Ever-Glory Reports Third Quarter 2021 Financial Results

News provided by

Ever-Glory International Group, Inc.

Nov 12, 2021, 04:03 ET

NEW YORK, Nov. 12, 2021 /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, 2021.

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 2021, 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 113 stores during 2021, we operated a nationwide network of 893 stores as of September 30, 2021."

"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 2021 Financial Results 

Total sales for the third quarter of 2021 were $94.4 million, an increase of 18.1% from $79.9 million in the third quarter of 2020. This increase was primarily driven by a 38.0% increase in our wholesale business partially offset by a 7.6% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 7.6% to $32.2 million for the third quarter of 2021, compared with $34.8 million for the third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales. The Company operated 893 retail stores as of September 30, 2021, compared with 923 retail stores as of September 30, 2020.

Sales for the Company's wholesale division increased by 38.0% to $62.2 million for the third quarter of 2021, compared with $45.1 million for the third quarter of 2020. This increase was primarily attributable to an increase in sales in Mainland China, Europe-Other, Japan and United States partially offset by a decrease in sales in Hong Kong and United Kingdom.

Total gross profit for the third quarter of 2021 decreased by 2% to $23.2 million, compared with $23.7 million for the third quarter of 2020. Total gross margin for the third quarter of 2021 decreased to 24.6% from 29.6% for the third quarter of 2020.

Gross profit for the retail business decreased by 10.3% to $13.0 million for the third quarter of 2021, compared with $14.5 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 40.3% compared to 41.6% for the third quarter of 2020.

Gross profit for the wholesale business increased by 11.2% to $10.2 million for the third quarter of 2021, compared with $9.2 million for the third quarter of 2020. Gross margin for the third quarter of 2021 decreased to 16.4% from 20.4% for the third quarter of 2020.

Selling expenses for the third quarter of 2021 increased by 11.1% to $14.4 million, or 15.3% of total sales, compared with $13.0 million, or 16.3% of total sales for the third quarter of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expenses for the third quarter of 2021 increased by 21.1% to $9.5 million, or 10% of total sales, compared with $7.8 million, or 9.8% of total sales for the third quarter of 2020. The increase was attributable to the increased salaries.

(Loss) Income from operations was ($0.7 million) for the third quarter of 2021, compared to $2.9 million for the third quarter of 2020.

Net loss attributable to the Company for the third quarter of 2021 was ($3.2 million) compared with $2.2 million for the third quarter of 2020. Basic and diluted loss per share were ($0.22) for the third quarter of 2021 compared with $0.15 for the third quarter of 2020.

Balance Sheet 

As of September 30, 2021, Ever-Glory had approximately $48.3 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $44.6 million as of September 30, 2021, and outstanding bank loans of approximately $67.8 million as of September 30, 2021.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 12, 2021(8:00 p.m. Beijing Time on November 12, 2021). Listeners can access the conference call by dialing +1-800-289-0438 or +1-323-794-2423 and using the access code 7678571. 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 10:00 a.m. Eastern Time on November 12 through 11:59 p.m. Eastern Time on November 19 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7678571.

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,
2021

December 31,
2020

ASSETS












CURRENT ASSETS





Cash and cash equivalents

$

48,336

$

81,865

Restricted cash

43,176


39,858

Trading securities

3,068


1,792

Accounts receivable, net

61,525


53,285

Inventories

67,275


53,893

Advances on inventory purchases

9,864


10,261

Value added tax receivable

2,484


1,244

Other receivables and prepaid expenses

6,638


5,479

Amounts due from related parties

1,994


567

Total Current Assets

243,360


248,244









NON-CURRENT ASSETS







Equity security investment

5,903


3,932

Intangible assets, net

4,686


4,794

Property and equipment, net

32,747


32,164

Operating lease right-of-use assets

49,002


41,690

Deferred tax assets

265


902

Other non-current assets

771


-

Total Non-Current Assets

93,374


83,482

TOTAL ASSETS

$

337,734

$

331,726









LIABILITIES AND STOCKHOLDERS' EQUITY
















CURRENT LIABILITIES







Bank loans

$

67,848

$

65,919

Accounts payable

73,120


67,762

Accounts payable and other payables – related parties

1,016


3,764

Other payables and accrued liabilities

13,758


16,073

Value added and other taxes payable

554


909

Income tax payable

1,900


1,062

Current operating lease liabilities

40,590


33,481

Total Current Liabilities

198,786


188,970









NON-CURRENT LIABILITIES







Non-current operating lease liabilities

8,549


8,307

TOTAL LIABILITIES

207,335


197,277









COMMITMENTS AND CONTINGENCIES (Note 9)
















