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, | December 31, | |||||||
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 | 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 | (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 (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 | 14,814,354 | 14,810,660 | 14,814,072 | 14,810,330 | ||||||||||||
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES (In thousands of U.S. Dollars, except share and per share data or otherwise stated) | |||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Retained Earnings | Accumulated | Amounts | |||||||||||||||||||||||||||||||||
Shares | Amount | paid-in | Treasury | Unrestricted | Statutory | comprehensive | related | Total | |||||||||||||||||||||||||||||
Balance at January 1, 2022 | 14,812,312 | $ | 15 | $ | 3,660 | $ | (363) | $ | 108,210 | $ | 21,245 | $ | 8,191 | $ | - | $ | 140,958 | ||||||||||||||||||||
Stock issued for | 2,042 | - | 5 | - | - | - | - | - | 5 | ||||||||||||||||||||||||||||
Net loss | - | - | - | - | (5,089) | - | - | - | (5,089) | ||||||||||||||||||||||||||||
Repurchase of 14,746 | - | - | - | (37) | - | - | - | (37) | |||||||||||||||||||||||||||||
Foreign currency | (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 | (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 | Amounts | |||||||||||||||||||||||||||||||||
Shares | Amount | paid-in | Treasury | Unrestricted | Statutory | Comprehensive | related |
| |||||||||||||||||||||||||||||
Balance at January 1, | 14,809,160 | $ | 15 | $ | 3,650 | $ | - | $ | 109,171 | $ | 20,376 | $ | 4,590 | $ | (3,353) | $ | 134,449 | ||||||||||||||||||||
Stock issued for | 1,500 | - | 5 | - | - | - | - | - | 5 | ||||||||||||||||||||||||||||
Net loss | - | - | - | - | (1,170) | - | - | - | (1,170) | ||||||||||||||||||||||||||||
Net cash received from | - | - | - | - | - | - | - | 379 | 379 | ||||||||||||||||||||||||||||
Foreign currency | (1,352) | (1,352) | |||||||||||||||||||||||||||||||||||
Balance at March 31, | 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 | - | - | - | - | - | - | - | 386 | 386 | ||||||||||||||||||||||||||||
Foreign currency | 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) | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
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 | ||||||||
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 | ||||
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SOURCE Ever-Glory International Group, Inc.