Ever-Glory Reports First Quarter 2019 Financial Results

2019-05-14 18:08 9979

NANJING, China, May 14, 2019 /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 first quarter ended March 31, 2019.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first quarter, 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. Notably, we achieved year-over-year improvement in gross profit of 13.0% for our wholesale business."

"During the first quarter of 2019, we remained our focus on driving retail business through store network optimization strategy, as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 7 stores during 2019, we operated a nationwide network of 1,315 stores as of December 31, 2019."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in the light of weak micro environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in account receivables collection. We believe the enduring strength of our wholesale business will support its long-term profitability." concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The first quarter results, coupled with our ability to increase operating leverage, resulted in expanded wholesale operating income during this quarter. 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."

First Quarter 2019 Financial Results

Total sales for the first quarter of 2019 were $88.0 million, a decrease of 5.2% from $92.8 million in the first quarter of 2018. This decrease was primarily driven by an 11.4% decrease in our retail business, partially offset by an 11.3% increase in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 11.4% to $59.9 million for the first quarter of 2019, compared with $67.5 million for the first quarter of 2018. This decrease was primarily due to a decrease in same-store sales. The Company had 1,315 retail stores as of March 31, 2019, compared with 1,409 retail stores as of March 31, 2018.

Sales for the Company's wholesale division increased by 11.3% to $28.1 million for the first quarter of 2019, compared with $25.3 million for the first quarter of 2018. This increase was primarily attributable to increased sales in Mainland China, other European markets and Japan partially offset for decreased sales in Hong Kong, the United States, the United Kingdom and Germany.

Total gross profit for the first quarter of 2019 decreased by 6.3% to $29.4 million, compared with $31.3 million for the first quarter of 2018. Total gross margin decreased to 33.4% from 33.8% for the first quarter of 2018.

Gross profit for the retail business decreased by 10.7% to $22.8 million for the first quarter of 2019, compared with $25.5 million for the first quarter of 2018. Gross margin was 38.1%, compared to 37.8% for the first quarter of 2018.

Gross profit for the wholesale business increased by 13.0% to $6.6 million for the first quarter of 2019, compared with $5.8 million for the first quarter of 2018. Gross margin increased to 23.3% from 23.0% for the first quarter of 2018.

Selling expenses for the first quarter of 2019 decreased by 5.5% to $21.0 million, or 23.9% of total sales, compared with $22.2 million, or 24.0% of total sales for the first quarter of 2018. The decrease was attributable to the decreased sales.

General and administrative expenses for the first quarter of 2019 decreased by 1.9% to $7.5 million, or 8.6% of total sales, compared with $7.7 million, or 8.3% of total sales for the first quarter of 2018. The decrease was mainly attributable to the decreased office expenses.

Income from operations for the first quarter of 2019 decreased by 43.2% to $0.8 million compared with $1.4 million for the first quarter of 2018.

Net income(loss) attributable to the Company for the first quarter of 2019 was ($0.5) million compared with $0.8 million for the first quarter of 2018. Basic and diluted earnings(loss) per share were ($0.04) for the first quarter of 2019 compared with basic and diluted earnings per share of $0.06 for the first quarter of 2018.

Balance Sheet

As of March 31, 2019, Ever-Glory had approximately $57.9 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $28.5 million as of March 31, 2019, and outstanding bank loans of approximately $28.8 million as of March 31, 2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 14, 2019 (8:00 p.m. Beijing Time on May 14, 2019). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 7887070. 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 May 14 through 11:59 p.m. Eastern Time on May 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 7887070.

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

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 (UNAUDITED)

	2019		2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	57,876	$	47,012
Accounts receivable, net		57,595		86,527
Inventories		55,035		65,929
Advances on inventory purchases		6,087		6,420
Value added tax receivable		1,229		2,580
Other receivables and prepaid expenses		6,365		10,204
Amounts due from related parties		75		192
Total Current Assets		184,262		218,864

NONCURRENT ASSETS
Intangible assets, net		5,046		4,962
Property and equipment, net		29,135		28,445
Operating lease right-of-use assets		64,549		-
Total Non-Current Assets		98,730		33,407
TOTAL ASSETS	$	282,992	$	252,271

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	28,839	$	29,497
Accounts payable		51,470		78,412
Accounts payable and other payables – related parties		4,040		4,756
Other payables and accrued liabilities		13,769		21,958
Value added and other taxes payable		1,305		2,569
Income tax payable		862		1,569
Current operating lease liabilities		55,434		-
Total Current Liabilities		155,719		138,761

NONCURRENT LIABILITIES
Deferred tax liabilities		330		354
Non-current operating lease liabilities		9,127		-
TOTAL LIABILITIES		165,176		139,115

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Stockholders' equity:
Preferred stock ($0.001 par value, authorized 5,000,000 shares, no shares issued and outstanding)		-		-
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,800,140 and 14,798,198 shares issued and outstanding As of March 31, 2019 and December 31, 2018, respectively)		15		15
Additional paid-in capital		3,635		3,627
Retained earnings		105,393		105,914
Statutory reserve		19,083		19,083
Accumulated other comprehensive income		394		(3,578)
Amounts due from related party		(9,253)		(10,354)
Total equity attributable to stockholders of the Company		119,267		114,707
Noncontrolling interest		(1,451)		(1,551)
Total Equity		117,816		113,156
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	282,992	$	252,271

