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Ever-Glory Reports First Quarter 2009 Financial ResultsAdd: 2009 Update: 2009/08/03 |
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NANJING, China, May 13 /PRNewswire-Asia-FirstCall/ -- Ever-Glory International Group, Inc. (the "Company," "Ever-Glory") (NYSE Amex: EVK), a leading apparel supply chain manager and retailer in China, today reported its financial results for the quarter ended March 31, 2009.
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During the first quarter 2009, net sales increased 3.9% to $20.5 million from $19.7 million in the same period of 2008. This increase was primarily attributable to increased sales orders in our wholesale business to customers in Japan and increased sales in the Company's retail business. Retail sales from LA GO GO, the Company's branded retail division, increased to $2.5 million, or 12.3% of total net sales, compared to $120 thousand in the prior year period. "Our performance was solid during the first quarter of 2009, especially given the global economic slowdown," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "Our growth held steady in the quarter and we believe that our business model as a one-stop- service for wholesale apparel production will continue to position us very competitively going forward. We remain focused on developing a high quality production platform and expanded production capacity. We have increased the innovative fashion concepts within our wholesale business by strengthening our design talent and enhanced our R&D infrastructure to add more style samples and fabric sampling. These efforts should allow us to broaden our sales opportunities even during challenging market conditions." Mr. Kang continued, "We are very encouraged by our retail strategy and the roll out of our LA GO GO stores. Sales generated from our retail business increased considerably in the first quarter of 2009 which demonstrated the strong momentum we have with our retail strategy. In the first quarter of 2009, we opened nine new LA GO GO stores for a total of 102 open stores, as of March 31, 2009. Through May 13, 2009, we opened 19 LA GO GO stores in 2009 and now have a total of 112 LA GO GO stores in China." In the first quarter of 2009, gross profit increased 26.7% to $4.7 million from $3.7 million in the same period of 2008. Gross margin increased 420 basis points to 23.0% in the first quarter of 2009, compared to 18.8% in the same period of 2008 largely due to increased fixed processing fees on certain manufacturing orders as well as increased leverage in the retail business. Selling expenses increased to $940 thousand in the first quarter of 2009 from $278 thousand in the first quarter of 2008. This increase was primarily due to increased retail marketing expenses to promote LA GO GO. General and administrative expenses increased 31.4% to $1.9 million from $1.4 million in the first quarter of 2008. The increase was primarily due to increased payroll to retain and attract management staff in order to execute the Company's business expansion as well as additional costs to support the Company's retail operations. Income from operations for the first quarter of 2009 was $1.9 million, or 9.4% of total sales, compared to $2.0 million, or 10.3% of sales, in the first quarter of 2008. Net income for the first quarter of 2009 increased 34.1% to $1.6 million or $0.12 per diluted share from $1.2 million, or $0.10 per diluted share in the same period of 2008. Balance Sheet and Cash Flow As of March 31, 2009, the Company had $3.8 million of cash and cash equivalents, compared to $1.4 million at December 31, 2008, Ever-Glory had working capital of approximately $15.5 million at March 31, 2009. The Company had bank loans of $6.6 million as of March 31, 2009. Business Outlook For the second quarter of 2009, the Company anticipates total net sales of $20 million to $25 million and net income of $1.2 million to $1.5 million. This compares to second quarter 2008 sales of $24 million and net income of $1.3 million. For full year 2009, the Company anticipates total net sales of $120 million to $135 million and net income of $5.8 million to $6.5 million. The full year revenue forecast is comprised of $110 million to $120 million in expected wholesale revenue and $10 million to $15 million in expected revenue from retail. Mr. Kang continued, "Even in such a difficult economic environment, we are encouraged with the opportunities in our business moving forward. We believe our unique operating philosophy provides us with a distinct competitive advantage over our peers. The nature of our one-stop-service has Ever-Glory involved in all aspects of apparel production -- product design and development, sourcing and sampling, quality control, manufacturing and logistics. We achieve better results by shortening the time to market, improving product quality control and ultimately achieving higher margins. As we execute our strategic vision, we continue to leverage our intimate market knowledge, experienced sourcing professionals and efficient management to deploy a global sourcing and product development network while maintaining strict product quality control and expense control. We place considerable emphasis on innovative and distinctive product designs that stand for exceptional styling and quality for both our wholesale and retail businesses. As we increase our network of professional designers, marketers and R&D team members, we believe we have a unique opportunity to expand our presence as a major player in the international wholesale and domestic retail apparel market." Conference Call The Company will hold a conference call today at 8:30 a.m. ET which will be hosted by Edward Kang, Chairman of the Board, President, and CEO, Yan Guo, Chief Financial Officer. Listeners may access the call by dialing #1-913-312- 0953. The conference call will also be broadcast live over the Internet and can be accessed at the Company's web site at the following URL: http://www.everglorygroup.com . A replay of the call will be available from May 13, 2009 through May 20, 2009 by calling #1-719-457-0820; pin number: 7464961. A webcast of the call will also be available on the Company's web at: http://www.everglorygroup.com . About Ever-Glory International Group, Inc. Based in Nanjing, China, Ever-Glory International Group, Inc. is a leading apparel supply chain manager and retailer in China. Ever-Glory is the first Chinese apparel company listed on the American Stock Exchange (now called NYSE Amex), and has a focus on middle-to-high grade casual wear, outerwear, and sportswear brands. The Company maintains global strategic partnerships in Europe, the United States, Japan and China, conducting business with several well-known brands and retail chain stores. In addition, Ever-Glory operates its own domestic chain of retail stores known as "LA GO GO." Safe Harbor Statement Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our 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 market acceptance of the Company's products and projects, the Company's continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties. These statements are based on our 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.
