Here's a better look at EGLY earnings: Ever-Glory Reports Annual Financial Results
Monday March 19, 9:49 am ET
NANJING, China, March 19 /Xinhua-PRNewswire-FirstCall/ -- Ever-Glory International Group, Inc. (OTC Bulletin Board: EGLY - News; "Ever-Glory"), a leading apparel manufacturer in the People's Republic of China ("PRC"), announced its financial results for the fiscal year ended December 31, 2006.
Full Year 2006 Highlights
-- Total net revenues increased 106.5% to $22.3 million
-- Operating income increased 82.1% to $2.1 million
-- Net income increased 43.1% to $1.5 million
-- Completed construction of new state-of-the-art factory and
corporate headquarters in Jiangning Economic and Technological
Development Zone, Nanjing, China
-- Completed strategic acquisition for a total of $12.0 million in cash
and stock, adding 900 new employees and annual production capacity of
2.5 million garment pieces per year
-- Levi Strauss added to list of high-profile customers
Full Year 2006 Results
For the full year 2006, net revenues were $22.3 million, up 106.5% from $10.8 million in 2005. In 2006, sales to customers in Europe and the U.S. increased by 185%, and 192%, respectively. Gross profit for the full year 2006 was $4.1 million, an increase of 94.6% from $2.1 million in 2005. Gross margin was 18.3% in 2006, compared to 19.4% in 2005. Operating income for the full year 2006 was $2.1 million, up 82.1% from $1.1 million in 2005. Operating margin was 9.2% in 2006, compared to 10.5% in 2005. The decline in operating margin in 2006 was primarily caused by higher salaries and selling expenses related to the growth of the company's business in 2006. Net income for the full year 2006 was $1.5 million, or $0.02 per diluted share, an increase of 43.1% from $1.0 million, or $0.01 per diluted share, in 2005.
In 2006, all Chinese manufacturers of certain garments were subject to aggregate export quotas, or limitations, to the United States and Europe. Companies were allocated a portion of the aggregate export quota based on their export performance in the prior year. As a result of its good export performance in the prior year, Ever-Glory was allocated sufficient export quotas to enable it to increase its sales to customers in Europe and the U.S. Overall, the imposition of such quotas did not have a material effect on the Company's net sales and its net margin.
At year-end, total annual production capacity increased to 2.85 million garment pieces, up from 1.70 million garment pieces at the end of 2005. This increase was mainly related to the great increase of outsourced production capacity in 2006. The recently acquired New-Tailun will increase Ever-Glory's total annual production capacity to more than 5.0 million garment pieces in 2007, including outsourced production capacity.
Financial Condition
As of December 31, 2006, the company had $660,096 in cash and cash equivalents and $1.9 million available under its credit facility. At year end, shareholders' equity stood at $17.8 million, up from $5.7 million at December 31, 2005.
Outlook for 2007
Based on its expectations of continued strong demand from its existing customers, potential new business, and the contribution from New-Tailun, Ever- Glory is anticipating another year of growth in revenue and net income in the double-digits. In addition, the company expects to achieve operational synergies as it integrates its recent acquisitions with its existing operations. The company also plans to expand its operations in the future by adding capacity, improving manufacturing operations and exploring growth opportunities in new markets.
"In 2007, our focus will be on internal growth and integrating New-Tailun into our existing operations. We also plan to improve quality control systems, supplement our product lines with more jeans products, expand our customer base in the Japanese market and increase capacity to meet demand," said Mr. Kang. "We also expect that Ever-Glory's strong brand recognition and reputation for high-quality products will lay a foundation for a highly successful launch of our self-owned brands in the Chinese market in the near future."
Recent Events
In December 2006, Ever-Glory completed the acquisition of Nanjing New- Tailun Garments Co., Ltd. through a combination of cash and stock valued at approximately $12.0 million. New-Tailun is mainly engaged in the sales and manufacturing of casual wear, sportswear, jeans and trousers for middle-high, well-known brands and retail chain stores in Japan, the United Kingdom, Europe and the United States. New-Tailun generated revenues of $9.7 million and net income of $1.0 million for the fiscal year of 2006. During the same period, sales to customers in Japan and the United Kingdom accounted for 45% and 19% of total revenues, respectively. The acquisition was funded by a combination of cash and stock valued at approximately $12 million. To close the transaction, Ever-Glory will pay the seller the equivalent of $2.0 million in Renminbi ("RMB") and issue approximately 20.8 million shares of its restricted common stock. Upon completion of this transaction, New-Tailun Co., Ltd. became a wholly owned subsidiary of Ever-Glory. Ever-Glory has received an opinion as to the fairness of the transaction from Savills Valuation and Professional Services Ltd, dated November 9, 2006.
About Ever-Glory International Group, Inc.
