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Ever-Glory Reports Second Quarter 2016 Financial Results

Add: 2016   Update: 2016/08/15

NANJING, China, August 15, 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 second quarter ended June 30, 2016.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “We are pleased with our financial results in the second quarter with top line increasing by 6.5% year-over-year and bottom line returning to profitability. The strategic initiatives we have implemented in the last few months have contributed to these solid results.”

“Despite soft year-over-year retail sales, the performance of this segment was within our expectation. In the second quarter, we continued to execute our key strategies to maintain stability in the retail business in the short term, while focusing on store network optimization, inventory and operation management and branding to drive profitable growth over the long run.”

“Our second quarter wholesale sales grew by 26.9% year-over-year, with strong results recorded in the United States, other European markets (excluding Germany and the United Kingdom) and China. We believe this reflects our recovery efforts as we strive to strengthen product development and supply chain management, as well as optimize our customer base by focusing on high-quality mid-to-high end customers with good credit histories. Looking at the remainder of 2016, we expect the challenging market conditions to remain. We are committed to our strategic initiatives and laying a firm foundation for a sustainable and profitable business in the long term,” concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, “Our solid financial performance reflects the prudent steps that we’ve taken to improve our cost structure, resulting in decreased operating expenses as percentage of total sales in the second quarter. Meanwhile, as part of our effort to reduce inventory levels for our retail business, we increased in-store discounts on out-of-season products during the second quarter, which led to higher production costs as percentage of retail sales and slightly impacted the gross margin for the retail segment. As we remain committed to maximizing operating efficiency and further reducing our inventory levels, we are confident in our long-term growth prospects.”

Second Quarter 2016 Financial Results

Total sales for the second quarter of 2016 were $80.7 million, an increase of 6.5% from $75.7 million in the second quarter of 2015. This increase was primarily driven by a 26.9% increase in our wholesale business partially offset by a 6.7% decrease in our retail business.

Sales for the Company’s branded fashion apparel retail division decreased by 6.7% to $42.9 million for the second quarter of 2016, compared with $45.9 million for the second quarter of 2015. This decrease was primarily due to a decrease in the same-store sales. The Company had 1,275 retail stores as of June 30, 2016, compared with 1,204 retail stores as of June 30, 2015.

Salesfor the Company’s wholesale division increased by 26.9% to $37.8 million for the second quarter of 2016, compared with $29.8 million for the second quarter of 2015. This increase was primarily due to an increase in sales in the United States, other European markets (excluding Germany and the United Kingdom) and China, partially offset by a decrease in sales in Germany and Japan.

Total gross profit for the second quarter of 2016 decreased by 11.1% to $26.7 million, compared with $30.0 million for the second quarter of 2015. Total gross margin decreased to 33.1% from 39.7% for the second quarter of 2015.

Gross profit for the retail business decreased by 13.4% to $20.6 million for the second quarter of 2016, compared with $23.8 million for the second quarter of 2015. Gross margin decreased to 48.1% from 51.8% for the second quarter of 2015.

Gross profitfor the wholesale business decreased by 2.5% to $6.1 million for the second quarter of 2016, compared with $6.2 million for the second quarter of 2015. Gross margin decreased to 16.1% from 21.0% for the second quarter of 2015.

Selling expenses for the second quarter of 2016 decreased by 8.8% to $16.0 million, or 19.9% of total sales, compared with $17.6 million, or 23.2% of total sales for the second quarter of 2015. This decrease was mainly attributable to lower retail sales and a decrease in store management expense.

General and administrative expenses for the second quarter of 2016 decreased by 3.8% to $7.3 million, or 9.1% of total sales, compared with $7.6 million, or 10.0% of total sales for the second quarter of 2015.

Income from operations for the second quarter of 2016 decreased by 30.9% to $3.4 million compared with $4.9 million for the second quarter of 2015.

Net income attributable to the Companyfor the second quarter of 2016 was $3.1 million compared with $3.6 million for the second quarter of 2015. Basic and diluted earnings per share were $0.21 for the second quarter of 2016 compared with $0.24 for the second quarter of 2015.