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)
2009 2008
NET SALES
Related parties $ -- $ 425,102
Third parties 20,507,822 19,322,106
Total net sales 20,507,822 19,747,208
COST OF SALES
Related parties -- 402,748
Third parties 15,793,667 15,623,424
Total cost of sales 15,793,667 16,026,172
GROSS PROFIT 4,714,155 3,721,036
OPERATING EXPENSES
Selling expenses 940,474 277,528
General and administrative expenses 1,856,122 1,412,654
Total Operating Expenses 2,796,596 1,690,182
INCOME FROM OPERATIONS 1,917,559 2,030,854
OTHER INCOME (EXPENSES)
Interest income 103,547 31,974
Interest expense (123,650) (577,828)
Other income 2,373 --
Total Other Income (Expenses) (17,730) (545,854)
INCOME BEFORE INCOME TAX EXPENSE 1,899,829 1,485,000
INCOME TAX EXPENSE (289,071) (283,838)
NET INCOME 1,610,758 1,201,162
ADD(LESS): NET LOSS(INCOME) ATTRIBUTABLE TO
THE NONCONTROLING INTEREST 11,598 (3,869)
NET INCOME ATTRIBUTABLE TO THE COMPANY 1,622,356 1,197,293
Foreign currency translation (loss) gain (44,208) 1,099,884
COMPREHENSIVE INCOME 1,578,148 2,297,177
COMPREHENSIVE INCOME ATTRIBUTABLE TO
THE NONCONTROLING INTEREST (12,392) 23,457
COMPREHENSIVE INCOME ATTRIBUTABLE TO
THE COMPANY $ 1,590,540 $ 2,273,720
NET INCOME PER SHARE
Attributable to the Company's common
stockholders
Basic $ 0.12 $ 0.10
Diluted $ 0.12 $ 0.10
Weighted average number of shares outstanding
Basic 13,531,225 11,449,682
Diluted 13,531,225 12,204,363
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 (UNAUDITED) AND DECEMBER 31, 2008
ASSETS
March 31, December 31,
2009 2008
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 3,833,600 $ 1,445,363
Accounts receivable 12,970,781 9,485,338
Accounts receivable - related parties 73,900 --
Inventories 2,856,073 3,735,227
Other receivables and prepaid expenses 433,038 945,191
Advances on inventory purchases 209,321 288,256
Amounts due from related party 10,754,680 11,565,574
Total Current Assets 31,131,393 27,464,949
LAND USE RIGHT, NET 2,834,195 2,854,508
PROPERTY AND EQUIPMENT, NET 12,799,944 12,494,452
INVESTMENT AT COST 1,465,000 1,467,000
TOTAL ASSETS $ 48,230,532 $ 44,280,909
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Bank loans $ 6,592,500 $ 6,542,820
Accounts payable 5,290,568 3,620,543
Other payables - related party 903,416 754,589
Other payables and accrued liabilities 1,813,614 1,683,977
Value added and other taxes payable 656,583 368,807
Income tax payable 207,550 257,946
Deferred tax liabilities 176,086 80,009
Total Current Liabilities 15,640,317 13,308,691
LONG-TERM LIABILITIES
Loan from related party 2,689,350 2,660,085
TOTAL LIABILITIES 18,329,667 15,968,776
COMMITMENTS AND CONTINGENCIES
EQUITY
Stockholders' equity of the Company
Preferred stock ($.001 par value,
authorized 5,000,000 shares,
no shares issued and outstanding) -- --
Common stock ($.001 par value, authorized
50,000,000 shares, 12,394,652 and
12,373,567 shares issued and outstanding
as of March 31,2009 and December 31, 2008,
respectively) 12,395 12,374
Additional paid-in capital 4,571,164 4,549,004
Retained earnings 17,429,895 15,807,539
Statutory reserve 3,437,379 3,437,379
Accumulated other comprehensive income 3,912,652 3,956,860
Total Stockholders' Equity of the
Company 29,363,485 27,763,156
Noncontrolling interest 537,380 548,977
Total Equity 29,900,865 28,312,133
TOTAL LIABILITIES AND EQUITY $ 48,230,532 $ 44,280,909
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,610,758 $ 1,201,162
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 484,005 238,432
Deferred income tax 96,194 --
Amortization of discount on convertible
notes -- 349,337
Amortization of deferred financing costs -- 73,676
Stock issued for interest -- 2,006
Changes in operating assets and
liabilities
Accounts receivable (3,488,612) 1,941,016
Accounts receivable - related parties (73,905) 161,317
Inventories 874,121 121,586
Other receivables and prepaid expenses (227,276) (8,636)
Advances on inventory purchases 78,547 (9,058)
Amounts due from related party 795,181 (44,291)
Accounts payable 1,675,077 299,523
Accounts payable - related parties 148,837 (68,882)
Other payables and accrued liabilities 151,499 (204,734)
Other payables-related parties 2,327 --
Value added and other taxes payable 288,298 123,406
Income tax payable (50,047) 196,038
Long term deferred expense (56,406)
Net cash provided by operating
activities 2,365,004 4,315,492
CASH FLOWS FROM INVESTING ACTIVITIES
Other payables-related party -- --
Investment in La Chapelle -- (1,397,700)
Purchase of property and equipment (65,719) (84,333)
Proceeds from sale of equipment 3,778 377
Net cash used in investing activities (61,941) (1,481,656)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution from minority shareholders -- 553,040
Proceeds from bank loans 5,860,400 --
Repayment of bank loans (5,801,796) (2,096,550)
Proceeds from long term loan 29,265 59,116
Net cash provided by financing activities 87,869 (1,484,394)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,695) 153,487
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,388,237 1,502,930
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 1,445,363 641,739
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,833,600 $ 2,144,669
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 144,646 $ 68,859
Income taxes $ 242,924 $ 84,576
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