Ever-Glory Reports Fourth Quarter 2019 Financial Results

Ever-Glory Reports Fourth Quarter 2019 Financial Results

NANJING, China, March 30, 2020 /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, reported its financial results today for the fourth quarter ended December 31, 2019.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “During the fourth 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 full year of 2019, 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 117 stores during 2019, we operated a nationwide network of 1,101 stores as of December 31, 2019.”

“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 fourth 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.”

Full Year 2019 Financial Results 

Total sales for the full year of 2019 were $383.1 million, a 14.6% decrease from $448.5 million in the full year of 2018. This decrease was primarily due to a 10.7% decrease in wholesale sales and an 18.2% decrease in retail sales.

Wholesale sales from the Company’s wholesale business decreased by 10.7% to $195.2 million for the full year of 2019, compared with $218.6 million for the full year of 2018. This decrease was primarily attributable to decreased sales in Mainland China, United Kingdom, Hong Kong China, Germany and Europe-Other partially offset by increased sales in Japan and United States.

Retail sales from the Company’s branded fashion apparel retail division decreased by 18.2% to $187.9 million for the full year of 2019, compared with $229.9 million for the full year of 2018. This decrease was primarily due to a decrease in same store sales.

Total gross profit for the full year of 2019 decreased by 19.4% to $118.8 million, compared with $147.4 million for the full year of 2018. Total gross margin for the full year of 2019 decreased to 31.0% from 32.9% for the full year of 2018. 

Gross profit for wholesale business decreased by 4.6% to $39.9 million for the full year of 2019, compared with $41.8 million for the full year of 2018. Gross margin for the full year of 2019 increased to 20.4% compared with 19.1% for the full year of 2018.

Gross profit for retail business decreased by 25.2% to $78.9 million for the full year of 2019, compared with $105.6 million for the full year of 2018. Gross margin for the full year of 2019 decreased to 42.0% from 45.9% for the full year of 2018.

Selling expenses for the full year of 2019 decreased by 12.3% to $80.2 million, or 20.9% of total sales, compared with $91.4 million, or 20.4% of total sales for the full year of 2018. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2019 decreased by 11.8% to $35.1 million, or 9.2% of total sales, compared with $39.8 million, or 8.9% of total sales for the full year of 2018. The decrease in absolute amount was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2019 decreased by 76.5% to $3.5 million compared with $15.0 million for the full year of 2018.

Net income attributable to the Company for the full year of 2019 decreased by 89.4% to $1.3 million compared with $12.0 million for the full year of 2018. Basic and diluted earnings per share were $0.09 and $0.81 for the full year of 2019 and 2018, respectively.

Balance Sheet

As of December 31, 2019, Ever-Glory had approximately $48.6 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $39.8 million as of December 31, 2019, and outstanding bank loans of approximately $29.9 million as of December 31, 2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 30, 2020 (8:00 p.m. Beijing Time on March 30, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 1073501. 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 March 30 through 11:59 p.m. Eastern Time on April 6, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 1073501.

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

CONSOLIDATED BALANCE SHEETS

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

AS OF DECEMBER 31, 2019 AND 2018

2019

2018

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

48,551

$

47,012

Accounts receivable, net

78,053

86,527

Inventories

67,355

65,929

Value added tax receivable

2,495

2,580

Other receivables and prepaid expenses

7,497

10,204

Advances on inventory purchases

9,681

6,420

Amounts due from related parties

123

192

Total Current Assets

213,755

218,864

NONCURRENT ASSETS

Intangible assets, net

4,729

4,962

Property and equipment, net

28,812

28,445

Operating lease right-of-use assets

53,379

Deferred tax assets

996

Total Non-Current Assets

87,916

33,407

TOTAL ASSETS

$

301,671

$

252,271

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Bank loans

$

29,931

$

29,497

Accounts payable

72,418

78,412

Accounts payable and other payables – related parties

4,811

4,756

Other payables and accrued liabilities

19,137

21,958

Value added and other taxes payable

1,657

2,569

Income tax payable

1,142

1,569

Current operating lease liabilities

44,888

Total Current Liabilities

173,984

138,761

NONCURRENT LIABILITIES

Deferred tax liabilities

354

Non-current operating lease liabilities

8,537

TOTAL LIABILITIES

182,521

139,115

NOTE 13 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, 14,801,770 and
     14,798,198 shares issued and outstanding as of December 31, 2019 and
     December 31, 2018, respectively)

15

15

Additional paid-in capital

3,640

3,627

Retained earnings

106,328

105,914

Statutory reserve

19,939

19,083

Accumulated other comprehensive loss

(4,330)

