Ever-Glory Reports First Quarter 2021 Financial Results

2021-05-14 18:00 9211

NEW YORK, May 14, 2021 /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, 2021.

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."

"During the first quarter 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 50-100 stores during 2021, we operated a nationwide network of 921 stores as of March 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." concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The first quarter results, are coupled with our ability to increase operating leverage. 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 2021 Financial Results

Total sales for the first quarter of 2021 were $70.8 million, a increase of 21.4% from $58.4 million in the first quarter of 2020. This increase was primarily driven by a 4.2% increase in our wholesale business and a 32.0% increase in retail business.

Sales for the Company's branded fashion apparel retail division increased by 32.0% to $47.6 million for the first quarter of 2021, compared with $36.1 million for the first quarter of 2020. This increase was primarily due to the increase in same-store sales. The Company had 921 retail stores as of March 31, 2021, compared with 1,038 retail stores as of March 31, 2020.

Sales for the Company's wholesale division increased by 4.2% to $23.2 million for the first quarter of 2021, compared with $22.3 million for the first quarter of 2020. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, the United Kingdom, and other European markets partially offset for decreased sales in Japan and the United States.

Total gross profit for the first quarter of 2021 increased by 39.9% to $22.4 million, compared with $16 million for the first quarter of 2020. Total gross margin for the first quarter of 2021 increased to 31.7% from 27.5% for the first quarter of 2020.

Gross profit for the retail business increased by 42.5% to $17.9 million for the first quarter of 2021, compared with $12.5 million for the first quarter of 2020. Gross margin for the first quarter of 2021 was 37.6% compared to 34.8% for the first quarter of 2020.

Gross profit for the wholesale business increased by 30.5% to $4.6 million for the first quarter of 2021, compared with $3.5 million for the first quarter of 2020. Gross margin for the first quarter of 2021 increased to 19.6% from 15.7% for the first quarter of 2020.

Selling expenses for the first quarter of 2021 increased by 15.4% to $15.5 million, or 22.0% of total sales, compared with $13.5 million, or 23.1% of total sales for the first quarter of 2020. The increase was attributable to the increased sales.

General and administrative expenses for the first quarter of 2021 increased by 35.7% to $7.9 million, or 11.1% of total sales, compared with $5.8 million, or 9.9% of total sales for the first quarter of 2020. The increase was mainly attributable to the decreased business trip and the exemption of social benefits by the PRC government in 2020.

Loss from operations was $1.0 million for the first quarter of 2021,compared to $3.2 million for the first quarter of 2020.

Net loss attributable to the Company for the first quarter of 2021 was $1.2 million compared with $2.7 million for first quarter of 2020. Basic and diluted loss per share were $0.08 for the first quarter of 2021 compared with $0.18 for the first quarter of 2020.

Balance Sheet

As of March 31, 2021, Ever-Glory had approximately $78.1 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $43.7 million as of March 31, 2021, and outstanding bank loans of approximately $71.5 million as of March 31, 2021.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 14, 2021(8:00 p.m. Beijing Time on May 14, 2021). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-647-484-0475 and using the access code 7935539. 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 May 14 through 11:59 p.m. Eastern Time on May 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7935539.

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" 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 (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

	March 31, 2021		December 31, 2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	78,056	$	81,865
Restricted cash		45,660		39,858
Trading securities		3,036		1,792
Accounts receivable, net		46,719		53,285
Inventories		43,342		53,893
Advances on inventory purchases		7,802		10,261
Value added tax receivable		1,183		1,244
Other receivables and prepaid expenses		5,956		5,479
Amounts due from related parties		674		567
Total Current Assets		232,428		248,244

NON-CURRENT ASSETS
Equity security investment		3,877		3,932
Intangible assets, net		4,712		4,794
Property and equipment, net		31,881		32,164
Operating lease right-of-use assets		55,839		41,690
Deferred tax assets		879		902
Total Non-Current Assets		97,188		83,482
TOTAL ASSETS	$	329,616	$	331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	71,534	$	65,919
Accounts payable		52,083		67,762
Accounts payable and other payables – related parties		2,829		3,764
Other payables and accrued liabilities		13,522		16,073
Value added and other taxes payable		684		909
Income tax payable		704		1,062
Current operating lease liabilities		47,327		33,481
Total Current Liabilities		188,683		188,970

NON-CURRENT LIABILITIES
Non-current operating lease liabilities		8,622		8,307
TOTAL LIABILITIES		197,305		197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,810,660 and 14,809,160 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively)		15		15
Additional paid-in capital		3,655		3,650
Retained earnings		108,001		109,171
Statutory reserve		20,376		20,376
Accumulated other comprehensive income		3,238		4,590
Amounts due from related party		(2,974)		(3,353)
Total equity		132,311		134,449
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	329,616	$	331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

