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Ever-Glory Reports Fourth Quarter 2019 Financial Resultsnew

Add: 2020   Update: 2020/03/30

 

Ever-Glory Reports Fourth Quarter 2019 Financial Results

NANJING, China, March 30, 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 fourth quarter ended December 31, 2019.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “During the fourth 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 full year of 2019, 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 117 stores during 2019, we operated a nationwide network of 1,101 stores as of December 31, 2019.”

“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 fourth 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.”

Full Year 2019 Financial Results

Total sales for the full year of 2019 were $383.1 million, a 14.6% decrease from $448.5 million in the full year of 2018. This decrease was primarily due to a 10.7% decrease in wholesale sales and an 18.2% decrease in retail sales.

Wholesale sales from the Company's wholesale business decreased by 10.7% to $195.2 million for the full year of 2019, compared with $218.6 million for the full year of 2018. This decrease was primarily attributable to decreased sales in Mainland China, United Kingdom, Hong Kong China, Germany and Europe-Other partially offset by increased sales in Japan and United States.

Retail sales from the Company's branded fashion apparel retail division decreased by 18.2% to $187.9 million for the full year of 2019, compared with $229.9 million for the full year of 2018. This decrease was primarily due to a decrease in same store sales.

Total gross profit for the full year of 2019 decreased by 19.4% to $118.8 million, compared with $147.4 million for the full year of 2018. Total gross margin for the full year of 2019 decreased to 31.0% from 32.9% for the full year of 2018.

Gross profit for wholesale business decreased by 4.6% to $39.9 million for the full year of 2019, compared with $41.8 million for the full year of 2018. Gross margin for the full year of 2019 increased to 20.4% compared with 19.1% for the full year of 2018.

Gross profit for retail business decreased by 25.2% to $78.9 million for the full year of 2019, compared with $105.6 million for the full year of 2018. Gross margin for the full year of 2019 decreased to 42.0% from 45.9% for the full year of 2018.

Selling expenses for the full year of 2019 decreased by 12.3% to $80.2 million, or 20.9% of total sales, compared with $91.4 million, or 20.4% of total sales for the full year of 2018. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2019 decreased by 11.8% to $35.1 million, or 9.2% of total sales, compared with $39.8 million, or 8.9% of total sales for the full year of 2018. The decrease in absolute amount was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2019 decreased by 76.5% to $3.5 million compared with $15.0 million for the full year of 2018.

Net income attributable to the Company for the full year of 2019 decreased by 89.4% to $1.3 million compared with $12.0 million for the full year of 2018. Basic and diluted earnings per share were $0.09 and $0.81 for the full year of 2019 and 2018, respectively.

 

Balance Sheet

As of December 31, 2019, Ever-Glory had approximately $48.6 million of cash and cash equivalents, compared with approximately $47.0 million as of December 31, 2018. Ever-Glory had working capital of approximately $39.8 million as of December 31, 2019, and outstanding bank loans of approximately $29.9 million as of December 31, 2019.

 

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 30, 2020 (8:00 p.m. Beijing Time on March 30, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 1073501. 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 March 30 through 11:59 p.m. Eastern Time on April 6, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 1073501.

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

 

  

 

 


 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 DECEMBER 31, 2019 AND 2018

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

48,551

 

 

$

47,012

 

Accounts receivable, net

 

 

78,053

 

 

 

86,527

 

Inventories

 

 

67,355

 

 

 

65,929

 

Value added tax receivable

 

 

2,495

 

 

 

2,580

 

Other receivables and prepaid expenses

 

 

7,497

 

 

 

10,204

 

Advances on inventory purchases

 

 

9,681

 

 

 

6,420

 

Amounts due from related parties

 

 

123

 

 

 

192

 

Total Current Assets

 

 

213,755

 

 

 

218,864

 

 

 

 

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

 

 

 

 

Intangible assets, net

 

 

4,729

 

 

 

4,962

 

Property and equipment, net

 

 

28,812

 

 

 

28,445

 

Operating lease right-of-use assets

 

 

53,379

 

 

 

-

 

Deferred tax assets

 

 

996

 

 

 

-

 

Total Non-Current Assets

 

 

87,916

 

 

 

33,407

 

TOTAL ASSETS

 

