Financial News

Jerash Holdings Reports Financial Results for Fiscal 2025 First Quarter

FAIRFIELD, NJ / ACCESSWIRE / August 13, 2024 / Jerash Holdings (US), Inc. (NASDAQ:JRSH) (the "Company" or "Jerash"), which manufactures and exports custom, ready-made, sportswear and outerwear for leading global brands, today announced financial results for its fiscal 2025 first quarter, ended June 30, 2024.

"Revenue for the fiscal 2025 first quarter grew by nearly 18 percent over the prior year period to a record high," said Sam Choi, Jerash's chairman and chief executive officer. "We are continuing to receive an increasing number of purchase orders for export shipments to our global customers in the U.S. and Europe, and our factories are currently fully booked through December 2024.

"Jerash's gross margin was once again impacted by the Red Sea shipping crisis, which continues to disrupt ocean trade routes, and led to significant increases in ocean freight rates and inland trucking prices. We faced delays in receiving raw materials last quarter due to the disruptions in the Red Sea, resulting in delays in production. Consequently, we incurred additional manufacturing costs associated with catching up on deliveries to our customers to compensate for these delays.

"The increased logistics and labor costs had an approximately 440 basis point negative impact on gross margin for the first quarter. Nevertheless, gross margin increased by about 400 basis points over the preceding quarter. While some of the higher costs are continuing into the second quarter, we anticipate a more normalized operating environment in the second half of this fiscal year.

"Positive momentum is continuing as we proceed into fiscal 2025. We are receiving a steady flow of purchase orders from global customers, expanding our product mix, as well as an increasing number of trial orders from major brands through our joint venture partner, Busana Apparel Group. To ensure minimal operational disruptions in the event of an escalating geopolitical situation in the region, we have put contingency plans in place with our partners in other locations," Choi added.

Outlook

  • Revenue for the fiscal 2025 second quarter is expected to increase by 11-13 percent from the same quarter last year; full-year revenue is expected to increase by 20-25 percent.

  • Gross margin goal for fiscal year 2025 is currently expected to be around 12-14 percent, subject to logistics and shipping charges and product mix.

Fiscal 2025 First Quarter Results

Fiscal 2025 first quarter revenue advanced to $40.9 million, up by 17.8 percent from $34.7 million in the same period last year, reflecting an increase in shipments to Jerash's major U.S. customers and growth with new customers in other regions that the Company added during the past two years.

Gross profit was $4.6 million for the fiscal 2025 first quarter, compared with $5.6 million in the same quarter last year. Gross margin for the quarter decreased to 11.3 percent, from 16.0 percent in the same period last year, primarily due to higher raw material import costs caused by the Red Sea shipping disruption, as well as additional costs, primarily on overtime and incentives paid, associated with catching up on delivery schedules to customers.

Operating expenses totaled $5.5 million in the fiscal 2025 first quarter, compared with $4.5 million in the same period last year. The increase was primarily due to the increase in shipments, higher sampling support costs, and increases in payroll and stock-based compensation expenses.

Operating loss totaled $829,000 in the fiscal 2025 first quarter, versus operating income of $1.1 million in the same period last year.

Total other expenses were $426,000 in the fiscal 2025 first quarter, compared with $299,000 in the same quarter last year. The increase primarily reflected higher interest expenses from the supply chain financing programs of certain major customers.

Net loss was $1.4 million, or $0.11 per share, in the fiscal 2025 first quarter, compared with net income of $495,000, or $0.04 per share, in the same period last year. Comprehensive loss attributable to the Company's common stockholders totaled $1.3 million in the fiscal 2025 first quarter, versus comprehensive income of $402,000 in the same period last year.

Balance Sheet, Cash Flow, and Dividends

Cash and restricted cash totaled $13.0 million, and net working capital was $34.5 million as of June 30, 2024. Net cash used in operating activities was approximately $2.2 million for the quarter ended June 30, 2024, compared with net cash provided by operating activities of $25,000 for the same period last year.

On August 5, 2024, Jerash's board of directors approved a regular quarterly dividend of $0.05 per share on its common stock, payable on August 23, 2024 to stockholders of record as of August 16, 2024.

