PR Newswire

Ever-Glory Reports Second Quarter 2022 Financial Results

NEW YORK, Aug. 12, 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 second quarter ended June 30, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, “During the second 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 second 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. “We operated a nationwide network of 816 stores as of June 30, 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 will 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 second 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.”

Second Quarter 2022 Financial Results 

Total sales for the second quarter of 2022 were $63.8 million,  an increase of 5.4% from $60.6 million in the second quarter of 2021. This increase was primarily attributable to a 60.5% ($16.0 million) increase in our wholesale business, offset by a 37.3% ($12.7 million) decrease in our retail business.

Sales for the Company’s branded fashion apparel retail division decreased by 37.3% to $21.4 million for the second quarter of 2022, compared to $34.1 million for the second quarter of 2021. This decrease was primarily due to outbreak of COVID-19. The outbreak in China resulted in the reduction of customer traffic and temporary closures of shopping malls as mandated by the provincial governments in various provinces of China, which had adversely affected our retail business with a decline in sales.

Sales for the Company’s wholesale division increased by 60.5% to $42.4 million for the second quarter of 2022, compared to $26.4 million for the second quarter of 2021. This increase was primarily attributable to an increase in sales in Mainland China, Hong Kong, the United Kingdom, Europe and the United States, partially offset by a decrease in sales in Japan.

Total gross profit for the second quarter of 2022 increased by 11.0% to $20.4 million, compared to $18.4 million for the second quarter of 2021. Total gross margin for the second quarter of 2022 increased to 32.0% from 30.4% for the second quarter of 2021.

Gross profit for the retail business decreased by 16.0% to $12.4 million for the second quarter of 2022, compared to $14.8 million for the second quarter of 2021. Gross margin for the second quarter of 2022 was 58.1% compared to 43.4% for the second quarter of 2021.

Gross profit for the wholesale business increased by 122.1% to $8.0 million for the second quarter of 2022, compared to $3.6 million for the second quarter of 2021. Gross margin for the second quarter of 2022 increased to 18.8% from 13.6% for the second quarter of 2021.

Selling expenses for the second quarter of 2022 decreased by 19.5% to $11.7 million, or 18.3% of total sales, compared to $14.5 million, or 24.0% of total sales for the second quarter of 2021. The decrease was attributable to the decreased average salaries and decreased business trips.

General and administrative expenses for the second quarter of 2022 decreased by 27.9% to $5.5 million, or 8.7% of total sales, compared to $7.7 million, or 12.7% of total sales for the second quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.

Income (loss) from Operations was $3.2 million for the second quarter of 2022, compared to  ($3.8 million)  for the second quarter of 2021.

Net income (loss) for the second quarter of 2022 was $2.4 million compared to ($1.8 million) for the second quarter of 2021. Basic and diluted loss per share were $0.16 for the second quarter of 2022 compared to ($0.12) for the second quarter of 2021.

Balance Sheet 

As of June 30, 2022, Ever-Glory had approximately $32.9 million of cash and cash equivalents, compared to approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $51.3 million as of June 30, 2022, and outstanding bank loans of approximately $65.6 million as of June 30, 2022.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 12, 2022(8:00 p.m. Beijing Time on August 12, 2022). Listeners can access the conference call by dialing +1-877-704-4453 or +1-201-389-0920 and using the access code 13732317. 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 August 12 through 11:59 p.m. Eastern Time on August 19 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 13732317.

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)

June 30,
2022

December 31,
2021

ASSETS

CURRENT ASSETS

      Cash and cash equivalents

$

32,880

$

56,573

      Restricted cash

42,316

40,768

      Trading securities

2,550

3,251

      Accounts receivable, net

60,039

69,859

      Inventories

66,003

63,841

      Advances on inventory purchases

4,683

8,179

      Value added tax receivable

2,072

1,693

      Other receivables and prepaid expenses

6,118

6,345

      Amounts due from related parties

1,387

220

Total Current Assets

218,048

250,729

NON-CURRENT ASSETS

      Equity security investment

5,416

5,682

      Intangible assets, net

4,494

4,794

      Property and equipment, net

33,621

36,340

      Operating lease right-of-use assets

40,131

50,077

      Deferred tax assets

899

      Other non-current assets

2,980

784

Total Non-Current Assets

86,642

98,576

TOTAL ASSETS

$

304,690

$

349,305

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

      Bank loans

$

65,560

$

68,992

      Accounts payable

52,362

67,930

      Accounts payable and other payables – related parties

1,752

1,332

      Other payables and accrued liabilities

13,833

18,531

      Value added and other taxes payable

425

999

      Income tax payable

558

334

      Current operating lease liabilities

32,229

41,633

Total Current Liabilities

166,719

199,751

   Deferred tax liabilities

243

Non-current operating lease liabilities

8,070

8,596

TOTAL LIABILITIES

175,032

208,347

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS’ EQUITY

   Common stock ($0.001 par value, authorized 50,000,000 shares, 14,814,354 and
      14,652,274 issued and outstanding as of June 30, 2022, respectively,
      14,812,312 and 14,664,978 issued and outstanding as of December 31, 2021,
       respectively)

15

15

   Additional paid-in capital

3,665

3,660

   Retained earnings

105,521

108,210

   Statutory reserve

21,245

21,245

   Treasury stock (at cost,162,080 and 147,334 shares at June 30, 2022 and
      December 31, 2021, respectively)

(400)

(363)

   Accumulated other comprehensive (loss) income

(388)

