Ever-Glory Reports Third Quarter 2020 Financial Results

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Ever-Glory International Group, Inc. (NASDAQ: EVK) reported Q3 2020 results, showcasing total sales of $79.9 million, down 29.5% from $113.3 million in Q3 2019. The decline stemmed from a 44.9% drop in wholesale sales, while retail sales rose by 10.3% to $34.8 million, boosted by e-commerce. Gross profit decreased by 2.8% to $23.7 million, but gross margin improved to 29.6%. Operating income soared by 344.5% to $2.8 million. Net income was $2.2 million, compared to a loss of $1.1 million a year prior. Cash and equivalents stood at approximately $70 million as of September 30, 2020.

Positive

• Retail sales increased by 10.3% to $34.8 million.
• Operating income improved by 344.5% to $2.8 million.
• Net income grew to $2.2 million from a loss of $1.1 million.

Negative

• Total sales decreased by 29.5% from Q3 2019.
• Wholesale sales dropped by 44.9% to $45.1 million.

NEW YORK, Nov. 13, 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 third quarter ended September 30, 2020.

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 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 38 stores during 2020, we operated a nationwide network of 923 stores as of September 30, 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 third 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."

Third Quarter 2020 Financial Results 

Total sales for the third quarter of 2020 were $79.9 million, a decrease of 29.5% from $113.3 million in the third quarter of 2019. This decrease was primarily driven by a 44.9% decrease in our wholesale business, partially offset by a 10.3% increase in retail business.

Sales for the Company's branded fashion apparel retail division increased by 10.3% to $34.8 million for the third quarter of 2020, compared with $31.6 million for the third quarter of 2019. This increase was primarily due to an increase in the e-commerce sales. The Company had 923 retail stores as of September 30, 2020, compared with 1,157 retail stores as of September 30, 2019.

Sales for the Company's wholesale division decreased by 44.9% to $45.1 million for the third quarter of 2020, compared with $81.7 million for the third quarter 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 third quarter of 2020 decreased by 2.8% to $23.7 million, compared with $24.4 million for the third quarter of 2019. Total gross margin increased to 29.6% from 21.5% for the third quarter of 2019.

Gross profit for the retail business increased by 2.7% to $14.5 million for the third quarter of 2020, compared with $14.1 million for the third quarter of 2019. Gross margin was 41.6%, compared to 44.7% for the third quarter of 2019.

Gross profit for the wholesale business decreased by 10.4% to $9.2 million for the third quarter of 2020, compared with $10.3 million for the third quarter of 2019. Gross margin increased to 20.4% from 12.6% for the third quarter of 2019.

Selling expenses for the third quarter of 2020 decreased by 27.6% to $13.0 million, or 16.3% of total sales, compared with $17.9 million, or 15.8% of total sales for the third quarter of 2019. The decrease was attributable to the lower travelling expenses.

General and administrative expenses for the third quarter of 2020 increased by 3.1% to $7.8 million, or 9.8% of total sales, compared with $7.6 million, or 6.7% of total sales for the third quarter of 2019. The increase was attributable to the foreign currency transaction gain.

Income (Loss) from operations for the third quarter of 2020 increased by 344.5% to $2.8 million compared with ($1.2 million) for the third quarter of 2019.

Net income (loss) attributable to the Company for the third quarter of 2020 was $2.2 million compared with ($1.1 million) for the third quarter of 2019. Basic and diluted earnings (loss) per share were $0.15 for the third quarter of 2020 compared with ($0.07) for the third quarter of 2019.

