PR Newswire | Nov 13, 2020 04:30AM EST

11/13 03:30 CST

Ever-Glory Reports Third Quarter 2020 Financial Results NEW YORK, Nov. 13, 2020

NEW YORK, Nov. 13, 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 third quarter ended September 30, 2020.

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 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 38 stores during 2020, we operated a nationwide network of 923 stores as of September 30, 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 third 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."

ThirdQuarter 2020Financial Results

Total sales for the third quarter of 2020 were $79.9 million, a decrease of 29.5% from $113.3 million in the third quarter of 2019. This decrease was primarily driven by a 44.9% decrease in our wholesale business, partially offset by a 10.3% increase in retail business.

Sales for the Company's branded fashion apparel retail divisionincreased by 10.3% to $34.8 million for the third quarter of 2020, compared with $31.6 million for the third quarter of 2019. This increase was primarily due to an increase in the e-commerce sales. The Company had 923 retail stores as of September 30, 2020, compared with 1,157 retail stores as of September 30, 2019.

Sales for the Company's wholesale division decreased by 44.9% to $45.1 million for the third quarter of 2020, compared with $81.7 million for the third quarter 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 third quarter of 2020 decreased by 2.8% to $23.7 million, compared with $24.4 million for the third quarter of 2019. Total gross margin increased to 29.6% from 21.5% for the third quarter of 2019.

Gross profit for the retail business increased by 2.7% to $14.5 million for the third quarter of 2020, compared with $14.1 million for the third quarter of 2019. Gross margin was 41.6%, compared to 44.7% for the third quarter of 2019.

Gross profit for the wholesale business decreased by 10.4% to $9.2 million for the third quarter of 2020, compared with $10.3 million for the third quarter of 2019. Gross margin increased to 20.4% from 12.6% for the third quarter of 2019.

Selling expenses for the third quarter of 2020 decreased by 27.6% to $13.0 million, or 16.3% of total sales, compared with $17.9 million, or 15.8% of total sales for the third quarter of 2019. The decrease was attributable to the lower travelling expenses.

General and administrative expenses for the third quarter of 2020 increased by 3.1% to $7.8 million, or 9.8% of total sales, compared with $7.6 million, or 6.7% of total sales for the third quarter of 2019. The increase was attributable to the foreign currency transaction gain.

Income(Loss)from operations for the third quarter of 2020 increased by 344.5% to $2.8 million compared with ($1.2 million) for the third quarter of 2019.

Net income(loss)attributable to the Companyfor the third quarter of 2020 was $2.2 million compared with ($1.1 million) for the third quarter of 2019. Basic and diluted earnings (loss) per share were $0.15 for the third quarter of 2020 compared with ($0.07) for the third quarter of 2019.

Balance Sheet

As of September 30, 2020, Ever-Glory had approximately $70.0 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $53.3 million as of September 30, 2020, and outstanding bank loans of approximately $48.4 million as of September 30, 2020.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 13, 2020 (8:00 p.m. Beijing Time on November 13, 2020). Listeners can access the conference call by dialing +1-866-548-4713 or + 1-323-794-2093 and using the access code 9522138. 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 13 through 11:59 p.m. Eastern Time on November 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 9522138.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

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

AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 (UNAUDITED)

2020 2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 69,950 $ 48,551

Restricted cash 20,552 2,204

Trading securities 817 -

Accounts receivable, net 62,866 78,053

Inventories 46,443 67,355

Advances on inventory purchases 7,393 9,681

Value added tax receivable 2,106 2,495

Other receivables and prepaid expenses 5,229 5,293

Amounts due from related parties 1,086 123

Total Current Assets 216,442 213,755

NONCURRENT ASSETS

Equity security investment 2,936 -

Intangible assets, net 4,628 4,729

Property and equipment, net 28,203 28,812

Operating lease right-of-use assets 37,705 53,379

Deferred tax assets 1,099 996

Total Non-Current Assets 74,571 87,916

TOTAL ASSETS $ 291,013 $ 301,671

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans $ 48,444 $ 29,931

Accounts payable 65,155 72,418

Accounts payable and other payables - related parties 3,878 4,811

Other payables and accrued liabilities 14,159 19,137

Value added and other taxes payable 1,134 1,657

Income tax payable 1,104 1,142

Current operating lease liabilities 29,296 44,888

Total Current Liabilities 163,170 173,984

NONCURRENT LIABILITIES

Non-current operating lease liabilities 8,491 8,537

TOTAL LIABILITIES 171,661 182,521

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Stockholders' equity:

