Ever-Glory Reports Third Quarter 2022 Financial Results

NANJING,China,Nov. 14,2022 --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 third quarter endedSeptember 30,2022.

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 2022,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 29 stores during 2022,we operated a nationwide network of 774 stores as of September 30,2022."

"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 2022Financial Results

Total salesfor the third quarter of 2022were $106.4million,anincrease of 12.7% from $94.4 million in the third quarter of 2021. This increase was primarily driven by a33.0% increase in our wholesale business,partially offset bya 26.4% decrease in retailbusiness.

Sales for the Company's wholesale divisionincreased by 33.0% to $82.7 million for the third quarter of 2022,compared with$62.2 million for the thirdquarter of 2021.This increase was primarily attributable to increased sales in Mainland China,Hong Kong,the United Kingdom,and other European markets partially offset for decreased sales in Japan and the United States.

Sales for the Company's branded fashion apparel retail division decreased by 26.4% to $23.7 million for the third quarter of 2022,compared with $32.2 million for the third quarter of 2021. This decrease was primarily due to a decrease in same-store sales.The Company operated 774retail stores as of September 30,2022,compared with 893retail stores as of September 30,2021,.

Total gross profit for the thirdquarter of 2022decreased by30.9% to $16.0 million,compared with $23.2 million for the thirdquarter of 2021. Total gross marginfor the third quarter of 2022decreased to 15.1% from 24.6% for the third quarter of 2021.

Gross profit for the wholesale businessincreased by 2.4% to $10.5 million for the thirdquarter of 2022,compared with $10.2 million for the thirdquarter of 2021. Gross marginfor the third quarter of 2022decreased to 12.6% from 16.4% for the thirdquarter of 2021.

Gross profit for the retail businessdecreased by 57.0% to $6.0million for the third quarter of 2022,compared with $13.0million for the third quarter of 2021. Gross margin for the third quarter of 2022 was 23.6%compared to 40.3% for the thirdquarter of 2021.

Selling expensesfor the thirdquarterof 2022 decreased by 11.4% to $12.8million,or 12.0% of total sales,compared with $14.4million,or 15.3% of total sales for the thirdquarter of 2020. The decrease was attributable to the decreased average salaries and decreased business trips.

General and administrative expensesfor the thirdquarterof 2022 decreased by1.7% to $9.3million,or 8.7% of total sales,compared with $9.5million,or 10.0% of total sales for the thirdquarter of 2021.The decrease was attributable to the decreased publicity expense and the depreciation of RMB.

Loss from operationswas $6.1 million for the third quarter of 2022,compared to $0.7 million for the third quarter of 2021.

Balance Sheet

As of September 30,Ever-Glory had approximately $32.2 million of cash and cash equivalents,compared with approximately $56.6million as of December 31,2021. Ever-Glory had working capital of approximately $41.6 million as of September 30,and outstanding bank loans of approximately $63.4 million as ofSeptember 30,2022.

Conference Call

The Company will hold a conference call at 6:00 a.m. Eastern Time on November 14,2022(7:00 p.m. Beijing Time on November 14,2022). Listeners can access the conference call by dialing +1-877-704-4453or +1-201-389-0920 and using the access code 13734457. 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 9:00 a.m. Eastern Time on November 14through 11:59 p.m. Eastern Time on November 21by calling +1-844-512-2921 or +1-412-317-6671with pin number 13734457.

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"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,

