Market Overview

Ever-Glory Reports Second Quarter 2018 Financial Results

Share:

Ever-Glory Reports Second Quarter 2018 Financial Results

PR Newswire

NANJING, China, Aug. 14, 2018 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NASDAQ:EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, today reported its financial results for the second quarter ended June 30, 2018.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the second quarter, we maintained our focus on developing retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio. Notably, we achieved year-over-year improvement in gross margins for both of our retail and wholesale businesses, as well as a year-over-year revenue increase of 17.6% for our wholesale business."

"During the second quarter of 2018, we remained our focus on driving retail business through store network optimization strategy, as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 69 stores during the second quarter, we operated a nationwide network of 1,417 stores as of June 30, 2018."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in the light of weak micro environment. Our wholesale gross margin continued to improve on a year-over-year basis. Going forward, we'll implement a stricter client evaluation system and remain diligent in 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, "We're delighted to see that our operating efficiency continued to improve in the second quarter. Overall gross margin increased by 60 basis points, with wholesale gross margin increasing by 50 basis points, compared with the same period of last year. With strengthened fundamentals and improved operating leverage of our overall business, we are excited about the opportunities that lay before us and we look forward to updating you with our progress next quarter."

Second Quarter 2018 Financial Results

Total sales for the second quarter of 2018 were $88.5 million, an increase of 11.0% from $79.8 million in the second quarter of 2017. This increase was primarily driven by a 17.6% increase in our wholesale business and an 6.3% increase in retail business.

Sales for the Company's branded fashion apparel retail division increased by 6.3% to $49.7 million for the second quarter of 2018, compared with $46.8 million for the second quarter of 2017. This increase was primarily due to an increase in same-store sales. The Company had 1,417 retail stores as of June 30, 2018, compared with 1,362 retail stores as of June 30, 2017.

Sales for the Company's wholesale division increased by 17.6% to $38.8 million for the second quarter of 2018, compared with $33.0 million for the second quarter of 2017. This increase was primarily attributable to an increase in sales in Mainland China, United Kingdom, United States and Japan, partially offset by a decrease in sales in Hong Kong, Germany and Europe other areas.

Total gross profit for the second quarter of 2018 increased by 12.7% to $34.5 million, compared with $30.7 million for the second quarter of 2017. Total gross margin increased to 39.0% from 38.4% for the second quarter of 2017.

Gross profit for the retail business increased by 10.6% to $27.4 million for the second quarter of 2018, compared with $24.8 million for the second quarter of 2017. Gross margin was 55.1%, compared to 52.9% for the second quarter of 2017.

Gross profit for the wholesale business increased by 21.3% to $7.2 million for the second quarter of 2018, compared with $5.9 million for the second quarter of 2017. Gross margin increased to 18.4% from 17.9% for the second quarter of 2017.

Selling expenses for the second quarter of 2018 increased by 11.7% to $22.6 million, or 25.5% of total sales, compared with $20.2 million, or 25.3% of total sales for the second quarter of 2017. The increase was attributable to the increased store decoration and marketing expenses.

General and administrative expenses for the second quarter of 2018 increased by 18.0% to $8.8 million, or 10.0% of total sales, compared with $7.5 million, or 9.4% of total sales for the second quarter of 2017. The increase was mainly attributable to the increased average salaries.

Income from operations for the second quarter of 2018 increased by 6.1% to $3.1 million compared with $2.9 million for the second quarter of 2017.

Net income attributable to the Company for the second quarter of 2018 was $2.8 million compared with 2.7 million for the second quarter of 2017. Basic and diluted earnings per share were $0.19 for the second quarter of 2018 compared with basic and diluted earnings per share of $0.18 for the second quarter of 2017.

Balance Sheet

As of June 30, 2018, Ever-Glory had approximately $36.4 million of cash and cash equivalents, compared with approximately $62.9 million as of December 31, 2017. Ever-Glory had working capital of approximately $65.7 million as of June 30, 2018, and outstanding bank loans of approximately $34.8 million as of June 30, 2018.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2018 (8:00 p.m. Beijing Time on August 14, 2018). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 3000953. 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 3000953.

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.

For investor and media inquiries, please contact:

Ever-Glory International Group
Dandan Song
Tel: +86-25-5209-6817
E-Mail: sdd@ever-glory.com.cn

 

 

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, 2018 (UNAUDITED) AND DECEMBER 31, 2017



2018


2017

ASSETS




CURRENT ASSETS




Cash and cash equivalents

$

36,439


$

62,876

Accounts receivable, net


61,072



81,859

Inventories


64,418



56,182

Value added tax receivable


3,037



3,757

Other receivables and prepaid expenses


13,771



5,139

Advances on inventory purchases


9,858



3,028

Amounts due from related parties


-



265

Total Current Assets


188,595



213,106







INTANGIBLE ASSETS


6,290



5,995

PROPERTY AND EQUIPMENT, NET


26,305



25,891

TOTAL ASSETS

$

221,190


$

244,992







LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES






Bank loans

$

34,768


$

37,730

Accounts payable


58,745



73,788

Accounts payable and other payables - related parties


4,448



4,675

Other payables and accrued liabilities


23,440



16,454

Derivative financial instruments


469



-

Value added and other taxes payable


245



6,052

Income tax payable


777



1,712

Total Current Liabilities


122,892



140,411







NONCURRENT LIABILITIES






Deferred tax liabilities


1,039



1,883

TOTAL LIABILITIES


123,931



142,294







COMMITMENTS AND CONTINGENCIES












STOCKHOLDERS' EQUITY






Stockholders' equity:






