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Ever-Glory Reports First Quarter 2016 Financial Results

Add: 2016   Update: 2016/05/13

 NANJING, China, May 13, 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 first quarter ended March 31, 2016.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “Our first quarter results reflect the continued challenging retail environment in China. Despite soft domestic consumption and lower-than-expected retail sales in the first quarter, we unveiled a new store design for our first brand, La go go. With a stylish, simple layout and new product displays, we aim to provide a fresh shopping experience for customers while improving same-store sales. Moreover, our new brands Sea To Sky, Velwin and idole continue to be well received by our consumers. ”

“First quarter wholesale sales remained at a stable level compared with the same period of prior year, benefiting from our strong supply chain management and product development capabilities. While our outlook for the apparel industry this year remains conservative due to the weak retail environment, we are confident about our long-term strategy to build a profitable and sustainable business,” concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, “As we advance our strategic initiatives to optimize the retail store network and tailor the management teams for each brand, our operating expenses increased during the first quarter. As a disciplined accounting measure, we also increased the provision on inventory of out-of-season products, which negatively impacted our bottom line. However, with a healthy balance sheet and strong cash position, we remain optimistic about the growth opportunities in our overall business. We believe our combined efforts will enhance our competitive position and enable growth and profitability as business conditions improve.

First Quarter 2016 Financial Results

Total sales for the first quarter of 2016 were $91.7 million, a decrease of 6.3% from $97.9 million in the first quarter of 2015. This decrease was primarily attributable to an 8.5% decrease in sales in our retail business and a 2.2% decrease in our wholesale business.

Retail sales for the Company’s branded fashion apparel retail division decreased by 8.5% to $59.1 million for the first quarter of 2016, compared with $64.6 million for the first quarter of 2015. This decrease was primarily due to the decrease in same-store sales. The Company had 1,171 retail stores as of March 31, 2016, compared with 1,206 retail stores as of March 31, 2015.

Sales for the Company’s wholesale division decreased by 2.2% to $32.6 million for the first quarter of 2016, compared with $33.3 million for the first quarter of 2015. This decrease was primarily due to decreased sales in China, Germany and the United Kingdom, partially offset by increased sales in other European markets, Japan and the United States.

Total gross profit for the first quarter of 2016 decreased by 7.4% to $28.3 million, compared with $30.6 million for the first quarter of 2015. Total gross margin decreased by 40 basis points to 30.9% from 31.3% for the first quarter of 2015.

Gross profit for the retail business decreased by 5.7% to $22.1 million for the first quarter of 2016, compared with $23.5 million for the first quarter of 2015. Gross margin increased by 110 basis points to 37.4% from 36.3% for the first quarter of 2015.

Gross profitfor the wholesale business decreased by 12.8% to $6.2 million for the first quarter of 2016, compared with $7.2 million for the first quarter of 2015. Gross margin decreased by 240 basis points to 19.1% from 21.5% for the first quarter of 2015.

Selling expenses for the first quarter of 2016 increased by 3.2% to $20.9 million, or 22.8% of total sales, compared with $20.3 million, or 20.7% of total sales for the first quarter of 2015. The increase was mainly attributable to increased average salaries as well as increased store decoration and marketing expenses associated with the promotion of our retail brands.

General and administrative expenses for the first quarter of 2016 increased slightly to $6.9 million, or 7.6% of total sales, compared with $6.9 million, or 7.1% of total sales for the first quarter of 2015.

Income from operations for the first quarter of 2016 decreased by 86.0% to $0.5 million compared with $3.4 million for the first quarter of 2015.

Net loss attributable to the Company for the first quarter of 2016 was $0.4 million compared with net income attributable to the Company of $2.4 million for the first quarter of 2015. Basic and diluted loss per share was $0.02 for the first quarter of 2016 compared with basic and diluted earnings per share of $0.16 for the first quarter of 2015.

Balance Sheet

As of March 31, 2016, Ever-Glory had approximately $34.6 million of cash and cash equivalents, compared with approximately $22.7 million as of December 31, 2015. Ever-Glory had working capital of approximately $54.2 million as of March 31, 2016, and outstanding bank loans of approximately $42.4 million as of March 31, 2016.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 13, 2016 (8:00 p.m. Beijing Time on May 13, 2016). Listeners can access the conference call by dialing +1-888-539-3696 or +1-719-325-2244 and using the access code 9325642. 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 May 13 through 11:59 p.m. Eastern Time on May 20, by dialing +1-877-870-5176 or +1-858-384-5517 and using the access code 9325642.

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 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 MARCH 31, 2016 (UNAUDITED) AND DECEMBER 31, 2015
 

 
 
2016
 
 
2015
 
ASSETS
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
34,639
 
 
$
22,702
 
Accounts receivable
 
 
57,612
 
 
 
87,527
 
Inventories
 
 
65,838
 
 
 
75,063
 
Value added tax receivable
 
 
1,944
 
 
 
2,736
 
Other receivables and prepaid expenses
 
 
7,072
 
 
 
3,840
 
Advances on inventory purchases
 
 
4,007
 
 
 
6,193
 
Amounts due from related parties
 
 
1,925
 
 
 
2,535
 
Total Current Assets
 
 
173,037
 
 
 
200,596
 
 
 
 
 
 
 
 
 
 
INTANGIBLE ASSETS
 
 
6,220
 
 
 
6,217
 
PROPERTY AND EQUIPMENT, NET
 
 
21,953
 
 
 
21,906
 
TOTAL ASSETS
 
$
201,210
 
 
$
228,719
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
Bank loans
 
$
42,414
 
 
$
44,841
 
Accounts payable
 
 
46,629
 
 
 
66,118
 
Accounts payable and other payables - related parties
 
 
2,314
 
 
 
