Ever-Glory Reports First Quarter 2022 Financial Results

NEW YORK, May 13, 2022 /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 first quarter ended March 31, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first 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 first quarter of 2022, 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 50-100 stores during 2022, we operated a nationwide network of 848 stores as of March 31, 2022."

"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 first 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."

First Quarter 2022 Financial Results 

Total sales for the first quarter of 2022 were $64.8 million,  a decrease of 8.5% from $70.8 million in the first quarter of 2021. This decrease was primarily attributable to a 28.7% increase in our wholesale business and a 26.7% decrease in our retail business.

Sales for the Company’s branded fashion apparel retail division decreased by 26.7% to $34.9 million for the first quarter of 2022, compared with $47.6 million for the first quarter of 2021. This decrease was primarily due to the decrease in same-store sales. The Company had 848 retail stores as of March 31, 2022, compared with 921 retail stores as of March 31, 2021.

Sales for the Company’s wholesale division increased by 28.7% to $29.9 million for the first quarter of 2022, compared with $23.2 million for the first quarter of 2021. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, Japan and the United States, and other European markets partially offset by decreased sales in the United Kingdom.

Total gross profit for the first quarter of 2021 decreased by 22.6% to $17.4 million, compared with $22.4 million for the first quarter of 2021. Total gross margin for the first quarter of 2022 decreased to 26.8% from 31.7% for the first quarter of 2021.

Gross profit for the retail business decreased by 34.8% to $11.7 million for the first quarter of 2022, compared with $17.9 million for the first quarter of 2021. Gross margin for the first quarter of 2022 was 33.4% compared to 37.6% for the first quarter of 2021.

Gross profit for the wholesale business increased by 25.2% to $5.7 million for the first quarter of 2022, compared with $4.6 million for the first quarter of 2021. Gross margin for the first quarter of 2022 decreased to 19.1% from 19.6% for the first quarter of 2021.

Selling expenses for the first quarter of 2022 decreased by 12.0% to $13.7 million, or 21.1% of total sales, compared with $15.5 million, or 22.0% of total sales for the first quarter of 2021. The decrease was attributable to the decreased salaries.

General and administrative expenses for the first quarter of 2022 decreased by 10.9% to $7.0 million, or 10.8% of total sales, compared with $7.9 million, or 11.1% of total sales for the first quarter of 2021. The decrease was attributable to the decreased salaries.

Loss from operations was $3.3 million for the first quarter of 2022,compared to $1.0 million for the first quarter of 2021.

Net loss attributable to the Company for the first quarter of 2022 was $5.1 million compared with $1.2 million for first quarter of 2021. Basic and diluted loss  per share were $0.34 for the first quarter of 2022 compared with $0.08 for the first quarter of 2021.

Balance Sheet

As of March 31, 2022, Ever-Glory had approximately $41.7 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $42.3 million as of March 31, 2022, and outstanding bank loans of approximately $69.3 million as of March 31, 2022.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 13, 2022(8:00 p.m. Beijing Time on May 13, 2022). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 1720370. 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 May 13 through 11:59 p.m. Eastern Time on May 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 1720370.

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", "idole" and "Jizhu".  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)

March 31,
2022

December 31,
2021

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

41,717

$

56,573

Restricted cash

42,525

40,768

Trading securities

2,965

3,251

Accounts receivable, net

55,025

69,859

Inventories

65,013

63,841

Advances on inventory purchases

5,065

8,179

Value added tax receivable

1,296

1,693

Other receivables and prepaid expenses

6,732

6,345

Amounts due from related parties

1,308

220

Total Current Assets

221,646

250,729

NON-CURRENT ASSETS

Equity security investment

5,229

5,682

Intangible assets, net

4,770

4,794

Property and equipment, net

36,838

36,340

Operating lease right-of-use assets

52,751

50,077

Deferred tax assets

202

899

Other non-current assets

1,575

784

Total Non-Current Assets

101,365

98,576

TOTAL ASSETS

$

323,011

$

349,305

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Bank loans

$

69,300

$

68,992

Accounts payable

50,533

67,930

Accounts payable and other payables – related parties

1,474

1,332

Other payables and accrued liabilities

13,288

18,531

Value added and other taxes payable

999

Income tax payable

500

334

Current operating lease liabilities

44,287

41,633

Total Current Liabilities

179,382

199,751

NON-CURRENT LIABILITIES

Deferred tax liabilities

Non-current operating lease liabilities

8,628

8,596

TOTAL LIABILITIES

188,010

208,347

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS’ EQUITY

Common stock ($0.001 par value, authorized 50,000,000 shares, 14,814,354 and
    14,812,312 shares issued and outstanding as of March 31, 2022 and December
     31, 2021, respectively)

15

15

Additional paid-in capital

3,665

3,660

Retained earnings

103,121

108,210

Statutory reserve

21,245

21,245

Treasury stock (at cost,162,080 and 147,334 shares at March 31,2022 and
    December 31, 2021, respectively)

(400)

(363)

