Ever-Glory Reports Second Quarter 2020 Financial Results

NANJING, China, Aug. 14, 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 second quarter ended June 30, 2020.

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 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 9 stores during 2020, we operated a nationwide network of 935 stores as of June 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 second 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."

Second Quarter 2020 Financial Results 

Total sales for the second quarter of 2020 were $50.1 million, a decrease of 35.2% from $77.3 million in the second quarter of 2019. This decrease was primarily driven by a 30.0% decrease in our retail business and a 40.8% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 30.0% to $28.1 million for the second quarter of 2020, compared with $40.1 million for the second quarter of 2019. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 935 retail stores as of June 30, 2020, compared with 1,235 retail stores as of June 30, 2019.

Sales for the Company's wholesale division decreased by 40.8% to $22.0 million for the second quarter of 2020, compared with $37.3 million for the second quarter of 2019. This decrease was primarily attributable to a decrease in sales in Hong Kong, Germany, Europe-Other, Mainland China, United Kingdom and United States, partially offset by an increase in sales in Japan.

Total gross profit for the second quarter of 2020 decreased by 50.2% to $14.4 million, compared with $29.0 million for the second quarter of 2019. Total gross margin decreased to 28.8% from 37.5% for the second quarter of 2019.

Gross profit for the retail business decreased by 56.1% to $10.1 million for the second quarter of 2020, compared with $23.0 million for the second quarter of 2019. Gross margin was 36.2%, compared to 57.3% for the second quarter of 2019.

Gross profit for the wholesale business decreased by 27.5% to $4.4 million for the second quarter of 2020, compared with $6.0 million for the second quarter of 2019. Gross margin increased to 19.7% from 16.1% for the second quarter of 2019.

Selling expenses for the second quarter of 2020 decreased by 35.9% to $12.6 million, or 25.2% of total sales, compared with $19.7 million, or 25.5% of total sales for the second quarter of 2019. The decrease was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the second quarter of 2020 decreased by 18.6% to $6.0 million, or 11.9% of total sales, compared with $7.3 million, or 9.5% of total sales for the second quarter of 2019. The decrease was attributable to the decline in number of stores.

(Loss) Income from operations for the second quarter of 2020 decreased by 312.8% to ($4.2 million) compared with $2.0 million for the second quarter of 2019.

Net (loss) income attributable to the Company for the second quarter of 2020 was ($3.8 million) compared with $1.9 million for the second quarter of 2019. Basic and diluted (loss) earnings per share were ($0.26) for the second quarter of 2020 compared with $0.13 for the second quarter of 2019.

Balance Sheet

As of June 30, 2020, Ever-Glory had approximately $59.2 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $54.4 million as of June 30, 2020, and outstanding bank loans of approximately $40.3 million as of June 30, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2020 (8:00 p.m. Beijing Time on August 14, 2020). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 4455706. 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 conference call will be available from 11:00 a.m. Eastern Time on August 14 through 11:59 p.m. Eastern Time on August 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 4455706.

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 otherwise stated)

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



2020


2019


ASSETS










CURRENT ASSETS





Cash and cash equivalents

$

59,238


$

48,551


Restrict cash


17,716



2,204


Trading securities


825



-


Accounts receivable, net


45,766



78,053


Inventories


51,254



67,355


Advances on inventory purchases


5,726



9,681


Value added tax receivable


1,340



2,495


Other receivables and prepaid expenses


4,328



5,293


Amounts due from related parties


329



123


Total Current Assets


186,522



213,755









NONCURRENT ASSETS







Intangible assets, net


4,499



4,729


Property and equipment, net


25,964



28,812


Operating lease right-of-use assets


34,496



53,379


Deferred tax assets


807



996


Total Non-Current Assets


65,766



87,916


TOTAL ASSETS

$

252,288


$

301,671









LIABILITIES AND STOCKHOLDERS' EQUITY














CURRENT LIABILITIES







Bank loans

$

40,271


$

29,931


Accounts payable


51,169



72,418


Accounts payable and other payables – related parties


4,050



4,811


Other payables and accrued liabilities


10,118



19,137


Value added and other taxes payable


-



1,657


Income tax payable


222



1,142


Current operating lease liabilities


26,309



44,888


Total Current Liabilities


132,139



173,984









NONCURRENT LIABILITIES







Non-current operating lease liabilities


8,256



8,537


TOTAL LIABILITIES


140,395



182,521









COMMITMENTS AND CONTINGENCIES (Note 8)














