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Ever-Glory Reports Third Quarter 2020 Financial Results

·9 min read


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


Cision
Cision

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SOURCE Ever-Glory International Group, Inc.