Ever-Glory Reports Third Quarter 2018 Financial Results

NANJING,China,Nov.8,2018 -- 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 third quarter ended September 30,2018.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the third 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 and enhancing our account receivables. Notably,we achieved year-over-year improvement in gross margin of our retail businesses,as well as a year-over-year revenue increase of 24.2% for our wholesale business."

"During the third 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 225 stores during the third quarter,we operated a nationwide network of 1,396 stores as of September 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 and enhancing our account receivables. 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,"The solid third quarter results,coupled with our ability to increase operating leverage,resulted in expanded wholesale operating income during this quarter. 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."

Third Quarter 2018 Financial Results

Total sales for the third quarter of 2018 were $125.5 million,an increase of 4.3% from $120.3 million in the third quarter of 2017. This increase was primarily driven by an 24.2% increase in our wholesale business partially offset by a 22.4% decrease in retail business.

Sales for the Company's branded fashion apparel retail division decreased by 22.4% to $39.8 million for the third quarter of 2018,compared with $51.3 million for thethird quarter of 2017. This decrease was primarily due to a decrease in same-store sales. The Company had 1,396 retail stores as of September 30,2018,compared with 1,363 retail stores as of September 30,2017.

Salesfor the Company's wholesale division increased by 24.2% to $85.7 million for the third quarter of 2018,compared with $69.0 million for the third quarter of 2017. This increase was primarily attributable to an increase in sales in Mainland China,Germany,the United Kingdom,Europe-Other,Japan and the United States partially offset by a decrease in sales in Hong Kong,China.

Total gross profit for the third quarter of 2018 decreased by 9.6% to $30.1 million,compared with $33.3 million for the third quarter of 2017. Total gross margin decreased to 24.0% from 27.6% for the third quarter of 2017.

Gross profit for the retail business decreased by 13.9% to $19.8 million for the third quarter of 2018,compared with $23.0 million for the third quarter of 2017. Gross margin was 49.8%,compared to 44.9% for the third quarter of 2017.

Gross profitfor the wholesale business increased by 0.1% to $10.24 million for the third quarter of 2018,compared with $10.23 million for the third quarter of 2017. Gross margin decreased to 12.0% from 14.8% for the third quarter of 2017.

Selling expenses for the third quarter of 2018 decreased by 13.1% to $17.6 million,or 14.6% of total sales,compared with $20.2 million,or 16.8% of total sales for the third quarter of 2017. The decrease was attributable to lower retail sales.

General and administrative expenses for the third quarter of 2018 decreased by 16.2% to $8.5 million,or 7.1% of total sales,compared with $10.2 million,or 8.5% of total sales for the third quarter of 2017. The decrease was mainly attributable to lower financial fees.

Income from operations for the third quarter of 2018 increased by 39.0% to $4.0 million compared with $2.8 million for the third quarter of 2017.

Net income attributable to the Company for the third quarter of 2018 was $3.3 million compared with 3.2 million for the third quarter of 2017. Basic and diluted earnings per share were $0.22 for the third quarter of 2018 compared with basic and diluted earnings per share of $0.22 for the third quarter of 2017.

Balance Sheet

As of September 30,Ever-Glory had approximately $24.5 million of cash and cash equivalents,compared with approximately $62.9 million as of December 31,2017. Ever-Glory had working capital of approximately $64.6 million as of September 30,and outstanding bank loans of approximately $35.6 million as of September 30,2018.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 8,2018 (8:00 p.m. Beijing Time on November 8,2018). Listeners can access the conference call by dialing +1-877-876-9174 or +1-785-424-1669 and using the access code 132217. 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 10:00 a.m. Eastern Time on November 8 through 11:59 p.m. Eastern Time on November 15,by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 132217.

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 SEPTEMBER 30,2018 (UNAUDITED) AND DECEMBER 31,2017

2018

2017

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

24,479

$

62,876

Accounts receivable,net

93,141

81,859

Inventories

83,243

56,182

Value added tax receivable

3,135

3,757

Other receivables and prepaid expenses

24,181

5,139

Advances on inventory purchases

10,998

3,028

Amounts due from related parties

25

265

Total Current Assets

239,202

213,106

INTANGIBLE ASSETS

6,337

5,995

PROPERTY AND EQUIPMENT,NET

26,746

25,891

TOTAL ASSETS

$

272,285

$

244,992

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

35,562

$

37,730

Accounts payable

99,399

73,788

Accounts payable and other payables - related parties

5,168

4,675

Other payables and accrued liabilities

29,560

16,454

Derivative financial instruments

1,073

-

Value added and other taxes payable

1,879

6,052

Income tax payable

1,931

1,712

Total Current Liabilities

174,572

140,411

NONCURRENT LIABILITIES

Deferred tax liabilities

95

1,883

TOTAL LIABILITIES

174,667

142,294

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Stockholders' equity:

Common stock $0.001 par value,authorized 50,000,000 shares,14,798,198 and

14,795,992 shares issued and outstanding as of September 30,2018 and

December 31,2017,respectively)

15

15

Additional paid-in capital

3,627

3,620

Retained earnings

102,102

95,195

Statutory reserve

17,794

17,794

Accumulated other comprehensive income

(4,240)

2,585

Amounts due from related party

(20,252)

(15,449)

Total equity attributable to stockholders of the Company

99,046

103,760

Noncontrolling interest

(1,428)

(1,062)

Total Equity

97,618

102,698

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

272,992

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 NINE MONTHS ENDED SEPTEMBER 30,2018 AND 2017 (UNAUDITED)

Three months ended

Nine months ended

September 30,

September 30,

2018

2017

2018

2017

NET SALES

$

125,480

$

120,257

$

306,806

$

285,148

COST OF SALES

95,419

87,007

210,858

192,740

GROSS PROFIT

30,061

33,250

95,948

92,408

OPERATING EXPENSES

Selling expenses

17,588

20,238

62,405

60,206

General and administrative expenses

8,519

10,167

25,015

24,900

Total Operating Expenses

26,107

30,405

87,420

85,106

INCOME FROM OPERATIONS

3,954

2,845

8,528

7,302

OTHER INCOME (EXPENSES)

Interest income

307

370

1,003

909

Interest expense

(278)

(562)

(1,202)

(1,207)

Other income

101

1,987

1,102

3,088

Total Other Income (Expenses)

130

1,795

903

2,790

INCOME BEFORE INCOME TAX EXPENSE

4,084

4,640

9,431

10,092

Income tax expense

(908)

(1,522)

(2,949)

(3,573)

NET INCOME

3,176

3,118

6,482

6,519

Net loss attributable to the non-controlling interest

140

115

425

376

NET INCOME ATTRIBUTABLE TO THE

COMPANY

3,316

3,233

6,907

6,895

NET INCOME

$

3,176

$

3,118

$

6,482

$

6,519

Foreign currency translation income(loss)

(3,674)

1,823

(5,742)

3,345

Unrealized gain (loss) of derivative contracts

designated as cash flow hedge

(614)

-

(1,083)

-

COMPREHENSIVE INCOME (LOSS)

(1,112)

4,941

(343)

9,864

Comprehensive loss attributable to the non-controlling interest

57

133

366

411

COMPREHENSIVE INCOME (LOSS)

ATTRIBUTABLE TO THE COMPANY

$

(1,055)

$

5,074

$

23

$

10,275

EARNINGS PER SHARE ATTRIBUTABLE TO

THE COMPANY'S STOCKHOLDERS

Basic and diluted

$

0.22

$

0.22

$

0.47

$

0.47

Weighted average number of shares outstanding

Basic and diluted

14,198

14,792,836

14,796,527

14,791,778

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 NINE MONTHS ENDED SEPTEMBER 30,2018 AND 2017 (UNAUDITED)

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES

Netincome

$

6,519

Adjustments to reconcile netincome to cash provided by operating activities:

Depreciation and amortization

6,523

5,066

Loss from sale of property and equipment

102

5

Provision of bad debt allowance

-

679

Provision for obsolete inventories

2,697

4,624

Deferred income tax

(1,706)

(2,004)

Stock-based compensation

7

10

Changes in operating assets and liabilities

Accounts receivable

(15,012)

(12,805)

Inventories

(32,831)

(3,423)

Value added tax receivable

430

(762)

Other receivables and prepaid expenses

(19,792)

(3,395)

Advances on inventory purchases

(8,199)

(1,619)

Amounts due from related parties

4

(937)

Accounts payable

29,547

(3,738)

Accounts payable and other payables- related parties

153

232

Other payables and accrued liabilities

14,054

(2,219)

Value added and other taxes payable

(3,892)

(2,561)

Income tax payable

311

(256)

Net cash used in operating activities

(21,122)

(16,584)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(9,144)

(4,356)

Net Cash used in by investing activities

(9,356)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

39,872

47,570

Repayment of bank loans

(40,225)

(33,372)

Repayment of loans from related party

3,232

7,596

Advances to related party

(8,183)

(6,464)

Net cash (used in) provided by financing activities

(5,304)

15,330

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(2,827)

1,121

NET DECREASE IN CASH AND CASH EQUIVALENTS

(38,397)

(4,489)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

62,876

45,288

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

24,479

$

40,799

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,202

$

645

Income taxes

$

4,427

$

3,120

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