EX-99.1 2 v150128_ex99-1.htm Unassociated Document
 
Ever-Glory Reports First Quarter 2009 Financial Results

-- 1Q09 Total Net Sales Increased 3.9% YoY to $20.5 Million --
-- 1Q09 Gross Margin Increased 420 Basis Points YoY to 23.0% --
-- 1Q09 Net Income Increased 34.1%YoY to $1.6 Million --
-- Company Reiterates Comfort with Full Year 2009 Financial Forecast --

NANJING, China, May 13 -- Ever-Glory International Group, Inc. (the "Company," "Ever-Glory") (NYSE Amex: EVK), a leading apparel supply chain manager and retailer in China, today reported its financial results for the quarter ended March 31, 2009.
During the first quarter 2009, net sales increased 3.9% to $20.5 million from $19.7 million in the same period of 2008. This increase was primarily attributable to increased sales orders in our wholesale business to customers in Japan and increased sales in the Company's retail business. Retail sales from LA GO GO, the Company's branded retail division, increased to $2.5 million, or 12.3% of total net sales, compared to $120 thousand in the prior year period.

"Our performance was solid during the first quarter of 2009, especially given the global economic slowdown," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "Our growth held steady in the quarter and we believe that our business model as a one-stop- service for wholesale apparel production will continue to position us very competitively going forward. We remain focused on developing a high quality production platform and expanded production capacity. We have increased the innovative fashion concepts within our wholesale business by strengthening our design talent and enhanced our R&D infrastructure to add more style samples and fabric sampling. These efforts should allow us to broaden our sales opportunities even during challenging market conditions."

Mr. Kang continued, "We are very encouraged by our retail strategy and the roll out of our LA GO GO stores. Sales generated from our retail business increased considerably in the first quarter of 2009 which demonstrated the strong momentum we have with our retail strategy. In the first quarter of 2009, we opened nine new LA GO GO stores for a total of 102 open stores, as of March 31, 2009. Through May 13, 2009, we opened 19 LA GO GO stores in 2009 and now have a total of 112 LA GO GO stores in China."

In the first quarter of 2009, gross profit increased 26.7% to $4.7 million from $3.7 million in the same period of 2008. Gross margin increased 420 basis points to 23.0% in the first quarter of 2009, compared to 18.8% in the same period of 2008 largely due to increased fixed processing fees on certain manufacturing orders as well as increased leverage in the retail business.
 
Selling expenses increased to $940 thousand in the first quarter of 2009 from $278 thousand in the first quarter of 2008. This increase was primarily due to increased retail marketing expenses to promote LA GO GO. General and administrative expenses increased 31.4% to $1.9 million from $1.4 million in the first quarter of 2008. The increase was primarily due to increased payroll to retain and attract management staff in order to execute the Company's business expansion as well as additional costs to support the Company's retail operations. Income from operations for the first quarter of 2009 was $1.9 million, or 9.4% of total sales, compared to $2.0 million, or 10.3% of sales, in the first quarter of 2008.

Net income for the first quarter of 2009 increased 34.1% to $1.6 million or $0.12 per diluted share from $1.2 million, or $0.10 per diluted share in the same period of 2008.

Balance Sheet and Cash Flow

As of March 31, 2009, the Company had $3.8 million of cash and cash equivalents, compared to $1.4 million at December 31, 2008, Ever-Glory had working capital of approximately $15.5 million at March 31, 2009. The Company had bank loans of $6.6 million as of March 31, 2009.

Business Outlook

For the second quarter of 2009, the Company anticipates total net sales of $20 million to $25 million and net income of $1.2 million to $1.5 million. This compares to second quarter 2008 sales of $24 million and net income of $1.3 million. For full year 2009, the Company anticipates total net sales of $120 million to $135 million and net income of $5.8 million to $6.5 million. The full year revenue forecast is comprised of $110 million to $120 million in expected wholesale revenue and $10 million to $15 million in expected revenue from retail.
 
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Mr. Kang continued, "Even in such a difficult economic environment, we are encouraged with the opportunities in our business moving forward. We believe our unique operating philosophy provides us with a distinct competitive advantage over our peers. The nature of our one-stop-service has Ever-Glory involved in all aspects of apparel production -- product design and development, sourcing and sampling, quality control, manufacturing and logistics. We achieve better results by shortening the time to market, improving product quality control and ultimately achieving higher margins. As we execute our strategic vision, we continue to leverage our intimate market knowledge, experienced sourcing professionals and efficient management to deploy a global sourcing and product development network while maintaining strict product quality control and expense control. We place considerable emphasis on innovative and distinctive product designs that stand for exceptional styling and quality for both our wholesale and retail businesses. As we increase our network of professional designers, marketers and R&D team members, we believe we have a unique opportunity to expand our presence as a major player in the international wholesale and domestic retail apparel market."

