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Ever-Glory Reports Third Quarter 2022 Financial Results

EVER-GLORY INTERNATIONAL GROUP INC
2022-11-14 17:30 1852

NANJING, China, Nov. 14, 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 third quarter ended September 30, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the third 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 third quarter of 2022, 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 29 stores during 2022, we operated a nationwide network of 774 stores as of September 30, 2022."

"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 third quarter 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."

Third Quarter 2022 Financial Results 

Total sales for the third quarter of 2022 were $106.4 million, an increase of 12.7% from $94.4 million in the third quarter of 2021. This increase was primarily driven by a 33.0% increase in our wholesale business, partially offset by a 26.4% decrease in retail business.

Sales for the Company's wholesale division increased by 33.0% to $82.7 million for the third quarter of 2022, compared with $62.2 million for the third quarter of 2021. 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.

Sales for the Company's branded fashion apparel retail division decreased by 26.4% to $23.7 million for the third quarter of 2022, compared with $32.2 million for the third quarter of 2021. This decrease was primarily due to a decrease in same-store sales. The Company operated 774 retail stores as of September 30, 2022, compared with 893 retail stores as of September 30, 2021,.

Total gross profit for the third quarter of 2022 decreased by 30.9% to $16.0 million, compared with $23.2 million for the third quarter of 2021. Total gross margin for the third quarter of 2022 decreased to 15.1% from 24.6% for the third quarter of 2021.

Gross profit for the wholesale business increased by 2.4% to $10.5 million for the third quarter of 2022, compared with $10.2 million for the third quarter of 2021. Gross margin for the third quarter of 2022 decreased to 12.6% from 16.4% for the third quarter of 2021.

Gross profit for the retail business decreased by 57.0% to $6.0 million for the third quarter of 2022, compared with $13.0 million for the third quarter of 2021. Gross margin for the third quarter of 2022 was 23.6% compared to 40.3% for the third quarter of 2021.

Selling expenses for the third quarter of 2022 decreased by 11.4% to $12.8 million, or 12.0% of total sales, compared with $14.4 million, or 15.3% of total sales for the third quarter of 2020. The decrease was attributable to the decreased average salaries and decreased business trips.

General and administrative expenses for the third quarter of 2022 decreased by 1.7% to $9.3 million, or 8.7% of total sales, compared with $9.5 million, or 10.0% of total sales for the third quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.

Loss from operations was $6.1 million for the third quarter of 2022, compared to $0.7 million for the third quarter of 2021.

Balance Sheet 

As of September 30, 2022, Ever-Glory had approximately $32.2 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $41.6 million as of September 30, 2022, and outstanding bank loans of approximately $63.4 million as of September 30, 2022.

Conference Call

The Company will hold a conference call at 6:00 a.m. Eastern Time on November 14, 2022(7:00 p.m. Beijing Time on November 14, 2022). Listeners can access the conference call by dialing +1-877-704-4453 or +1-201-389-0920 and using the access code 13734457. 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 9:00 a.m. Eastern Time on November 14 through 11:59 p.m. Eastern Time on November 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 13734457.

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.

 

 

 

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)



September 30,
2022

December 31,
2021

ASSETS












CURRENT ASSETS





    Cash and cash equivalents

$

32,177

$

56,573

    Restricted cash

39,706


40,768

    Trading securities

2,189


3,251

    Accounts receivable, net

79,875


69,859

    Inventories

49,038


63,841

    Advances on inventory purchases

4,260


8,179

    Value added tax receivable

2,144


1,693

    Other receivables and prepaid expenses

6,049


6,345

    Amounts due from related parties

-


220

Total Current Assets

215,438


250,729









NON-CURRENT ASSETS







    Equity security investment

4,566


5,682

    Intangible assets, net

4,211


4,794

    Property and equipment, net

31,148


36,340

    Operating lease right-of-use assets

38,905


50,077

    Deferred tax assets

768


899

    Other non-current assets

3,520


784

Total Non-Current Assets

83,118


98,576

TOTAL ASSETS

$

298,556

$

349,305









LIABILITIES AND STOCKHOLDERS' EQUITY
















CURRENT LIABILITIES







    Bank loans

$

63,360

$

68,992

    Accounts payable

59,894


67,930

    Accounts payable and other payables – related parties

2,907


1,332

    Other payables and accrued liabilities

14,166


18,531

    Value added and other taxes payable

842


999

    Income tax payable

1,107


334

    Current operating lease liabilities

31,538


41,633

Total Current Liabilities

173,814


199,751



Non-current operating lease liabilities

7,538


8,596

TOTAL LIABILITIES

181,352


208,347



COMMITMENTS AND CONTINGENCIES (Note 9)















