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Ever-Glory Reports Third Quarter 2021 Financial Results

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Cision

NEW YORK, Nov. 12, 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 third quarter ended September 30, 2021.

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 2021, 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 113 stores during 2021, we operated a nationwide network of 893 stores as of September 30, 2021."

"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," Mr. Kang concluded.

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 confidence 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 2021 Financial Results

Total sales for the third quarter of 2021 were $94.4 million, an increase of 18.1% from $79.9 million in the third quarter of 2020. This increase was primarily driven by a 38.0% increase in our wholesale business partially offset by a 7.6% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 7.6% to $32.2 million for the third quarter of 2021, compared with $34.8 million for the third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales. The Company operated 893 retail stores as of September 30, 2021, compared with 923 retail stores as of September 30, 2020.

Sales for the Company's wholesale division increased by 38.0% to $62.2 million for the third quarter of 2021, compared with $45.1 million for the third quarter of 2020. This increase was primarily attributable to an increase in sales in Mainland China, Europe-Other, Japan and United States partially offset by a decrease in sales in Hong Kong and United Kingdom.

Total gross profit for the third quarter of 2021 decreased by 2% to $23.2 million, compared with $23.7 million for the third quarter of 2020. Total gross margin for the third quarter of 2021 decreased to 24.6% from 29.6% for the third quarter of 2020.

Gross profit for the retail business decreased by 10.3% to $13.0 million for the third quarter of 2021, compared with $14.5 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 40.3% compared to 41.6% for the third quarter of 2020.

Gross profit for the wholesale business increased by 11.2% to $10.2 million for the third quarter of 2021, compared with $9.2 million for the third quarter of 2020. Gross margin for the third quarter of 2021 decreased to 16.4% from 20.4% for the third quarter of 2020.

Selling expenses for the third quarter of 2021 increased by 11.1% to $14.4 million, or 15.3% of total sales, compared with $13.0 million, or 16.3% of total sales for the third quarter of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expenses for the third quarter of 2021 increased by 21.1% to $9.5 million, or 10% of total sales, compared with $7.8 million, or 9.8% of total sales for the third quarter of 2020. The increase was attributable to the increased salaries.

(Loss) Income from operations was ($0.7 million) for the third quarter of 2021, compared to $2.9 million for the third quarter of 2020.

Net loss attributable to the Company for the third quarter of 2021 was ($3.2 million) compared with $2.2 million for the third quarter of 2020. Basic and diluted loss per share were ($0.22) for the third quarter of 2021 compared with $0.15 for the third quarter of 2020.

Balance Sheet

As of September 30, 2021, Ever-Glory had approximately $48.3 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $44.6 million as of September 30, 2021, and outstanding bank loans of approximately $67.8 million as of September 30, 2021.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 12, 2021(8:00 p.m. Beijing Time on November 12, 2021). Listeners can access the conference call by dialing +1-800-289-0438 or +1-323-794-2423 and using the access code 7678571. 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 12 through 11:59 p.m. Eastern Time on November 19 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7678571.

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" 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 (Unaudited)

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




September 30,
2021



December 31,
2020


ASSETS














CURRENT ASSETS







Cash and cash equivalents


$

48,336



$

81,865


Restricted cash



43,176




39,858


Trading securities



3,068




1,792


Accounts receivable, net



61,525




53,285


Inventories



67,275




53,893


Advances on inventory purchases



9,864




10,261


Value added tax receivable



2,484




1,244


Other receivables and prepaid expenses



6,638




5,479


Amounts due from related parties



1,994




567


Total Current Assets



243,360




248,244











NON-CURRENT ASSETS









Equity security investment



5,903




3,932


Intangible assets, net



4,686




4,794


Property and equipment, net



32,747




32,164


Operating lease right-of-use assets



49,002




41,690


Deferred tax assets



265




902


Other non-current assets



771




-


Total Non-Current Assets



93,374




83,482


TOTAL ASSETS


$

337,734



$

331,726











LIABILITIES AND STOCKHOLDERS' EQUITY


















CURRENT LIABILITIES









Bank loans


$

67,848



$

65,919


Accounts payable



73,120




67,762


Accounts payable and other payables – related parties



1,016




3,764


Other payables and accrued liabilities



13,758




16,073


Value added and other taxes payable



554




909


Income tax payable



1,900




1,062


Current operating lease liabilities



40,590




33,481


Total Current Liabilities



198,786




188,970











NON-CURRENT LIABILITIES









Non-current operating lease liabilities



8,549




8,307


TOTAL LIABILITIES



207,335




197,277











COMMITMENTS AND CONTINGENCIES (Note 9)


















