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Ever-Glory Reports Fourth Quarter 2020 Financial Results

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NEW YORK, March 31, 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 fourth quarter ended December 31, 2020.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the fourth 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 fourth 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 54 stores during 2020, we operated a nationwide network of 936 stores as of December 31, 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 fourth 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."

Full year 2020 Financial Results

Total sales for the full year of 2020 were $267.4 million, a decrease of 30.2% from $383.1 million in the full year of 2019. This decrease was primarily driven by a 39.9% decrease in our wholesale business and a 20.1% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 20.1% to $150.1 million for the full year of 2020, compared with $187.9 million for the full year of 2019. This decrease was primarily due to a decrease in same store sales. The Company had 936 retail stores as of December 31, 2020, compared with 1,101 retail stores as of December 31, 2019.

Sales for the Company's wholesale division decreased by 39.9% to $117.2 million for the full year of 2020, compared with $195.2 million for the full year 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 full year of 2020 decreased by 23.2% to $91.2 million, compared with $118.8 million for the full year of 2019. Total gross margin increased to 34.1% from 31.0% for the full year of 2019.

Gross profit for the retail business decreased by 22.1% to $61.5 million for the full year of 2020, compared with $78.9 million for the full year of 2019. Gross margin was 40.9%, compared to 42.0% for the full year of 2019.

Gross profit for the wholesale business decreased by 25.4% to $29.7 million for the full year of 2020, compared with $39.9 million for the full year of 2019. Gross margin increased to 25.4% from 20.4% for the full year of 2019.

Selling expenses for the full year of 2020 decreased by 30.3% to $56.0 million, or 20.9% of total sales, compared with $80.2 million, or 20.9% of total sales for the full year of 2019. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2020 decreased by 11.2% to $31.2 million, or 11.7% of total sales, compared with $35.1 million, or 9.2% of total sales for the full year of 2019. The decrease was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2020 increased by 19.5% to $4.1 million compared with $3.5 million for the full year of 2019.

Net income attributable to the Company for the full year of 2020 was $3.3 million compared with $1.3 million for the full year of 2019. Basic and diluted earnings per share were $0.22 for the full year of 2020 compared with $0.09 for the full year of 2019.

Balance Sheet

As of December 31, 2020, Ever-Glory had approximately $81.9 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $59.3 million as of December 31, 2020, and outstanding bank loans of approximately $65.9 million as of December 31, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 31, 2020 (8:00 p.m. Beijing Time on March 31, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 3008303. 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 11:00 a.m. Eastern Time on March 31 through 11:59 p.m. Eastern Time on April 7 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 3008303.

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

CONSOLIDATED BALANCE SHEETS

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

AS OF DECEMBER 31, 2020 AND 2019




2020



2019


ASSETS














CURRENT ASSETS







Cash and cash equivalents


$

81,865



$

48,551


Restricted cash



39,858




2,204


Trading securities



1,792




-


Accounts receivable, net



53,285




78,053


Inventories



53,893




67,355


Advances on inventory purchases



10,261




9,681


Value added tax receivable



1,244




2,495


Other receivables and prepaid expenses



5,479




5,293


Amounts due from related parties



567




123


Total Current Assets



248,244




213,755











NONCURRENT ASSETS









Equity security investment



3,932




-


Intangible assets, net



4,794




4,729


Property and equipment, net



32,164




28,812


Operating lease right-of-use assets



41,690




53,379


Deferred tax assets



902




996


Total Non-Current Assets



83,482




87,916


TOTAL ASSETS


$

331,726



$

301,671











LIABILITIES AND STOCKHOLDERS' EQUITY


















CURRENT LIABILITIES









Bank loans


$

65,919



$

29,931


Accounts payable



67,762




72,418


Accounts payable and other payables – related parties



3,764




4,811


Other payables and accrued liabilities



16,073




19,137


Value added and other taxes payable



909




1,657


Income tax payable



1,062




1,142


Current operating lease liabilities



33,481




44,888


Total Current Liabilities



188,970




173,984











NONCURRENT LIABILITIES









Non-current operating lease liabilities



8,307




8,537


TOTAL LIABILITIES



197,277




182,521











COMMITMENTS AND CONTINGENCIES (Note 9)


















STOCKHOLDERS' EQUITY









Stockholders' equity:









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



15




15


Additional paid-in capital



3,650




3,640


Retained earnings



109,171




106,328


Statutory reserve



20,376




19,939


Accumulated other comprehensive income (loss)



4,590




(4,330)


Amounts due from related party



(3,353)




(4,932)


Total equity attributable to stockholders of the Company



134,449




120,660


Noncontrolling interest



-




(1,510)


Total Equity



134,449




119,150


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

331,726



$

301,671


EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019




2020



2019









SALES


$

267,354



$

383,101











COST OF SALES



176,141




264,330











GROSS PROFIT



91,213




118,771











OPERATING EXPENSES









Selling expenses



55,894




80,180


General and administrative expenses



31,176




35,123


Total operating expenses



87,070




115,303











INCOME FROM OPERATIONS



4,143




3,468











OTHER INCOME (EXPENSE)









