Ever-Glory Reports Fourth Quarter and Full Year 2016 Financial Results
NANJING, China, March 31, 2017 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NASDAQ-GM: EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, today reported its financial results for the fourth quarter and full year ended December 31, 2016.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "In light of the challenging macro environment in 2016 that continued in the fourth quarter, we have been proactively making operational adjustments to maintain our competitive advantage in a tough market and remain focused on the execution of our strategies for both of our retail and wholesale business segments, with a goal to evolve our business towards long-term sustainability.
"For our retail business, we continued to drive our store network optimization efforts by adding a net total of 33 stores during the fourth quarter. As of December 31, 2016, we operated a nationwide network of 1,378 stores, and expect to operate over 1,450 stores at the end of 2017. With our approach and efforts to balance fast inventory turnover and sales in 2016, we look forward to growth improvement in 2017. In addition, we have completed the new store designs for our youth brand Sea To Sky and high-end brand idole, and we are excited for the sales opportunities the new designs can bring when launched later this year. In 2017, we will continue to focus on inventory and operation management and branding, while further fine-tuning our store network."
"For our wholesale business, although we have experienced continued pricing pressure due to lackluster consumer confidence, we are pleased to report gross margin improvement for the fourth quarter and full year of 2016. In 2017, we look forward to maintaining our sales trend in the United States, while further improving the growth in Europe and Japan. We believe our extensive product development and one-stop supply chain management expertise, as well as network of high quality, reliable and cost-efficient sourcing channels and manufacturers will continue to drive the long-term growth of our wholesales business," concluded Mr. Kang.
Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "Despite the soft market conditions throughout the year 2016, we are pleased that our business remains solid and showed resilience to the slowdown of global economies. In 2016, we maintained the gross margin for wholesale business at the same level compared with the year-ago period while improving the gross margin for retail business by 110 basis points, mainly due to the decreased rent costs. As we diligently carry out our inventory management strategy, we aim to continually improve the balance between inventory turnover and sales growth in 2017. While we expect 2017 to remain challenging, we will continue implementing our margin enhancement and cost control measures to further strengthen the profitability of our business."
Fourth Quarter 2016 Financial Results
Total sales for the fourth quarter of 2016 were $110.4 million, a decrease of 14.5% from $129.2 million in the fourth quarter of 2015. This decrease was primarily driven by a 21.2% decrease in our wholesale business and an 8.3% decrease in retail business.
Sales for the Company's branded fashion apparel retail division decreased by 8.3% to $61.4 million for the fourth quarter of 2016, compared with $67.0 million for the fourth quarter of 2015. This decrease was primarily due to a decrease in same-store sales. The Company had 1,378 retail stores as of December 31, 2016, compared with 1,159 retail stores as of December 31,2015.
Sales for the Company's wholesale division decreased by 21.2% to $49.0 million for the fourth quarter of 2016, compared with $62.2 million for the fourth quarter of 2015. This decrease was primarily due to a decrease in sales in Hong Kong, Germany, the United Kingdom and Mainland China, partially offset by an increase in sales in Europe-Other, Japan and the United States.
Total gross profit for the fourth quarter of 2016 increased by 0.5% to $36.5 million, compared with $36.3 million for the fourth quarter of 2015. Total gross margin increased to 33.1% from 28.1% for the fourth quarter of 2015.
Gross profit for the retail business increased by 4.4% to $25.8 million for the fourth quarter of 2016, compared with $24.7 million for the fourth quarter of 2015. Gross margin increased to 42.0% from 36.9% for the fourth quarter of 2015.
Gross profit for the wholesale business decreased by 7.8% to $10.7 million for the fourth quarter of 2016, compared with $11.6 million for the fourth quarter of 2015. Gross margin increased to 21.8% from 18.6% for the fourth quarter of 2015.
