Ever-Glory Reports First Quarter 2020 Financial Results

NANJING, China, May 15, 2020 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") EVK, a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, reported its financial results today for the first quarter ended March 31, 2020.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first quarter, we maintained our focus on developing the retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio and enhancing our account receivables."

"During the first quarter of 2020, our retail brands continue to attract new customers and retain existing customers by focusing on design, quality and value," Mr. Kang continued. "Following the remodeling or relocation of 2 stores during 2020, we operated a nationwide network of 1,038 stores as of March 31, 2020."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in our account receivables collection. We believe the enduring strength of our wholesale business will support its long-term profitability," concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The first quarter results, are coupled with our ability to increase operating leverage. Going forward, we remain confident in the long-term prospects of our business and we will continue implementing our margin enhancement and cost control measures to further strengthen the profitability of our business."

First Quarter 2020 Financial Results 

Total sales for the first quarter of 2020 were $58.4 million, a decrease of 33.7% from $88.0 million in the first quarter of 2019. This decrease was primarily driven by a 20.7% decrease in our wholesale business and a 39.7% decrease in our retail business.

Sales for the Company's wholesale division decreased by 20.7% to $22.3 million for the first quarter of 2020, compared with $28.1 million for the first quarter of 2019. This decrease was primarily attributable to decreased sales in Mainland China, Germany, other European markets and Japan partially offset for increased sales in Hong Kong, the United States and the United Kingdom.

Sales for the Company's branded fashion apparel retail division decreased by 39.7% to $36.1 million for the first quarter of 2020, compared with $59.9 million for the first quarter of 2019. This decrease was primarily due to a decrease in same-store sales. The Company had 1,038 retail stores as of March 31, 2020, compared with 1,315 retail stores as of March 31, 2019.

Total gross profit for the first quarter of 2020 decreased by 45.4% to $16.0 million, compared with $29.4 million for the first quarter of 2019. Total gross margin decreased to 27.5% from 33.4% for the first quarter of 2019.

Gross profit for the wholesale business increased by 46.7% to $3.5 million for the first quarter of 2020, compared with $6.6 million for the first quarter of 2019. Gross margin decreased to 15.7% from 23.3% for the first quarter of 2019. 

Gross profit for the retail business decreased by 45.0% to $12.5 million for the first quarter of 2020, compared with $22.8 million for the first quarter of 2019. Gross margin was 34.8%, compared to 38.1% for the first quarter of 2019.

Selling expenses for the first quarter of 2020 decreased by 35.8% to $13.5 million, or 23.1% of total sales, compared with $21.0 million, or 23.9% of total sales for the first quarter of 2019. The decrease was attributable to the decreased sales.

General and administrative expenses for the first quarter of 2020 decreased by 23.2% to $5.8 million, or 9.9% of total sales, compared with $7.5 million, or 8.6% of total sales for the first quarter of 2019. The decrease was mainly attributable to the decreased office expenses.

(Loss) Income from operations for the first quarter of 2020 decreased by 493.0% to ($3.2) million compared with $0.8 million for the first quarter of 2019.

Net loss attributable to the Company for the first quarter of 2020 was $2.7 million compared with $0.5 million for the first quarter of 2019. Basic and diluted loss per share were $0.18 for the first quarter of 2020 compared with basic and diluted earnings per share of  $0.04 for the first quarter of 2019.

Balance Sheet

As of March 31, 2020, Ever-Glory had approximately $70.0 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $49.3 million as of March 31, 2020, and outstanding bank loans of approximately $26.1 million as of March 31, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 15, 2020 (8:00 p.m. Beijing Time on May 15, 2020). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 2134878. The conference call will also be webcast live over the Internet and can be accessed at the Company's website at http://www.everglorygroup.com.

A replay of the conference call will be available from 11:00 a.m. Eastern Time on May 15 through 11:59 p.m. Eastern Time on May 22, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 2134878.

About Ever-Glory International Group, Inc.

Based in Nanjing, China, Ever-Glory International Group, Inc. is a retailer of branded fashion apparel and a leading global apparel supply chain solution provider. Ever-Glory is the first Chinese apparel Company listed on the American Stock Exchange (now named as NYSE MKT) in July 2008 and then transferred to The NASDAQ Global Market on December 31, 2015. Ever-Glory offers apparel to woman in China under its own brands "La go go", "Velwin", "Sea To Sky" and "idole". Ever-Glory is also a leading global apparel supply chain solution provider with a focus on middle-to-high end casual wear, outerwear, and sportswear brands. Ever-Glory services a number of well-known brands and retail stores by providing a complete set of supply chain management services, including: fabric development and design, sampling, sourcing, quality control, manufacturing, logistics, customs clearance and distribution.

