Ever-Glory Reports Third Quarter 2020 Financial Results

NEW YORK,Nov. 13,2020 -- 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 thirdquarter ended September 30,2020.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the third 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 third 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 38 stores during 2020,we operated a nationwide network of 923 stores as of September 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 thirdquarter 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."

ThirdQuarter 2020Financial Results

Total salesfor the thirdquarter of 2020were $79.9million,a decrease of 29.5% from $113.3million in the thirdquarter of 2019. This decrease was primarily driven by a44.9% decrease in our wholesale business,partially offset bya 10.3% increase in retailbusiness.

Sales for the Company's branded fashion apparel retail division increased by 10.3% to $34.8million for the thirdquarter of 2020,compared with $31.6million for the thirdquarter of 2019. This increase was primarily due to an increase in the e-commerce sales. The Company had 923retail stores as of September30,2020,compared with 1,157retail stores as of September30,2019.

Sales for the Company's wholesale divisiondecreased by 44.9% to $45.1million for the thirdquarter of 2020,compared with $81.7million for the thirdquarter of 2019. This decrease was primarily attributable to a decrease in sales in Mainland China,Hong Kong,Germany,Europe-Other,Japan,United States and United Kingdom.

Total gross profit for the thirdquarter of 2020decreased by 2.8% to $23.7million,compared with $24.4million for the thirdquarter of 2019. Total gross margin increased to 29.6% from 21.5% for the thirdquarter of 2019.

Gross profit for the retail businessincreased by 2.7% to $14.5million for the third quarter of 2020,compared with $14.1million for the thirdquarter of 2019. Gross margin was 41.6%,compared to 44.7% for the thirdquarter of 2019.

Gross profit for the wholesale businessdecreased by 10.4% to $9.2million for the thirdquarter of 2020,compared with $10.3million for the thirdquarter of 2019. Gross margin increased to 20.4% from 12.6% for the thirdquarter of 2019.

Selling expensesfor the thirdquarter of 2020decreased by 27.6% to $13.0million,or 16.3% of total sales,compared with $17.9million,or 15.8% of total sales for the thirdquarter of 2019. The decrease was attributable to the lower travellingexpenses.

General and administrative expensesfor the thirdquarter of 2020increased by 3.1% to $7.8million,or 9.8% of total sales,compared with $7.6million,or 6.7% of total sales for the thirdquarter of 2019. The increase was attributable to the foreign currency transaction gain.

Income(Loss) from operationsfor the thirdquarter of 2020increased by 344.5% to $2.8million compared with ($1.2million)for the thirdquarter of 2019.

Net income (loss) attributable to the Company for the thirdquarter of 2020was $2.2million compared with ($1.1million)for the thirdquarter of 2019. Basic and diluted earnings (loss) per share were $0.15for the thirdquarter of 2020compared with ($0.07)for the thirdquarter of 2019.

Balance Sheet

As of September 30,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 $53.3 million as of September 30,and outstanding bank loans of approximately $48.4million as of September 30,2020.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 13,2020(8:00 p.m. Beijing Time on November 13,2020). Listeners can access the conference call by dialing +1-866-548-4713or + 1-323-794-2093and using the access code 9522138. 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 call will be available from 10:00 a.m. Eastern Time on November 13 through 11:59 p.m. Eastern Time on November 20 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 9522138.

About Ever-Glory International Group,Inc.

Based in Nanjing,China,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 SEPTEMBER 30,2020 AND DECEMBER 31,2019 (UNAUDITED)

2020

2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

69,950

$

48,551

Restricted cash

20,552

2,204

Trading securities

817

-

Accounts receivable,net

62,866

78,053

Inventories

46,443

67,355

Advances on inventory purchases

7,393

9,681

Value added tax receivable

2,106

2,495

Other receivables and prepaid expenses

5,229

5,293

Amounts due from related parties

1,086

123

Total Current Assets

216,442

213,755

NONCURRENT ASSETS

Equity security investment

2,936

-

Intangible assets,net

4,628

4,729

Property and equipment,net

28,203

28,812

Operating lease right-of-use assets

37,705

53,379

Deferred tax assets

1,099

996

Total Non-Current Assets

74,571

87,916

TOTAL ASSETS

$

291,013

$

301,671

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

48,444

$

29,931

Accounts payable

65,155

72,418

Accounts payable and other payables – related parties

3,878

4,811

Other payables and accrued liabilities

14,159

19,137

Value added and other taxes payable

1,134

1,657

Income tax payable

1,104

1,142

Current operating lease liabilities

29,296

44,888

Total Current Liabilities

163,170

173,984

NONCURRENT LIABILITIES

Non-current operating lease liabilities

8,491

8,537

TOTAL LIABILITIES

171,661

182,521

COMMITMENTS AND CONTINGENCIES (Note 9)

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 50,14,809,160 and

14,801,770 shares issued and outstanding as of September 30,2020 and

December 31,2019,respectively)

15

15

Additional paid-in capital

3,650

3,640

Retained earnings

102,049

106,328

Statutory reserve

19,939

19,939

Accumulated other comprehensive (loss)

(1,308)

(4,330)

Amounts due from related party

(3,430)

(4,932)

Total equity attributable to stockholders of the Company

120,915

120,660

Noncontrolling interest

(1,563)

(1,510)

Total Equity

119,352

119,150

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

291,671

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 NINE MONTHS ENDED SEPTEMBER 30,2020 AND 2019 (UNAUDITED)