Selling expenses for the fourth quarter of 2016 increased by 12.4% to $21.9 million, or 19.9% of total sales, compared with $19.5 million, or 15.1% of total sales for the fourth quarter of 2015. This increase was mainly attributable to the increased average salaries, increased number of stores, as well as increased store decoration associated with the promotion of the retail brand.
General and administrative expenses for the fourth quarter of 2016 decreased by 18.1% to $9.9 million, or 9.0% of total sales, compared with $12.1 million, or 9.4% of total sales for the fourth quarter of 2015. The decrease was attributable to a decrease in the number of wholesale and retail management personnel.
Income from operations for the fourth quarter of 2016 decreased by 1.0% to $4.65 million compared with $4.7 million for the fourth quarter of 2015.
Net income attributable to the Company for the fourth quarter of 2016 was $3.4 million compared with $4.7 million for the fourth quarter of 2015. Basic and diluted earnings per share were $0.23 for the fourth quarter of 2016 compared with $0.32 for the fourth quarter of 2015.
Full Year 2016 Financial Results
Total sales for the full year of 2016 were $392.7 million, a 6.8% decrease from $421.4 million in the full year of 2015. This decrease was primarily due to a 9.1% decrease in retail sales and a 4.3% decrease in wholesale sales.
Retail sales from the Company's branded fashion apparel retail division decreased by 9.1% to $204.4 million for the full year of 2016, compared with $224.8 million for the full year of 2015. This decrease was primarily due to a decrease in same store sales.
Wholesale sales from the Company's wholesale business decreased by 4.3% to $188.2 million for the full year of 2016, compared with $196.6 million for the full year of 2015. This decrease was primarily due to decreased sales in Mainland China, Hong Kong China, Germany, the United Kingdom and Japan, partially offset by increased sales in Europe and the United States.
Total gross profit for the full year of 2016 decreased by 6.3% to $121.2 million, compared with $129.3 million for the full year of 2015. Total gross margin for the full year of 2016 increased by 20 basis points to 30.9% from 30.7% for the full year of 2015.
Gross profit for retail business decreased by 6.7% to $88.1 million for the full year of 2016, compared with $94.4 million for the full year of 2015. Gross margin for the full year of 2016 increased by 110 basis points to 43.1% from 42.0% for the full year of 2015.
Gross profit for wholesale business decreased by 5.2% to $33.1 million for the full year of 2016, compared with $34.9 million for the full year of 2015. Gross margin for the full year of 2016 remained relatively flat at 17.6% compared with the full year of 2015.
Selling expenses for the full year of 2016 increased by 1.1% to $77.4 million, or 19.7% of total sales, compared with $76.5 million, or 18.2% of total sales for the full year of 2015. The increase was attributable to the increased average salaries as well as the increased store decoration and marketing expenses associated with the promotion of the retail brands.
General and administrative expenses for the full year of 2016 decreased by 5.3% to $34.0 million, or 8.7% of total sales, compared with $36.0 million, or 8.5% of total sales for the full year of 2015. The decrease was mainly due to a decrease in the number of wholesale and retail management personnel.
Income from operations for the full year of 2016 decreased by 42.2% to $9.7 million compared with $16.8 million for the full year of 2015.
Net income attributable to the Company for the full year of 2016 decreased by 50.2% to $6.8 million compared with $13.6 million for the full year of 2015. Basic and diluted earnings per share were $0.46 and $0.92 for the full year of 2016 and 2015, respectively.
Balance Sheet
As of December 31, 2016, Ever-Glory had approximately $45.3 million of cash and cash equivalents, compared with approximately $22.7 million as of December 31, 2015. Ever-Glory had working capital of approximately $59.1 million as of December 31, 2016, and outstanding bank loans of approximately $29.2 million as of December 31, 2016.
Conference Call
The Company will hold a conference call at 8:00 a.m. Eastern Time on March 31, 2017 (8:00 p.m. Beijing Time on March 31, 2017). Listeners can access the conference call by dialing +1-888-857-6931 or +1-719-457-1512 and using the access code 8874312. 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 March 31 through 11:59 p.m. Eastern Time on April 7, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 8874312.
