Ever-Glory Reports Second Quarter 2021 Financial Results

Actualizado el 13 de agosto, 2021 - 11.00hs.

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Ever-Glory Reports Second Quarter 2021 Financial Results

PR Newswire

NEW YORK, Aug. 13, 2021

NEW YORK, Aug. 13, 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 second quarter ended June 30, 2021.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the second 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 second 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 66 stores during 2021, we operated a nationwide network of 931 stores as of June 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 second 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."

Second Quarter 2021 Financial Results

Total sales for the second quarter of 2021 were $60.6 million, an increase of 20.9% from $50.1 million in the second quarter of 2020. This increase was primarily driven by a 19.9% increase in our wholesale business and a 21.7% increase in retail business.

Sales for the Company's branded fashion apparel retail division increased by 21.7% to $34.1 million for the second quarter of 2021, compared with $28.0 million for the second quarter of 2020. This increase was primarily due to the increase in same-store sales. The Company operated 931 retail stores as of June 30, 2021, compared with 935 retail stores as of June 30, 2020.

Sales for the Company's wholesale division increased by 19.9% to $26.4 million for the second quarter of 2021, compared with $22.0 million for the second quarter of 2020. 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.

Total gross profit for the second quarter of 2021 increased by 27.3% to $18.4 million, compared with $14.4 million for the second quarter of 2020. Total gross margin for the second quarter of 2021 increased to 30.4% from 28.8% for the second quarter of 2020.

Gross profit for the retail business increased by 46.7% to $14.8 million for the second quarter of 2021, compared with $10.1 million for the second quarter of 2020. Gross margin for the second quarter of 2021 was 43.4% compared to 36.2% for the second quarter of 2020.

Gross profit for the wholesale business decreased by 17.5% to $3.6 million for the second quarter of 2021, compared with $4.4 million for the second quarter of 2020. Gross margin for the second quarter of 2021 decreased to 13.6% from 19.7% for the second quarter of 2020.

Selling expenses for the second quarter of 2021 increased by 14.9% to $14.5 million, or 24.0% of total sales, compared with $12.6 million, or 25.2% of total sales for the second quarter of 2020. The increase was attributable to the increased marketing expenses associated with the promotion of the retail brand.

General and administrative expenses for the second quarter of 2021 increased by 28.3% to $7.7 million, or 12.7% of total sales, compared with $6.0 million, or 11.9% of total sales for the second quarter of 2020. The increase was attributable to the decreased business trip and the exemption of social benefits by the PRC government during the COVID-19 outbreak in China 2020.

Loss from operations was $3.7 million for the second quarter of 2021, compared to $4.2 million for the second quarter of 2020.

Net loss attributable to the Company for the second quarter of 2021 was $1.8 million compared with $3.8 million for the second quarter of 2020. Basic and diluted loss per share were $0.12 for the second quarter of 2021 compared with $0.26 for the second quarter of 2020.

Balance Sheet

As of June 30, 2021, Ever-Glory had approximately $64.0 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $48.9 million as of June 30, 2021, and outstanding bank loans of approximately $65.5 million as of June 30, 2021.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 13, 2021(8:00 p.m. Beijing Time on August 13, 2021). Listeners can access the conference call by dialing +1-800-263-0877 or + 1-646-828-8143 and using the access code 2633372. 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 11:00 a.m. Eastern Time on August 13 through 11:59 p.m. Eastern Time on August 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 2633372.

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.

For investor and media inquiries, please contact:

Ever-Glory International Group
Dandan Song
Tel: +86-25-5209-6817
E-Mail: [email protected]

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)

	June 30, 2021		December 31, 2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	63,963	$	81,865
Restricted cash		42,725		39,858
Trading securities		3,581		1,792
Accounts receivable, net		39,643		53,285
Inventories		60,190		53,893
Advances on inventory purchases		7,556		10,261
Value added tax receivable		2,114		1,244
Other receivables and prepaid expenses		6,255		5,479
Amounts due from related parties		186		567
Total Current Assets		226,213		248,244

NON-CURRENT ASSETS
Equity security investment		5,929		3,932
Intangible assets, net		4,750		4,794
Property and equipment, net		33,414		32,164
Operating lease right-of-use assets		49,725		41,690
Deferred tax assets		306		902
Total Non-Current Assets		94,124		83,482
TOTAL ASSETS	$	320,337	$	331,726

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	65,498	$	65,919
Accounts payable		52,595		67,762
Accounts payable and other payables – related parties		2,131		3,764
Other payables and accrued liabilities		15,410		16,073
Value added and other taxes payable		-		909
Income tax payable		493		1,062
Current operating lease liabilities		41,174		33,481
Total Current Liabilities		177,301		188,970

