-- 2Q09 Gross Margin Increased 320 Basis Points YoY to 21.3% --
NANJING, China, Aug. 6 /PRNewswire-Asia-FirstCall/ -- Ever-Glory
International Group, Inc. (the "Company," "Ever-Glory") (NYSE Amex:
EVK), a leading apparel supply chain manager and retailer in China,
today reported its financial results for the quarter ended June 30,
2009. During the second quarter 2009, net sales decreased 12.2% to
$21.1 million from $24.1 million in the second quarter of 2008.
This decrease was primarily attributable to decreased sales orders
in our wholesale business. Ever-Glory halted orders with two major
customers due to the financial outlook and timely payment ability
of those customers. Retail sales from LA GO GO, the Company's
branded retail division, increased to $2.0 million, or 704.5%,
compared to $253 thousand in the second quarter of 2008. In the
second quarter of 2009, sales from the retail business totaled 9.6%
of total sales. "The second quarter of 2009 proved to be a
challenging quarter in our wholesale business," commented Mr.
Edward Yihua Kang, Chairman of the Board and Chief Executive
Officer of Ever-Glory. "Our wholesale business experienced
decreased sales. The majority of this decrease was because
Ever-Glory took the proactive step of halting orders with two
customers as we couldn't be certain of their ability to maintain
timely payments. Our top priority in this difficult economy is to
protect Ever-Glory, its financial position and its cash flow. We
believe we are taking the appropriate steps to protect our finances
and provide Ever-Glory with a more stable customer base. "Positive
momentum continued in our retail business as we recorded over $2.0
million of retail sales in the quarter versus approximately
$253,000 last year. In the second quarter of 2009, we opened 28 new
LA GO GO stores and as of June 30, 2009 we had 130 LA GO GO stores
open. Also encouraging is that our retail sales per square meter
per month increased more than 30% compared to the same period of
last year." In the second quarter of 2009, gross profit increased
3.5% to $4.5 million from $4.4 million in the second quarter of
2008. Gross margin increased 320 basis points to 21.3% in the
second quarter of 2009, compared to 18.1% in the second quarter of
2008 largely due to increased "Cut-Made-Trim", or CMT, orders, as
well as increased leverage in the retail business. Mr. Kang
continued, "We were pleased to experience an increase in gross
margins with our increase in CMT product orders. With CMT orders,
our buyers supply us with the raw materials and we charge customers
only for production. Raw materials supplied by the buyer are not
included in the pricing, only production charges are recorded as
sales volume. These orders help alleviate cash flow pressures and
our overall financial risk is reduced. We are very encouraged that
our gross margins increased in spite of lower sales volume."
Selling expenses increased 134.8% to $865 thousand in the second
quarter of 2009 from $369 thousand in the second quarter of 2008.
This increase was primarily due to increased retail staff,
renovation and retail marketing expenses to promote LA GO GO.
General and administrative expenses increased 25.6% to $2.3 million
from $1.8 million in the second quarter of 2008. The increase was
primarily due to additional management, design and marketing staff
as a result of our business expansion and increased expenses
associated with the development of LA GO GO. Income from operations
for the second quarter of 2009 decreased 37.4% to $1.4 million, or
6.4% of total sales, compared to $2.2 million, or 9.0% of sales, in
the second quarter of 2008. Net income for the second quarter of
2009 decreased 12.9% to $1.2 million or $0.09 per diluted share
from $1.3 million, or $0.00 per diluted share in the second quarter
of 2008. Balance Sheet and Cash Flow As of June 30, 2009, the
Company had $994 thousand of cash and cash equivalents, compared to
$1.4 million at December 31, 2008, Ever-Glory had working capital
of approximately $16.9 million at June 30, 2009. The Company had
bank loans of $3.2 million as of June 30, 2009. On June 30, 2009,
HSBC bank approved a revolving credit facility amounting to $2.5
million to Perfect-Dream, a wholly-owned subsidiary of Ever-Glory
International Group. On July 3, 2009, Ever-Glory Apparel entered
into a one-year line of credit agreement for RMB40 million
(approximately $5.9 million) with Nanjing Bank. Business Outlook
For full year 2009, the Company anticipates total net sales of $113
million to $128 million and net income of $5.8 million to $6.5
million. The full year revenue forecast is comprised of $100
million to $110 million in expected wholesale revenue and $13
million to $18 million in expected revenue from retail. Mr. Kang
continued, "Despite the difficult economic environment, we are
encouraged with the opportunities both in our wholesale and retail
business segments. Our retail business is performing above
expectations which we believe will continue through 2009.
Opportunities in our wholesale business are robust and we believe
we have taken the necessary steps to strengthen our customer base.