$

301,671

 

 

$

252,271

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Bank loans

 

$

29,931

 

 

$

29,497

 

Accounts payable

 

 

72,418

 

 

 

78,412

 

Accounts payable and other payables - related parties

 

 

4,811

 

 

 

4,756

 

Other payables and accrued liabilities

 

 

19,137

 

 

 

21,958

 

Value added and other taxes payable

 

 

1,657

 

 

 

2,569

 

Income tax payable

 

 

1,142

 

 

 

1,569

 

Current operating lease liabilities

 

 

44,888

 

 

 

-

 

Total Current Liabilities

 

 

173,984

 

 

 

138,761

 

 

 

 

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

-

 

 

 

354

 

Non-current operating lease liabilities

 

 

8,537

 

 

 

-

 

TOTAL LIABILITIES

 

 

182,521

 

 

 

139,115

 

 

 

 

 

 

 

 

 

 

NOTE 13 COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock ($0.001 par value, authorized 5,000,000 shares, no shares issued and outstanding)

 

 

-

 

 

 

-

 

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,801,770 and 14,798,198 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively)

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

3,640

 

 

 

3,627

 

Retained earnings

 

 

106,328

 

 

 

105,914

 

Statutory reserve

 

 

19,939

 

 

 

19,083

 

Accumulated other comprehensive loss

 

 

(4,330

)

 

 

(3,578

)

Amounts due from related party

 

 

(4,932

)

 

 

(10,354

)

Total equity attributable to stockholders of the Company

 

 

120,660

 

 

 

114,707

 

Noncontrolling interest

 

 

(1,510

)

 

 

(1,551

)

Total Equity

 

 

119,150

 

 

 

113,156

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

301,671

 

 

$

252,271

 

 

See the accompanying notes to the consolidated financial statements.

 

F-2

 

  

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

SALES

 

$

383,101

 

 

$

448,508

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

264,330

 

 

 

301,153

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

118,771

 

 

 

147,355

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Selling expenses

 

 

80,180

 

 

 

91,439

 

General and administrative expenses

 

 

35,123

 

 

 

39,811

 

Marketing related intangible asset impairment

 

 

-

 

 

 

1,086

 

Total operating expenses

 

 

115,303

 

 

 

132,336

 

 

 

 

　  

 

 

 

　  

 

INCOME FROM OPERATIONS

 

 

3,468

 

 

 

15,019

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

Interest income

 

 

1,003

 

 

 

1,375

 

Interest expense

 

 

(1,222

)

 

 

(1,989

)

Other income

 

 

2,532

 

 

 

1,977

 

Total other income

 

 

2,313

 

 

 

1,363

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAX EXPENSE

 

 

5,781

 

 

 

16,382

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

 

 

(4,562

)

 

 

(4,942

)

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

1,219

 

 

 

11,440

 

 

 

 

 

 

 

 

 

 

Net loss attributable to the non-controlling interest

 

 

51

 

 

 

568

 

NET INCOME ATTRIBUTABLE TO THE COMPANY

 

$

1,270

 

 

$

12,008

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

1,219

 

 

$

11,440

 

Foreign currency translation loss

 

 

(660

)

 

 

(6,084

)

COMPREHENSIVE INCOME

 

$

559

 

 

$

5,356

 

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to the noncontrolling interest

 

 

41

 

 

 

489

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

 

$

610

 

 

$

5,845

 

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.09

 

 

$

0.81

 

Weighted average number of shares outstanding Basic and diluted

 

 

14,801,770

 

 

 

14,798,198

 

 

See the accompanying notes to the consolidated financial statements.

