-- 3Q09 Gross Margin Increased 420 Basis Points YoY to 18.6% -- --
3Q09 Net Income Increased 200.3% to $1.9 million or $0.14 per
diluted share -- NANJING, China, Nov. 9 /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 third quarter ended September 30, 2009. During the third
quarter 2009, net sales decreased 21.8% to $24.9 million from $31.9
million in the third quarter of 2008. This decrease was primarily
attributable to decreased sales orders in the Company's wholesale
business because of the global economic slowdown. Retail sales from
LA GO GO, the Company's branded retail division, increased to $2.6
million, or 152.8%, compared to $1.0 million in the third quarter
of 2008. "The third 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 due to our decision in the second
quarter to halt orders with several customers as we couldn't be
certain of their ability to maintain timely payments thus affecting
year over year comparisons for the remainder of 2009. 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. "Our retail business remains
strong and we recorded over $2.6 million of retail sales in the
quarter versus approximately $1.0 million in the third quarter of
last year. In the third quarter of 2009, we opened 25 new LA GO GO
stores, closed one store and as of September 30, 2009 we had 154 LA
GO GO stores in operation in total. Also encouraging is that our
retail sales per square foot per month increased approximately 15%
compared to the same period of last year." In the third quarter of
2009, gross profit increased 0.9% to $4.63 million from $4.59
million in the third quarter of 2008. Gross margin increased 420
basis points to 18.6% in the third quarter of 2009, compared to
14.4% in the third quarter of 2008 largely because we decreased
lower margin orders as a continued effort to pursue higher added
value operations in our wholesale business and same store sales
increased during the quarter ended September 30, 2009 in our retail
business. Selling expenses increased 94.7% to $1.1 million in the
third quarter of 2009 from $564 thousand in the third 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 decreased 7.2% to $1.6 million
from $1.7 million in the third quarter of 2008. Although we
increased payroll for additional management, design and marketing
staff as a result of our business expansion, total G&A expenses
decreased because non-occurrence of the expenses related to our
AMEX listing which occurred in the third quarter of 2008. Income
from operations for the third quarter of 2009 decreased 15.8% to
$2.0 million, or 7.9% of total sales, compared to $2.3 million, or
7.3% of sales, in the third quarter of 2008. Net income for the
third quarter of 2009 increased 200.3% to $1.9 million or $0.14 per
diluted share from $643 thousand, or $0.05 per diluted share in the
third quarter of 2008. Balance Sheet and Cash Flow As of September
30, 2009, the Company had $3.6 million of cash and cash
equivalents, compared to $1.4 million as of December 31, 2008;
Ever-Glory had working capital of approximately $18.5 million as of
September 30, 2009. The Company had bank loans of $5.4 million as
of September 30, 2009. Business Outlook For full year 2009, the
Company anticipates total net sales of $103 million to $118 million
and net income of $5.8 million to $6.5 million. The full year
revenue forecast is comprised of $90 million to $100 million in
expected wholesale revenue and $13 million to $18 million in
expected revenue from retail. Conference Call The Company will hold
a conference call today at 8:30 a.m. Eastern Time 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 #1-913-981-4900. 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 November 9, 2009 through November 16, 2009 by
calling #1-719-457-0820; pin number: 3006456. 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
Amex), 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 NINE MONTHS
ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) Three months ended
Nine months ended September 30, September 30, 2009 2008 2009 2008
NET SALES Related parties $66,221 $17,582 $75,572 $510,145 Third
parties 24,870,500 31,867,994 66,494,465 75,191,036 Total net sales
24,936,721 31,885,576 66,570,037 75,701,181 COST OF SALES Related
parties 38,281 10,989 47,294 472,373 Third parties 20,264,735
27,284,216 52,667,322 62,563,564 Total cost of sales 20,303,016
27,295,205 52,714,616 63,035,937 GROSS PROFIT 4,633,705 4,590,371
13,855,421 12,665,244 OPERATING EXPENSES Selling expenses 1,097,840
563,971 2,903,655 1,210,063 General and administrative expenses
1,562,382 1,683,713 5,707,786 4,918,696 Total Operating Expenses
2,660,222 2,247,684 8,611,441 6,128,759 INCOME FROM OPERATIONS
1,973,483 2,342,687 5,243,980 6,536,485 OTHER INCOME (EXPENSES)
Interest income 180,089 41,052 445,117 121,616 Interest expense
(94,016) (1,468,592) (332,900) (2,677,546) Other income 269 571
45,252 53,656 Total Other Income (Expenses) 86,342 (1,426,969)
157,469 (2,502,274) INCOME BEFORE INCOME TAX EXPENSE 2,059,825
915,718 5,401,449 4,034,211 INCOME TAX EXPENSE (130,479) (273,203)
(692,206) (841,850) NET INCOME 1,929,346 642,515 4,709,243
3,192,361 ADD: NET LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTEREST
