NANJING, China, Aug. 14, 2018 /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 second quarter ended June 30, 2018.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the second quarter, we maintained our focus on developing retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio. Notably, we achieved year-over-year improvement in gross margins for both of our retail and wholesale businesses, as well as a year-over-year revenue increase of 17.6% for our wholesale business."
"During the second quarter of 2018, 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 69 stores during the second quarter, we operated a nationwide network of 1,417 stores as of June 30, 2018."
"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. Our wholesale gross margin continued to improve on a year-over-year basis. 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, "We're delighted to see that our operating efficiency continued to improve in the second quarter. Overall gross margin increased by 60 basis points, with wholesale gross margin increasing by 50 basis points, compared with the same period of last year. With strengthened fundamentals and improved operating leverage of our overall business, we are excited about the opportunities that lay before us and we look forward to updating you with our progress next quarter."
Second Quarter 2018 Financial Results
Total sales for the second quarter of 2018 were $88.5 million, an increase of 11.0% from $79.8 million in the second quarter of 2017. This increase was primarily driven by a 17.6% increase in our wholesale business and an 6.3% increase in retail business.
Sales for the Company's branded fashion apparel retail division increased by 6.3% to $49.7 million for the second quarter of 2018, compared with $46.8 million for the second quarter of 2017. This increase was primarily due to an increase in same-store sales. The Company had 1,417 retail stores as of June 30, 2018, compared with 1,362 retail stores as of June 30, 2017.
Sales for the Company's wholesale division increased by 17.6% to $38.8 million for the second quarter of 2018, compared with $33.0 million for the second quarter of 2017. This increase was primarily attributable to an increase in sales in Mainland China, United Kingdom, United States and Japan, partially offset by a decrease in sales in Hong Kong, Germany and Europe other areas.
Total gross profit for the second quarter of 2018 increased by 12.7% to $34.5 million, compared with $30.7 million for the second quarter of 2017. Total gross margin increased to 39.0% from 38.4% for the second quarter of 2017.
Gross profit for the retail business increased by 10.6% to $27.4 million for the second quarter of 2018, compared with $24.8 million for the second quarter of 2017. Gross margin was 55.1%, compared to 52.9% for the second quarter of 2017.
Gross profit for the wholesale business increased by 21.3% to $7.2 million for the second quarter of 2018, compared with $5.9 million for the second quarter of 2017. Gross margin increased to 18.4% from 17.9% for the second quarter of 2017.
Selling expenses for the second quarter of 2018 increased by 11.7% to $22.6 million, or 25.5% of total sales, compared with $20.2 million, or 25.3% of total sales for the second quarter of 2017. The increase was attributable to the increased store decoration and marketing expenses.
General and administrative expenses for the second quarter of 2018 increased by 18.0% to $8.8 million, or 10.0% of total sales, compared with $7.5 million, or 9.4% of total sales for the second quarter of 2017. The increase was mainly attributable to the increased average salaries.
Income from operations for the second quarter of 2018 increased by 6.1% to $3.1 million compared with $2.9 million for the second quarter of 2017.
Net income attributable to the Company for the second quarter of 2018 was $2.8 million compared with 2.7 million for the second quarter of 2017. Basic and diluted earnings per share were $0.19 for the second quarter of 2018 compared with basic and diluted earnings per share of $0.18 for the second quarter of 2017.
Balance Sheet
As of June 30, 2018, Ever-Glory had approximately $36.4 million of cash and cash equivalents, compared with approximately $62.9 million as of December 31, 2017. Ever-Glory had working capital of approximately $65.7 million as of June 30, 2018, and outstanding bank loans of approximately $34.8 million as of June 30, 2018.
Conference Call
The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2018 (8:00 p.m. Beijing Time on August 14, 2018). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 3000953. 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 August 14 through 11:59 p.m. Eastern Time on August 21, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 3000953.
