Ever-Glory Reports Fourth Quarter 2019 Financial Results

NANJING, China, March 30, 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 fourth quarter ended December 31, 2019.

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 full year 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 117 stores during 2019, we operated a nationwide network of 1,101 stores as of December 31, 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 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 2019 Financial Results 

Total sales for the full year of 2019 were $383.1 million, a 14.6% decrease from $448.5 million in the full year of 2018. This decrease was primarily due to a 10.7% decrease in wholesale sales and an 18.2% decrease in retail sales.

Wholesale sales from the Company's wholesale business decreased by 10.7% to $195.2 million for the full year of 2019, compared with $218.6 million for the full year of 2018. This decrease was primarily attributable to decreased sales in Mainland China, United Kingdom, Hong Kong China, Germany and Europe-Other partially offset by increased sales in Japan and United States.

Retail sales from the Company's branded fashion apparel retail division decreased by 18.2% to $187.9 million for the full year of 2019, compared with $229.9 million for the full year of 2018. This decrease was primarily due to a decrease in same store sales.

Total gross profit for the full year of 2019 decreased by 19.4% to $118.8 million, compared with $147.4 million for the full year of 2018. Total gross margin for the full year of 2019 decreased to 31.0% from 32.9% for the full year of 2018. 

Gross profit for wholesale business decreased by 4.6% to $39.9 million for the full year of 2019, compared with $41.8 million for the full year of 2018. Gross margin for the full year of 2019 increased to 20.4% compared with 19.1% for the full year of 2018.

Gross profit for retail business decreased by 25.2% to $78.9 million for the full year of 2019, compared with $105.6 million for the full year of 2018. Gross margin for the full year of 2019 decreased to 42.0% from 45.9% for the full year of 2018.

Selling expenses for the full year of 2019 decreased by 12.3% to $80.2 million, or 20.9% of total sales, compared with $91.4 million, or 20.4% of total sales for the full year of 2018. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2019 decreased by 11.8% to $35.1 million, or 9.2% of total sales, compared with $39.8 million, or 8.9% of total sales for the full year of 2018. The decrease in absolute amount was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2019 decreased by 76.5% to $3.5 million compared with $15.0 million for the full year of 2018.

Net income attributable to the Company for the full year of 2019 decreased by 89.4% to $1.3 million compared with $12.0 million for the full year of 2018. Basic and diluted earnings per share were $0.09 and $0.81 for the full year of 2019 and 2018, respectively.

Balance Sheet

As of December 31, 2019, Ever-Glory had approximately $48.6 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $39.8 million as of December 31, 2019, and outstanding bank loans of approximately $29.9 million as of December 31, 2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 30, 2020 (8:00 p.m. Beijing Time on March 30, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 1073501. 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 11:00 a.m. Eastern Time on March 30 through 11:59 p.m. Eastern Time on April 6, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 1073501.

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.

For investor and media inquiries, please contact:

Ever-Glory International Group
Dandan Song
Tel: +86-25-5209-6817
E-Mail: sdd@ever-glory.com.cn

 

 

 

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, 2019 AND 2018



2019


2018


ASSETS





CURRENT ASSETS





Cash and cash equivalents

$

48,551


$

47,012


Accounts receivable, net


78,053



86,527


Inventories


67,355



65,929


Value added tax receivable


2,495



2,580


Other receivables and prepaid expenses


7,497



10,204


Advances on inventory purchases


9,681



6,420


Amounts due from related parties


123



192


Total Current Assets


213,755



218,864









NONCURRENT ASSETS







Intangible assets, net


4,729



4,962


Property and equipment, net


28,812



28,445


Operating lease right-of-use assets


53,379



-


Deferred tax assets


996



-


Total Non-Current Assets


87,916



33,407


TOTAL ASSETS

$

301,671


$

252,271









LIABILITIES AND STOCKHOLDERS' EQUITY














CURRENT LIABILITIES







Bank loans

$

29,931


$

29,497


Accounts payable


72,418



78,412


Accounts payable and other payables - related parties


4,811



4,756


Other payables and accrued liabilities


19,137



21,958


Value added and other taxes payable


1,657



2,569


Income tax payable


1,142



1,569


Current operating lease liabilities


44,888



-


Total Current Liabilities


173,984



138,761









NONCURRENT LIABILITIES







Deferred tax liabilities


-



354


Non-current operating lease liabilities


8,537



-


TOTAL LIABILITIES


182,521



139,115









NOTE 13 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 December 31, 2019 and
     December 31, 2018, respectively)


15



15


Additional paid-in capital


3,640



3,627


Retained earnings


106,328



105,914


Statutory reserve


19,939



19,083


Accumulated other comprehensive loss


(4,330)



(3,578)


Amounts due from related party


(4,932)



(10,354)