Preferred stock ($0.001 par value, authorized 5,000,000 shares, no sharesissued - - and outstanding)

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,809,160 and 14,801,770 shares issued and outstanding as of September 30, 2020 and 15 15 December 31, 2019, respectively)

Additional paid-in capital 3,650 3,640

Retained earnings 102,049 106,328

Statutory reserve 19,939 19,939

Accumulated other comprehensive (loss) (1,308) (4,330)

Amounts due from related party (3,430) (4,932)

Total equity attributable to stockholders of the Company 120,915 120,660

Noncontrolling interest (1,563) (1,510)

Total Equity 119,352 119,150

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 291,013 $ 301,671

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

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

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Three months ended Nine months ended

September 30, September 30,

2020 2019 2020 2019

NET SALES $ 79,908 $ 113,326 $ 188,350 $ 278,598

COST OF SALES 56,235 88,967 134,193 195,895

GROSS PROFIT 23,673 24,359 54,157 82,703

OPERATING EXPENSES

Selling expenses 12,996 17,944 39,101 58,651

General and administrative expenses 7,818 7,584 19,574 22,450

Total Operating Expenses 20,814 25,528 58,675 81,101

INCOME (LOSS) FROM OPERATIONS 2,859 (1,169) (4,518) 1,602

OTHER INCOME (EXPENSES)

Interest income 313 215 930 699

Interest expense (700) (265) (1,607) (1,036)

Other income, net 574 502 2,236 1,616

Total Other Income, Net 187 452 1,559 1,279

INCOME (LOSS) BEFORE INCOME TAX 3,046 (717) (2,959) 2,881EXPENSE

Income tax expense (822) (387) (1,315) (2,667)

NET INCOME (LOSS) 2,224 (1,104) (4,274) 214

Net (loss) income attributable to the non-controlling (8) 28 (4) 46interest

NET INCOME (LOSS) ATTRIBUTABLE TO THE 2,216 (1,076) (4,278) 260COMPANY

NET INCOME (LOSS) $ 2,224 $ (1,104) $ (4,274) $ 214

Foreign currency translation gain (loss) 4,664 (3,729) 2,964 (2,244)

COMPREHENSIVE INCOME (LOSS) 6,888 (4,833) (1,310) (2,030)

Comprehensive (loss) income attributable to the non- (56) 15 (54) 67controlling interest

COMPREHENSIVE INCOME $ 6,832 $ (4,818) $ (1,364) $ (1,963)(LOSS) ATTRIBUTABLE TO THE COMPANY

EARNINGS PER SHARE ATTRIBUTABLE TOTHE COMPANY'S STOCKHOLDERS

Basic and diluted $ 0.15 $ (0.07) $ (0.29) $ 0.02

Weighted average number of shares outstanding 14,808,737 14,801,770 14,805,987 14,801,770Basic and diluted

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Total Additional Retained Accumulated Amounts equity Non- Earnings 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 atJanuary 1, 14,801,770 $ 15 $ 3,640 $ 106,328 $ 19,939 $ (4,330) $ (4,932) $ 120,660 (1,510) $ 119,1502020

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

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

Net cash receivedfrom relatedparty under - - - - - - 785 785 - 785counterguaranteeagreement

Foreigncurrency (1,440) - (1,440) 3 (1,437)translationgain (loss)

Balance atMarch 14,804,832 15 3,645 103,627 19,939 (5,770) (4,147) 117,309 (1,504) 115,80531, 2020

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

Net cashreceivedfrom relatedparty under 151 151 151counterguaranteeagreement

Foreigncurrency (261) (261) (2) (263)translationloss

Balance atJune 30, 14,804,832 $ 15 $ 3,645 $ 99,833 $ 19,939 $ (6,031) $ (3,996) $ 113,405 (1,512) $ 111,8932020