STOCKHOLDERS' EQUITY







Stockholders' equity:







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


-



-


Common stock ($0.001 par value, authorized 50,000,000 shares, 14,804,832 and
14,801,770 shares issued and outstanding as of June 30, 2020 and December 31,
2019, respectively)


15



15


Additional paid-in capital


3,645



3,640


Retained earnings


99,833



106,328


Statutory reserve


19,939



19,939


Accumulated other comprehensive (loss)


(6,031)



(4,330)


Amounts due from related party


(3,996)



(4,932)


Total equity attributable to stockholders of the Company


113,405



120,660


Noncontrolling interest


(1,512)



(1,510)


Total Equity


111,893



119,150


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

252,288


$

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 otherwise stated)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)



Three months ended


Six months ended


June 30,


June 30,


2020


2019


2020


2019

NET SALES

$

50,086


$

77,316


$

108,441


$

165,272

COST OF SALES


35,641



48,330



77,958



106,928













GROSS PROFIT


14,445



28,986



30,483



58,344













OPERATING EXPENSES












Selling expenses


12,626



19,699



26,105



40,706

General and administrative expenses


5,971



7,337



11,755



14,867

Total Operating Expenses


18,597



27,036



37,860



55,573













(LOSS) INCOME FROM OPERATIONS


(4,152)



1,950



(7,377)



2,771













OTHER INCOME (EXPENSES)












Interest income


339



277



616



484

Interest expense


(566)



(408)



(907)



(771)

Other income


845



1,409



1,663



1,114

Total Other Income, Net


618



1,278



1,372



827













(LOSS) INCOME BEFORE INCOME TAX
EXPENSE


(3,534)



3,228



(6,005)



3,598

Income tax expense


(266)



(1,455)



(493)



(2,280)













NET (LOSS) INCOME


(3,800)



1,773



(6,498)



1,318













Non-controlling interest


6



83



3



17

NET (LOSS) INCOME ATTRIBUTABLE TO THE
COMPANY


(3,794)



1,856



(6,495)



1,335













NET (LOSS) INCOME

$

(3,800)


$

1,773


$

(6,498)


$

1,318













Foreign currency translation (loss) gain


(263)



(2,453)



(1,700)



1,553

COMPREHENSIVE (LOSS) INCOME


(4,063)



(680)



(8,198)



2,871













Comprehensive loss (income) attributable to the non-
controlling interest


8



49



2



(51)

COMPREHENSIVE (LOSS)
INCOME ATTRIBUTABLE TO THE
COMPANY

$

(4,055)


$

(631)


$

(8,196)


$

2,820













(LOSS) EARNINGS PER SHARE
ATTRIBUTABLE TO THE COMPANY'S
STOCKHOLDERS












Basic and diluted

$

(0.26)


$

0.13


$

(0.44)


$

0.09

Weighted average number of shares outstanding
Basic and diluted


14,804,832



14,800,140



14,804,595



14,800,140

 

 

 

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 otherwise stated)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)




































Total




















equity



















attributable










Additional


Retained Earnings


Accumulated

other


Amounts

due from


to stockholders


Non-




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, 2020

14,801,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660


(1,510)

$

119,150





















Stock issued for compensation

3,062


0.003


5


-


-


-


-


5




5

Net income (loss)

-


-


-


(2,701)


-


-


-


(2,701)


3


(2,698)

Net cash received
from related party
under counter
guarantee
agreement

-


-


-


-


-


-


785


785


-


785

Foreign currency translation gain
(loss)











(1,440)


-


(1,440)


