Ever-Glory Reports Second Quarter 2019 Financial Results

NANJING,China,Aug. 14,2019 --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 second quarter ended June 30,2019.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the second 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."

"During the second quarter of 2019,our retail brands continue to attract new customers and retain existing customers by focusing on design,quality and value," Mr. Kang continued. "Following the remodeling or relocation of 39 stores during 2019,we operated a nationwide network of 1,235 stores as of June 30,2019."

"Looking at our wholesale business,we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward,we'll implement a stricter client evaluation system and remain diligent in our 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 second quarter results,are coupled with our ability to increase operating leverage. 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."

Second Quarter 2019 Financial Results

Total salesfor the second quarter of 2019 were $77.3 million,a decrease of 12.7% from $88.5 million in the second quarter of 2018. This decrease was primarily driven by an 19.4% decrease in our retail business and a 4.0% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 19.4% to $40.1 million for the second quarter of 2019,compared with $49.7 million for the second quarter of 2018. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 1,235 retail stores as of June 30,2019,compared with 1,417 retail stores as of June 30,2018.

Sales for the Company's wholesale divisiondecreased by 4.0% to $37.3 million for the second quarter of 2019,compared with $38.8 million for the second quarter of 2018. This decrease was primarily attributable to decreased sales in Mainland China,Hong Kong China,Japan,Germany,United Kingdom and other European markets partially offset for increased sales in the United States.

Total gross profit for the second quarter of 2019 decreased by 16.1% to $29.0 million,compared with $34.5 million for the second quarter of 2018. Total gross margin decreased to 37.5% from 39.0% for the second quarter of 2018.

Gross profit for the retail businessdecreased by 16.1% to $23.0 million for the second quarter of 2019,compared with $27.4 million for the second quarter of 2018. Gross margin was 57.3%,compared to 55.1% for the second quarter of 2018.

Gross profit for the wholesale businessdecreased by 16.0% to $6.0 million for the second quarter of 2019,compared with $7.2 million for the second quarter of 2018. Gross margin decreased to 16.1% from 18.4% for the second quarter of 2018.

Selling expensesfor the second quarter of 2019 decreased by 12.8% to $19.7 million,or 25.5% of total sales,compared with $22.6 million,or 25.5% of total sales for the second quarter of 2018. The decrease was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expensesfor the second quarter of 2019 decreased by 16.8% to $7.3 million,or 9.5% of total sales,compared with $8.8 million,or 10.0% of total sales for the second quarter of 2018. The decrease was mainly attributable to the decline in number of stores.

Income from operationsfor the second quarter of 2019 decreased by 37.7% to $2.0 million compared with $3.1 million for the second quarter of 2018.

Net income attributable to the Company for the second quarter of 2019 was $1.9 million compared with $2.8 million for the second quarter of 2018. Basic and diluted earnings per share were $0.13 for the second quarter of 2019 compared with $0.19 for the second quarter of 2018.

Balance Sheet

As of June 30,Ever-Glory had approximately $34.5 million of cash and cash equivalents,compared with approximately $47.0 million as of December 31,2018. Ever-Glory had working capital of approximately $42.6 million as of June 30,and outstanding bank loans of approximately $26.0 million as of June 30,2019.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14,2019(8:00 p.m. Beijing Time on August 14,2019). Listeners can access the conference call by dialing +1-800-289-0438 or + 1-323-794-2423 and using the access code 5902045. 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 5902045.

