PR Newswire | Mar 31, 2021 05:45AM EDT

03/31 04:45 CDT

Ever-Glory Reports Fourth Quarter 2020 Financial Results NEW YORK, March 31, 2021

NEW YORK, March 31, 2021 /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, 2020.

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 fourth 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 54 stores during 2020, we operated a nationwide network of 936 stores as of December 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 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 year2020Financial Results

Total sales for the full year of 2020 were $267.4 million, a decrease of 30.2% from $383.1 million in the full year of 2019. This decrease was primarily driven by a 39.9% decrease in our wholesale business and a 20.1% decrease in retail business.

Sales for the Company's branded fashion apparel retail divisiondecreased by 20.1% to $150.1 million for the full year of 2020, compared with $187.9 million for the full year of 2019. This decrease was primarily due to a decrease in same store sales. The Company had 936 retail stores as of December 31, 2020, compared with 1,101 retail stores as of December 31, 2019.

Sales for the Company's wholesale division decreased by 39.9% to $117.2 million for the full year of 2020, compared with $195.2 million for the full year of 2019. This decrease was primarily attributable to a decrease in sales in Mainland China, Hong Kong, Germany, Europe-Other, Japan, United States and United Kingdom.

Total gross profitfor the full year of 2020 decreased by 23.2% to $91.2 million, compared with $118.8 million for the full year of 2019. Total gross margin increased to 34.1% from 31.0% for the full year of 2019.

Gross profit for the retail business decreased by 22.1% to $61.5 million for the full year of 2020, compared with $78.9 million for the full year of 2019. Gross margin was 40.9%, compared to 42.0% for the full year of 2019.

Gross profit for the wholesale business decreased by 25.4% to $29.7 million for the full year of 2020, compared with $39.9 million for the full year of 2019. Gross margin increased to 25.4% from 20.4% for the full year of 2019.

Selling expenses for the full year of 2020 decreased by 30.3% to $56.0 million, or 20.9% of total sales, compared with $80.2 million, or 20.9% of total sales for the full year of 2019. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2020 decreased by 11.2% to $31.2 million, or 11.7% of total sales, compared with $35.1 million, or 9.2% of total sales for the full year of 2019. The decrease was mainly attributable to the decline in number of stores.

Incomefrom operations for the full year of 2020 increased by 19.5% to $4.1 million compared with $3.5 million for the full year of 2019.

Net incomeattributable to the Companyfor the full year of 2020 was $3.3 million compared with $1.3 million for the full year of 2019. Basic and diluted earnings per share were $0.22 for the full year of 2020 compared with $0.09 for the full year of 2019.

Balance Sheet

As of December 31, 2020, Ever-Glory had approximately $81.9 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $59.3 million as of December 31, 2020, and outstanding bank loans of approximately $65.9 million as of December 31, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 31, 2020 (8:00 p.m. Beijing Time on March 31, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 3008303. 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 call will be available from 11:00 a.m. Eastern Time on March 31 through 11:59 p.m. Eastern Time on April 7 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 3008303.

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

CONSOLIDATED BALANCE SHEETS

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

AS OF DECEMBER 31, 2020 AND 2019

2020 2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 81,865 $ 48,551

Restricted cash 39,858 2,204

Trading securities 1,792 -

Accounts receivable, net 53,285 78,053

Inventories 53,893 67,355

Advances on inventory purchases 10,261 9,681

Value added tax receivable 1,244 2,495

Other receivables and prepaid expenses 5,479 5,293

Amounts due from related parties 567 123

Total Current Assets 248,244 213,755

NONCURRENT ASSETS

Equity security investment 3,932 -

Intangible assets, net 4,794 4,729

Property and equipment, net 32,164 28,812

Operating lease right-of-use assets 41,690 53,379

Deferred tax assets 902 996

Total Non-Current Assets 83,482 87,916

TOTAL ASSETS $ 331,726 $ 301,671

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $ 65,919 $ 29,931

Accounts payable 67,762 72,418

Accounts payable and other payables - related parties 3,764 4,811

Other payables and accrued liabilities 16,073 19,137

Value added and other taxes payable 909 1,657

Income tax payable 1,062 1,142

Current operating lease liabilities 33,481 44,888

Total Current Liabilities 188,970 173,984

NONCURRENT LIABILITIES

Non-current operating lease liabilities 8,307 8,537

TOTAL LIABILITIES 197,277 182,521

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Stockholders' equity:

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,809,160 and 14,801,770 shares issued and outstanding as of December 31, 2020 and 15 15 December 31, 2019, respectively)

Additional paid-in capital 3,650 3,640

Retained earnings 109,171 106,328

Statutory reserve 20,376 19,939

Accumulated other comprehensive income (loss) 4,590 (4,330)

Amounts due from related party (3,353) (4,932)

Total equity attributable to stockholders of the Company 134,449 120,660

Noncontrolling interest - (1,510)

Total Equity 134,449 119,150

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 331,726 $ 301,671

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 otherwisestated)

