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Ever-Glory Reports Fourth Quarter and Full Year 2015 Financial Results

Add: 2016   Update: 2016/03/28

 

NANJING, China, March 28, 2016 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NASDAQ-GM: EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, today reported its financial results for the fourth quarter and full year ended December 31, 2015.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During 2015, soft global economy and Chinese retail conditions led to a challenging consumer environment, impacting sales in both our wholesale and retail businesses. Nevertheless, our product development and supply chain management capability continued to gain recognition among high quality mid-to-high end wholesale customers both domestically and internationally in 2015."
"For our retail business, we remain focused on the retail network expansion, as we opened 228 stores in China during 2015. In addition, to further enhance our profitability, and improve our store performance and operating efficiency, we made the decision to optimize our retail network by closing 270 underperforming stores and remodeling or relocating 216 stores in 2015, while enhancing our product development and retail store management. Following the 2014 introduction of our two new retail brands, Velwin and Sea To Sky, and the 2015 introduction of our latest brand idole, we had a network of 1,159 retail stores across over 300 cities in China, at the end of 2015. Heading into 2016, we continue to execute on our multi-brand strategy to increase our competitiveness and market share."
"While we expect economic pressures to persist, we remain optimistic regarding our future growth opportunities. With a wholesale strategy focused on mid-to-high end customer base expansion, supply chain management refinement and manufacturing process optimization, and a retail strategy focused on retail store management and customer-driven product development, we believe our efforts will support the long-term sustainability of our overall business," concluded Mr. Kang.
Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "We are pleased with our improvement in gross margin in 2015 from last year. While the market weakness impacted our topline results, we enacted several strategic initiatives throughout the year, including optimizing retail store network, increasing marketing and promotional activities and developing online channels. Going forward, we believe our efforts will help ensure the growth of Ever-Glory over the long-run as market conditions improve, and we continue to remain focused on maximizing our profitability through disciplined expense management."
Fourth Quarter 2015 Financial Results
Total sales for the fourth quarter of 2015 were $129.2 million, a 0.5% increase from $128.5 million in the fourth quarter of 2014. This increase was primarily due to a 4.4% increase in wholesale sales, partially offset by a 2.9% decrease in retail sales.
Retail sales from the Company's branded fashion apparel retail division decreased by 2.9% to $67.0 million for the fourth quarter of 2015, compared with $68.9 million for the fourth quarter of 2014. This decrease was primarily due to the decrease in same-store sales and the number of retail stores. We had 1,159 retail stores as of December 31, 2015, compared with 1,201 retail stores as of December 31, 2014.
Wholesale sales from the Company's wholesale business increased by 4.4% to $62.2 million for the fourth quarter of 2015, compared with $59.6 million for the fourth quarter of 2014. This increase was primarily due to increased sales in China and Europe, partially offset by decreased sales in Germany, the United Kingdom, the United States and Japan.
Total gross profit for the fourth quarter of 2015 increased by 9.1% to $36.3 million, compared with $33.3 million for the fourth quarter of 2014. Total gross margin increased by 220 basis points to 28.1% from 25.9% for the fourth quarter of 2014.
Gross profit for retail business increased by 5.1% to $24.7 million for the fourth quarter of 2015, compared with $23.5 million for the fourth quarter of 2014. Gross margin increased by 280 basis points to 36.9% from 34.1% for the fourth quarter of 2014.
Gross profit for wholesale business increased by 18.6% to $11.6 million for the fourth quarter of 2015, compared with $9.8 million for the fourth quarter of 2014. Gross margin increased by 220 basis points to 18.6% from 16.4% for the fourth quarter of 2014.
Selling expenses for the fourth quarter of 2015 increased by 0.5% to $19.5 million, or 15.1% of total sales, compared with $19.4 million, or 15.1% of total sales for the fourth quarter of 2014.
