Ever-Glory Reports 2011 Full Year Financial Results
NANJING, China, March 28, 2012 /PRNewswire-Asia-FirstCall/ — Ever-Glory International Group, Inc. (the “Company,” “Ever-Glory”) (NYSE Amex: EVK), a leading apparel supply chain manager and retailer based in China, today reported its financial results for its fiscal year ended December 31, 2011.
Full Year 2011 Highlights
- Total net sales increased 60.9% year-over-year to $215.8 million
- Gross profit increased 70.3% year-over-year to $44.5 million
- Income from operations increased 82.2% year-over-year to $12.1 million
- Net Income increased 43.8% year-over-year to $9.6 million
During the fiscal year ended December 31, 2011, net sales increased 60.9% to $215.8 million from $134.1 million in 2010. The increase was attributable to increased sales in both Ever-Glory’s retail and wholesale businesses.
In 2011, retail sales from LA GO GO, the Company’s branded retail division, increased 82.7% to $53.5 million, compared to $29.3 million in 2010. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 467 LA GO GO stores as of December 31, 2011, compared to 293 LA GO GO stores at December 31, 2010. Currently, there are LA GO GO stores in more than 20 provinces in China.
In 2011, sales generated from the Company’s wholesale business increased 54.7% to $162.2 million, compared to $104.8 million in 2010. This increase was primarily attributable to increased sales in the PRC, the United Kingdom and the United States. The increased sales in the wholesale segment were primarily due to the following factors:(i) the progressive adjustment of the Company’s wholesale client and product portfolio has resulted in an increase in wholesale orders; (ii) in response to the global economic uncertainty, in mid-2010 we adjusted our sales strategy to develop more wholesale business in China. (iii) increased production capacity thanks to continued expansion of the Company’s outsourcing base to Vietnam and Cambodia starting from the third quarter of 2010.
“We’re very pleased with the significant progress we made in 2011, as sales in both our retail and wholesale segments continued to increase,” commented by Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. “We are especially encouraged by achieving the objectives of LA GO GO store expansion. As of December 31, 2011, we had 467 LA GO GO stores in China, we surpassed our goal of opening an additional 80 to 100 new stores in 2011! We had 293 stores at the end of 2010.”
“For 2012 , we see our basic strategies of retail business as unchanged, we will continue to develop LA GO GO through perfecting design styles, improving store management efficiency and opening more stores in desired locations,” continued Mr. Kang. “We are confident that, continuing to pursue these measures, we can enhance same-store sales, expand LA GO GO’s market penetration and increase its brand position in China.”
In 2011, gross profit in Every-Glory’s retail business increased 81.6% to $18.3 million from $10.1 million in 2010. Gross margin for the retail business slightly decreased to 34.1% in 2011 compared to 34.3% in 2010.
In 2011, gross profit in Every-Glory’s wholesale business increased 63.2% to $26.3 million from $16.1 million in 2010. Gross margin for the wholesale business increased to 16.2% in 2011 compared to 15.4% in 2010. The increase in gross margin was primarily due to lower outsourced manufacturing costs.
Total gross profit in 2011 increased 70.3% to $44.5 million from $26.2 million in 2010. Gross margin increased to 20.6% in 2011, compared to 19.5% in 2010.
Selling expenses were $18.1 million in 2011, an increase of $8.4 million compared to 2010. As a percentage of sales, selling expense accounted for 8.4% of our total sales in 2011, an increase of 1.1% compared to 7.3% in 2010. The increase was attributable to the enlarged number of retail employees and higher average salaries, as well as the increased store decoration and marketing expenses associated with the promotion of LA GO GO.
General and administrative expenses were $14.3 million in 2011, an increase of $4.6 million compared to 2010. As a percent of sales, general and administrative expenses accounted for 6.6% of our total sales in 2011, a decrease of 0.7% compared to 7.3% in 2010. The increase in total general and administrative expenses was attributable to an increase in payroll for additional management, and design and marketing staff as a result of the Company’s business expansion. The decrease in general and administrative expenses as a percentage of total sales was due to the increase in the Company’s sales.
Income from operations increased 82.2% to $12.1 million in 2011 from $6.6 million in 2010.