Accumulated other comprehensive income

7,355

8,191

Total equity

135,001

140,958

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

323,011

$

349,305

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended

March 31,
2022

March 31,
2021

NET SALES

$

64,773

$

70,814

COST OF SALES

47,401

48,379

GROSS PROFIT

17,372

22,435

OPERATING EXPENSES

Selling expenses

13,686

15,548

General and administrative expenses

6,994

7,851

Total operating expenses

20,680

23,399

LOSS FROM OPERATIONS

(3,308)

(964)

OTHER (EXPENSE) INCOME

Interest income

186

224

Interest expense

(613)

(492)

Government subsidy

3

259

(Loss) gain from changes in fair values of investments

(762)

339

Other income

517

193

Total Other (Expense) Income, Net

(669)

523

LOSS BEFORE INCOME TAX EXPENSE

(3,977)

(441)

INCOME TAX EXPENSE

(1,112)

(729)

NET LOSS

$

(5,089)

$

(1,170)

Foreign currency translation loss

(836)

(1,352)

COMPREHENSIVE LOSS

$

(5,925)

$

(2,522)

LOSS PER SHARE

Basic and diluted

$

(0.34)

$

(0.08)

Weighted average number of shares outstanding Basic and diluted

14,813,787

14,810,001

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED March 31, 2022 AND 2021 (Unaudited)

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

Total
equity

Common
Stock

Additional

Retained
Earnings

Accumulated
other

Amounts
due from

attributable to
stockholders

Non-

Shares

Amount

paid-in
capital

Treasury
Stock

Unrestricted

Statutory
reserve

Comprehensive
income

related
party

of the
Company

controlling
Interest

Total
equity

Balance at
   January 1, 2022

14,812,312

$

15

$

3,660

$

(363)

$

108,210

$

21,245

$

8,191

$

$

140,958

$

$

140,958

Stock issued
   for compensation

2,042

5

5

5

Net  loss

(5,089)

(5,089)

(5,089)

Repurchase  
   of 14,746 shares
   of common stock

(37)

(37)

(37)

Foreign currency
   translation loss

(836)

(836)

(836)

Balance at March
   31, 2022

14,814,354

$

15

$

3,665

$

(400)

$

103,121

$

21,245

$

7,355

$

$

135,001

$

$

135,001

Total
equity

Common
Stock

Additional

Retained
Earnings

Accumulated
other

Amounts
due from

attributable to
stockholders

Non-

Shares

Amount

paid-in
capital

Treasury
Stock

Unrestricted

Statutory
reserve

Comprehensive
income

related
party

of the
Company

controlling
Interest

Total
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 compensation

1,500

5

5

5

Net income (loss)

(1,170)

(1,170)

(1,170)

Transfer to reserve

Payments received
   from related party
   under counter
   guarantee
   agreement

379

379

379

Repurchase  of
   147,334 shares
    of common stock

Foreign currency
   translation gain

(1,352)

(1,352)

(1,352)

Balance at
   December 31,
   2021

14,810,660

$

15

$

3,655

$

$

108,001

$

20,376

$

3,238

$

(2,974)

$

132,311

$

$

132,311

 

 

 

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)

Three Months Ended

March 31,
2022

March 31,
2021

CASH FLOWS FROM OPERATING ACTIVITIES

Net less

$

(5,089)

(1,170)

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

Depreciation and amortization

2,147

1,377

Loss from sale of property and equipment

52

102

Loss on deconsolidation of a subsidiary

Provision of (recovering from) bad debt allowance

298

(196)

Provision for obsolete inventories

3,759

3,583

Changes in fair value of trading securities

(283)

(262)

Changes in fair value of investment

479

28

Deferred income tax

701

17

Stock-based compensation

5

5

Changes in operating assets and liabilities

Accounts receivable

14,815

6,509

Inventories

(4,680)

6,805

Value added tax receivable

405

52

Other receivables and prepaid expenses

(278)

(367)

Advances on inventory purchases

3,150

2,544

Amounts due from related parties

(1,089)

(71)

Accounts payable

(16,838)

(14,690)

Accounts payable and other payables- related parties

226

(769)

Other payables and accrued liabilities

(6,252)

(3,221)

Value added and other taxes payable

(1,067)

(220)

Income tax payable

165

(358)

Net cash (used in) operating activities

(9,374)

(302)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(2,507)

(1,378)

Net purchase (proceeds from) of trading securities

569

(983)

Investment payment

(788)

Net cash used in investing activities

(2,726)

(2,361)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

12,600

12,336

Repayment of bank loans

(12,600)

(6,168)

Repurchase of common stock

(37)

Net collection of amounts due from related party (equity)

148

Net cash (used in) provided by financing activities

(37)

6,316

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(962)

(1,660)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND
   RESTRICTED CASH

(13,099)

1,993

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING
   OF PERIOD

97,341

121,723

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF
   PERIOD

$

84,242

$

123,716

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

Cash and Cash Equivalents

41,717

78,056

Restricted cash

42,525

45,660

$

84,242

$

123,716

Cash paid during the period for:

Interest

$

613

$

492

Income taxes

$

1,112

$

729

 

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