Ever-Glory Reports First Quarter 2014 Financial Results

NANJING, China, May 15, 2014 /PRNewswire/ -- 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 first quarter ended March 31, 2014.

Total sales for the quarter were $106.0 million, an increase of 35.4% compared to $78.3 million in the first quarter of last year. This increase was primarily attributable to a 42.7% increased sales in retail business as well as a 24.6% increased sales in wholesale business.

Retail sales for the quarter from LA GO GO, the Company's branded retail division, increased 42.7% to $66.6 million, compared to $46.7 million last year. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 976 LA GO GO stores as of March 31, 2014, compared to 755 LA GO GO stores as of March 31, 2013.

Wholesale sales generated from the Company's wholesale business for the quarter increased 24.6% to $39.4 million, compared to $31.7 million last year. This increase was primarily attributable to increased sales in the PRC, the Germany, France and Japan partially offset for decreased sales in the United Kingdom and United States.

Total gross profit for the quarter was $25.8 million, or 24.3% of total sales, compared to $20.3 million, or 25.9% of total sales last year.

Selling expenses for the quarter increased 36.0% to $16.1 million compared to $11.9 million last year. As a percentage of sales, selling expenses increased 10 basis points to 15.2% compared to 15.1% last year. The increase was attributable to the increased number of stores, leading to increased numbers 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 41.4% to $6.4 million compared to $4.5 million last year. As a percentage of total sales, general and administrative expenses increased 30 basis points to 6.0% compared to 5.7% last year. The increase was attributable to an increase in payroll for additional management and design and marketing staff as a result of our business expansion.

Income from operations for the quarter decreased 16.1% to $3.3 million compared to $4.0 million last year. As a percentage of sales, income from operations accounted for 3.1% of our total sales for the quarter, a decrease of 2.0% compared to 5.1% last year.

For the first quarter, net income was $2.4 million, or $0.16 per diluted share, a decrease of 22.6% from $3.1 million, or $0.21 per diluted share in the first quarter of 2013. Net income in the first quarter of 2013 includes approximately $0.3 million, or $0.02 per diluted share, of non-cash income related to the change in fair value of a derivative liability. Excluding this non-cash item for the first quarter 2013, non-GAAP diluted earnings per share were $0.19 in the first quarter of 2013. See "About Non-GAAP Financial Measures" below.

Balance Sheet and Cash Flow

As of March 31, 2014, Ever-Glory had approximately $26.7 million of cash and cash equivalents, compared to approximately $27.8 million as of December 31, 2013. Ever-Glory had working capital of approximately $34.2 million as of March 31, 2014, and outstanding bank loans of approximately $51.5 million as of March 31, 2014.

Business Outlook

For the second quarter of 2014, Every-Glory anticipates total net sales in the range of $65 to $75 million and net income in the range of $1.5 to $2.0 million. For full year 2014, Every-Glory anticipates total net sales in the range of $420 to $470 million and net income in the range of $11 to $17 million. The full year revenue forecast is comprised of $160 to $180 million in anticipated wholesale revenue and $260 to $290 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 March 31, 2014 and 2013:

Conference Call

The Company will hold a conference call today at 8:00 a.m. Eastern Time which will be hosted by Jason Jiansong Wang, Chief Financial Officer. Listeners can access the conference call by dialing # 1-719-325-2145 and referring to the confirmation code 9593630. 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. May 15, 2014 through May 22, 2014 Eastern Time by calling # 1-858-384-5517; pin number: 9593630.

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.