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Ever-Glory Reports Third Quarter 2020 Financial Resultsnew

Add: 2020   Update: 2020/11/13

 

Ever-Glory Reports Third Quarter 2020 Financial Results

NANJING, China, November 13, 2020 /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 third quarter ended September 30, 2020.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “During the third 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.

“During the third quarter of 2020, our retail brands continue to attract new customers and retain existing customers by focusing on design, quality and value,” Mr. Kang continued. “Following the remodeling or relocation of 38 stores during 2020, we operated a nationwide network of 923 stores as of September 30, 2020.”

“Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward, we’ll implement a stricter client evaluation system and remain diligent in our 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 third quarter results, are coupled with our ability to increase operating leverage. 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.”

Third Quarter 2020 Financial Results

Total sales for the third quarter of 2020 were $79.9 million, a decrease of 29.5% from $113.3 million in the third quarter of 2019. This decrease was primarily driven by a 44.9% decrease in our wholesale business, partially offset by a 10.3% increase in retail business.

Sales for the Company’s branded fashion apparel retail division increased by 10.3% to $34.8 million for the third quarter of 2020, compared with $31.6 million for the third quarter of 2019. This increase was primarily due to an increase in the e-commerce sales. The Company had 923 retail stores as of September 30, 2020, compared with 1,157 retail stores as of September 30, 2019.

Sales for the Company’s wholesale division decreased by 44.9% to $45.1 million for the third quarter of 2020, compared with $81.7 million for the third quarter of 2019. This decrease was primarily attributable to a decrease in sales in Mainland China, Hong Kong, Germany, Europe-Other, Japan, United States and United Kingdom.

Total gross profit for the third quarter of 2020 decreased by 2.8% to $23.7 million, compared with $24.4 million for the third quarter of 2019. Total gross margin increased to 29.6% from 21.5% for the third quarter of 2019.

Gross profit for the retail business increased by 2.7% to $14.5 million for the third quarter of 2020, compared with $14.1 million for the third quarter of 2019. Gross margin was 41.6%, compared to 44.7% for the third quarter of 2019.

Gross profit for the wholesale business decreased by 10.4% to $9.2 million for the third quarter of 2020, compared with $10.3 million for the third quarter of 2019. Gross margin increased to 20.4% from 12.6% for the third quarter of 2019.

Selling expenses for the third quarter of 2020 decreased by 27.6% to $13.0 million, or 16.3% of total sales, compared with $17.9 million, or 15.8% of total sales for the third quarter of 2019. The decrease was attributable to the lower travelling expenses.

General and administrative expenses for the third quarter of 2020 increased by 3.1% to $7.8 million, or 9.8% of total sales, compared with $7.6 million, or 6.7% of total sales for the third quarter of 2019. The increase was attributable to the foreign currency transaction gain.

Income (Loss) from operations for the third quarter of 2020 increased by 344.5% to $2.8 million compared with ($1.2 million) for the third quarter of 2019.

Net income (loss) attributable to the Company for the third quarter of 2020 was $2.2 million compared with ($1.1 million) for the third quarter of 2019. Basic and diluted earnings (loss) per share were $0.15 for the third quarter of 2020 compared with ($0.07) for the third quarter of 2019.

Balance Sheet

As of September 30, 2020, Ever-Glory had approximately $70.0 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $53.3 million as of September 30, 2020, and outstanding bank loans of approximately $48.4 million as of September 30, 2020.

 

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 13, 2020 (8:00 p.m. Beijing Time on November 13, 2020). Listeners can access the conference call by dialing +1-866-548-4713 or + 1-323-794-2093 and using the access code 9522138. 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 10:00 a.m. Eastern Time on November 13 through 11:59 p.m. Eastern Time on November 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 9522138.

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 SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 (UNAUDITED)

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,950

 

 

$

48,551

 

Restricted cash

 

 

20,552

 

 

 

2,204

 

Trading securities

 

 

817

 

 

 

-

 

Accounts receivable, net

 

 

62,866

 

 

 

78,053

 

Inventories

 

 

46,443

 

 

 

67,355

 

Advances on inventory purchases

 

 

7,393

 

 

 

9,681

 

Value added tax receivable

 

 

2,106

 

 

 

2,495

 

Other receivables and prepaid expenses

 

 

5,229

 

 

 

5,293

 

Amounts due from related parties

 

 

1,086

 

 

 

123

 

Total Current Assets

 

 

216,442

 

 

 

213,755

 

 

 

 

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

 

 

 

 

Equity security investment

 

 

2,936

 

 

 

-

 

Intangible assets, net

 

 

4,628

 

 

 

4,729

 

Property and equipment, net

 

 

28,203

 

 

 

28,812

 

Operating lease right-of-use assets

 

 

37,705

 

 

 

53,379

 

Deferred tax assets

 

 

1,099

 

 

 

996

 

Total Non-Current Assets

 

 

74,571

 

 

 

87,916

 

TOTAL ASSETS

 

$

291,013

 

 

$

301,671

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Bank loans

 

$

48,444

 

 

$

29,931

 

Accounts payable

 

 

65,155

 

 

 

72,418

 

Accounts payable and other payables – related parties

 

 

3,878

 

 

 

4,811

 

Other payables and accrued liabilities

 

 

14,159

 

 

 

19,137

 

Value added and other taxes payable

 

 

1,134

 

 

 

1,657

 

Income tax payable

 

 

1,104

 

 

 

1,142

 

Current operating lease liabilities

 

 

29,296

 

 

 

44,888

 

Total Current Liabilities

 

 

163,170

 

 

 

173,984

 

 

 

 

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

8,491

 

 

 

8,537

 

TOTAL LIABILITIES

 

 

171,661

 

 

 

182,521

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 14,809,160 and 14,801,770 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