Forward-Looking Statements

Certain statements in this release and other written or oral statements made by or on behalf of Ever-Glory International Group, Inc. (the "Company") are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and the Company's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The forward looking statements are subject to a number of risks and uncertainties including, without limitation, market acceptance of the Company's products and offerings, development and expansion of the Company's wholesale and retail operations, the Company's continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves (including, without limitation, the results stemming from the future implementation of the Company's strategies and the revenue, net income and new retail store projections set forth herein) may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties (many of which are beyond the Company's control). These statements are based on management's current expectations and speak only as of the date of such statements. Readers should carefully review the risks and uncertainties described in the Company's latest Annual Report on Form 10-K and other documents that the Company files from time to time with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

AS OF MARCH 31, 2020 AND DECEMBER 31, 2019 (UNAUDITED)







2020





2019



ASSETS













CURRENT ASSETS













Cash and cash equivalents



$

70,036





$

48,551



Accounts receivable, net





42,265







78,053



Inventories





52,152







67,355



Advances on inventory purchases





1,248







2,495



Value added tax receivable





6,961







7,497



Other receivables and prepaid expenses





6,723







9,681



Amounts due from related parties





102







123



Total Current Assets





179,487







213,755





















NONCURRENT ASSETS

















Intangible assets, net





4,529







4,729



Property and equipment, net





26,886







28,812



Operating lease right-of-use assets





42,583







53,379



Deferred tax assets





878







996



Total Non-Current Assets





74,876







87,916



TOTAL ASSETS



$

254,363





$

301,671





















LIABILITIES AND STOCKHOLDERS' EQUITY



































CURRENT LIABILITIES

















Bank loans



$

26,104





$

29,931



Accounts payable





52,173







72,418



Accounts payable and other payables – related parties





3,889







4,811



Other payables and accrued liabilities





13,033







19,137



Value added and other taxes payable





598







1,657



Income tax payable





121







1,142



Current operating lease liabilities





34,315







44,888



Total Current Liabilities





130,233







173,984





















NONCURRENT LIABILITIES

















Non-current operating lease liabilities





8,325







8,537



TOTAL LIABILITIES





138,558







182,521





















COMMITMENTS AND CONTINGENCIES



































STOCKHOLDERS' EQUITY

















Stockholders' equity:

















Preferred stock ($0.001 par value, authorized 5,000,000 shares, no shares issued

    and outstanding)





-







-



Common stock ($0.001 par value, authorized 50,000,000 shares, 14,804,832 and

    14,801,770 shares issued and outstanding As of March 31, 2020 and December

    31, 2019, respectively)





15







15



Additional paid-in capital





3,645







3,640



Retained earnings





103,627







106,328



Statutory reserve





19,939







19,939



Accumulated other comprehensive loss





(5,770)







(4,330)



Amounts due from related party





(4,147)







(4,932)



Total equity attributable to stockholders of the Company





117,309







120,660



Noncontrolling interest





(1,504)







(1,510)



Total Equity





115,805







119,150



TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY



$

254,363





$

301,671



 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE LOSS (INCOME)

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)







2020





2019

















SALES



$

58,355





$

87,956





















COST OF SALES





42,317







58,598





















GROSS PROFIT





16,038







29,358





















OPERATING EXPENSES

















Selling expenses





13,478







21,008



General and administrative expenses





5,785







7,529



Total operating expenses





19,263







28,537





















(LOSS) INCOME FROM OPERATIONS





(3,225)







821





















OTHER INCOME (EXPENSE)

















Interest income





277







207



Interest expense





(341)







(363)



Other income (expense), net





818







(295)



Total other income (expense), net





754







(451)





















(LOSS) INCOME BEFORE INCOME TAX





(2,471)







370





















INCOME TAX EXPENSE





(227)







(825)





















NET LOSS





(2,698)







(455)



Net (income) loss attributable to the non-controlling interest





(3)







(66)



NET LOSS ATTRIBUTABLE TO THE COMPANY



$

(2,701)





$

(521)





















NET LOSS



$

(2,698)





$

(455)



Foreign currency translation gain (loss)





(1,437)







4,006



COMPREHENSIVE (LOSS) INCOME



$

(4,135)





$

3,551





















Comprehensive loss attributable to the noncontrolling interest





6







100





















COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY



$

(4,129)





$

3,651



EARNINGS (LOSS) PER SHARE:

















Basic and diluted



$

(0.18)





$

(0.04)