STOCKHOLDERS' EQUITY







Common stock ($0.001 par value, authorized 50,000,000 shares, 14,812,312
and 14,809,160 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectively)

15


15

Additional paid-in capital

3,660


3,650

Retained earnings

103,013


109,171

Statutory reserve

20,376


20,376

Accumulated other comprehensive income

5,610


4,590

Amounts due from related party

(2,275)


(3,353)

Total equity

130,399


134,449

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

337,734

$

331,726

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (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,


2021

2020

2021

2020

NET SALES

$

94,406

$

79,908

$

225,776

$

188,350

COST OF SALES

71,196


56,235


161,738


134,193

















GROSS PROFIT

23,210


23,673


64,038


54,157

















OPERATING EXPENSES















Selling expenses

14,443


12,996


44,495


39,101

General and administrative expenses

9,467


7,818


24,980


19,574

Total Operating Expenses

23,910


20,814


69,475


58,675

















(LOSS) INCOME FROM OPERATIONS

(700)


2,859


(5,437)


(4,518)

















OTHER INCOME (EXPENSES)















Interest income

176


313


928


930

Interest expense

(1,218)


(700)


(1,909)


(1,607)

Government subsidy

340


235


842


926

(Loss) Gain from changes in fair values of
investments

(123)


(4)


2,151


-

Other income (expenses)

253


343


1,027


1,310

Total Other Income (expenses), Net

(572)


187


3,039


1,559

















(LOSS) INCOME BEFORE INCOME TAX
    EXPENSE

(1,272)


3,046


(2,398)


(2,959)

















Income tax expense

(1,945)


(822)


(3,759)


(1,315)

















NET (LOSS) INCOME

(3,217)


2,224


(6,157)


(4,274)

















Net loss attributable to the non-controlling interest

-


(8)


-


(4)

NET LOSS ATTRIBUTABLE TO THE COMPANY

(3,217)


2,216


(6,157)


(4,278)

















NET (LOSS) INCOME

$

(3,217)

$

2,224

$

(6,157)

$

(4,274)

















Foreign currency translation gain (loss)

(1,061)


4,664


1,020


2,964

COMPREHENSIVE INCOME (LOSS)

(4,278)


6,888


(5,137)


(1,310)

















Comprehensive loss attributable to the non-controlling
    interest

-


51


-


53

COMPREHENSIVE
    INCOME (LOSS) ATTRIBUTABLE TO THE
    COMPANY

$

(4,278)

$

6,939

$

(5,137)

$

(1,257)

















LOSS PER SHARE ATTRIBUTABLE TO THE
    COMPANY'S STOCKHOLDERS















Basic and diluted

$

(0.22)

$

0.15

$

(0.42)

$

(0.29)

Weighted average number of shares outstanding Basic
    and diluted

14,811,073


14,808,737


14,810,585


14,805,987

See the accompanying notes to the condensed consolidated financial statements.

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)






Addition
al

Retained Earnings

Accumulated
other

Amoun
ts
due from

Total
equity
attributable
to stockholders





Common Stock

paid-in




Statutor
y

Comprehens
ive

related

of the

Total 


Shares

Amou
nt

capital

Unrestrict
ed

reserve

loss

party

Company

equity

Balance at
   January 1,
   2021

14,809,160

$

15

$

3,650

$

109,171

$

20,376

$

4,590

$

(3,353)

$

134,449

$

134,449

Stock issued
   for compens
   ation

1,500


-


5


-


-


-


-


5


5

Net loss

-


-


-


(1,170)


-


-


-


(1,170)


(1,170)

Net cash
   received
   from related
   party under
   counter
   guarantee
   agreement

-


-


-


-


-


-


379


379


379

Foreign
   currency
   translation
   gain (loss)





















(1,352)


-


(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


132,311

Net loss













(1,771)














(1,771)


(1,771)

Net cash
   received
   from related
   party under
   counter
   guarantee
   agreement

























386


386


386

Foreign
   currency
   translation
   loss





















3,434






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

$

134,360

Stock issued
   for
   compensatio
   n

1,652


-


5


-


-


-


-


5


5

Net (Loss)
   income













(3,217)














(3,217)


(3,217)

Net cash
   received
   from related
   party under
   counter
   guarantee
   agreement

























313


313


313

Foreign
   currency
   translation
   gain





















(1,062)






(1,062)


(1,062)