Conference Call

The Company will hold a conference call today at 8:30 a.m. ET which will be hosted by Edward Kang, Chairman of the Board, President, and CEO, Yan Guo, Chief Financial Officer. Listeners may access the call by dialing #1-913-312- 0953. The conference call will also be broadcast live over the Internet and can be accessed at the Company's web site at the following URL: http://www.everglorygroup.com .

A replay of the call will be available from May 13, 2009 through May 20, 2009 by calling #1-719-457-0820; pin number: 7464961. A webcast of the call will also be available on the Company's web at: http://www.everglorygroup.com .

About Ever-Glory International Group, Inc.

Based in Nanjing, China, Ever-Glory International Group, Inc. is a leading apparel supply chain manager and retailer in China. Ever-Glory is the first Chinese apparel company listed on the American Stock Exchange (now called NYSE Amex), and has a focus on middle-to-high grade casual wear, outerwear, and sportswear brands. The Company maintains global strategic partnerships in Europe, the United States, Japan and China, conducting business with several well-known brands and retail chain stores. In addition, Ever-Glory operates its own domestic chain of retail stores known as "LA GO GO."

Safe Harbor Statement

Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our 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 market acceptance of the Company's products and projects, the Company's continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties. These statements are based on our 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.
 
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Contact Information

Company Contact
Ever-Glory International Group, Inc.
Yan Guo
Chief Financial Officer
Tel: +86-25-5209-6222

Investor Relations:
In the U.S.:
Brian M. Prenoveau, CFA
ICR, Inc.
203-682-8200

In Asia:
Bill Zima & Yuening Jiang
Tel: +86-10-6599-7965
 
(Financial Statements on the Following Pages)
 
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EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 (UNAUDITED) AND DECEMBER 31, 2008

   
March 31,
    
December 31,
  
   
2009
    
2008
  
   
(unaudited)
        
ASSETS
            
             
CURRENT ASSETS
            
Cash and cash equivalents
  
$
3,833,600
    
$
1,445,363
  
Accounts receivable
    
12,970,781
      
9,485,338
  
Accounts receivable - related parties
    
73,900
      
-
  
Inventories
    
2,856,073
      
3,735,227
  
Other receivables and prepaid expenses
    
433,038
      
945,191
  
Advances on inventory purchases
    
209,321
      
288,256
  
Amounts due from related party
    
10,754,680
      
11,565,574
  
Total Current Assets
    
31,131,393
      
27,464,949
  
 
               
LAND USE RIGHT, NET
    
2,834,195
      
2,854,508
  
PROPERTY AND EQUIPMENT, NET
    
12,799,944
      
12,494,452
  
INVESTMENT AT COST
    
1,465,000
      
1,467,000
  
TOTAL ASSETS
  
$
48,230,532
    
$
44,280,909
  
 
               
LIABILITIES AND EQUITY
                
                 
CURRENT LIABILITIES
                
Bank loans
  
$
6,592,500
    
$
6,542,820
  
Accounts payable
    
5,290,568
      
3,620,543
  
Other payables- related party
    
903,416
      
754,589
  
Other payables and accrued liabilities
    
1,813,614
      
1,683,977
  
Value added and other taxes payable
    
656,583
      
368,807
  
Income tax payable
    
207,550
      
257,946
  
Deferred tax liabilities
    
176,086
      
80,009
  
Total Current Liabilities
    
15,640,317
      
13,308,691
  
 
               
LONG-TERM LIABILITIES
                
Loan from related party
    
2,689,350
      
2,660,085
  
TOTAL LIABILITIES
    
18,329,667
      
15,968,776
  
 
               
COMMITMENTS AND CONTINGENCIES
                
 
               
EQUITY
                
Stockholders' equity of the Company
                
Preferred stock ($.001 par value, authorized 5,000,000 shares, no shares issued and outstanding)
    
-
      
-
  
Common stock ($.001 par value, authorized 50,000,000 shares, 12,394,652 and 12,373,567 shares issued and outstanding as of March 31,2009 and December 31, 2008, respectively)
    
12,395
      
12,374
  
Additional paid-in capital
    
4,571,164
      
4,549,004
  
Retained earnings
    
17,429,895
      
15,807,539
  
Statutory reserve
    
3,437,379
      
3,437,379
  
Accumulated other comprehensive income
    
3,912,652
      
3,956,860
  
Total Stockholders' Equity of the Company
    
29,363,485
      
27,763,156
  
Noncontrolling interest
    
537,380
      
548,977
  
Total Equity
    
29,900,865
      
28,312,133
  
 
               
TOTAL LIABILITIES AND EQUITY
  
$
48,230,532
    
$
44,280,909
  
 
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EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)