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
Yanhua Huang
Tel: +86-25-5209-6875
E-Mail: [email protected]
The Piacente Group, Inc.
Emilie Wu
China: +86-10-5730-6200
US: +1-212-481-2050
E-Mail: [email protected]
| 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, 2016 AND 2015 |
||||||||
| 2016 |
2015 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash and cash equivalents |
$ |
45,288 |
$ |
22,702 |
||||
| Accounts receivable |
67,644 |
87,527 |
||||||
| Inventories |
49,630 |
75,063 |
||||||
| Value added tax receivable |
2,938 |
2,736 |
||||||
| Other receivables and prepaid expenses |
3,674 |
3,840 |
||||||
| Advances on inventory purchases |
3,139 |
6,193 |
||||||
| Amounts due from related parties |
486 |
2,535 |
||||||
| Total Current Assets |
172,799 |
200,596 |
||||||
| INTANGIBLE ASSETS |
5,769 |
6,217 |
||||||
| PROPERTY AND EQUIPMENT, NET |
22,694 |
21,906 |
||||||
| TOTAL ASSETS |
$ |
201,262 |
$ |
228,719 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Bank loans |
$ |
29,232 |
$ |
44,841 |
||||
| Accounts payable |
58,170 |
66,118 |
||||||
| Accounts payable and other payables - related parties |
4,337 |
2,823 |
||||||
| Other payables and accrued liabilities |
15,007 |
22,221 |
||||||
| Value added and other taxes payable |
5,118 |
6,882 |
||||||
| Income tax payable |
1,842 |
4,052 |
||||||
| Total Current Liabilities |
113,706 |
146,937 |
||||||
| NONCURRENT LIABILITIES |
||||||||
| Deferred tax liabilities |
3,254 |
2,992 |
||||||
| TOTAL LIABILITIES |
116,960 |
149,929 |
||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| STOCKHOLDERS' EQUITY |
||||||||
| Stockholders' equity: |
||||||||
| Preferred stock ($.001 par value, authorized 5,000,000 shares, no shares issued and outstanding) |
- |
- |
||||||
| Common stock ($.001 par value, authorized 50,000,000 shares, 14,787,940 and 14,785,868 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively) |
15 |
15 |
||||||
| Additional paid-in capital |
3,602 |
3,597 |
||||||
| Retained earnings |
83,423 |
78,439 |
||||||
| Statutory reserve |
17,107 |
15,327 |
||||||
| Accumulated other comprehensive income |
(3,297) |
3,249 |
||||||
| Amounts due from related party |
(15,936) |
(21,776) |
||||||
| Total equity attributable to stockholders of the Company |
84,914 |
78,851 |
||||||
| Noncontrolling interest |
(612) |
(61) |
||||||
| Total Equity |
84,302 |
78,790 |
||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
201,262 |
$ |
228,719 |
||||
| 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, 2016 AND 2015 |
||||||||
| 2016 |
2015 |
|||||||
| SALES |
$ |
392,666 |
$ |
421,389 |
||||
| COST OF SALES |
271,506 |
292,090 |
||||||
| GROSS PROFIT |
121,160 |
129,299 |
||||||
| OPERATING EXPENSES |
||||||||
| Selling expenses |
77,398 |
76,537 |
||||||
| General and administrative expenses |
34,042 |
35,956 |
||||||
| Total operating expenses |
111,440 |
112,493 |
||||||
| INCOME FROM OPERATIONS |
9,720 |
16,806 |
||||||
| OTHER INCOME (EXPENSE) |
||||||||
| Interest income |
1,059 |
1,001 |
||||||
| Interest expense |
(1,997) |
(2,689) |
||||||
| Other income |
1,479 |
3,241 |
||||||
| Total other income |
541 |
1,553 |
||||||
| INCOME BEFORE INCOME TAX EXPENSE |
10,261 |
18,359 |
||||||
| INCOME TAX EXPENSE |
(4,077) |
(5,054) |
||||||
| NET INCOME |
6,184 |
13,305 |
||||||
| Net loss attributable to the non-controlling interest |
580 |
264 |
||||||
| NET INCOME ATTRIBUTABLE TO THE COMPANY |
$ |
6,764 |
$ |
13,569 |
||||
| NET INCOME |
