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Ever-Glory Reports Third Quarter 2022 Financial Resultsnew

Add: 2022   Update: 2022/11/14

 Ever-Glory Reports Third Quarter 2022 Financial Results

NANJING, China, November 14, 2022 /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, 2022.
 
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 2022, 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 29 stores during 2022, we operated a nationwide network of 774 stores as of September 30, 2022.”
 
“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,” Mr. Kang concluded.
 
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 confidence 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 2022 Financial Results 
 
Total sales for the third quarter of 2022 were $106.4 million, an increase of 12.7% from $94.4 million in the third quarter of 2021. This increase was primarily driven by a 33.0% increase in our wholesale business, partially offset by a 26.4% decrease in retail business.
 
Sales for the Company’s wholesale division increased by 33.0% to $82.7 million for the third quarter of 2022, compared with $62.2 million for the third quarter of 2021. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, the United Kingdom, and other European markets partially offset for decreased sales in Japan and the United States.
 
Sales for the Company’s branded fashion apparel retail division decreased by 26.4% to $23.7 million for the third quarter of 2022, compared with $32.2 million for the third quarter of 2021. This decrease was primarily due to a decrease in same-store sales. The Company operated 774 retail stores as of September 30, 2022, compared with 893 retail stores as of September 30, 2021,. 
 
Total gross profit for the third quarter of 2022 decreased by 30.9% to $16.0 million, compared with $23.2 million for the third quarter of 2021. Total gross margin for the third quarter of 2022 decreased to 15.1% from 24.6% for the third quarter of 2021.
 
Gross profit for the wholesale business increased by 2.4% to $10.5 million for the third quarter of 2022, compared with $10.2 million for the third quarter of 2021. Gross margin for the third quarter of 2022 decreased to 12.6% from 16.4% for the third quarter of 2021.
 
Gross profit for the retail business decreased by 57.0% to $6.0 million for the third quarter of 2022, compared with $13.0 million for the third quarter of 2021. Gross margin for the third quarter of 2022 was 23.6% compared to 40.3% for the third quarter of 2021. 
 
Selling expenses for the third quarter of 2022 decreased by 11.4% to $12.8 million, or 12.0% of total sales, compared with $14.4 million, or 15.3% of total sales for the third quarter of 2020. The decrease was attributable to the decreased average salaries and decreased business trips.
 
General and administrative expenses for the third quarter of 2022 decreased by 1.7% to $9.3 million, or 8.7% of total sales, compared with $9.5 million, or 10.0% of total sales for the third quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.
 
Loss from operations was $6.1 million for the third quarter of 2022, compared to $0.7 million for the third quarter of 2021.
Balance Sheet 
 
As of September 30, 2022, Ever-Glory had approximately $32.2 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $41.6 million as of September 30, 2022, and outstanding bank loans of approximately $63.4 million as of September 30, 2022.
 
Conference Call
 
The Company will hold a conference call at 6:00 a.m. Eastern Time on November 14, 2022(7:00 p.m. Beijing Time on November 14, 2022). Listeners can access the conference call by dialing +1-877-704-4453 or +1-201-389-0920 and using the access code 13734457. 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 9:00 a.m. Eastern Time on November 14 through 11:59 p.m. Eastern Time on November 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 13734457.
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” 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: +86-25-5209-6884
E-Mail: sdd@ever-glory.com.cn
 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,177

 

 

$

56,573

 

Restricted cash

 

 

39,706

 

 

 

40,768

 

Trading securities

 

 

2,189

 

 

 

3,251

 

Accounts receivable, net

 

 

79,875

 

 

 

69,859

 

Inventories

 

 

49,038

 

 

 

63,841

 

Advances on inventory purchases

 

 

4,260

 

 

 

8,179

 

Value added tax receivable

 

 

2,144

 

 

 

1,693

 

Other receivables and prepaid expenses

 

 

6,049

 

 

 

6,345

 

Amounts due from related parties

 

 

-

 

 

 

220

 

Total Current Assets

 

 

215,438

 

 

 

250,729

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

Equity security investment

 

 

4,566

 

 

 