Ever-Glory International Group is a U.S. publicly traded company engaged in international garment manufacturing for well-known middle- to high-grade casual, outer, and sportswear brands. The company's U.S. headquarters is based in Los Angeles, CA, although Ever-Glory also owns two full subsidiary companies, Nanjing Goldenway Garments Co. Ltd., and New-Tailun Garment Co, Ltd. Ever-Glory has strategic business partners in countries including China, Europe and the U.S. The Company cooperates with well-respected garment retailer chains such as Itochu, Shinko, Debenhams, Next, C&A, Itoyokado and others in handling high- and middle-grade casual wear and sportswear. The company entered into production and sales cooperation agreements with a number of internationally famous brands such as Matalan, Eddie Bauer, Best-Seller, BB Dakota and others. Ever-Glory employs more than 1,500 people. At present, the market distribution is segmented as 5% in Japan, 64% in Europe, 22% in United States and 5% in China. For more information about Ever-Glory International Group, please visit: everglorygroup.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to the company's ability to accurately complete product orders, coordinate product design with its customers, ability to expand and grow its distribution channels, political and economic factors in the People's Republic of China, the company's ability to find attractive acquisition candidates, dependence on a limited number of larger customers and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
- FINANCIAL TABLES FOLLOW -
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the years ended
December 31,
2006 2005
NET SALES
To related parties $86,672 $713,580
To third parties 22,245,696 10,100,381
Total net sales 22,332,368 10,813,961
COST OF SALES
From related parties (2,792,554) (2,246,856)
From third parties (15,450,823) (6,465,709)
Total cost of sales (18,243,377) (8,712,565)
GROSS PROFIT 4,088,991 2,101,396
OPERATING EXPENSES
Stock issued for services -- 42,045
Export quota charges 153,997 --
Selling expenses 450,832 85,108
General and administrative expenses 888,447 597,727
Salaries and allowances 476,071 213,825
Loss on disposal of fixed assets 5,233 2,065
Depreciation and amortization 53,251 28,893
Total Operating Expenses 2,027,831 969,663
INCOME FROM OPERATIONS 2,061,160 1,131,733
OTHER INCOME (EXPENSES)
Interest income 5,520 131,610
Interest expenses (285,876) (74,284)
Other income from a related company 18,811 18,337
Other income 6,113 64
Other expenses (293) (2,240)
Total Other Income (Expenses) (255,725) 73,487
INCOME BEFORE INCOME TAX EXPENSE 1,805,435 1,205,220
INCOME TAX EXPENSE (312,010) (161,680)
NET INCOME 1,493,425 1,043,540
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain 532,746 5,621
COMPREHENSIVE INCOME 2,026,171 $ 1,049,161
Net income per share - basic 0.07 $ 0.02
Net income per share - diluted 0.02 $
Weighted average number of shares 0.01
outstanding during the year - basic 20,028,836 55,224,701
Weighted average number of shares
outstanding during the year - diluted 79,943,824 115,139,689
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2005
ASSETS
2006 2005
CURRENT ASSETS
Cash and cash equivalents $660,096 $1,467,245
Accounts receivable, net of allowances 6,225,936 236,289
Accounts receivable - related companies 2,516,767 --
Inventories, net 746,817 396,207
Income tax recoverable -- 59,021
Other receivables and prepaid expenses 83,923 20,955
Total Current Assets 10,233,539 2,179,717
GOODWILL, NET 10,079,156 --
LAND USE RIGHT, NET 2,521,109 --
PROPERTY AND EQUIPMENT, NET 12,158,912 5,855,562
TOTAL ASSETS $34,992,716 $8,035,279
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $897,609 $84,300
Accounts payable - related companies 1,408,504 486,475
Due to related parties 2,621,130 --
Other payables and accrued liabilities 3,305,778 1,054,942
Value added tax 202,243 49,276
Income tax payable and other taxes
payable 61,536 --
Notes payable 4,482,180 611,247
Total Current Liabilities 12,978,980 2,286,240
LONG-TERM LIABILITIES
Due to a related company 4,238,526 --
TOTAL LIABILITIES 17,217,506 2,286,240
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock ($.0001 par value,
authorized 5,000,000 shares,
Nil shares issued and outstanding) -- --
Series A Convertible Preferred Stock
($.0001 par value,
authorized 10,000 shares, 7,883 shares
issued and outstanding as of December 31,
2006 and 2005) 1 1
Common stock ($.0001 par value, authorized
100,000,000 shares,
issued and outstanding 19,971,758
shares as of December 31, 2006 and 2005 1,997 1,997
Common stock to be issued for acquisition 2,083 --
(20,833,333 shares)
Additional paid-in capital 11,261,666 1,263,749
Retained earnings
Unappropriated 3,713,144 2,437,823
Appropriated 2,230,145 2,012,041
Accumulated other comprehensive income 566,174 33,428
Total Stockholders' Equity 17,775,210 5,749,039
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $34,992,716 $8,035,279
EVER-GLORY INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,493,425 $ 1,043,540
Adjusted to reconcile net income to
cash provided
by operating activities:
Stock issued for services -- 42,045
Depreciation and amortization -
cost of sales 234,483 134,013
Depreciation and amortization 53,251 28,893
Loss on disposal of fixed assets 5,233 2,065
Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable (3,284,045) (55,676)
Accounts receivable - related companies (2,516,767) 130,784
Due from a related party -- 2,535,500
Other receivables and prepaid expenses (50,310) 122,460
Inventories 268,018 398,205
Increase (decrease) in:
Accounts payable 477,817 (238,025)
Accounts payable - related companies (346,507) (1,094,394)
Other payables and accrued liabilities 2,218,307 321,341
Value add tax payables (6,847) (17,241)
Income tax and other tax payables 120,143 (143,841)
Net cash (used in) provided by
operating activities (1,333,799) 3,209,669
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash inflow from business combination
(Note 2) 39,280 --
Purchase of land use right (205,693) --
Purchase of property and equipment (8,282,558) (2,519,904)
Net cash used in investing activities (8,448,971) (2,519,904)
CASH FLOWS FROM FINANCING ACTIVITIES
Due to related parties 4,859,656 --
Repayment of note payable (611,247) --
Proceeds from notes payable 4,482,180 611,247
Net cash provided by financing activities 8,730,589 611,247
EFFECT OF EXCHANGE RATE ON CASH 245,032 5,621
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (807,149) 1,306,633
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR 1,467,245 160,612
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 660,096 $ 1,467,245
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest expenses $ 50,017 $ 12,594
Cash paid during the year for:
Income taxes $ 357,280 $ 306,434
--------------------------------------------------------------------------------
Source: Ever-Glory International Group, Inc
I had incorrect numbers earlier I guess...sorry about that...tuna |