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 JUNE 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017 |
|||||
| 2018 |
2017 |
||||
| ASSETS |
|||||
| CURRENT ASSETS |
|||||
| Cash and cash equivalents |
$ |
36,439 |
$ |
62,876 |
|
| Accounts receivable, net |
61,072 |
81,859 |
|||
| Inventories |
64,418 |
56,182 |
|||
| Value added tax receivable |
3,037 |
3,757 |
|||
| Other receivables and prepaid expenses |
13,771 |
5,139 |
|||
| Advances on inventory purchases |
9,858 |
3,028 |
|||
| Amounts due from related parties |
- |
265 |
|||
| Total Current Assets |
188,595 |
213,106 |
|||
| INTANGIBLE ASSETS |
6,290 |
5,995 |
|||
| PROPERTY AND EQUIPMENT, NET |
26,305 |
25,891 |
|||
| TOTAL ASSETS |
$ |
221,190 |
$ |
244,992 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
| CURRENT LIABILITIES |
|||||
| Bank loans |
$ |
34,768 |
$ |
37,730 |
|
| Accounts payable |
58,745 |
73,788 |
|||
| Accounts payable and other payables - related parties |
4,448 |
4,675 |
|||
| Other payables and accrued liabilities |
23,440 |
16,454 |
|||
| Derivative financial instruments |
469 |
- |
|||
| Value added and other taxes payable |
245 |
6,052 |
|||
| Income tax payable |
777 |
1,712 |
|||
| Total Current Liabilities |
122,892 |
140,411 |
|||
| NONCURRENT LIABILITIES |
|||||
| Deferred tax liabilities |
1,039 |
1,883 |
|||
| TOTAL LIABILITIES |
123,931 |
142,294 |
|||
| COMMITMENTS AND CONTINGENCIES |
|||||
| STOCKHOLDERS' EQUITY |
|||||
| Stockholders' equity: |
|||||
| Common stock $0.001 par value, authorized 50,000,000 shares, 14,795,992 and |
15 |
15 |
|||
| Additional paid-in capital |
3,620 |
3,620 |
|||
| Retained earnings |
98,786 |
95,195 |
|||
| Statutory reserve |
17,794 |
17,794 |
|||
| Accumulated other comprehensive income |
(48) |
2,585 |
|||
| Amounts due from related party |
(21,589) |
(15,449) |
|||
| Total equity attributable to stockholders of the Company |
98,578 |
103,760 |
|||
| Noncontrolling interest |
(1,319) |
(1,062) |
|||
| Total Equity |
97,259 |
102,698 |
|||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
221,190 |
$ |
244,992 |
|
| EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED |
|||||||||||||
| 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 SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (UNAUDITED) |
|||||||||||||
| Three months ended |
Six months ended |
||||||||||||
| June 30, |
June 30, |
||||||||||||
| 2018 |
2017 |
2018 |
2017 |
||||||||||
| NET SALES |
$ |
88,541 |
$ |
79,771 |
$ |
181,326 |
$ |
164,891 |
|||||
| COST OF SALES |
53,999 |
49,121 |
115,439 |
105,732 |
|||||||||
| GROSS PROFIT |
34,542 |
30,650 |
65,887 |
59,159 |
|||||||||
| OPERATING EXPENSES |
|||||||||||||
| Selling expenses |
22,590 |
20,223 |
44,817 |
39,968 |
|||||||||
| General and administrative expenses |
8,823 |
7,479 |
16,496 |
14,734 |
|||||||||
| Total Operating Expenses |
31,413 |
27,702 |
61,313 |
54,702 |
|||||||||
| INCOME FROM OPERATIONS |
3,129 |
2,948 |
4,574 |
4,457 |
|||||||||
| OTHER INCOME (EXPENSES) |
|||||||||||||
| Interest income |
370 |
282 |
696 |
539 |
|||||||||
| Interest expense |
(360) |
(318) |
(924) |
(645) |
|||||||||
| Other income |
865 |
523 |
1,001 |
1,100 |
|||||||||
| Total Other Income, Net |
875 |
487 |
773 |
994 |
|||||||||
| INCOME BEFORE INCOME TAX EXPENSE |
4,004 |
3,435 |
5,347 |
5,451 |
|||||||||
| Income tax expense |
(1,285) |
(833) |
(2,041) |
(2,050) |