2,823
 
Other payables and accrued liabilities
 
 
19,855
 
 
 
22,221
 
Value added and other taxes payable
 
 
5,250
 
 
 
6,882
 
Income tax payable
 
 
2,362
 
 
 
4,052
 
Total Current Liabilities
 
 
118,824
 
 
 
146,937
 
 
 
 
 
 
 
 
 
 
NONCURRENT LIABILITIES
 
 
 
 
 
 
 
 
Deferred tax liabilities
 
 
2,722
 
 
 
2,992
 
TOTAL LIABILITIES
 
 
121,546
 
 
 
149,929
 
 
 
 
 
 
 
 
 
 
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 14,785,868 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively)
 
 
15
 
 
 
15
 
Additional paid-in capital
 
 
3,597
 
 
 
3,597
 
Retained earnings
 
 
78,078
 
 
 
78,439
 
Statutory reserve
 
 
15,327
 
 
 
15,327
 
Accumulated other comprehensive income
 
 
4,029
 
 
 
3,249
 
Amounts due from related party
 
 
(21,182
)
 
 
(21,776
)
Total equity attributable to stockholders of the Company
 
 
79,864
 
 
 
78,851
 
Noncontrolling interest
 
 
(200
)
 
 
(61
)
Total Equity
 
 
79,664
 
 
 
78,790
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
201,210
 
 
$
228,719
 

 
  
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(In thousands of U.S. Dollars, except
share and per share data or otherwise stated)
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015 (UNAUDITED)
 

 
 
2016
 
 
2015
 
 
 
 
 
 
 
 
SALES
 
$
91,693
 
 
$
97,903
 
 
 
 
 
 
 
 
 
 
COST OF SALES
 
 
63,350
 
 
 
67,295
 
 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
28,343
 
 
 
30,608
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
Selling expenses
 
 
20,913
 
 
 
20,255
 
General and administrative expenses
 
 
6,949
 
 
 
6,914
 
Total operating expenses
 
 
27,862
 
 
 
27,169
 
 
 
 
   
 
 
 
   
 
INCOME FROM OPERATIONS
 
 
481
 
 
 
3,439
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
Interest income
 
 
384
 
 
 
324
 
Interest expense
 
 
(597
)
 
 
(776
)
Other income
 
 
67
 
 
 
234
 
Total other expenses
 
 
(146
)
 
 
(218
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
335
 
 
 
3,221
 
 
 
 
 
 
 
 
 
 
INCOME TAX EXPENSE
 
 
(835
)
 
 
(825
)
 
 
 
 
 
 
 
 
 
NET (LOSS) INCOME
 
 
(500
)
 
 
2,396
 
Net loss attributable to the non-controlling interest
 
 
140
 
 
 
-
 
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY
 
$
(360
)
 
$
2,396
 
 
 
 
 
 
 
 
 
 
NET (LOSS) INCOME
 
$
(500
)
 
$
2,396
 
Foreign currency translation income
 
 
782
 
 
 
456
 
COMPREHENSIVE INCOME
 
$
282
 
 
$
2,851
 
 
 
 
 
 
 
 
 
 
Comprehensive loss attributable to the noncontrolling interest
 
 
143
 
 
 
-
 
 
 
 
 
 
 
 
 
 
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY
 
$
425
 
 
$
2,851
 
(LOSS) EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.02
)
 
$
0.16
 
Weighted average number of shares outstanding Basic and diluted
 
 
14,786
 
 
 
14,784
 

 
 
 
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 THREE MONTHS ENDED MARCH 31, 2016 AND 2015 (UNAUDITED)
 

 
 
2016
 
 
2015
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net (loss) income
 
$
(500
)
 
$
2,396
 
Adjustments to reconcile net (loss) income to cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
1,758
 
 
 
2,510
 
Provision for obsolete inventories
 
 
2,098
 
 
 
-
 
Deferred income tax
 
 
(285
)
 
 
(128
)
Changes in operating assets and liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
 
30,037
 
 
 
23,930
 
Inventories
 
 
7,443
 
 
 
9,214
 
Value added tax receivable
 
 
799
 
 
 
277
 
Other receivables and prepaid expenses
 
 
(3,163
)
 
 
1,153
 
Advances on inventory purchases
 
 
2,196
 
 
 
(2,716
)
Amounts due from related parties
 
 
552
 
 
 
(3,277
)
Accounts payable
 
 
(19,781
)
 
 
(10,733
)
Accounts payable and other payables- related parties
 
 
(517
)
 
 
(2,341
)
Other payables and accrued liabilities
 
 
(2,484
)
 
 
(2,375
)
Value added and other taxes payable
 
 
(1,653
)
 
 
1,766
 
Income tax payable
 
 
(1,693
)
 
 
(1,278
)
Net cash provided by operating activities
 
 
14,807
 
 
 
18,397
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
(1,633
)
 
 
(4,410
)
Proceeds from sale of property and equipment
 
 
-
 
 
 
3
 
Net cash used in investing activities
 
 
(1,633
)
 
 
(4,407
)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Proceeds from bank loans
 
 
23,593
 
 
 
28,350
 
Repayment of bank loans
 
 
(26,250
)
 
 
(43,051
)
Repayment of loans from related party
 
 
917
 
 
 
-
 
Advances to related party
 
 
-
 
 
 
(813
)
Net cash used in financing activities
 
 
(1,740
)
 
 
(15,513
)
 
 
 
 
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
 
503
 
 
 
(631
)
 
 
 
 
 
 
 
 
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
11,937
 
 
 
(2,154
)
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
 
22,702
 
 
 
34,134
 
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
34,639
 
 
$
31,980
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
 
 
Interest
 
$
597
 
 
$
776
 
Income taxes
 
$
2,851
 
 
$
2,231