Ever-Glory Reports Second Quarter 2018 Financial Results

NANJING,China,Aug. 14,2018 --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,today reported its financial results for the second quarter ended June 30,2018.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the second quarter,we maintained our focus on developing retail business through our multi-brand strategy and store network optimization initiative,while improving our wholesale business by upgrading customer portfolio. Notably,we achieved year-over-year improvement in gross margins for both of our retail and wholesale businesses,as well as a year-over-year revenue increase of 17.6% for our wholesale business."

"During the second quarter of 2018,we remained our focus on driving retail business through store network optimization strategy,as well as inventory management strategy," Mr. Kang continued. "Following the remodeling or relocation of 69 stores during the second quarter,we operated a nationwide network of 1,417 stores as of June 30,2018."

"Looking at our wholesale business,we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in the light of weak micro environment. Our wholesale gross margin continued to improve on a year-over-year basis. Going forward,we'll implement a stricter client evaluation system and remain diligent in 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,"We're delighted to see that our operating efficiency continued to improve in the second quarter. Overall gross margin increased by 60 basis points,with wholesale gross margin increasing by 50 basis points,compared with the same period of last year. With strengthened fundamentals and improved operating leverage of our overall business,we are excited about the opportunities that lay before us and we look forward to updating you with our progress next quarter."

Second Quarter 2018 Financial Results

Total sales for the second quarter of 2018 were $88.5 million,an increase of 11.0% from $79.8 million in the second quarter of 2017. This increase was primarily driven by a 17.6% increase in our wholesale business and an 6.3% increase in retail business.

Sales for the Company's branded fashion apparel retail division increased by 6.3% to $49.7 million for the second quarter of 2018,compared with $46.8 million for the second quarter of 2017. This increase was primarily due to an increase in same-store sales. The Company had 1,417 retail stores as of June 30,2018,compared with 1,362 retail stores as of June 30,2017.

Salesfor the Company's wholesale division increased by 17.6% to $38.8 million for the second quarter of 2018,compared with $33.0 million for the second quarter of 2017. This increase was primarily attributable to an increase in sales in Mainland China,United Kingdom,United States and Japan,partially offset by a decrease in sales in Hong Kong,Germany and Europe other areas.

Total gross profit for the second quarter of 2018 increased by 12.7% to $34.5 million,compared with $30.7 million for the second quarter of 2017. Total gross margin increased to 39.0% from 38.4% for the second quarter of 2017.

Gross profit for the retail business increased by 10.6% to $27.4 million for the second quarter of 2018,compared with $24.8 million for the second quarter of 2017. Gross margin was 55.1%,compared to 52.9% for the second quarter of 2017.

Gross profitfor the wholesale business increased by 21.3% to $7.2 million for the second quarter of 2018,compared with $5.9 million for the second quarter of 2017. Gross margin increased to 18.4% from 17.9% for the second quarter of 2017.

Selling expenses for the second quarter of 2018 increased by 11.7% to $22.6 million,or 25.5% of total sales,compared with $20.2 million,or 25.3% of total sales for the second quarter of 2017. The increase was attributable to the increased store decoration and marketing expenses.

General and administrative expenses for the second quarter of 2018 increased by 18.0% to $8.8 million,or 10.0% of total sales,compared with $7.5 million,or 9.4% of total sales for the second quarter of 2017. The increase was mainly attributable to the increased average salaries.

Income from operations for the second quarter of 2018 increased by 6.1% to $3.1 million compared with $2.9 million for the second quarter of 2017.

Net income attributable to the Company for the second quarter of 2018 was $2.8 million compared with 2.7 million for the second quarter of 2017. Basic and diluted earnings per share were $0.19 for the second quarter of 2018 compared with basic and diluted earnings per share of $0.18 for the second quarter of 2017.

Balance Sheet

As of June 30,Ever-Glory had approximately $36.4 million of cash and cash equivalents,compared with approximately $62.9 million as of December 31,2017. Ever-Glory had working capital of approximately $65.7 million as of June 30,and outstanding bank loans of approximately $34.8 million as of June 30,2018.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14,2018 (8:00 p.m. Beijing Time on August 14,2018). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 3000953. 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 conference call will be available from 11:00 a.m. Eastern Time on August 14 through 11:59 p.m. Eastern Time on August 21,by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 3000953.

About Ever-Glory International Group,Inc.

Based in Nanjing,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","Sea To Sky" 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,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.

