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Ever-Glory Reports Third Quarter 2020 Financial Results

PR Newswire

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.”

Third
 Quarter 20
20
 Financial 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 division increased 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 profit for 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 Company for 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 otherwise stated)


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 shares issued
    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
    December 31, 2019, respectively)

15

15

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 otherwise stated)


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
EXPENSE

3,046

(717)

(2,959)

2,881


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
interest

(8)

28

(4)

46


NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY

2,216

(1,076)

(4,278)

260


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-
controlling interest

(56)

15

(54)

67


COMPREHENSIVE INCOME
(LOSS) ATTRIBUTABLE TO THE COMPANY

$

6,832

$

(4,818)

$

(1,364)

$

(1,963)


EARNINGS PER SHARE ATTRIBUTABLE TO
THE COMPANY’S STOCKHOLDERS

Basic and diluted

$

0.15

$

(0.07)

$

(0.29)

$

0.02

Weighted average number of shares outstanding
Basic and diluted

14,808,737

14,801,770

14,805,987

14,801,770

 


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


Additional


Retained
Earnings


Accumulated
other


Amounts
due from


Total
equity
attributable
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

–

5

–

–

–

–

5

5

Net 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

Stock issued
for
compensation

4,328

–

5

–

–

–

–

5

5

Net income

2,216

2,216

8

2,224

Net cash
received
from related
party under
counter
guarantee
agreement

566

566

–

566

Foreign
currency
translation
gain

4,723

4,723

(59)

4,664

Balance at
September 
30, 2020

14,809,160

$

15

$

3,650

$

102,049

$

19,939

$

(1,308)

$

(3,430)

$

120,915

(1,563)

$

119,352

 

 


Additional


Retained
Earnings


Accumulated
other


Amounts
due from


Total
equity
attributable
to stockholders


Non-


Common Stock


paid-in


Statutory


Comprehensive


related


of the


controlling


Total


Shares


Amount


capital


Unrestricted


reserve


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

Stock issued
for compensation

1,630

0.002

5

5

5

Net income
(loss)

(1,076)

(1,076)

(28)

(1,104)

Net cash
advanced to
related party
under
counter
guarantee
agreement

1,215

1,215

1,215

Foreign
currency
translation
loss

(3,729)

(3,729)

43

(3,686)

Balance at
September 30,
2019

14,801,770

$

15

$

3,640

$

106,173

$

19,083

$

(5,822)

$

(6,648)

$

116,441

(1,485)

$

114,956

 

 


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 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 operating
activities:

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
CASH

39,747

211


CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
OF PERIOD

50,755

47,012


CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
PERIOD

$

90,502

$

47,223

Reconciliation of cash, cash equivalents and restricted cash reported within their
consolidated 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.