Ever-Glory Reports First Quarter 2020 Financial Results
NANJING, China, May 15, 2020 /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 first quarter ended March 31, 2020.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first 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 first 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 2 stores during 2020, we operated a nationwide network of 1,038 stores as of March 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 first 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."
First Quarter 2020 Financial Results
Total sales for the first quarter of 2020 were $58.4 million, a decrease of 33.7% from $88.0 million in the first quarter of 2019. This decrease was primarily driven by a 20.7% decrease in our wholesale business and a 39.7% decrease in our retail business.
Sales for the Company's wholesale division decreased by 20.7% to $22.3 million for the first quarter of 2020, compared with $28.1 million for the first quarter of 2019. This decrease was primarily attributable to decreased sales in Mainland China, Germany, other European markets and Japan partially offset for increased sales in Hong Kong, the United States and the United Kingdom.
Sales for the Company's branded fashion apparel retail division decreased by 39.7% to $36.1 million for the first quarter of 2020, compared with $59.9 million for the first quarter of 2019. This decrease was primarily due to a decrease in same-store sales. The Company had 1,038 retail stores as of March 31, 2020, compared with 1,315 retail stores as of March 31, 2019.
Total gross profit for the first quarter of 2020 decreased by 45.4% to $16.0 million, compared with $29.4 million for the first quarter of 2019. Total gross margin decreased to 27.5% from 33.4% for the first quarter of 2019.
Gross profit for the wholesale business increased by 46.7% to $3.5 million for the first quarter of 2020, compared with $6.6 million for the first quarter of 2019. Gross margin decreased to 15.7% from 23.3% for the first quarter of 2019.
Gross profit for the retail business decreased by 45.0% to $12.5 million for the first quarter of 2020, compared with $22.8 million for the first quarter of 2019. Gross margin was 34.8%, compared to 38.1% for the first quarter of 2019.
Selling expenses for the first quarter of 2020 decreased by 35.8% to $13.5 million, or 23.1% of total sales, compared with $21.0 million, or 23.9% of total sales for the first quarter of 2019. The decrease was attributable to the decreased sales.
General and administrative expenses for the first quarter of 2020 decreased by 23.2% to $5.8 million, or 9.9% of total sales, compared with $7.5 million, or 8.6% of total sales for the first quarter of 2019. The decrease was mainly attributable to the decreased office expenses.
(Loss) Income from operations for the first quarter of 2020 decreased by 493.0% to ($3.2) million compared with $0.8 million for the first quarter of 2019.
Net loss attributable to the Company for the first quarter of 2020 was $2.7 million compared with $0.5 million for the first quarter of 2019. Basic and diluted loss per share were $0.18 for the first quarter of 2020 compared with basic and diluted earnings per share of $0.04 for the first quarter of 2019.
Balance Sheet
As of March 31, 2020, Ever-Glory had approximately $70.0 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $49.3 million as of March 31, 2020, and outstanding bank loans of approximately $26.1 million as of March 31, 2020.
Conference Call
The Company will hold a conference call at 8:00 a.m. Eastern Time on May 15, 2020 (8:00 p.m. Beijing Time on May 15, 2020). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 2134878. 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 May 15 through 11:59 p.m. Eastern Time on May 22, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 2134878.
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 |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands of U.S. Dollars, except share and per share data or otherwise stated) |
||||||||
AS OF MARCH 31, 2020 AND DECEMBER 31, 2019 (UNAUDITED) |
||||||||
2020 |
2019 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ |
70,036 |
$ |
48,551 |
||||
Accounts receivable, net |
42,265 |
78,053 |
||||||
Inventories |
52,152 |
67,355 |
||||||
Advances on inventory purchases |
1,248 |
2,495 |
||||||
Value added tax receivable |
6,961 |
7,497 |
||||||
Other receivables and prepaid expenses |
