Ever-Glory Reports Third Quarter 2021 Financial Results

NEW YORK,Nov.12,2021 -- 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 endedSeptember 30,2021.

Mr. Yihua Kang,Chairman,President and Chief Executive Officer of Ever-Glory,said,"During the thirdquarter,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 thirdquarter of 2021,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 113 stores during 2021,we operated a nationwide network of 893 stores as of September 30,2021."

"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," Mr. Kang concluded.

Mr. Jason Jiansong Wang,Chief Financial Officer of Ever-Glory,added,"The thirdquarter resultsare coupled with our ability to increase operating leverage. Going forward,we remain confidence 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 2021Financial Results

Total salesfor the thirdquarter of 2021were $94.4million,anincrease of 18.1% from $79.9 million in the thirdquarter of 2020. This increase was primarily driven by a38.0% increase in our wholesale businesspartially offset bya 7.6% decrease in retailbusiness.

Sales for the Company's branded fashion apparel retail division decreased by 7.6% to $32.2 million for the third quarter of 2021,compared with $34.8 million for the third quarter of 2020. This decrease was primarily due to a decrease in the e-commerce sales.TheCompany operated 893retail stores as of September 30,2021,compared with 923retailstores as of September 30,2020.

Sales for the Company's wholesale divisionincreased by 38.0% to $62.2 million for the thirdquarter of 2021,compared with$45.1 million for the thirdquarter of 2020.This increase was primarily attributable to an increase in sales in Mainland China,Europe-Other,Japan and United States partially offset by a decrease in sales in Hong Kong and United Kingdom.

Total gross profit for the thirdquarter of 2021decreased by2% to $23.2 million,compared with $23.7 million for the thirdquarter of 2020. Total gross marginfor the thirdquarter of 2021decreased to 24.6% from 29.6% for the thirdquarter of 2020.

Gross profit for the retail businessdecreased by 10.3% to $13.0million for the thirdquarter of 2021,compared with $14.5million for the thirdquarter of 2020. Gross margin for the third quarter of 2021 was 40.3%compared to 41.6% for the thirdquarter of 2020.

Gross profit for the wholesale businessincreased by 11.2% to $10.2 million for the thirdquarterof 2021,compared with $9.2 million for the thirdquarter of 2020. Gross marginfor the third quarter of 2021decreased to 16.4% from 20.4% for the thirdquarter of 2020.

Selling expensesfor the thirdquarterof 2021increased by 11.1% to $14.4million,or 15.3% of total sales,compared with $13.0million,or 16.3% of total sales for the thirdquarter of 2020. The increase was attributable to the higher travelling expenses.

General and administrative expensesfor the thirdquarterof 2021increased by21.1% to $9.5million,or 10% of total sales,compared with $7.8million,or 9.8% of total sales for the thirdquarter of 2020.The increase was attributable to the increased salaries.

(Loss) Income from operationswas ($0.7 million) for the third quarter of 2021,compared to $2.9 million for the third quarter of 2020.

Net loss attributableto the Companyfor the thirdquarter of 2021was ($3.2 million)compared with $2.2million for the thirdquarter of 2020. Basic and diluted lossper share were ($0.22)for the thirdquarter of 2021compared with $0.15for the thirdquarter of 2020.

Balance Sheet

As of September 30,Ever-Glory had approximately $48.3 million of cash and cash equivalents,compared with approximately $81.9million as of December 31,2020. Ever-Glory had working capital of approximately $44.6 million as of September 30,and outstanding bank loans of approximately $67.8million as ofSeptember 30,2021.

Conference Call

The Company will hold a conference call at 7:00 a.m. Eastern Time on November 12,2021(8:00 p.m. Beijing Time on November 12,2021). Listeners can access the conference call by dialing +1-800-289-0438or +1-323-794-2423and using the access code 7678571. 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 12through 11:59 p.m. Eastern Time on November 19by calling +1-844-512-2921 or +1-412-317-6671with pin number 7678571.