Interest income



1,014




1,003


Interest expense



(2,345)




(1,222)


Loss on deconsolidation of a subsidiary



(1,085)




-


Gain from changes in fair values of investments



950




-


Government subsidy



1,235




1,809


Other income



1,830




723


Total other income



1,599




2,313











INCOME BEFORE INCOME TAX EXPENSE



5,742




5,781











INCOME TAX EXPENSE



(2,469)




(4,562)











NET INCOME



3,273




1,219











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



7




51


NET INCOME ATTRIBUTABLE TO THE COMPANY


$

3,280



$

1,270











NET INCOME


$

3,273



$

1,219


Foreign currency translation income (loss)



8,920




(660)


COMPREHENSIVE INCOME


$

12,193



$

559











Comprehensive (loss) income attributable to the noncontrolling interest



7




41











COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY


$

12,200



$

610


EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S
STOCKHOLDERS:









Basic and diluted


$

0.22



$

0.09


Weighted average number of shares outstanding Basic and diluted



14,806,778




14,801,770


EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

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

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019










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



3,572




-




13




-




-




-




-




13








13


Net income
(loss)



-




-




-




1,270




-




-




-




1,270




(51)




1,219


Transfer to
reserve



-




-




-




(856)




856




-




-




-








-


Net cash paid to
related party
under
counter
guarantee
agreement



-




-




-




-




-




-




5,422




5,422




-




5,422


Foreign
currency
translation
(loss) gain























(752)








(752)




92




(660)


Balance at
December 31,
2019



14,801,770



$

15



$

3,640



$

106,328



$

19,939



$

(4,330)



$

(4,932)



$

120,660



$

(1,510)



$

119,150











































Stock issued for
compensation



7,390




-




10




-




-




-




-




10








10


Net income
(loss)



-




-




-




3,280




-




-




-




3,280




(7)




3,273


Transfer to
reserve



-




-




-




(437)




437




-




-




-








-


Net cash paid to
related party
under
counter
guarantee
agreement
(Note 11)



-




-




-




-




-




-




1,579




1,579




-




1,579


Deconsolidation
of Yiduo



-




-




-




-




-




-




-




-




1,517




1,517


Foreign
currency
translation
gain























8,920








8,920




-




8,920


Balance at
December 31,
2020



14,809,160



$

15



$

3,650



$

109,171



$

20,376



$

4,590



$

(3,353)



$

134,449



$

-



$

134,449


EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019




2020



2019


CASH FLOWS FROM OPERATING ACTIVITIES







Net income


$

3,273



$

1,219


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









Depreciation and amortization



5,291




8,239


Loss from sale of property and equipment



209




9


Loss on deconsolidation of a subsidiary



1,085




-


Provision of bad debt allowance



1,117




1,062


Provision for obsolete inventories



6,753




2,804


Changes in fair value of trading securities



(131)




-


Changes in fair value of investment



(819)




-


Deferred income tax



154




(1,472)


Stock-based compensation



10




12


Changes in operating assets and liabilities









Accounts receivable



27,173




6,652


Inventories



10,161




(5,145)


Value added tax receivable



1,336




1,077


Other receivables and prepaid expenses



(135)




2,394


Advances on inventory purchases



(28)




(3,395)


Amounts due from related parties



(480)




67


Accounts payable



(9,316)




(2,305)


Accounts payable and other payables- related parties



(1,145)




176


Other payables and accrued liabilities



(3,098)




(4,052)


Value added and other taxes payable



(806)




(2,948)


Income tax payable



(148)




(409)


Net cash provided by operating activities



40,456




3,985











CASH FLOWS FROM INVESTING ACTIVITIES









Purchases of property and equipment



(6,354)




(8,675)


Purchases of trading securities



(2,644)




-


Proceeds from trading securities



979




-


Investment in a partnership



(2,936)




-


Net cash used in investing activities



(10,955)




(8,675)











CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from bank loans



90,729




59,528


Repayment of bank loans



(58,658)




(58,665)


Net collection (advance) of amounts due from related party (equity)



1,848




5,254


Net cash provided by financing activities



33,919




6,117











EFFECT OF EXCHANGE RATE CHANGES ON CASH



7,548




2,316











NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH



70,968




3,743











CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF
PERIOD



50,755




47,012











CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD


$

121,723



$

50,755











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


















Cash and Cash Equivalents



81,865




48,551


Restricted cash



39,858




2,204




$

121,723



$

50,755











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









Net asset (liabilities) derecognized due to deconsolidation of a subsidiary



1,164




-


Cash paid during the period for:









Interest


$

2,345



$

1,222


Income taxes


$

2,469



$

6,327


Cision
Cision

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SOURCE Ever-Glory International Group, Inc.