General and administrative expenses for the fourth quarter of 2015 increased by 33.4% to $12.1 million, or 9.4% of total sales, compared with $9.1 million, or 7.1% of total sales for the fourth quarter of 2014. The increase was mainly due to an increase in the number of wholesale and retail management personnel, and the depreciation and amortization of the new logistics center.
Income from operations for the fourth quarter of 2015 decreased by 2.5% to $4.7 million compared with $4.8 million for the fourth quarter of 2014.
Net income attributable to the Company for the fourth quarter of 2015 increased by 42.3% to $4.7 million compared with $3.3 million for the fourth quarter of 2014. Basic and diluted earnings per share were $0.32 and $0.22 for the fourth quarter of 2015 and 2014, respectively.
Full Year 2015 Financial Results
Total sales for the full year of 2015 were $421.4 million, an 8.4% decrease from $460.1 million in the full year of 2014. This decrease was primarily due to an 8.8% decrease in wholesale sales and an 8.1% decrease in retails sales.
Retail sales from the Company's branded fashion apparel retail division decreased by 8.1% to $224.8 million for the full year of 2015, compared with $244.7 million for the full year of 2014. This decrease was primarily due to decreased same-store sales and number of retail stores.
Wholesale sales from the Company's wholesale business decreased by 8.8% to $196.6 million for the full year of 2015, compared with $215.5 million for the full year of 2014. This decrease was primarily attributable to decreased sales in Germany, the United Kingdom, Europe and Japan, partially offset by increased sales in China and the United States.
Total gross profit for the full year of 2015 increased by 5.8% to $129.3 million, compared with $122.2 million for the full year of 2014. Total gross margin for the full year of 2015 increased by 410 basis points to 30.7% from 26.6% for the full year of 2014.
Gross profit for retail business increased by 10.2% to $94.4 million for the full year of 2015, compared with $85.6 million for the full year of 2014. Gross margin for the full year of 2015 increased by 700 basis points to 42.0% from 35.0% for the full year of 2014.
Gross profit for wholesale business decreased by 4.7% to $34.9 million for the full year of 2015, compared with $36.6 million for the full year of 2014. Gross margin for the full year of 2015 increased by 70 basis points to 17.7% from 17.0% for the full year of 2014.
Selling expenses for the full year of 2015 increased by 13.0% to $76.5 million, or 18.2% of total sales, compared with $67.7 million, or 14.7% of total sales for the full year of 2014.
General and administrative expenses for the full year of 2015 increased by 9.9% to $36.0 million, or 8.5% of total sales, compared with $32.7 million, or 7.1% of total sales for the full year of 2014. The increase was mainly due to an increase in the number of wholesale and retail management personnel, and the depreciation and amortization of the new logistics center.
Income from operations for the full year of 2015 decreased by 23.0% to $16.8 million compared with $21.8 million for the full year of 2014.
Net income attributable to the Company for the full year of 2015 decreased by 17.1% to $13.6 million compared with $16.4 million for the full year of 2014. Basic and diluted earnings per share were $0.92 and $1.11 for the full year of 2015 and 2014, respectively.
Balance Sheet
As of December 31, 2015, Ever-Glory had approximately $22.7 million of cash and cash equivalents, compared with approximately $34.1 million as of December 31, 2014. Ever-Glory had working capital of approximately $53.7 million as of December 31, 2015, and outstanding bank loans of approximately $44.8 million as of December 31, 2015.
Conference Call
The Company will hold a conference call at 8:00 a.m. Eastern Time on March 28, 2016 (8:00 p.m. Beijing Time on March 28, 2016). Listeners can access the conference call by dialing +1-888-481-2877 or +1-719-457-2648 and referring to the confirmation code 4988655. 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 28 through 11:59 p.m. Eastern Time on April 4 by calling +1-877-870-5176 or +1-858-384-5517 with pin number 4988655.
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, 2014. Ever-Glory offers apparel to woman under its own brands "La go go", "Velwin", "Sea To Sky" and "idole" in China. 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 services of supply chain management on 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
Yanhua Huang
Tel: +86-25-52096875
E-Mail: xxnfff@126.com
The Piacente Group, Inc.
Emilie Wu
China: +86-10-6535-0148
US: +1-212-481-2050
E-Mail: everglory@tpg-ir.com
 