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"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 (Unaudited)

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

September30,

2021

December31,

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

48,336

$

81,865

Restricted cash

43,176

39,858

Trading securities

3,068

1,792

Accounts receivable,net

61,525

53,285

Inventories

67,275

53,893

Advances on inventory purchases

9,864

10,261

Value added tax receivable

2,484

1,244

Other receivables and prepaid expenses

6,638

5,479

Amounts due from related parties

1,994

567

Total Current Assets

243,360

248,244

NON-CURRENT ASSETS

Equity security investment

5,903

3,932

Intangible assets,net

4,686

4,794

Property and equipment,net

32,747

32,164

Operating lease right-of-use assets

49,002

41,690

Deferred tax assets

265

902

Other non-current assets

771

-

Total Non-Current Assets

93,374

83,482

TOTAL ASSETS

$

337,734

$

331,726

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

67,848

$

65,919

Accounts payable

73,120

67,762

Accounts payable and other payables – related parties

1,016

3,764

Other payables and accrued liabilities

13,758

16,073

Value added and other taxes payable

554

909

Income tax payable

1,900

1,062

Current operating lease liabilities

40,590

33,481

Total Current Liabilities

198,786

188,970

NON-CURRENT LIABILITIES

Non-current operating lease liabilities

8,549

8,307

TOTAL LIABILITIES

207,335

197,277

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value,authorized 50,000,000 shares,14,812,312

and 14,809,160 shares issued and outstanding as of September 30,2021

and December 31,2020,respectively)

15

15

Additional paid-in capital

3,660

3,650

Retained earnings

103,013

109,171

Statutory reserve

20,376

20,376

Accumulated other comprehensive income

5,610

4,590

Amounts due from related party

(2,275)

(3,353)

Total equity

130,399

134,449

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

337,726

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME (LOSS) (Unaudited)

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

Threemonths ended

Nine months ended

September 30,

September 30,

2021

2020

2021

2020

NET SALES

$

94,406

$

79,908

$

225,776

$

188,350

COST OF SALES

71,196

56,235

161,738

134,193

GROSS PROFIT

23,210

23,673

64,038

54,157

OPERATING EXPENSES

Selling expenses

14,443

12,996

44,495

39,101

General and administrative expenses

9,467

7,818

24,980

19,574

Total Operating Expenses

23,910

20,814

69,475

58,675

(LOSS) INCOME FROM OPERATIONS

(700)

2,859

(5,437)

(4,518)

OTHER INCOME (EXPENSES)

Interest income

176

313

928

930

Interest expense

(1,218)

(700)

(1,909)

(1,607)

Government subsidy

340

235

842

926

(Loss) Gain from changes in fair values of

investments

(123)

(4)

2,151

-

Other income (expenses)

253

343

1,027

1,310

Total Other Income (expenses),Net

(572)

187

3,039

1,559

(LOSS) INCOME BEFORE INCOME TAX

EXPENSE

(1,272)

3,046

(2,398)

(2,959)

Income tax expense

(1,945)

(822)

(3,759)

(1,315)

NET (LOSS) INCOME

(3,217)

2,224

(6,157)

(4,274)

Net loss attributable to the non-controlling interest

-

(8)

-

(4)

NET LOSS ATTRIBUTABLE TO THE COMPANY

(3,216

(6,278)

NET (LOSS) INCOME

$

(3,217)

$

2,224

$

(6,157)

$

(4,274)

Foreign currency translation gain (loss)

(1,061)

4,664

1,020

2,964

COMPREHENSIVE INCOME (LOSS)

(4,278)

6,888

(5,137)

(1,310)

Comprehensive loss attributable to the non-controlling

interest

-

51

-

53

COMPREHENSIVE

INCOME(LOSS)ATTRIBUTABLE TO THE

COMPANY

$

(4,278)

$

6,939

$

(5,137)

$

(1,257)

LOSS PER SHARE ATTRIBUTABLE TO THE

COMPANY'S STOCKHOLDERS

Basic and diluted

$

(0.22)

$

0.15

$

(0.42)

$

(0.29)

Weighted average number of shares outstanding Basic

and diluted

14,811,073

14,808,737

14,810,585

14,805,987

See the accompanying notes to thecondensed consolidated financial statements.

