Ever-Glory Reports Third Quarter 2021 Financial Results

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Ever-Glory International Group, Inc. (NASDAQ: EVK) reported its Q3 2021 results with total sales of $94.4 million, an 18.1% increase from Q3 2020, driven mainly by a 38% growth in wholesale despite a 7.6% decline in retail sales, which fell to $32.2 million. Gross profit decreased by 2% to $23.2 million with a gross margin drop from 29.6% to 24.6%. The company reported a net loss of $3.2 million, with a loss per share of ($0.22). Cash reserves also fell to $48.3 million from $81.9 million at the end of 2020.

Positive

• Total sales increased by 18.1% to $94.4 million, driven by a 38% rise in wholesale revenue.
• Implementation of a stricter client evaluation system in the wholesale division to mitigate risk.

Negative

• Net loss increased to $3.2 million from $2.2 million YoY.
• Retail sales decreased by 7.6% to $32.2 million, primarily due to reduced e-commerce sales.
• Total gross profit fell by 2% to $23.2 million, with gross margin declining from 29.6% to 24.6%.

NEW YORK, Nov. 12, 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 third quarter ended September 30, 2021.

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 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 113 stores during 2021, we operated a nationwide network of 893 stores as of September 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 third 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."

Third Quarter 2021 Financial Results 

Total sales for the third quarter of 2021 were $94.4 million, an increase of 18.1% from $79.9 million in the third quarter of 2020. This increase was primarily driven by a 38.0% increase in our wholesale business partially offset by a 7.6% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 7.6% to $32.2 million for the third quarter of 2021, compared with $34.8 million for the third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales. The Company operated 893 retail stores as of September 30, 2021, compared with 923 retail stores as of September 30, 2020.

Sales for the Company's wholesale division increased by 38.0% to $62.2 million for the third quarter of 2021, compared with $45.1 million for the third quarter of 2020. This increase was primarily attributable to an increase in sales in Mainland China, Europe-Other, Japan and United States partially offset by a decrease in sales in Hong Kong and United Kingdom.

Total gross profit for the third quarter of 2021 decreased by 2% to $23.2 million, compared with $23.7 million for the third quarter of 2020. Total gross margin for the third quarter of 2021 decreased to 24.6% from 29.6% for the third quarter of 2020.

Gross profit for the retail business decreased by 10.3% to $13.0 million for the third quarter of 2021, compared with $14.5 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 40.3% compared to 41.6% for the third quarter of 2020.

Gross profit for the wholesale business increased by 11.2% to $10.2 million for the third quarter of 2021, compared with $9.2 million for the third quarter of 2020. Gross margin for the third quarter of 2021 decreased to 16.4% from 20.4% for the third quarter of 2020.

Selling expenses for the third quarter of 2021 increased by 11.1% to $14.4 million, or 15.3% of total sales, compared with $13.0 million, or 16.3% of total sales for the third quarter of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expenses for the third quarter of 2021 increased by 21.1% to $9.5 million, or 10% of total sales, compared with $7.8 million, or 9.8% of total sales for the third quarter of 2020. The increase was attributable to the increased salaries.

(Loss) Income from operations was ($0.7 million) for the third quarter of 2021, compared to $2.9 million for the third quarter of 2020.

Net loss attributable to the Company for the third quarter of 2021 was ($3.2 million) compared with $2.2 million for the third quarter of 2020. Basic and diluted loss per share were ($0.22) for the third quarter of 2021 compared with $0.15 for the third quarter of 2020.

Balance Sheet 

As of September 30, 2021, Ever-Glory had approximately $48.3 million of cash and cash equivalents, compared with approximately $81.9 million as of December 31, 2020. Ever-Glory had working capital of approximately $44.6 million as of September 30, 2021, and outstanding bank loans of approximately $67.8 million as of September 30, 2021.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 12, 2021(8:00 p.m. Beijing Time on November 12, 2021). Listeners can access the conference call by dialing +1-800-289-0438 or +1-323-794-2423 and using the access code 7678571. 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 12 through 11:59 p.m. Eastern Time on November 19 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 7678571.

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.

