Ever-Glory Reports Second Quarter 2017 Financial Results
NANJING, China, Aug. 14, 2017 /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, 2017.
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 9.1% for our retail business.
"Following the remodeling or relocation of 86 stores in the second quarter, we managed a nationwide network of 1,362 stores as of June 30, 2017. The new store designs for our brands La go go, Sea to Sky and idole have received positive customer feedback and we are planning to launch a new store design for Velwin in the second half of this year. We are pleased to see our store network optimization and new store designs initiatives resulting in robust same store sales growth in the second quarter. While we enjoyed retail growth, we also made efforts to balance inventory turnover by clearing out-of-season products and shortening order response time. Our e-commerce initiative also brought in new branding and cross-selling opportunities as well as a new channel to clear inventory.
"Our wholesale business remained under pressure in the second quarter due to economic slowdowns in many of our key global markets. However, we still managed to improve our gross margin on a year-over-year basis. Looking ahead, we aim to further optimize our customer base with a goal of realizing margin expansion and improved efficiencies. Overall, we remain confident in both our retail and wholesale businesses. Through our established brand management capabilities and strong presence in the supply chain space, we are committed to driving our business towards long-term sustainability," concluded Mr. Kang.
Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "We continued to improve our operating leverage during the second quarter, and our diligence is paying off. We are pleased to see margin expansion in the retail and wholesale business of 480 and 180 basis points, respectively, from the year-ago period. Our focus going forward is to continue to balance profitability by increasing operating efficiency while at the same time building a solid foundation for our overall business. With our steady and strategic steps, we are ready to capture the opportunities when the market conditions improve."
Second Quarter 2017 Financial Results
Total sales for the second quarter of 2017 were $79.8 million, a decrease of 1.1% from $80.7 million in the second quarter of 2016. This decrease was primarily driven by a 12.7% decrease in our wholesale business, partially offset by a 9.1% increase in retail business.
Sales for the Company's branded fashion apparel retail division increased by 9.1% to $46.8 million for the second quarter of 2017, compared with $42.9 million for the second quarter of 2016. This increase was primarily due to increased same-store sales. The Company had 1,362 retail stores as of June 30, 2017, compared with 1,275 retail stores as of June 30, 2016.
Sales for the Company's wholesale division decreased by 12.7% to $33.0 million for the second quarter of 2017, compared with $37.8 million for the second quarter of 2016. This decrease was primarily due to a decrease in sales in Mainland China, the United Kingdom, Europe-Other and Japan, partially offset by an increase in sales in Hong Kong, Germany and the United States.
Total gross profit for the second quarter of 2017 increased by 14.7% to $30.7 million, compared with $26.7 million for the second quarter of 2016. Total gross margin increased to 38.4% from 33.1% for the second quarter of 2016.
Gross profit for the retail business increased by 20.0% to $24.8 million for the second quarter of 2017, compared with $20.6 million for the second quarter of 2016. Gross margin increased to 52.9% from 48.1% for the second quarter of 2016.
Gross profit for the wholesale business decreased by 3.2% to $5.9 million for the second quarter of 2017, compared with $6.1 million for the second quarter of 2016. Gross margin increased to 17.9% from 16.1% for the second quarter of 2016.
Selling expenses for the second quarter of 2017 increased by 26.1% to $20.2 million, or 25.3% of total sales, compared with $16.0 million, or 19.9% of total sales for the second quarter of 2016. This increase was mainly attributable to increased store decoration and marketing expenses associated with the promotion of the retail brands.
General and administrative expenses for the second quarter of 2017 increased by 2.2% to $7.5 million, or 9.4% of total sales, compared with $7.3 million, or 9.1% of total sales for the second quarter of 2016. The increase was attributable to the increased average salaries.
Income from operations for the second quarter of 2017 decreased by 12.1% to $2.9 million compared with $3.4 million for the second quarter of 2016.
Net income attributable to the Company for the second quarter of 2017 was $2.7 million compared with a net income of $3.1 million for the second quarter of 2016. Basic and diluted earnings per share were $0.18 for the second quarter of 2017 compared with basic and diluted earnings per share of $0.21 for the second quarter of 2016.