	Three Months Ended
	March 31, 2021		March 31, 2020

SALES	$	70,814	$	58,355

COST OF SALES		48,379		42,317

GROSS PROFIT		22,435		16,038

OPERATING EXPENSES
Selling expenses		15,548		13,478
General and administrative expenses		7,851		5,785
Total operating expenses		23,399		19,263

LOSS FROM OPERATIONS		(964)		(3,225)

OTHER INCOME (EXPENSE)
Interest income		224		277
Interest expense		(492)		(341)
Government subsidy		259		460
Other income (expense), net		532		358
Total other income (expense), net		523		754

LOSS BEFORE INCOME TAX		(441)		(2,471)

INCOME TAX EXPENSE		(729)		(227)

NET LOSS		(1,170)		(2,698)
Net income attributable to the non-controlling interest		-		(3)
NET LOSS ATTRIBUTABLE TO THE COMPANY	$	(1,170)	$	(2,701)

NET LOSS	$	(1,170)	$	(2,698)
Foreign currency translation loss		(1,352)		(1,437)
COMPREHENSIVE LOSS	$	(2,522)	$	(4,135)

Comprehensive loss attributable to the non-controlling interest		-		6

COMPREHENSIVE LOSS ATTRIBUTABLE TO THE COMPANY	$	(2,522)	$	(4,129)
LOSS PER SHARE:
Basic and diluted	$	(0.08)	$	(0.18)
Weighted average number of shares outstanding Basic and diluted		14,810,001		14,804,832

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

					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 (loss)		party		Company		Interest		equity
Balance at January 1, 2021		14,809,160	$	15	$	3,650	$	109,171	$	20,376	$	4,590	$	(3,353)	$	134,449	$	-	$	134,449

Stock-based compensation		1,500		-		5		-		-		-		-		5		-		5
Net loss		-		-		-		(1,170)		-		-		-		(1,170)		-		(1,170)
Net cash received from related party under counter guarantee agreement		-		-		-		-		-		-		379		379		-		379
Foreign currency translation loss		-		-		-		-		-		(1,352)		-		(1,352)		-		(1,352)
Balance at March 31, 2021		14,810,660	$	15	$	3,655	$	108,001	$	20,376	$	3,238	$	(2,974)	$	132,311		-	$	132,311

					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 (loss)		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-based compensation		3,062		-		5		-		-		-		-		5		-		5
Net income (loss)		-		-		-		(2,701)		-		-		-		(2,701)		3		(2,698)
Net cash received from related party under counter guarantee agreement		-		-		-		-		-		-		785		785		-		785
Foreign currency translation income (loss)		-		-		-		-		-		(1,440)		-		(1,440)		3		(1,437)
Balance at March 31, 2020		14,804,832	$	15	$	3,645	$	103,627	$	19,939	$	(5,770)	$	(4,147)	$	117,309		(1,504)	$	115,805

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

	Three Months Ended
	March 31, 2021		March 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,170)	$	(2,698)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization		1,377		1,587
Gain on disposal of intangible assets		-		(268)
Loss from sale of property and equipment		102		102
(Recovering from) Provision of bad debt allowance		(196)		278
Provision for obsolete inventories		3,583		4,204
Changes in fair value of trading securities		(262)		-
Changes in fair value of investment		28		-
Deferred income tax		17		104
Stock-based compensation		5		5
Changes in operating assets and liabilities
Accounts receivable		6,509		34,906
Inventories		6,805		10,303
Value added tax receivable		52		210
Other receivables and prepaid expenses		(367)		364
Advances on inventory purchases		2,544		2,855
Amounts due from related parties		(71)		142
Accounts payable		(14,690)		(19,864)
Accounts payable and other payables- related parties		(769)		(1,038)
Other payables and accrued liabilities		(3,221)		(5,587)
Value added and other taxes payable		(220)		(31)
Income tax payable		(358)		(1,019)
Net cash (used in) provided by operating activities		(302)		24,555

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(1,378)		(78)
Disposal of intangible assets		-		353
Purchases of trading securities		(1,238)		-
Proceeds from trading securities		255		-
Net cash (used in) provided by investing activities		(2,361)		275

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		12,336		11,464
Repayment of bank loans		(6,168)		(14,884)
Net collection (advance) of amounts due from related party (equity)		148		748
Net cash provided by (used in) financing activities		6,316		(2,672)

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(1,659)		1,497

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		1,993		23,655

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		121,723		48,551

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	123,716	$	72,206

Reconciliation of cash, cash equivalents and restricted cash reported within their consolidated balance sheets:

Cash and Cash Equivalents		78,056		70,036
Restricted cash		45,660		2,170
	$	123,716	$	72,206

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	492	$	341
Income taxes	$	729	$	1,218