Ever-Glory Reports Fourth Quarter 2018 Financial Results

Date : 03/29/2019 @ 9:30AM
Source : PR Newswire (US)
Stock : Ever Glory International Group Inc (EVK)
Quote : 1.5002  0.0 (0.00%) @ 12:00AM

Ever-Glory Reports Fourth Quarter 2018 Financial Results

Ever Glory (NASDAQ:EVK)
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NANJING, China, March 29, 2019 /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 fourth quarter ended December 31, 2018.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the fourth 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. Notably, we achieved year-over-year improvement in gross margin of 15.7% for our wholesale businesses, as well as 6.0% for our retail business."

"During the fourth quarter of 2018, we remained our focus on driving retail business through store network optimization strategy, as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 250 stores during 2018, we operated a nationwide network of 1,381 stores as of December 31, 2018."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in the light of weak micro environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in 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 solid fourth quarter results, coupled with our ability to increase operating leverage, resulted in expanded wholesale operating income during this quarter. 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."

Full Year 2018 Financial Results 

Total sales for the full year of 2018 were $448.5 million, a 7.9% increase from $415.6 million in the full year of 2017. This increase was primarily due to a 14.9% increase in wholesale sales and a 2.0% increase in retail sales.

Wholesale sales from the Company's wholesale business increased by 14.9% to $218.6 million for the full year of 2018, compared with $190.2 million for the full year of 2017. This increase was primarily due to increased sales in Japan, Mainland China, United Kingdom and United States partially offset by decreased sales in Hong Kong China, Germany and Europe-Other.

Retail sales from the Company's branded fashion apparel retail division increased by 2.0% to $229.9 million for the full year of 2018, compared with $225.3 million for the full year of 2017. This increase was primarily due to an increase in same store sales.

Total gross profit for the full year of 2018 increased by 8.6% to $147.4 million, compared with $135.7 million for the full year of 2017. Total gross margin for the full year of 2018 increased to 32.9% from 32.7% for the full year of 2017. 

Gross profit for wholesale business increased by 15.7% to $41.8 million for the full year of 2018, compared with $36.1 million for the full year of 2017. Gross margin for the full year of 2018 increased to 19.1% compared with 19.0% for the full year of 2017.

Gross profit for retail business increased by 6.0% to $105.6 million for the full year of 2018, compared with $99.6 million for the full year of 2017. Gross margin for the full year of 2018 increased to 45.9% from 44.2% for the full year of 2017.

Selling expenses for the full year of 2018 increased by 6.4% to $91.4 million, or 20.4% of total sales, compared with $85.9 million, or 20.7% of total sales for the full year of 2017. The increase was attributable to higher retail sales.

General and administrative expenses for the full year of 2018 increased by 13.6% to $39.8 million, or 8.9% of total sales, compared with $35.1 million, or 8.4% of total sales for the full year of 2017. The increase was mainly due to increased average salaries.

Income from operations for the full year of 2018 increased by 1.8% to $15.0 million compared with $14.7 million for the full year of 2017.

Net income attributable to the Company for the full year of 2018 decreased by 3.6% to $12.0 million compared with $12.5 million for the full year of 2017. Basic and diluted earnings per share were $0.81 and $0.84 for the full year of 2018 and 2017, respectively.

Balance Sheet

As of December 31, 2018, Ever-Glory had approximately $47.0 million of cash and cash equivalents, compared with approximately $62.9 million as of December 31, 2017. Ever-Glory had working capital of approximately $80.1 million as of December 31, 2018, and outstanding bank loans of approximately $29.5 million as of December 31, 2018.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 29, 2019 (8:00 p.m. Beijing Time on March 29, 2019). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 1693644. 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 conference call will be available from 10:00 a.m. Eastern Time on March 29 through 11:59 p.m. Eastern Time on April 5, by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 1693644.

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

CONSOLIDATED BALANCE SHEETS

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

AS OF DECEMBER 31, 2018 AND 2017




2018



2017


ASSETS







CURRENT ASSETS







Cash and cash equivalents


$

47,012



$

62,876


Accounts receivable, net



86,527




81,859


Inventories



65,929




56,182


Value added tax receivable



2,580




3,757


Other receivables and prepaid expenses



10,204




5,139


Advances on inventory purchases



6,420




3,028


Amounts due from related parties



192




265


Total Current Assets



218,864




213,106











INTANGIBLE ASSETS



4,962




5,995


PROPERTY AND EQUIPMENT, NET



28,445




25,891


TOTAL ASSETS


$

252,271



$

244,992











LIABILITIES AND STOCKHOLDERS' EQUITY


















CURRENT LIABILITIES









Bank loans


$

29,497



$

37,730


Accounts payable



78,412




73,788


Accounts payable and other payables - related parties



4,756




4,675


Other payables and accrued liabilities



21,958




16,454


Value added and other taxes payable



2,569




6,052


Income tax payable



1,569




1,712


Total Current Liabilities



138,761




140,411











NONCURRENT LIABILITIES









Deferred tax liabilities



354




1,883


TOTAL LIABILITIES



139,115




142,294











Note 13 COMMITMENTS AND CONTINGENCIES


















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, 14,798,198 and
    14,795,992 shares issued and outstanding as of December 31, 2018 and
     December 31, 2017, respectively)



