Ever-Glory Reports Fourth Quarter 2020 Financial Results

2021-03-31 17:45 2105

NEW YORK, March 31, 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 fourth quarter ended December 31, 2020.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the fourth 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 fourth quarter of 2020, 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 54 stores during 2020, we operated a nationwide network of 936 stores as of December 31, 2020."

"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 fourth 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."

Full year 2020 Financial Results

Total sales for the full year of 2020 were $267.4 million, a decrease of 30.2% from $383.1 million in the full year of 2019. This decrease was primarily driven by a 39.9% decrease in our wholesale business and a 20.1% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 20.1% to $150.1 million for the full year of 2020, compared with $187.9 million for the full year of 2019. This decrease was primarily due to a decrease in same store sales. The Company had 936 retail stores as of December 31, 2020, compared with 1,101 retail stores as of December 31, 2019.

Sales for the Company's wholesale division decreased by 39.9% to $117.2 million for the full year of 2020, compared with $195.2 million for the full year of 2019. This decrease was primarily attributable to a decrease in sales in Mainland China, Hong Kong, Germany, Europe-Other, Japan, United States and United Kingdom.

Total gross profit for the full year of 2020 decreased by 23.2% to $91.2 million, compared with $118.8 million for the full year of 2019. Total gross margin increased to 34.1% from 31.0% for the full year of 2019.

Gross profit for the retail business decreased by 22.1% to $61.5 million for the full year of 2020, compared with $78.9 million for the full year of 2019. Gross margin was 40.9%, compared to 42.0% for the full year of 2019.

Gross profit for the wholesale business decreased by 25.4% to $29.7 million for the full year of 2020, compared with $39.9 million for the full year of 2019. Gross margin increased to 25.4% from 20.4% for the full year of 2019.

Selling expenses for the full year of 2020 decreased by 30.3% to $56.0 million, or 20.9% of total sales, compared with $80.2 million, or 20.9% of total sales for the full year of 2019. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2020 decreased by 11.2% to $31.2 million, or 11.7% of total sales, compared with $35.1 million, or 9.2% of total sales for the full year of 2019. The decrease was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2020 increased by 19.5% to $4.1 million compared with $3.5 million for the full year of 2019.

Net income attributable to the Company for the full year of 2020 was $3.3 million compared with $1.3 million for the full year of 2019. Basic and diluted earnings per share were $0.22 for the full year of 2020 compared with $0.09 for the full year of 2019.

Balance Sheet

As of December 31, 2020, Ever-Glory had approximately $81.9 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $59.3 million as of December 31, 2020, and outstanding bank loans of approximately $65.9 million as of December 31, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 31, 2020 (8:00 p.m. Beijing Time on March 31, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 3008303. 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 March 31 through 11:59 p.m. Eastern Time on April 7 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 3008303.

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.

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, 2020 AND 2019

	2020		2019
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	81,865	$	48,551
Restricted cash		39,858		2,204
Trading securities		1,792		-
Accounts receivable, net		53,285		78,053
Inventories		53,893		67,355
Advances on inventory purchases		10,261		9,681
Value added tax receivable		1,244		2,495
Other receivables and prepaid expenses		5,479		5,293
Amounts due from related parties		567		123
Total Current Assets		248,244		213,755

NONCURRENT ASSETS
Equity security investment		3,932		-
Intangible assets, net		4,794		4,729
Property and equipment, net		32,164		28,812
Operating lease right-of-use assets		41,690		53,379
Deferred tax assets		902		996
Total Non-Current Assets		83,482		87,916
TOTAL ASSETS	$	331,726	$	301,671

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	65,919	$	29,931
Accounts payable		67,762		72,418
Accounts payable and other payables – related parties		3,764		4,811
Other payables and accrued liabilities		16,073		19,137
Value added and other taxes payable		909		1,657
Income tax payable		1,062		1,142
Current operating lease liabilities		33,481		44,888
Total Current Liabilities		188,970		173,984

NONCURRENT LIABILITIES
Non-current operating lease liabilities		8,307		8,537
TOTAL LIABILITIES		197,277		182,521

