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Ever-Glory Reports First Quarter 2019 Financial Resultsnew

Add: 2019   Update: 2019/05/14

Ever-Glory Reports First Quarter 2019 Financial Results

NANJING, China, May 14, 2019 /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 first quarter ended March 31, 2019.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first 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. Notably, we achieved year-over-year improvement in gross profit of 13.0% for our wholesale business."

"During the first quarter of 2019, we remained our focus on driving retail business through store network optimization strategy, as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 7 stores during 2019, we operated a nationwide network of 1,315 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 the light of weak micro environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in 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 first quarter results, coupled with our ability to increase operating leverage, resulted in expanded wholesale operating income during this quarter. 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."

First Quarter 2019 Financial Results 

Total sales for the first quarter of 2019 were $88.0 million, a decrease of 5.2% from $92.8 million in the first quarter of 2018. This decrease was primarily driven by an 11.4% decrease in our retail business, partially offset by an 11.3% increase in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 11.4% to $59.9 million for the first quarter of 2019, compared with $67.5 million for the first quarter of 2018. This decrease was primarily due to a decrease in same-store sales. The Company had 1,315 retail stores as of March 31, 2019, compared with 1,409 retail stores as of March 31, 2018.

Sales for the Company's wholesale division increased by 11.3% to $28.1 million for the first quarter of 2019, compared with $25.3 million for the first quarter of 2018. This increase was primarily attributable to increased sales in Mainland China, other European markets and Japan partially offset for decreased sales in Hong Kong, the United States, the United Kingdom and Germany.

Total gross profit for the first quarter of 2019 decreased by 6.3% to $29.4 million, compared with $31.3 million for the first quarter of 2018. Total gross margin decreased to 33.4% from 33.8% for the first quarter of 2018.

Gross profit for the retail business decreased by 10.7% to $22.8 million for the first quarter of 2019, compared with $25.5 million for the first quarter of 2018. Gross margin was 38.1%, compared to 37.8% for the first quarter of 2018.

Gross profit for the wholesale business increased by 13.0% to $6.6 million for the first quarter of 2019, compared with $5.8 million for the first quarter of 2018. Gross margin increased to 23.3% from 23.0% for the first quarter of 2018.

Selling expenses for the first quarter of 2019 decreased by 5.5% to $21.0 million, or 23.9% of total sales, compared with $22.2 million, or 24.0% of total sales for the first quarter of 2018. The decrease was attributable to the decreased sales.

General and administrative expenses for the first quarter of 2019 decreased by 1.9% to $7.5 million, or 8.6% of total sales, compared with $7.7 million, or 8.3% of total sales for the first quarter of 2018. The decrease was mainly attributable to the decreased office expenses.

Income from operations for the first quarter of 2019 decreased by 43.2% to $0.8 million compared with $1.4 million for the first quarter of 2018.

Net income(loss) attributable to the Company for the first quarter of 2019 was ($0.5) million compared with $0.8 million for the first quarter of 2018. Basic and diluted earnings(loss) per share were ($0.04) for the first quarter of 2019 compared with basic and diluted earnings per share of $0.06 for the first quarter of 2018.

Balance Sheet

As of March 31, 2019, Ever-Glory had approximately $57.9 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $28.5 million as of March 31, 2019, and outstanding bank loans of approximately $28.8 million as of March 31, 2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 14, 2019 (8:00 p.m. Beijing Time on May 14, 2019). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 7887070. 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 14 through 11:59 p.m. Eastern Time on May 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 7887070.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 (UNAUDITED)
 

 
 
2019
 
 
2018
 
ASSETS
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
57,876
 
 
$
47,012
 
Accounts receivable, net
 
 
57,595
 
 
 
86,527
 
Inventories
 
 
55,035
 
 
 
65,929
 
Advances on inventory purchases
 
 
6,087
 
 
 
6,420
 
Value added tax receivable
 
 
1,229
 
 
 
2,580
 
Other receivables and prepaid expenses
 
 
6,365
 
 
 
10,204
 
Amounts due from related parties
 
 
75
 
 
 
192
 
Total Current Assets
 
 
184,262
 
 
 
218,864
 
 
 
 
 
 
 
 
 
 
NONCURRENT ASSETS
 
 
 
 
 
 
 
 
Intangible assets, net
 
 
5,046
 
 
 