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

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

Addition

al

Retained Earnings

Accumulated

other

Amoun

ts

due from

Total

equity

attributable

to stockholders

Common Stock

paid-in

Statutor

y

Comprehens

ive

related

of the

Total

Shares

Amou

nt

capital

Unrestrict

ed

reserve

loss

party

Company

equity

Balance at

January1,

2021

14,160

$

15

$

3,650

$

109,171

$

20,376

$

4,590

$

(3,353)

$

134,449

$

134,449

Stock issued

forcompens

ation

1,500

-

5

-

-

-

-

5

5

Net loss

-

-

-

(1,170)

-

-

-

(1,170)

(1,170)

Net cash

received

from related

party under

counter

guarantee

agreement

-

-

-

-

-

-

379

379

379

Foreign

currency

translation

gain (loss)

(1,352)

-

(1,352)

(1,352)

Balance at

March31,660

15

3,655

108,001

20,376

3,238

(2,974)

132,311

132,311

Net loss

(1,771)

(1,771)

Net cash

received

from related

party under

counter

guarantee

agreement

386

386

386

Foreign

currency

translation

loss

3,434

3,434

Balance at

June 30,660

$

15

$

3,655

$

106,230

$

20,376

$

6,672

$

(2,588)

$

134,360

$

134,360

Stock issued

for

compensatio

n

1,652

-

5

-

-

-

-

5

5

Net (Loss)

income

(3,217)

(3,217)

Net cash

received

from related

party under

counter

guarantee

agreement

313

313

313

Foreign

currency

translation

gain

(1,062)

(1,062)

Balance at

September3

0,2021

14,312

$

15

$

3,660

$

103,013

$

20,376

$

5,610

$

(2,275)

$

130,399

$

130,399

Additio

nal

Retained Earnings

Accumulate

d

other

Amount

s

due from

Total

equity

attributabl

e

to stockholde

rs

Non-

Common Stock

paid-in

Statuto

ry

Comprehen

sive

related

of the

controll

ing

Total

Shares

Amou

nt

capital

Unrestric

ted

reserv

e

loss

party

Company

Interest

equity

Balance at

January1,

2020

14,801,770

$

15

$

3,640

$

106,328

$

19,939

$

(4,330)

$

(4,932)

$

120,660

(1,510)

$

119,150

Stock issued

forcompen

sation

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

March31,804,832

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 compensati

on

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

30,2020

14,650

$

102,049

$

19,939

$

(1,308)

$

(3,430)

$

120,915

(1,563)

$

119,352

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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

Nine Months Ended

September 30,

2021

September 30,

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(6,274)

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

Depreciation and amortization

4,384

4,114

Loss from sale of property and equipment

590

283

Provision of bad debt allowance

676

683

Write off obsolete inventories

7,595

5,786

Changes in fair value of investment

(2,151)

13

Deferred income tax

644

(165)

Stock-based compensation

10

10

Changes in operating assets and liabilities

Accounts receivable

(8,614)

15,571

Inventories

(20,702)

16,135

Value added tax receivable

(1,235)

(577)

Other receivables and prepaid expenses

(1,096)

50

Advances on inventory purchases

586

2,461

Amounts due from related parties

(1,514)

(848)

Accounts payable

5,930

(7,842)

Accounts payable and other payables- related parties

(3,204)

(1,112)

Other payables and accrued liabilities

(3,332)

(6,093)

Value added and other taxes payable

(360)

467

Income tax payable

831

(64)

Net cash (used in) provided by operating activities

(27,119)

24,598

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(5,109)

(2,769)

Net (purchase) sale of trading securities

(1,077)

(901)

Investment payment

(773)

(2,860)

Net cash (used in) investing activities

(6,959)

(6,530)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

56,110

66,599

Repayment of bank loans

(54,565)

(49,278)

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

1,630

1,618

Net cash used in (provided by) financing activities

3,175

18,939

EFFECT OF EXCHANGE RATE CHANGES ON CASH

693

2,740

NET (DECREASE) INCREASE IN CASH,CASH EQUIVALENTS AND

RESTRICTED CASH

(30,211)

39,747

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT

BEGINNING OF PERIOD

121,723

50,755

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

$

91,512

$

90,502

Reconciliation of cash,cash equivalents and restricted cash reported within

their consolidated balance sheets:

Cash and Cash Equivalents

48,336

69,950

Restricted cash

43,176

20,552

$

91,502

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,909

$

1,607

Income taxes

$

2,272

$

1,455

View original content:https://www.prnewswire.com/news-releases/ever-glory-reports-third-quarter-2021-financial-results-301422882.html