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,809,160 and 14,801,770 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively)		15		15
Additional paid-in capital		3,650		3,640
Retained earnings		109,171		106,328
Statutory reserve		20,376		19,939
Accumulated other comprehensive income (loss)		4,590		(4,330)
Amounts due from related party		(3,353)		(4,932)
Total equity attributable to stockholders of the Company		134,449		120,660
Noncontrolling interest		-		(1,510)
Total Equity		134,449		119,150
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	331,726	$	301,671

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, 2020 AND 2019

	2020		2019

SALES	$	267,354	$	383,101

COST OF SALES		176,141		264,330

GROSS PROFIT		91,213		118,771

OPERATING EXPENSES
Selling expenses		55,894		80,180
General and administrative expenses		31,176		35,123
Total operating expenses		87,070		115,303

INCOME FROM OPERATIONS		4,143		3,468

OTHER INCOME (EXPENSE)
Interest income		1,014		1,003
Interest expense		(2,345)		(1,222)
Loss on deconsolidation of a subsidiary		(1,085)		-
Gain from changes in fair values of investments		950		-
Government subsidy		1,235		1,809
Other income		1,830		723
Total other income		1,599		2,313

INCOME BEFORE INCOME TAX EXPENSE		5,742		5,781

INCOME TAX EXPENSE		(2,469)		(4,562)

NET INCOME		3,273		1,219

Net loss (income) attributable to the non-controlling interest		7		51
NET INCOME ATTRIBUTABLE TO THE COMPANY	$	3,280	$	1,270

NET INCOME	$	3,273	$	1,219
Foreign currency translation income (loss)		8,920		(660)
COMPREHENSIVE INCOME	$	12,193	$	559

Comprehensive (loss) income attributable to the noncontrolling interest		7		41

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	12,200	$	610
EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS:
Basic and diluted	$	0.22	$	0.09
Weighted average number of shares outstanding Basic and diluted		14,806,778		14,801,770

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, 2020 AND 2019

					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		3,572		-		13		-		-		-		-		13				13
Net income (loss)		-		-		-		1,270		-		-		-		1,270		(51)		1,219
Transfer to reserve		-		-		-		(856)		856		-		-		-				-
Net cash paid to related party under counter guarantee agreement		-		-		-		-		-		-		5,422		5,422		-		5,422
Foreign currency translation (loss) gain												(752)				(752)		92		(660)
Balance at December 31, 2019		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

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, 2020 AND 2019

	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,273	$	1,219
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization		5,291		8,239
Loss from sale of property and equipment		209		9
Loss on deconsolidation of a subsidiary		1,085		-
Provision of bad debt allowance		1,117		1,062
Provision for obsolete inventories		6,753		2,804
Changes in fair value of trading securities		(131)		-
Changes in fair value of investment		(819)		-
Deferred income tax		154		(1,472)
Stock-based compensation		10		12
Changes in operating assets and liabilities
Accounts receivable		27,173		6,652
Inventories		10,161		(5,145)
Value added tax receivable		1,336		1,077
Other receivables and prepaid expenses		(135)		2,394
Advances on inventory purchases		(28)		(3,395)
Amounts due from related parties		(480)		67
Accounts payable		(9,316)		(2,305)
Accounts payable and other payables- related parties		(1,145)		176
Other payables and accrued liabilities		(3,098)		(4,052)
Value added and other taxes payable		(806)		(2,948)
Income tax payable		(148)		(409)
Net cash provided by operating activities		40,456		3,985

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(6,354)		(8,675)
Purchases of trading securities		(2,644)		-
Proceeds from trading securities		979		-
Investment in a partnership		(2,936)		-
Net cash used in investing activities		(10,955)		(8,675)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		90,729		59,528
Repayment of bank loans		(58,658)		(58,665)
Net collection (advance) of amounts due from related party (equity)		1,848		5,254
Net cash provided by financing activities		33,919		6,117

EFFECT OF EXCHANGE RATE CHANGES ON CASH		7,548		2,316

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		70,968		3,743

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		50,755		47,012

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

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

Cash and Cash Equivalents		81,865		48,551
Restricted cash		39,858		2,204
	$	121,723	$	50,755

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	$	2,345	$	1,222
Income taxes	$	2,469	$	6,327