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 30,2019 AND DECEMBER 31,2018 (UNAUDITED)

2019

2018

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

34,526

$

47,012

Accounts receivable,net

64,704

86,527

Inventories

63,127

65,929

Advances on inventory purchases

8,754

6,420

Value added tax receivable

3,102

2,580

Other receivables and prepaid expenses

6,648

10,204

Amounts due from related parties

144

192

Total Current Assets

181,005

218,864

NONCURRENT ASSETS

Intangible assets,net

4,886

4,962

Property and equipment,net

28,245

28,445

Operating lease right-of-use assets

51,623

-

Total Non-Current Assets

84,754

33,407

TOTAL ASSETS

$

265,759

$

252,271

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

25,999

$

29,497

Accounts payable

50,352

78,412

Accounts payable and other payables – related parties

4,796

4,756

Other payables and accrued liabilities

12,665

21,958

Value added and other taxes payable

-

2,569

Income tax payable

1,774

1,569

Current operating lease liabilities

42,808

-

Total Current Liabilities

138,394

138,761

NONCURRENT LIABILITIES

Deferred tax liabilities

-

354

Non-current operating lease liabilities

8,839

-

TOTAL LIABILITIES

147,233

139,115

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 50,14,800,140 and

14,798,198 shares issued and outstanding As of June 30,2019 and December 31,

2018,respectively)

15

15

Additional paid-in capital

3,635

3,627

Retained earnings

107,249

105,914

Statutory reserve

19,083

19,083

Accumulated other comprehensive income

(2,093)

(3,578)

Amounts due from related party

(7,863)

(10,354)

Total equity attributable to stockholders of the Company

120,026

114,707

Noncontrolling interest

(1,500)

(1,551)

Total Equity

118,526

113,156

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

265,271

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 30,2019 AND 2018 (UNAUDITED)

Threemonths ended

Six months ended

June 30,

June 30,

2019

2018

2019

2018

NET SALES

$

77,316

$

88,541

$

165,272

$

181,326

COST OF SALES

48,330

53,999

106,928

115,439

GROSS PROFIT

28,986

34,542

58,344

65,887

OPERATING EXPENSES

Selling expenses

19,699

22,590

40,706

44,817

General and administrative expenses

7,337

8,823

14,867

16,496

Total Operating Expenses

27,036

31,413

55,573

61,313

INCOME FROM OPERATIONS

1,950

3,129

2,771

4,574

OTHER INCOME (EXPENSES)

Interest income

277

370

484

696

Interest expense

(408)

(360)

(771)

(924)

Other income

1,409

865

1,114

1,001

Total Other Income,Net

1,278

875

827

773

INCOME BEFORE INCOME TAX EXPENSE

3,228

4,004

3,598

5,347

Income tax expense

(1,455)

(1,285)

(2,280)

(2,041)

NET INCOME

1,773

2,719

1,318

3,306

Net loss attributable to the non-controlling interest

83

57

17

285

NET INCOME ATTRIBUTABLE TO THE

COMPANY

1,856

2,776

1,335

3,591

NET INCOME

$

1,773

$

2,719

$

1,318

$

3,306

Foreign currency translation (loss) gain

(2,487)

(6,091)

1,485

(2,068)

Unrealized loss of derivative contracts designated as

cash flow hedge

-

(469)

-

(469)

COMPREHENSIVE INCOME (LOSS)

(714)

(3,841)

2,803

769

Comprehensive (loss)income attributable to the non-

controlling interest

(48)

(13)

52

309

COMPREHENSIVE INCOME (LOSS)

ATTRIBUTABLE TO THE COMPANY

$

(762)

$

(3,854)

$

2,855

$

1,078

EARNINGS PER SHARE ATTRIBUTABLE TO

THE COMPANY'S STOCKHOLDERS

Basic and diluted

$

0.13

$

0.19

$

0.09

$

0.24

Weighted average number of shares outstanding

Basic and diluted

14,140

14,795,992

14,992

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

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

FOR THE THREE AND SIX MONTHSENDED JUNE 30,2019 AND 2018 (UNAUDITED)

Additional

Retained Earnings

Accumulated

other

Amounts

due from

Total

equity

attributable

to stockholders

Non-

Common Stock

paid-in

Statutory

Comprehensive

related

of the

controlling

Total

Shares

Amount

capital

Unrestricted

reserve

income

party

Company

Interest

equity

Balance at January 1,2019

14,198

$

15

$

3,627

$

105,914

$

19,083

$

(3,578)