 
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, 2015 AND 2014
 

 
 
2015
 
 
2014
 
ASSETS
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
22,702
 
 
$
34,134
 
Accounts receivable
 
 
87,527
 
 
 
91,875
 
Inventories
 
 
75,063
 
 
 
70,270
 
Value added tax receivable
 
 
2,736
 
 
 
2,697
 
Other receivables and prepaid expenses
 
 
3,840
 
 
 
3,524
 
Advances on inventory purchases
 
 
6,193
 
 
 
3,917
 
Amounts due from related parties
 
 
2,535
 
 
 
1,652
 
Total Current Assets
 
 
200,596
 
 
 
208,069
 
 
 
 
 
 
 
 
 
 
INTANGIBLE ASSETS
 
 
6,217
 
 
 
4,041
 
PROPERTY AND EQUIPMENT, NET
 
 
21,906
 
 
 
20,103
 
TOTAL ASSETS
 
$
228,719
 
 
$
232,213
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
Bank loans
 
$
44,841
 
 
$
60,217
 
Accounts payable
 
 
66,118
 
 
 
58,923
 
Accounts payable and other payables - related parties
 
 
2,823
 
 
 
3,896
 
Other payables and accrued liabilities
 
 
22,221
 
 
 
20,911
 
Value added and other taxes payable
 
 
6,882
 
 
 
6,217
 
Income tax payable
 
 
4,052
 
 
 
5,523
 
Total Current Liabilities
 
 
146,937
 
 
 
155,687
 
 
 
 
 
 
 
 
 
 
NONCURRENT LIABILITIES
 
 
 
 
 
 
 
 
Deferred tax liabilities
 
 
2,992
 
 
 
3,874
 
TOTAL LIABILITIES
 
 
149,929
 
 
 
159,561
 
 
 
 
 
 
 
 
 
 
COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
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, 14,785,868 and 14,784,094 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively)
 
 
15
 
 
 
15
 
Additional paid-in capital
 
 
3,597
 
 
 
3,587
 
Retained earnings
 
 
78,439
 
 
 
67,660
 
Statutory reserve
 
 
15,327
 
 
 
12,537
 
Accumulated other comprehensive income
 
 
3,249
 
 
 
8,277
 
Amounts due from related party
 
 
(21,776
)
 
 
(19,424
)
Total equity attributable to stockholders of the Company
 
 
78,851
 
 
 
72,652
 
Noncontrolling interest
 
 
(61
)
 
 
-
 
Total Equity
 
 
78,790
 
 
 
72,652
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
228,719
 
 
$
232,213
 

  
 
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 dat
a or otherwise stated)
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
 

 
 
2015
 
 
2014
 
 
 
 
 
 
 
 
SALES
 
$
421,389
 
 
$
460,141
 
 
 
 
 
 
 
 
 
 
COST OF SALES
 
 
292,090
 
 
 
337,893
 
 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
129,299
 
 
 
122,248
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
Selling expenses
 
 
76,537
 
 
 
67,730
 
General and administrative expenses
 
 
35,956
 
 
 
32,704
 
Total operating expenses
 
 
112,493
 
 
 
100,434
 
 
 
 
   
 
 
 
   
 
INCOME FROM OPERATIONS
 
 
16,806
 
 
 
21,814
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
Interest income
 
 
1,001
 
 
 
1,238
 
Interest expense
 
 
(2,689
)
 
 
(3,269
)
Other income
 
 
3,241
 
 
 
2,060
 
Total other income (expense)
 
 
1,553
 
 
 
29
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
18,359
 
 
 
21,843
 
 
 
 
 
 
 
 
 
 
INCOME TAX EXPENSE
 
 
(5,054
)
 
 
(5,477
)
 
 
 
 
 
 
 
 
 