For investor and media inquiries,please contact:

Ever-Glory International Group

Dandan Song

Tel: +86-25-5209-6817

E-Mail: sdd@ever-glory.com.cn

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars,except share and per share data or otherwise stated)

AS OF JUNE 30,2018 (UNAUDITED) AND DECEMBER 31,2017

2018

2017

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

36,439

$

62,876

Accounts receivable,net

61,072

81,859

Inventories

64,418

56,182

Value added tax receivable

3,037

3,757

Other receivables and prepaid expenses

13,771

5,139

Advances on inventory purchases

9,858

3,028

Amounts due from related parties

-

265

Total Current Assets

188,595

213,106

INTANGIBLE ASSETS

6,290

5,995

PROPERTY AND EQUIPMENT,NET

26,305

25,891

TOTAL ASSETS

$

221,190

$

244,992

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

34,768

$

37,730

Accounts payable

58,745

73,788

Accounts payable and other payables - related parties

4,448

4,675

Other payables and accrued liabilities

23,440

16,454

Derivative financial instruments

469

-

Value added and other taxes payable

245

6,052

Income tax payable

777

1,712

Total Current Liabilities

122,892

140,411

NONCURRENT LIABILITIES

Deferred tax liabilities

1,039

1,883

TOTAL LIABILITIES

123,931

142,294

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Stockholders' equity:

Common stock $0.001 par value,authorized 50,000,000 shares,14,795,992 and

14,992 shares issued and outstanding As of June 30,2018 and December

31,2017,respectively)

15

15

Additional paid-in capital

3,620

3,620

Retained earnings

98,786

95,195

Statutory reserve

17,794

17,794

Accumulated other comprehensive income

(48)

2,585

Amounts due from related party

(21,589)

(15,449)

Total equity attributable to stockholders of the Company

98,578

103,760

Noncontrolling interest

(1,319)

(1,062)

Total Equity

97,259

102,698

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

221,992

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. Dollars,except share and per share data or otherwise stated)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,2018 AND 2017 (UNAUDITED)

Threemonths ended

Six months ended

June 30,

June 30,

2018

2017

2018

2017

NET SALES

$

88,541

$

79,771

$

181,326

$

164,891

COST OF SALES

53,999

49,121

115,439

105,732

GROSS PROFIT

34,542

30,650

65,887

59,159

OPERATING EXPENSES

Selling expenses

22,590

20,223

44,817

39,968

General and administrative expenses

8,823

7,479

16,496

14,734

Total Operating Expenses

31,413

27,702

61,313

54,702

INCOME FROM OPERATIONS

3,129

2,948

4,574

4,457

OTHER INCOME (EXPENSES)

Interest income

370

282

696

539

Interest expense

(360)

(318)

(924)

(645)

Other income

865

523

1,001

1,100

Total Other Income,Net

875

487

773

994

INCOME BEFORE INCOME TAX EXPENSE

4,004

3,435

5,347

5,451

Income tax expense

(1,285)

(833)

(2,041)

(2,050)

NET INCOME

2,719

2,602

3,306

3,401

Net loss attributable to the non-controlling interest

57

86

285

261

NET INCOME ATTRIBUTABLE TO THE

COMPANY

2,776

2,688

3,591

3,662

NET INCOME

$

2,719

$

2,602

$

3,306

$

3,401

Foreign currency translation (loss) gain

(6,091)

1,063

(2,068)

1,522

Unrealized gain (loss) of derivative contracts

designated as cash flow hedge

(469)

-

(469)

-

COMPREHENSIVE INCOME (LOSS)

(3,841)

3,665

769

4,923

Comprehensive income(loss) attributable to the non-

controlling interest

(13)

98

309

278

COMPREHENSIVE INCOME (LOSS)

ATTRIBUTABLE TO THE COMPANY

$

(3,854)

$

3,763

$

1,078

$

5,201

EARNINGS PER SHARE ATTRIBUTABLE TO

THE COMPANY'S STOCKHOLDERS

Basic and diluted

$

0.19

$

0.18

$

0.24

$

0.25

Weighted average number of shares outstanding

Basic and diluted

14,992

14,792,836

14,791,240

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars,except share and per share data or otherwise stated)

FOR THE SIX MONTHS ENDED JUNE 30,2018 AND 2017 (UNAUDITED)

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES

Netincome

$

3,401

Adjustments to reconcile netincome to cash provided by operating activities:

Depreciation and amortization

4,903

3,481

Loss from sale of property and equipment

6

5

Provision of bad debt allowance

-

688

Provision for obsolete inventories

1,626

4,105

Deferred income tax

(843)

(1,744)

Stock-based compensation

-

10

Changes in operating assets and liabilities

Accounts receivable

20,150

13,865

Inventories

(10,873)

(11,750)

Value added tax receivable

681

(1,446)

Other receivables and prepaid expenses

(8,942)

(673)

Advances on inventory purchases

(7,145)

(2,684)

Amounts due from related parties

1,117

(161)

Accounts payable

(14,296)

(7,542)

Accounts payable and other payables- related parties

(1,485)

(818)

Other payables and accrued liabilities

8,006

(1,353)

Value added and other taxes payable

(5,924)

(4,048)

Income tax payable

(942)

(753)

Net cash used in operating activities

(10,655)

(7,417)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(6,295)

(2,220)

Net Cash (used in) provided by investing activities

(6,220)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

28,111

25,664

Repayment of bank loans

(30,533)

(17,821)

Repayment of loans from related party

2,556

482

Advances to related party

(8,734)

(6,433)

Net cash used in financing activities

(8,600)

1,892

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(887)

310

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(26,437)

(7,435)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

62,876

45,288

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

36,439

$

37,853

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

924

$

645

Income taxes

$

3,016

$

3,120

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