Ever-Glory Reports Second Quarter 2020 Financial Results

NANJING, China, Aug. 14, 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 second quarter ended June 30, 2020.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the second 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 second 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 9 stores during 2020, we operated a nationwide network of 935 stores as of June 30, 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 second 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."

Second Quarter 2020 Financial Results 

Total sales for the second quarter of 2020 were $50.1 million, a decrease of 35.2% from $77.3 million in the second quarter of 2019. This decrease was primarily driven by a 30.0% decrease in our retail business and a 40.8% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 30.0% to $28.1 million for the second quarter of 2020, compared with $40.1 million for the second quarter of 2019. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 935 retail stores as of June 30, 2020, compared with 1,235 retail stores as of June 30, 2019.

Sales for the Company's wholesale division decreased by 40.8% to $22.0 million for the second quarter of 2020, compared with $37.3 million for the second quarter of 2019. This decrease was primarily attributable to a decrease in sales in Hong Kong, Germany, Europe-Other, Mainland China, United Kingdom and United States, partially offset by an increase in sales in Japan.

Total gross profit for the second quarter of 2020 decreased by 50.2% to $14.4 million, compared with $29.0 million for the second quarter of 2019. Total gross margin decreased to 28.8% from 37.5% for the second quarter of 2019.

Gross profit for the retail business decreased by 56.1% to $10.1 million for the second quarter of 2020, compared with $23.0 million for the second quarter of 2019. Gross margin was 36.2%, compared to 57.3% for the second quarter of 2019.

Gross profit for the wholesale business decreased by 27.5% to $4.4 million for the second quarter of 2020, compared with $6.0 million for the second quarter of 2019. Gross margin increased to 19.7% from 16.1% for the second quarter of 2019.

Selling expenses for the second quarter of 2020 decreased by 35.9% to $12.6 million, or 25.2% of total sales, compared with $19.7 million, or 25.5% of total sales for the second quarter of 2019. The decrease was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the second quarter of 2020 decreased by 18.6% to $6.0 million, or 11.9% of total sales, compared with $7.3 million, or 9.5% of total sales for the second quarter of 2019. The decrease was attributable to the decline in number of stores.

(Loss) Income from operations for the second quarter of 2020 decreased by 312.8% to ($4.2 million) compared with $2.0 million for the second quarter of 2019.

Net (loss) income attributable to the Company for the second quarter of 2020 was ($3.8 million) compared with $1.9 million for the second quarter of 2019. Basic and diluted (loss) earnings per share were ($0.26) for the second quarter of 2020 compared with $0.13 for the second quarter of 2019.

Balance Sheet

As of June 30, 2020, Ever-Glory had approximately $59.2 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $54.4 million as of June 30, 2020, and outstanding bank loans of approximately $40.3 million as of June 30, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2020 (8:00 p.m. Beijing Time on August 14, 2020). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 4455706. 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 August 14 through 11:59 p.m. Eastern Time on August 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 4455706.

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 JUNE 30, 2020 AND DECEMBER 31, 2019 (UNAUDITED)





2020



2019



ASSETS



















CURRENT ASSETS









Cash and cash equivalents

$

59,238



$

48,551



Restrict cash



17,716





2,204



Trading securities



825





-



Accounts receivable, net



45,766





78,053



Inventories



51,254





67,355



Advances on inventory purchases



5,726





9,681



Value added tax receivable



1,340





2,495



Other receivables and prepaid expenses



4,328





5,293



Amounts due from related parties



329





123



Total Current Assets



186,522





213,755

















NONCURRENT ASSETS













Intangible assets, net



4,499





4,729



Property and equipment, net



25,964





28,812



Operating lease right-of-use assets



34,496





53,379



Deferred tax assets



807





996



Total Non-Current Assets



65,766





87,916



TOTAL ASSETS

$

252,288



$

301,671

















LIABILITIES AND STOCKHOLDERS' EQUITY



























CURRENT LIABILITIES













Bank loans

$

40,271



$

29,931



Accounts payable



51,169





72,418



Accounts payable and other payables – related parties



4,050





4,811



Other payables and accrued liabilities



10,118





19,137



Value added and other taxes payable



-





1,657



Income tax payable



222





1,142



Current operating lease liabilities



26,309





44,888



Total Current Liabilities



132,139





173,984

















NONCURRENT LIABILITIES













Non-current operating lease liabilities



8,256





8,537



TOTAL LIABILITIES



140,395





182,521

















COMMITMENTS AND CONTINGENCIES (Note 8)



























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 June 30, 2020 and December 31,

2019, respectively)



15





15



Additional paid-in capital



3,645





3,640



Retained earnings



99,833





106,328



Statutory reserve



19,939





19,939



Accumulated other comprehensive (loss)



(6,031)





(4,330)



Amounts due from related party



(3,996)





(4,932)



Total equity attributable to stockholders of the Company



113,405





120,660



Noncontrolling interest



(1,512)





(1,510)



Total Equity



111,893





119,150



TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

252,288



$

301,671



 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

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

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)





Three months ended



Six months ended



June 30,



June 30,



2020



2019



2020



2019

NET SALES

$

50,086



$

77,316



$

108,441



$

165,272

COST OF SALES



35,641





48,330





77,958





106,928

























GROSS PROFIT



14,445





28,986





30,483





58,344

























OPERATING EXPENSES























Selling expenses



12,626





19,699





26,105





40,706

General and administrative expenses



5,971





7,337





11,755





14,867

Total Operating Expenses



18,597





27,036





37,860





55,573

























(LOSS) INCOME FROM OPERATIONS



(4,152)





1,950





(7,377)