5,682

 

Intangible assets, net

 

 

4,211

 

 

 

4,794

 

Property and equipment, net

 

 

31,148

 

 

 

36,340

 

Operating lease right-of-use assets

 

 

38,905

 

 

 

50,077

 

Deferred tax assets

 

 

768

 

 

 

899

 

Other non-current assets

 

 

3,520

 

 

 

784

 

Total Non-Current Assets

 

 

83,118

 

 

 

98,576

 

TOTAL ASSETS

 

$

298,556

 

 

$

349,305

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Bank loans

 

$

63,360

 

 

$

68,992

 

Accounts payable

 

 

59,894

 

 

 

67,930

 

Accounts payable and other payables – related parties

 

 

2,907

 

 

 

1,332

 

Other payables and accrued liabilities

 

 

14,166

 

 

 

18,531

 

Value added and other taxes payable

 

 

842

 

 

 

999

 

Income tax payable

 

 

1,107

 

 

 

334

 

Current operating lease liabilities

 

 

31,538

 

 

 

41,633

 

Total Current Liabilities

 

 

173,814

 

 

 

199,751

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

7,538

 

 

 

8,596

 

TOTAL LIABILITIES

 

 

181,352

 

 

 

208,347

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,818,006 and 14,655,926 issued and outstanding as of September 30, 2022, respectively, 14,812,312 and 14,664,978 issued and outstanding as of December 31, 2021, respectively)

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

3,670

 

 

 

3,660

 

Retained earnings

 

 

99,398

 

 

 

108,210

 

Statutory reserve

 

 

21,245

 

 

 

21,245

 

Treasury stock (at cost,162,080 and 147,334 shares at September 30, 2022 and December 31, 2021, respectively)

 

 

(400

)

 

 

(363

)

Accumulated other comprehensive (loss) income

 

 

(6,724

)

 

 

8,191

 

 

 

 

 

 

 

 

 

 

Total Equity

 

 

117,204

 

 

 

140,958

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

298,556

 

 

$

349,305

 

 


 EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NET SALES

 

$

106,437

 

 

$

94,406

 

 

$

235,022

 

 

$

225,776

 

COST OF SALES

 

 

90,390

 

 

 

71,196

 

 

 

181,194

 

 

 

161,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

16,047

 

 

 

23,210

 

 

 

53,828

 

 

 

64,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

12,792

 

 

 

14,443

 

 

 

38,153

 

 

 

44,495

 

General and administrative expenses

 

 

9,306

 

 

 

9,467

 

 

 

21,821

 

 

 

24,980

 

Total Operating Expenses

 

 

22,098

 

 

 

23,910

 

 

 

59,974

 

 

 

69,475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(6,051

)

 

 

(700

)

 

 

(6,146

)

 

 

(5,437

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSES) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

22

 

 

 

176

 

 

 

299

 

 

 

928

 

Interest expense

 

 

(524

)

 

 

(1,218

)

 

 

(1,458

)

 

 

(1,909

)

Government subsidy

 

 

192

 

 

 

340

 

 

 

397

 

 

 

842

 

(Loss) gain from changes in fair values of investments

 

 

(915

)

 

 

(123

)

 

 

(1,587

)

 

 

2,151

 

Other income

 

 

317

 

 

 

253

 

 

 

885

 

 

 

1,027

 

Total Other (Expenses) Income, Net

 

 

(908

)

 

 

(572

)

 

 

(1,464

)

 

 

3,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAX EXPENSE

 

 

(6,959

)

 

 

(1,272

)

 

 

(7,610

)

 

 

(2,398

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

835

 

 

 

(1,945

)

 

 

(1,203

)

 

 

(3,759

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(6,124

)

 

$

(3,217

)

 

$

(8,813

)

 

$

(6,157

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss) gain

 

 

(6,336

)

 

 

(1,061

)

 

 

(14,915

)

 

 

1,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

$

(12,460

)

 

 

(4,278

)

 

$

(23,728

)

 

$

(5,137

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.41

)

 

$

(0.22

)

 

$

(0.59

)

 

$

(0.42

)