For 2011, GAAP net income attributable to the Company was $9.6 million, or $0.65 per diluted share, an increase of 45.1% from $6.7 million, or $0.45 per diluted share in 2010. GAAP net income attributable to the Company results for 2011 include approximately $0.2 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability compared to approximately $1.0 million, or $0.07 per diluted share, of non-cash income related to the change in fair value of a derivative liability in 2010. Excluding this non-cash items for 2011 and 2010, non-GAAP diluted earnings per share were $0.64 in 2011 compared to $0.38 in 2010. (see “About Non-GAAP Financial Measures” below).
Balance Sheet and Cash Flow
As of December 31, 2011, the Company had approximately $8.8 million of cash and cash equivalents, compared to approximately $3.7 million as of December 31, 2010. Ever-Glory had working capital of approximately $34.7 million as of December 31, 2011, and outstanding bank loans of approximately $29.2 million as of December 31, 2011.
For the first quarter of 2012, Every-Glory anticipates total net sales of $50 to $60 million and net income of $1.8 to $2.2 million. For full year 2012, Every-Glory anticipates total net sales between $225 and $260 million and net income between $9.5 and $12 million. The full year revenue forecast is comprised of $140 to $160 million in expected wholesale revenue and $85 to $100 million in expected revenue from retail operations.
About Non-GAAP Financial Measures
This press release and presentations of management related to the subject matter of this press release contains financial measures for earnings that are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) in that they exclude the items arising from the change in fair value of a derivative liability. Ever-Glory believes that these non-GAAP financial measures are useful to investors because they reflect the essential operating activities of Ever-Glory. Readers are cautioned, however, that non-GAAP measures are subject to inherent limitations because they involve the exercise of judgment about which items are excluded in the determination of the non-GAAP financial measure.
The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure for 2011 and 2010:
Adjusted Net Income 2011 2010 ---- ---- GAAP Net Income attributable to the Company $9,647,003 $6,650,077 GAAP Diluted EPS $0.65 $0.45 Addition: Non-Cash Income(Expense) for Convertible Notes: $216,000 $1,021,039 $0.01 $0.07 Diluted EPS: Non GAAP Net Income: $9,431,003 $5,629,038 Non GAAP Diluted EPS: $0.64 $0.38 Diluted Shares used in computation 14,757,319 14,737,945
The Company will hold a conference call today at 8:30 a.m. Eastern Time which will be hosted by Edward Yihua Kang, Chairman of the Board, President, and CEO, and Jason Jiansong Wang, Chief Financial Officer. Listeners can access the conference call by dialing # 1-719-325-2313 and referring to the confirmation code 1147848. 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 11:30 a.m. March 28, 2012 through April 4, 2012 Eastern Time by calling # 1-858-384-5517; pin number: 1147848.
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. Ever-Glory 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”.
Cautionary Note Regarding 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, without limitation, 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.
Contact Information Company Contact Yanhua Huang Tel: +86-25-5209-6875
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 2011 2010 ---- ---- SALES $215,779,014 $134,145,710 COST OF SALES 171,234,899 107,987,342 ----------- ----------- GROSS PROFIT 44,544,115 26,158,368 ---------- ---------- OPERATING EXPENSES Selling expenses 18,145,937 9,760,424 General and administrative expenses 14,344,606 9,782,025 ---------- --------- Total operating expenses 32,490,543 19,542,449 ---------- ---------- INCOME FROM OPERATIONS 12,053,572 6,615,919 ---------- --------- OTHER INCOME (EXPENSE) Interest income 703,039 125,492 Interest expense (1,446,192) (490,001) Change in fair value of derivative liability 216,000 1,021,039 Other income 160,830 221,404 Gain on sale of investment - 349,139 --- ------- Total other income(expense) (366,323) 1,227,073 -------- --------- INCOME BEFORE INCOME TAX EXPENSE 11,687,249 7,842,992 INCOME TAX EXPENSE (2,040,246) (1,134,214) ---------- ---------- NET INCOME 9,647,003 6,708,778 LESS: NET INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST (58,701) ------- NET INCOME ATTRIBUTABLE TO THE COMPANY $9,647,003 $6,650,077 ========== ========== NET INCOME $9,647,003 $6,708,778 Foreign currency translation gain 1,327,093 1,216,623 --------- --------- COMPREHENSIVE INCOME 10,974,096 7,925,401 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE NONCONTROLLING INTEREST (58,721) ------- COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $10,974,096 $7,866,680 =========== ========== EARNINGS PER SHARE: Basic and diluted $0.65 $0.45 ===== ===== Weighted average number of shares outstanding Basic and diluted 14,757,319 14,737,945 ========== ==========
SOURCE Ever-Glory International Group, Inc.