Balance Sheet
As of June 30, 2017, Ever-Glory had approximately $37.9 million of cash and cash equivalents, compared with approximately $45.3 million as of December 31, 2016. Ever-Glory had working capital of approximately $55.5 million and outstanding bank loans of approximately $37.8 million as of June 30, 2017.
Conference Call
The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14, 2017 (8:00 p.m. Beijing Time on August 14, 2017). Listeners can access the conference call by dialing +1-877-397-0286 or +1-719-457-2702 and using the access code 5518821. 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 5518821.
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: [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 JUNE 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016 |
||||||||
| 2017 |
2016 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash and cash equivalents |
$ |
37,853 |
$ |
45,288 |
||||
| Accounts receivable |
54,429 |
67,644 |
||||||
| Inventories |
58,413 |
49,630 |
||||||
| Value added tax receivable |
4,468 |
2,938 |
||||||
| Other receivables and prepaid expenses |
3,724 |
3,674 |
||||||
| Advances on inventory purchases |
5,922 |
3,139 |
||||||
| Amounts due from related parties |
918 |
486 |
||||||
| Total Current Assets |
165,727 |
172,799 |
||||||
| INTANGIBLE ASSETS |
5,824 |
5,769 |
||||||
| PROPERTY AND EQUIPMENT, NET |
22,756 |
22,694 |
||||||
| TOTAL ASSETS |
$ |
194,307 |
$ |
201,262 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Bank loans |
$ |
37,849 |
$ |
29,232 |
||||
| Accounts payable |
51,944 |
58,170 |
||||||
| Accounts payable and other payables - related parties |
4,152 |
4,337 |
||||||
| Other payables and accrued liabilities |
14,005 |
15,007 |
||||||
| Value added and other taxes payable |
1,044 |
5,118 |
||||||
| Income tax payable |
1,240 |
1,842 |
||||||
| Total Current Liabilities |
110,234 |
113,706 |
||||||
| NONCURRENT LIABILITIES |
||||||||
| Deferred tax liabilities |
1,574 |
3,254 |
||||||
| TOTAL LIABILITIES |
111,808 |
116,960 |
||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| STOCKHOLDERS' EQUITY |
||||||||
| Stockholders' equity: |
||||||||
| Preferred stock ($.001 par value, authorized 5,000,000 shares, no shares issued |
- |
- |
||||||
| Common stock ($.001 par value, authorized 50,000,000 shares, 14,792,836 and |
15 |
15 |
||||||
| Additional paid-in capital |
3,612 |
3,602 |
||||||
| Retained earnings |
87,085 |
83,423 |
||||||
| Statutory reserve |
17,107 |
17,107 |
||||||
| Accumulated other comprehensive income |
(1,774) |
(3,297) |
||||||
| Amounts due from related party |
(22,656) |
(15,936) |
||||||
| Total equity attributable to stockholders of the Company |
83,389 |
84,914 |
||||||
| Noncontrolling interest |
(890) |
(612) |
||||||
| Total Equity |
82,499 |
84,302 |
||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
194,307 |
$ |
201,262 |
||||
| EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||
| 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, 2017 AND 2016 (UNAUDITED) |
||||||||||||||||
| Three months ended |
Six months ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2017 |
2016 |
2017 |
2016 |
|||||||||||||
| NET SALES |
$ |
79,771 |
$ |
80,676 |
$ |
164,891 |
$ |
172,369 |
||||||||
| COST OF SALES |
49,121 |
53,961 |
105,732 |
117,311 |
||||||||||||
| GROSS PROFIT |
30,650 |
26,715 |
59,159 |
55,058 |
||||||||||||
| OPERATING EXPENSES |
||||||||||||||||
| Selling expenses |
20,223 |
16,043 |
39,968 |
36,956 |
||||||||||||
| General and administrative expenses |
7,479 |
7,316 |
14,734 |
14,265 |
||||||||||||
| Total Operating Expenses |
27,702 |
23,359 |
54,702 |
51,221 |
||||||||||||
| INCOME FROM OPERATIONS |
2,948 |
3,356 |
4,457 |
3,837 |
||||||||||||
| OTHER INCOME (EXPENSES) |