7,552 4,666 25,011 1,417 NET INCOME ATTRIBUTABLE TO THE COMPANY
$1,936,898 $647,181 $4,734,254 $3,193,778 NET INCOME $1,929,346
$642,515 $4,709,243 $3,192,361 Foreign currency translation gain
(loss) 46,364 107,468 (36,947) 1,818,706 COMPREHENSIVE INCOME
1,975,710 749,983 4,672,296 5,011,067 COMPREHENSIVE (INCOME) LOSS
ATTRIBUTABLE TO THE NONCONTROLLING INTEREST (6,752) 34,441 8,749
11,419 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $1,968,958
$784,424 $4,681,045 $5,022,486 NET INCOME PER SHARE Attributable to
the Company's common stockholders Basic $0.14 $0.05 $0.35 $0.27
Diluted $0.14 $0.05 $0.35 $0.27 Weighted average number of shares
outstanding Basic 13,558,326 11,914,825 13,546,116 11,692,604
Diluted 13,558,326 12,002,908 13,546,116 11,715,332 EVER-GLORY
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS AS OF SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER
31, 2008 ASSETS September 30, December 31, 2009 2008 (unaudited)
CURRENT ASSETS Cash and cash equivalents $3,561,116 $1,445,363
Accounts receivable 14,590,133 9,485,338 Inventories 7,232,455
3,735,227 Value added tax receivable 802,120 -- Other receivables
and prepaid expenses 480,667 945,191 Advances on inventory
purchases 381,850 288,256 Amounts due from related party 10,475,672
11,565,574 Total Current Assets 37,524,013 27,464,949 LAND USE
RIGHT, NET 2,805,175 2,854,508 PROPERTY AND EQUIPMENT, NET
12,574,798 12,494,452 INVESTMENT AT COST 1,467,000 1,467,000 TOTAL
ASSETS $54,370,986 $44,280,909 LIABILITIES AND EQUITY CURRENT
LIABILITIES Bank loans $5,398,560 $6,542,820 Loan from related
party - short term 500,000 -- Accounts payable 9,682,539 3,620,543
Accounts payable and other Payables - related parties 739,437
754,589 Other payables and accrued liabilities 1,943,983 1,683,977
Value added and other taxes payable 371,655 368,807 Income tax
payable 118,921 257,946 Deferred tax liabilities 304,670 80,009
Total Current Liabilities 19,059,765 13,308,691 LONG-TERM
LIABILITIES Loan from related party 2,247,879 2,660,085 TOTAL
LIABILITIES 21,307,644 15,968,776 COMMITMENTS AND CONTINGENCIES
EQUITY Stockholders' equity of the Company Preferred stock ($.001
par value, authorized 5,000,000 shares, no shares issued and
outstanding) -- -- Common stock ($.001 par value, authorized
50,000,000 shares, 13,560,240 and 12,373,567 shares issued and
outstanding as of September 30, 2009 and December 31, 2008,
respectively) 13,560 12,374 Additional paid-in capital 4,592,971
4,549,004 Retained earnings 20,541,793 15,807,539 Statutory reserve
3,437,379 3,437,379 Accumulated other comprehensive income
3,919,913 3,956,860 Total Stockholders' Equity of the Company
32,505,616 27,763,156 Noncontrolling interest 557,726 548,977 Total
Equity 33,063,342 28,312,133 TOTAL LIABILITIES AND EQUITY
$54,370,986 $44,280,909 EVER-GLORY INTERNATIONAL GROUP, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) 2009
2008 CASH FLOWS FROM OPERATING ACTIVITIES Net income $4,709,243
$3,192,361 Adjustments to reconcile net income to cash provided by
operating activities: Depreciation and amortization 1,512,089
714,446 Deferred income tax 224,493 -- Amortization of discount on
convertible notes -- 1,934,026 Amortization of deferred financing
costs -- 318,196 Stock issued for interest -- 2,155 Stock-based
compensation 22,181 12,855 Changes in operating assets and
liabilities Accounts receivable (5,100,967) (3,306,125) Accounts
receivable - related parties 153,420 Inventories (3,494,605)
(597,330) Value added tax receivable (801,519) Other receivables
and prepaid expenses (123,094) (631,466) Other receivable - related
parties -- (37,823) Advances on inventory purchases (93,524)
(332,988) Amounts due from related party 1,088,634 (4,059,141)
Accounts payable 6,057,452 4,325,070 Accounts payable and other
payables - related parties 72,399 149,688 Other payables and
accrued liabilities 259,657 435,963 Value added and other taxes
payable 2,845 181,056 Income tax payable (138,920) 268,334 Net cash
provided by operating activities 4,196,364 2,722,697 CASH FLOWS
FROM INVESTING ACTIVITIES Investment in La Chapelle -- (1,397,700)
Purchase of property and equipment (984,346) (800,669) Proceeds
from sale of equipment 28,537 37,019 Net cash used in investing
activities (955,809) (2,161,350) CASH FLOWS FROM FINANCING
ACTIVITIES Contribution from minority shareholders -- 553,040
Proceeds from bank loans 11,991,062 11,354,904 Repayment of bank
loans (13,134,464) (10,695,402) Repayment of long term loan --
(1,844,164) Exercise of warrants -- 219,635 Net cash used in
financing activities (1,143,402) (411,987) EFFECT OF EXCHANGE RATE
CHANGES ON CASH 18,600 91,449 NET INCREASE IN CASH AND CASH
EQUIVALENTS 2,115,753 240,809 CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,445,363 641,739 CASH AND CASH EQUIVALENTS AT
END OF PERIOD $3,561,116 $882,548 SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION: Cash paid during the period for: Interest expense
$245,105 $295,562 Income taxes $606,622 $573,557 DATASOURCE:
Ever-Glory International Group, Inc. CONTACT: Company Contact -
Ever-Glory International Group, Inc., Yan Guo, Chief Financial
Officer, +86-25-5209-6222 Web Site: http://www.everglorygroup.com/
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