8,191

Total Equity

129,658

140,958

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

304,690

$

349,305

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

Six months ended

June 30,

June 30,

2022

2021

2022

2021

NET SALES

$

63,812

$

60,555

$

128,585

$

131,369

COST OF SALES

43,403

42,163

90,804

90,541

GROSS PROFIT

20,409

18,392

37,781

40,828

OPERATING EXPENSES

      Selling expenses

11,675

14,503

25,361

30,052

      General and administrative expenses

5,521

7,662

12,515

15,513

Total Operating Expenses

17,196

22,165

37,876

45,565

INCOME (LOSS) FROM OPERATIONS

3,213

(3,773)

(95)

(4,737)

OTHER INCOME (EXPENSES)

      Interest income

91

527

277

752

      Interest expense

(321)

(200)

(934)

(692)

      Government subsidy

202

243

205

502

      Gain (loss) from changes in fair values of investments

90

2,041

(672)

2,275

      Other income

51

477

568

774

Total Other Income (Expenses), Net

113

3,088

(556)

3,611

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

3,326

(685)

(651)

(1,126)

Income tax expense

(926)

(1,086)

(2,038)

(1,815)

NET INCOME (LOSS)

$

2,400

$

(1,771)

$

(2,689)

$

(2,941)

      Foreign currency translation (loss) gain

(7,743)

3,434

(8,579)

2,083

COMPREHENSIVE (LOSS) INCOME

$

(5,343)

1,663

$

(11,268)

$

(858)

EARNINGS (LOSS) PER SHARE

      Basic and diluted

$

0.16

$

(0.12)

$

(0.18)

$

(0.20)

      Weighted average number of shares outstanding basic
        and diluted

14,814,354

14,810,660

14,814,072

14,810,330

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)

Common Stock

Additional

Retained Earnings

Accumulated
other

Amounts
due from

Shares

Amount

paid-in
capital

Treasury
stock

Unrestricted

Statutory
reserve

comprehensive
income (loss)

related
party

Total
equity

Balance at January 1, 2022

14,812,312

$

15

$

3,660

$

(363)

$

108,210

$

21,245

$

8,191

$

$

140,958

Stock issued for
   compensation

2,042

5

5

Net  loss

(5,089)

(5,089)

Repurchase of 14,746
    shares of common stock

(37)

(37)

Foreign currency
   translation loss

(836)

(836)

Balance at March 31, 2022

14,814,354

$

15

$

3,665

$

(400)

$

103,121

$

21,245

$

7,355

$

$

135,001

Net  income

2,400

2,400

Foreign currency
   translation loss

(7,743)

(7,743)

Balance at June 30, 2022

14,814,354

$

15

$

3,665

$

(400)

$

105,521

$

21,245

$

(388)

$

129,658

Common Stock

Additional

Retained Earnings

Accumulated
other

Amounts
due from

Shares

Amount

paid-in
capital

Treasury
Stock

Unrestricted

Statutory
reserve

Comprehensive
income

related
party


Total
equity

Balance at January 1,
   2021

14,809,160

$

15

$

3,650

$

$

109,171

$

20,376

$

4,590

$

(3,353)

$

134,449

Stock issued for
   compensation

1,500

5

5

Net  loss

(1,170)

(1,170)

Net cash received from
   related party under
   counter guarantee
   agreement

379

379

   Foreign currency
   translation adjustment

(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

Net loss

(1,771)

(1,771)

Transfer to reserve

Net cash received from
   related party under
   counter guarantee
   agreement

386

386

   Foreign currency
   translation adjustment

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

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)

Six Months Ended

June 30,
2022

June 30,
2021

   CASH FLOWS FROM OPERATING ACTIVITIES

      Net loss

$

(2,689)

(2,941)

Adjustments to reconcile net loss to cash used in operating activities:

      Depreciation and amortization

3,880

3,212

      Loss from sale of property and equipment

96

463

      Provision of bad debt allowance

677

652

      Provision for obsolete inventories

2,611

5,530

      Changes in fair value of trading securities

689

(321)

      Changes in fair value of investments

(17)

(1,954)

      Deferred income tax

1,136

604

      Stock-based compensation

5

5

      Changes in operating assets and liabilities

Accounts receivable

6,649

13,433

Inventories

(7,564)

(11,346)

Value added tax receivable

(479)

(562)

Other receivables and prepaid expenses

(122)

(632)

Advances on inventory purchases

3,197

2,928

Amounts due from related parties

(1,176)

546

Accounts payable

(11,734)

(17,753)

Accounts payable and other payables- related parties

494

(1,763)

Other payables and accrued liabilities

(5,066)

1,201

Value added and other taxes payable

(543)

(1,209)

Income tax payable

250

(581)

Net cash used in operating activities

(9,706)

(10,488)

CASH FLOWS FROM INVESTING ACTIVITIES

      Purchases of property and equipment and intangible asset

(2,940)

(4,452)

      Net proceeds from sale (purchase) of trading securities

11

(1,468)

      Investment payment

(2,313)

Net cash used in investing activities

(5,242)

(5,920)

CASH FLOWS FROM FINANCING ACTIVITIES

      Proceeds from bank loans

24,672

12,841

      Repayment of bank loans

(24,672)

(13,905)

      Repurchase of common stock

(37)

      Net collection of amounts due from related party (equity)

798

Net cash used in provided by financing activities

(37)

(266)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(7,160)

1,639

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(22,145)

(15,035)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

97,341

121,723

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

75,196

$

106,688

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

Cash and Cash Equivalents

32,880

63,963

Restricted cash

42,316

42,725

$

75,196

$

106,688

Cash paid during the period for:

Interest

$

934

$

692

Income taxes

$

2,038

$

1,815

Cision View original content:https://www.prnewswire.com/news-releases/ever-glory-reports-second-quarter-2022-financial-results-301604907.html

Source: Ever-Glory International Group, Inc.