15




15


Additional paid-in capital



3,627




3,620


Retained earnings



105,914




95,195


Statutory reserve



19,083




17,794


Accumulated other comprehensive income



(3,578)




2,585


Amounts due from related party



(10,354)




(15,449)


Total equity attributable to stockholders of the Company



114,707




103,760


Noncontrolling interest



(1,551)




(1,062)


Total Equity



113,156




102,698


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

252,271



$

244,992











See the accompanying notes to the consolidated financial statements.

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017




2018



2017









SALES


$

448,508



$

415,581











COST OF SALES



301,153




279,839











GROSS PROFIT



147,355




135,742











OPERATING EXPENSES









Selling expenses



91,439




85,940


General and administrative expenses



39,811




35,053


Marketing related intangible asset impairment



1,086




-


Total operating expenses



132,336




120,993











INCOME FROM OPERATIONS



15,019




14,749











OTHER INCOME (EXPENSE)









Interest income



1,375




1,260


Interest expense



(1,989)




(1,648)


Other income



1,977




3,509


Total other income



1,363




3,121











INCOME BEFORE INCOME TAX EXPENSE



16,382




17,870











INCOME TAX EXPENSE



(4,942)




(5,805)











NET INCOME



11,440




12,065











Net loss attributable to the non-controlling interest



568




394


NET INCOME ATTRIBUTABLE TO THE COMPANY


$

12,008



$

12,459











NET INCOME


$

11,440



$

12,065


Foreign currency translation gain



(6,163)




5,882


COMPREHENSIVE INCOME


$

5,277



$

17,947











Comprehensive loss attributable to the noncontrolling interest



79




450











COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY


$

5,198



$

18,397


EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S
STOCKHOLDERS:









Basic and diluted


$

0.81



$

0.84


Weighted average number of shares outstanding Basic and diluted



14,796,947




14,795,992











See the accompanying notes to the consolidated financial statements.

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017










2018



2017


CASH FLOWS FROM OPERATING ACTIVITIES







Net income


$

11,440



$

12,065


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









Intangible asset impairment loss



1,086




-


Depreciation and amortization



6,664




7,015


Loss from sale of property and equipment



108




24


Provision of bad debt allowance



660




1,223


Provision for obsolete inventories



3,324




4,624


Deferred income tax



(1,370)




(1,530)


Stock-based compensation



7




18


Changes in operating assets and liabilities









Accounts receivable



(9,893)




(11,204)


Inventories



(16,462)




(7,919)


Value added tax receivable



1,016




(600)


Other receivables and prepaid expenses



(5,659)




(1,136)


Advances on inventory purchases



(3,698)




307


Amounts due from related parties



(2,761)




(592)


Accounts payable



8,485




11,489


Accounts payable and other payables- related parties



6,275




351


Other payables and accrued liabilities



5,604




460


Value added and other taxes payable



(2,210)




567


Income tax payable



(54)




(238)


Net cash provided by operating activities



2,562




14,924











CASH FLOWS FROM INVESTING ACTIVITIES









Purchase of property and equipment



(12,182)




(8,564)


Net cash used in investing activities



(12,182)




(8,564)











CASH FLOWS FROM FINANCING ACTIVITIES









Proceeds from bank loans



64,006




62,693


Repayment of bank loans



(70,513)




(56,296)


Repayment of loans from related party



6,657




9,280


Advances to related party



(8,428)




(7,119)


Interest income received from related party



2,997




-


Net cash provided by (used in) financing activities



(5,281)




8,558











EFFECT OF EXCHANGE RATE CHANGES ON CASH



(963)




2,670











NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



(15,864)




17,588











CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD



62,876




45,288











CASH AND CASH EQUIVALENTS AT END OF PERIOD


$

47,012



$

62,876











SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


















Cash paid during the period for:









Accrued interest income on amounts due from related party under counter-guarantee
    agreement (Note 12)


$

738



$

818


Interest


$

1,755



$

1,648


Income taxes


$

6,350



$

6,247


 

Cision View original content:http://www.prnewswire.com/news-releases/ever-glory-reports-fourth-quarter-2018-financial-results-300820903.html

SOURCE Ever-Glory International Group, Inc.

Copyright 2019 PR Newswire

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