Balance Sheet

As of September 30, 2020, Ever-Glory had approximately $70.0 million of cash and cash equivalents, compared with approximately $48.6 million as of December 31, 2019. Ever-Glory had working capital of approximately $53.3 million as of September 30, 2020, and outstanding bank loans of approximately $48.4 million as of September 30, 2020.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 13, 2020 (8:00 p.m. Beijing Time on November 13, 2020). Listeners can access the conference call by dialing +1-866-548-4713 or + 1-323-794-2093 and using the access code 9522138. 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 13 through 11:59 p.m. Eastern Time on November 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 9522138.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 (UNAUDITED)
		2020				2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	69,950			$	48,551
Restricted cash			20,552				2,204
Trading securities			817				-
Accounts receivable, net			62,866				78,053
Inventories			46,443				67,355
Advances on inventory purchases			7,393				9,681
Value added tax receivable			2,106				2,495
Other receivables and prepaid expenses			5,229				5,293
Amounts due from related parties			1,086				123
Total Current Assets			216,442				213,755
NONCURRENT ASSETS
Equity security investment			2,936				-
Intangible assets, net			4,628				4,729
Property and equipment, net			28,203				28,812
Operating lease right-of-use assets			37,705				53,379
Deferred tax assets			1,099				996
Total Non-Current Assets			74,571				87,916
TOTAL ASSETS		$	291,013			$	301,671
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans		$	48,444			$	29,931
Accounts payable			65,155				72,418
Accounts payable and other payables – related parties			3,878				4,811
Other payables and accrued liabilities			14,159				19,137
Value added and other taxes payable			1,134				1,657
Income tax payable			1,104				1,142
Current operating lease liabilities			29,296				44,888
Total Current Liabilities			163,170				173,984
NONCURRENT LIABILITIES
Non-current operating lease liabilities			8,491				8,537
TOTAL LIABILITIES			171,661				182,521
COMMITMENTS AND CONTINGENCIES (Note 9)
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, 14,809,160 and     14,801,770 shares issued and outstanding as of September 30, 2020 and     December 31, 2019, respectively)			15				15
Additional paid-in capital			3,650				3,640
Retained earnings			102,049				106,328
Statutory reserve			19,939				19,939
Accumulated other comprehensive (loss)			(1,308)				(4,330)
Amounts due from related party			(3,430)				(4,932)
Total equity attributable to stockholders of the Company			120,915				120,660
Noncontrolling interest			(1,563)				(1,510)
Total Equity			119,352				119,150
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	291,013			$	301,671

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
		Three months ended								Nine months ended
		September 30,								September 30,
		2020				2019				2020				2019
NET SALES		$	79,908			$	113,326			$	188,350			$	278,598
COST OF SALES			56,235				88,967				134,193				195,895
GROSS PROFIT			23,673				24,359				54,157				82,703
OPERATING EXPENSES
Selling expenses			12,996				17,944				39,101				58,651
General and administrative expenses			7,818				7,584				19,574				22,450
Total Operating Expenses			20,814				25,528				58,675				81,101
INCOME (LOSS) FROM OPERATIONS			2,859				(1,169)				(4,518)				1,602
OTHER INCOME (EXPENSES)
Interest income			313				215				930				699
Interest expense			(700)				(265)				(1,607)				(1,036)
Other income, net			574				502				2,236				1,616
Total Other Income, Net			187				452				1,559				1,279
INCOME (LOSS) BEFORE INCOME TAX EXPENSE			3,046				(717)				(2,959)				2,881
Income tax expense			(822)				(387)				(1,315)				(2,667)
NET INCOME (LOSS)			2,224				(1,104)				(4,274)				214
Net (loss) income attributable to the non-controlling interest			(8)				28				(4)				46
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY			2,216				(1,076)				(4,278)				260
NET INCOME (LOSS)		$	2,224			$	(1,104)			$	(4,274)			$	214
Foreign currency translation gain (loss)			4,664				(3,729)				2,964				(2,244)
COMPREHENSIVE INCOME (LOSS)			6,888				(4,833)				(1,310)				(2,030)
Comprehensive (loss) income attributable to the non- controlling interest			(56)				15				(54)				67
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY		$	6,832			$	(4,818)			$	(1,364)			$	(1,963)
EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS
Basic and diluted		$	0.15			$	(0.07)			$	(0.29)			$	0.02
Weighted average number of shares outstanding Basic and diluted			14,808,737				14,801,770				14,805,987				14,801,770

