Ever-Glory Intl (NYSE AMEX:EVK)

First Quarter 2013 Results

• Total sales for the quarter were $78.3 million, an increase of 47.1% compared to $53.2 million in the first quarter of last year.
• Non-GAAP diluted earnings per share were $0.19 in the first quarter of 2013 compared to $0.13 in the first quarter of 2012.

Business Outlook

For the second quarter of 2013, Every-Glory anticipates total net sales in the range of $50 to $60 million and net income in the range of $1.5 to $2 million. For full year 2013, Every-Glory anticipates total net sales in the range of $300 to $360 million and net income in the range of $11 to $17 million. The full year revenue forecast is comprised of $150 to $180 million in anticipated wholesale revenue and $150 to $180 million in anticipated revenue from retail operations.

Item 4.02 Non-Reliance on Previously Issued Financial Statements

On April 13, 2013, management of Ever-Glory International Group, Inc. (the “Company”), after consultation with the Company’s independent registered public accounting firm, GHP Horwath, P.C (“GHP Horwath”) concluded, and the Audit Committee of the Board of Directors (the “Audit Committee”) approved the conclusion, that the following previously filed financial statements of the Company should not be relied upon:
 
(i) The Company’s unaudited financial statements for the three-month period ended March 31, 2012 contained in the Company’s Quarterly Report on Form 10-Q, originally filed with the Securities and Exchange Commission (“SEC”) on May 11, 2012;

(ii) The Company’s unaudited financial statements for the three-month period and six-month period ended June 30, 2012 contained in the Company’s Quarterly Report on Form 10-Q, originally filed with the SEC on August 10, 2012;

(iii) The Company’s unaudited financial statements for the three-month period and nine-month period ended September 30, 2012 contained in the Company’s Quarterly Report on Form 10-Q, originally filed with the SEC on October 22, 2012.

The Company’s review of the above mentioned filings revealed that the financial statements in such filings contained errors primarily as a result of the incorrect accounting treatment of certain related party transactions.
 
After discussion, review and analysis of the accounting and disclosures, the Company determined that the aforementioned financial statements should be adjusted to reclassify amounts provided in cash to a related party under a counter-guarantee agreement from current assets to a component of Stockholders’ equity. The counter-guarantee agreement was entered into in exchange for guarantees and collateral provided by the related party in connection with certain of the Company’s lines of credit. Amounts provided and to be reclassified are approximately as follows:

March 31, 2012 $4.3 Million
June 30, 2012 $12.4 Million
September 20, 2012 $25.6 Million

The reclassification does not affect previously reported amounts for revenues, income from operations, net income or earnings per share.

The Company will, as soon is practicable, make these adjustments by filing with the SEC amendments to the above reference reports which, in each case, will include restated consolidated financial statements and notes thereto, and other appropriate revisions to reflect the foregoing.

The Company’s management, Audit Committee and board of directors of the Company are assessing the effect of the pending restatements on its internal control over financial reporting and its disclosure controls and procedures and will not reach a final conclusion until completion of the restatement process.

NANJING, China, April 15, 2013 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NYSE MKT: EVK), a leading apparel supply chain manager and retailer based in China, today reported its financial results for its fiscal year endedDecember 31, 2012

4th Quarter EPS was $0 .40 vs $0.13 in prior year.

Total sales for the year ended December 31, 2012 were $279.6 million, an increase of 29.6% from the year ended December 31, 2011. This increase was primarily attributable to increased sales in our retail business as well as our wholesale business.

In 2012, retail sales from LA GO GO, the Company's branded retail division, increased 102.8% to $108.6 million, compared to $53.5 million in 2011. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 727 LA GO GO stores as of December 31, 2012, compared to 467 LA GO GO stores at December 31, 2011. Currently, there are LA GO GO stores in more than 20 provinces in China.

In 2012, wholesale sales generated from the Company's wholesale business increased 5.4% to $171.0 million, compared to $162.2 million last year. This increase was primarily attributable to increased sales in the PRC, the United Kingdom and Japan partially offset for decreased sales in Germany and the United States..

Total gross profit for the year 2012 was $65.1 million, or 23.3% of total sales, compared to $44.5 million, or 20.6% of total sales last year.

