PR Newswire | Nov 12, 2021 04:04AM EST

11/12 03:03 CST

Ever-Glory Reports Third Quarter 2021 Financial Results NEW YORK, Nov. 12, 2021

NEW YORK, Nov. 12, 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 third quarter ended September 30, 2021.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the third 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 third 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 113 stores during 2021, we operated a nationwide network of 893 stores as of September 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 third 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."

ThirdQuarter 2021Financial Results

Total sales for the third quarter of 2021 were $94.4 million, an increase of 18.1% from $79.9 million in the third quarter of 2020. This increase was primarily driven by a 38.0% increase in our wholesale business partially offset by a 7.6% decrease in retail business.

Sales for the Company's branded fashion apparel retail divisiondecreased by 7.6% to $32.2 million for the third quarter of 2021, compared with $34.8 million for the third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales. The Company operated 893 retail stores as of September 30, 2021, compared with 923 retail stores as of September 30, 2020.

Sales for the Company's wholesale division increased by 38.0% to $62.2 million for the third quarter of 2021, compared with $45.1 million for the third quarter of 2020. This increase was primarily attributable to an increase in sales in Mainland China, Europe-Other, Japan and United States partially offset by a decrease in sales in Hong Kong and United Kingdom.

Total gross profitfor the third quarter of 2021 decreased by 2% to $23.2 million, compared with $23.7 million for the third quarter of 2020. Total gross margin for the third quarter of 2021 decreased to 24.6% from 29.6% for the third quarter of 2020.

Gross profit for the retail business decreased by 10.3% to $13.0 million for the third quarter of 2021, compared with $14.5 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 40.3% compared to 41.6% for the third quarter of 2020.

Gross profit for the wholesale business increased by 11.2% to $10.2 million for the third quarter of 2021, compared with $9.2 million for the third quarter of 2020. Gross margin for the third quarter of 2021 decreased to 16.4% from 20.4% for the third quarter of 2020.

Selling expenses for the third quarter of 2021 increased by 11.1% to $14.4 million, or 15.3% of total sales, compared with $13.0 million, or 16.3% of total sales for the third quarter of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expenses for the third quarter of 2021 increased by 21.1% to $9.5 million, or 10% of total sales, compared with $7.8 million, or 9.8% of total sales for the third quarter of 2020. The increase was attributable to the increased salaries.

(Loss) Incomefrom operations was ($0.7 million) for the third quarter of 2021, compared to $2.9 million for the third quarter of 2020.

Netlossattributableto the Companyfor the third quarter of 2021 was ($3.2 million) compared with $2.2 million for the third quarter of 2020. Basic and diluted loss per share were ($0.22) for the third quarter of 2021 compared with $0.15 for the third quarter of 2020.

Balance Sheet

As of September 30, 2021, Ever-Glory had approximately $48.3 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $44.6 million as of September 30, 2021, and outstanding bank loans of approximately $67.8 million as of September 30, 2021.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 12, 2021(8:00 p.m. Beijing Time on November 12, 2021). Listeners can access the conference call by dialing +1-800-289-0438 or +1-323-794-2423 and using the access code 7678571. 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 10:00 a.m. Eastern Time on November 12 through 11:59 p.m. Eastern Time on November 19 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7678571.

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.

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)

September 30, December 31, 2021 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 48,336 $ 81,865

Restricted cash 43,176 39,858

Trading securities 3,068 1,792

Accounts receivable, net 61,525 53,285

Inventories 67,275 53,893

Advances on inventory purchases 9,864 10,261

Value added tax receivable 2,484 1,244

Other receivables and prepaid expenses 6,638 5,479

Amounts due from related parties 1,994 567

Total Current Assets 243,360 248,244

NON-CURRENT ASSETS

Equity security investment 5,903 3,932

Intangible assets, net 4,686 4,794

Property and equipment, net 32,747 32,164

Operating lease right-of-use assets 49,002 41,690

Deferred tax assets 265 902

Other non-current assets 771 -

Total Non-Current Assets 93,374 83,482

TOTAL ASSETS $ 337,734 $ 331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $ 67,848 $ 65,919

Accounts payable 73,120 67,762

Accounts payable and other payables - related parties 1,016 3,764

Other payables and accrued liabilities 13,758 16,073

Value added and other taxes payable 554 909

Income tax payable 1,900 1,062

Current operating lease liabilities 40,590 33,481

Total Current Liabilities 198,786 188,970

NON-CURRENT LIABILITIES

Non-current operating lease liabilities 8,549 8,307

TOTAL LIABILITIES 207,335 197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,812,312and 14,809,160 shares issued and outstanding as of September 30, 2021 15 15and December 31, 2020, respectively)

Additional paid-in capital 3,660 3,650

Retained earnings 103,013 109,171

Statutory reserve 20,376 20,376

Accumulated other comprehensive income 5,610 4,590

Amounts due from related party (2,275) (3,353)

Total equity 130,399 134,449

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 337,734 $ 331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVEINCOME (LOSS) (Unaudited)

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

Three months ended Nine months ended

September 30, September 30,

2021 2020 2021 2020

NET SALES $ 94,406 $ 79,908 $ 225,776 $ 188,350

COST OF SALES 71,196 56,235 161,738 134,193

GROSS PROFIT 23,210 23,673 64,038 54,157

OPERATING EXPENSES

Selling expenses 14,443 12,996 44,495 39,101

General and administrative expenses 9,467 7,818 24,980 19,574

Total Operating Expenses 23,910 20,814 69,475 58,675

(LOSS) INCOME FROM OPERATIONS (700) 2,859 (5,437) (4,518)