$

(10,354)

$

114,707

(1,551)

$

113,156

Stock issued forcompensation

1,942

0.004

8

-

-

-

-

8

-

8

Net income (loss)

-

-

-

(521)

-

-

-

(521)

66

(455)

Net cash received from related party

under counter guarantee agreement

-

-

-

-

-

-

1,101

1,101

-

1,101

Foreign currency translation gain

3,972

-

3,972

34

4,006

Balance at March 31,140

15

3,635

105,393

19,083

394

(9,253)

119,267

(1,451)

117,816

Net income (loss)

-

-

-

1,856

-

-

1,856

(83)

1,773

Net cash received from related party

under counter guarantee agreement

-

-

-

-

-

1,390

1,390

-

1,390

Foreign currency translation loss

-

-

-

-

-

(2,487)

(2,487)

34

(2,453)

Balance at June 30,140

$

15

$

3,635

$

107,249

$

19,083

$

(2,093)

$

(7,863)

$

120,026

(1,500)

$

118,526

Additional

Retained Earnings

Accumulated

other

Amounts

due from

Total

equity

attributable

to stockholders

Non-

Common Stock

paid-in

Statutory

Comprehensive

related

of the

controlling

Total

Shares

Amount

capital

Unrestricted

reserve

income

party

Company

Interest

equity

Balance at January1,2018

14,992

$

15

$

3,620

$

95,195

$

17,794

$

2,585

$

(15,449)

$

103,760

(1,062)

$

102,698

Net income (loss)

-

-

-

815

-

-

-

815

(228)

587

Net cash paid to related party under

counter guarantee agreement

-

-

-

-

-

-

(8,480)

(8,480)

-

(8,480)

Foreign currency translation gain(loss)

4,023

-

4,023

(94)

3,929

Balance at March 31,992

15

3,620

96,010

17,794

6,608

(23,929)

100,118

(1,384)

98,734

Net income (loss)

-

-

-

2,776

-

-

-

2,776

(58)

2,718

Net cash received from related party

under counter guarantee agreement

-

-

-

-

-

-

2,340

2,340

-

2,340

Foreign currency translation loss

-

-

-

-

-

(6,656)

-

(6,656)

123

(6,533)

Balance at June 30,620

$

98,786

$

17,794

$

(48)

$

(21,589)

$

98,578

(1,319)

$

97,259

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 30,2019 AND 2018 (UNAUDITED)

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

1,306

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

Depreciation and amortization

4,491

4,903

Loss from sale of property and equipment

53

6

Provision of bad debt allowance

682

-

Provision for obsolete inventories

1,824

1,626

Deferred income tax

(1,461)

(843)

Stock-based compensation

8

-

Changes in operating assets and liabilities

Accounts receivable

21,793

20,150

Inventories

1,145

(10,873)

Value added tax receivable

504

681

Other receivables and prepaid expenses

3,502

(8,942)

Advances on inventory purchases

(2,353)

(7,145)

Amounts due from related parties

(129)

1,117

Accounts payable

(25,954)

(14,296)

Accounts payable and other payables- related parties

58

(1,485)

Other payables and accrued liabilities

(10,789)

8,006

Value added and other taxes payable

(4,684)

(5,924)

Income tax payable

207

(942)

Net cash used in operating activities

(9,785)

(10,655)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(4,082)

(6,295)

Net cash used in investing activities

(4,295)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

16,320

28,111

Repayment of bank loans

(19,904)

(30,533)

Repayment of loans from related party

8,149

2,556

Advances to related party

(5,454)

(8,734)

Net cash used in financing activities

(889)

(8,600)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

2,270

(887)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(12,486)

(26,437)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

47,012

62,876

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

34,526

$

36,439

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

771

$

924

Income taxes

$

2,436

$

3,016

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