Selling expenses for the year 2012 increased 85.8% to $33.7 million compared to $18.1 million last year. As a percentage of sales, selling expenses increased 370 basis points to 12.1% compared to 8.4% last year. The increase was attributable to the increased number of stores, leading to increased numbers of retail employees and increased average salaries, as well as the increased store decoration and marketing expenses associated with the promotion of the LA GO GO brand.

General and administrative expenses for the year 2012 increased 13.3% to $16.2 million compared to $14.3 million last year. As a percentage of sales, general and administrative expenses decreased 80 basis points to 5.8% compared to 6.6% last year. The decrease was attributable to the increase in sales.

Income from operations increased 25.1% to $15.1 million in 2012 compared to $12.1 million in 2011. As a percent of sales, income from operations accounted for 5.4% of our total sales in 2012, a decrease of 0.2% compared to 2011.

For 2012, net income was $12.8 million, or $0.87 per diluted share, an increase of 32.7% from $9.6 million, or $0.65 per diluted share in 2011. Net income for 2012 includes approximately $0.1 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 $0.2 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability for 2011. Excluding this non-cash item for 2012 and 2011, non-GAAP diluted earnings per share were $0.86 in 2012 compared to $0.64 in 2011. See "About Non-GAAP Financial Measures" below.

Business Outlook

For the first quarter of 2013, Every-Glory anticipates total net sales in the range of $68 to $85 million and net income in the range of$2.0 to $3.0 million. For full year 2013, Every-Glory anticipates total net sales in the range of $300 to $360 million and net income in the range of $11 to $17 million. The full year revenue forecast is comprised of $150 to $180 million in anticipated wholesale revenue and$150 to $180 million in anticipated revenue from retail operations.

 Third Quarter ended September 30, 2012.

• Total sales for the quarter were $69.3 million, an increase of 29.1% compared to $53.7 million in the third quarter of last year. This increase was primarily attributable to increased sales in our retail business as well as our wholesale business.
• For the third quarter, net income was $2.3 million, or $0.15 per diluted share, a decrease of 15.9% from $2.7 million, or $0.18 per diluted share in the third quarter of 2011.

Business Outlook

For the fourth quarter of 2012, Every-Glory anticipates total net sales in the range of $70 to $90 million and net income in the range of $3.6 to $5.0 million. For full year 2012, Every-Glory anticipates total net sales in the range of$230 to $260 million and net income in the range of $9.5 to $12 million. The full year revenue forecast is comprised of$140 to $160 million in anticipated wholesale revenue and $90 to $100 million in anticipated revenue from retail operations.

Second Quarter 2012 Results

• Total sales for the quarter were $47.2 million, an increase of 10.0% compared to $42.9 million in the second quarter of last year.
• Excluding this non-cash item for the second quarter 2012 and 2011, non-GAAP diluted earnings per share were $0.15 in the second quarter of 2012 compared to $0.14 in the second quarter of 2011.

Business Outlook

For the third quarter of 2012, Every-Glory anticipates total net sales in the range of $50 to $60 million and net income in the range of $1.8 to $2.0 million. For full year 2012, Every-Glory anticipates total net sales in the range of $210 to $250 million and net income in the range of $9.5 to $12 million. The full year revenue forecast is comprised of $140 to $160 million in anticipated wholesale revenue and $70 to $90 million in anticipated revenue from retail operations.

NANJING, China, July 14, 2012 /PRNewswire-Asia/ -- Ever-Glory International Group, Inc. (the "Company," "Ever-Glory") (NYSE Amex: EVK), a leading apparel supply chain manager and retailer in China, today provided an update regarding its financial results for the second quarter ended June 30, 2012.

The total net sales in the second quarter of 2012 are anticipated in the range of $46 to $49 million versus prior guidance of $50 to $60 million, primarily because of the weaker-than-expected sales in the Company's retail segment. Accordingly, the Company expects full-year 2012 sales in the range of $210 to 250 million versus prior guidance of $225 to $260 million.

The increase in sales from retail segment during the second quarter of 2012 compared to the same period last year is expected to be lower than the Company's previous projection. The sales from retail segment in the second quarter of 2012 are now expected to increase by approximately 98% compared to same period last year while the Company previously expected a minimum increase of 137%. The management expects sales from wholesale segment will decrease 14% compared to same period last year as previously projected.