Weighted average number of shares outstanding, basic and diluted

 

 

14,817,053

 

 

 

14,811,073

 

 

 

14,815,077

 

 

 

14,810,585

 


EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Retained Earnings

 

 

Accumulated
other

 

 

Amounts

due from

 

 

 

 

 

 

Shares

 

 

Amount

 

 

paid-in
capital

 

 

Treasury

stock

 

 

Unrestricted

 

 

Statutory

reserve

 

 

comprehensive

income (loss)

 

 

related
party

 

 

Total equity

 

Balance at January 1, 2022

 

 

14,812,312

 

 

$

15

 

 

$

3,660

 

 

$

(363

)

 

$

108,210

 

 

$

21,245

 

 

$

8,191

 

 

$

       -

 

 

$

140,958

 

Stock issued for compensation

 

 

2,042

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,089

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,089

)

Repurchase of 14,746 shares of common stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(37

)

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(37

)

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(836

)

 

 

 

 

 

 

(836

)

Balance at March 31, 2022

 

 

14,814,354

 

 

$

15

 

 

$

3,665

 

 

$

(400

)

 

$

103,121

 

 

$

21,245

 

 

$

7,355

 

 

$

-

 

 

$

135,001

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,400

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,400

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,743

)

 

 

 

 

 

 

(7,743

)

Balance at June 30, 2022

 

 

14,814,354

 

 

$

15

 

 

$

3,665

 

 

$

(400

)

 

$

105,521

 

 

$

21,245

 

 

$

(388

)

 

 

-

 

 

$

129,658

 

Stock issued for compensation

 

 

3,652

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

Net  loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,123

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,123

)

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,336

)

 

 

 

 

 

 

(6,336

)

Balance at September 30, 2022

 

 

14,818,006

 

 

$

       15

 

 

$

3,670

 

 

$

(400

)

 

$

99,398

 

 

$

21,245

 

 

$

(6,724

)

 

$

-

 

 

$

117,204

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Retained Earnings

 

 

Accumulated
other

 

 

Amounts

due from

 

 

 

 

 

 

Shares

 

 

Amount

 

 

paid-in
capital

 

 

Treasury

stock

 

 

Unrestricted

 

 

Statutory

reserve

 

 

comprehensive

income

 

 

related
party

 

 

Total equity

 

Balance at January 1, 2021

 

 

14,809,160

 

 

$

       15

 

 

$

3,650

 

 

$

       -

 

 

$

109,171

 

 

$

20,376

 

 

$

4,590

 

 

$

(3,353

)

 

$

134,449

 

Stock issued for compensation

 

 

1,500

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

Net  loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,170

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,170

)

Net cash received from related party under counter guarantee agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

379

 

 

 

379

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,352

)

 

 

 

 

 

 

(1,352

)

Balance at March 31, 2021

 

 

14,810,660

 

 

$

15

 

 

$

3,655

 

 

$

-

 

 

$

108,001

 

 

$

20,376

 

 

$

3,238

 

 

$

(2,974

)

 

$

132,311

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,771

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,771

)

Transfer to reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net cash received from related party under counter guarantee agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

386

 

 

 

386

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,434

 

 

 

 

 

 

 

3,434

 

Balance at June 30, 2021

 

 

14,810,660

 

 

$

15

 

 

$

3,655

 

 

$

-

 

 

$

106,230

 

 

$

20,376

 

 

$

6,672

 

 

$

(2,588

)

 

$

134,360

 

Stock issued for compensation

 

 

1,652

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

Net  loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,217

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,217

)

Net cash received from related party under counter guarantee agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

313

 

 

 

313

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,062

)

 

 

 

 

 

 

(1,062

)

Balance at September 30, 2021

 

 

14,812,312

 

 

$

15

 

 

$

3,660

 

 

$

-

 

 

$

103,013

 

 

$

20,376

 

 

$

5,610

 

 

$

(2,275

)

 

$

130,399

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

 

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

 

September 30,
2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(8,813

)

 

 

(6,157

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

　

 

 

 

　

 

Depreciation and amortization

 

 

5,256