PR Newswire | May 14, 2021 06:00AM EDT

05/14 05:00 CDT

Ever-Glory Reports First Quarter 2021 Financial Results NEW YORK, May 14, 2021

NEW YORK, May 14, 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 first quarter ended March 31, 2021.

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 2021, 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 50-100 stores during 2021, we operated a nationwide network of 921 stores as of March 31, 2021."

"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 2021Financial Results

Total sales for the first quarter of 2021 were $70.8 million, a increase of 21.4% from $58.4 million in the first quarter of 2020. This increase was primarily driven by a 4.2% increase in our wholesale business and a 32.0% increase in retail business.

Sales for the Company's branded fashion apparel retail divisionincreased by 32.0% to $47.6 million for the first quarter of 2021, compared with $36.1 million for the first quarter of 2020. This increase was primarily due to the increase in same-store sales. The Company had 921 retail stores as of March 31, 2021, compared with 1,038 retail stores as of March 31, 2020.

Sales for the Company's wholesale division increased by 4.2% to $23.2 million for the first quarter of 2021, compared with $22.3 million for the first quarter of 2020. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, the United Kingdom, and other European markets partially offset for decreased sales in Japan and the United States.

Total gross profitfor the first quarter of 2021 increased by 39.9% to $22.4 million, compared with $16 million for the first quarter of 2020. Total gross margin for the first quarter of 2021 increased to 31.7% from 27.5% for the first quarter of 2020.

Gross profit for the retail business increased by 42.5% to $17.9 million for the first quarter of 2021, compared with $12.5 million for the first quarter of 2020. Gross margin for the first quarter of 2021 was 37.6% compared to 34.8% for the first quarter of 2020.

Gross profit for the wholesale business increased by 30.5% to $4.6 million for the first quarter of 2021, compared with $3.5 million for the first quarter of 2020. Gross margin for the first quarter of 2021 increased to 19.6% from 15.7% for the first quarter of 2020.

Selling expenses for the first quarter of 2021 increased by 15.4% to $15.5 million, or 22.0% of total sales, compared with $13.5 million, or 23.1% of total sales for the first quarter of 2020. The increase was attributable to the increased sales.

General and administrative expenses for the first quarter of 2021 increased by 35.7% to $7.9 million, or 11.1% of total sales, compared with $5.8 million, or 9.9% of total sales for the first quarter of 2020. The increase was mainly attributable to the decreased business trip and the exemption of social benefits by the PRC government in 2020.

Lossfrom operations was $1.0 million for the first quarter of 2021,compared to $3.2 million for the first quarter of 2020.

Netlossattributableto the Companyfor the first quarter of 2021 was $1.2 million compared with $2.7 million for first quarter of 2020. Basic and diluted loss per share were $0.08 for the first quarter of 2021 compared with $0.18 for the first quarter of 2020.

Balance Sheet

As of March 31, 2021, Ever-Glory had approximately $78.1 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $43.7 million as of March 31, 2021, and outstanding bank loans of approximately $71.5 million as of March 31, 2021.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 14, 2021(8:00 p.m. Beijing Time on May 14, 2021). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-647-484-0475 and using the access code 7935539. 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 May 14 through 11:59 p.m. Eastern Time on May 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7935539.

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" 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 SongTel: +86-25-5209-6817E-Mail: sdd@ever-glory.com.cn

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

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

March 31, December 31, 2021 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 78,056 $ 81,865

Restricted cash 45,660 39,858

Trading securities 3,036 1,792

Accounts receivable, net 46,719 53,285

Inventories 43,342 53,893

Advances on inventory purchases 7,802 10,261

Value added tax receivable 1,183 1,244

Other receivables and prepaid expenses 5,956 5,479

Amounts due from related parties 674 567

Total Current Assets 232,428 248,244

NON-CURRENT ASSETS

Equity security investment 3,877 3,932

Intangible assets, net 4,712 4,794

Property and equipment, net 31,881 32,164

Operating lease right-of-use assets 55,839 41,690

Deferred tax assets 879 902

Total Non-Current Assets 97,188 83,482

TOTAL ASSETS $ 329,616 $ 331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $ 71,534 $ 65,919

Accounts payable 52,083 67,762

Accounts payable and other payables - related parties 2,829 3,764

Other payables and accrued liabilities 13,522 16,073

Value added and other taxes payable 684 909

Income tax payable 704 1,062

Current operating lease liabilities 47,327 33,481

Total Current Liabilities 188,683 188,970

NON-CURRENT LIABILITIES

Non-current operating lease liabilities 8,622 8,307

TOTAL LIABILITIES 197,305 197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Stockholders' equity:

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,810,660 and14,809,160 shares issued and outstanding as of March 31, 2021 and December 31, 15 152020, respectively)

Additional paid-in capital 3,655 3,650

Retained earnings 108,001 109,171

Statutory reserve 20,376 20,376

Accumulated other comprehensive income 3,238 4,590

Amounts due from related party (2,974) (3,353)

Total equity 132,311 134,449

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 329,616 $ 331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