Balance at
   September 3
   0, 2021

14,812,312

$

15

$

3,660

$

103,013

$

20,376

$

5,610

$

(2,275)

$

130,399

$

130,399





Additio
nal

Retained Earnings

Accumulate
d
other

Amount
s
due from

Total
equity
attributabl
e
to stockholde
rs

Non-





Common Stock

paid-in




Statuto
ry

Comprehen
sive

related

of the

controll
ing

Total


Shares

Amou
nt

capital

Unrestric
ted

reserv
e

loss

party

Company

Interest

equity

Balance at
   January 1, 
   2020

14,801,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660


(1,510)

$

119,150

Stock issued
   for compen
   sation

3,062


-


5


-


-


-


-


5






5

Net loss

-


-


-


(2,701)


-


-


-


(2,701)


3


(2,698)

Net cash
   received
   from
   related
   party
   under
   counter
   guarantee
   agreement

-


-


-


-


-


-


785


785


-


785

Foreign
   currency
   translation
   gain (loss)





















(1,440)


-


(1,440)


3


(1,437)

Balance at
   March 31,
   2020

14,804,832


15


3,645


103,627


19,939


(5,770)


(4,147)


117,309


(1,504)


115,805

Net loss













(3,794)














(3,794)


(6)


(3,800)

Net cash
   received
   from
   related
   party
   under
   counter
   guarantee
   agreement

























151


151






151

Foreign
   currency
   translation
   loss





















(261)






(261)


(2)


(263)

Balance at
   June 30,
   2020

14,804,832

$

15

$

3,645

$

99,833

$

19,939

$

(6,031)

$

(3,996)

$

113,405


(1,512)

$

111,893

Stock issued
   for compensati
   on

4,328


-


5


-


-


-


-


5






5

Net income













2,216














2,216


8


2,224

Net cash
   received
   from
   related
   party
   under
   counter
   guarantee
   agreement

























566


566


-


566

Foreign
   currency
   translation
   gain





















4,723






4,723


(59)


4,664

Balance at
   September 
   30, 2020

14,809,160

$

15

$

3,650

$

102,049

$

19,939

$

(1,308)

$

(3,430)

$

120,915


(1,563)

$

119,352

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,
2021

September 30,
2020

CASH FLOWS FROM OPERATING ACTIVITIES





Net loss

$

(6,157)

$

(4,274)

Adjustments to reconcile net loss to cash provided by operating activities:







Depreciation and amortization

4,384


4,114

Loss from sale of property and equipment

590


283

Provision of bad debt allowance

676


683

Write off obsolete inventories

7,595


5,786

Changes in fair value of investment

(2,151)


13

Deferred income tax

644


(165)

Stock-based compensation

10


10

Changes in operating assets and liabilities







Accounts receivable

(8,614)


15,571

Inventories

(20,702)


16,135

Value added tax receivable

(1,235)


(577)

Other receivables and prepaid expenses

(1,096)


50

Advances on inventory purchases

586


2,461

Amounts due from related parties

(1,514)


(848)

Accounts payable

5,930


(7,842)

Accounts payable and other payables- related parties

(3,204)


(1,112)

Other payables and accrued liabilities

(3,332)


(6,093)

Value added and other taxes payable

(360)


467

Income tax payable

831


(64)

Net cash (used in) provided by operating activities

(27,119)


24,598









CASH FLOWS FROM INVESTING ACTIVITIES







Purchases of property and equipment

(5,109)


(2,769)

Net (purchase) sale of trading securities

(1,077)


(901)

Investment payment

(773)


(2,860)

Net cash (used in) investing activities

(6,959)


(6,530)









CASH FLOWS FROM FINANCING ACTIVITIES







Proceeds from bank loans

56,110


66,599

Repayment of bank loans

(54,565)


(49,278)

Net collection (advance) of amounts due from related party (equity)

1,630


1,618

Net cash  used in (provided by) financing activities

3,175


18,939









EFFECT OF EXCHANGE RATE CHANGES ON CASH

693


2,740









NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND
   RESTRICTED CASH

(30,211)


39,747









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT
   BEGINNING OF PERIOD

121,723


50,755









CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
   PERIOD

$

91,512

$

90,502









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
















Cash and Cash Equivalents

48,336


69,950

Restricted cash

43,176


20,552


$

91,512

$

90,502









SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:







Cash paid during the period for:







Interest

$

1,909

$

1,607

Income taxes

$

2,272

$

1,455

SOURCE Ever-Glory International Group, Inc.

Related Links

http://www.everglorygroup.com

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