$ |
6,184 |
$ |
13,305 |
||||
| Foreign currency translation loss |
(6,546) |
(5,029) |
||||||
| COMPREHENSIVE (LOSS) INCOME |
$ |
(362) |
$ |
8,276 |
||||
| Comprehensive loss attributable to the noncontrolling interest |
612 |
265 |
||||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY |
$ |
250 |
$ |
8,541 |
||||
| EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS: |
||||||||
| Basic and diluted |
$ |
0.46 |
$ |
0.92 |
||||
| Weighted average number of shares outstanding Basic and diluted |
14,787,270 |
14,784,847 |
||||||
| 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, 2016 AND 2015 |
||||||||
| 2016 |
2015 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ |
6,184 |
$ |
13,305 |
||||
| Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
| Depreciation and amortization |
7,915 |
8,495 |
||||||
| Provision for obsolete inventories |
- |
3,690 |
||||||
| Loss from sale of property and equipment |
- |
(28) |
||||||
| Provision for doubtful accounts |
2,962 |
503 |
||||||
| Deferred income tax |
477 |
(708) |
||||||
| Stock-based compensation |
5 |
10 |
||||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
12,416 |
(491) |
||||||
| Inventories |
21,741 |
(12,261) |
||||||
| Value added tax receivable |
(398) |
(187) |
||||||
| Other receivables and prepaid expenses |
779 |
(524) |
||||||
| Advances on inventory purchases |
2,773 |
(2,582) |
||||||
| Amounts due from related parties |
1,830 |
(1,359) |
||||||
| Accounts payable |
(4,042) |
10,836 |
||||||
| Accounts payable and other payables- related parties |
953 |
(1,829) |
||||||
| Other payables and accrued liabilities |
(6,058) |
2,460 |
||||||
| Value added and other taxes payable |
(1,372) |
1,030 |
||||||
| Income tax payable |
(2,039) |
(1,230) |
||||||
| Net cash provided by operating activities |
44,126 |
19,130 |
||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Purchases of property and equipment |
(11,016) |
(11,385) |
||||||
| Proceeds from sale of property and equipment |
41 |
67 |
||||||
| Purchase of land use rights |
- |
(1,475) |
||||||
| Acquisition of Yiduo net of cash acquired |
- |
(690) |
||||||
| Net cash used in investing activities |
(10,975) |
(13,483) |
||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Proceeds from bank loans |
102,519 |
136,910 |
||||||
| Repayment of bank loans |
(115,839) |
(149,791) |
||||||
| Repayment of loans from related party |
4,816 |
2,405 |
||||||
| Advances to related party |
(1,204) |
(4,873) |
||||||
| Interest income received from related party |
1,956 |
- |
||||||
| Net cash used in financing activities |
(7,752) |
(15,349) |
||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |
(2,813) |
(1,730) |
||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
22,586 |
(11,432) |
||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
22,702 |
34,134 |
||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
45,288 |
$ |
22,702 |
||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
| Cash paid during the period for: |
||||||||
| Accrued interest income on amounts due from related party under counter- guarantee agreement |
$ |
795 |
$ |
888 |
||||
| Interest |
$ |
1,997 |
$ |
2,627 |
||||
| Income taxes |
$ |
6,987 |
$ |
6,993 |
||||
| SUPPLEMENTAL INFORMATION OF NONCASH INVESTING ACTIVITIES |
||||||||
| Increase in intangible assets and non-controlling interests |
$ |
- |
$ |
233 |
||||
SOURCE Ever-Glory International Group, Inc.
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