4,962
 
Property and equipment, net
 
 
29,135
 
 
 
28,445
 
Operating lease right-of-use assets
 
 
64,549
 
 
 
-
 
Total Non-Current Assets
 
 
98,730
 
 
 
33,407
 
TOTAL ASSETS
 
$
282,992
 
 
$
252,271
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
Bank loans
 
$
28,839
 
 
$
29,497
 
Accounts payable
 
 
51,470
 
 
 
78,412
 
Accounts payable and other payables – related parties
 
 
4,040
 
 
 
4,756
 
Other payables and accrued liabilities
 
 
13,769
 
 
 
21,958
 
Value added and other taxes payable
 
 
1,305
 
 
 
2,569
 
Income tax payable
 
 
862
 
 
 
1,569
 
Current operating lease liabilities
 
 
55,434
 
 
 
-
 
Total Current Liabilities
 
 
155,719
 
 
 
138,761
 
 
 
 
 
 
 
 
 
 
NONCURRENT LIABILITIES
 
 
 
 
 
 
 
 
Deferred tax liabilities
 
 
330
 
 
 
354
 
Non-current operating lease liabilities
 
 
9,127
 
 
 
-
 
TOTAL LIABILITIES
 
 
165,176
 
 
 
139,115
 
 
 
 
 
 
 
 
 
 
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, 14,800,140 and 14,798,198 shares issued and outstanding As of March 31, 2019 and December 31, 2018, respectively)
 
 
15
 
 
 
15
 
Additional paid-in capital
 
 
3,635
 
 
 
3,627
 
Retained earnings
 
 
105,393
 
 
 
105,914
 
Statutory reserve
 
 
19,083
 
 
 
19,083
 
Accumulated other comprehensive income
 
 
394
 
 
 
(3,578
)
Amounts due from related party
 
 
(9,253
)
 
 
(10,354
)
Total equity attributable to stockholders of the Company
 
 
119,267
 
 
 
114,707
 
Noncontrolling interest
 
 
(1,451
)
 
 
(1,551
)
Total Equity
 
 
117,816
 
 
 
113,156
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
282,992
 
 
$
252,271
 

 
 
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED
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, 2019 AND 2018 (UNAUDITED)
 

 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
SALES
 
$
87,956
 
 
$
92,785
 
 
 
 
 
 
 
 
 
 
COST OF SALES
 
 
58,598
 
 
 
61,440
 
 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
29,358
 
 
 
31,345
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
Selling expenses
 
 
21,008
 
 
 
22,225
 
General and administrative expenses
 
 
7,529
 
 
 
7,674
 
Total operating expenses
 
 
28,537
 
 
 
29,899
 
 
 
 
　  
 
 
 
　  
 
INCOME FROM OPERATIONS
 
 
821
 
 
 
1,446
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
Interest income
 
 
207
 
 
 
326
 
Interest expense
 
 
(363
)
 
 
(564
)
Other income (expenses)
 
 
(295
)
 
 
136
 
Total other expenses
 
 
(451
)
 
 
(102
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
370
 
 
 
1,344
 
 
 
 
 
 
 
 
 
 
INCOME TAX EXPENSE
 
 
(825
)
 
 
(757
)
 
 
 
 
 
 
 
 
 
NET INCOME(LOSS)
 
 
(455
)
 
 
587
 
Net income(loss) attributable to the non-controlling interest
 
 
(66
)
 
 
228
 
NET INCOME(LOSS) ATTRIBUTABLE TO THE COMPANY
 
$
(521
)
 
$
815
 
 
 
 
 
 
 
 
 
 
NET INCOME(LOSS)
 
$
(455
)
 
$
587
 
Foreign currency translation gain
 
 
3,972
 
 
 
4,023
 
COMPREHENSIVE INCOME
 
$
3,517
 
 
$
4,610
 
 
 
 
 
 
 
 
 
 
Comprehensive loss attributable to the noncontrolling interest
 
 
100
 
 
 
270
 
 
 
 
 
 
 
 
 
 
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY
 
$
3,617
 
 
$
4,880
 
EARNINGS(LOSS) PER SHARE:
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.04
)
 
$
0.06
 
Weighted average number of shares outstanding Basic and diluted
 
 
14,800,140
 
 
 
14,795,992
 

 
 
 
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE MONTHS ENDED March 31, 2019 AND 2018 (Unaudited)
 