Threemonths ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

NET SALES

$

79,908

$

113,326

$

188,350

$

278,598

COST OF SALES

56,235

88,967

134,193

195,895

GROSS PROFIT

23,673

24,359

54,157

82,703

OPERATING EXPENSES

Selling expenses

12,996

17,944

39,101

58,651

General and administrative expenses

7,818

7,584

19,574

22,450

Total Operating Expenses

20,814

25,528

58,675

81,101

INCOME (LOSS) FROM OPERATIONS

2,859

(1,169)

(4,518)

1,602

OTHER INCOME (EXPENSES)

Interest income

313

215

930

699

Interest expense

(700)

(265)

(1,607)

(1,036)

Other income,net

574

502

2,236

1,616

Total Other Income,Net

187

452

1,559

1,279

INCOME (LOSS) BEFORE INCOME TAX

EXPENSE

3,046

(717)

(2,959)

2,881

Income tax expense

(822)

(387)

(1,315)

(2,667)

NET INCOME (LOSS)

2,224

(1,104)

(4,274)

214

Net (loss) income attributable to the non-controlling

interest

(8)

28

(4)

46

NET INCOME (LOSS) ATTRIBUTABLE TO THE

COMPANY

2,216

(1,076)

(4,278)

260

NET INCOME (LOSS)

$

2,224

$

(1,104)

$

(4,274)

$

214

Foreign currency translation gain (loss)

4,664

(3,729)

2,964

(2,244)

COMPREHENSIVE INCOME (LOSS)

6,888

(4,833)

(1,310)

(2,030)

Comprehensive (loss) income attributable to the non-

controlling interest

(56)

15

(54)

67

COMPREHENSIVE INCOME

(LOSS)ATTRIBUTABLE TO THE COMPANY

$

6,832

$

(4,818)

$

(1,364)

$

(1,963)

EARNINGS PER SHARE ATTRIBUTABLE TO

THE COMPANY'S STOCKHOLDERS

Basic and diluted

$

0.15

$

(0.07)

$

(0.29)

$

0.02

Weighted average number of shares outstanding

Basic and diluted

14,808,737

14,770

14,805,987

14,770

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 NINE MONTHSENDED SEPTEMBER 30,2020 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

January 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

-

5

-

-

-

-

5

5

Net 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

31,2020

14,804,832

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 30,832

$

15

$

3,645

$

99,833

$

19,939

$

(6,031)

$

(3,996)

$

113,405

(1,512)

$

111,893

Stock issued

for

compensation

4,328

-

5

-

-

-

-

5

5

Net income

2,216

2,216

8

2,224

Net cash

received

from related

party under

counter

guarantee

agreement

566

566

-

566

Foreign

currency

translation

gain

4,723

4,723

(59)

4,664

Balance at

September

30,160

$

15

$

3,650

$

102,049

$

19,939

$

(1,308)

$

(3,430)

$

120,915

(1,563)

$

119,352

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,

2019

14,798,198

$

15

$

3,627

$

105,914

$

19,083

$

(3,578)

$

(10,354)

$

114,707

(1,551)

$

113,156

Stock issued

for

compensation

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

March31,800,140

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

June30,140

$

15

$

3,635

$

107,249

$

19,083

$

(2,093)

$

(7,863)

$

120,026

(1,500)

$

118,526

Stock issued

forcompensation

1,630

0.002

5

5

5

Net income

(loss)

(1,076)

(1,076)

(28)

(1,104)

Net cash

advanced to

related party

under

counter

guarantee

agreement

1,215

1,215

Foreign

currency

translation

loss

(3,729)

(3,729)

43

(3,686)

Balance at

September30,173

$

19,083

$

(5,822)

$

(6,648)

$

116,441

(1,485)

$

114,956

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 30,2020 AND 2019 (UNAUDITED)

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income

$

(4,274)

$

214

Adjustments to reconcile net (loss) income to cash provided by operating

activities:

Depreciation and amortization

4,114

6,824

Loss from sale of property and equipment

283

16

Provision of bad debt allowance

683

820

Provision for obsolete inventories

5,786

3,846

Investment loss from the trading securities

13

-

Deferred income tax

(165)

(2,388)

Stock-based compensation

10

12

Changes in operating assets and liabilities

Accounts receivable

15,571

312

Inventories

16,135

(4,979)

Value added tax receivable

(577)

(281)

Other receivables and prepaid expenses

50

3,738

Advances on inventory purchases

2,461

(3,214)

Amounts due from related parties

(848)

16

Accounts payable

(7,842)

6,253

Accounts payable and other payables- related parties

(1,112)

(692)

Other payables and accrued liabilities

(6,093)

(10,594)

Value added and other taxes payable

467

(4,120)

Income tax payable

(64)

746

Net cash provided by (used in) operating activities

24,598

(3,471)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(2,769)

(6,555)

Purchases of trading securities

(825)

-

Investment in a partnership

(2,936)

-

Net cash used in investing activities

(6,530)

(6,555)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

66,599

42,570

Repayment of bank loans

(49,278)

(35,620)

Net collection (advance) of amounts due from related party (equity)

1,618

3,937

Net cash provided by financing activities

18,939

10,887

EFFECT OF EXCHANGE RATE CHANGES ON CASH

2,740

(650)

NET INCREASE IN CASH,CASH EQUIVALENTS AND RESTRICTED

CASH

39,747

211

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING

OF PERIOD

50,755

47,012

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

$

90,502

$

47,223

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

consolidated balance sheets:

Cash and Cash Equivalents

69,950

45,837

Restricted cash

20,552

1,386

$

90,223

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,607

$

1,036

Income taxes

$

1,455

$

4,196

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