NANJING, China, November 10, 2011 /PRNewswire-Asia-FirstCall/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NYSE Amex: EVK), a leading apparel supply chain manager and retailer based in China, today reported its financial results for the third quarter ended September 30, 2011.
During the third quarter of 2011, net sales increased 68.1% to $53.7 million compared to $31.9 million in the third quarter of 2010. The increase was attributable to increased sales in both Ever-Glory's retail and wholesale businesses.
Retail sales from LA GO GO, the Company's branded retail division, increased 83.8% to $11.6 million, compared to $6.3 million in the third quarter of 2010. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 421 LA GO GO stores as of September 30, 2011, compared to 214 LA GO GO stores at September 30, 2010. LA GO GO stores are located in more than 20 provinces in China.
Sales generated from the Company's wholesale business increased 64.2% to $42.0 million, compared to $25.6 million in the third quarter of 2010. This increase was primarily attributable to increased sales in the PRC, the United Kingdom and the United States. The increased sales in the wholesale segment were primarily due to the following factors:(i) the progressive adjustment of our wholesale client and product portfolio has resulted in an increase of orders in the wholesale segment; (ii) in response to the global economic uncertainty, in mid-2010 we adjusted our sales strategy to develop more wholesale customers in China. (iii) expansion of our outsourcing base to Vietnam and Cambodia starting from the third quarter of 2010, which significantly increased our production capacity to process more orders.
In the third quarter of 2011, gross profit was $11.2 million, an increase of 76.3% compared to the same period in 2010. Gross margin increased 1.0% to 20.9% in the third quarter of 2011, compared to 19.9% in the third quarter of 2010. The increase was mainly due to lower outsourced manufacturing costs.
"I am very pleased to report that in the third quarter of 2011, our sales in both wholesale and retail segments continued to increase," commented by Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "We are especially encouraged by the rapid expansion of LA GO GO. As of September 30, 2011, we have 421 LA GO GO stores in China, We achieved our goal in advance to open an additional 80-100 new stores in 2011. We had only 293 stores at the end of 2010.
"We will continue to develop LA GO GO through perfecting design styles, improving store management efficiency and opening more stores in desired locations," continued Mr. Kang. "We are confident that, through these measures, we can enhance same-store sales, expand LA GO GO's market penetration and increase its brand influence in China."
Selling expenses increased 86.4% to $4.3 million in the third quarter of 2011 from $2.3 million in the third quarter of 2010. The increase was attributable to the enlarged number of retail employees and higher average salaries, as well as increased store decoration and marketing expenses associated with the promotion of the LA GO GO brand.
General and administrative expenses increased 37.7% to $3.4 million in the third quarter of 2011 from $2.5 million in the third quarter of 2010. As a percentage of total sales, general and administrative expenses decreased to 6.4% of total sales for the three months ended September 30, 2011, compared to 7.8% of total sales for the three months ended September 30, 2010. This decrease was due to the increase of our sales.
Income from operations for the third quarter of 2011 increased 123.0% to $3.5 million, compared to $1.6 million in the third quarter of 2010.
For the third quarter of 2011, GAAP net income attributable to the Company was $2.7 million, or $0.18 per diluted share, an increase of 48.0% from $1.8 million, or $0.12 per diluted share in the third quarter of 2010. GAAP net income attributable to the Company in the third quarter of 2010 include approximately $0.6 million, or $0.04 per diluted share, of non-cash income related to the change in fair value of a derivative liability. The change in fair value of a derivative liability in the third quarter of 2011 was not significant. Excluding this non-cash items for the third quarter 2011 and 2010, non-GAAP diluted earnings per share were $0.18 in the third quarter of 2011 compared to $0.08 in the third quarter of 2010. (see "About Non-GAAP Financial Measures" below).
Balance Sheet and Cash Flow
As of September 30, 2011, the Company had approximately $8.2 million of cash and cash equivalents, compared to approximately $3.7 million as of December 31, 2010. Ever-Glory had working capital of approximately $32.4 million as of September 30, 2011, and outstanding bank loans of approximately $30.1 million as of September 30, 2011.
For the fourth quarter of 2011, the Company anticipates total net sales of $52 to $66 million and net income of $2.3 to $3.3 million. For full year 2011, Ever-Glory anticipates total net sales between $200 and $220 million and net income between $8.5 and $10.5 million. The full year revenue forecast is comprised of $145 to $155 million in expected wholesale revenue and $55 to $65 million in expected revenue from retail operations.
About Non-GAAP Financial Measures
This press release and presentations of management related to the subject matter of this press release contains financial measures for earnings that are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP") in that they exclude the items arising from the change in fair value of a derivative liability. Ever-Glory believes that these non-GAAP financial measures are useful to investors because they reflect the essential operating activities of Ever-Glory. Readers are cautioned, however, that non-GAAP measures are subject to inherent limitations because they involve the exercise of judgment about which items are excluded in the determination of the non-GAAP financial measure.
The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure for the three months ended September 30, 2011 and 2010:
Adjusted Net Income
Three Months Ended September 30,
GAAP Net Income attributable to the Company
GAAP Diluted EPS
Non-Cash Income(Expense) for
Non GAAP Net Income:
Non GAAP Diluted EPS:
Diluted Shares used in computation
The Company will hold a conference call today at 8:00 a.m. Eastern Time which will be hosted by Edward Yihua Kang, Chairman of the Board and CEO, and Jason Jiansong Wang, Chief Financial Officer. Listeners can access the conference call by dialing # 1-719-325-2122 and referring to the confirmation code 1814563. The conference call will also be broadcast live over the Internet and can be accessed at the Company's web site at the following URL: http://www.everglorygroup.com.
A replay of the call will be available from 11:00 a.m. November 10, 2011 through November 17, 2011 Eastern Time by calling # 1-858-384-5517; pin number: 1814563.
About Ever-Glory International Group, Inc.
Based in Nanjing, China, Ever-Glory International Group, Inc. is a leading apparel supply chain manager and retailer in China. Ever-Glory is the first Chinese apparel Company listed on the American Stock Exchange (now called NYSE Amex), and has a focus on middle-to-high grade casual wear, outerwear, and sportswear brands. Ever-Glory maintains global strategic partnerships in Europe, the United States, Japan and China, conducting business with several well-known brands and retail chain stores. In addition, Ever-Glory operates its own domestic chain of retail stores known as "LA GO GO."
Cautionary Note Regarding 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 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.
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (UNAUDITED)
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Total Operating Expenses
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LESS: NET INCOME ATTRIBUTABLE TO THE NON
NET INCOME ATTRIBUTABLE TO THE COMPANY
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COMPREHENSIVE INCOME ATTRIBUTABLE TO
THE NONCONTROLLING INTEREST
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