2,771

























OTHER INCOME (EXPENSES)























Interest income



339





277





616





484

Interest expense



(566)





(408)





(907)





(771)

Other income



845





1,409





1,663





1,114

Total Other Income, Net



618





1,278





1,372





827

























(LOSS) INCOME BEFORE INCOME TAX

EXPENSE



(3,534)





3,228





(6,005)





3,598

Income tax expense



(266)





(1,455)





(493)





(2,280)

























NET (LOSS) INCOME



(3,800)





1,773





(6,498)





1,318

























Non-controlling interest



6





83





3





17

NET (LOSS) INCOME ATTRIBUTABLE TO THE

COMPANY



(3,794)





1,856





(6,495)





1,335

























NET (LOSS) INCOME

$

(3,800)



$

1,773



$

(6,498)



$

1,318

























Foreign currency translation (loss) gain



(263)





(2,453)





(1,700)





1,553

COMPREHENSIVE (LOSS) INCOME



(4,063)





(680)





(8,198)





2,871

























Comprehensive loss (income) attributable to the non-

controlling interest



8





49





2





(51)

COMPREHENSIVE (LOSS)

INCOME ATTRIBUTABLE TO THE

COMPANY

$

(4,055)



$

(631)



$

(8,196)



$

2,820

























(LOSS) EARNINGS PER SHARE

ATTRIBUTABLE TO THE COMPANY'S

STOCKHOLDERS























Basic and diluted

$

(0.26)



$

0.13



$

(0.44)



$

0.09

Weighted average number of shares outstanding

Basic and diluted



14,804,832





14,800,140





14,804,595





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 AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)







































































Total







































equity





































attributable



















Additional



Retained Earnings



Accumulated

other



Amounts

due from



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 issued for compensation

3,062



0.003



5



-



-



-



-



5







5

Net income (loss)

-



-



-



(2,701)



-



-



-



(2,701)



3



(2,698)

Net cash received

from related party

under counter

guarantee

agreement

-



-



-



-



-



-



785



785



-



785

Foreign currency translation gain

(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

Net (loss)













(3,794)















(3,794)



(6)



(3,800)

Net cash received

from related party

under counter

guarantee

agreement























151



151







151

Foreign currency translation loss





















(261)







(261)



(2)



(263)

Balance at June 30,

2020

14,804,832

$

15

$

3,645

$

99,833

$

19,939

$

(6,031)

$

(3,996)

$

113,405



(1,512)

$

111,893





































































Total







































equity





































attributable























Retained Earnings



Accumulated



Amounts



to











Common Stock



Additional

paid-in







Statutory



other

Comprehensive



due from

related



 stockholders

of the



Non-

controlling



Total



Shares



Amount



capital



Unrestricted



reserve



(loss) 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 issued for compensation

1,942



0.004



8



-



-



-



-



8







8

Net income (loss)

-



-



-



(521)



-



-



-



(521)



66



(455)

Net cash received from related party under counter guarantee agreement

-



-



-



-



-



-



1,101



1,101



-



1,101

Foreign currency translation gain





















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

Net income (loss)













1,856















1,856



(83)



1,773

Net cash received from related party under counter guarantee agreement

























1,390



1,390







1,390

Foreign currency translation loss





















(2,487)







(2,487)



34



(2,453)

Balance at June 30, 2019

14,800,140

$

15

$

3,635

$

107,249

$

19,083

$

(2,093)

$

(7,863)

$

120,026



(1,500)

$

118,526

 

 

 

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 SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)





2020



2019

CASH FLOWS FROM OPERATING ACTIVITIES







Net (loss) income

$

(6,498)



$

1,318

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











Depreciation and amortization



3,597





4,491

Loss from sale of property and equipment



189





53

Provision of bad debt allowance



969





682

Provision for obsolete inventories



3,681





1,824

Deferred income tax



71





(1,461)

Stock-based compensation



3





8

Changes in operating assets and liabilities











Accounts receivable



30,444





21,793

Inventories



11,659





1,145

Value added tax receivable



1,076





504

Other receivables and prepaid expenses



737





3,502

Advances on inventory purchases



3,845





(2,353)

Amounts due from related parties



(214)





(129)

Accounts payable



(22,522)





(25,954)

Accounts payable and other payables- related parties



(466)





58

Other payables and accrued liabilities



(7,027)





(10,789)

Value added and other taxes payable



(1,593)





(4,684)

Income tax payable



(910)





207

Net cash provided (used in) operating activities



17,041





(9,785)













CASH FLOWS FROM INVESTING ACTIVITIES











Purchases of property and equipment



(1,018)





(4,082)

Purchases of trading securities



(825)





-

Net cash used in investing activities



(1,843)





(4,082)













CASH FLOWS FROM FINANCING ACTIVITIES











Proceeds from bank loans



31,995





16,320

Repayment of bank loans



(21,173)





(19,904)

Repayment of loans from related party



4,027





8,149

Advances to related party



(3,129)





(5,454)

Net cash provided (used in) financing activities



11,720





(889)













EFFECT OF EXCHANGE RATE CHANGES ON CASH



(721)





2,270













NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND

RESTRICTED CASH



26,197





(12,486)













CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING

OF PERIOD



50,755





47,012













CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

$

76,952



$

34,526













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

consolidated balance sheets:























Cash and Cash Equivalents



59,236





47,012

Restricted cash



17,716





-



$

76,952



$

47,012













SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:























Cash paid during the period for:











Interest

$

907



$

771

Income taxes

$

493



$

2,436

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-second-quarter-2020-financial-results-301112410.html

SOURCE Ever-Glory International Group, Inc.

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