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)

	2019		2018

SALES	$	87,956	$	92,785

COST OF SALES		58,598		61,440

GROSS PROFIT		29,358		31,345

OPERATING EXPENSES
Selling expenses		21,008		22,225
General and administrative expenses		7,529		7,674
Total operating expenses		28,537		29,899

INCOME FROM OPERATIONS		821		1,446

OTHER INCOME (EXPENSE)
Interest income		207		326
Interest expense		(363)		(564)
Other income (expenses)		(295)		136
Total other expenses		(451)		(102)

INCOME BEFORE INCOME TAX EXPENSE		370		1,344

INCOME TAX EXPENSE		(825)		(757)

NET INCOME(LOSS)		(455)		587
Net income(loss) attributable to the non-controlling interest		(66)		228
NET INCOME(LOSS) ATTRIBUTABLE TO THE COMPANY	$	(521)	$	815

NET INCOME(LOSS)	$	(455)	$	587
Foreign currency translation gain		3,972		4,023
COMPREHENSIVE INCOME	$	3,517	$	4,610

Comprehensive loss attributable to the noncontrolling interest		100		270

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	3,617	$	4,880
EARNINGS(LOSS) PER SHARE:
Basic and diluted	$	(0.04)	$	0.06
Weighted average number of shares outstanding Basic and diluted		14,800,140		14,795,992

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE MONTHS ENDED March 31, 2019 AND 2018 (Unaudited)

					Additional		Retained Earnings				Accumulated other		Amounts due from		Total equity attributable to stockholders		Non-
	Common Stock				paid-in				Statutory		Comprehensive		related		of the		controlling		Total
	Shares		Amount		capital		Unrestricted		reserve		income		party		Company		Interest		equity
Balance at January 1, 2019		14,798,198	$	15	$	3,627	$	105,914	$	19,083	$	(3,578)	$	(10,354)	$	114,707		(1,551)	$	113,156

Stock issued for compensation		1,942		0.004		8		-		-		-		-		8				8
Net income (loss)		-		-		-		(521)		-		-		-		(521)		66		(455)
Net cash paid to related party under counter guarantee agreement		-		-		-		-		-		-		1,101		1,101		-		1,101
Foreign currency translation loss												3,972		-		3,972		34		4,006
Balance at March 31, 2019		14,800,140	$	15	$	3,635	$	105,393	$	19,083	$	394	$	(9,253)	$	119,267		(1,451)	$	117,816

					Additional		Retained Earnings				Accumulated other		Amounts due from		Total equity attributable to stockholders		Non-
	Common Stock				paid-in				Statutory		Comprehensive		related		of the		controlling		Total
	Shares		Amount		capital		Unrestricted		reserve		income		party		Company		Interest		equity
Balance at January 1, 2018		14,795,992	$	15	$	3,620	$	95,195	$	17,794	$	2,585	$	(15,449)	$	103,760		(1,062)	$	102,698

Net income (loss)		-		-		-		815		-		-		-		815		(228)		587
Net cash paid to related party under counter guarantee agreement		-		-		-		-		-		-		(8,480)		(8,480)		-		(8,480)
Foreign currency translation loss												4,023		-		4,023		(94)		3,929
Balance at March 31, 2018		14,795,992	$	15	$	3,620	$	96,010	$	17,794	$	6,608	$	(23,929)	$	100,118		(1,384)	$	98,734

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (UNAUDITED)

	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(455)	$	587
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2,225		2,537
Loss from sale of property and equipment		52		4
Provision for obsolete inventories		1,824		1,626
Deferred income tax		(145)		(234)
Stock-based compensation		8		-
Changes in operating assets and liabilities
Accounts receivable		31,027		28,466
Inventories		10,557		(129)
Value added tax receivable		1,406		1,895
Other receivables and prepaid expenses		3,975		832
Advances on inventory purchases		490		(1,175)
Amounts due from related parties		103		(165)
Accounts payable		(26,505)		(17,944)
Accounts payable and other payables- related parties		(741)		(653)
Other payables and accrued liabilities		(9,565)		(5,182)
Value added and other taxes payable		(2,788)		(1,988)
Income tax payable		(327)		(670)
Net cash provided by operating activities		11,141		7,807

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(2,131)		(2,552)
Net cash used in investing activities		(2,131)		(2,552)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		6,029		17,346
Repayment of bank loans		(7,408)		(14,780)
Repayment of loans from related party		3,488		-
Advances to related party		(2,163)		(7,692)
Net cash used in financing activities		(54)		(5,126)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		1,908		2,172

NET INCREASE IN CASH AND CASH EQUIVALENTS		10,864		2,301

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		47,012		62,876

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	57,876	$	65,177

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:
Interest	$	363	$	564
Income taxes	$	126	$	1,938