Stock issuedfor 4,328 - 5 - - - - 5 5compensation

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

Net cashreceivedfrom relatedparty under 566 566 - 566counterguaranteeagreement

Foreigncurrency 4,723 4,723 (59) 4,664translationgain

Balance atSeptember 14,809,160 $ 15 $ 3,650 $ 102,049 $ 19,939 $ (1,308) $ (3,430) $ 120,915 (1,563) $ 119,35230, 2020

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

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

Shares Amount capital Unrestricted reserve income party Company Interest equity

Balance atJanuary 1, 14,798,198 $ 15 $ 3,627 $ 105,914 $ 19,083 $ (3,578) $ (10,354) $ 114,707 (1,551) $ 113,1562019

Stock issuedfor 1,942 0.004 8 - - - - 8 8compensation

Net income - - - (521) - - - (521) 66 (455)(loss)

Net cashreceivedfrom relatedparty under - - - - - - 1,101 1,101 - 1,101counterguaranteeagreement

Foreigncurrency 3,972 - 3,972 34 4,006translationgain

Balance atMarch 31, 14,800,140 15 3,635 105,393 19,083 394 (9,253) 119,267 (1,451) 117,8162019

Net income 1,856 1,856 (83) 1,773(loss)

Net cashreceivedfrom relatedparty under 1,390 1,390 1,390counterguaranteeagreement

Foreigncurrency (2,487) (2,487) 34 (2,453)translationloss

Balance atJune 30, 14,800,140 $ 15 $ 3,635 $ 107,249 $ 19,083 $ (2,093) $ (7,863) $ 120,026 (1,500) $ 118,5262019

Stock issued 1,630 0.002 5 5 5for compensation

Net income (1,076) (1,076) (28) (1,104)(loss)

Net cashadvanced torelated partyunder 1,215 1,215 1,215counterguaranteeagreement

Foreigncurrency (3,729) (3,729) 43 (3,686)translationloss

Balance atSeptember 30, 14,801,770 $ 15 $ 3,640 $ 106,173 $ 19,083 $ (5,822) $ (6,648) $ 116,441 (1,485) $ 114,9562019

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income $ (4,274) $ 214

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

Depreciation and amortization 4,114 6,824

Loss from sale of property and equipment 283 16

Provision of bad debt allowance 683 820

Provision for obsolete inventories 5,786 3,846

Investment loss from the trading securities 13 -

Deferred income tax (165) (2,388)

Stock-based compensation 10 12

Changes in operating assets and liabilities

Accounts receivable 15,571 312

Inventories 16,135 (4,979)

Value added tax receivable (577) (281)

Other receivables and prepaid expenses 50 3,738

Advances on inventory purchases 2,461 (3,214)

Amounts due from related parties (848) 16

Accounts payable (7,842) 6,253

Accounts payable and other payables- related parties (1,112) (692)

Other payables and accrued liabilities (6,093) (10,594)

Value added and other taxes payable 467 (4,120)

Income tax payable (64) 746

Net cash provided by (used in) operating activities 24,598 (3,471)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (2,769) (6,555)

Purchases of trading securities (825) -

Investment in a partnership (2,936) -

Net cash used in investing activities (6,530) (6,555)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans 66,599 42,570

Repayment of bank loans (49,278) (35,620)

Net collection (advance) of amounts due from related party (equity) 1,618 3,937

Net cash provided by financing activities 18,939 10,887

EFFECT OF EXCHANGE RATE CHANGES ON CASH 2,740 (650)

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED 39,747 211CASH

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

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF $ 90,502 $ 47,223PERIOD

Reconciliation of cash, cash equivalents and restricted cash reported withintheirconsolidated balance sheets:

Cash and Cash Equivalents 69,950 45,837

Restricted cash 20,552 1,386

$ 90,502 $ 47,223

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest $ 1,607 $ 1,036

Income taxes $ 1,455 $ 4,196

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SOURCE Ever-Glory International Group, Inc.