3,650

 

 

 

3,640

 

Retained earnings

 

 

102,049

 

 

 

106,328

 

Statutory reserve

 

 

19,939

 

 

 

19,939

 

Accumulated other comprehensive (loss)

 

 

(1,308

)

 

 

(4,330

)

Amounts due from related party

 

 

(3,430

)

 

 

(4,932

)

Total equity attributable to stockholders of the Company

 

 

120,915

 

 

 

120,660

 

Noncontrolling interest

 

 

(1,563

)

 

 

(1,510

)

Total Equity

 

 

119,352

 

 

 

119,150

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

291,013

 

 

$

301,671

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

NET SALES

 

$

79,908

 

 

$

113,326

 

 

$

188,350

 

 

$

278,598

 

COST OF SALES

 

 

56,235

 

 

 

88,967

 

 

 

134,193

 

 

 

195,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

23,673

 

 

 

24,359

 

 

 

54,157

 

 

 

82,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

12,996

 

 

 

17,944

 

 

 

39,101

 

 

 

58,651

 

General and administrative expenses

 

 

7,818

 

 

 

7,584

 

 

 

19,574

 

 

 

22,450

 

Total Operating Expenses

 

 

20,814

 

 

 

25,528

 

 

 

58,675

 

 

 

81,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

2,859

 

 

 

(1,169

)

 

 

(4,518

)

 

 

1,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

313

 

 

 

215

 

 

 

930

 

 

 

699

 

Interest expense

 

 

(700

)

 

 

(265

)

 

 

(1,607

)

 

 

(1,036

)

Other income, net

 

 

574

 

 

 

502

 

 

 

2,236

 

 

 

1,616

 

Total Other Income, Net

 

 

187

 

 

 

452

 

 

 

1,559

 

 

 

1,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

 

 

3,046

 

 

 

(717

)

 

 

(2,959

)

 

 

2,881

 

Income tax expense

 

 

(822

)

 

 

(387

)

 

 

(1,315

)

 

 

(2,667

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

2,224

 

 

 

(1,104

)

 

 

(4,274

)

 

 

214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to the non-controlling interest

 

 

(8

)

 

 

28

 

 

 

(4

)

 

 

46

 

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

 

 

2,216

 

 

 

(1,076

)

 

 

(4,278

)

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

2,224

 

 

$

(1,104

)

 

$

(4,274

)

 

$

214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

4,664

 

 

 

(3,729

)

 

 

2,964

 

 

 

(2,244

)

COMPREHENSIVE INCOME (LOSS)

 

 

6,888

 

 

 

(4,833

)

 

 

(1,310

)

 

 

(2,030

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income attributable to the non-controlling interest

 

 

(56

)

 

 

15

 

 

 

(54

)

 

 

67

 

COMPREHENSIVE INCOME (LOSS)  ATTRIBUTABLE TO THE COMPANY

 

$

6,832

 

 

$

(4,818

)

 

$

(1,364

)

 

$

(1,963

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.15

 

 

$

(0.07

)

 

$

(0.29

)

 

$

0.02

 

Weighted average number of shares outstanding Basic and diluted

 

 

14,808,737

 

 

 

14,801,770

 

 

 

14,805,987

 

 

 

14,801,770

 

 

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 AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (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

 

 

loss

 

 

party

 

 

Company

 

 

Interest

 

 

equity

 

Balance at January  1, 2020

 

 

14,801,770

 

 

$

15

 

 

$

3,640

 

 

$

106,328

 

 

$

19,939

 

 

$

(4,330

)

 

$

(4,932

)

 

$

120,660

 

 

 

(1,510

)

 

$

119,150

 

Stock issued for compensation

 

 

3,062

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

 

 

 

 

5

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,701

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,701

)

 

 

3

 

 

 

(2,698

)

Net cash received from related party under counter guarantee agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

785

 

 

 

785

 

 

 

-

 

 

 

785

 

Foreign currency translation gain (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,440

)

 

 

-

 

 

 

(1,440

)

 

 

3

 

 

 

(1,437

)

Balance at March 31, 2020

 

 

14,804,832

 

 

 

15

 

 

 

3,645

 

 

 

103,627

 

 

 

19,939

 

 

 

(5,770

)

 

 

(4,147

)

 

 

117,309

 

 

 

(1,504

)

 

 

115,805

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,794

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,794

)

 

 

(6

)

 

 

(3,800

)

Net cash received from related party under counter guarantee agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

151

 

 

 

151

 

 

 

 

 

 

 

151

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(261

)

 

 

 

 

 

 

(261

)

 

 

(2

)

 

 

(263

)

Balance at June 30, 2020

 

 

14,804,832

 

 

$

15

 

 

$

3,645

 

 

$

99,833

 

 

$

19,939

 

 

$

(6,031

)

 

$

(3,996

)

 

$

113,405

 

 

 

(1,512

)

 

$

111,893

 

Stock issued for compensation

 

 

4,328

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

 

 

 

 

5

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,216

 

 

 

8

 

 

 

2,224

 

Net cash received from related party under counter guarantee agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

566

 

 

 

566

 

 

 

-

 

 

 

566

 

Foreign currency translation gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,723

 

 

 

 

 

 

 

4,723

 

 

 

(59

)

 

 

4,664

 

Balance at September 30, 2020

 

 

14,809,160

 

 

$

15

 

 

$

3,650

 

 

$

102,049

 

 

$

19,939

 

 

$

(1,308

)

 

$

(3,430

)

 

$

120,915

 

 

 

(1,563

)

 

$

119,352

 

  

 

 

 

 

 

Additional

 

 

Retained Earnings

 

 

Accumulated
other

 

 

Amounts
due from

 

 

Total
equity
attributable
to stockholders

 

 

Non-