Ever-Glory Reports Second Quarter 2020 Financial Results

NANJING,China,Aug. 14,2020 -- 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 secondquarter ended June 30,2020.

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 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 9 stores during 2020,we operated a nationwide network of 935 stores as of June 30,2020."

"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 secondquarter 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."

SecondQuarter 2020Financial Results

Total salesfor the second quarter of 2020were $50.1million,a decrease of 35.2% from $77.3million in the second quarter of 2019. This decrease was primarily driven by a30.0% decrease in our retail business and a 40.8% decrease in wholesale business.

Sales for the Company's branded fashion apparel retail division decreased by 30.0% to $28.1million for the second quarter of 2020,compared with $40.1million for the second quarter of 2019. This decrease was primarily due to a decrease in the amounts of stores and same-store sales. The Company had 935 retail stores as of June 30,2020,compared with 1,235retail stores as of June 30,2019.

Sales for the Company's wholesale divisiondecreased by 40.8% to $22.0million for the second quarter of 2020,compared with $37.3million for the second quarter of 2019. This decrease was primarily attributable to a decrease in sales in Hong Kong,Germany,Europe-Other,Mainland China,United Kingdom and United States,partially offset by an increase in sales in Japan.

Total gross profit for the second quarter of 2020decreased by 50.2% to $14.4million,compared with $29.0million for the second quarter of 2019. Total gross margin decreased to 28.8% from 37.5% for the second quarter of 2019.

Gross profit for the retail businessdecreased by 56.1% to $10.1million for the second quarter of 2020,compared with $23.0million for the second quarter of 2019. Gross margin was 36.2%,compared to 57.3% for the second quarter of 2019.

Gross profit for the wholesale businessdecreased by 27.5% to $4.4million for the second quarter of 2020,compared with $6.0million for the second quarter of 2019. Gross margin increased to 19.7% from 16.1% for the second quarter of 2019.

Selling expensesfor the second quarter of 2020decreased by 35.9% to $12.6million,or 25.2% of total sales,compared with $19.7million,or 25.5% of total sales for the second quarter of 2019. The decrease was attributable to the marketing expenses associated with the promotion of the retail brand.

General and administrative expensesfor the second quarter of 2020decreased by 18.6% to $6.0million,or 11.9% of total sales,compared with $7.3 million,or 9.5% of total sales for the second quarter of 2019. The decrease was attributable to the decline in number of stores.

(Loss) Income from operationsfor the second quarter of 2020decreased by 312.8% to ($4.2million)compared with $2.0million for the second quarter of 2019.

Net (loss) income attributable to the Company for the second quarter of 2020was ($3.8million)compared with $1.9 million for the second quarter of 2019. Basic and diluted (loss) earnings per share were ($0.26)for the second quarter of 2020compared with $0.13for the second quarter of 2019.

Balance Sheet

As of June 30,Ever-Glory had approximately $59.2 million of cash and cash equivalents,compared with approximately $48.6million as of December 31,2019. Ever-Glory had working capital of approximately $54.4 million as of June 30,and outstanding bank loans of approximately $40.3million as of June 30,2020.

Conference Call

The Company will hold a conference call at 8:00 a.m. Eastern Time on August 14,2020(8:00 p.m. Beijing Time on August 14,2020). Listeners can access the conference call by dialing +1-800-263-0877or + 1-646-828-8143 and using the access code 4455706. 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 14through 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 4455706.

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 JUNE 30,2020 AND DECEMBER 31,2019 (UNAUDITED)

2020

2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

59,238

$

48,551

Restrict cash

17,716

2,204

Trading securities

825

-

Accounts receivable,net

45,766

78,053

Inventories

51,254

67,355

Advances on inventory purchases

5,726

9,681

Value added tax receivable

1,340

2,495

Other receivables and prepaid expenses

4,328

5,293

Amounts due from related parties

329

123

Total Current Assets

186,522

213,755

NONCURRENT ASSETS

Intangible assets,net

4,499

4,729

Property and equipment,net

25,964

28,812

Operating lease right-of-use assets

34,496

53,379

Deferred tax assets

807

996

Total Non-Current Assets

65,766

87,916

TOTAL ASSETS

$

252,288

$

301,671

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

40,271

$

29,931

Accounts payable

51,169

72,418

Accounts payable and other payables – related parties

4,050

4,811

Other payables and accrued liabilities

10,118

19,137

Value added and other taxes payable

-

1,657

Income tax payable

222

1,142

Current operating lease liabilities

26,309

44,888

Total Current Liabilities

132,139

173,984

NONCURRENT LIABILITIES

Non-current operating lease liabilities

8,256

8,537

TOTAL LIABILITIES

140,395

182,521

COMMITMENTS AND CONTINGENCIES (Note 8)

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 June 30,2020 and December 31,

2019,respectively)

15

15

Additional paid-in capital

3,645

3,640

Retained earnings

99,833

106,328

Statutory reserve

19,939

19,939

Accumulated other comprehensive (loss)

(6,031)

(4,330)

Amounts due from related party

(3,996)

(4,932)

Total equity attributable to stockholders of the Company

113,405

120,660

Noncontrolling interest

(1,512)

(1,510)

Total Equity

111,893

119,150

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

252,671

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES CONDENSED

CONSOLIDATED STATEMENTS OF INCOME (LOSS) 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 30,2020 AND 2019 (UNAUDITED)

