Ever-Glory Reports Third Quarter 2017 Financial Results

- Retail revenue increased by 24.9% year-over-year to $51.3 million

- Income from operations increased by 131.3% year-over-year

2017-11-13 19:00 1349

NANJING, China, Nov. 13, 2017 /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, today reported its financial results for the third quarter ended September 30, 2017.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "Constantly building upon our growing brand recognition and leading supply chain management capabilities, we reported a solid third quarter with both revenue and net income delivering year-over-year growth. In particular, our retail revenue increased by 24.9% compared with the year-ago period as both our in-fashion collections with our upgraded store images and best-in-class customer service continue to receive high marks from our customers. We continued to optimize our store network during the quarter by strengthening our quick response system and better managing our inventory levels. As of September 30, 2017, we managed a nationwide network of 1,363 stores and launched a new store design for Velwin in July.

"While our wholesale business in the third quarter remained flat compared with the year-ago period, we're pleased to achieve the stabilized results even as overall market conditions in many of our key global markets remained challenging in the quarter," continued Mr. Kang. "Looking ahead, we expect sales in European areas to remain stable while sales in Japan to remain weak. However, we continued our efforts in cost management and managed to improve our gross margin for wholesale business on a year-over-year basis.

"Overall, we are very pleased with our third quarter results. They support our conviction and the priorities we have set for ourselves, as well as the strategies we continue to follow to strengthen the foundations of our business. We believe these goals and objectives will enable us to capture the right opportunities when market conditions improve," concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The solid third quarter results, coupled with our ability to increase operating leverage, resulted in expanded overall gross margin and operating income during this quarter. While we continued to improve our wholesale gross margin, third quarter retail gross margin was impacted by higher production costs as we proactively cleared out-of-season inventory. 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 2017 Financial Results

Total sales for the third quarter of 2017 were $120.3 million, an increase of 9.4% from $109.9 million in the third quarter of 2016. This increase was primarily attributable to a 0.2% increase in sales in our wholesale business and a 24.9% increase in our retail business.

Sales for the Company's branded fashion apparel retail division increased by 24.9% to $51.3 million for the third quarter of 2017, compared with $41.1 million for the third quarter of 2016. This increase was primarily due to increased same-store sales. The Company had 1,363 retail stores as of September 30, 2017, compared with 1,345 retail stores as of September 30, 2016.

Sales for the Company's wholesale division slightly increased by 0.2% to $69.0 million for the third quarter of 2017, compared with $68.9 million for the third quarter of 2016. This increase was primarily due to an increase in sales in Mainland China and Hong Kong partially offset by a decrease in sales in Germany, the United Kingdom, Europe-Other, Japan and the United States.

Total gross profit for the third quarter of 2017 increased by 12.3% to $33.3 million, compared with $29.6 million for the third quarter of 2016. Total gross margin increased to 27.6% from 26.9% for the third quarter of 2016.

Gross profit for the retail business increased by 17.8% to $23.0 million for the third quarter of 2017, compared with $19.6 million for the third quarter of 2016. Gross margin decreased to 44.9% from 47.6% for the third quarter of 2016.

Gross profit for the wholesale business increased by 1.6% to $10.2 million for the third quarter of 2017, compared with $10.1 million for the third quarter of 2016. Gross margin increased to 14.8% from 14.6% for the third quarter of 2016.

Selling expenses for the third quarter of 2017 increased by 9.3% to $20.2 million, or 16.8% of total sales, compared with $18.5 million, or 16.8% of total sales for the third quarter of 2016. The increase was mainly attributable to higher retail sales.

General and administrative expenses for the third quarter of 2017 increased by 3.1% to $10.2 million, or 8.5% of total sales, compared with $9.9 million, or 9.0% of total sales for the third quarter of 2016. The increase was attributable to the increased average salaries.

Income from operations for the third quarter of 2017 increased by 131.3% to $2.8 million compared with $1.2 million for the third quarter of 2016.

Net income attributable to the Company for the third quarter of 2017 was $3.2 million compared with a net income attributable to the Company of $0.6 million for the third quarter of 2016. Basic and diluted earnings per share were $0.22 for the third quarter of 2017 compared with basic and diluted earnings per share of $0.04 for the third quarter of 2016.

Balance Sheet

As of September 30, 2017, Ever-Glory had approximately $40.8 million of cash and cash equivalents, compared with approximately $45.3 million as of December 31, 2016. Ever-Glory had working capital of approximately $65.7 million and outstanding bank loans of approximately $44.9 million as of September 30, 2017.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on November 13, 2017 (9:00 p.m. Beijing Time on November 13, 2017). Listeners can access the conference call by dialing +1-888-394-8218 or +1-323-701-0225 and using the access code 4697641. 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 conference call will be available from 11:00 a.m. Eastern Time on November 13 through 11:59 p.m. Eastern Time on November 20, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 4697641.