Balance Sheet

As of June 30, 2016, Ever-Glory had approximately $27.5 million of cash and cash equivalents, compared with approximately $22.7 million as of December 31, 2015. Ever-Glory had working capital of approximately $53.8 million as of June 30, 2016, and outstanding bank loans of approximately $43.7 million as of June 30, 2016.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 15, 2016 (8:00 p.m. Beijing Time on August 15, 2016). Listeners can access the conference call by dialing +1-888-318-7451 or +1-719-457-2659 and using the access code 2412954. 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 August 15 through 11:59 p.m. Eastern Time on August 22, by dialing +1-877-870-5176 or +1-858-384-5517 and using the access code 2412954.

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
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 JUNE 30, 2016 (UNAUDITED) AND DECEMBER 31, 2015
 
 
 
2016
 
 
2015
 
ASSETS
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
27,475
 
 
$
22,702
 
Accounts receivable
 
 
62,233
 
 
 
87,527
 
Inventories
 
 
62,720
 
 
 
75,063
 
Value added tax receivable
 
 
5,215
 
 
 
2,736
 
Other receivables and prepaid expenses
 
 
4,899
 
 
 
3,840
 
Advances on inventory purchases
 
 
3,658
 
 
 
6,193
 
Amounts due from related parties
 
 
1,054
 
 
 
2,535
 
Total Current Assets
 
 
167,254
 
 
 
200,596
 
 
 
 
 
 
 
 
 
 
INTANGIBLE ASSETS
 
 
6,041
 
 
 
6,217
 
PROPERTY AND EQUIPMENT, NET
 
 
23,791
 
 
 
21,906
 
TOTAL ASSETS
 
$
197,086
 
 
$
228,719
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
Bank loans
 
$
43,675
 
 
$
44,841
 
Accounts payable
 
 
44,240
 
 
 
66,118
 
Accounts payable and other payables - related parties
 
 
2,530
 
 
 
2,823
 
Other payables and accrued liabilities
 
 
16,949
 
 
 
22,221
 
Value added and other taxes payable
 
 
4,317
 
 
 
6,882
 
Income tax payable
 
 
1,701
 
 
 
4,052
 
Total Current Liabilities
 
 
113,412
 
 
 
146,937
 
 
 
 
 
 
 
 
 
 
NONCURRENT LIABILITIES
 
 
 
 
 
 
 
 
Deferred tax liabilities
 
 
2,910
 
 
 
2,992
 
TOTAL LIABILITIES
 
 
116,322
 
 
 
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, 14,787,940 and 14,785,868 shares issued and outstanding As of June 30, 2016 and December 31, 2015, respectively)
 
 
15
 
 
 
15
 
Additional paid-in capital
 
 
3,602
 
 
 
3,597
 
Retained earnings
 
 
81,223
 
 
 
78,439
 
Statutory reserve
 
 
15,327
 
 
 
15,327
 
Accumulated other comprehensive income
 
 
853
 
 
 
3,249
 
Amounts due from related party
 
 
(19,967
)
 
 
(21,776
)
Total equity attributable to stockholders of the Company
 
 
81,053
 
 
 
78,851
 
Noncontrolling interest
 
 
(289
)
 
 
(61
)
Total Equity
 
 
80,764
 
 
 
78,790
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
197,086
 
 
$
228,719
 
 
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015 (UNAUDITED)
 
 
 
Three months ended
 
 
Six months ended
 
 
 
June 30,
 
 
June 30,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
NET SALES
 
$
80,676
 
 
$
75,727
 
 
$
172,369
 
 
$
173,630
 
COST OF SALES
 
 
53,961
 
 
 
45,679
 
 
 
117,311
 
 
 
112,974
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
26,715
 
 
 
30,048
 
 
 
55,058
 
 
 
60,656
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling expenses
 
 
16,043
 
 
 
17,583
 
 
 
36,956
 
 
 
37,838
 
General and administrative expenses
 
 
7,316
 
 
 
7,606
 
 
 
14,265
 
 
 
14,520
 
Total Operating Expenses
 
 
23,359
 
 
 
25,189
 
 
 
51,221
 
 
 
52,358
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
 
3,356
 
 
 
4,859
 
 
 
3,837
 
 
 
8,298
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
237
 
 
 
215
 
 
 
621
 
 
 
539
 
Interest expense
 
 
(334
)
 
 
(716
)
 
 
(931
)
 
 
(1,492
)
Other income
 
 
621
 
 
 
539
 
 
 
687
 
 
 
