Ever-Glory Reports Fourth Quarter 2020 Financial Results

Rhea-AI Summary

Ever-Glory International Group reported a challenging financial performance for 2020, with total sales of $267.4 million, down 30.2% from 2019. The retail division saw a 20.1% decline to $150.1 million, with a reduction in same-store sales and a decrease in the number of operational stores from 1,101 to 936. However, gross margin improved to 34.1%. The company achieved a net income of $3.3 million, an increase from $1.3 million in 2019, with EPS rising to $0.22. Ever-Glory had $81.9 million in cash as of the end of 2020, reflecting improved liquidity.

Positive

• Net income increased to $3.3 million from $1.3 million in 2019.
• Earnings per share rose to $0.22, up from $0.09 in 2019.
• Improved gross margin to 34.1% from 31.0% in 2019.
• Operating income increased by 19.5% to $4.1 million.

Negative

• Total sales decreased by 30.2% year-over-year.
• Retail sales dropped by 20.1%, attributed to reduced same-store sales.
• Wholesale sales fell 39.9%, heavily impacting revenue.
• Number of retail stores decreased from 1,101 to 936.

NEW YORK, March 31, 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 fourth quarter ended December 31, 2020.

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 fourth 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 54 stores during 2020, we operated a nationwide network of 936 stores as of December 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 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 2020 Financial Results 

Total sales for the full year of 2020 were $267.4 million, a decrease of 30.2% from $383.1 million in the full year of 2019. This decrease was primarily driven by a 39.9% decrease in our wholesale business and a 20.1% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 20.1% to $150.1 million for the full year of 2020, compared with $187.9 million for the full year of 2019. This decrease was primarily due to a decrease in same store sales. The Company had 936 retail stores as of December 31, 2020, compared with 1,101 retail stores as of December 31, 2019.

Sales for the Company's wholesale division decreased by 39.9% to $117.2 million for the full year of 2020, compared with $195.2 million for the full year of 2019. This decrease was primarily attributable to a decrease in sales in Mainland China, Hong Kong, Germany, Europe-Other, Japan, United States and United Kingdom.

Total gross profit for the full year of 2020 decreased by 23.2% to $91.2 million, compared with $118.8 million for the full year of 2019. Total gross margin increased to 34.1% from 31.0% for the full year of 2019.

Gross profit for the retail business decreased by 22.1% to $61.5 million for the full year of 2020, compared with $78.9 million for the full year of 2019. Gross margin was 40.9%, compared to 42.0% for the full year of 2019.

Gross profit for the wholesale business decreased by 25.4% to $29.7 million for the full year of 2020, compared with $39.9 million for the full year of 2019. Gross margin increased to 25.4% from 20.4% for the full year of 2019.

Selling expenses for the full year of 2020 decreased by 30.3% to $56.0 million, or 20.9% of total sales, compared with $80.2 million, or 20.9% of total sales for the full year of 2019. The decrease was attributable to lower retail sales.

General and administrative expenses for the full year of 2020 decreased by 11.2% to $31.2 million, or 11.7% of total sales, compared with $35.1 million, or 9.2% of total sales for the full year of 2019. The decrease was mainly attributable to the decline in number of stores.

Income from operations for the full year of 2020 increased by 19.5% to $4.1 million compared with $3.5 million for the full year of 2019.

Net income attributable to the Company for the full year of 2020 was $3.3 million compared with $1.3 million for the full year of 2019. Basic and diluted earnings  per share were $0.22 for the full year of 2020 compared with $0.09 for the full year of 2019.

Balance Sheet

As of December 31, 2020, Ever-Glory had approximately $81.9 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $59.3 million as of December 31, 2020, and outstanding bank loans of approximately $65.9 million as of December 31, 2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 31, 2020 (8:00 p.m. Beijing Time on March 31, 2020). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 3008303. 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 March 31 through 11:59 p.m. Eastern Time on April 7 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 3008303.

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
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
AS OF DECEMBER 31, 2020 AND 2019
		2020				2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	81,865			$	48,551
Restricted cash			39,858				2,204
Trading securities			1,792				-
Accounts receivable, net			53,285				78,053
Inventories			53,893				67,355
Advances on inventory purchases			10,261				9,681
Value added tax receivable			1,244				2,495
Other receivables and prepaid expenses			5,479				5,293
Amounts due from related parties			567				123
Total Current Assets			248,244				213,755
NONCURRENT ASSETS
Equity security investment			3,932				-
Intangible assets, net			4,794				4,729
Property and equipment, net			32,164				28,812
Operating lease right-of-use assets			41,690				53,379
Deferred tax assets			902				996
Total Non-Current Assets			83,482				87,916
TOTAL ASSETS		$	331,726			$	301,671
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans		$	65,919			$	29,931
Accounts payable			67,762				72,418
Accounts payable and other payables – related parties			3,764				4,811
Other payables and accrued liabilities			16,073				19,137
Value added and other taxes payable			909				1,657
Income tax payable			1,062				1,142
Current operating lease liabilities			33,481				44,888
Total Current Liabilities			188,970				173,984
NONCURRENT LIABILITIES
Non-current operating lease liabilities			8,307				8,537
TOTAL LIABILITIES			197,277				182,521
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,809,160 and    14,801,770 shares issued and outstanding as of December 31, 2020 and    December 31, 2019, respectively)			15				15
Additional paid-in capital			3,650				3,640
Retained earnings			109,171				106,328
Statutory reserve			20,376				19,939
Accumulated other comprehensive income (loss)			4,590				(4,330)
Amounts due from related party			(3,353)				(4,932)
Total equity attributable to stockholders of the Company			134,449				120,660
Noncontrolling interest			-				(1,510)
Total Equity			134,449				119,150
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	331,726			$	301,671