The slowdown in increase of retail revenue is primarily due to the deteriorated domestic consumption in China. The eroding global economy in the first half year of 2012 affected China's economic environment. As a result, domestic consumption decreased significantly.

Despite of the lower than expected total net sales, the Company expects net income in second quarter to be approximately in line with prior guidance. Because management believes the profit margin in second quarter of 2012 will slightly increase compared to same period last year.

Ever-Glory had 562 LA GO GO stores as of June 30, 2012, compared to 368 LA GO GO stores as of June 30, 2011.

Full Year 2011 Results

• 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 

"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."

Business Outlook

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.

Third Quarter 2011 Results

• Net sales increased 68.1% to $53.7 million compared to $31.9 million in the third quarter of 2010.
• Excluding this non-cash items for the third quarter 2011 and 2010, non-GAAP diluted earnings per share were $0.18 in the third quarter of 2011 compared to $0.08 in the third quarter of 2010.

Second Quarter 2011 Results

• During the second quarter of 2011, net sales increased 85.8% to $42.9 million compared to $23.1 million in the second quarter of 2010. The increase was attributable to increased sales in Ever-Glory's retail business as well as its wholesale business.
• In the second quarter of 2011, gross profit was $10.4 million, an increase of 129.7% compared to the same period in 2010. Gross margin increased 4.6% to 24.1% in the second quarter of 2011, compared to 19.5% in the second quarter of 2010. The increase was mainly due to lower outsourced manufacturing costs.
• For the second quarter of 2011, GAAP net income attributable to the Company was $2.3 million, or $0.15 per diluted share, an increase of 182.1% from $0.8 million, or $0.05 per diluted share in the second quarter of 2010. GAAP net income attributable to the Company results for in the second quarter of 2011 include approximately $0.1 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability.
• The change in fair value of a derivative liability in the second quarter of 2010 was not significant. Excluding these non-cash items for the second quarter 2011 and 2010, non-GAAP diluted earnings per share were $0.14 in the second quarter of 2011 compared to $0.06 in the second quarter of 2010.

"In the second quarter of 2011, sales increased significantly in both our wholesale and retail segments," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "We are especially encouraged by our strong performance. The total number of LA GO GO stores in China increased from 293 at the end of 2010 to 368 stores as of June 30, 2011, we expect to open an additional 80-100 new stores in 2011 based on the 293 stores we had at the end of 2010.

"In 2011, we plan to 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, through these measures, we can enhance same-store sales, expand LA GO GO's market penetration and increase its brand influence in China."

Business Outlook

For the third quarter of 2011, the Company anticipates

• total net sales of $42.0 to $52.0 million 
• net income of $2.0 to $2.5 million.

For full year 2011, Ever-Glory anticipates

• total net sales between $180 and $215 million 
• net income between $7.3 and $9.0 million.

The full year revenue forecast is comprised of $120 to $150 million in expected wholesale revenue and $60 to $65 million in expected revenue from retail operations.

• During the first quarter of 2011, net sales increased 103.6% to $53.2 million compared to $26.1 million in the first quarter of 2010
• In the first quarter of 2011, gross profit was $9.1 million, an increase of 67.8% compared to the same period in 2010

"In the first quarter of 2011, sales increased significantly in both our wholesale and retail segments." commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "We are especially encouraged by our strong performance. The total number of LA GO GO stores in China increased from 293 at the end of 2010 to 305 stores as of March 31, 2011, we expect to open additional 80-100 new stores in 2011 based on the 293 stores we had at the end of 2010.

• non-GAAP diluted earnings per share were $0.17 in the first quarter of 2011 compared to $0.10 in the first quarter of 2010

For the second quarter of 2011, the Company anticipates total net sales of $32 to $42 million and net income of $1.3 to $1.8 million. For full year 2011, Ever-Glory anticipates total net sales between $180 and $215 million and net income between $7.3 and $9.0 million. The full year revenue forecast is comprised of $120 to $150 million in expected wholesale revenue and $60 to $65 million in expected revenue from retail operations.

We have a continuing program for the purpose of improving our manufacturing facilities and extending our LA GO GO stores. We anticipate that cash flows from operations and borrowings from banks will be used to pay for these capital commitments.

