Ever-Glory Reports First Quarter 2020 Financial Results

NANJING,China,May15,2020 -- 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 firstquarter ended March31,2020.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the first 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 first quarter of 2020,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 2 stores during 2020,we operated a nationwide network of 1,038 stores as of March 31,2020."

"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 firstquarter 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."

First Quarter 2020Financial Results

Total salesfor the first quarter of 2020were $58.4million,a decrease of 33.7% from $88.0 million in the first quarter of 2019. This decrease was primarily driven by a20.7% decrease in our wholesalebusinessanda39.7% decrease in our retailbusiness.

Salesfor the Company's wholesale divisiondecreased by 20.7% to $22.3 million for the first quarter of 2020,compared with $28.1 million for the first quarter of 2019. This decrease was primarily attributable to decreased sales in Mainland China,Germany,other European markets and Japan partially offset for increased sales in Hong Kong,the United States and the United Kingdom.

Sales for the Company's branded fashion apparel retail division decreased by 39.7% to $36.1 million for the first quarter of 2020,compared with $59.9 million for the first quarter of 2019. This decrease was primarily due to a decrease in same-store sales. The Company had 1,038retail stores as of March 31,2020,compared with 1,315retail stores as of March 31,2019.

Total gross profit for the first quarter of 2020decreased by45.4% to $16.0 million,compared with $29.4 million for the first quarter of 2019. Total gross margin decreased to 27.5% from 33.4% for the first quarter of 2019.

Gross profitfor the wholesale businessincreasedby 46.7% to $3.5 million for the first quarter of 2020,compared with $6.6 million for the first quarter of 2019. Gross margin decreased to 15.7% from 23.3% for the first quarter of 2019.

Gross profit for the retail businessdecreased by 45.0% to $12.5 million for the first quarter of 2020,compared with $22.8 million for the first quarter of 2019. Gross margin was 34.8%,compared to38.1% for the first quarter of 2019.

Selling expensesfor the first quarter of 2020decreased by 35.8% to $13.5 million,or 23.1% of total sales,compared with $21.0 million,or 23.9% of total salesfor the first quarter of 2019. The decrease was attributable to the decreased sales.

General and administrative expensesfor the first quarter of 2020decreased by 23.2% to $5.8 million,or 9.9% of total sales,compared with $7.5 million,or 8.6% of total salesfor the first quarter of 2019. The decrease was mainly attributable to the decreased office expenses.

(Loss) Income from operationsfor the first quarter of 2020decreased by 493.0% to ($3.2)million compared with $0.8million for the first quarter of 2019.

Net loss attributableto the Companyfor the first quarter of 2020was $2.7million compared with $0.5 million for the first quarter of 2019. Basic and diluted loss per share were $0.18for the first quarter of 2020compared with basic and diluted earnings per share of $0.04 for the first quarter of 2019.

Balance Sheet

As of March31,Ever-Glory had approximately $70.0 million of cash and cash equivalents,compared with approximately $48.6million as of December 31,2019. Ever-Glory had working capital of approximately $49.3 million as of March31,and outstanding bank loans of approximately $26.1million as of March 31,2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on May 15,2020(8:00 p.m. Beijing Time on May 15,2020). Listeners can access the conference call by dialing +1-800-263-0877or + 1-646-828-8143 and using the access code 2134878. 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 May 15through 11:59 p.m. Eastern Time on May 22,by dialing +1-844-512-2921 or +1-412-317-6671 and using the access code 2134878.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

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

AS OF MARCH 31,2020 AND DECEMBER 31,2019 (UNAUDITED)

2020

2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

70,036

$

48,551

Accounts receivable,net

42,265

78,053

Inventories

52,152

67,355

Advances on inventory purchases

1,248

2,495

Value added tax receivable

6,961

7,497

Other receivables and prepaid expenses

6,723

9,681

Amounts due from related parties

102

123

Total Current Assets

179,487

213,755

NONCURRENT ASSETS

Intangible assets,net

4,529

4,729

Property and equipment,net

26,886

28,812

Operating lease right-of-use assets

42,583

53,379

Deferred tax assets

878

996

Total Non-Current Assets

74,876

87,916

TOTAL ASSETS

$

254,363

$

301,671

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

26,104

$

29,931

Accounts payable

52,173

72,418

Accounts payable and other payables – related parties

3,889

4,811

Other payables and accrued liabilities

13,033

19,137

Value added and other taxes payable

598

1,657

Income tax payable

121

1,142

Current operating lease liabilities

34,315

44,888

Total Current Liabilities

130,233

173,984

NONCURRENT LIABILITIES

Non-current operating lease liabilities

8,325

8,537

TOTAL LIABILITIES

138,558

182,521

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 50,14,804,832 and

14,801,770 shares issued and outstanding As of March 31,2020 and December

31,2019,respectively)

15

15

Additional paid-in capital

3,645

3,640

Retained earnings

103,627

106,328

Statutory reserve

19,939

19,939

Accumulated other comprehensive loss

(5,770)

(4,330)

Amounts due from related party

(4,147)