 

 

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)
		September 30, 2021				December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	48,336			$	81,865
Restricted cash			43,176				39,858
Trading securities			3,068				1,792
Accounts receivable, net			61,525				53,285
Inventories			67,275				53,893
Advances on inventory purchases			9,864				10,261
Value added tax receivable			2,484				1,244
Other receivables and prepaid expenses			6,638				5,479
Amounts due from related parties			1,994				567
Total Current Assets			243,360				248,244
NON-CURRENT ASSETS
Equity security investment			5,903				3,932
Intangible assets, net			4,686				4,794
Property and equipment, net			32,747				32,164
Operating lease right-of-use assets			49,002				41,690
Deferred tax assets			265				902
Other non-current assets			771				-
Total Non-Current Assets			93,374				83,482
TOTAL ASSETS		$	337,734			$	331,726
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans		$	67,848			$	65,919
Accounts payable			73,120				67,762
Accounts payable and other payables – related parties			1,016				3,764
Other payables and accrued liabilities			13,758				16,073
Value added and other taxes payable			554				909
Income tax payable			1,900				1,062
Current operating lease liabilities			40,590				33,481
Total Current Liabilities			198,786				188,970
NON-CURRENT LIABILITIES
Non-current operating lease liabilities			8,549				8,307
TOTAL LIABILITIES			207,335				197,277
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,812,312 and 14,809,160 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively)			15				15
Additional paid-in capital			3,660				3,650
Retained earnings			103,013				109,171
Statutory reserve			20,376				20,376
Accumulated other comprehensive income			5,610				4,590
Amounts due from related party			(2,275)				(3,353)
Total equity			130,399				134,449
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	337,734			$	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								Nine months ended
		September 30,								September 30,
		2021				2020				2021				2020
NET SALES		$	94,406			$	79,908			$	225,776			$	188,350
COST OF SALES			71,196				56,235				161,738				134,193
GROSS PROFIT			23,210				23,673				64,038				54,157
OPERATING EXPENSES
Selling expenses			14,443				12,996				44,495				39,101
General and administrative expenses			9,467				7,818				24,980				19,574
Total Operating Expenses			23,910				20,814				69,475				58,675
(LOSS) INCOME FROM OPERATIONS			(700)				2,859				(5,437)				(4,518)
OTHER INCOME (EXPENSES)
Interest income			176				313				928				930
Interest expense			(1,218)				(700)				(1,909)				(1,607)
Government subsidy			340				235				842				926
(Loss) Gain from changes in fair values of investments			(123)				(4)				2,151				-
Other income (expenses)			253				343				1,027				1,310
Total Other Income (expenses), Net			(572)				187				3,039				1,559
(LOSS) INCOME BEFORE INCOME TAX     EXPENSE			(1,272)				3,046				(2,398)				(2,959)
Income tax expense			(1,945)				(822)				(3,759)				(1,315)
NET (LOSS) INCOME			(3,217)				2,224				(6,157)				(4,274)
Net loss attributable to the non-controlling interest			-				(8)				-				(4)
NET LOSS ATTRIBUTABLE TO THE COMPANY			(3,217)				2,216				(6,157)				(4,278)
NET (LOSS) INCOME		$	(3,217)			$	2,224			$	(6,157)			$	(4,274)
Foreign currency translation gain (loss)			(1,061)				4,664				1,020				2,964
COMPREHENSIVE INCOME (LOSS)			(4,278)				6,888				(5,137)				(1,310)
Comprehensive loss attributable to the non-controlling     interest			-				51				-				53
COMPREHENSIVE     INCOME (LOSS) ATTRIBUTABLE TO THE     COMPANY		$	(4,278)			$	6,939			$	(5,137)			$	(1,257)
LOSS PER SHARE ATTRIBUTABLE TO THE     COMPANY'S STOCKHOLDERS
Basic and diluted		$	(0.22)			$	0.15			$	(0.42)			$	(0.29)
Weighted average number of shares outstanding Basic     and diluted			14,811,073				14,808,737				14,810,585				14,805,987

 

See the accompanying notes to the condensed consolidated financial statements.