||||||||||||||||
| Interest income |
282 |
237 |
539 |
621 |
||||||||||||
| Interest expense |
(318) |
(334) |
(645) |
(931) |
||||||||||||
| Other income |
523 |
621 |
1,100 |
687 |
||||||||||||
| Total Other Income |
487 |
524 |
994 |
377 |
||||||||||||
| INCOME BEFORE INCOME TAX EXPENSE |
3,435 |
3,880 |
5,451 |
4,214 |
||||||||||||
| Income tax expense |
(833) |
(828) |
(2,050) |
(1,662) |
||||||||||||
| NET INCOME |
2,602 |
3,052 |
3,401 |
2,552 |
||||||||||||
| Net loss attributable to the non-controlling interest |
86 |
93 |
261 |
233 |
||||||||||||
| NET INCOME ATTRIBUTABLE TO THE |
2,688 |
3,145 |
3,662 |
2,785 |
||||||||||||
| NET INCOME |
$ |
2,602 |
$ |
3,052 |
$ |
3,401 |
$ |
2,552 |
||||||||
| Foreign currency translation (loss) gain |
1,063 |
(3,178) |
1,522 |
(2,396) |
||||||||||||
| COMPREHENSIVE INCOME (LOSS) |
3,665 |
(126) |
4,923 |
156 |
||||||||||||
| Comprehensive loss attributable to the non-controlling |
98 |
85 |
278 |
228 |
||||||||||||
| COMPREHENSIVE INCOME (LOSS) |
$ |
3,763 |
$ |
(41) |
$ |
5,201 |
$ |
384 |
||||||||
| EARNINGS PER SHARE ATTRIBUTABLE TO |
||||||||||||||||
| Basic and diluted |
$ |
0.18 |
$ |
0.21 |
$ |
0.25 |
$ |
0.19 |
||||||||
| Weighted average number of shares outstanding |
14,792,836 |
14,787,302 |
14,791,240 |
14,786,589 |
||||||||||||
| 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 SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED) |
||||||||
| 2017 |
2016 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ |
3,401 |
$ |
2,552 |
||||
| Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
| Depreciation and amortization |
3,481 |
3,331 |
||||||
| Loss from sale of property and equipment |
5 |
- |
||||||
| Provision of bad debt allowance |
688 |
- |
||||||
| Inventory write-down |
4,105 |
7,111 |
||||||
| Deferred income tax |
(1,744) |
(14) |
||||||
| Stock-based compensation |
10 |
5 |
||||||
| Changes in operating assets and liabilities |
||||||||
| Accounts receivable |
13,865 |
23,903 |
||||||
| Inventories |
(11,750) |
3,901 |
||||||
| Value added tax receivable |
(1,446) |
(2,583) |
||||||
| Other receivables and prepaid expenses |
(673) |
(1,166) |
||||||
| Advances on inventory purchases |
(2,684) |
2,434 |
||||||
| Amounts due from related parties |
(161) |
1,092 |
||||||
| Accounts payable |
(7,542) |
(20,847) |
||||||
| Accounts payable and other payables- related parties |
(818) |
(275) |
||||||
| Other payables and accrued liabilities |
(1,353) |
(4,852) |
||||||
| Value added and other taxes payable |
(4,048) |
(2,448) |
||||||
| Income tax payable |
(753) |
(2,297) |
||||||
| Net cash (used in) provided by operating activities |
(7,417) |
9,847 |
||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Purchases of property and equipment |
(2,220) |
(5,692) |
||||||
| Net cash (used in) investing activities |
(2,220) |
(5,692) |
||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Proceeds from bank loans |
25,664 |
48,295 |
||||||
| Repayment of bank loans |
(17,821) |
(48,521) |
||||||
| Repayment of loans from related party |
482 |
1,836 |
||||||
| Advances to related party |
(6,433) |
- |
||||||
| Net cash provided by financing activities |
1,892 |
1,610 |
||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |
310 |
(992) |
||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(7,435) |
4,773 |
||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
45,288 |
22,702 |
||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
37,853 |
$ |
27,475 |
||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
| Cash paid during the period for: |
||||||||
| Interest |
$ |
645 |
$ |
931 |
||||
| Income taxes |
$ |
3,120 |
$ |
4,442 |
||||
SOURCE Ever-Glory International Group, Inc.
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