(3,578)

Amounts due from related party

(4,932)

(10,354)

Total equity attributable to stockholders of the Company

120,660

114,707

Noncontrolling interest

(1,510)

(1,551)

Total Equity

119,150

113,156

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

301,671

$

252,271

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

2019

2018

SALES

$

383,101

$

448,508

COST OF SALES

264,330

301,153

GROSS PROFIT

118,771

147,355

OPERATING EXPENSES

Selling expenses

80,180

91,439

General and administrative expenses

35,123

39,811

Marketing related intangible asset impairment

1,086

Total operating expenses

115,303

132,336

INCOME FROM OPERATIONS

3,468

15,019

OTHER INCOME (EXPENSE)

Interest income

1,003

1,375

Interest expense

(1,222)

(1,989)

Other income

2,532

1,977

Total other income

2,313

1,363

INCOME BEFORE INCOME TAX EXPENSE

5,781

16,382

INCOME TAX EXPENSE

(4,562)

(4,942)

NET INCOME

1,219

11,440

Net loss attributable to the non-controlling interest

51

568

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

1,270

$

12,008

NET INCOME

$

1,219

$

11,440

Foreign currency translation loss

(660)

(6,084)

COMPREHENSIVE INCOME

$

559

$

5,356

Comprehensive loss attributable to the noncontrolling interest

41

489

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

$

610

$

5,845

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY’S
STOCKHOLDERS:

Basic and diluted

$

0.09

$

0.81

Weighted average number of shares outstanding Basic and diluted

14,801,770

14,798,198

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

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

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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,
   2018

14,795,992

$

15

$

3,620

$

95,195

$

17,794

$

2,585

$

(15,449)

$

103,760

(1,062)

$

102,698

Stock issued 
   for 
   compensation

2,206

0.002

7

7

7

Net income
    (loss)

12,008

12,008

(568)

11,440

Transfer to
    reserve

(1,289)

1,289

Net cash paid to
    related party
    under counter
    guarantee
    agreement

5,095

5,095

5,095

Foreign
    currency
    translation
    loss

(6,163)

(6,163)

79

(6,084)

Balance at
    December
    31, 2018

14,798,198

$

15

$

3,627

$

105,914

$

19,083

$

(3,578)

$

(10,354)

$

114,707

(1,551)

$

113,156

Stock issued for
    compensation

3,572

13

13

13

Net income
    (loss)

1,270

1,270

(51)

1,219

Transfer to
    reserve

(856)

856

Net cash paid to
    related party
    under counter
    guarantee
    agreement
    (Note 12)

5,422

5,422

5,422

Foreign
    currency
    translation
    gain

(752)

(752)

92

(660)

Balance at
    December
    31, 2019

14,801,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660

(1,510)

$

119,150

  

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

1,219

$

11,440

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

Intangible asset impairment loss

1,086

Depreciation and amortization

8,239

6,664

Loss from sale of property and equipment

9

108

Provision of bad debt allowance

1,062

660

Provision for obsolete inventories

2,804

3,324

Deferred income tax

(1,472)

(1,370)

Stock-based compensation

12

7

Changes in operating assets and liabilities

Accounts receivable

6,652

(9,893)

Inventories

(5,145)

(16,462)

Value added tax receivable

1,077

1,016

Other receivables and prepaid expenses

2,394

(5,659)

Advances on inventory purchases

(3,395)

(3,698)

Amounts due from related parties

67

(2,761)

Accounts payable

(2,305)

8,485

Accounts payable and other payables- related parties

176

6,275

Other payables and accrued liabilities

(4,052)

5,604

Value added and other taxes payable

(2,948)

(2,210)

Income tax payable

(409)

(54)

Net cash provided by operating activities

3,985

2,562

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

(8,675)

(12,182)

Net cash used in investing activities

(8,675)

(12,182)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

59,528

64,006

Repayment of bank loans

(58,665)

(70,513)

Repayment of loans from related party

13,163

6,657

Advances to related party

(8,381)

(8,428)

Interest income received from related party

472

2,997

Net cash provided by (used in) financing activities

6,117

(5,281)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

2,316

(963)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH

3,743

(15,864)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
OF PERIOD

47,012

62,876

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
PERIOD

$

50,755

$

47,012

Reconciliation of cash, cash equivalents and restricted cash reported within their
consolidated balance sheets:

Cash and Cash Equivalents

48,551

47,012

Restricted cash (booked in other receivables and prepaid expenses)

2,204

$

50,755

$

47,012

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,222

$

1,755

Income taxes

$

6,327

$

6,350

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Source: Ever-Glory International Group, Inc.