Ever-Glory Reports Third Quarter 2022 Financial Results
NANJING, China, Nov. 14, 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 third quarter ended September 30, 2022.
Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the third 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 third 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 29 stores during 2022, we operated a nationwide network of 774 stores as of September 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'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," Mr. Kang concluded.
Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The third 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."
Third Quarter 2022 Financial Results
Total sales for the third quarter of 2022 were $106.4 million, an increase of 12.7% from $94.4 million in the third quarter of 2021. This increase was primarily driven by a 33.0% increase in our wholesale business, partially offset by a 26.4% decrease in retail business.
Sales for the Company's wholesale division increased by 33.0% to $82.7 million for the third quarter of 2022, compared with $62.2 million for the third quarter of 2021. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, the United Kingdom, and other European markets partially offset for decreased sales in Japan and the United States.
Sales for the Company's branded fashion apparel retail division decreased by 26.4% to $23.7 million for the third quarter of 2022, compared with $32.2 million for the third quarter of 2021. This decrease was primarily due to a decrease in same-store sales. The Company operated 774 retail stores as of September 30, 2022, compared with 893 retail stores as of September 30, 2021,.
Total gross profit for the third quarter of 2022 decreased by 30.9% to $16.0 million, compared with $23.2 million for the third quarter of 2021. Total gross margin for the third quarter of 2022 decreased to 15.1% from 24.6% for the third quarter of 2021.
Gross profit for the wholesale business increased by 2.4% to $10.5 million for the third quarter of 2022, compared with $10.2 million for the third quarter of 2021. Gross margin for the third quarter of 2022 decreased to 12.6% from 16.4% for the third quarter of 2021.
Gross profit for the retail business decreased by 57.0% to $6.0 million for the third quarter of 2022, compared with $13.0 million for the third quarter of 2021. Gross margin for the third quarter of 2022 was 23.6% compared to 40.3% for the third quarter of 2021.
Selling expenses for the third quarter of 2022 decreased by 11.4% to $12.8 million, or 12.0% of total sales, compared with $14.4 million, or 15.3% of total sales for the third quarter of 2020. The decrease was attributable to the decreased average salaries and decreased business trips.
General and administrative expenses for the third quarter of 2022 decreased by 1.7% to $9.3 million, or 8.7% of total sales, compared with $9.5 million, or 10.0% of total sales for the third quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.
Loss from operations was $6.1 million for the third quarter of 2022, compared to $0.7 million for the third quarter of 2021.
Balance Sheet
As of September 30, 2022, Ever-Glory had approximately $32.2 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $41.6 million as of September 30, 2022, and outstanding bank loans of approximately $63.4 million as of September 30, 2022.
Conference Call
The Company will hold a conference call at 6:00 a.m. Eastern Time on November 14, 2022(7:00 p.m. Beijing Time on November 14, 2022). Listeners can access the conference call by dialing +1-877-704-4453 or +1-201-389-0920 and using the access code 13734457. 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 9:00 a.m. Eastern Time on November 14 through 11:59 p.m. Eastern Time on November 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 13734457.
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" 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 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||
(In thousands of U.S. Dollars, except share and per share data or otherwise stated) | ||||||||
September 30, | December 31, | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 32,177 | $ | 56,573 | ||||
Restricted cash | 39,706 | 40,768 | ||||||
Trading securities | 2,189 | 3,251 | ||||||
Accounts receivable, net | 79,875 | 69,859 | ||||||
Inventories | 49,038 | 63,841 | ||||||
Advances on inventory purchases | 4,260 | 8,179 | ||||||
Value added tax receivable | 2,144 | 1,693 | ||||||
Other receivables and prepaid expenses | 6,049 | 6,345 | ||||||
Amounts due from related parties | - | 220 | ||||||