STOCKHOLDERS' EQUITY







    Common stock ($0.001 par value, authorized 50,000,000 shares, 14,818,006
      and 14,655,926 issued and outstanding as of September 30, 2022,
      respectively, 14,812,312 and 14,664,978 issued and outstanding as of
      December 31, 2021, respectively)

15


15

    Additional paid-in capital

3,670


3,660

    Retained earnings

99,398


108,210

    Statutory reserve

21,245


21,245

    Treasury stock (at cost,162,080 and 147,334 shares at September 30, 2022
      and December 31, 2021, respectively)

(400)


(363)

    Accumulated other comprehensive (loss) income

(6,724)


8,191









Total Equity

117,204


140,958

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

298,556

$

349,305

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 

(Unaudited)

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




Three months ended

Nine months ended


September 30,

September 30,


2022

2021

2022

2021

NET SALES

$

106,437

$

94,406

$

235,022

$

225,776

COST OF SALES

90,390


71,196


181,194


161,738

















GROSS PROFIT

16,047


23,210


53,828


64,038

















OPERATING EXPENSES















    Selling expenses

12,792


14,443


38,153


44,495

    General and administrative expenses

9,306


9,467


21,821


24,980

       Total Operating Expenses

22,098


23,910


59,974


69,475

















LOSS FROM OPERATIONS

(6,051)


(700)


(6,146)


(5,437)

















OTHER (EXPENSES) INCOME















    Interest income

22


176


299


928

    Interest expense

(524)


(1,218)


(1,458)


(1,909)

    Government subsidy

192


340


397


842

    (Loss) gain from changes in fair values of investments

(915)


(123)


(1,587)


2,151

    Other income

317


253


885


1,027

Total Other (Expenses) Income, Net

(908)


(572)


(1,464)


3,039

















LOSS BEFORE INCOME TAX EXPENSE

(6,959)


(1,272)


(7,610)


(2,398)


Income tax benefit (expense)

835


(1,945)


(1,203)


(3,759)


NET LOSS

$

(6,124)

$

(3,217)

$

(8,813)

$

(6,157)


    Foreign currency translation (loss) gain

(6,336)


(1,061)


(14,915)


1,020


COMPREHENSIVE LOSS

$

(12,460)


(4,278)

$

(23,728)

$

(5,137)


































LOSS PER SHARE















    Basic and diluted

$

(0.41)

$

(0.22)

$

(0.59)

$

(0.42)

    Weighted average number of shares outstanding,
      basic and diluted

14,817,053


14,811,073


14,815,077


14,810,585

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

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
























































Common Stock

Additional


Retained Earnings

Accumulated

Amounts


other

due from


Shares

Amount

paid-in

Treasury

Unrestricted

Statutory

comprehensive

related

Total equity

capital

stock

reserve

income (loss)

party

Balance at
    January 1, 2022

14,812,312

$

15

$

3,660

$

(363)

$

108,210

$

21,245

$

8,191

$

-

$

140,958

Stock issued
    for compensation

2,042

-

5

-

-

-

-

-

5

Net loss

-

-

-

-

(5,089)

-

-

-

(5,089)

Repurchase of
    14,746 shares of
    common stock

-

-

-

(37)




-

-

-

(37)

Foreign currency
    translation loss


















(836)




(836)

Balance at
    March 31, 2022

14,814,354

$

15

$

3,665

$

(400)

$

103,121

$

21,245

$

7,355

$

-

$

135,001

Net income

-

-

-

-

2,400

-

-

-

2,400

Foreign currency
    translation loss


















(7,743)




(7,743)

Balance at
    June 30, 2022

14,814,354

$

15

$

3,665

$

(400)

$

105,521

$

21,245

$

(388)

-

$

129,658

Stock issued
    for compensation

3,652

-

5

-

-

-

-

-

5

Net  loss

-

-

-

-

(6,123)

-

-

-

(6,123)

Foreign currency
    translation loss


















(6,336)




(6,336)

Balance at
    September 30, 2022

14,818,006

$

15

$

3,670

$

(400)