Conference Call

Jerash Holdings will host an investor conference call to discuss its fiscal 2025 first quarter results today, August 13, 2024, at 9:00 a.m. Eastern Time.

Phone: 888-506-0062 (domestic); 973-528-0011 (international)

Conference ID: 510634

A live and archived webcast will be available online in the investor relations section of Jerash's website at www.jerashholdings.com. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.

About Jerash Holdings (US), Inc.

Jerash manufactures and exports custom, ready-made, sportswear and outerwear for leading global brands and retailers, including VF Corporation (which owns brands such as The North Face, Timberland, and Vans), New Balance, G-III (which licenses brands such as Calvin Klein, Tommy Hilfiger, DKNY, and Guess), American Eagle, and Skechers. Jerash's existing production facilities comprise six factory units and four warehouses, and Jerash currently employs approximately 5,000 people. Additional information is available at www.jerashholdings.com.

Forward-Looking Statements

This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "seek", "potential," "outlook" and similar expressions are intended to identify forward-looking statements. Such statements, including, but not limited to, Jerash's current views with respect to future events and its financial forecasts, and expansion of the customer base among high-profile global brands, are subject to such risks and uncertainties. Many factors could cause actual results to differ materially from the statements made, including those risks described from time to time in filings made by Jerash with the Securities and Exchange Commission. In addition, there is uncertainty about the further spread of the COVID-19 virus or the occurrence of another wave of cases and the impact it may have on the Company's operations, the demand for the Company's products, global supply chains and economic activity in general. These and other risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Statements contained in this news release regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Jerash does not intend and does not assume any obligation to update these forward-looking statements, other than as required by law.

Contact:

PondelWilkinson Inc.
Judy Lin or Roger Pondel
310-279-5980; jlin@pondel.com

# # #
(tables below)


JERASH HOLDINGS (US), INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME (Unaudited)


For the Three Months Ended June 30,


2024

2023




Revenue, net

$

40,935,716

$

34,735,657

Cost of goods sold

36,295,845

29,168,117

Gross Profit

4,639,871

5,567,540


Selling, general, and administrative expenses

4,999,744

4,234,918

Stock-based compensation expenses

468,935

240,802

Total Operating Expenses

5,468,679

4,475,720


(Loss) Income from Operations

(828,808

)

1,091,820


Other Income (Expenses):

Interest expenses

(480,203

)

(388,951

)

Other income, net

54,035

90,227

Total other expenses, net

(426,168

)

(298,724

)


Net (loss) income before provision for income taxes

(1,254,976

)

793,096


Income tax expenses

111,721

297,981


Net (loss) income

(1,366,697

)

495,115


Net loss attributable to noncontrolling interest

21,481

1,411

Net (loss) income attributable to Jerash Holdings (US), Inc.'s Common Stockholders

$

(1,345,216

)

$

496,526


Net (loss) income

$

(1,366,697

)

$

495,115

Other Comprehensive Income (Loss):

Foreign currency translation income (loss)

8,913

(94,659

)

Total Comprehensive (Loss) Income

(1,357,784

)

400,456

Comprehensive loss attributable to noncontrolling interest

21,481

1,411

Comprehensive (Loss) Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders

$

(1,336,303

)

$

401,867


(Loss) Earnings Per Share Attributable to Common Stockholders:

Basic and diluted

$

(0.11

)

$

0.04


Weighted Average Number of Shares

Basic

12,294,840

12,294,840

Diluted

12,294,840

12,294,840


Dividend per share

$

0.05

$

0.05

JERASH HOLDINGS (US), INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


June 30,
2024

March 31,
2024


(Unaudited)


ASSETS

Current Assets:



Cash

$

11,366,228

$

12,428,369

Accounts receivable, net

9,400,763

5,417,513

Inventories

20,727,685

27,241,573

Prepaid expenses and other current assets

2,981,096

2,746,068

Advance to suppliers, net

3,166,899

3,086,137

Total Current Assets

47,642,671

50,919,660


Restricted cash - non-current

1,607,644

1,608,498

Long-term deposits

1,000,682

802,306

Deferred tax assets, net

158,329

158,329

Property, plant, and equipment, net

24,573,926

24,998,096

Goodwill

499,282

499,282

Operating lease right of use assets

1,177,242

1,259,395

Total Assets

$

76,659,776

$

80,245,566


LIABILITIES AND EQUITY


Current Liabilities:

Credit facilities

$

2,130,743

$

-

Accounts payable

3,299,839

6,340,237

Accrued expenses

3,425,901

4,175,843

Income tax payable - current

1,449,202

1,647,199

Other payables

2,300,102

2,234,870

Deferred revenue

246,027

10,200

Operating lease liabilities - current

288,768

370,802

Total Current Liabilities

13,140,582

14,779,151


Operating lease liabilities - non-current

592,122

618,302

Income tax payable - non-current

-

417,450

Total Liabilities

13,732,704

15,814,903


Equity

Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding

$

-

$

-

Common stock, $0.001 par value; 30,000,000 shares authorized; 12,534,318 shares issued, and 12,294,840 shares outstanding

12,534

12,534

Additional paid-in capital

24,386,029

23,917,094

Treasury stock, 239,478 shares

(1,169,046

)

(1,169,046

)

Statutory reserve

413,821

413,821

Retained earnings

39,744,280

41,704,238

Accumulated other comprehensive loss

(483,406

)

(492,319

)

Total Jerash Holdings (US), Inc. Stockholders' Equity

62,904,212

64,386,322


Noncontrolling interest

22,860

44,341

Total Equity

62,927,072

64,430,663


Total Liabilities and Equity

$

76,659,776

$

80,245,566

JERASH HOLDINGS (US), INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Three Months Ended
June 30,

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) income

$

(1,366,697

)

$

495,115

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization

612,759

608,776

Stock-based compensation expenses

468,935

240,802

Amortization of operating lease right-of-use assets

150,008

205,112

Changes in operating assets:

Accounts receivable

(3,983,251

)

(4,169,920

)

Bills receivable

-

87,573

Inventories

6,513,887

8,856,426

Prepaid expenses and other current assets

(235,028

)

62,161

Advance to suppliers

(80,762

)

(1,679,610

)

Changes in operating liabilities:

Accounts payable

(3,040,398

)

(2,211,568

)

Accrued expenses

(749,942

)

(485,721

)

Other payables

65,232

(203,553

)

Deferred revenue

235,827

(303,261

)

Operating lease liabilities

(176,069

)

(206,702

)

Income tax payable

(615,449

)

(1,270,858

)

Net cash (used in) provided by operating activities

(2,200,948

)

24,772

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant, and equipment

(130,271

)

(61,258

)

Payments for construction of properties

(15,150

)

(1,434,965

)

Payment for long-term deposits

(241,544

)

(276,498

)

Net cash used in investing activities

(386,965

)

(1,772,721

)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend payment

(614,742

)

(614,742

)

Repayment from short-term loan

(3,435,297

)

-

Proceeds from short-term loan

5,566,040

3,117,337

Net cash provided by financing activities

1,516,001

2,502,595

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH

8,917

(95,016

)

NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH

(1,062,995

)

659,630

CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD

14,036,867

19,411,603

CASH, AND RESTRICTED CASH, END OF THE PERIOD

$

12,973,872

$

20,071,233

CASH, AND RESTRICTED CASH, END OF THE PERIOD

$

12,973,872

$

20,071,233

LESS: NON-CURRENT RESTRICTED CASH

1,607,644

1,611,294

CASH, END OF THE PERIOD

$

11,366,228

$

18,459,939

Supplemental disclosure information:

Cash paid for interest

$

480,203

$

388,951

Income tax paid

$

726,177

$

1,585,961

Non-cash investing and financing activities

Equipment obtained by utilizing long-term deposit

$

44,215

$

25,464

Operating lease right of use assets obtained in exchange for operating lease obligations

$

67,512

$

177,068

SOURCE: Jerash Holdings (US), Inc.



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