|||||||||
| NET INCOME |
2,719 |
2,602 |
3,306 |
3,401 |
|||||||||
| Net loss attributable to the non-controlling interest |
57 |
86 |
285 |
261 |
|||||||||
| NET INCOME ATTRIBUTABLE TO THE |
2,776 |
2,688 |
3,591 |
3,662 |
|||||||||
| NET INCOME |
$ |
2,719 |
$ |
2,602 |
$ |
3,306 |
$ |
3,401 |
|||||
| Foreign currency translation (loss) gain |
(6,091) |
1,063 |
(2,068) |
1,522 |
|||||||||
| Unrealized gain (loss) of derivative contracts |
(469) |
- |
(469) |
- |
|||||||||
| COMPREHENSIVE INCOME (LOSS) |
(3,841) |
3,665 |
769 |
4,923 |
|||||||||
| Comprehensive income(loss) attributable to the non- |
(13) |
98 |
309 |
278 |
|||||||||
| COMPREHENSIVE INCOME (LOSS) |
$ |
(3,854) |
$ |
3,763 |
$ |
1,078 |
$ |
5,201 |
|||||
| EARNINGS PER SHARE ATTRIBUTABLE TO |
|||||||||||||
| Basic and diluted |
$ |
0.19 |
$ |
0.18 |
$ |
0.24 |
$ |
0.25 |
|||||
| Weighted average number of shares outstanding |
14,795,992 |
14,792,836 |
14,795,992 |
14,791,240 |
|||||||||
| 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 SIX MONTHS ENDED JUNE 30, 2018 AND 2017 (UNAUDITED) |
|||||
| 2018 |
2017 |
||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|||||
| Net income |
$ |
3,306 |
$ |
3,401 |
|
| Adjustments to reconcile net income to cash provided by operating activities: |
|||||
| Depreciation and amortization |
4,903 |
3,481 |
|||
| Loss from sale of property and equipment |
6 |
5 |
|||
| Provision of bad debt allowance |
- |
688 |
|||
| Provision for obsolete inventories |
1,626 |
4,105 |
|||
| Deferred income tax |
(843) |
(1,744) |
|||
| Stock-based compensation |
- |
10 |
|||
| Changes in operating assets and liabilities |
|||||
| Accounts receivable |
20,150 |
13,865 |
|||
| Inventories |
(10,873) |
(11,750) |
|||
| Value added tax receivable |
681 |
(1,446) |
|||
| Other receivables and prepaid expenses |
(8,942) |
(673) |
|||
| Advances on inventory purchases |
(7,145) |
(2,684) |
|||
| Amounts due from related parties |
1,117 |
(161) |
|||
| Accounts payable |
(14,296) |
(7,542) |
|||
| Accounts payable and other payables- related parties |
(1,485) |
(818) |
|||
| Other payables and accrued liabilities |
8,006 |
(1,353) |
|||
| Value added and other taxes payable |
(5,924) |
(4,048) |
|||
| Income tax payable |
(942) |
(753) |
|||
| Net cash used in operating activities |
(10,655) |
(7,417) |
|||
| CASH FLOWS FROM INVESTING ACTIVITIES |
|||||
| Purchases of property and equipment |
(6,295) |
(2,220) |
|||
| Net Cash (used in) provided by investing activities |
(6,295) |
(2,220) |
|||
| CASH FLOWS FROM FINANCING ACTIVITIES |
|||||
| Proceeds from bank loans |
28,111 |
25,664 |
|||
| Repayment of bank loans |
(30,533) |
(17,821) |
|||
| Repayment of loans from related party |
2,556 |
482 |
|||
| Advances to related party |
(8,734) |
(6,433) |
|||
| Net cash used in financing activities |
(8,600) |
1,892 |
|||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |
(887) |
310 |
|||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(26,437) |
(7,435) |
|||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
62,876 |
45,288 |
|||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
36,439 |
$ |
37,853 |
|
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|||||
| Cash paid during the period for: |
|||||
| Interest |
$ |
924 |
$ |
645 |
|
| Income taxes |
$ |
3,016 |
$ |
3,120 |
|
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