Total equity attributable to stockholders of the Company


120,660



114,707


Noncontrolling interest


(1,510)



(1,551)


Total Equity


119,150



113,156


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

301,671


$

252,271


 

 

 

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, 2019 AND 2018



2019


2018







SALES

$

383,101


$

448,508









COST OF SALES


264,330



301,153









GROSS PROFIT


118,771



147,355









OPERATING EXPENSES







Selling expenses


80,180



91,439


General and administrative expenses


35,123



39,811


Marketing related intangible asset impairment


-



1,086


Total operating expenses


115,303



132,336









INCOME FROM OPERATIONS


3,468



15,019









OTHER INCOME (EXPENSE)







Interest income


1,003



1,375


Interest expense


(1,222)



(1,989)


Other income


2,532



1,977


Total other income


2,313



1,363









INCOME BEFORE INCOME TAX EXPENSE


5,781



16,382









INCOME TAX EXPENSE


(4,562)



(4,942)









NET INCOME


1,219



11,440









Net loss attributable to the non-controlling interest


51



568


NET INCOME ATTRIBUTABLE TO THE COMPANY

$

1,270


$

12,008









NET INCOME

$

1,219


$

11,440


Foreign currency translation loss


(660)



(6,084)


COMPREHENSIVE INCOME

$

559


$

5,356









Comprehensive loss attributable to the noncontrolling interest


41



489









COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

$

610


$

5,845


EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S
STOCKHOLDERS:







Basic and diluted

$

0.09


$

0.81


Weighted average number of shares outstanding Basic and diluted


14,801,770



14,798,198


 

 

 

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, 2019 AND 2018







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,
   2018


14,795,992


$

15


$

3,620


$

95,195


$

17,794


$

2,585


$

(15,449)


$

103,760


(1,062)


$

102,698
































Stock issued 
   for 
   compensation


2,206



0.002



7



-



-



-



-



7





7


Net income
    (loss)


-



-



-



12,008



-



-



-



12,008


(568)



11,440


Transfer to
    reserve


-



-



-



(1,289)



1,289



-



-



-





-


Net cash paid to
    related party
    under counter
    guarantee
    agreement


-



-



-



-



-



-



5,095



5,095


-



5,095


Foreign
    currency
    translation
    loss

















(6,163)






(6,163)


79



(6,084)


Balance at
    December
    31, 2018


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
    (Note 12)


-



-



-



-



-



-



5,422



5,422


-



5,422


Foreign
    currency
    translation
    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


 

  

 

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, 2019 AND 2018





2019


2018


CASH FLOWS FROM OPERATING ACTIVITIES





Net income

$

1,219


$

11,440


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







Intangible asset impairment loss


-



1,086


Depreciation and amortization


8,239



6,664


Loss from sale of property and equipment


9



108


Provision of bad debt allowance


1,062



660


Provision for obsolete inventories


2,804



3,324


Deferred income tax


(1,472)



(1,370)


Stock-based compensation


12



7


Changes in operating assets and liabilities







Accounts receivable


6,652



(9,893)


Inventories


(5,145)



(16,462)


Value added tax receivable


1,077



1,016


Other receivables and prepaid expenses


2,394



(5,659)


Advances on inventory purchases


(3,395)



(3,698)


Amounts due from related parties


67



(2,761)


Accounts payable


(2,305)



8,485


Accounts payable and other payables- related parties


176



6,275


Other payables and accrued liabilities


(4,052)



5,604


Value added and other taxes payable


(2,948)



(2,210)


Income tax payable


(409)



(54)


Net cash provided by operating activities


3,985



2,562









CASH FLOWS FROM INVESTING ACTIVITIES







Purchase of property and equipment


(8,675)



(12,182)


Net cash used in investing activities


(8,675)



(12,182)









CASH FLOWS FROM FINANCING ACTIVITIES







Proceeds from bank loans


59,528



64,006


Repayment of bank loans


(58,665)



(70,513)


Repayment of loans from related party


13,163



6,657


Advances to related party


(8,381)



(8,428)


Interest income received from related party


472



2,997


Net cash provided by (used in) financing activities


6,117



(5,281)









EFFECT OF EXCHANGE RATE CHANGES ON CASH


2,316



(963)









NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH


3,743



(15,864)









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
OF PERIOD


47,012



62,876









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
PERIOD

$

50,755


$

47,012









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














Cash and Cash Equivalents


48,551



47,012


Restricted cash (booked in other receivables and prepaid expenses)


2,204



-



$

50,755


$

47,012









SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:














Cash paid during the period for:







Interest

$

1,222


$

1,755


Income taxes

$

6,327


$

6,350


 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-fourth-quarter-2019-financial-results-301031521.html

SOURCE Ever-Glory International Group, Inc.

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