$

99,398

$

21,245

$

(6,724)

$

-

$

117,204





























Common Stock

Additional


Retained Earnings

Accumulated

Amounts

other

due from


Shares

Amount

paid-in

Treasury

Unrestricted

Statutory

comprehensive

related

Total equity

capital

stock

reserve

income 

party

Balance at
    January 1, 2021

14,809,160

$

15

$

3,650

$

-

$

109,171

$

20,376

$

4,590

$

(3,353)

$

134,449

Stock issued
    for compensation

1,500

-

5

-

-

-

-

-

5

Net  loss

-

-

-

-

(1,170)

-

-

-

(1,170)

Net cash received
    from related
    party under
    counter guarantee agreement

-

-

-

-

-

-

-

379

379

Foreign currency
    translation adjustment


















(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

Net loss

-

-

-

-

(1,771)

-

-

-

(1,771)

Transfer to
    reserve

-

-

-

-

-

-

-

-

-

Net cash
    received from
    related party under
    counter guarantee
    agreement

-

-

-

-

-

-

-

386

386

Foreign currency
    translation adjustment


















3,434




3,434

Balance at
    June 30, 2021

14,810,660

$

15

$

3,655

$

-

$

106,230

$

20,376

$

6,672

$

(2,588)

$

134,360

Stock issued for
    compensation

1,652

-

5

-

-

-

-

-

5

Net  loss

-

-

-

-

(3,217)

-

-

-

(3,217)

Net cash received
    from related party under
    counter guarantee agreement

-

-

-

-

-

-

-

313

313

Foreign currency
    translation adjustment


















(1,062)




(1,062)

Balance at
    September 30, 2021

14,812,312

$

15

$

3,660

$

-

$

103,013

$

20,376

$

5,610

$

(2,275)

$

130,399

 

 

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)






Nine Months Ended


September 30,
2022

September 30,
2021

CASH FLOWS FROM OPERATING ACTIVITIES





    Net loss

$

(8,813)


(6,157)

Adjustments to reconcile net loss to cash used in operating activities:







    Depreciation and amortization

5,256


4,384

    Loss from sale of property and equipment

141


590

    Provision of bad debt allowance

3,943


676

    Provision for obsolete inventories

5,296


842

    Changes in fair value of trading securities

1,010


(200)

    Changes in fair value of investments

577


(1,951)

    Deferred income tax

42


644

    Stock-based compensation

10


10

    Changes in operating assets and liabilities







    Accounts receivable

(20,334)


(8,614)

    Inventories

4,353


(13,949)

    Value added tax receivable

(671)


(1,235)

    Other receivables and prepaid expenses

(434)


(1,096)

    Advances on inventory purchases

3,317


586

    Amounts due from related parties

211


(1,514)

    Accounts payable

229


5,930

    Accounts payable and other payables- related parties

1,779


(3,204)

    Other payables and accrued liabilities

(5,124)


(3,332)

    Value added and other taxes payable

891


(360)

    Income tax payable

(81)


831

Net cash used in operating activities

(8,402)


(27,119)


















CASH FLOWS FROM INVESTING ACTIVITIES







    Purchases of property and equipment and intangible asset

(3,645)


(5,109)

    Net proceeds from sale (purchase) of trading securities

52


(1,077)

    Investment payment of other non-current assets

(3,028)


(773)

Net cash used in investing activities

(6,621)


(6,959)


















CASH FLOWS FROM FINANCING ACTIVITIES







    Proceeds from bank loans

56,018


56,110

    Repayment of bank loans

(54,504)


(54,565)

    Repurchase of common stock

(37)


-

    Net collection of amounts due from related party (equity)

-


1,630

Net cash provided by financing activities

1,477


3,175









EFFECT OF EXCHANGE RATE CHANGES ON CASH

(11,912)


693









NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(25,458)


(30,211)









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

97,341


121,723









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

71,883

$

91,512









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
















Cash and Cash Equivalents

32,177


48,336

Restricted cash

39,706


43,176


$

71,883

$

91,512

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:







    Cash paid during the period for:







    Interest

$

1,458

$

1,909

    Income taxes

$

1,175

$

2,272

    SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:







    Common stock issued for compensation

$

10

$

10

 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/ever-glory-reports-third-quarter-2022-financial-results-301676709.html

Source: EVER-GLORY INTERNATIONAL GROUP INC
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