NET INCOME
 
 
13,305
 
 
 
16,366
 
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to the non-controlling interest
 
 
264
 
 
 
-
 
NET INCOME ATTRIBUTABLE TO THE COMPANY
 
$
13,569
 
 
$
16,366
 
 
 
 
 
 
 
 
 
 
NET INCOME
 
$
13,305
 
 
$
16,366
 
Foreign currency translation (loss) gain
 
 
(5,029
)
 
 
(506
)
COMPREHENSIVE INCOME
 
$
8,276
 
 
$
15,860
 
 
 
 
 
 
 
 
 
 
Comprehensive (income) loss attributable to the noncontrolling interest
 
 
265
 
 
 
-
 
 
 
 
 
 
 
 
 
 
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY
 
$
8,541
 
 
$
15,860
 
EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
0.92
 
 
$
1.11
 
Weighted average number of shares outstanding basic and diluted
 
 
14,784,847
 
 
 
14,782,320
 

 
 
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars, except share and per share dat
a or otherwise stated)
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
 

 
 
2015
 
 
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income
 
$
13,305
 
 
$
16,366
 
Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
8,495
 
 
 
7,532
 
Provision for obsolete inventories
 
 
3,690
 
 
 
4,967
 
Loss from sale of property and equipment
 
 
(28
)
 
 
-
 
Provision for doubtful accounts
 
 
503
 
 
 
1,789
 
Deferred income tax
 
 
(708
)
 
 
(3,471
)
Stock-based compensation
 
 
10
 
 
 
15
 
Changes in operating assets and liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
 
(491
)
 
 
(13,850
)
Inventories
 
 
(12,261
)
 
 
(511
)
Value added tax receivable
 
 
(187
)
 
 
(95
)
Other receivables and prepaid expenses
 
 
(524
)
 
 
(1,767
)
Advances on inventory purchases
 
 
(2,582
)
 
 
2,055
 
Amounts due from related parties
 
 
(1,359
)
 
 
240
 
Accounts payable
 
 
10,836
 
 
 
(13,459
)
Accounts payable and other payables- related parties
 
 
(1,829
)
 
 
(1,285
)
Other payables and accrued liabilities
 
 
2,460
 
 
 
4,897
 
Value added and other taxes payable
 
 
1,030
 
 
 
838
 
Income tax payable
 
 
(1,230
)
 
 
5,061
 
Net cash provided by operating activities
 
 
19,130
 
 
 
9,322
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
(11,385
)
 
 
(9,477
)
Proceeds from sale of property and equipment
 
 
67
 
 
 
161
 
Purchase of land use rights
 
 
(1,475
)
 
 
(1,314
)
Acquisition of Yiduo net of cash acquired
 
 
(690
)
 
 
-
 
Net cash used in investing activities
 
 
(13,483
)
 
 
(10,630
)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Proceeds from bank loans
 
 
136,910
 
 
 
138,413
 
Repayment of bank loans
 
 
(149,791
)
 
 
(131,173
)
Repayment of loans from related party
 
 
2,405
 
 
 
4,358
 
Advances to related party
 
 
(4,873
)
 
 
(5,044
)
Interest income received from related party
 
 
-
 
 
 
1,302
 
Net cash provided by (used in) financing activities
 
 
(15,349
)
 
 
7,856
 
 
 
 
 
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
 
(1,730
)
 
 
(186
)
 
 
 
 
 
 
 
 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
 
 
(11,432
)
 
 
6,361
 
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
 
34,134
 
 
 
27,773
 
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
22,702
 
 
$
34,134
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
 
 
Accrued interest income on amounts due from related party under counter-guarantee agreement
 
$
888
 
 
$
1,075
 
Interest
 
$
2,627
 
 
$
3,269
 
Income taxes
 
$
6,993
 
 
$
3,905
 
SUPPLEMENTAL INFORMATION OF NONCASH INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Increase in intangible assets and non-controlling interests
 
$
233
 
 
$
-