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Ever-Glory Reports Second Quarter 2022 Financial Results

2022-08-12 17:00

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.

Related stocks: NASDAQ:EVK

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