Weighted average number of shares outstanding Basic and diluted





14,804,832







14,800,140



 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE THREE MONTHS ENDED March 31, 2020 AND 2019 (Unaudited)













Additional





Retained

Earnings





Accumulated

other





Amounts

due from





Total

equity

attributable

to

stockholders





Non-













Common Stock





paid-in











Statutory





Comprehensive





related





of the





controlling





Total







Shares





Amount





capital





Unrestricted





reserve





loss





party





Company





Interest





equity



Balance at

  January 1, 2020





14,801,770





$

15





$

3,640





$

106,328





$

19,939





$

(4,330)





$

(4,932)





$

120,660







(1,510)





$

119,150





















































































Stock-based

  compensation





3,062







0.003







5







-







-







-







-







5















5



Net income (loss)





-







-







-







(2,701)















-







-







(2,701)







3







(2,698)



Net cash received

  (paid) to related

  party under

  counter guarantee

  agreement





-







-







-







-







-







-







785







785







-







785



Foreign currency

  translation income 

  (loss)













































(1,440)







-







(1,440)







3







(1,437)



Balance at

  March 31, 2020





14,804,832





$

15





$

3,645





$

103,627





$

19,939





$

(5,770)





$

(4,147)





$

117,309







(1,504)





$

115,805























Additional





Retained

Earnings





Accumulated

other





Amounts

due from





Total

equity

attributable

to

stockholders





Non-













Common Stock





paid-in











Statutory





Comprehensive





related





of the





controlling





Total







Shares





Amount





capital





Unrestricted





reserve





income





party





Company





Interest





equity



Balance at

  January 1, 2019





14,798,198





$

15





$

3,627





$

105,914





$

19,083





$

(3,578)





$

(10,354)





$

114,707







(1,551)





$

113,156





















































































Stock-based

  compensation





1,942







0.004







8







-







-







-







-







8















8



Net (loss) income





-







-







-







(521)







-







-







-







(521)







66







(455)



Net cash received

  (paid) to related

  party under

  counter guarantee

  agreement





-







-







-







-







-







-







1,101







1,101







-







1,101



Foreign currency

  translation income

  (loss)













































3,972







-







3,972







34







4,006



Balance at

  March 31, 2019





14,800,140





$

15





$

3,635





$

105,393





$

19,083





$

394





$

(9,253)





$

119,267







(1,451)





$

117,816



 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)









2020



2019

CASH FLOWS FROM OPERATING ACTIVITIES









Net loss



$

(2,698)



$

(455)

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













Depreciation and amortization





1,587





2,225

Gain on disposal of intangible assets





(268)





-

Loss from sale of property and equipment





102





52

Provision of bad debt allowance





278





-

Provision for obsolete inventories





4,204





1,824

Deferred income tax





104





(145)

Stock-based compensation





5





8

Changes in operating assets and liabilities













Accounts receivable





34,906





31,027

Inventories





10,303





10,557

Value added tax receivable





210





1,406

Other receivables and prepaid expenses





364





3,975

Advances on inventory purchases





2,855





490

Amounts due from related parties





142





103

Accounts payable





(19,864)





(26,505)

Accounts payable and other payables- related parties





(1,038)





(741)

Other payables and accrued liabilities





(5,587)





(9,565)

Value added and other taxes payable





(31)





(2,788)

Income tax payable





(1,019)





(327)

Net cash provided by operating activities





24,555





11,141















CASH FLOWS FROM INVESTING ACTIVITIES













Purchase of property and equipment





(78)





(2,131)

Disposal of intangible assets





353





-

Net cash provided by (used in) investing activities





275





(2,131)















CASH FLOWS FROM FINANCING ACTIVITIES













Proceeds from bank loans





11,464





6,029

Repayment of bank loans





(14,884)





(7,408)

Repayment of counter guarantee from related party





748





3,488

Advances to related party





-





(2,163)

Net cash provided by (used in) financing activities





(2,672)





(54)















EFFECT OF EXCHANGE RATE CHANGES ON CASH





1,497





1,908















NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED

CASH





23,655





10,864















CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING

OF PERIOD





48,551





47,012















CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD



$

72,206



$

57,876















Reconciliation of cash, cash equivalents and restricted cash reported within their

consolidated balance sheets:



























Cash and Cash Equivalents





70,036





47,012

Restricted cash (booked in other receivables and prepaid expenses)





2,170





-





$

72,206



$

47,012















SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:



























Cash paid during the period for:













Interest



$

341



$

363

Income taxes



$

1,218



$

126

 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-first-quarter-2020-financial-results-301060011.html

SOURCE Ever-Glory International Group, Inc.

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