Ever-Glory Reports First Quarter 2022 Financial Results

NEW YORK, May 13, 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 first quarter ended March 31, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the first 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 first 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 50-100 stores during 2022, we operated a nationwide network of 848 stores as of March 31, 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." concluded Mr. Kang.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The first quarter results, are coupled with our ability to increase operating leverage. 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."

First Quarter 2022 Financial Results

Total sales for the first quarter of 2022 were $64.8 million, a decrease of 8.5% from $70.8 million in the first quarter of 2021. This decrease was primarily attributable to a 28.7% increase in our wholesale business and a 26.7% decrease in our retail business.

Sales for the Company's branded fashion apparel retail division decreased by 26.7% to $34.9 million for the first quarter of 2022, compared with $47.6 million for the first quarter of 2021. This decrease was primarily due to the decrease in same-store sales. The Company had 848 retail stores as of March 31, 2022, compared with 921 retail stores as of March 31, 2021.

Sales for the Company's wholesale division increased by 28.7% to $29.9 million for the first quarter of 2022, compared with $23.2 million for the first quarter of 2021. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, Japan and the United States, and other European markets partially offset by decreased sales in the United Kingdom.

Total gross profit for the first quarter of 2021 decreased by 22.6% to $17.4 million, compared with $22.4 million for the first quarter of 2021. Total gross margin for the first quarter of 2022 decreased to 26.8% from 31.7% for the first quarter of 2021.

Gross profit for the retail business decreased by 34.8% to $11.7 million for the first quarter of 2022, compared with $17.9 million for the first quarter of 2021. Gross margin for the first quarter of 2022 was 33.4% compared to 37.6% for the first quarter of 2021.

Gross profit for the wholesale business increased by 25.2% to $5.7 million for the first quarter of 2022, compared with $4.6 million for the first quarter of 2021. Gross margin for the first quarter of 2022 decreased to 19.1% from 19.6% for the first quarter of 2021.

Selling expenses for the first quarter of 2022 decreased by 12.0% to $13.7 million, or 21.1% of total sales, compared with $15.5 million, or 22.0% of total sales for the first quarter of 2021. The decrease was attributable to the decreased salaries.

General and administrative expenses for the first quarter of 2022 decreased by 10.9% to $7.0 million, or 10.8% of total sales, compared with $7.9 million, or 11.1% of total sales for the first quarter of 2021. The decrease was attributable to the decreased salaries.

Loss from operations was $3.3 million for the first quarter of 2022,compared to $1.0 million for the first quarter of 2021.

Net loss attributable to the Company for the first quarter of 2022 was $5.1 million compared with $1.2 million for first quarter of 2021. Basic and diluted loss per share were $0.34 for the first quarter of 2022 compared with $0.08 for the first quarter of 2021.

Balance Sheet

As of March 31, 2022, Ever-Glory had approximately $41.7 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $42.3 million as of March 31, 2022, and outstanding bank loans of approximately $69.3 million as of March 31, 2022.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 13, 2022(8:00 p.m. Beijing Time on May 13, 2022). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 1720370. 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 May 13 through 11:59 p.m. Eastern Time on May 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 1720370.

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)

	March 31, 2022		December 31, 2021
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	41,717	$	56,573
Restricted cash		42,525		40,768
Trading securities		2,965		3,251
Accounts receivable, net		55,025		69,859
Inventories		65,013		63,841
Advances on inventory purchases		5,065		8,179
Value added tax receivable		1,296		1,693
Other receivables and prepaid expenses		6,732		6,345
Amounts due from related parties		1,308		220
Total Current Assets		221,646		250,729

NON-CURRENT ASSETS
Equity security investment		5,229		5,682
Intangible assets, net		4,770		4,794
Property and equipment, net		36,838		36,340
Operating lease right-of-use assets		52,751		50,077
Deferred tax assets		202		899
Other non-current assets		1,575		784
Total Non-Current Assets		101,365		98,576
TOTAL ASSETS	$	323,011	$	349,305

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank loans	$	69,300	$	68,992
Accounts payable		50,533		67,930
Accounts payable and other payables – related parties		1,474		1,332
Other payables and accrued liabilities		13,288		18,531
Value added and other taxes payable		-		999
Income tax payable		500		334
Current operating lease liabilities		44,287		41,633
Total Current Liabilities		179,382		199,751

NON-CURRENT LIABILITIES
Deferred tax liabilities		-		-
Non-current operating lease liabilities		8,628		8,596
TOTAL LIABILITIES		188,010		208,347

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,814,354 and 14,812,312 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively)		15		15
Additional paid-in capital		3,665		3,660
Retained earnings		103,121		108,210
Statutory reserve		21,245		21,245
Treasury stock (at cost,162,080 and 147,334 shares at March 31,2022 and December 31, 2021, respectively)		(400)		(363)
Accumulated other comprehensive income		7,355		8,191

Total equity		135,001		140,958
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	323,011	$	349,305

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited) (In thousands of U.S. Dollars, except share and per share data or otherwise stated)

	Three Months Ended
	March 31, 2022		March 31, 2021

NET SALES	$	64,773	$	70,814

COST OF SALES		47,401		48,379

GROSS PROFIT		17,372		22,435

OPERATING EXPENSES
Selling expenses		13,686		15,548
General and administrative expenses		6,994		7,851
Total operating expenses		20,680		23,399

