PR Newswire | Aug 13, 2021 05:01AM EDT

08/13 04:00 CDT

Ever-Glory Reports Second Quarter 2021 Financial Results NEW YORK, Aug. 13, 2021

NEW YORK, Aug. 13, 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 second quarter ended June 30, 2021.

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 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 66 stores during 2021, we operated a nationwide network of 931 stores as of June 30, 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," Mr. Kang concluded.

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 confidence 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."

SecondQuarter 2021Financial Results

Total sales for the second quarter of 2021 were $60.6 million, an increase of 20.9% from $50.1 million in the second quarter of 2020. This increase was primarily driven by a 19.9% increase in our wholesale business and a 21.7% increase in retail business.

Sales for the Company's branded fashion apparel retail divisionincreased by 21.7% to $34.1 million for the second quarter of 2021, compared with $28.0 million for the second quarter of 2020. This increase was primarily due to the increase in same-store sales. The Company operated 931 retail stores as of June 30, 2021, compared with 935 retail stores as of June 30, 2020.

Sales for the Company's wholesale division increased by 19.9% to $26.4 million for the second quarter of 2021, compared with $22.0 million for the second 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 second quarter of 2021 increased by 27.3% to $18.4 million, compared with $14.4 million for the second quarter of 2020. Total gross margin for the second quarter of 2021 increased to 30.4% from 28.8% for the second quarter of 2020.

Gross profit for the retail business increased by 46.7% to $14.8 million for the second quarter of 2021, compared with $10.1 million for the second quarter of 2020. Gross margin for the second quarter of 2021 was 43.4% compared to 36.2% for the second quarter of 2020.

Gross profit for the wholesale business decreased by 17.5% to $3.6 million for the second quarter of 2021, compared with $4.4 million for the second quarter of 2020. Gross margin for the second quarter of 2021 decreased to 13.6% from 19.7% for the second quarter of 2020.

Selling expenses for the second quarter of 2021 increased by 14.9% to $14.5 million, or 24.0% of total sales, compared with $12.6 million, or 25.2% of total sales for the second quarter of 2020. The increase was attributable to the increased marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the second quarter of 2021 increased by 28.3% to $7.7 million, or 12.7% of total sales, compared with $6.0 million, or 11.9% of total sales for the second quarter of 2020. The increase was attributable to the decreased business trip and the exemption of social benefits by the PRC government during the COVID-19 outbreak in China 2020.

Lossfrom operations was $3.7 million for the second quarter of 2021, compared to $4.2 million for the second quarter of 2020.

Netlossattributableto the Companyfor the second quarter of 2021 was $1.8 million compared with $3.8 million for the second quarter of 2020. Basic and diluted loss per share were $0.12 for the second quarter of 2021 compared with $0.26 for the second quarter of 2020.

Balance Sheet

As of June 30, 2021, Ever-Glory had approximately $64.0 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $48.9 million as of June 30, 2021, and outstanding bank loans of approximately $65.5 million as of June 30, 2021.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 13, 2021(8:00 p.m. Beijing Time on August 13, 2021). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 2633372. 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 August 13 through 11:59 p.m. Eastern Time on August 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 2633372.

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)

June 30, December 31, 2021 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 63,963 $ 81,865

Restricted cash 42,725 39,858

Trading securities 3,581 1,792

Accounts receivable, net 39,643 53,285

Inventories 60,190 53,893

Advances on inventory purchases 7,556 10,261

Value added tax receivable 2,114 1,244

Other receivables and prepaid expenses 6,255 5,479

Amounts due from related parties 186 567

Total Current Assets 226,213 248,244

NON-CURRENT ASSETS

Equity security investment 5,929 3,932

Intangible assets, net 4,750 4,794

Property and equipment, net 33,414 32,164

Operating lease right-of-use assets 49,725 41,690

Deferred tax assets 306 902

Total Non-Current Assets 94,124 83,482

TOTAL ASSETS $ 320,337 $ 331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $ 65,498 $ 65,919

Accounts payable 52,595 67,762

Accounts payable and other payables - related 2,131 3,764parties

Other payables and accrued liabilities 15,410 16,073

Value added and other taxes payable - 909

Income tax payable 493 1,062

Current operating lease liabilities 41,174 33,481

Total Current Liabilities 177,301 188,970

NON-CURRENT LIABILITIES

Non-current operating lease liabilities 8,676 8,307

TOTAL LIABILITIES 185,977 197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value, authorized50,000,000 shares, 14,810,660 and14,809,160 shares issued and outstanding as of June 15 1530, 2021 and December 31,2020, respectively)

Additional paid-in capital 3,655 3,650

Retained earnings 106,230 109,171

Statutory reserve 20,376 20,376

Accumulated other comprehensive income 6,672 4,590

Amounts due from related party (2,588) (3,353)

Total equity 134,360 134,449

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 320,337 $ 331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

