,000|
|Provision for deferred income taxes||-||4,039,723|
|Loss on abandonment of assets||-||10,523|
|Gain on sale of long-term assets||(125||)||-|
|Changes in assets and liabilities:|
|Prepaid expenses and other assets, net||(104,821||)||116,459|
|Accrued cooperative advertising||(162,000||)||32,000|
|Accrued income taxes||12,821||12,240|
|Accrued expenses and other liabilities||315,954||302,110|
|Net cash provided by operating activities||1,567,893||2,034,997|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Purchases of property and equipment||(428,128||)||(545,543||)|
|Patent, license rights, and trademark costs||(45,742||)||(55,518||)|
|Proceeds from sale of assets||175||-|
|Net cash used in investing activities||(473,695||)||(601,061||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Stock option exercises||172,766||-|
|Net cash provided by financing activities||172,766||-|
|NET INCREASE IN CASH AND CASH EQUIVALENTS||1,266,964||1,433,936|
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD||4,007,341||2,573,405|
|CASH AND CASH EQUIVALENTS, END OF PERIOD||$||5,274,305||$||4,007,341|
|Supplemental disclosure of cash flow information:|
|Cash paid during the year for interest||$||10,359||$||901|
|Cash paid during the year for income taxes||$||-||$||-|
|Non-cash investing activities:|
|Tenant improvement allowance received under operating lease||$||-||$||550,160|