Ever-Glory Reports First Quarter 2018 Financial Results

NANJING, China, May 15, 2018 /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 first quarter ended March 31, 2018.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "We are pleased to start 2018 with solid first quarter results, highlighted by 18.9% year-over-year increase in retail sales as our strong execution on the overall strategy which focuses on operational improvements. Specifically, La go go achieved outstanding performance with innovative and distinctive designs that stand for exceptional styling, quality and value."

"Heading into 2018, we remained our focus on driving retail business through store network optimization strategy, as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 40 stores during the first quarter, we operated a nationwide network of 1,409 stores as of March 31, 2018."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in the light of weak micro environment. Our wholesale gross margin continued to improve on a year-over-year basis despite decrease in sales. Going forward, we'll implement a stricter client evaluation system and remain diligent in 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, "We're delighted to see that our operating efficiency continued to improve in the first quarter. Overall gross margin increased by 30 basis points, with wholesale gross margin increasing by 70 basis points, compared with the same period of last year. With strengthened fundamentals and improved operating leverage of our overall business, we are excited about the opportunities that lay before us and we look forward to updating you with our progress next quarter."

First Quarter 2018 Financial Results

Total sales for the first quarter of 2018 were $92.8 million, an increase of 9.0% from $85.1 million in the first quarter of 2017. This increase was primarily driven by an 18.9% increase in our retail business, partially offset by a 10.8% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division increased by 18.9% to $67.5 million for the first quarter of 2018, compared with $56.8 million for the first quarter of 2017. This increase was primarily due to an increase in same-store sales. The Company had 1,409 retail stores as of March 31, 2018, compared with 1,369 retail stores as of March 31, 2017.

Sales for the Company's wholesale division decreased by 10.8% to $25.3 million for the first quarter of 2018, compared with $28.3 million for the first quarter of 2017. This decrease was primarily attributable to decreased sales in Mainland China, Germany, the United Kingdom, other European markets and Hong Kong, partially offset for increased sales in the United States and Japan.

Total gross profit for the first quarter of 2018 increased by 9.9% to $31.3 million, compared with $28.5 million for the first quarter of 2017. Total gross margin increased to 33.8% from 33.5% for the first quarter of 2017.

Gross profit for the retail business increased by 15.0% to $25.5 million for the first quarter of 2018, compared with $22.2 million for the first quarter of 2017. Gross margin was 37.8%, compared to 39.1% for the first quarter of 2017.

Gross profit for the wholesale business decreased by 7.9% to $5.8 million for the first quarter of 2018, compared with $6.3 million for the first quarter of 2017. Gross margin increased to 23.0% from 22.3% for the first quarter of 2017.

Selling expenses for the first quarter of 2018 increased by 12.6% to $22.2 million, or 24.0% of total sales, compared with $19.7 million, or 23.2% of total sales for the first quarter of 2017. The increase was attributable to the increased store decoration and marketing expenses.

General and administrative expenses for the first quarter of 2018 increased by 5.8% to $7.7 million, or 8.3% of total sales, compared with $7.3 million, or 8.5% of total sales for the first quarter of 2017. The increase was mainly attributable to the increased average salaries.

Income from operations for the first quarter of 2018 decreased by 4.2% to $1.4 million compared with $1.5 million for the first quarter of 2017.

Net income attributable to the Company for the first quarter of 2018 was $0.8 million compared with 1.0 million for the first quarter of 2017. Basic and diluted earnings per share were $0.06 for the first quarter of 2018 compared with basic and diluted earnings per share of $0.07 for the first quarter of 2017.

Balance Sheet

As of March 31, 2018, Ever-Glory had approximately $65.2 million of cash and cash equivalents, compared with approximately $62.9 million as of December 31, 2017. Ever-Glory had working capital of approximately $67.7 million as of March 31, 2018, and outstanding bank loans of approximately $41.6 million as of March 31, 2018.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 15, 2018 (8:00 p.m. Beijing Time on May 15, 2018). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 2785487. 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 2785487.