STOCKHOLDERS' EQUITY









Common stock ($0.001 par value, authorized 50,000,000 shares, 14,812,312
and 14,809,160 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectively)



15




15


Additional paid-in capital



3,660




3,650


Retained earnings



103,013




109,171


Statutory reserve



20,376




20,376


Accumulated other comprehensive income



5,610




4,590


Amounts due from related party



(2,275)




(3,353)


Total equity



130,399




134,449


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

337,734



$

331,726


EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS) (Unaudited)

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




Three months ended



Nine months ended




September 30,



September 30,




2021



2020



2021



2020


NET SALES


$

94,406



$

79,908



$

225,776



$

188,350


COST OF SALES



71,196




56,235




161,738




134,193



















GROSS PROFIT



23,210




23,673




64,038




54,157



















OPERATING EXPENSES

















Selling expenses



14,443




12,996




44,495




39,101


General and administrative expenses



9,467




7,818




24,980




19,574


Total Operating Expenses



23,910




20,814




69,475




58,675



















(LOSS) INCOME FROM OPERATIONS



(700)




2,859




(5,437)




(4,518)



















OTHER INCOME (EXPENSES)

















Interest income



176




313




928




930


Interest expense



(1,218)




(700)




(1,909)




(1,607)


Government subsidy



340




235




842




926


(Loss) Gain from changes in fair values of
investments



(123)




(4)




2,151




-


Other income (expenses)



253




343




1,027




1,310


Total Other Income (expenses), Net



(572)




187




3,039




1,559



















(LOSS) INCOME BEFORE INCOME TAX
EXPENSE



(1,272)




3,046




(2,398)




(2,959)



















Income tax expense



(1,945)




(822)




(3,759)




(1,315)



















NET (LOSS) INCOME



(3,217)




2,224




(6,157)




(4,274)



















Net loss attributable to the non-controlling interest



-




(8)




-




(4)


NET LOSS ATTRIBUTABLE TO THE COMPANY



(3,217)




2,216




(6,157)




(4,278)



















NET (LOSS) INCOME


$

(3,217)



$

2,224



$

(6,157)



$

(4,274)



















Foreign currency translation gain (loss)



(1,061)




4,664




1,020




2,964


COMPREHENSIVE INCOME (LOSS)



(4,278)




6,888




(5,137)




(1,310)



















Comprehensive loss attributable to the non-controlling
interest



-




51




-




53


COMPREHENSIVE
INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY


$

(4,278)



$

6,939



$

(5,137)



$

(1,257)



















LOSS PER SHARE ATTRIBUTABLE TO THE
COMPANY'S STOCKHOLDERS

















Basic and diluted


$

(0.22)



$

0.15



$

(0.42)



$

(0.29)


Weighted average number of shares outstanding Basic
and diluted



14,811,073




14,808,737




14,810,585




14,805,987


See the accompanying notes to the condensed consolidated financial statements.

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

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







Addition
al



Retained Earnings



Accumulated
other



Amoun
ts
due from



Total
equity
attributable
to stockholders







Common Stock



paid-in






Statutor
y



Comprehens
ive



related



of the



Total




Shares



Amou
nt



capital



Unrestrict
ed



reserve



loss



party



Company



equity


Balance at
January 1,
2021



14,809,160



$

15



$

3,650



$

109,171



$

20,376



$

4,590



$

(3,353)



$

134,449



$

134,449


Stock issued
for compens
ation



1,500




-




5




-




-




-




-




5




5


Net loss



-




-




-




(1,170)




-




-




-




(1,170)




(1,170)


Net cash
received
from related
party under
counter
guarantee
agreement



-




-




-




-




-




-




379




379




379


Foreign
currency
translation
gain (loss)























(1,352)




-




(1,352)




(1,352)


Balance at
March 31,
2021



14,810,660




15




3,655




108,001




20,376




3,238




(2,974)




132,311




...

132,311


Net loss















(1,771)
















(1,771)




(1,771)


Net cash
received
from related
party under
counter
guarantee
agreement


...