OTHER INCOME (EXPENSES)

Interest income 176 313 928 930

Interest expense (1,218) (700) (1,909) (1,607)

Government subsidy 340 235 842 926

(Loss) Gain from changes in fair values of (123) (4) 2,151 -investments

Other income (expenses) 253 343 1,027 1,310

Total Other Income (expenses), Net (572) 187 3,039 1,559

(LOSS) INCOME BEFORE INCOME TAX (1,272) 3,046 (2,398) (2,959) EXPENSE

Income tax expense (1,945) (822) (3,759) (1,315)

NET (LOSS) INCOME (3,217) 2,224 (6,157) (4,274)

Net loss attributable to the non-controlling interest - (8) - (4)

NET LOSS ATTRIBUTABLE TO THE COMPANY (3,217) 2,216 (6,157) (4,278)

NET (LOSS) INCOME $ (3,217) $ 2,224 $ (6,157) $ (4,274)

Foreign currency translation gain (loss) (1,061) 4,664 1,020 2,964

COMPREHENSIVE INCOME (LOSS) (4,278) 6,888 (5,137) (1,310)

Comprehensive loss attributable to the non-controlling - 51 - 53 interest

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE $ (4,278) $ 6,939 $ (5,137) $ (1,257) COMPANY

LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS

Basic and diluted $ (0.22) $ 0.15 $ (0.42) $ (0.29)

Weighted average number of shares outstanding Basic 14,811,073 14,808,737 14,810,585 14,805,987 and diluted

See the accompanying notes to the condensed consolidated financial statements.

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

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

Amoun Total Addition Retained Earnings Accumulated ts equity al other due from attributable to stockholders

Common Stock paid-in Statutor Comprehens related of the Total y ive

Shares Amou capital Unrestrict reserve loss party Company equity nt ed

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

Stock issued for compens 1,500 - 5 - - - - 5 5 ation

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

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

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

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

Net loss (1,771) (1,771) (1,771)

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

Foreign currency 3,434 3,434 3,434 translation loss

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

Stock issued for 1,652 - 5 - - - - 5 5 compensatio n

Net (Loss) (3,217) (3,217) (3,217) income

Net cash received from related party under 313 313 313 counter guarantee agreement

Foreign currency (1,062) (1,062) (1,062) translation gain

Balance at September 3 14,812,312 $ 15 $ 3,660 $ 103,013 $ 20,376 $ 5,610 $ (2,275) $ 130,399 $ 130,399 0, 2021

Total Accumulate Amount equity Additio Retained Earnings d s attributabl Non- nal other due from e to stockholde rs

Common Stock paid-in Statuto Comprehen related of the controll Total ry sive ing

Shares Amou capital Unrestric reserv loss party Company Interest equity nt ted e

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 for compen 3,062 - 5 - - - - 5 5 sation

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

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

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

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

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

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

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

Stock issued for compensati 4,328 - 5 - - - - 5 5 on

Net income 2,216 2,216 8 2,224

Net cash received from related party 566 566 - 566 under counter guarantee agreement

Foreign currency 4,723 4,723 (59) 4,664 translation gain

Balance at September 14,809,160 $ 15 $ 3,650 $ 102,049 $ 19,939 $ (1,308) $ (3,430) $ 120,915 (1,563) $ 119,352 30, 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)

Nine Months Ended

September 30, September 30, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (6,157) $ (4,274)

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

Depreciation and amortization 4,384 4,114

Loss from sale of property and equipment 590 283

Provision of bad debt allowance 676 683

Write off obsolete inventories 7,595 5,786

Changes in fair value of investment (2,151) 13

Deferred income tax 644 (165)

Stock-based compensation 10 10

Changes in operating assets and liabilities

Accounts receivable (8,614) 15,571

Inventories (20,702) 16,135

Value added tax receivable (1,235) (577)

Other receivables and prepaid expenses (1,096) 50

Advances on inventory purchases 586 2,461

Amounts due from related parties (1,514) (848)

Accounts payable 5,930 (7,842)

Accounts payable and other payables- related parties (3,204) (1,112)

Other payables and accrued liabilities (3,332) (6,093)

Value added and other taxes payable (360) 467

Income tax payable 831 (64)

Net cash (used in) provided by operating activities (27,119) 24,598

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (5,109) (2,769)

Net (purchase) sale of trading securities (1,077) (901)

Investment payment (773) (2,860)

Net cash (used in) investing activities (6,959) (6,530)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans 56,110 66,599

Repayment of bank loans (54,565) (49,278)

Net collection (advance) of amounts due from related party (equity) 1,630 1,618

Net cash used in (provided by) financing activities 3,175 18,939

EFFECT OF EXCHANGE RATE CHANGES ON CASH 693 2,740

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND (30,211) 39,747 RESTRICTED CASH

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

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF $ 91,512 $ 90,502 PERIOD

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

Cash and Cash Equivalents 48,336 69,950

Restricted cash 43,176 20,552

$ 91,512 $ 90,502

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest $ 1,909 $ 1,607

Income taxes $ 2,272 $ 1,455

View original content: https://www.prnewswire.com/news-releases/ever-glory-reports-third-quarter-2021-financial-results-301422882.html

SOURCE Ever-Glory International Group, Inc.