2022

December31,

2021

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

32,177

$

56,573

Restricted cash

39,706

40,768

Trading securities

2,189

3,251

Accounts receivable,net

79,875

69,859

Inventories

49,038

63,841

Advances on inventory purchases

4,260

8,179

Value added tax receivable

2,144

1,693

Other receivables and prepaid expenses

6,049

6,345

Amounts due from related parties

-

220

Total Current Assets

215,438

250,729

NON-CURRENT ASSETS

Equity security investment

4,566

5,682

Intangible assets,net

4,211

4,794

Property and equipment,net

31,148

36,340

Operating lease right-of-use assets

38,905

50,077

Deferred tax assets

768

899

Other non-current assets

3,520

784

Total Non-Current Assets

83,118

98,576

TOTAL ASSETS

$

298,556

$

349,305

LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES

Bank loans

$

63,360

$

68,992

Accounts payable

59,894

67,930

Accounts payable and other payables – related parties

2,907

1,332

Other payables and accrued liabilities

14,166

18,531

Value added and other taxes payable

842

999

Income tax payable

1,107

334

Current operating lease liabilities

31,538

41,633

Total Current Liabilities

173,814

199,751

Non-current operating lease liabilities

7,538

8,596

TOTAL LIABILITIES

181,352

208,347

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY

Common stock ($0.001 par value,authorized 50,000,000 shares,14,818,006

and 14,655,926 issued and outstanding as of September 30,

respectively,812,312 and 14,664,978 issued and outstanding as of

December 31,respectively)

15

15

Additional paid-in capital

3,670

3,660

Retained earnings

99,398

108,210

Statutory reserve

21,245

21,245

Treasury stock (at cost,162,080 and 147,334 shares at September 30,2022

and December 31,respectively)

(400)

(363)

Accumulated other comprehensive (loss) income

(6,724)

8,191

Total Equity

117,204

140,958

TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY

$

298,305

EVER-GLORY INTERNATIONAL GROUP,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE 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,

2022

2021

2022

2021

NET SALES

$

106,437

$

94,406

$

235,022

$

225,776

COST OF SALES

90,390

71,196

181,194

161,738

GROSS PROFIT

16,047

23,210

53,828

64,038

OPERATING EXPENSES

Selling expenses

12,792

14,443

38,153

44,495

General and administrative expenses

9,306

9,467

21,821

24,980

Total Operating Expenses

22,098

23,910

59,974

69,475

LOSS FROM OPERATIONS

(6,051)

(700)

(6,146)

(5,437)

OTHER (EXPENSES) INCOME

Interest income

22

176

299

928

Interest expense

(524)

(1,218)

(1,458)

(1,909)

Government subsidy

192

340

397

842

(Loss) gain from changes in fair values of investments

(915)

(123)

(1,587)

2,151

Other income

317

253

885

1,027

Total Other (Expenses) Income,Net

(908)

(572)

(1,464)

3,039

LOSS BEFORE INCOME TAX EXPENSE

(6,959)

(1,272)

(7,610)

(2,398)

Income tax benefit (expense)

835

(1,945)

(1,203)

(3,759)

NET LOSS

$

(6,124)

$

(3,217)

$

(8,813)

$

(6,157)

Foreign currency translation (loss) gain

(6,336)

(1,061)

(14,915)

1,020

COMPREHENSIVE LOSS

$

(12,460)

(4,278)

$

(23,728)

$

(5,137)

LOSS PER SHARE

Basic and diluted

$

(0.41)

$

(0.22)

$

(0.59)

$

(0.42)

Weighted average number of shares outstanding,

basic and diluted

14,817,053

14,811,073

14,815,077

14,810,585

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)

Common Stock

Additional

Retained Earnings

Accumulated

Amounts

other

due from

Shares

Amount

paid-in

Treasury

Unrestricted

Statutory

comprehensive

related

Total equity

capital

stock

reserve

income (loss)

party

Balance at

January 1,2022

14,312

$

15

$

3,660

$

(363)

$

108,210

$

21,245

$

8,191

$

-

$

140,958

Stock issued

for compensation

2,042

-

5

-

-

-

-

-

5

Net loss

-

-

-

-

(5,089)

-

-

-

(5,089)

Repurchase of

14,746 shares of

common stock

-

-

-

(37)

-

-

-

(37)

Foreign currency

translation loss

(836)

(836)

Balance at

March 31,814,354

$

15

$

3,665

$

(400)

$

103,121

$

21,245

$

7,355

$

-

$

135,001

Net income

-

-

-

-

2,400

-

-

-

2,400

Foreign currency

translation loss

(7,743)

(7,743)

Balance at

June 30,665

$

(400)

$

105,521

$

21,245

$

(388)