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: sdd@ever-glory.com.cn

The Piacente Group, Inc.
Emilie Wu
China: +86-10-5730-6200
US: +1-212-481-2050
E-Mail: everglory@tpg-ir.com

 

 

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 MARCH 31, 2018 (UNAUDITED) AND DECEMBER 31, 2017



2018


2017

ASSETS




CURRENT ASSETS




Cash and cash equivalents

$

65,177


$

62,876

Accounts receivable, net


55,682



81,859

Inventories


56,598



56,182

Value added tax receivable


1,976



3,757

Other receivables and prepaid expenses


4,725



5,139

Advances on inventory purchases


4,320



3,028

Amounts due from related parties


248



265

Total Current Assets


188,726



213,106







INTANGIBLE ASSETS


6,616



5,995

PROPERTY AND EQUIPMENT, NET


26,172



25,891

TOTAL ASSETS

$

221,514


$

244,992







LIABILITIES AND STOCKHOLDERS' EQUITY












CURRENT LIABILITIES






Bank loans

$

41,620


$

37,730

Accounts payable


58,191



73,788

Accounts payable and other payables - related parties


4,052



4,675

Other payables and accrued liabilities


11,793



16,454

Value added and other taxes payable


4,352



6,052

Income tax payable


1,005



1,712

Total Current Liabilities


121,013



140,411







NONCURRENT LIABILITIES






Deferred tax liabilities


1,714



1,883

TOTAL LIABILITIES


122,727



142,294







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, 14,795,992 and
14,795,992 shares issued and outstanding As of March 31, 2018 and December
31, 2017, respectively)


15



15

Additional paid-in capital


3,620



3,620

Retained earnings


96,010



95,195

Statutory reserve


17,794



17,794

Accumulated other comprehensive income


6,608



2,585

Amounts due from related party


(23,928)



(15,449)

Total equity attributable to stockholders of the Company


100,119



103,760

Noncontrolling interest


(1,332)



(1,062)

Total Equity


98,787



102,698

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

221,514


$

244,992

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME

(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)



2018


2017





SALES

$

92,785


$

85,120







COST OF SALES


61,440



56,611







GROSS PROFIT


31,345



28,509







OPERATING EXPENSES






Selling expenses


22,225



19,745

General and administrative expenses


7,674



7,255

Total operating expenses


29,899



27,000







INCOME FROM OPERATIONS


1,446



1,509







OTHER INCOME (EXPENSE)






Interest income


326



257

Interest expense


(564)



(327)

Other income


136



577

Total other expenses


(102)



507







INCOME BEFORE INCOME TAX EXPENSE


1,344



2,016







INCOME TAX EXPENSE


(757)



(1,217)







NET INCOME


587



799

Net loss attributable to the non-controlling interest


228



175

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

815


$

974







NET INCOME

$

587


$

799

Foreign currency translation income


4,023



459

COMPREHENSIVE INCOME

$

4,610


$

1,258







Comprehensive loss attributable to the noncontrolling interest


270



180







COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

$

4,880


$

1,438

EARNINGS PER SHARE:






Basic and diluted

$

0.06


$

0.07

Weighted average number of shares outstanding Basic and diluted


14,795,992



14,789,626

 

 

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 THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (UNAUDITED)



2018


2017

CASH FLOWS FROM OPERATING ACTIVITIES




Net income

$

587


$

799

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






Depreciation and amortization


2,537



2,241

Loss from sale of property and equipment


4



5

Provision for obsolete inventories


1,626



4,105

Deferred income tax


(234)



(1,180)

Stock-based compensation


-



10

Changes in operating assets and liabilities






Accounts receivable


28,466



23,487

Inventories


(129)



5,541

Value added tax receivable


1,895



1,236

Other receivables and prepaid expenses


832



(543)

Advances on inventory purchases


(1,175)



(1,730)

Amounts due from related parties


(165)



(495)

Accounts payable


(17,944)



(11,762)

Accounts payable and other payables- related parties


(653)



(1,527)

Other payables and accrued liabilities


(5,182)



(1,794)

Value added and other taxes payable


(1,988)



(2,713)

Income tax payable


(670)



(755)

Net cash provided by operating activities


7,807



14,925







CASH FLOWS FROM INVESTING ACTIVITIES






Purchases of property and equipment


(2,552)



(1,209)

Net cash used in investing activities


(2,552)



(1,209)







CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from bank loans


17,346



15,671

Repayment of bank loans


(14,780)



(12,913)

Advances to related party


(7,692)



(1,742)

Net cash provided by (used in) financing activities


(5,126)



1,016







EFFECT OF EXCHANGE RATE CHANGES ON CASH


2,172



80







NET INCREASE IN CASH AND CASH EQUIVALENTS


2,301



14,812







CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


62,876



45,288







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

65,177


$

60,100







SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:












Cash paid during the period for:






Interest

$

564


$

327

Income taxes

$

1,938


$

1,853

 

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