Ever-Glory Reports Third Quarter 2019 Financial Results

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November 13, 2019 5:00 AM EST

NANJING, China, Nov. 13, 2019 /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, 2019.

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 2019, 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 89 stores during 2019, we operated a nationwide network of 1,157 stores as of September 30, 2019."

"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 2019 Financial Results 

Total sales for the third quarter of 2019 were $113.3 million, a decrease of 9.7% from $125.5 million in the third quarter of 2018. This decrease was primarily driven by a 20.6% decrease in our retail business and a 4.6% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 20.6% to $31.6 million for the third quarter of 2019, compared with $39.8 million for the third quarter of 2018. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 1,157 retail stores as of September 30, 2019, compared with 1,396 retail stores as of September 30, 2018.

Sales for the Company's wholesale division decreased by 4.6% to $81.7 million for the third quarter of 2019, compared with $85.7 million for the third quarter of 2018. This decrease was primarily attributable to a decrease in sales in Mainland China, Hong Kong, Germany and Europe-Other partially offset by an increase in sales in United Kingdom,  Japan and United States.

Total gross profit for the third quarter of 2019 decreased by 19.0% to $24.4 million, compared with $30.1 million for the third quarter of 2018. Total gross margin decreased to 21.5% from 24.0% for the third quarter of 2018.

Gross profit for the retail business decreased by 28.9% to $14.1 million for the third quarter of 2019, compared with $19.8 million for the third quarter of 2018. Gross margin was 44.7%, compared to 49.8% for the third quarter of 2018.

Gross profit for the wholesale business increased by 0.2% to $10.3 million for the third quarter of 2019, compared with $10.2 million for the third quarter of 2018. Gross margin increased to 12.6% from 12.0% for the third quarter of 2018.

Selling expenses for the third quarter of 2019 increased by 2.0% to $17.9 million, or 15.8% of total sales, compared with $17.6 million, or 14.6% of total sales for the third quarter of 2018. The increase was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the third quarter of 2019 decreased by 11.0% to $7.6 million, or 6.7% of total sales, compared with $8.5 million, or 7.1% of total sales for the third quarter of 2018. The decrease was mainly attributable to the decline in number of stores.

Income (Loss) from operations for the third quarter of 2019 decreased by 129.6% to ($1.2) million compared with $4.0 million for the third quarter of 2018.

Net income (Loss) attributable to the Company for the third quarter of 2019 was ($1.1) million compared with $3.3 million for the third quarter of 2018. Basic and diluted earnings (loss) per share were ($0.07) for the third quarter of 2019 compared with $0.22 for the third quarter of 2018.

Balance Sheet

As of September 30, 2019, Ever-Glory had approximately $45.8 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $54.0 million as of September 30, 2019, and outstanding bank loans of approximately $35.5 million as of September 30, 2019.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 13, 2019 (8:00 p.m. Beijing Time on November 13, 2019). Listeners can access the conference call by dialing +1-866-548-4713 or + 1-323-794-2093 and using the access code 2080253. 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 10:00 a.m. Eastern Time on November 13 through 11:59 p.m. Eastern Time on November 20, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 2080253.

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, 2019 AND DECEMBER 31, 2018 (UNAUDITED)

2019

2018

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

45,837

$

47,012

Accounts receivable, net

83,863

86,527

Inventories

65,288

65,929

Advances on inventory purchases

9,358

6,420

Value added tax receivable

3,799

2,580

Other receivables and prepaid expenses

7,563

10,204

Amounts due from related parties

123

192

Total Current Assets

215,831

218,864

NONCURRENT ASSETS

Intangible assets, net

4,711

4,962

Property and equipment, net

27,615

28,445

Operating lease right-of-use assets

35,226

-

Deferred tax assets

1,862

-

Total Non-Current Assets

69,414

33,407

TOTAL ASSETS

$

285,245

$

252,271

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank loans

$

35,492

$

29,497

Accounts payable

77,172

78,412

Accounts payable and other payables – related parties

4,355

4,756

Other payables and accrued liabilities

15,230

21,958

Value added and other taxes payable

530

2,569

Income tax payable

2,249

1,569

Current operating lease liabilities

26,757

-

Total Current Liabilities

161,785

138,761

NONCURRENT LIABILITIES

Deferred tax liabilities

-

354

Non-current operating lease liabilities

8,504

-

TOTAL LIABILITIES

170,289

139,115

COMMITMENTS AND CONTINGENCIES

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, 14,801,770      and 14,798,198 shares issued and outstanding As of September 30, 2019      and December 31, 2018, respectively)

15

15

Additional paid-in capital

3,640

3,627

Retained earnings

106,173

105,914

Statutory reserve

19,083

19,083

Accumulated other comprehensive income

(5,822)

(3,578)

Amounts due from related party

(6,648)

(10,354)

Total equity attributable to stockholders of the Company

116,441

114,707

Noncontrolling interest

(1,485)

(1,551)

Total Equity

114,956

113,156

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

285,245

$

252,271

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME 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, 2019 AND 2018 (UNAUDITED)

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

NET SALES

$

113,326

$

125,480

$

278,598

$

306,806

COST OF SALES

88,967

95,419

195,895

210,858

GROSS PROFIT

24,359

30,061

82,703

95,948

OPERATING EXPENSES

Selling expenses

17,944

17,588

58,651

62,405

General and administrative expenses

7,584

8,519

22,450

25,015

Total Operating Expenses

25,528

26,107

81,101

87,420

(LOSS)INCOME FROM OPERATIONS

(1,169)