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
										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				-				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 compensation			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

 

 

										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			1,942				0.004				8				-				-				-				-				8								8
Net income (loss)			-				-				-				(521)				-				-				-				(521)				66				(455)
Net cash received from related party under counter guarantee agreement			-				-				-				-				-				-				1,101				1,101				-				1,101
Foreign currency translation gain																							3,972				-				3,972				34				4,006
Balance at March 31, 2019			14,800,140				15				3,635				105,393				19,083				394				(9,253)				119,267				(1,451)				117,816
Net income (loss)															1,856																1,856				(83)				1,773
Net cash received from related party under counter guarantee agreement																											1,390				1,390								1,390
Foreign currency translation loss																							(2,487)								(2,487)				34				(2,453)
Balance at June 30, 2019			14,800,140			$	15			$	3,635			$	107,249			$	19,083			$	(2,093)			$	(7,863)			$	120,026				(1,500)			$	118,526
Stock issued for compensation			1,630				0.002				5																				5								5
Net income (loss)															(1,076)																(1,076)				(28)				(1,104)
Net cash advanced to related party under counter guarantee agreement																											1,215				1,215								1,215
Foreign currency translation loss																							(3,729)								(3,729)				43				(3,686)
Balance at September 30, 2019			14,801,770			$	15			$	3,640			$	106,173			$	19,083			$	(5,822)			$	(6,648)			$	116,441				(1,485)			$	114,956

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income		$	(4,274)			$	214
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization			4,114				6,824
Loss from sale of property and equipment			283				16
Provision of bad debt allowance			683				820
Provision for obsolete inventories			5,786				3,846
Investment loss from the trading securities			13				-
Deferred income tax			(165)				(2,388)
Stock-based compensation			10				12
Changes in operating assets and liabilities
Accounts receivable			15,571				312
Inventories			16,135				(4,979)
Value added tax receivable			(577)				(281)
Other receivables and prepaid expenses			50				3,738
Advances on inventory purchases			2,461				(3,214)
Amounts due from related parties			(848)				16
Accounts payable			(7,842)				6,253
Accounts payable and other payables- related parties			(1,112)				(692)
Other payables and accrued liabilities			(6,093)				(10,594)
Value added and other taxes payable			467				(4,120)
Income tax payable			(64)				746
Net cash provided by (used in) operating activities			24,598				(3,471)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(2,769)				(6,555)
Purchases of trading securities			(825)				-
Investment in a partnership			(2,936)				-
Net cash used in investing activities			(6,530)				(6,555)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans			66,599				42,570
Repayment of bank loans			(49,278)				(35,620)
Net collection (advance) of amounts due from related party (equity)			1,618				3,937
Net cash provided by financing activities			18,939				10,887
EFFECT OF EXCHANGE RATE CHANGES ON CASH			2,740				(650)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			39,747				211
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD			50,755				47,012
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	90,502			$	47,223
Reconciliation of cash, cash equivalents and restricted cash reported within their consolidated balance sheets:
Cash and Cash Equivalents			69,950				45,837
Restricted cash			20,552				1,386
		$	90,502			$	47,223
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	1,607			$	1,036
Income taxes		$	1,455			$	4,196

 

 

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SOURCE Ever-Glory International Group, Inc.

FAQ

What were Ever-Glory's total sales for Q3 2020?

Total sales for Q3 2020 were $79.9 million.

How much did retail sales increase in Q3 2020 for EVK?

Retail sales increased by 10.3% to $34.8 million.

What was Ever-Glory's net income in Q3 2020?

Net income for Q3 2020 was $2.2 million.

What was the percentage decline in wholesale sales for Ever-Glory?

Wholesale sales declined by 44.9% to $45.1 million.

What was Ever-Glory's gross profit for Q3 2020?

Gross profit for Q3 2020 was $23.7 million, a decrease of 2.8%.