Threemonths ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

NET SALES

$

50,086

$

77,316

$

108,441

$

165,272

COST OF SALES

35,641

48,330

77,958

106,928

GROSS PROFIT

14,445

28,986

30,483

58,344

OPERATING EXPENSES

Selling expenses

12,626

19,699

26,105

40,706

General and administrative expenses

5,971

7,337

11,755

14,867

Total Operating Expenses

18,597

27,036

37,860

55,573

(LOSS) INCOME FROM OPERATIONS

(4,152)

1,950

(7,377)

2,771

OTHER INCOME (EXPENSES)

Interest income

339

277

616

484

Interest expense

(566)

(408)

(907)

(771)

Other income

845

1,409

1,663

1,114

Total Other Income,Net

618

1,278

1,372

827

(LOSS) INCOME BEFORE INCOME TAX

EXPENSE

(3,534)

3,228

(6,005)

3,598

Income tax expense

(266)

(1,455)

(493)

(2,280)

NET (LOSS) INCOME

(3,800)

1,773

(6,498)

1,318

Non-controlling interest

6

83

3

17

NET (LOSS) INCOME ATTRIBUTABLE TO THE

COMPANY

(3,794)

1,856

(6,495)

1,335

NET (LOSS) INCOME

$

(3,800)

$

1,773

$

(6,498)

$

1,318

Foreign currency translation (loss) gain

(263)

(2,453)

(1,700)

1,553

COMPREHENSIVE (LOSS) INCOME

(4,063)

(680)

(8,198)

2,871

Comprehensive loss (income) attributable to the non-

controlling interest

8

49

2

(51)

COMPREHENSIVE (LOSS)

INCOMEATTRIBUTABLE TO THE

COMPANY

$

(4,055)

$

(631)

$

(8,196)

$

2,820

(LOSS) EARNINGS PER SHARE

ATTRIBUTABLE TO THE COMPANY'S

STOCKHOLDERS

Basic and diluted

$

(0.26)

$

0.13

$

(0.44)

$

0.09

Weighted average number of shares outstanding

Basic and diluted

14,832

14,800,140

14,595

14,140

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 AND SIX MONTHSENDED JUNE 30,2020 AND 2019 (UNAUDITED)

Total

equity

attributable

Additional

Retained Earnings

Accumulated

other

Amounts

due from

to stockholders

Non-

Common Stock

paid-in

Statutory

Comprehensive

related

of the

controlling

Total

Shares

Amount

capital

Unrestricted

reserve

loss

party

Company

Interest

equity

BalanceatJanuary 1,2020

14,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660

(1,510)

$

119,150

Stock issued forcompensation

3,062

0.003

5

-

-

-

-

5

5

Net income (loss)

-

-

-

(2,701)

-

-

-

(2,701)

3

(2,698)

Net cash received

from related party

under counter

guarantee

agreement

-

-

-

-

-

-

785

785

-

785

Foreign currency translation gain

(loss)

(1,440)

-

(1,440)

3

(1,437)

Balance at March

31,832

15

3,645

103,627

19,939

(5,770)

(4,147)

117,309

(1,504)

115,805

Net (loss)

(3,794)

(3,794)

(6)

(3,800)

Net cash received

from related party

under counter

guarantee

agreement

151

151

151

Foreign currency translation loss

(261)

(261)

(2)

(263)

Balance at June 30,

2020

14,832

$

15

$

3,645

$

99,833

$

19,939

$

(6,031)

$

(3,996)

$

113,405

(1,512)

$

111,893

Total

equity

attributable

Retained Earnings

Accumulated

Amounts

to

Common Stock

Additional

paid-in

Statutory

other

Comprehensive

due from

related

stockholders

of the

Non-

controlling

Total

Shares

Amount

capital

Unrestricted

reserve

(loss) income

party

Company

Interest

equity

BalanceatJanuary1,2019

14,798,198

$

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

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

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 30,2020 AND 2019 (UNAUDITED)

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income

$

(6,318

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

Depreciation and amortization

3,597

4,491

Loss from sale of property and equipment

189

53

Provision of bad debt allowance

969

682

Provision for obsolete inventories

3,681

1,824

Deferred income tax

71

(1,461)

Stock-based compensation

3

8

Changes in operating assets and liabilities

Accounts receivable

30,444

21,793

Inventories

11,659

1,145

Value added tax receivable

1,076

504

Other receivables and prepaid expenses

737

3,502

Advances on inventory purchases

3,845

(2,353)

Amounts due from related parties

(214)

(129)

Accounts payable

(22,522)

(25,954)

Accounts payable and other payables- related parties

(466)

58

Other payables and accrued liabilities

(7,027)

(10,789)

Value added and other taxes payable

(1,593)

(4,684)

Income tax payable

(910)

207

Net cash provided (used in) operating activities

17,041

(9,785)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(1,018)

(4,082)

Purchases of trading securities

(825)

-

Net cash used in investing activities

(1,843)

(4,082)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

31,995

16,320

Repayment of bank loans

(21,173)

(19,904)

Repayment of loans from related party

4,027

8,149

Advances to related party

(3,129)

(5,454)

Net cash provided (used in) financing activities

11,720

(889)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(721)

2,270

NET INCREASE (DECREASE) IN CASH,CASH EQUIVALENTS AND

RESTRICTED CASH

26,197

(12,486)

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING

OF PERIOD

50,755

47,012

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

$

76,952

$

34,526

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

consolidated balance sheets:

Cash and Cash Equivalents

59,236

47,012

Restricted cash

17,716

-

$

76,952

$

47,012

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

907

$

771

Income taxes

$

493

$

2,436

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