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

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

Three months ended Six months ended

June 30, June 30,

2021 2020 2021 2020

NET SALES $ 60,555 $ 50,086 $ 131,369 $ 108,441

COST OF SALES 42,163 35,641 90,541 77,958

GROSS PROFIT 18,392 14,445 40,828 30,483

OPERATING EXPENSES

Selling expenses 14,503 12,626 30,052 26,105

General and administrative expenses 7,662 5,971 15,513 11,755

Total Operating Expenses 22,165 18,597 45,565 37,860

LOSS FROM OPERATIONS (3,773) (4,152) (4,737) (7,377)

OTHER INCOME (EXPENSES)

Interest income 527 339 752 616

Interest expense (200) (566) (692) (907)

Government subsidy 243 231 502 691

Gain from changes in fair values of investments 2,041 4 2,275 4

Other income 477 610 774 968

Total Other Income, Net 3,088 618 3,611 1,372

LOSS BEFORE INCOME TAX EXPENSE (685) (3,534) (1,126) (6,005)

Income tax expense (1,086) (266) (1,815) (493)

NET LOSS (1,771) (3,800) (2,941) (6,498)

Net loss attributable to the non-controlling interest - 6 - 3

NET LOSS ATTRIBUTABLE TO THE COMPANY (1,771) (3,794) (2,941) (6,495)

NET LOSS $ (1,771) $ (3,800) $ (2,941) $ (6,498)

Foreign currency translation gain (loss) 3,434 (263) 2,083 (1,700)

COMPREHENSIVE INCOME (LOSS) 1,663 (4,063) (858) (8,198)

Comprehensive loss attributable to the non-controlling - 8 - 2 interest

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE $ 1,663 $ (4,055) $ (858) $ (8,196) COMPANY

LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS

Basic and diluted $ (0.12) $ (0.26) $ (0.20) $ (0.44)

Weighted average number of shares outstanding Basic 14,810,660 14,804,832 14,810,330 14,804,595 and diluted

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

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

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

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, 14,809,160 $ 15 $ 3,650 $ 109,171 $ 20,376 $ 4,590 $ (3,353) $ 134,449 - $ 134,4492021

Stock issued 1,500 - 5 - - - - 5 5 for compensation

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

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

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

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

Net income - - - (1,771) - - - (1,771) - (1,771)

Net cash received from related party under counter - - - - - - 386 386 - 386 guarantee agreement

Foreign currency translation - - - - - 3,434 3,434 - 3,434 adjustment

Balance at June 30, 14,810,660 $ 15 $ 3,655 $ 106,230 $ 20,376 $ 6,672 $ (2,588) $ 134,360 - $ 134,360 2021

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

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

Stock issued 3,062 0.003 5 - - - - 5 5 for compensation

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

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

Foreign currency translation (1,440) - (1,440) 3 (1,437) adjustment

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

Net (loss) (3,794) (3,794) (6) (3,800)

Net cash received from related party under counter 151 151 151 guarantee agreement

Foreign currency translation (261) (261) (2) (263) adjustment

Balance at June 30, 14,804,832 $ 15 $ 3,645 $ 99,833 $ 19,939 $ (6,031) $ (3,996) $ 113,405 (1,512) $ 111,893 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)

Six Months Ended

June 30, June 30, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (2,941) $ (6,498)

Adjustments to reconcile net loss to cash provided byoperating activities:

Depreciation and amortization 3,212 3,597

Loss from sale of property and equipment 463 189

Provision of bad debt allowance 652 969

Write off obsolete inventories 5,530 3,681

Changes in fair value of investment (2,275) -

Deferred income tax 604 71

Stock-based compensation 5 5

Changes in operating assets and liabilities

Accounts receivable 13,433 30,444

Inventories (11,346) 11,659

Value added tax receivable (562) 1,076

Other receivables and prepaid expenses (632) 737

Advances on inventory purchases 2,928 3,845

Amounts due from related parties 546 (214)

Accounts payable (17,753) (22,522)

Accounts payable and other payables- related parties (1,763) (466)

Other payables and accrued liabilities 1,201 (7,027)

Value added and other taxes payable (1,209) (1,593)

Income tax payable (581) (910)

Net cash (used in) provided by operating activities (10,488) 17,043

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (4,452) (1,018)

Net (purchase) sale of trading securities (1,468) (825)

Net cash (used in) investing activities (5,920) (1,843)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans 12,841 31,995

Repayment of bank loans (13,905) (21,173)

Net collection (advance) of amounts due from related 798 898party (equity)

Net cash (used in) provided by financing activities (266) 11,720

EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,639 (723)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND (15,035) 26,197 RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH ATBEGINNING OF 121,723 50,755 PERIOD

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF $ 106,688 $ 76,952 PERIOD

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

Cash and Cash Equivalents 63,963 59,236

Restricted cash 42,725 17,716

$ 106,688 $ 76,952

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest $ 692 $ 907

Income taxes $ 1,781 $ 493

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SOURCE Ever-Glory International Group, Inc.