6,723 |
9,681 |
||||||
Amounts due from related parties |
102 |
123 |
||||||
Total Current Assets |
179,487 |
213,755 |
||||||
NONCURRENT ASSETS |
||||||||
Intangible assets, net |
4,529 |
4,729 |
||||||
Property and equipment, net |
26,886 |
28,812 |
||||||
Operating lease right-of-use assets |
42,583 |
53,379 |
||||||
Deferred tax assets |
878 |
996 |
||||||
Total Non-Current Assets |
74,876 |
87,916 |
||||||
TOTAL ASSETS |
$ |
254,363 |
$ |
301,671 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Bank loans |
$ |
26,104 |
$ |
29,931 |
||||
Accounts payable |
52,173 |
72,418 |
||||||
Accounts payable and other payables – related parties |
3,889 |
4,811 |
||||||
Other payables and accrued liabilities |
13,033 |
19,137 |
||||||
Value added and other taxes payable |
598 |
1,657 |
||||||
Income tax payable |
121 |
1,142 |
||||||
Current operating lease liabilities |
34,315 |
44,888 |
||||||
Total Current Liabilities |
130,233 |
173,984 |
||||||
NONCURRENT LIABILITIES |
||||||||
Non-current operating lease liabilities |
8,325 |
8,537 |
||||||
TOTAL LIABILITIES |
138,558 |
182,521 |
||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
STOCKHOLDERS' EQUITY |
||||||||
Stockholders' equity: |
||||||||
Preferred stock ($0.001 par value, authorized 5,000,000 shares, no shares issued |
- |
- |
||||||
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,804,832 and |
15 |
15 |
||||||
Additional paid-in capital |
3,645 |
3,640 |
||||||
Retained earnings |
103,627 |
106,328 |
||||||
Statutory reserve |
19,939 |
19,939 |
||||||
Accumulated other comprehensive loss |
(5,770) |
(4,330) |
||||||
Amounts due from related party |
(4,147) |
(4,932) |
||||||
Total equity attributable to stockholders of the Company |
117,309 |
120,660 |
||||||
Noncontrolling interest |
(1,504) |
(1,510) |
||||||
Total Equity |
115,805 |
119,150 |
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
254,363 |
$ |
301,671 |
||||
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED |
||||||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE LOSS (INCOME) |
||||||||
(In thousands of U.S. Dollars, except share and per share data or otherwise stated) |
||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED) |
||||||||
2020 |
2019 |
|||||||
SALES |
$ |
58,355 |
$ |
87,956 |
||||
COST OF SALES |
42,317 |
58,598 |
||||||
GROSS PROFIT |
16,038 |
29,358 |
||||||
OPERATING EXPENSES |
||||||||
Selling expenses |
13,478 |
21,008 |
||||||
General and administrative expenses |
5,785 |
7,529 |
||||||
Total operating expenses |
19,263 |
28,537 |
||||||
(LOSS) INCOME FROM OPERATIONS |
(3,225) |
821 |
||||||
OTHER INCOME (EXPENSE) |
||||||||
Interest income |
277 |
207 |
||||||
Interest expense |
(341) |
(363) |
||||||
Other income (expense), net |
818 |
(295) |
||||||
Total other income (expense), net |
754 |
(451) |
||||||
(LOSS) INCOME BEFORE INCOME TAX |
(2,471) |
370 |
||||||
INCOME TAX EXPENSE |
(227) |
(825) |
||||||
NET LOSS |
(2,698) |
(455) |
||||||
Net (income) loss attributable to the non-controlling interest |
(3) |
(66) |
||||||
NET LOSS ATTRIBUTABLE TO THE COMPANY |
$ |
(2,701) |
$ |
(521) |
||||
NET LOSS |
$ |
(2,698) |
$ |
(455) |
||||
Foreign currency translation gain (loss) |
(1,437) |
4,006 |
||||||
COMPREHENSIVE (LOSS) INCOME |
$ |
(4,135) |
$ |
3,551 |
||||
Comprehensive loss attributable to the noncontrolling interest |
6 |
100 |
||||||
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY |
$ |
(4,129) |
$ |
3,651 |
||||
EARNINGS (LOSS) PER SHARE: |
||||||||
Basic and diluted |
$ |
(0.18) |
$ |
(0.04) |
||||
Weighted average number of shares outstanding Basic and diluted |
14,804,832 |
14,800,140 |
||||||
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY |
||||||||||||||||||||||||||||||||||||||||
(In thousands of U.S. Dollars, except share and per share data or otherwise stated) |
||||||||||||||||||||||||||||||||||||||||
FOR THE THREE MONTHS ENDED March 31, 2020 AND 2019 (Unaudited) |
||||||||||||||||||||||||||||||||||||||||
Additional |
Retained |
Accumulated |
Amounts |
Total |
Non- |
|||||||||||||||||||||||||||||||||||
Common Stock |
paid-in |
Statutory |
Comprehensive |
related |
of the |
controlling |
Total |
|||||||||||||||||||||||||||||||||
Shares |
Amount |
capital |
Unrestricted |
reserve |
loss |
party |
Company |
Interest |
equity |
|||||||||||||||||||||||||||||||
Balance at |
14,801,770 |
$ |
15 |
$ |
3,640 |
$ |
106,328 |
$ |
19,939 |
$ |
(4,330) |
$ |
(4,932) |
$ |