 

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)
										Addition al				Retained Earnings								Accumulated other				Amoun ts due from				Total equity attributable to stockholders
		Common Stock								paid-in								Statutor y				Comprehens ive				related				of the				Total
		Shares				Amou nt				capital				Unrestrict ed				reserve				loss				party				Company				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 compens    ation			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    gain (loss)																							(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 loss															(1,771)																(1,771)				(1,771)
Net cash    received    from related    party under    counter    guarantee    agreement																											386				386				386
Foreign    currency    translation    loss																							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
Stock issued    for    compensatio    n			1,652				-				5				-				-				-				-				5				5
Net (Loss)    income															(3,217)																(3,217)				(3,217)
Net cash    received    from related    party under    counter    guarantee    agreement																											313				313				313
Foreign    currency    translation    gain																							(1,062)								(1,062)				(1,062)
Balance at    September 3    0, 2021			14,812,312			$	15			$	3,660			$	103,013			$	20,376			$	5,610			$	(2,275)			$	130,399			$	130,399

 

										Additio nal				Retained Earnings								Accumulate d other				Amount s due from				Total equity attributabl e to stockholde rs				Non-
		Common Stock								paid-in								Statuto ry				Comprehen sive				related				of the				controll ing				Total
		Shares				Amou nt				capital				Unrestric ted				reserv e				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 compen    sation			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 compensati    on			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

 

 

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)
		Nine Months Ended
		September 30, 2021				September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(6,157)			$	(4,274)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization			4,384				4,114
Loss from sale of property and equipment			590				283
Provision of bad debt allowance			676				683
Write off obsolete inventories			7,595				5,786
Changes in fair value of investment			(2,151)				13
Deferred income tax			644				(165)
Stock-based compensation			10				10
Changes in operating assets and liabilities
Accounts receivable			(8,614)				15,571
Inventories			(20,702)				16,135
Value added tax receivable			(1,235)				(577)
Other receivables and prepaid expenses			(1,096)				50
Advances on inventory purchases			586				2,461
Amounts due from related parties			(1,514)				(848)
Accounts payable			5,930				(7,842)
Accounts payable and other payables- related parties			(3,204)				(1,112)
Other payables and accrued liabilities			(3,332)				(6,093)
Value added and other taxes payable			(360)				467
Income tax payable			831				(64)
Net cash (used in) provided by operating activities			(27,119)				24,598
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(5,109)				(2,769)
Net (purchase) sale of trading securities			(1,077)				(901)
Investment payment			(773)				(2,860)
Net cash (used in) investing activities			(6,959)				(6,530)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans			56,110				66,599
Repayment of bank loans			(54,565)				(49,278)
Net collection (advance) of amounts due from related party (equity)			1,630				1,618
Net cash  used in (provided by) financing activities			3,175				18,939
EFFECT OF EXCHANGE RATE CHANGES ON CASH			693				2,740
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND    RESTRICTED CASH			(30,211)				39,747
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT    BEGINNING OF PERIOD			121,723				50,755
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF    PERIOD		$	91,512			$	90,502
Reconciliation of cash, cash equivalents and restricted cash reported within    their consolidated balance sheets:
Cash and Cash Equivalents			48,336				69,950
Restricted cash			43,176				20,552
		$	91,512			$	90,502
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	1,909			$	1,607
Income taxes		$	2,272			$	1,455

 

 

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SOURCE Ever-Glory International Group, Inc.

FAQ

What were Ever-Glory's sales figures for Q3 2021?

Ever-Glory reported total sales of $94.4 million for Q3 2021, an 18.1% increase from Q3 2020.

How did Ever-Glory perform in the wholesale sector during Q3 2021?

The wholesale business saw a significant 38% increase in sales, reaching $62.2 million.

What was Ever-Glory's net loss for Q3 2021?

The company reported a net loss of $3.2 million for the third quarter of 2021.

What was the gross profit margin for Ever-Glory in Q3 2021?

The gross profit margin for Q3 2021 decreased to 24.6%, down from 29.6% in Q3 2020.

How many retail stores did Ever-Glory operate as of September 30, 2021?

As of September 30, 2021, Ever-Glory operated 893 retail stores.