Ever-Glory Reports Fourth Quarter 2018 Financial Results

NANJING,China,March 29,2019 -- 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 fourth quarter ended December 31,2018.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the fourth 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. Notably,we achieved year-over-year improvement in gross marginof 15.7% for our wholesale businesses,as well as 6.0% for our retail business."

"During the fourth 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 250 stores during 2018,we operated a nationwide network of 1,381 stores as of December 31,2018."

"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 fourth 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."

Full Year 2018 Financial Results

Total salesfor the full year of 2018 were $448.5million,a 7.9% increasefrom $415.6million in the full year of 2017. This increase was primarily due to a 14.9% increase in wholesale sales and a 2.0% increase in retail sales.

Wholesale salesfrom the Company's wholesale business increasedby 14.9% to $218.6 million for the full year of 2018,compared with $190.2 million for the full year of 2017. This increasewas primarily due to increased sales in Japan,Mainland China,United Kingdom and United States partially offset by decreased sales in Hong Kong China,Germany and Europe-Other.

Retail salesfrom the Company's branded fashion apparel retail division increasedby 2.0% to $229.9million for the full year of 2018,compared with $225.3million for the full year of 2017. This increasewas primarily due to an increase in same store sales.

Total gross profit forthe full year of 2018 increasedby 8.6% to $147.4million,compared with $135.7 million for the full year of 2017. Total gross margin for the full year of 2018 increased to 32.9% from 32.7% for the full year of 2017.

Gross profit for wholesale businessincreased by 15.7% to $41.8million for the full year of 2018,compared with $36.1million for the full year of 2017. Gross margin for the full year of 2018 increased to 19.1% compared with 19.0% for the full year of 2017.

Gross profit for retail businessincreased by 6.0% to $105.6million for the full year of 2018,compared with $99.6million for the full year of 2017. Gross margin for the full year of 2018 increased to 45.9% from 44.2% for the full year of 2017.

Selling expensesfor the full year of 2018 increased by 6.4% to $91.4million,or 20.4% of total sales,compared with $85.9million,or 20.7% of total sales for the full year of 2017. The increase was attributable to higher retail sales.

General and administrative expensesfor the full year of 2018 increasedby 13.6% to $39.8million,or 8.9% of total sales,compared with $35.1million,or 8.4% of total sales for the full year of 2017. The increasewas mainly due to increased average salaries.

Income from operationsfor the full year of 2018 increasedby 1.8% to $15.0million compared with $14.7million for the full year of 2017.

Net incomeattributable to the Company for the full year of 2018 decreasedby 3.6% to $12.0million compared with $12.5million for the full year of 2017. Basic and diluted earnings per share were $0.81and $0.84for the full year of 2018 and 2017,respectively.

Balance Sheet

As of December 31,2018,Ever-Glory had approximately $47.0 million of cash and cash equivalents,compared with approximately $62.9million as of December 31,2017. Ever-Glory had working capital of approximately $80.1 million as of December 31,and outstanding bank loans of approximately $29.5million as of December 31,2018.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on March 29,2019(8:00 p.m. Beijing Time on March 29,2019). Listeners can access the conference call by dialing +1-888-394-8218 or + 1-323-701-0225 and using the access code 1693644. 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 March 29 through 11:59 p.m. Eastern Time on April 5,by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 1693644.

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.

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

AS OF DECEMBER 31,2018 AND 2017

2018

2017

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

47,012

$

62,876

Accounts receivable,net

86,527

81,859

Inventories

65,929

56,182

Value added tax receivable

2,580

3,757

Other receivables and prepaid expenses

10,204

5,139

Advances on inventory purchases

6,420

3,028

Amounts due from related parties

192

265

Total Current Assets

218,864

213,106

INTANGIBLE ASSETS

4,962

5,995

PROPERTY AND EQUIPMENT,NET

28,445

25,891

TOTAL ASSETS

$

252,271

$

244,992

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

29,497

$

37,730

Accounts payable

78,412

73,788

Accounts payable and other payables - related parties

4,756

4,675

Other payables and accrued liabilities

21,958

16,454

Value added and other taxes payable

2,569

6,052

Income tax payable

1,569

1,712

Total Current Liabilities

138,761

140,411

NONCURRENT LIABILITIES

Deferred tax liabilities

354

1,883

TOTAL LIABILITIES

139,115

142,294

Note 13 COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Stockholders' equity:

Preferred stock ($0.001 par value,authorized 5,000,000 shares,no shares issued

and outstanding)

-

-

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

14,795,992 shares issued and outstanding as of December 31,2018 and

December 31,2017,respectively)

15

15

Additional paid-in capital

3,627

3,620

Retained earnings

105,914

95,195

Statutory reserve

19,083

17,794

Accumulated other comprehensive income

(3,578)

2,585

Amounts due from related party

(10,354)

(15,449)

Total equity attributable to stockholders of the Company

114,707

103,760

Noncontrolling interest

(1,551)

(1,062)

Total Equity

113,156

102,698

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

252,992

See the accompanying notes to theconsolidated financial statements.

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

FOR THE YEARS ENDED DECEMBER 31,2018 AND 2017

2018

2017

SALES

$

448,508

$

415,581

COST OF SALES

301,153

279,839

GROSS PROFIT

147,355

135,742

OPERATING EXPENSES

Selling expenses

91,439

85,940

General and administrative expenses

39,811

35,053

Marketing related intangible asset impairment

1,086

-

Total operating expenses

132,336

120,993

INCOME FROM OPERATIONS

15,019

14,749

OTHER INCOME (EXPENSE)

Interest income

1,375

1,260

Interest expense

(1,989)

(1,648)

Other income

1,977

3,509

Total other income

1,363

3,121

INCOME BEFORE INCOME TAX EXPENSE

16,382

17,870

INCOME TAX EXPENSE

(4,942)

(5,805)

NET INCOME

11,440

12,065

Net loss attributable to the non-controlling interest

568

394

NET INCOME ATTRIBUTABLE TO THE COMPANY

$

12,008

$

12,459

NET INCOME

$

11,440

$

12,065

Foreign currency translation gain

(6,163)

5,882

COMPREHENSIVE INCOME

$

5,277

$

17,947

Comprehensive loss attributable to the noncontrolling interest

79

450

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

$

5,198

$

18,397

EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY'S

STOCKHOLDERS:

Basic and diluted

$

0.81

$

0.84

Weighted average number of shares outstanding Basic and diluted

14,796,947

14,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars,2018 AND 2017

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

11,065

Adjustments to reconcile net income to cash provided by operating activities:

Intangible asset impairment loss

1,086

-

Depreciation and amortization

6,664

7,015

Loss from sale of property and equipment

108

24

Provision of bad debt allowance

660

1,223

Provision for obsolete inventories

3,324

4,624

Deferred income tax

(1,370)

(1,530)

Stock-based compensation

7

18

Changes in operating assets and liabilities

Accounts receivable

(9,893)

(11,204)

Inventories

(16,462)

(7,919)

Value added tax receivable

1,016

(600)

Other receivables and prepaid expenses

(5,659)

(1,136)

Advances on inventory purchases

(3,698)

307

Amounts due from related parties

(2,761)

(592)

Accounts payable

8,485

11,489

Accounts payable and other payables- related parties

6,275

351

Other payables and accrued liabilities

5,604

460

Value added and other taxes payable

(2,210)

567

Income tax payable

(54)

(238)

Net cash provided by operating activities

2,562

14,924

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

(12,182)

(8,564)

Net cash used in investing activities

(12,564)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

64,006

62,693

Repayment of bank loans

(70,513)

(56,296)

Repayment of loans from related party

6,657

9,280

Advances to related party

(8,428)

(7,119)

Interest income received from related party

2,997

-

Net cash provided by (used in) financing activities

(5,281)

8,558

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(963)

2,670

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(15,864)

17,588

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

62,876

45,288

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

47,876

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Accrued interest income on amounts due from related party under counter-guarantee

agreement (Note 12)

$

738

$

818

Interest

$

1,755

$

1,648

Income taxes

$

6,350

$

6,247

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