"The nature of Ever-Glory's one-stop-service is a competitive
advantage that allows us to achieve better results by shortening
the time to market, improving product quality control and
ultimately achieving higher margins. We place considerable emphasis
on innovative and distinctive product designs that stand for
exceptional styling and quality for both our wholesale and retail
businesses. As we expand our team of professional designers,
marketers and R&D team members, we can expand our presence as a
major player in the international wholesale and domestic retail
apparel market." Conference Call The Company will hold a conference
call today at 8:30 a.m. ET which will be hosted by Edward Yihua
Kang, Chairman of the Board, President, and CEO, Yan Guo, Chief
Financial Officer. Listeners can access the conference call by
dialing #1-913-312-1502. The conference call will also be broadcast
live over the Internet and can be accessed at the Company's web
site at the following URL: http://www.everglorygroup.com/ . A
replay of the call will be available from August 6, 2009 through
August 13, 2009 by calling #1-719-457-0820; pin number: 8845206.
About Ever-Glory International Group, Inc. Based in Nanjing, China,
Ever-Glory International Group, Inc. is a leading apparel supply
chain manager and retailer in China. Ever-Glory is the first
Chinese apparel company listed on the American Stock Exchange (now
called NYSE Alternext), and has a focus on middle-to-high grade
casual wear, outerwear, and sportswear brands. The Company
maintains global strategic partnerships in Europe, the United
States, Japan and China, conducting business with several
well-known brands and retail chain stores. In addition, Ever-Glory
operates its own domestic chain of retail stores known as "LA GO
GO." Safe Harbor Statement Certain statements in this release and
other written or oral statements made by or on behalf of the
Company are "forward looking statements" within the meaning of the
federal securities laws. Statements regarding future events and
developments and our 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 market acceptance of the
Company's products and projects, the Company's continued access to
capital, currency exchange rate fluctuation and other risks and
uncertainties. The actual results the Company achieves may differ
materially from those contemplated by any forward-looking
statements due to such risks and uncertainties. These statements
are based on our 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. EVER-GLORY
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE AND
SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED) Three months
ended Six months ended June 30, June 30, 2009 2008 2009 2008 NET
SALES Related parties $ 9,351 $ 67,461 $ 9,351 $ 492,563 Third
parties 21,116,143 24,000,936 41,623,965 43,323,042 Total net sales
21,125,494 24,068,397 41,633,316 43,815,605 COST OF SALES Related
parties 9,013 58,636 9,013 461,384 Third parties 16,608,920
19,655,924 32,402,587 35,279,348 Total cost of sales 16,617,933
19,714,560 32,411,600 35,740,732 GROSS PROFIT 4,507,561 4,353,837
9,221,716 8,074,873 OPERATING EXPENSES Selling expenses 865,341
368,564 1,805,815 646,092 General and administrative expenses
2,289,282 1,822,329 4,145,404 3,234,983 Total Operating Expenses
3,154,623 2,190,893 5,951,219 3,881,075 INCOME FROM OPERATIONS
1,352,938 2,162,944 3,270,497 4,193,798 OTHER INCOME (EXPENSES)
Interest income 161,481 48,590 265,028 80,564 Interest expense
(115,234) (631,126) (238,884) (1,208,954) Other income 42,610
53,085 44,983 53,085 Total Other Income (Expenses) 88,857 (529,451)
71,127 (1,075,305) INCOME BEFORE INCOME TAX EXPENSE 1,441,795
1,633,493 3,341,624 3,118,493 INCOME TAX EXPENSE (272,656)
(284,809) (561,727) (568,647) NET INCOME 1,169,139 1,348,684
2,779,897 2,549,846 ADD(LESS): NET LOSS(INCOME) ATTRIBUTABLE TO THE
NONCONTROLLING INTEREST 5,861 620 17,459 (3,249) NET INCOME
ATTRIBUTABLE TO THE COMPANY $1,175,000 $1,349,304 $2,797,356
$2,546,597 NET INCOME PER SHARE Attributable to the Company's
common stockholders Basic $0.09 $0.12 $0.21 $0.22 Diluted $0.09 $
-- $0.21 $0.10 Weighted average number of shares outstanding Basic
13,548,498 11,710,865 13,539,909 11,580,273 Diluted 13,548,498
12,528,595 13,539,909 12,291,758 DATASOURCE: Ever-Glory
International Group, Inc. CONTACT: Company Contact: Ever-Glory
International Group, Inc., Yan Guo, Chief Financial Officer,
+86-25-5209-6222; Or Investor Relations: In the U.S.: Brian M.
Prenoveau, CFA of ICR, Inc., +1-203-682-8200 or In Asia: Yuening
Jiang, +86-10-6599-7965 Web site: http://www.everglorygroup.com/
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