2008 Total Net Sales Increased 38.6% to $97.5 Million 2008 Gross
Profit Increased 40.6% to $15.9 Million NANJING, China, March 23
/PRNewswire-Asia-FirstCall/ -- Ever-Glory International Group, Inc.
(the "Company," "Ever-Glory") (NYSE Alternext US: EVK), a leading
apparel supply chain manager and retailer in China, today reported
its financial results for the year ended December 31, 2008. Full
Year 2008 Highlights -- Total net sales increased 38.6% to $97.5
million -- Gross profit increased 40.6% to $15.9 million --
Operating income increased 2.9% to $7.5 million Full Year 2008
Results During the fiscal year ended December 31, 2008, net sales
increased 38.6% to $97.5 million from $70.3 million in 2007. The
increase in our sales was primarily attributable to sales growth in
our wholesale business to customers in the People's Republic of
China (PRC), Japan, Europe and the U.S. In addition, the Company
received revenue contributions from the newly launched retail
product "LA GO GO" in 2008. Among the Company's key geographic
regions, European sales increased 31.1% to $52.9 million from $40.3
million, sales from the U.S. increased 16.7% to $16.9 million from
$14.5 million, sales from Japan increased 51.3% to $16.6 million
from $11.0 million and sales from China increased 66.1% to $7.6
million from $4.6 million in the prior year period. Retail sales
from LA GO GO, the Company's branded retail division that launched
in January 2008, contributed $3.5 million, or 3.6% of total net
sales. "We are very pleased to have reported such positive
financial results for 2008," said Mr. Edward Yihua Kang, Chairman
of the Board and Chief Executive Officer of Ever-Glory. "Our 2008
performance reflected the notable progress we are making in both
our wholesale and retail apparel operations. In our wholesale
business, we remain focused on mid-to-high end apparel casual wear,
outerwear and sportswear production. Sales in 2008 increased in all
of our key geographic areas as we enjoyed new orders from both new
and existing customers. Our wholesale business remains dedicated to
delivering quality products while remaining ahead of the
competition in product development and overall innovation. We are
also very pleased with our retail strategy and the roll out of our
LA GO GO stores. During 2008, we opened 93 LA GO GO stores, each
store generating average revenue of approximately $8,500 per month.
We believe that LA GO GO will become more meaningful to our revenue
and add to our profitability in the coming years." Gross profit in
2008 increased 40.6% to $15.9 million from $11.3 million a year
ago. Gross margin increased approximately 20 basis points to 16.3%
in 2008, compared to 16.1% in 2007. The slight increase in margin
was primarily due to better control of manufacturing overhead and
improvements in production efficiency. Selling expenses increased
to $2.0 million from $0.6 million in 2007. This increase was
primarily due to increased traveling expenses and marketing
expenses incurred by the international sales force to obtain new
customers, increased export expenses, and increased retail
marketing expenses. General and administrative expenses increased
89.0% to $6.4 million from $3.4 million in 2007. The increase was
due in part to the higher depreciation and amortization expenses
related to new office facilities, and to additional costs to
support the Company's retail operations, as well as higher
professional fees and expenses resulting from being a public
company. Income from operations for 2008 was $7.5 million
representing an increase of 2.9% from operating income of $7.3
million in 2007. For 2008, GAAP net income was $3.6 million, or
$0.26 per diluted share, a decrease of 47.4% from $6.8 million, or
$0.94 per diluted share in 2007. GAAP net income results for 2008
include approximately $2.3 million, or $0.17 per diluted share, of
non-cash expense related to the amortization issuance costs and
discounts on convertible notes compared to $26 thousand, or $0.00
per diluted share, in 2007. Excluding these non-cash expenses for
2008 and 2007, non-GAAP diluted earnings per share were $0.43 in
2008 compared to $0.94 in 2007 (see "About Non-GAAP Financial
Measures" toward the end of this release). During 2008, the $2
million secured convertible notes issued in August 2007 were
converted into shares of the company's common stock. As of December
31, 2008, total annual production capacity was 12 million garment
pieces, up from 9 million garment pieces at the end of 2007. The
increase was due to increased out-sourcing volume. Recent Events In
January 2009, the Company announced that it had opened 7 new retail
LA GO GO stores bringing the total number of stores to 100. In
2008, LA GO GO sales were 3.6% of total sales and are expected to
grow to approximately 9.0% in 2009. Business Outlook For the first
quarter of 2009, the Company anticipates total net sales of $20 to
$25 million and net income of $1.0 to $1.2 million. This compares
to first quarter 2008 sales of $19.7 million and net income of $1.2
million. For full year 2009, the Company anticipates total net
sales between $120 and $135 million and net income between $5.8 to
$6.5 million. The full year revenue forecast is comprised of $110
to $120 million in expected wholesale revenue and $10 to $15
million in expected revenue from retail. Mr. Kang continued, "Even
in such a difficult economic environment, we are encouraged with
the opportunities in our business moving forward. We anticipate
growing revenue as we expand our wholesale and retail business,
however given the current economic outlook, we expect some pricing
pressure in our wholesale business that will likely result in a
year-over-year decline in our gross margin. We also believe
operating expenses will trend higher as we intensify our efforts to
secure additional orders from new and existing customers. "We are
working diligently to establish LA GO GO as a premier mid-end mass
market brand for women. Seven new LA GO GO stores have been opened
this year and we believe a total of 80-100 stores can be opened in
2009. Our goal is to increase our per-store revenue average on a
monthly basis and to establish positive same store sales trends. We
have a compelling opportunity to expand our wholesale business
portfolio into higher class brands and expand our global customer
base. Our core strengths will allow us to expand our competitive
position in the marketplace." About Non-GAAP Financial Measures
This press release contains non-GAAP financial measures for
earnings that exclude the amortization of issuance costs and
discounts on convertible notes issued by the Company. Ever-Glory
believes that these non-GAAP financial measures are useful to
investors because they exclude non-cash charges that Ever-Glory's
management excludes when it internally evaluates the performance of
Ever-Glory's business and makes operating decisions, including
internal budgeting, and performance measurement, because these
measures provide a consistent method of comparison to historical
periods. Moreover, management believes these non-GAAP measures
reflect the essential operating activities of Ever-Glory.