 
 
 
 
 
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, 2019
 
 
14,798,198
 
 
$
15
 
 
$
3,627
 
 
$
105,914
 
 
$
19,083
 
 
$
(3,578
)
 
$
(10,354
)
 
$
114,707
 
 
 
(1,551
)
 
$
113,156
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock issued for compensation
 
 
1,942
 
 
 
0.004
 
 
 
8
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
8
 
 
 
 
 
 
 
8
 
Net income (loss)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(521
)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(521
)
 
 
66
 
 
 
(455
)
Net cash paid to related party under counter guarantee agreement
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
1,101
 
 
 
1,101
 
 
 
-
 
 
 
1,101
 
Foreign currency translation loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,972
 
 
 
-
 
 
 
3,972
 
 
 
34
 
 
 
4,006
 
Balance at March 31, 2019
 
 
14,800,140
 
 
$
15
 
 
$
3,635
 
 
$
105,393
 
 
$
19,083
 
 
$
394
 
 
$
(9,253
)
 
$
119,267
 
 
 
(1,451
)
 
$
117,816
 

 

 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
 
-
 
 
 
-
 
 
 
-
 
 
 
815
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
815
 
 
 
(228
)
 
 
587
 
Net cash paid to related party under counter guarantee agreement
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(8,480
)
 
 
(8,480
)
 
 
-
 
 
 
(8,480
)
Foreign currency translation loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,023
 
 
 
-
 
 
 
4,023
 
 
 
(94
)
 
 
3,929
 
Balance at March 31, 2018
 
 
14,795,992
 
 
$
15
 
 
$
3,620
 
 
$
96,010
 
 
$
17,794
 
 
$
6,608
 
 
$
(23,929
)
 
$
100,118
 
 
 
(1,384
)
 
$
98,734
 

 
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED 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, 2019 AND 2018 (UNAUDITED)
 

 
 
2019
 
 
2018
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income (loss)
 
$
(455
)
 
$
587
 
Adjustments to reconcile net income to cash provided by operating activities:
 
 
　
 
 
 
　
 
Depreciation and amortization
 
 
2,225
 
 
 
2,537
 
Loss from sale of property and equipment
 
 
52
 
 
 
4
 
Provision for obsolete inventories
 
 
1,824
 
 
 
1,626
 
Deferred income tax
 
 
(145
)
 
 
(234
)
Stock-based compensation
 
 
8
 
 
 
-
 
Changes in operating assets and liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
 
31,027
 
 
 
28,466
 
Inventories
 
 
10,557
 
 
 
(129
)
Value added tax receivable
 
 
1,406
 
 
 
1,895
 
Other receivables and prepaid expenses
 
 
3,975
 
 
 
832
 
Advances on inventory purchases
 
 
490
 
 
 
(1,175
)
Amounts due from related parties
 
 
103
 
 
 
(165
)
Accounts payable
 
 
(26,505
)
 
 
(17,944
)
Accounts payable and other payables- related parties
 
 
(741
)
 
 
(653
)
Other payables and accrued liabilities
 
 
(9,565
)
 
 
(5,182
)
Value added and other taxes payable
 
 
(2,788
)
 
 
(1,988
)
Income tax payable
 
 
(327
)
 
 
(670
)
Net cash provided by operating activities
 
 
11,141
 
 
 
7,807
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
(2,131
)
 
 
(2,552
)
Net cash used in investing activities
 
 
(2,131
)
 
 
(2,552
)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Proceeds from bank loans
 
 
6,029
 
 
 
17,346
 
Repayment of bank loans
 
 
(7,408
)
 
 
(14,780
)
Repayment of loans from related party
 
 
3,488
 
 
 
-
 
Advances to related party
 
 
(2,163
)
 
 
(7,692
)
Net cash used in financing activities
 
 
(54
)
 
 
(5,126
)
 
 
 
 
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
 
1,908
 
 
 
2,172
 
 
 
 
　
 
 
 
　
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
 
 
10,864
 
 
 
2,301
 
 
 
 
　
 
 
 
　
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
 
47,012
 
 
 
62,876
 
 
 
 
　
 
 
 
　
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
57,876
 
 
$
65,177
 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
 
 
 
Interest
 
$
363
 
 
$
564
 
Income taxes
 
$
126
 
 
$
1,938
 

 

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