Ever-Glory Fourth Quarter 2021 Financial Results

2022-04-13 17:56 3913

NEW YORK, April 13, 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 full year ended December 31, 2021.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the full year of 2021, 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 full year of 2021, 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 137 stores during 2021, we operated a nationwide network of 880 stores as of December 31, 2021."

"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 full year 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."

Full year 2021 Financial Results

Total sales for the full year of 2021 were $331.0 million, an increase of 23.8% from $267.4 million in the full year of 2020. This increase was primarily driven by a 57.8% increase in our wholesale business partially offset by a 2.7% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 2.7% to $146.1 million for the full year of 2021, compared with $150.1 million for the full year of 2020. This decrease was primarily due to a decrease in same store sales. The Company operated 880 retail stores as of December 31, 2021, compared with 936 retail stores as of December 31, 2020.

Sales for the Company's wholesale division increased by 57.8% to $184.9 million for the full year of 2021, compared with $117.2 million for the full year of 2020. This increase was primarily attributable to increased sales in Mainland China, Hong Kong China, Europe-Other, Japan and United States.

Total gross profit for the full year of 2021 increase by 10.7% to $101.0 million, compared with $91.2 million for tthe full year of 2020. Total gross margin for the full year of 2021 decreased to 30.5% from 34.1% for the full year of 2020.

Gross profit for the retail business increase by 3.6% to $63.7 million for the full year of 2021, compared with $61.5 million for the full year of 2020. Gross margin for the full year of 2021 was 43.6% compared to 40.9% for the full year of 2020.

Gross profit for the wholesale business increased by 25.4% to $37.3 million for the full year of 2021, compared with $29.7 million for the full year of 2020. Gross margin for the full year of 2021 decreased to 20.2% from 25.4% for the full year of 2020.

Selling expenses for the full year of 2021 increased by 12.8% to $63.1 million, or 19.1% of total sales, compared with $55.9 million, or 20.9% of total sales for the full year of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expenses for the full year of 2021 increased by 23.2% to $38.4 million, or 11.6% of total sales, compared with $31.2 million, or 11.7% of total sales for the full year of 2020. The increase was attributable to the increased salaries.

(Loss) Income from operations was ($0.5 million) for the full year of 2021, compared to $4.1 million for the full year of 2020.

Net loss attributable to the Company for the full year of 2021 was ($0.09 million )compared with 3.3 million for the full year of 2020. Basic and diluted loss per share were ($0.01) for the full year of 2021 compared with $0.22 for the full year of 2020.

Balance Sheet

As of December 31, 2021, Ever-Glory had approximately $56.6 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $51.0 million as of December 31, 2021, and outstanding bank loans of approximately $69.0 million as of December 31, 2021.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on April 13, 2022(8:00 p.m. Beijing Time on April 13, 2022). Listeners can access the conference call by dialing +1-800-239-9838 or +1-323-794-2551 and using the access code 1990321. 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 11:00 a.m. Eastern Time on April 13 through 11:59 p.m. Eastern Time on April 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 1990321.

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", "idole" and "Jizhu". 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
Huilin Hua
Tel: +86-25-52096859
E-Mail: huahuilin@ever-glory.com.cn

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 DECEMBER 31, 2021 AND 2020

	December 31, 2021		December 31, 2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	56,573	$	81,865
Restricted cash		40,768		39,858
Trading securities		3,251		1,792
Accounts receivable, net		69,859		53,285
Inventories		63,841		53,893
Advances on inventory purchases		8,179		10,261
Value added tax receivable		1,693		1,244
Other receivables and prepaid expenses		6,345		5,479
Amounts due from related parties		220		567
Total Current Assets		250,729		248,244

NON-CURRENT ASSETS
Equity security investment		5,682		3,932
Intangible assets, net		4,794		4,794
Property and equipment, net		36,340		32,164
Operating lease right-of-use assets		50,077		41,690
Deferred tax assets		899		902
Other non-current assets		784		-
Total Non-Current Assets		98,576		83,482
TOTAL ASSETS	$	349,305	$	331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	68,992	$	65,919
Accounts payable		67,930		67,762
Accounts payable and other payables – related parties		1,332		3,764
Other payables and accrued liabilities		18,531		16,073
Value added and other taxes payable		999		909
Income tax payable		334		1,062
Current operating lease liabilities		41,633		33,481
Total Current Liabilities		199,751		188,970

NON-CURRENT LIABILITIES
Non-current operating lease liabilities		8,596		8,307
TOTAL LIABILITIES		208,347		197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,812,312 and 14,809,160 shares issued and outstanding as of December 30, 2021 and December 31, 2020, respectively)		15		15
Additional paid-in capital		3,660		3,650
Retained earnings		108,210		109,171
Statutory reserve		21,245		20,376
Treasury stock (as cost,147,334 shares at December 30, 2021)		(363)		-
Accumulated other comprehensive income		8,191		4,590
Amounts due from related party				(3,353)
Total equity		140,958		134,449
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	349,305	$	331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

	2021		2020

NET SALES	$	330,978	$	267,354

COST OF SALES		230,026		176,141

GROSS PROFIT		100,952		91,213

OPERATING EXPENSES
Selling expenses		63,074		55,894
General and administrative expenses		38,416		31,176
Total operating expenses		101,490		87,070