Total Current Assets | 215,438 | 250,729 | ||||||
NON-CURRENT ASSETS | ||||||||
Equity security investment | 4,566 | 5,682 | ||||||
Intangible assets, net | 4,211 | 4,794 | ||||||
Property and equipment, net | 31,148 | 36,340 | ||||||
Operating lease right-of-use assets | 38,905 | 50,077 | ||||||
Deferred tax assets | 768 | 899 | ||||||
Other non-current assets | 3,520 | 784 | ||||||
Total Non-Current Assets | 83,118 | 98,576 | ||||||
TOTAL ASSETS | $ | 298,556 | $ | 349,305 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Bank loans | $ | 63,360 | $ | 68,992 | ||||
Accounts payable | 59,894 | 67,930 | ||||||
Accounts payable and other payables – related parties | 2,907 | 1,332 | ||||||
Other payables and accrued liabilities | 14,166 | 18,531 | ||||||
Value added and other taxes payable | 842 | 999 | ||||||
Income tax payable | 1,107 | 334 | ||||||
Current operating lease liabilities | 31,538 | 41,633 | ||||||
Total Current Liabilities | 173,814 | 199,751 | ||||||
Non-current operating lease liabilities | 7,538 | 8,596 | ||||||
TOTAL LIABILITIES | 181,352 | 208,347 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 9) | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,818,006 | 15 | 15 | ||||||
Additional paid-in capital | 3,670 | 3,660 | ||||||
Retained earnings | 99,398 | 108,210 | ||||||
Statutory reserve | 21,245 | 21,245 | ||||||
Treasury stock (at cost,162,080 and 147,334 shares at September 30, 2022 | (400) | (363) | ||||||
Accumulated other comprehensive (loss) income | (6,724) | 8,191 | ||||||
Total Equity | 117,204 | 140,958 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 298,556 | $ | 349,305 | ||||
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands of U.S. Dollars, except share and per share data or otherwise stated) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
NET SALES | $ | 106,437 | $ | 94,406 | $ | 235,022 | $ | 225,776 | ||||||||
COST OF SALES | 90,390 | 71,196 | 181,194 | 161,738 | ||||||||||||
GROSS PROFIT | 16,047 | 23,210 | 53,828 | 64,038 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling expenses | 12,792 | 14,443 | 38,153 | 44,495 | ||||||||||||
General and administrative expenses | 9,306 | 9,467 | 21,821 | 24,980 | ||||||||||||
Total Operating Expenses | 22,098 | 23,910 | 59,974 | 69,475 | ||||||||||||
LOSS FROM OPERATIONS | (6,051) | (700) | (6,146) | (5,437) | ||||||||||||
OTHER (EXPENSES) INCOME | ||||||||||||||||
Interest income | 22 | 176 | 299 | 928 | ||||||||||||
Interest expense | (524) | (1,218) | (1,458) | (1,909) | ||||||||||||
Government subsidy | 192 | 340 | 397 | 842 | ||||||||||||
(Loss) gain from changes in fair values of investments | (915) | (123) | (1,587) | 2,151 | ||||||||||||
Other income | 317 | 253 | 885 | 1,027 | ||||||||||||
Total Other (Expenses) Income, Net | (908) | (572) | (1,464) | 3,039 | ||||||||||||
LOSS BEFORE INCOME TAX EXPENSE | (6,959) | (1,272) | (7,610) | (2,398) | ||||||||||||
Income tax benefit (expense) | 835 | (1,945) | (1,203) | (3,759) | ||||||||||||
NET LOSS | $ | (6,124) | $ | (3,217) | $ | (8,813) | $ | (6,157) | ||||||||
Foreign currency translation (loss) gain | (6,336) | (1,061) | (14,915) | 1,020 | ||||||||||||
COMPREHENSIVE LOSS | $ | (12,460) | (4,278) | $ | (23,728) | $ | (5,137) | |||||||||
LOSS PER SHARE | ||||||||||||||||
Basic and diluted | $ | (0.41) | $ | (0.22) | $ | (0.59) | $ | (0.42) | ||||||||
Weighted average number of shares outstanding, | 14,817,053 | 14,811,073 | 14,815,077 | 14,810,585 | ||||||||||||
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 | Amounts | ||||||||||||||||||||||
other | due from | |||||||||||||||||||||||||
Shares | Amount | paid-in | Treasury | Unrestricted | Statutory | comprehensive | related | Total equity | ||||||||||||||||||
capital | stock | reserve | income (loss) | party | ||||||||||||||||||||||
Balance at | 14,812,312 | $ | 15 | $ | 3,660 | $ | (363) | $ | 108,210 | $ | 21,245 | $ | 8,191 | $ | - | $ | 140,958 | |||||||||
Stock issued | 2,042 | - | 5 | - | - | - | - | - | 5 | |||||||||||||||||
Net loss | - | - | - | - | (5,089) | - | - | - | (5,089) | |||||||||||||||||
Repurchase of | - | - | - | (37) | - | - | - | (37) | ||||||||||||||||||
Foreign currency | (836) | (836) | ||||||||||||||||||||||||
Balance at | 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 | 14,814,354 | $ | 15 | $ | 3,665 | $ | (400) | $ | 105,521 | $ | 21,245 | $ | (388) | - | $ | 129,658 | ||||||||||
Stock issued | 3,652 | - | 5 | - | - | - | - | - | 5 | |||||||||||||||||
Net loss | - | - | - | - | (6,123) | - | - | - | (6,123) | |||||||||||||||||
Foreign currency | (6,336) | (6,336) | ||||||||||||||||||||||||