Accordingly, management excludes the expense arising from the
amortization of issuance costs and discounts on convertible notes
when making operational decisions. Ever-Glory believes that
providing the non-GAAP measures that management uses to its
investors is useful to investors for a number of reasons. The
non-GAAP measures provide a consistent basis for investors to
understand Ever-Glory's financial performance in comparison to
historical periods. In addition, it allows investors to evaluate
Ever-Glory's performance using the same methodology and information
as that used by Ever- Glory's management. Non-GAAP measures are
subject to inherent limitations because they do not include all of
the expenses included under GAAP and because they involve the
exercise of judgment about which charges are excluded from the
non-GAAP financial measure. However, Ever-Glory's management
compensates for these limitations by providing relevant disclosure
of the items excluded. 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. Adjusted Net Income 2008 2007 GAAP Net Income $3,559,791
$6,765,249 GAAP Diluted EPS $0.26 $0.94 Addition: Non-Cash Expense
for Convertible Notes: $2,296,575 $25,503 Diluted EPS: $0.17 $0.00
Non GAAP Net Income: $5,856,366 $6,790,752 Non GAAP Diluted EPS:
$0.43 $0.94 Diluted Shares used in computation 13,489,769 7,244,062
Conference Call Ever-Glory will be holding 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,
and Angel Zhang, Vice President of Finance. To participate in the
call, please dial #1-866-316-1365 (U.S) and #1-913-905-1086
(international). 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 March 23, 2009 through March 30, 2009
by calling #1-888-203-1112 (U.S) & #1-719-457-0820
(international); access code: 4738088. A webcast of the call will
also be available on the Company's web site at the following URL:
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 Alternext US), 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. (Income Statement to
Follow) EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER
31, 2008 AND 2007 2008 2007 NET SALES To related parties $681,167
$1,155,998 To third parties 96,790,515 69,179,385 Total net sales
97,471,682 70,335,383 COST OF SALES From related parties 621,103
995,398 From third parties 80,948,413 58,030,867 Total cost of
sales 81,569,516 59,026,265 (Including depreciation of $222,681 and
$400,584 for the years ended December 31, 2008 and 2007,
respectively) GROSS PROFIT 15,902,166 11,309,118 OPERATING EXPENSES
Selling expenses 1,966,926 593,570 General and administrative
expenses 6,390,180 3,381,108 Total Operating Expenses 8,357,106
3,974,678 INCOME FROM OPERATIONS 7,545,060 7,334,440 OTHER INCOME
(EXPENSES) Interest income 227,090 174,036 Interest expense
(2,858,168) (424,448) Other income 34,952 25,708 Other expenses
(302,200) (91,805) Total Other Income (Expenses) (2,898,326)
(316,509) INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST
4,646,734 7,017,931 INCOME TAX EXPENSE (1,091,006) (252,682) INCOME
BEFORE MINORITY INTEREST 3,555,728 6,765,249 MINORITY INTEREST
4,063 -- NET INCOME 3,559,791 6,765,249 Net income per share -
basic $0.30 $0.99 Net income per share - diluted $0.26 $0.94
Weighted average number of shares outstanding during the year -
basic 11,895,048 6,865,482 Weighted average number of shares
Outstanding during the year - diluted 13,489,769 7,244,062
DATASOURCE: Ever-Glory International Group, Inc. CONTACT: At
Ever-Glory International Group, Inc.: in the U.S.: Angel Zhang at
+1-646-385-5222; in Asia: Yan Guo at +86-25-5209-6222; Or Investor
Relations: in the U.S.: Brian M. Prenoveau, CFA, ICR, Inc. at
+1-203-682-8200; or in Asia: Bill Zima & Annie Chen at
+86-10-6599-7969 Web site: http://www.everglorygroup.com/
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