(LOSS) INCOME FROM OPERATIONS		(538)		4,143

OTHER INCOME (EXPENSE)
Interest income		976		1,014
Interest expense		(2,391)		(2,345)
Government subsidy		1,163		1,235
Gain (loss) from changes in fair values of investments		1,791		(135)
Other income		1,852		1,830
Total Other Income, Net		3,391		1,599

INCOME BEFORE INCOME TAX EXPENSE		2,853		5,742

INCOME TAX EXPENSE		(2,945)		(2,469)

(LOSS)NET INCOME		(92)		3,273

Net loss attributable to the non-controlling interest		-		7
NET INCOME ATTRIBUTABLE TO THE COMPANY	$	(92)	$	3,280

(LOSS)NET INCOME	$	(92)	$	3,273
Foreign currency translation gain		3,601		8,920
COMPREHENSIVE INCOME	$	3,509	$	12,193

Comprehensive income attributable to the noncontrolling interest		-		7

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	3,509	$	12,200
(LOSS)EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS:
Basic and diluted	$	(0.01)	$	0.22
Weighted average number of shares outstanding Basic and diluted		14,811,020		14,806,778

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

					Additional				Retained Earnings				Accumulated other		Amounts due from		Total equity attributable to stockholders		Non-
	Common Stock				paid-in		Treasury Stock				Statutory		Comprehensive		related		of the		controlling		Total
	Shares		Amount		capital				Unrestricted		reserve		income		party		Company		Interest		equity
Balance at January 1, 2020		14,801,770	$	15	$	3,640	$	-	$	106,328	$	19,939	$	(4,330)	$	(4,932)	$	120,660	$	(1,510)	$	119,150

Stock issued for compensation		7,390		-		10		-		-		-		-		-		10				10
Net income (loss)		-		-		-		-		3,280		-		-		-		3,280		(7)		3,273
Transfer to reserve		-		-		-		-		(437)		437		-		-		-				-
Net cash paid to related party under counter guarantee agreement (Note 11)		-		-		-		-		-		-		-		1,579		1,579		-		1,579

Deconsolidation of Yiduo		-		-		-		-		-		-		-		-		-		1,517		1,517
Foreign currency translation gain														8,920				8,920		-		8,920
Balance at December 31, 2020		14,809,160	$	15	$	3,650	$	-	$	109,171	$	20,376	$	4,590	$	(3,353)	$	134,449	$	-	$	134,449

Stock issued for compensation		3,152		-		10		-		-		-		-		-		10				10
Net income (loss)		-		-		-		-		(92)		-		-		-		(92)		-		(92)
Transfer to reserve		-		-		-		-		(869)		869		-		-		-				-
Payments received from party under counter guarantee agreement (Note 11)		-		-		-		-		-		-		-		3,353		3,353		-		3,353
Repurchase of 147,334 shares of common stock		-		-		-		(363)				-		-		-		(363)		-		(363)
Foreign currency translation gain														3,601		-		3,601		-		3,601
Balance at December 31, 2021		14,812,312	$	15	$	3,660	$	(363)	$	108,210	$	21,245	$	8,191	$	-	$	140,958	$	-	$	140,958

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 YEARS ENDED DECEMBER 31, 2021AND 2020

	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	(92)		3,273
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		6,404		5,291
Loss from sale of property and equipment		610		209
Loss on deconsolidation of a subsidiary		-		1,085
Provision of bad debt allowance		1,429		1,117
Provision for obsolete inventories		6,735		6,753
Changes in fair value of trading securities		(150)		(131)
Changes in fair value of investment		(1,641)		(819)
Deferred income tax		24		154)
Stock-based compensation		10		10
Changes in operating assets and liabilities
Accounts receivable		(16,737)		27,173
Inventories		(15,483)		10,161
Value added tax receivable		(416)		1,336
Other receivables and prepaid expenses		(710)		(135)
Advances on inventory purchases		2,418		(28)
Amounts due from related parties		3,563		(480)
Accounts payable		(2,238)		(9,316)
Accounts payable and other payables- related parties		(3,142)		(1,145)
Other payables and accrued liabilities		3,083		(3,098)
Value added and other taxes payable		71		(806)
Income tax payable		(747)		(148)
Net cash (used in) provided by operating activities		(17,009)		40,456

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(10,123)		(6,354)
Net purchase of trading securities		(1,309)		(1,665)
Investment payment		(775)		(2,936)
Net cash used in investing activities		(12,207)		(10,955)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		73,340		90,729
Repayment of bank loans		(71,790)		(58,658)
Repurchase of common stock		363		-
Net collection of amounts due from related party (equity)		863		1,848
Net cash provided by financing activities		2,776		33,919

EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,058		7,548

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(24,382)		70,968

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		121,723		50,755

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	97,341	$	121,723

Reconciliation of cash, cash equivalents and restricted cash reported within their consolidated balance sheets:
Cash and Cash Equivalents		56,573		81,865
Restricted cash		40,768		39,858
	$	97,341	$	121,723

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Net asset (liabilities) derecognized due to deconsolidation of a subsidiary		-	$	1,164
Cash paid during the period for:
Interest	$	2,391	$	2,345
Income taxes	$	2,945	$	2,469