 

 

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, 2020 AND 2019
		2020				2019
SALES		$	267,354			$	383,101
COST OF SALES			176,141				264,330
GROSS PROFIT			91,213				118,771
OPERATING EXPENSES
Selling expenses			55,894				80,180
General and administrative expenses			31,176				35,123
Total operating expenses			87,070				115,303
INCOME FROM OPERATIONS			4,143				3,468
OTHER INCOME (EXPENSE)
Interest income			1,014				1,003
Interest expense			(2,345)				(1,222)
Loss on deconsolidation of a subsidiary			(1,085)				-
Gain from changes in fair values of investments			950				-
Government subsidy			1,235				1,809
Other income			1,830				723
Total other income			1,599				2,313
INCOME BEFORE INCOME TAX EXPENSE			5,742				5,781
INCOME TAX EXPENSE			(2,469)				(4,562)
NET INCOME			3,273				1,219
Net loss (income) attributable to the non-controlling interest			7				51
NET INCOME ATTRIBUTABLE TO THE COMPANY		$	3,280			$	1,270
NET INCOME		$	3,273			$	1,219
Foreign currency translation income (loss)			8,920				(660)
COMPREHENSIVE INCOME		$	12,193			$	559
Comprehensive (loss) income attributable to the noncontrolling interest			7				41
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY		$	12,200			$	610
EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS:
Basic and diluted		$	0.22			$	0.09
Weighted average number of shares outstanding Basic and diluted			14,806,778				14,801,770

 

 

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, 2020 AND 2019
										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,    2019			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			-				-				-				-				-				-				5,422				5,422				-				5,422
Foreign    currency    translation    (loss) 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
Stock issued for    compensation			7,390				-				10				-				-				-				-				10								10
Net income    (loss)			-				-				-				3,280				-				-				-				3,280				(7)				3,273
Transfer to    reserve			-				-				-				(437)				437				-				-				-								-
Net cash paid to    related party    under    counter    guarantee    agreement    (Note 11)			-				-				-				-				-				-				1,579				1,579				-				1,579
Deconsolidation    of Yiduo			-				-				-				-				-				-				-				-				1,517				1,517
Foreign    currency    translation    gain																							8,920								8,920				-				8,920
Balance at    December 31,    2020			14,809,160			$	15			$	3,650			$	109,171			$	20,376			$	4,590			$	(3,353)			$	134,449			$	-			$	134,449

 

 

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, 2020 AND 2019
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	3,273			$	1,219
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization			5,291				8,239
Loss from sale of property and equipment			209				9
Loss on deconsolidation of a subsidiary			1,085				-
Provision of bad debt allowance			1,117				1,062
Provision for obsolete inventories			6,753				2,804
Changes in fair value of trading securities			(131)				-
Changes in fair value of investment			(819)				-
Deferred income tax			154				(1,472)
Stock-based compensation			10				12
Changes in operating assets and liabilities
Accounts receivable			27,173				6,652
Inventories			10,161				(5,145)
Value added tax receivable			1,336				1,077
Other receivables and prepaid expenses			(135)				2,394
Advances on inventory purchases			(28)				(3,395)
Amounts due from related parties			(480)				67
Accounts payable			(9,316)				(2,305)
Accounts payable and other payables- related parties			(1,145)				176
Other payables and accrued liabilities			(3,098)				(4,052)
Value added and other taxes payable			(806)				(2,948)
Income tax payable			(148)				(409)
Net cash provided by operating activities			40,456				3,985
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(6,354)				(8,675)
Purchases of trading securities			(2,644)				-
Proceeds from trading securities			979				-
Investment in a partnership			(2,936)				-
Net cash used in investing activities			(10,955)				(8,675)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans			90,729				59,528
Repayment of bank loans			(58,658)				(58,665)
Net collection (advance) of amounts due from related party (equity)			1,848				5,254
Net cash provided by financing activities			33,919				6,117
EFFECT OF EXCHANGE RATE CHANGES ON CASH			7,548				2,316
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			70,968				3,743
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD			50,755				47,012
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	121,723			$	50,755
Reconciliation of cash, cash equivalents and restricted cash reported within their    consolidated balance sheets:
Cash and Cash Equivalents			81,865				48,551
Restricted cash			39,858				2,204
		$	121,723			$	50,755
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Net asset (liabilities) derecognized due to deconsolidation of a subsidiary			1,164				-
Cash paid during the period for:
Interest		$	2,345			$	1,222
Income taxes		$	2,469			$	6,327

 

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SOURCE Ever-Glory International Group, Inc.

FAQ

What were Ever-Glory's total sales for 2020?

Ever-Glory reported total sales of $267.4 million for the year 2020.

How did Ever-Glory's net income change in 2020?

Net income for Ever-Glory increased to $3.3 million in 2020, up from $1.3 million in 2019.

What was Ever-Glory's earnings per share for 2020?

The earnings per share (EPS) for Ever-Glory in 2020 were $0.22, compared to $0.09 in 2019.

How did the gross margin change for Ever-Glory in 2020?

Ever-Glory's gross margin improved to 34.1% in 2020, up from 31.0% in the previous year.

What challenges did Ever-Glory face in its wholesale business in 2020?

Ever-Glory's wholesale sales decreased by 39.9% in 2020, significantly impacting its revenue.