3,954

1,602

8,528

OTHER INCOME (EXPENSES)

Interest income

215

307

699

1,003

Interest expense

(265)

(278)

(1,036)

(1,202)

Other income

502

101

1,616

1,102

Total Other Income, Net

452

130

1,279

903

(LOSS) INCOME BEFORE INCOME TAX EXPENSE

(717)

4,084

2,881

9,431

Income tax expense

(387)

(908)

(2,667)

(2,949)

NET (LOSS) INCOME

(1,104)

3,176

214

6,482

Net loss attributable to the non-controlling interest

28

140

46

425

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY

(1,076)

3,316

260

6,907

NET (LOSS) INCOME

$

(1,104)

$

3,176

$

214

$

6,482

Foreign currency translation (loss) gain

(3,729)

(3,674)

(2,244)

(5,742)

Unrealized loss of derivative contracts designated as cash flow hedge

-

(614)

-

(1,083)

COMPREHENSIVE (LOSS) INCOME

(4,833)

(1,112)

(2,030)

(343)

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

15

57

67

366

COMPREHENSIVE (LOSS)      INCOME ATTRIBUTABLE TO THE COMPANY

$

(4,818)

$

(1,055)

$

(1,963)

$

23

EARNINGS PER SHARE ATTRIBUTABLE TO      THE COMPANY'S STOCKHOLDERS

Basic and diluted

$

(0.07)

$

0.22

$

0.02

$

0.47

Weighted average number of shares      outstanding Basic and diluted

14,801,770

14,798,198

14,801,770

14,796,527

 

 

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, 2019 AND 2018 (UNAUDITED)

Retained Earnings

Totalequity

Common Stock

 

Additional

paid-in

Statutory

AccumulatedotherComprehensive

Amountsdue from

related

attributableto stockholdersof the

Non-

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

Retained Earnings

Accumulated

Amounts

Totalequityattributable

Common Stock

Additional

paid-in

Statutory

otherComprehensive

due fromrelated

to stockholdersof the

Non-

controlling

Total

Shares

Amount

capital

Unrestricted

reserve

income

party

Company

Interest

equity

Balance at      January 1, 2018

14,795,992

$

15

$

3,620

$

95,195

$

17,794

$

2,585

$

(15,449)

$

103,760

(1,062)

$

102,698

Net income      (loss)

-

-

-

815

-

-

-

815

(228)

587

Net cash      paid to      related party      under counter      guarantee agreement

-

-

-

-

-

-

(8,479)

(8,479)

-

(8,479)

Foreign currency      translation gain (loss)

4,023

-

4,023

(42)

3,981

Balance at      March 31, 2018

14,795,992

15

3,620

96,010

17,794

6,608

(23,928)

100,119

(1,332)

98,787

Net income      (loss)

2,776

2,776

(57)

2,719

Net cash      advanced to      related party      under counter      guarantee agreement

2,339

2,339

2,339

Foreign currency      translation loss

(6,656)

(6,656)

70

(6,586)

Balance at      June 30, 2018

14,795,992

$

15

$

3,620

$

98,786

$

17,794

$

(48)

$

(21,589)

$

98,578

(1,319)

$

97,259

Stock issued      for compensation

2,206

7

7

7

Net income      (loss)

3,316

3,316

(140)

3,176

Net cash      advanced to      related party      under counter      guarantee agreement

1,337

1,337

1,337

Foreign currency      translation loss

(4,192)

(4,192)

31

(4,161)

Balance at      September 30, 2018

14,798,198

$

15

$

3,627

$

102,102

$

17,794

$

(4,240)

$

(20,252)

$

99,046

(1,428)

$

97,618

 

 

 

 

 

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, 2019 AND 2018 (UNAUDITED)

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

214

$

6,482

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

Depreciation and amortization

6,824

6,523

Loss from sale of property and equipment

16

102

Provision of bad debt allowance

820

-

Provision for obsolete inventories

3,846

2,697

Deferred income tax

(2,388)

(1,706)

Stock-based compensation

12

7

Changes in operating assets and liabilities

Accounts receivable

312

(15,012)

Inventories

(4,979)

(32,831)

Value added tax receivable

(281)

430

Other receivables and prepaid expenses

966

(19,792)

Advances on inventory purchases

(3,214)

(8,199)

Amounts due from related parties

16

4

Accounts payable

6,253

29,547

Accounts payable and other payables- related parties

(692)

153

Other payables and accrued liabilities

(10,594)

14,054

Value added and other taxes payable

(4,120)

(3,892)

Income tax payable

746

311

Net cash used in operating activities

(6,243)

(21,122)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(6,555)

(9,144)

Net cash used in investing activities

(6,555)

(9,144)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

42,570

39,872

Repayment of bank loans

(35,620)

(40,225)

Repayment of loans from related party

10,692

3,232

Advances to related party

(6,755)

(8,183)

Net cash used in financing activities

10,887

(5,304)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(650)

(2,827)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(2,561)

(38,397)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

47,012

62,876

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

44,451

$

24,479

RESTRICTED CASH

$

1,386

$

-

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,036

$

1,202

Income taxes

$

4,196

$

4,427

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-third-quarter-2019-financial-results-300957228.html

SOURCE Ever-Glory International Group, Inc.


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