NANJING, China, August 10, 2012 /PRNewswire-Asia/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NYSE MKT: EVK), a leading apparel supply chain manager and retailer based in China, today reported its financial results for the second quarter ended June 30, 2012.
Total sales for the quarter were $47.2 million, an increase of 10.0% compared to $42.9 million in the second quarter of last year.
Retail sales for the quarter from LA GO GO, the Company's branded retail division, increased 98.6% to $18.4 million, compared to $9.3 million last year. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 562 LA GO GO stores as of June 30, 2012, compared to 368 LA GO GO stores as of June 30, 2011. Currently, there are LA GO GO stores in more than 20 provinces in China.
Wholesale sales generated from the Company's wholesale business for the quarter decreased 14.4% to $28.8 million, compared to $33.7 million last year. This decrease was primarily attributable to decreased sales in Germany, the United States, the United Kingdom and Japan. The reduced sales in the wholesale segment was primarily due to the global economic uncertainty and instability, the advanced economies represented by Europe and the US are recovering slowly, which seriously impacted China's apparel exports, as a result, our overseas wholesale business also faced declining orders.
Total gross profit for the quarter was $13.6 million, or 28.8% of total sales, compared to $10.4 million, or 24.1% of total sales last year.
Selling expenses for the quarter increased 84.9% to $7.0 million compared to $3.8 million last year. As a percentage of sales, selling expenses increased 600 basis points to 14.8% compared to 8.8% last year. The increase was attributable to the increased number of retail employees and increased average salaries, as well as the increased store decoration and marketing expenses associated with the promotion of the LA GO GO brand.
General and administrative expenses for the quarter increased 2.0% to $4.2 million compared to $4.1 million last year. As a percentage of sales, general and administrative expenses decreased 70 basis points to 8.9% compared to 9.6% last year. The decrease was attributable to the increase in our sales.
Income from operations for the quarter decreased 2.0% to $2.4 million compared to $2.5 million last year.
For the second quarter, net income was $2.4 million, or $0.16 per diluted share, an increase of 4.1% from $2.3 million, or $0.15 per diluted share in the second quarter of 2011. Net income in the second quarter of 2012 includes approximately $0.2 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability compared to approximately $0.1 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability in the second quarter of 2011. Excluding this non-cash item for the second quarter 2012 and 2011, non-GAAP diluted earnings per share were $0.15 in the second quarter of 2012 compared to $0.14 in the second quarter of 2011. See "About Non-GAAP Financial Measures" below.
Balance Sheet and Cash Flow
As of June 30, 2012, Ever-Glory had approximately $7.2 million of cash and cash equivalents, compared to approximately $8.8 million as of December 31, 2011. Ever-Glory had working capital of approximately $39.0 million as of June 30, 2012, and outstanding bank loans of approximately $22.5 million as of June 30, 2012.
For the third quarter of 2012, Every-Glory anticipates total net sales in the range of $50 to $60 million and net income in the range of $1.8 to $2.0 million. For full year 2012, Every-Glory anticipates total net sales in the range of $210 to $250 million and net income in the range of $9.5 to $12 million. The full year revenue forecast is comprised of $140 to $160 million in anticipated wholesale revenue and $70 to $90 million in anticipated revenue from retail operations.
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 MKT), 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".
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 June 30, 2012 and 2011:
Adjusted Net Income
Three Months Ended June 30
GAAP Net Income
GAAP Diluted EPS
Non-Cash Income for
Change in fair value of derivative liability:
Non GAAP Net Income:
Non GAAP Diluted EPS:
Diluted Shares used in computation
The Company will hold a conference call today at 8:30 a.m. Eastern Time which will be hosted by Edward Yihua Kang, Chairman of the Board, President, and CEO, and Jason Jiansong Wang, Chief Financial Officer. Listeners can access the conference call by dialing # 1-719-325-2426 and referring to the confirmation code 1116543. 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 11:30 a.m. August 10, 2012 through August 17, 2012 Eastern Time by calling # 1-858-384-5517; pin number: 1116543.
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 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.
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 (UNAUDITED)
Three months ended
Six months ended
COST OF SALES
General and administrative expenses
Total Operating Expenses
INCOME FROM OPERATIONS
OTHER INCOME (EXPENSES)
Change in fair value of derivative liability
Total Other Income (Expenses)
INCOME BEFORE INCOME TAX EXPENSE
INCOME TAX EXPENSE
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation (loss) gain
EARNINGS PER SHARE
Basic and diluted
Weighted average number of shares outstanding
Basic and diluted