LOSS FROM OPERATIONS		(3,308)		(964)

OTHER (EXPENSE) INCOME
Interest income		186		224
Interest expense		(613)		(492)
Government subsidy		3		259
(Loss) gain from changes in fair values of investments		(762)		339
Other income		517		193
Total Other (Expense) Income, Net		(669)		523

LOSS BEFORE INCOME TAX EXPENSE		(3,977)		(441)

INCOME TAX EXPENSE		(1,112)		(729)

NET LOSS	$	(5,089)	$	(1,170)
Foreign currency translation loss		(836)		(1,352)

COMPREHENSIVE LOSS	$	(5,925)	$	(2,522)
LOSS PER SHARE
Basic and diluted	$	(0.34)	$	(0.08)
Weighted average number of shares outstanding Basic and diluted		14,813,787		14,810,001

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE MONTHS ENDED March 31, 2022 AND 2021 (Unaudited) (In thousands of U.S. Dollars, except share and per share data or otherwise stated)
																	Total equity
	Common Stock				Additional				Retained Earnings				Accumulated other		Amounts due from		attributable to stockholders		Non-
	Shares		Amount		paid-in capital		Treasury Stock		Unrestricted		Statutory reserve		Comprehensive income		related party		of the Company		controlling Interest		Total equity
Balance at January 1, 2022		14,812,312	$	15	$	3,660	$	(363)	$	108,210	$	21,245	$	8,191	$	-	$	140,958	$	-	$	140,958

Stock issued for compensation		2,042		-		5		-		-		-		-		-		5				5
Net loss		-		-		-		-		(5,089)		-		-		-		(5,089)		-		(5,089)
Repurchase of 14,746 shares of common stock		-		-		-		(37)				-		-		-		(37)		-		(37)
Foreign currency translation loss														(836)		-		(836)		-		(836)
Balance at March 31, 2022		14,814,354	$	15	$	3,665	$	(400)	$	103,121	$	21,245	$	7,355	$	-	$	135,001	$	-	$	135,001

																	Total equity
	Common Stock				Additional				Retained Earnings				Accumulated other		Amounts due from		attributable to stockholders		Non-
	Shares		Amount		paid-in capital		Treasury Stock		Unrestricted		Statutory reserve		Comprehensive income		related party		of the Company		controlling Interest		Total equity
Balance at January 1, 2021		14,809,160	$	15	$	3,650	$	-	$	109,171	$	20,376	$	4,590	$	(3,353)	$	134,449	$	-	$	134,449

Stock issued for compensation		1,500		-		5		-		-		-		-		-		5				5
Net income (loss)		-		-		-		-		(1,170)		-		-		-		(1,170)		-		(1,170)
Transfer to reserve		-		-		-		-		-		-		-		-		-				-
Payments received from related party under counter guarantee agreement		-		-		-		-		-		-		-		379		379		-		379
Repurchase of 147,334 shares of common stock		-		-		-		-				-		-		-		-		-		-
Foreign currency translation gain														(1,352)		-		(1,352)		-		(1,352)
Balance at December 31, 2021		14,810,660	$	15	$	3,655	$	-	$	108,001	$	20,376	$	3,238	$	(2,974)	$	132,311	$	-	$	132,311

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)

	Three Months Ended
	March 31, 2022		March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net less	$	(5,089)		(1,170)
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2,147		1,377
Loss from sale of property and equipment		52		102
Loss on deconsolidation of a subsidiary		-		-
Provision of (recovering from) bad debt allowance		298		(196)
Provision for obsolete inventories		3,759		3,583
Changes in fair value of trading securities		(283)		(262)
Changes in fair value of investment		479		28
Deferred income tax		701		17
Stock-based compensation		5		5
Changes in operating assets and liabilities
Accounts receivable		14,815		6,509
Inventories		(4,680)		6,805
Value added tax receivable		405		52
Other receivables and prepaid expenses		(278)		(367)
Advances on inventory purchases		3,150		2,544
Amounts due from related parties		(1,089)		(71)
Accounts payable		(16,838)		(14,690)
Accounts payable and other payables- related parties		226		(769)
Other payables and accrued liabilities		(6,252)		(3,221)
Value added and other taxes payable		(1,067)		(220)
Income tax payable		165		(358)
Net cash (used in) operating activities		(9,374)		(302)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(2,507)		(1,378)
Net purchase (proceeds from) of trading securities		569		(983)
Investment payment		(788)		-
Net cash used in investing activities		(2,726)		(2,361)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans		12,600		12,336
Repayment of bank loans		(12,600)		(6,168)
Repurchase of common stock		(37)		-
Net collection of amounts due from related party (equity)		-		148
Net cash (used in) provided by financing activities		(37)		6,316

EFFECT OF EXCHANGE RATE CHANGES ON CASH		(962)		(1,660)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(13,099)		1,993

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		97,341		121,723

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	84,242	$	123,716

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

Cash and Cash Equivalents		41,717		78,056
Restricted cash		42,525		45,660
	$	84,242	$	123,716

Cash paid during the period for:
Interest	$	613	$	492
Income taxes	$	1,112	$	729