NON-CURRENT LIABILITIES
Non-current operating lease liabilities		8,676		8,307
TOTAL LIABILITIES		185,977		197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,810,660 and 14,809,160 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively)		15		15
Additional paid-in capital		3,655		3,650
Retained earnings		106,230		109,171
Statutory reserve		20,376		20,376
Accumulated other comprehensive income		6,672		4,590
Amounts due from related party		(2,588)		(3,353)
Total equity		134,360		134,449
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	320,337	$	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				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
NET SALES	$	60,555	$	50,086	$	131,369	$	108,441
COST OF SALES		42,163		35,641		90,541		77,958

GROSS PROFIT		18,392		14,445		40,828		30,483

OPERATING EXPENSES
Selling expenses		14,503		12,626		30,052		26,105
General and administrative expenses		7,662		5,971		15,513		11,755
Total Operating Expenses		22,165		18,597		45,565		37,860

LOSS FROM OPERATIONS		(3,773)		(4,152)		(4,737)		(7,377)

OTHER INCOME (EXPENSES)
Interest income		527		339		752		616
Interest expense		(200)		(566)		(692)		(907)
Government subsidy		243		231		502		691
Gain from changes in fair values of investments		2,041		4		2,275		4
Other income		477		610		774		968
Total Other Income, Net		3,088		618		3,611		1,372

LOSS BEFORE INCOME TAX EXPENSE		(685)		(3,534)		(1,126)		(6,005)

Income tax expense		(1,086)		(266)		(1,815)		(493)

NET LOSS		(1,771)		(3,800)		(2,941)		(6,498)

Net loss attributable to the non-controlling interest		-		6		-		3
NET LOSS ATTRIBUTABLE TO THE COMPANY		(1,771)		(3,794)		(2,941)		(6,495)

NET LOSS	$	(1,771)	$	(3,800)	$	(2,941)	$	(6,498)

Foreign currency translation gain (loss)		3,434		(263)		2,083		(1,700)
COMPREHENSIVE INCOME (LOSS)		1,663		(4,063)		(858)		(8,198)

Comprehensive loss attributable to the non-controlling interest		-		8		-		2
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$	1,663	$	(4,055)	$	(858)	$	(8,196)

LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS
Basic and diluted	$	(0.12)	$	(0.26)	$	(0.20)	$	(0.44)
Weighted average number of shares outstanding Basic and diluted		14,810,660		14,804,832		14,810,330		14,804,595

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)

					Additional		Retained Earnings				Accumulated other		Amounts due from		Total equity attributable to stockholders		Non-
	Common Stock				paid-in				Statutory		Comprehensive		related		of the		controlling		Total
	Shares		Amount		capital		Unrestricted		reserve		loss		party		Company		Interest		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 compensation		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 adjustment												(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 income		-		-		-		(1,771)		-		-		-		(1,771)		-		(1,771)
Net cash received from related party under counter guarantee agreement		-		-		-		-		-		-		386		386		-		386
Foreign currency translation adjustment		-		-		-		-		-		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

					Additional		Retained Earnings				Accumulated other		Amounts due from		Total equity attributable to stockholders		Non-
	Common Stock				paid-in				Statutory		Comprehensive		related		of the		controlling		Total
	Shares		Amount		capital		Unrestricted		reserve		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 compensation		3,062		0.003		5		-		-		-		-		5				5
Net income (loss)		-		-		-		(2,701)		-		-		-		(2,701)		3		(2,698)
Net cash received from related party under counter guarantee agreement		-		-		-		-		-		-		785		785		-		785
Foreign currency translation adjustment												(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 adjustment												(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

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)

	Six Months Ended
	June 30, 2021		June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,941)	$	(6,498)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization		3,212		3,597
Loss from sale of property and equipment		463		189
Provision of bad debt allowance		652		969
Write off obsolete inventories		5,530		3,681
Changes in fair value of investment		(2,275)		-
Deferred income tax		604		71
Stock-based compensation		5		5
Changes in operating assets and liabilities
Accounts receivable		13,433		30,444
Inventories		(11,346)		11,659
Value added tax receivable		(562)		1,076
Other receivables and prepaid expenses		(632)		737
Advances on inventory purchases		2,928		3,845
Amounts due from related parties		546		(214)
Accounts payable		(17,753)		(22,522)
Accounts payable and other payables- related parties		(1,763)		(466)
Other payables and accrued liabilities		1,201		(7,027)
Value added and other taxes payable		(1,209)		(1,593)
Income tax payable		(581)		(910)
Net cash (used in) provided by operating activities		(10,488)		17,043

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(4,452)		(1,018)
Net (purchase) sale of trading securities		(1,468)		(825)
Net cash (used in) investing activities		(5,920)		(1,843)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		12,841		31,995
Repayment of bank loans		(13,905)		(21,173)
Net collection (advance) of amounts due from related party (equity)		798		898
Net cash (used in) provided by financing activities		(266)		11,720

EFFECT OF EXCHANGE RATE CHANGES ON CASH		1,639		(723)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(15,035)		26,197

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		121,723		50,755

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	106,688	$	76,952

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

Cash and Cash Equivalents		63,963		59,236
Restricted cash		42,725		17,716
	$	106,688	$	76,952

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	692	$	907
Income taxes	$	1,781	$	493