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

2020 2019

SALES $ 267,354 $ 383,101

COST OF SALES 176,141 264,330

GROSS PROFIT 91,213 118,771

OPERATING EXPENSES

Selling expenses 55,894 80,180

General and administrative expenses 31,176 35,123

Total operating expenses 87,070 115,303

INCOME FROM OPERATIONS 4,143 3,468

OTHER INCOME (EXPENSE)

Interest income 1,014 1,003

Interest expense (2,345) (1,222)

Loss on deconsolidation of a subsidiary (1,085) -

Gain from changes in fair values of investments 950 -

Government subsidy 1,235 1,809

Other income 1,830 723

Total other income 1,599 2,313

INCOME BEFORE INCOME TAX EXPENSE 5,742 5,781

INCOME TAX EXPENSE (2,469) (4,562)

NET INCOME 3,273 1,219

Net loss (income) attributable to the non-controlling interest 7 51

NET INCOME ATTRIBUTABLE TO THE COMPANY $ 3,280 $ 1,270

NET INCOME $ 3,273 $ 1,219

Foreign currency translation income (loss) 8,920 (660)

COMPREHENSIVE INCOME $ 12,193 $ 559

Comprehensive (loss) income attributable to the noncontrolling interest 7 41

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ 12,200 $ 610

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'SSTOCKHOLDERS:

Basic and diluted $ 0.22 $ 0.09

Weighted average number of shares outstanding Basic and diluted 14,806,778 14,801,770

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

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

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Total Accumulated Amounts equity Additional Retained Earnings other due attributable Non- from to stockholders

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, 14,798,198 $ 15 $ 3,627 $ 105,914 $ 19,083 $ (3,578) $ (10,354) $ 114,707 $ (1,551) $ 113,156 2019

Stock issued 3,572 - 13 - - - - 13 13 for compensation

Net income - - - 1,270 - - - 1,270 (51) 1,219 (loss)

Transfer to - - - (856) 856 - - - - reserve

Net cash paid to related party under - - - - - - 5,422 5,422 - 5,422 counter guarantee agreement

Foreign currency (752) (752) 92 (660) translation (loss) gain

Balance at December 31, 14,801,770 $ 15 $ 3,640 $ 106,328 $ 19,939 $ (4,330) $ (4,932) $ 120,660 $ (1,510) $ 119,150 2019

Stock issued for 7,390 - 10 - - - - 10 10 compensation

Net income - - - 3,280 - - - 3,280 (7) 3,273 (loss)

Transfer to - - - (437) 437 - - - - reserve

Net cash paid to related party under counter - - - - - - 1,579 1,579 - 1,579 guarantee agreement (Note 11)

Deconsolidation - - - - - - - - 1,517 1,517 of Yiduo

Foreign currency 8,920 8,920 - 8,920 translation gain

Balance at December 31, 14,809,160 $ 15 $ 3,650 $ 109,171 $ 20,376 $ 4,590 $ (3,353) $ 134,449 $ - $ 134,449 2020

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 otherwisestated)

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 3,273 $ 1,219

Adjustments to reconcile net (loss) income to cash provided by operatingactivities:

Depreciation and amortization 5,291 8,239

Loss from sale of property and equipment 209 9

Loss on deconsolidation of a subsidiary 1,085 -

Provision of bad debt allowance 1,117 1,062

Provision for obsolete inventories 6,753 2,804

Changes in fair value of trading securities (131) -

Changes in fair value of investment (819) -

Deferred income tax 154 (1,472)

Stock-based compensation 10 12

Changes in operating assets and liabilities

Accounts receivable 27,173 6,652

Inventories 10,161 (5,145)

Value added tax receivable 1,336 1,077

Other receivables and prepaid expenses (135) 2,394

Advances on inventory purchases (28) (3,395)

Amounts due from related parties (480) 67

Accounts payable (9,316) (2,305)

Accounts payable and other payables- related parties (1,145) 176

Other payables and accrued liabilities (3,098) (4,052)

Value added and other taxes payable (806) (2,948)

Income tax payable (148) (409)

Net cash provided by operating activities 40,456 3,985

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (6,354) (8,675)

Purchases of trading securities (2,644) -

Proceeds from trading securities 979 -

Investment in a partnership (2,936) -

Net cash used in investing activities (10,955) (8,675)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans 90,729 59,528

Repayment of bank loans (58,658) (58,665)

Net collection (advance) of amounts due from related party (equity) 1,848 5,254

Net cash provided by financing activities 33,919 6,117

EFFECT OF EXCHANGE RATE CHANGES ON CASH 7,548 2,316

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 70,968 3,743

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF 50,755 47,012PERIOD

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 121,723 $ 50,755

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

Cash and Cash Equivalents 81,865 48,551

Restricted cash 39,858 2,204

$ 121,723 $ 50,755

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Net asset (liabilities) derecognized due to deconsolidation of a subsidiary 1,164 -

Cash paid during the period for:

Interest $ 2,345 $ 1,222

Income taxes $ 2,469 $ 6,327

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SOURCE Ever-Glory International Group, Inc.