  Common stock $0.001 par value, authorized 50,000,000 shares, 14,795,992 and
     14,795,992 shares issued and outstanding As of June 30, 2018 and December
     31, 2017, respectively)


15



15

Additional paid-in capital


3,620



3,620

Retained earnings


98,786



95,195

Statutory reserve


17,794



17,794

Accumulated other comprehensive income


(48)



2,585

Amounts due from related party


(21,589)



(15,449)

Total equity attributable to stockholders of the Company


98,578



103,760

Noncontrolling interest


(1,319)



(1,062)

Total Equity


97,259



102,698

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

221,190


$

244,992

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME 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, 2018 AND 2017 (UNAUDITED)



Three months ended


Six months ended


June 30,


June 30,


2018


2017


2018


2017

NET SALES

$

88,541


$

79,771


$

181,326


$

164,891

COST OF SALES


53,999



49,121



115,439



105,732













GROSS PROFIT


34,542



30,650



65,887



59,159













OPERATING EXPENSES












Selling expenses


22,590



20,223



44,817



39,968

General and administrative expenses


8,823



7,479



16,496



14,734

Total Operating Expenses


31,413



27,702



61,313



54,702













INCOME FROM OPERATIONS


3,129



2,948



4,574



4,457













OTHER INCOME (EXPENSES)












Interest income


370



282



696



539

Interest expense


(360)



(318)



(924)



(645)

Other income


865



523



1,001



1,100

Total Other Income, Net


875



487



773



994













INCOME BEFORE INCOME TAX EXPENSE


4,004



3,435



5,347



5,451

Income tax expense


(1,285)



(833)



(2,041)



(2,050)













NET INCOME


2,719



2,602



3,306



3,401













Net loss attributable to the non-controlling interest


57



86



285



261

NET INCOME ATTRIBUTABLE TO THE
COMPANY


2,776



2,688



3,591



3,662













NET INCOME

$

2,719


$

2,602


$

3,306


$

3,401













Foreign currency translation (loss) gain


(6,091)



1,063



(2,068)



1,522

Unrealized gain (loss) of derivative contracts
designated as cash flow hedge


(469)



-



(469)



-

COMPREHENSIVE INCOME (LOSS)


(3,841)



3,665



769



4,923













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


(13)



98



309



278

COMPREHENSIVE INCOME (LOSS)
     ATTRIBUTABLE TO THE COMPANY

$

(3,854)


$

3,763


$

1,078


$

5,201













EARNINGS PER SHARE ATTRIBUTABLE TO
     THE COMPANY'S STOCKHOLDERS












Basic and diluted

$

0.19


$

0.18


$

0.24


$

0.25

Weighted average number of shares outstanding
     Basic and diluted


14,795,992



14,792,836



14,795,992



14,791,240

 

 

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, 2018 AND 2017 (UNAUDITED)



2018


2017

CASH FLOWS FROM OPERATING ACTIVITIES




Net income

$

3,306


$

3,401

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






Depreciation and amortization


4,903



3,481

Loss from sale of property and equipment


6



5

Provision of bad debt allowance


-



688

Provision for obsolete inventories


1,626



4,105

Deferred income tax


(843)



(1,744)

Stock-based compensation


-



10

Changes in operating assets and liabilities






Accounts receivable


20,150



13,865

Inventories


(10,873)



(11,750)

Value added tax receivable


681



(1,446)

Other receivables and prepaid expenses


(8,942)



(673)

Advances on inventory purchases


(7,145)



(2,684)

Amounts due from related parties


1,117



(161)

Accounts payable


(14,296)



(7,542)

Accounts payable and other payables- related parties


(1,485)



(818)

Other payables and accrued liabilities


8,006



(1,353)

Value added and other taxes payable


(5,924)



(4,048)

Income tax payable


(942)



(753)

Net cash used in operating activities


(10,655)



(7,417)







CASH FLOWS FROM INVESTING ACTIVITIES






Purchases of property and equipment


(6,295)



(2,220)

Net Cash (used in) provided by investing activities


(6,295)



(2,220)







CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from bank loans


28,111



25,664

Repayment of bank loans


(30,533)



(17,821)

Repayment of loans from related party


2,556



482

Advances to related party


(8,734)



(6,433)

Net cash used in financing activities


(8,600)



1,892







EFFECT OF EXCHANGE RATE CHANGES ON CASH


(887)



310







NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(26,437)



(7,435)







CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


62,876



45,288







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

36,439


$

37,853







SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:












Cash paid during the period for:












Interest

$

924


$

645

Income taxes

$

3,016


$

3,120

 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-second-quarter-2018-financial-results-300696642.html

SOURCE Ever-Glory International Group, Inc.

View Comments and Join the Discussion!