-

$

129,658

Stock issued

for compensation

3,652

-

5

-

-

-

-

-

5

Netloss

-

-

-

-

(6,123)

-

-

-

(6,123)

Foreign currency

translation loss

(6,336)

(6,336)

Balance at

September 30,006

$

15

$

3,670

$

(400)

$

99,398

$

21,245

$

(6,724)

$

-

$

117,204

Common Stock

Additional

Retained Earnings

Accumulated

Amounts

other

due from

Shares

Amount

paid-in

Treasury

Unrestricted

Statutory

comprehensive

related

Total equity

capital

stock

reserve

income

party

Balance at

January 1,2021

14,809,160

$

15

$

3,650

$

-

$

109,171

$

20,376

$

4,590

$

(3,353)

$

134,449

Stock issued

for compensation

1,500

-

5

-

-

-

-

-

5

Netloss

-

-

-

-

(1,170)

-

-

-

(1,170)

Net cash received

from related

party under

counter guarantee agreement

-

-

-

-

-

-

-

379

379

Foreign currency

translation adjustment

(1,352)

(1,352)

Balance at

March 31,660

$

15

$

3,655

$

-

$

108,001

$

20,376

$

3,238

$

(2,974)

$

132,311

Net loss

-

-

-

-

(1,771)

-

-

-

(1,771)

Transfer to

reserve

-

-

-

-

-

-

-

-

-

Net cash

received from

related party under

counter guarantee

agreement

-

-

-

-

-

-

-

386

386

Foreign currency

translation adjustment

3,434

3,434

Balance at

June 30,655

$

-

$

106,230

$

20,376

$

6,672

$

(2,588)

$

134,360

Stock issued for

compensation

1,652

-

5

-

-

-

-

-

5

Netloss

-

-

-

-

(3,217)

-

-

-

(3,217)

Net cash received

from related party under

counter guarantee agreement

-

-

-

-

-

-

-

313

313

Foreign currency

translation adjustment

(1,062)

(1,062)

Balance at

September 30,660

$

-

$

103,013

$

20,376

$

5,610

$

(2,275)

$

130,399

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

September30,

2022

September30,

2021

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(8,813)

(6,157)

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation and amortization

5,256

4,384

Loss from sale of property and equipment

141

590

Provision of bad debt allowance

3,943

676

Provision for obsolete inventories

5,296

842

Changes in fair value of trading securities

1,010

(200)

Changes in fair value of investments

577

(1,951)

Deferred income tax

42

644

Stock-based compensation

10

10

Changes in operating assets and liabilities

Accounts receivable

(20,334)

(8,614)

Inventories

4,353

(13,949)

Value added tax receivable

(671)

(1,235)

Other receivables and prepaid expenses

(434)

(1,096)

Advances on inventory purchases

3,317

586

Amounts due from related parties

211

(1,514)

Accounts payable

229

5,930

Accounts payable and other payables- related parties

1,779

(3,204)

Other payables and accrued liabilities

(5,124)

(3,332)

Value added and other taxes payable

891

(360)

Income tax payable

(81)

831

Net cash used in operating activities

(8,402)

(27,119)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment and intangible asset

(3,645)

(5,109)

Net proceeds from sale (purchase) of trading securities

52

(1,077)

Investment payment of other non-current assets

(3,028)

(773)

Net cash used in investing activities

(6,621)

(6,959)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

56,018

56,110

Repayment of bank loans

(54,504)

(54,565)

Repurchase of common stock

(37)

-

Net collection of amounts due from related party (equity)

-

1,630

Net cash provided by financing activities

1,477

3,175

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(11,912)

693

NET DECREASE IN CASH,CASH EQUIVALENTS AND RESTRICTED CASH

(25,458)

(30,211)

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

97,341

121,723

CASH,CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

71,883

$

91,512

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

consolidated balance sheets:

Cash and Cash Equivalents

32,177

48,336

Restricted cash

39,706

43,176

$

71,512

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

1,458

$

1,909

Income taxes

$

1,175

$

2,272

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:

Common stock issued for compensation

$

10

$

10

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