   
2009
    
2008
  
             
NET SALES
            
Related parties
  
$
-
    
$
425,102
  
Third parties
    
20,507,822
      
19,322,106
  
Total net sales
    
20,507,822
      
19,747,208
  
                 
COST OF SALES
                
Related parties
    
-
      
402,748
  
Third parties
    
15,793,667
      
15,623,424
  
Total cost of sales
    
15,793,667
      
16,026,172
  
                 
GROSS PROFIT
    
4,714,155
      
3,721,036
  
                 
OPERATING EXPENSES
                
Selling expenses
    
940,474
      
277,528
  
General and administrative expenses
    
1,856,122
      
1,412,654
  
Total Operating Expenses
    
2,796,596
      
1,690,182
  
                 
INCOME FROM OPERATIONS
    
1,917,559
      
2,030,854
  
                 
OTHER INCOME (EXPENSES)
                
Interest income
    
103,547
      
31,974
  
Interest expense
    
(123,650
)
    
(577,828
)
Other income
    
2,373
      
-
  
Total Other Income (Expenses)
    
(17,730
)
    
(545,854
)
                 
INCOME BEFORE INCOME TAX EXPENSE
    
1,899,829
      
1,485,000
  
                 
INCOME TAX EXPENSE
    
(289,071
)
    
(283,838
)
                 
NET INCOME
    
1,610,758
      
1,201,162
  
                 
ADD(LESS): NET LOSS(INCOME) ATTRIBUTABLE TO THE NONCONTROLING INTEREST
    
11,598
      
(3,869
)
                 
NET INCOME ATTRIBUTABLE TO THE COMPANY
    
1,622,356
      
1,197,293
  
                 
Foreign currency translation (loss) gain
    
(44,208
)
    
1,099,884
  
COMPREHENSIVE INCOME
    
1,578,148
      
2,297,177
  
                 
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO
                
THE NONCONTROLING INTEREST
    
(12,392
)
    
23,457
  
                 
COMPREHENSIVE INCOME ATTRIBUTABLE TO
                
THE COMPANY
  
$
1,590,540
    
$
2,273,720
  
                 
                 
NET INCOME PER SHARE
                
Attributable to the Company's common stockholders
                
Basic
  
$
0.12
    
$
0.10
  
Diluted
  
$
0.12
    
$
0.10
  
                 
Weighted average number of shares outstanding
                
Basic
    
13,531,225
      
11,449,682
  
Diluted
    
13,531,225
      
12,204,363
  

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EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)

     
  
2009
    
2008
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net income
  
$
1,610,758
    
$
1,201,162
  
Adjustments to reconcile net income to cash provided by operating activities:
                
Depreciation and amortization
    
484,005
      
238,432
  
Deferred income tax  
    
96,194
      
-
  
Amortization of discount on convertible notes
    
-
      
349,337
  
Amortization of deferred financing costs
    
-
      
73,676
  
Stock issued for interest  
    
-
      
2,006
  
Changes in operating assets and liabilities
                
Accounts receivable
    
(3,488,612
)
    
1,941,016
  
Accounts receivable - related parties
    
(73,905
)
    
161,317
  
Inventories
    
874,121
      
121,586
  
Other receivables and prepaid expenses
    
(227,276
)
    
(8,636
)
Advances on inventory purchases  
    
78,547
      
(9,058
)
Amounts due from related party
    
795,181
      
(44,291
)
Accounts payable
    
1,675,077
      
299,523
  
Accounts payable - related parties
    
148,837
      
(68,882
)
Other payables and accrued liabilities
    
151,499
      
(204,734
)
Other payables-related parties
    
2,327
      
-
  
Value added and other taxes payable
    
288,298
      
123,406
  
Income tax payable
    
(50,047
)
    
196,038
  
Long term deferred expense  
            
(56,406
)
Net cash provided by operating activities
    
2,365,004
      
4,315,492
  
   
                
CASH FLOWS FROM INVESTING ACTIVITIES
                
                 
Investment in La Chapelle
    
-
      
(1,397,700
)
Purchase of property and equipment
    
(65,719
)
    
(84,333
)
Proceeds from sale of equipment    
    
3,778
      
377
  
Net cash used in investing activities
    
(61,941
)
    
(1,481,656
)
       
                
CASH FLOWS FROM FINANCING ACTIVITIES
                
Contribution from minority shareholders    
    
-
      
553,040
  
Proceeds from bank loans
    
5,860,400
      
-
  
Repayment of bank loans
    
(5,801,796
)
    
(2,096,550
)
Proceeds from related party loan 
    
29,265
      
59,116
  
Net cash provided by (used in) financing activities
    
87,869
      
(1,484,394
)
       
                
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
(2,695
)
    
153,487
  
       
                
NET INCREASE IN CASH AND CASH EQUIVALENTS
    
2,388,237
      
1,502,930
  
       
                
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
1,445,363
      
641,739
  
       
                
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  
$
3,833,600
    
$
2,144,669
  
       
                
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
       
                
Cash paid during the period for:      
                
Interest
  
$
144,646
    
$
68,859
  
Income taxes
  
$
242,924
    
$
84,576
  
 
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