(4,932)

Total equity attributable to stockholders of the Company

117,309

120,660

Noncontrolling interest

(1,504)

(1,510)

Total Equity

115,805

119,150

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

254,671

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVELOSS (INCOME)

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

FOR THE THREE MONTHS ENDED MARCH 31,2020 AND 2019 (UNAUDITED)

2020

2019

SALES

$

58,355

$

87,956

COST OF SALES

42,317

58,598

GROSS PROFIT

16,038

29,358

OPERATING EXPENSES

Selling expenses

13,478

21,008

General and administrative expenses

5,785

7,529

Total operating expenses

19,263

28,537

(LOSS) INCOME FROM OPERATIONS

(3,225)

821

OTHER INCOME (EXPENSE)

Interest income

277

207

Interest expense

(341)

(363)

Other income (expense),net

818

(295)

Total other income (expense),net

754

(451)

(LOSS) INCOME BEFORE INCOME TAX

(2,471)

370

INCOME TAX EXPENSE

(227)

(825)

NET LOSS

(2,698)

(455)

Net (income) loss attributable to the non-controlling interest

(3)

(66)

NET LOSS ATTRIBUTABLE TO THE COMPANY

$

(2,701)

$

(521)

NET LOSS

$

(2,698)

$

(455)

Foreign currency translation gain (loss)

(1,437)

4,006

COMPREHENSIVE (LOSS) INCOME

$

(4,135)

$

3,551

Comprehensive loss attributable to the noncontrolling interest

6

100

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY

$

(4,129)

$

3,651

EARNINGS (LOSS) PER SHARE:

Basic and diluted

$

(0.18)

$

(0.04)

Weighted average number of shares outstanding Basic and diluted

14,832

14,800,140

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 MONTHSENDED March 31,2020 AND 2019 (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

loss

party

Company

Interest

equity

Balance at

January1,2020

14,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660

(1,510)

$

119,150

Stock-based

compensation

3,062

0.003

5

-

-

-

-

5

5

Net income (loss)

-

-

-

(2,701)

-

-

(2,701)

3

(2,698)

Net cash received

(paid) to related

party under

counter guarantee

agreement

-

-

-

-

-

-

785

785

-

785

Foreign currency

translation income

(loss)

(1,440)

-

(1,440)

3

(1,437)

Balance at

March31,832

$

15

$

3,645

$

103,627

$

19,939

$

(5,770)

$

(4,147)

$

117,309

(1,504)

$

115,805

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

14,798,198

$

15

$

3,627

$

105,914

$

19,083

$

(3,578)

$

(10,354)

$

114,707

(1,551)

$

113,156

Stock-based

compensation

1,942

0.004

8

-

-

-

-

8

8

Net (loss) income

-

-

-

(521)

-

-

-

(521)

66

(455)

Net cash received

(paid) to related

party under

counter guarantee

agreement

-

-

-

-

-

-

1,101

1,101

-

1,101

Foreign currency

translation income

(loss)

3,972

-

3,972

34

4,006

Balance at

March31,140

$

15

$

3,635

$

105,393

$

19,083

$

394

$

(9,253)

$

119,267

(1,451)

$

117,816

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars,2020 AND 2019 (UNAUDITED)

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(2,698)

$

(455)

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

Depreciation and amortization

1,587

2,225

Gain on disposal of intangible assets

(268)

-

Loss from sale of property and equipment

102

52

Provision of bad debt allowance

278

-

Provision for obsolete inventories

4,204

1,824

Deferred income tax

104

(145)

Stock-based compensation

5

8

Changes in operating assets and liabilities

Accounts receivable

34,906

31,027

Inventories

10,303

10,557

Value added tax receivable

210

1,406

Other receivables and prepaid expenses

364

3,975

Advances on inventory purchases

2,855

490

Amounts due from related parties

142

103

Accounts payable

(19,864)

(26,505)

Accounts payable and other payables- related parties

(1,038)

(741)

Other payables and accrued liabilities

(5,587)

(9,565)

Value added and other taxes payable

(31)

(2,788)

Income tax payable

(1,019)

(327)

Net cash provided by operating activities

24,555

11,141

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

(78)

(2,131)

Disposal of intangible assets

353

-

Net cash provided by (used in) investing activities

275

(2,131)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

11,464

6,029

Repayment of bank loans

(14,884)

(7,408)

Repayment of counter guarantee from related party

748

3,488

Advances to related party

-

(2,163)

Net cash provided by (used in) financing activities

(2,672)

(54)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

1,497

1,908

NET INCREASE IN CASH,CASH EQUIVALENTS AND RESTRICTED

CASH

23,655

10,864

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING

OF PERIOD

48,551

47,012

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

$

72,206

$

57,876

Reconciliation of cash,cash equivalents and restricted cash reported within their

consolidated balance sheets:

Cash and Cash Equivalents

70,036

47,012

Restricted cash (booked in other receivables and prepaid expenses)

2,170

-

$

72,206

$

47,012

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

341

$

363

Income taxes

$

1,218

$

126

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