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

The Piacente Group, Inc.
Emilie Wu
China: +86-10-5730-6200
US: +1-212-481-2050
E-Mail: everglory@tpg-ir.com

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
AS OF SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016

	2017		2016

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	40,799	$	45,288
Accounts receivable, net		82,550		67,644
Inventories		50,116		49,630
Value added tax receivable		3,844		2,938
Other receivables and prepaid expenses		6,672		3,674
Advances on inventory purchases		4,927		3,139
Amounts due from related parties		934		486
Total Current Assets		189,842		172,799

INTANGIBLE ASSETS		5,881		5,769
PROPERTY AND EQUIPMENT, NET		23,815		22,694
TOTAL ASSETS	$	219,538	$	201,262

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	44,937	$	29,232
Accounts payable		56,447		58,170
Accounts payable and other payables - related parties		4,660		4,337
Other payables and accrued liabilities		13,690		15,007
Value added and other taxes payable		2,728		5,118
Income tax payable		1,651		1,842
Total Current Liabilities		124,113		113,706

NONCURRENT LIABILITIES
Deferred tax liabilities		1,345		3,254
TOTAL LIABILITIES		125,458		116,960

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Stockholders' equity:
Preferred stock ($.001 par value, authorized 5,000,000 shares, no shares issued and outstanding)		-		-
Common stock ($.001 par value, authorized 50,000,000 shares, 14,792,836 and 14,787,940 shares issued and outstanding As of September 30, 2017 and December 31, 2016, respectively)		15		15
Additional paid-in capital		3,612		3,602
Retained earnings		90,318		83,423
Statutory reserve		17,107		17,107
Accumulated other comprehensive income		50		(3,297)
Amounts due from related party		(15,999)		(15,936)
Total equity attributable to stockholders of the Company		95,103		84,914
Noncontrolling interest		(1,023)		(612)
Total Equity		94,080		84,302
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	219,538	$	201,262

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME 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, 2017 AND 2016 (UNAUDITED)

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
NET SALES	$	120,257	$	109,926	$	285,148	$	282,295
COST OF SALES		87,007		80,312		192,740		197,623

GROSS PROFIT		33,250		29,614		92,408		84,672

OPERATING EXPENSES
Selling expenses		20,238		18,522		60,206		55,477
General and administrative expenses		10,167		9,862		24,900		24,128
Total Operating Expenses		30,405		28,384		85,106		79,605

INCOME FROM OPERATIONS		2,845		1,230		7,302		5,067

OTHER INCOME (EXPENSES)
Interest income		370		233		909		854
Interest expense		(562)		(580)		(1,207)		(1,511)
Other income		1,987		253		3,088		939
Total Other Income (Expenses)		1,795		(94)		2,790		282

INCOME BEFORE INCOME TAX EXPENSE		4,640		1,136		10,092		5,349
Income tax expense		(1,522)		(724)		(3,573)		(2,385)

NET INCOME		3,118		412		6,519		2,964

Net loss attributable to the non-controlling interest		115		208		376		441
NET INCOME ATTRIBUTABLE TO THE COMPANY		3,233		620		6,895		3,405

NET INCOME	$	3,118	$	412	$	6,519	$	2,964

Foreign currency translation income (loss)		1,823		(471)		3,345		(2,860)
COMPREHENSIVE INCOME (LOSS)		4,941		(59)		9,864		104

Comprehensive loss attributable to the non-controlling interest		133		205		411		434
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$	5,074	$	146	$	10,275	$	538

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS
Basic and diluted	$	0.22	$	0.04	$	0.47	$	0.23
Weighted average number of shares outstanding
Basic and diluted		14,792,836		14,787,940		14,791,778		14,787,044

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (UNAUDITED)

	2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	6,519	$	2,964
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		5,066		5,337
Loss from sale of property and equipment		5		40
Provision of bad debt allowance		679		975
Inventory write-down		4,624		7,111
Deferred income tax		(2,004)		(79)
Stock-based compensation		10		5
Changes in operating assets and liabilities
Accounts receivable		(12,805)		4,127
Inventories		(3,423)		19,293
Value added tax receivable		(762)		(2,452)
Other receivables and prepaid expenses		(3,395)		(638)
Advances on inventory purchases		(1,619)		1,618
Amounts due from related parties		(937)		1,918
Accounts payable		(3,738)		(14,467)
Accounts payable and other payables- related parties		232		630
Other payables and accrued liabilities		(2,219)		(3,289)
Value added and other taxes payable		(2,561)		(1,987)
Income tax payable		(256)		(2,460)
Net cash used in (provided by) operating activities		(16,584)		18,646

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(4,356)		(8,577)
Net cash used in investing activities		(4,356)		(8,577)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		47,570		75,263
Repayment of bank loans		(33,372)		(69,125)
Repayment of loans from related party		7,596		1,824
Advances to related party		(6,464)		(1,216)
Net cash provided by financing activities		15,330		6,746

EFFECT OF EXCHANGE RATE CHANGES ON CASH		1,121		(1,200)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(4,489)		15,615

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		45,288		22,702

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	40,799	$	38,317

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest	$	1,207	$	1,511
Income taxes	$	4,521	$	5,362