772
 
Total Other Income (Expenses)
 
 
524
 
 
 
38
 
 
 
377
 
 
 
(181
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
3,880
 
 
 
4,897
 
 
 
4,214
 
 
 
8,117
 
Income tax expense
 
 
(828
)
 
 
(1,379
)
 
 
(1,662
)
 
 
(2,204
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
 
 
3,052
 
 
 
3,518
 
 
 
2,552
 
 
 
5,913
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to the non-controlling interest
 
 
93
 
 
 
80
 
 
 
233
 
 
 
81
 
NET INCOME ATTRIBUTABLE TO THE COMPANY
 
 
3,145
 
 
 
3,598
 
 
 
2,785
 
 
 
5,994
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
 
$
3,052
 
 
$
3,518
 
 
$
2,552
 
 
$
5,913
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation (loss) gain
 
 
(3,178
)
 
 
(127
)
 
 
(2,396
)
 
 
329
 
COMPREHENSIVE INCOME
 
 
(126
)
 
 
3,391
 
 
 
156
 
 
 
6,242
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive loss attributable to the non-controlling interest
 
 
85
 
 
 
80
 
 
 
228
 
 
 
81
 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY
 
$
(41
)
 
$
3,471
 
 
$
384
 
 
$
6,323
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
$
0.21
 
 
$
0.24
 
 
$
0.19
 
 
$
0.41
 
Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
 
14,787,302
 
 
 
14,784,094
 
 
 
14,786,589
 
 
 
14,784,094
 
 
 
 
 
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 SIX MONTHS ENDED JUNE 30, 2016 AND 2015 (UNAUDITED)
 
 
 
2016
 
 
2015
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income
 
$
2,552
 
 
$
5,913
 
Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
3,331
 
 
 
4,678
 
Recovering for doubtful accounts
 
 
-
 
 
 
(143
)
Provision for obsolete inventories
 
 
7,111
 
 
 
 
Deferred income tax
 
 
(14
)
 
 
3
 
Stock-based compensation
 
 
5
 
 
 
-
 
Changes in operating assets and liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
 
23,903
 
 
 
34,101
 
Inventories
 
 
3,901
 
 
 
(7,266
)
Value added tax receivable
 
 
(2,583
)
 
 
(1,333
)
Other receivables and prepaid expenses
 
 
(1,166
)
 
 
865
 
Advances on inventory purchases
 
 
2,434
 
 
 
1,055
 
Amounts due from related parties
 
 
1,092
 
 
 
186
 
Accounts payable
 
 
(20,847
)
 
 
(13,416
)
Accounts payable and other payables- related parties
 
 
(275
)
 
 
(1,074
)
Other payables and accrued liabilities
 
 
(4,852
)
 
 
(1,987
)
Value added and other taxes payable
 
 
(2,448
)
 
 
(779
)
Income tax payable
 
 
(2,297
)
 
 
(1,099
)
Net cash provided by operating activities
 
 
9,847
 
 
 
19,704
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
(5,692
)
 
 
(5,438
)
Proceeds from sale of property and equipment
 
 
-
 
 
 
4
 
Purchase of intangible assets
 
 
-
 
 
 
(1,732
)
Acquisition of Yiduo net of cash acquired
 
 
-
 
 
 
(457
)
Net cash (used in) investing activities
 
 
(5,692
)
 
 
(7,623
)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Proceeds from bank loans
 
 
48,295
 
 
 
52,715
 
Repayment of bank loans
 
 
(48,521
)
 
 
(72,217
)
Repayment of loans from related party
 
 
1,836
 
 
 
2,444
 
Advances to related party
 
 
-
 
 
 
(815
)
Net cash provided by (used in) financing activities
 
 
1,610
 
 
 
(17,873
)
 
 
 
 
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
 
(992
)
 
 
(91
)
 
 
 
 
 
 
 
 
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
4,773
 
 
 
(5,883
)
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
 
22,702
 
 
 
34,134
 
 
 
 
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
27,475
 
 
$
28,251
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
 
$
931
 
 
$
1,492
 
Income taxes
 
$
4,442
 
 
$
3,301
 
SUPPLEMENTAL INFORMATION OF NONCASH INVESTING ACTIVITIES
 
 
 
 
 
Increase in intangible assets and non-controlling interests
 
 
-
 
 
$
233
 

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