Balance at | 14,818,006 | $ | 15 | $ | 3,670 | $ | (400) | $ | 99,398 | $ | 21,245 | $ | (6,724) | $ | - | $ | 117,204 | |||||||||
Common Stock | Additional | Retained Earnings | Accumulated | Amounts | ||||||||||||||||||||||
other | due from | |||||||||||||||||||||||||
Shares | Amount | paid-in | Treasury | Unrestricted | Statutory | comprehensive | related | Total equity | ||||||||||||||||||
capital | stock | reserve | income | party | ||||||||||||||||||||||
Balance at | 14,809,160 | $ | 15 | $ | 3,650 | $ | - | $ | 109,171 | $ | 20,376 | $ | 4,590 | $ | (3,353) | $ | 134,449 | |||||||||
Stock issued | 1,500 | - | 5 | - | - | - | - | - | 5 | |||||||||||||||||
Net loss | - | - | - | - | (1,170) | - | - | - | (1,170) | |||||||||||||||||
Net cash received | - | - | - | - | - | - | - | 379 | 379 | |||||||||||||||||
Foreign currency | (1,352) | (1,352) | ||||||||||||||||||||||||
Balance at | 14,810,660 | $ | 15 | $ | 3,655 | $ | - | $ | 108,001 | $ | 20,376 | $ | 3,238 | $ | (2,974) | $ | 132,311 | |||||||||
Net loss | - | - | - | - | (1,771) | - | - | - | (1,771) | |||||||||||||||||
Transfer to | - | - | - | - | - | - | - | - | - | |||||||||||||||||
Net cash | - | - | - | - | - | - | - | 386 | 386 | |||||||||||||||||
Foreign currency | 3,434 | 3,434 | ||||||||||||||||||||||||
Balance at | 14,810,660 | $ | 15 | $ | 3,655 | $ | - | $ | 106,230 | $ | 20,376 | $ | 6,672 | $ | (2,588) | $ | 134,360 | |||||||||
Stock issued for | 1,652 | - | 5 | - | - | - | - | - | 5 | |||||||||||||||||
Net loss | - | - | - | - | (3,217) | - | - | - | (3,217) | |||||||||||||||||
Net cash received | - | - | - | - | - | - | - | 313 | 313 | |||||||||||||||||
Foreign currency | (1,062) | (1,062) | ||||||||||||||||||||||||
Balance at | 14,812,312 | $ | 15 | $ | 3,660 | $ | - | $ | 103,013 | $ | 20,376 | $ | 5,610 | $ | (2,275) | $ | 130,399 | |||||||||
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) | ||||||||
Nine Months Ended | ||||||||
September 30, | September 30, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (8,813) | (6,157) | |||||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 5,256 | 4,384 | ||||||
Loss from sale of property and equipment | 141 | 590 | ||||||
Provision of bad debt allowance | 3,943 | 676 | ||||||
Provision for obsolete inventories | 5,296 | 842 | ||||||
Changes in fair value of trading securities | 1,010 | (200) | ||||||
Changes in fair value of investments | 577 | (1,951) | ||||||
Deferred income tax | 42 | 644 | ||||||
Stock-based compensation | 10 | 10 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (20,334) | (8,614) | ||||||
Inventories | 4,353 | (13,949) | ||||||
Value added tax receivable | (671) | (1,235) | ||||||
Other receivables and prepaid expenses | (434) | (1,096) | ||||||
Advances on inventory purchases | 3,317 | 586 | ||||||
Amounts due from related parties | 211 | (1,514) | ||||||
Accounts payable | 229 | 5,930 | ||||||
Accounts payable and other payables- related parties | 1,779 | (3,204) | ||||||
Other payables and accrued liabilities | (5,124) | (3,332) | ||||||
Value added and other taxes payable | 891 | (360) | ||||||
Income tax payable | (81) | 831 | ||||||
Net cash used in operating activities | (8,402) | (27,119) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of property and equipment and intangible asset | (3,645) | (5,109) | ||||||
Net proceeds from sale (purchase) of trading securities | 52 | (1,077) | ||||||
Investment payment of other non-current assets | (3,028) | (773) | ||||||
Net cash used in investing activities | (6,621) | (6,959) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from bank loans | 56,018 | 56,110 | ||||||
Repayment of bank loans | (54,504) | (54,565) | ||||||
Repurchase of common stock | (37) | - | ||||||
Net collection of amounts due from related party (equity) | - | 1,630 | ||||||
Net cash provided by financing activities | 1,477 | 3,175 | ||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (11,912) | 693 | ||||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (25,458) | (30,211) | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 97,341 | 121,723 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 71,883 | $ | 91,512 | ||||
Reconciliation of cash, cash equivalents and restricted cash reported within their | ||||||||
Cash and Cash Equivalents | 32,177 | 48,336 | ||||||
Restricted cash | 39,706 | 43,176 | ||||||
$ | 71,883 | $ | 91,512 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 1,458 | $ | 1,909 | ||||
Income taxes | $ | 1,175 | $ | 2,272 | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES: | ||||||||
Common stock issued for compensation | $ | 10 | $ | 10 | ||||
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SOURCE EVER-GLORY INTERNATIONAL GROUP INC