As part of our business strategy, we expect to continue to review opportunities to buy or invest in other businesses or technologies that we believe would enhance our manufacturing capabilities, or that may otherwise offer growth opportunities. If we buy or invest in other businesses in the future, this may require the use of cash, or we may incur debt or assume contingent liabilities.

2010 Year End Results:

• During the fiscal year ended December 31, 2010, net sales increased 49.3% to $134.1 million from $89.9 million in 2009

"In 2010, we were very pleased to see sales increase significantly in both our wholesale and retail segments," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "On behalf of our board and management, I extend my warmest thanks to our customers for their trust in us, and to our staff for their tireless efforts and devotion to our customers."

• Total gross profit in 2010 increased 42.9% to $26.2 million from $18.3 million a year ago
• Non GAAP Net Income: $5,629,038 vs. $5,398,155
• non-GAAP diluted earnings per share were $0.38 in 2010 compared to $0.37 in 2009.

For the first quarter of 2011, Every-Glory anticipates total net sales of $45 to $55 million and net income of $1.8 to $2.2 million. For full year 2011, Every-Glory anticipates total net sales between $180 and $215 million and net income between $7.3 and $9.0 million. The full year revenue forecast is comprised of $120 to $150 million in expected wholesale revenue and $60 to $65 million in expected revenue from retail operations.

GeoTeam Note:

• Fourth quarter 2010 vs 2009 adjusted EPS was 0.12 vs. $0.02
• 2011 first quarter implied EPS guidance: $0.14
• 2011 full year implied EPS guidance: $0.55

• The Agreement allows the Company to borrow RMB40 million (approximately USD$5.8 million), which amount was funded in full on December 10, 2010 pending final documentation.
• The loan bears a fixed interest rate of 5.56% per annum.  The loan proceeds shall be used by the Company for working capital purposes.  The loan is secured by certain properties and land use rights of the Company.  The principal amount of the loan matures and is payable on December 10, 2011 and the interest is due and payable on the 20th of the last month of each quarter.

Third quarter of 2010

• During the third quarter of 2010, net sales increased 28.1% to $31.9 million compared to $24.9 million in the third quarter of 2009.

• Income from operations for the third quarter of 2010 decreased 20.6% to $1.6 million, or 4.9% of total sales, compared to $2.0 million, or 7.9% of total sales, in the third quarter of 2009. The decrease was mainly due to the increased selling, general and administrative expenses.

• For the third quarter of 2010, net income attributable to the Company was $1.83 million or $0.12 per diluted share, an increase of 1.8% from $1.79 million, or $0.13 per diluted share for the same period of 2009.

• Net income attributable to the Company for the third quarter of 2010 includes $621,600 of non-cash gains related to the change in fair value of derivative liabilities, compared to approximately $143,000 of non-cash expenses related to the change in fair value of derivative liabilities in the third quarter of 2009.

Business Outlook

For the fourth quarter of 2010, the Company anticipates

• total net sales of $40 to $60 million 
• net income of $1.9 to $2.9 million.

For full year 2010, the Company anticipates

• total net sales between $121 and $141 million 
• net income between $5.5 and $6.5 million.
• The full year revenue forecast is comprised of $95 to $110 million in expected wholesale revenue and $26 to $31 million in expected revenue from retail.

Ever-Glory International Group, Inc. announced the resignation of its Chief Financial Officer and Corporate Secretary Ms. Yan Guo, effective on September 2, 2010. Ms. Yan Guo's resignation was due to personal reasons and was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices.

The Company further announced the appointment of Mr. Jiansong Wang as the Chief Financial Officer and Corporate Secretary, effective from September 2, 2010.

 "The second quarter of 2010 proved to be a challenging quarter for us on wholesale business due to the increased labor and raw material prices," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory. "But we are also very encouraged by our retail business's performance. Sales generated from our retail business increased considerably in the second quarter of 2010, which demonstrates the strong momentum we have with our retail strategy. We opened 26 new LA GO GO stores in the second quarter of 2010 and now have a total of 210 LA GO GO stores in China as of June 30, 2010."

For the third quarter of 2010, the Company anticipates total net sales of $31 to $34 million and net income of $1.2 to $1.5 million. For full year 2010, the Company anticipates total net sales between $121 and $141 million and net income between $6 and $7 million. The full year revenue forecast is comprised of $95 to $110 million in expected wholesale revenue and $26 to $31 million in expected revenue from retail.