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Ever-Glory Reports 2013 Full Year Financial Results

NANJING, China, April 14, 2014 /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 ended December 31, 2013.

Total sales for the year ended December 31, 2013 were $368.1 million, an increase of 31.6% from the year ended December 31, 2012. This increase was primarily attributable to a 74.7% increased sales in retail business as well as a 4.3% increased sales in wholesale business.

In 2013, retail sales from LA GO GO, the Company's branded retail division, increased 74.7% to $189.7 million, compared to $108.6 million in 2012. This increase was primarily due to the increase in new stores opened and same store sales. Ever-Glory had 960 LA GO GO stores as of December 31, 2013, compared to 727 LA GO GO stores at December 31, 2012.

In 2013, wholesale sales generated from the Company's wholesale business increased 4.3% to $178.3 million, compared to $171.0 million in 2012. This increase was primarily attributable to increased sales in the PRC, the United Kingdom and Europe partially offset by decreased sales in Germany, Japan and the United States.

Total gross profit for the year 2013 was $94.6 million, or 25.7% of total sales, compared to $65.1 million, or 23.3% of total sales last year.

Selling expenses for the year 2013 increased 53.5% to $51.8 million compared to $33.7 million last year. As a percentage of sales, selling expenses increased 200 basis points to 14.1% compared to 12.1% 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 2013 increased 51.9% to $24.7 million compared to $16.2 million last year. As a percentage of sales, general and administrative expenses increased 90 basis points to 6.7% compared to 5.8% last year. The increase was attributable to an increase in the number of wholesale and retail management personnel.

Income from operations increased by 20.3% to $18.1 million in 2013 from $15.1 million in 2012. As a percent of sales, income from operations accounted for 4.9% of our total sales in 2013, a decrease of 0.5% compared to 2012.

For 2013, net income was $10.7 million, or $0.73 per diluted share, a decrease of 16.1% from $12.8 million, or $0.87 per diluted share in 2012. Net income for 2013 includes approximately $0.3 million, or $0.02 per diluted share, of non-cash income related to the change in fair value of a derivative liability compared to 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 for 2012. Excluding this non-cash item for 2013 and 2012, non-GAAP diluted earnings per share were $0.71 in 2013 compared to $0.86 in 2012. See "About Non-GAAP Financial Measures" below.

Balance Sheet and Cash Flow

As of December 31, 2013, Ever-Glory had approximately $27.8 million of cash and cash equivalents, compared to approximately $9.4 million as of December 31, 2012. Ever-Glory had working capital of approximately $35.9 million as of December 31, 2013, and outstanding bank loans of approximately $53.3 million as of December 31, 2013.

Business Outlook

For the first quarter of 2014, Every-Glory anticipates total net sales in the range of $90 to $110 million and net income in the range of $2 to $3 million. For full year 2014, Every-Glory anticipates total net sales in the range of $420 to $470 million and net income in the range of $11 to $17 million. The full year revenue forecast is comprised of $160 to $180 million in anticipated wholesale revenue and $260 to $290 million in anticipated revenue from retail operations.

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 MKT), 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".

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 2013 and 2012:

Adjusted Net Income




2013

2012

GAAP Net Income             

$10,738,578

$12,802,942

GAAP Diluted EPS

$0.73

$0.87




Addition:



Non-Cash Income for



Change in fair value of derivative liability:

$294,000

$96,800




Non GAAP Net Income:

$10,444,578

$12,706,142

Non GAAP Diluted EPS:

$0.71

$0.86

Diluted Shares used in computation

14,778,080

14,767,253

Conference Call

The Company will hold a conference call today at 8:00 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 # 1-913-312-0859 and referring to the confirmation code 2227162. 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 11:00 a.m. April 14, 2014 through April 21, 2014 Eastern Time by calling # 1-858-384-5517; pin number: 2227162.

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.

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012




2013



2012









SALES


$

368,078,425



$

279,633,212











COST OF SALES



273,484,086




214,577,277











GROSS PROFIT



94,594,339




65,055,935











OPERATING EXPENSES









Selling expenses



51,772,169




33,723,088


General and administrative expenses



24,676,303




16,248,947


Total operating expenses



76,448,472




49,972,035










INCOME FROM OPERATIONS



18,145,867




15,083,900











OTHER INCOME (EXPENSE)









Interest income



1,186,402




1,348,646


Interest expense



(3,005,579)




( 2,103,103)


Change in fair value of derivative liability



294,000




96,800


Other income



745,322




284,310


Total other income(expense)



(779,855)




(373,347)











INCOME BEFORE INCOME TAX EXPENSE



17,366,012




14,710,553











INCOME TAX EXPENSE



(6,627,434)




(1,907,611)











NET INCOME



10,738,578




12,802,942











Foreign currency translation gain



1,910,255




385,284


COMPREHENSIVE INCOME


$

12,648,833



$

13,188,226











EARNINGS PER SHARE:









Basic and diluted


$

0.73



$

0.87


Weighted average number of shares outstanding









Basic and diluted



14,778,080




14,767,253


SOURCE Ever-Glory International, Inc.

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