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

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

Three Months Ended

March 31, March 31, 2021 2020

SALES $ 70,814 $ 58,355

COST OF SALES 48,379 42,317

GROSS PROFIT 22,435 16,038

OPERATING EXPENSES

Selling expenses 15,548 13,478

General and administrative expenses 7,851 5,785

Total operating expenses 23,399 19,263

LOSS FROM OPERATIONS (964) (3,225)

OTHER INCOME (EXPENSE)

Interest income 224 277

Interest expense (492) (341)

Government subsidy 259 460

Other income (expense), net 532 358

Total other income (expense), net 523 754

LOSS BEFORE INCOME TAX (441) (2,471)

INCOME TAX EXPENSE (729) (227)

NET LOSS (1,170) (2,698)

Net income attributable to the non-controlling interest - (3)

NET LOSS ATTRIBUTABLE TO THE COMPANY $ (1,170) $ (2,701)

NET LOSS $ (1,170) $ (2,698)

Foreign currency translation loss (1,352) (1,437)

COMPREHENSIVE LOSS $ (2,522) $ (4,135)

Comprehensive loss attributable to the non-controlling interest - 6

COMPREHENSIVE LOSS ATTRIBUTABLE TO THE COMPANY $ (2,522) $ (4,129)

LOSS PER SHARE:

Basic and diluted $ (0.08) $ (0.18)

Weighted average number of shares outstanding Basic and diluted 14,810,001 14,804,832

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED March 31, 2021 AND 2020 (Unaudited)

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

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

Common Stock paid-in Statutory Comprehensive related of the controlling Total

Shares Amount capital Unrestricted reserve Income (loss) party Company Interest equity

Balance at January 1, 14,809,160 $ 15 $ 3,650 $ 109,171 $ 20,376 $ 4,590 $ (3,353) $ 134,449 $ - $ 134,449 2021

Stock-based 1,500 - 5 - - - - 5 - 5 compensation

Net loss - - - (1,170) - - - (1,170) - (1,170)

Net cash received from related party - - - - - - 379 379 - 379 under counter guarantee agreement

Foreign currency - - - - - (1,352) - (1,352) - (1,352) translation loss

Balance at March 31, 14,810,660 $ 15 $ 3,655 $ 108,001 $ 20,376 $ 3,238 $ (2,974) $ 132,311 - $ 132,311 2021

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

Common Stock paid-in Statutory Comprehensive related of the controlling Total

Shares Amount capital Unrestricted reserve Income (loss) party Company Interest equity

Balance at January 1, 14,801,770 $ 15 $ 3,640 $ 106,328 $ 19,939 $ (4,330) $ (4,932) $ 120,660 (1,510) $ 119,150 2020

Stock-based 3,062 - 5 - - - - 5 - 5 compensation

Net income - - - (2,701) - - - (2,701) 3 (2,698) (loss)

Net cash received from related party - - - - - - 785 785 - 785 under counter guarantee agreement

Foreign currency translation - - - - - (1,440) - (1,440) 3 (1,437) income (loss)

Balance at March 31, 14,804,832 $ 15 $ 3,645 $ 103,627 $ 19,939 $ (5,770) $ (4,147) $ 117,309 (1,504) $ 115,805 2020

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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

Three Months Ended

March 31, March 31, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (1,170) $ (2,698)

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

Depreciation and amortization 1,377 1,587

Gain on disposal of intangible assets - (268)

Loss from sale of property and equipment 102 102

(Recovering from) Provision of bad debt allowance (196) 278

Provision for obsolete inventories 3,583 4,204

Changes in fair value of trading securities (262) -

Changes in fair value of investment 28 -

Deferred income tax 17 104

Stock-based compensation 5 5

Changes in operating assets and liabilities

Accounts receivable 6,509 34,906

Inventories 6,805 10,303

Value added tax receivable 52 210

Other receivables and prepaid expenses (367) 364

Advances on inventory purchases 2,544 2,855

Amounts due from related parties (71) 142

Accounts payable (14,690) (19,864)

Accounts payable and other payables- related parties (769) (1,038)

Other payables and accrued liabilities (3,221) (5,587)

Value added and other taxes payable (220) (31)

Income tax payable (358) (1,019)

Net cash (used in) provided by operating activities (302) 24,555

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (1,378) (78)

Disposal of intangible assets - 353

Purchases of trading securities (1,238) -

Proceeds from trading securities 255 -

Net cash (used in) provided by investing activities (2,361) 275

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans 12,336 11,464

Repayment of bank loans (6,168) (14,884)

Net collection (advance) of amounts due from related party (equity) 148 748

Net cash provided by (used in) financing activities 6,316 (2,672)

EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,659) 1,497

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,993 23,655

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF 121,723 48,551PERIOD

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF $ 123,716 $ 72,206PERIOD

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

Cash and Cash Equivalents 78,056 70,036

Restricted cash 45,660 2,170

$ 123,716 $ 72,206

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest $ 492 $ 341

Income taxes $ 729 $ 1,218

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SOURCE Ever-Glory International Group, Inc.