120,660 |
(1,510) |
$ |
119,150 |
||||||||||||||||||||||
Stock-based |
3,062 |
0.003 |
5 |
- |
- |
- |
- |
5 |
5 |
|||||||||||||||||||||||||||||||
Net income (loss) |
- |
- |
- |
(2,701) |
- |
- |
(2,701) |
3 |
(2,698) |
|||||||||||||||||||||||||||||||
Net cash received |
- |
- |
- |
- |
- |
- |
785 |
785 |
- |
785 |
||||||||||||||||||||||||||||||
Foreign currency |
(1,440) |
- |
(1,440) |
3 |
(1,437) |
|||||||||||||||||||||||||||||||||||
Balance at |
14,804,832 |
$ |
15 |
$ |
3,645 |
$ |
103,627 |
$ |
19,939 |
$ |
(5,770) |
$ |
(4,147) |
$ |
117,309 |
(1,504) |
$ |
115,805 |
||||||||||||||||||||||
Additional |
Retained |
Accumulated |
Amounts |
Total |
Non- |
|||||||||||||||||||||||||||||||||||
Common Stock |
paid-in |
Statutory |
Comprehensive |
related |
of the |
controlling |
Total |
|||||||||||||||||||||||||||||||||
Shares |
Amount |
capital |
Unrestricted |
reserve |
income |
party |
Company |
Interest |
equity |
|||||||||||||||||||||||||||||||
Balance at |
14,798,198 |
$ |
15 |
$ |
3,627 |
$ |
105,914 |
$ |
19,083 |
$ |
(3,578) |
$ |
(10,354) |
$ |
114,707 |
(1,551) |
$ |
113,156 |
||||||||||||||||||||||
Stock-based |
1,942 |
0.004 |
8 |
- |
- |
- |
- |
8 |
8 |
|||||||||||||||||||||||||||||||
Net (loss) income |
- |
- |
- |
(521) |
- |
- |
- |
(521) |
66 |
(455) |
||||||||||||||||||||||||||||||
Net cash received |
- |
- |
- |
- |
- |
- |
1,101 |
1,101 |
- |
1,101 |
||||||||||||||||||||||||||||||
Foreign currency |
3,972 |
- |
3,972 |
34 |
4,006 |
|||||||||||||||||||||||||||||||||||
Balance at |
14,800,140 |
$ |
15 |
$ |
3,635 |
$ |
105,393 |
$ |
19,083 |
$ |
394 |
$ |
(9,253) |
$ |
119,267 |
(1,451) |
$ |
117,816 |
||||||||||||||||||||||
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 THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED) |
||||||
2020 |
2019 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||
Net loss |
$ |
(2,698) |
$ |
(455) |
||
Adjustments to reconcile net loss to cash provided by operating activities: |
||||||
Depreciation and amortization |
1,587 |
2,225 |
||||
Gain on disposal of intangible assets |
(268) |
- |
||||
Loss from sale of property and equipment |
102 |
52 |
||||
Provision of bad debt allowance |
278 |
- |
||||
Provision for obsolete inventories |
4,204 |
1,824 |
||||
Deferred income tax |
104 |
(145) |
||||
Stock-based compensation |
5 |
8 |
||||
Changes in operating assets and liabilities |
||||||
Accounts receivable |
34,906 |
31,027 |
||||
Inventories |
10,303 |
10,557 |
||||
Value added tax receivable |
210 |
1,406 |
||||
Other receivables and prepaid expenses |
364 |
3,975 |
||||
Advances on inventory purchases |
2,855 |
490 |
||||
Amounts due from related parties |
142 |
103 |
||||
Accounts payable |
(19,864) |
(26,505) |
||||
Accounts payable and other payables- related parties |
(1,038) |
(741) |
||||
Other payables and accrued liabilities |
(5,587) |
(9,565) |
||||
Value added and other taxes payable |
(31) |
(2,788) |
||||
Income tax payable |
(1,019) |
(327) |
||||
Net cash provided by operating activities |
24,555 |
11,141 |
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||
Purchase of property and equipment |
(78) |
(2,131) |
||||
Disposal of intangible assets |
353 |
- |
||||
Net cash provided by (used in) investing activities |
275 |
(2,131) |
||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||
Proceeds from bank loans |
11,464 |
6,029 |
||||
Repayment of bank loans |
(14,884) |
(7,408) |
||||
Repayment of counter guarantee from related party |
748 |
3,488 |
||||
Advances to related party |
- |
(2,163) |
||||
Net cash provided by (used in) financing activities |
(2,672) |
(54) |
||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
1,497 |
1,908 |
||||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED |
23,655 |
10,864 |
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING |
48,551 |
47,012 |
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF |
$ |
72,206 |
$ |
57,876 |
||
Reconciliation of cash, cash equivalents and restricted cash reported within their |
||||||
Cash and Cash Equivalents |
70,036 |
47,012 |
||||
Restricted cash (booked in other receivables and prepaid expenses) |
2,170 |
- |
||||
$ |
72,206 |
$ |
47,012 |
|||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||
Cash paid during the period for: |
||||||
Interest |
$ |
341 |
$ |
363 |
||
Income taxes |
$ |
1,218 |
$ |
126 |
||
SOURCE Ever-Glory International Group, Inc.
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