 

F-3

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

 

 

 

 

 

 

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

 

 

income

 

 

party

 

 

Company

 

 

Interest

 

 

equity

 

Balance at January 1, 2018

 

 

14,795,992

 

 

$

15

 

 

$

3,620

 

 

$

95,195

 

 

$

17,794

 

 

$

2,585

 

 

$

(15,449

)

 

$

103,760

 

 

 

(1,062

)

 

$

102,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for compensation

 

 

2,206

 

 

 

0.002

 

 

 

7

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7

 

 

 

 

 

 

 

7

 

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,008

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,008

 

 

 

(568

)

 

 

11,440

 

Transfer to reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,289

)

 

 

1,289

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

Net cash paid to related party under counter guarantee agreement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,095

 

 

 

5,095

 

 

 

-

 

 

 

5,095

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,163

)

 

 

 

 

 

 

(6,163

)

 

 

79

 

 

 

(6,084

)

Balance at December 31, 2018

 

 

14,798,198

 

 

$

15

 

 

$

3,627

 

 

$

105,914

 

 

$

19,083

 

 

$

(3,578

)

 

$

(10,354

)

 

$

114,707

 

 

 

(1,551

)

 

$

113,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for compensation

 

 

3,572

 

 

 

-

 

 

 

13

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13

 

 

 

 

 

 

 

13

 

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,270

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,270

 

 

 

(51

)

 

 

1,219

 

Transfer to reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(856

)

 

 

856

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

Net cash paid to related party under counter guarantee agreement (Note 12)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,422

 

 

 

5,422

 

 

 

-

 

 

 

5,422

 

Foreign currency translation gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(752

)

 

 

 

 

 

 

(752

)

 

 

92

 

 

 

(660

)

Balance at December 31, 2019

 

 

14,801,770

 

 

$

15

 

 

$

3,640

 

 

$

106,328

 

 

$

19,939

 

 

$

(4,330

)

 

$

(4,932

)

 

$

120,660

 

 

 

(1,510

)

 

$

119,150

 

 

See the accompanying notes to the consolidated financial statements.

 

F-4

 

  

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 YEARS ENDED DECEMBER 31, 2019 AND 2018

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

1,219

 

 

$

11,440

 

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

 

 

 

 

 

 

 

 

Intangible asset impairment loss

 

 

-

 

 

 

1,086

 

Depreciation and amortization

 

 

8,239

 

 

 

6,664

 

Loss from sale of property and equipment

 

 

9

 

 

 

108

 

Provision of bad debt allowance

 

 

1,062

 

 

 

660

 

Provision for obsolete inventories

 

 

2,804

 

 

 

3,324

 

Deferred income tax

 

 

(1,472

)

 

 

(1,370

)

Stock-based compensation

 

 

12

 

 

 

7

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

6,652

 

 

 

(9,893

)

Inventories

 

 

(5,145

)

 

 

(16,462

)

Value added tax receivable

 

 

1,077

 

 

 

1,016

 

Other receivables and prepaid expenses

 

 

2,394

 

 

 

(5,659

)

Advances on inventory purchases

 

 

(3,395

)

 

 

(3,698

)

Amounts due from related parties

 

 

67

 

 

 

(2,761

)

Accounts payable

 

 

(2,305

)

 

 

8,485

 

Accounts payable and other payables- related parties

 

 

176

 

 

 

6,275

 

Other payables and accrued liabilities

 

 

(4,052

)

 

 

5,604

 

Value added and other taxes payable

 

 

(2,948

)

 

 

(2,210

)

Income tax payable

 

 

(409

)

 

 

(54

)

Net cash provided by operating activities

 

 

3,985

 

 

 

2,562

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(8,675

)

 

 

(12,182

)

Net cash used in investing activities

 

 

(8,675

)

 

 

(12,182

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from bank loans

 

 

59,528

 

 

 

64,006

 

Repayment of bank loans

 

 

(58,665

)

 

 

(70,513

)

Repayment of loans from related party

 

 

13,163

 

 

 

6,657

 

Advances to related party

 

 

(8,381

)

 

 

(8,428

)

Interest income received from related party

 

 

472

 

 

 

2,997

 

Net cash provided by (used in) financing activities

 

 

6,117

 

 

 

(5,281

)

 

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

 

2,316

 

 

 

(963

)

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

3,743

 

 

 

(15,864

)

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

47,012

 

 

 

62,876

 

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

 

$

50,755

 

 

$

47,012

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

 

48,551

 

 

 

47,012

 

Restricted cash (booked in other receivables and prepaid expenses)

 

 

2,204

 

 

 

-

 

 

 

$

50,755

 

 

$

47,012

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

1,222

 

 

$

1,755

 

Income taxes

 

$

6,327

 

 

$

6,350

 

 

See the accompanying notes to the consolidated financial statements.

 

F-5

 

 

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