3


(1,437)

Balance at March
31, 2020

14,804,832


15


3,645


103,627


19,939


(5,770)


(4,147)


117,309


(1,504)


115,805

Net (loss)







(3,794)








(3,794)


(6)


(3,800)

Net cash received
from related party
under counter
guarantee
agreement












151


151




151

Foreign currency translation loss











(261)




(261)


(2)


(263)

Balance at June 30,
2020

14,804,832

$

15

$

3,645

$

99,833

$

19,939

$

(6,031)

$

(3,996)

$

113,405


(1,512)

$

111,893



































Total




















equity



















attributable












Retained Earnings


Accumulated


Amounts


to






Common Stock


Additional

paid-in




Statutory


other

Comprehensive


due from

related


 stockholders

of the


Non-

controlling


Total


Shares


Amount


capital


Unrestricted


reserve


(loss) income


party


Company


Interest


equity

Balance at January 1, 2019

14,798,198

$

15

$

3,627

$

105,914

$

19,083

$

(3,578)

$

(10,354)

$

114,707


(1,551)

$

113,156





















Stock issued for compensation

1,942


0.004


8


-


-


-


-


8




8

Net income (loss)

-


-


-


(521)


-


-


-


(521)


66


(455)

Net cash received from related party under counter guarantee agreement

-


-


-


-


-


-


1,101


1,101


-


1,101

Foreign currency translation gain











3,972


-


3,972


34


4,006

Balance at March 31, 2019

14,800,140


15


3,635


105,393


19,083


394


(9,253)


119,267


(1,451)


117,816

Net income (loss)







1,856








1,856


(83)


1,773

Net cash received from related party under counter guarantee agreement













1,390


1,390




1,390

Foreign currency translation loss











(2,487)




(2,487)


34


(2,453)

Balance at June 30, 2019

14,800,140

$

15

$

3,635

$

107,249

$

19,083

$

(2,093)

$

(7,863)

$

120,026


(1,500)

$

118,526

 

 

 

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 otherwise stated)

FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED)



2020


2019

CASH FLOWS FROM OPERATING ACTIVITIES




Net (loss) income

$

(6,498)


$

1,318

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






Depreciation and amortization


3,597



4,491

Loss from sale of property and equipment


189



53

Provision of bad debt allowance


969



682

Provision for obsolete inventories


3,681



1,824

Deferred income tax


71



(1,461)

Stock-based compensation


3



8

Changes in operating assets and liabilities






Accounts receivable


30,444



21,793

Inventories


11,659



1,145

Value added tax receivable


1,076



504

Other receivables and prepaid expenses


737



3,502

Advances on inventory purchases


3,845



(2,353)

Amounts due from related parties


(214)



(129)

Accounts payable


(22,522)



(25,954)

Accounts payable and other payables- related parties


(466)



58

Other payables and accrued liabilities


(7,027)



(10,789)

Value added and other taxes payable


(1,593)



(4,684)

Income tax payable


(910)



207

Net cash provided (used in) operating activities


17,041



(9,785)







CASH FLOWS FROM INVESTING ACTIVITIES






Purchases of property and equipment


(1,018)



(4,082)

Purchases of trading securities


(825)



-

Net cash used in investing activities


(1,843)



(4,082)







CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from bank loans


31,995



16,320

Repayment of bank loans


(21,173)



(19,904)

Repayment of loans from related party


4,027



8,149

Advances to related party


(3,129)



(5,454)

Net cash provided (used in) financing activities


11,720



(889)







EFFECT OF EXCHANGE RATE CHANGES ON CASH


(721)



2,270







NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH


26,197



(12,486)







CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
OF PERIOD


50,755



47,012







CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
PERIOD

$

76,952


$

34,526







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












Cash and Cash Equivalents


59,236



47,012

Restricted cash


17,716



-


$

76,952


$

47,012







SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:












Cash paid during the period for:






Interest

$

907


$

771

Income taxes

$

493


$

2,436

 

 

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SOURCE Ever-Glory International Group, Inc.

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