Jerash Holdings Reports Fiscal 2024 Third Quarter Financial Results
*FAIRFIELD, NJ / ACCESSWIRE / February 8, 2024 / *Jerash Holdings (US), Inc. ("Jerash" or the "Company") (NASDAQ:JRSH), which manufactures and exports custom, ready-made, sportswear and outerwear for leading global brands, today announced financial results for its fiscal year 2024 third quarter, ended December 31, 2023.
*Impact of Middle East Situation*
The ongoing turmoil in the Middle East, including the attacks on ships in the Red Sea, is causing supply chain disruptions throughout the region and affecting many companies, including Jerash. Shipments of raw materials to the Company have been delayed, which, in turn, had a transitory effect on operations and financial performance.
While the extent of the impact on the region remains uncertain, the Company's operations in Jordan are fully active, and exports from Jordan at both the Aqaba and Haifa ports are open following a temporary shutdown at Haifa. Starting in December 2023, Jerash has been able to adopt an alternative route through the Port of Jebel Ali in United Arab Emirates for raw material import. The Company is in close communication with its customers and has put contingency plans in place that will enable it to fulfill customer orders.
*Fiscal Year 2024 Third Quarter Results*
"The ongoing tension in the region presented supply chain issues, causing delays, but not cancellations, and curtailing production during the quarter," said Sam Choi, Jerash's chairman and chief executive officer. "While revenue was significantly down compared with the prior year period, we achieved profitability for the quarter and continued to make good progress attracting a fresh pipeline of orders from new customers representing established global brands.
"We are excited about our growth opportunity in Europe, having recently attracted another European-based high-end apparel brand for which we have begun to produce several trial orders. In addition, Vans and Dickies, both VF Corporation brands, placed trial orders for both the U.S. and European markets. These are all positive indicators for the future.
"While our new customers and the eventual shipment of delayed orders bode well for Jerash's longer term future performance, it would be imprudent at this time to provide formal guidance on what to expect for the current quarter because of the ongoing geopolitical uncertainty. The Ministry of Foreign Affairs of Jordan has reassured our team that the government is proactive in maintaining a safe and stable environment for businesses and providing protection export sea routes. We are grateful that day-to-day life in Jordan remains normal. Our hearts go out to the innocent victims on all sides of the crisis, and we pray for an expeditious resolution," Choi added.
Revenue for the fiscal year 2024 third quarter was $27.5 million, compared with $43.0 million in the same quarter last year, principally reflecting the supply chain interruptions, with fewer shipments being delivered to some of the Company's major customers in the U.S.
Gross profit for the fiscal year 2024 third quarter was $4.5 million, compared with $5.8 million in the same quarter last year. Gross margin improved 270 basis points to 16.2 percent in the fiscal year 2024 third quarter, from 13.5 percent in the same quarter last year. The increase was primarily due to improved product mix, with a larger proportion of shipments to the Company's major U.S. customers that generate higher margins.
Operating expenses were reduced to $4.1 million in the fiscal year 2024 third quarter, from $4.5 million in the same quarter last year. Selling, general and administrative expenses also were lower, at $3.8 million in the fiscal year 2024 third quarter, compared with $4.5 million in the same quarter last year. Stock-based compensation expenses for the fiscal year 2024 third quarter were $243,000, compared with none in the same quarter last year.
Operating income totaled $376,000 in the fiscal year 2024 third quarter, versus $1.3 million in the same quarter last year.
Total other expenses were $105,000 in the fiscal year 2024 third quarter, compared with $111,000 in the same quarter last year.
Net income was $232,000 in the fiscal year 2024 third quarter, or $0.02 per diluted share, versus $891,000, or $0.07 per diluted share, in the same quarter last year.
Comprehensive income attributable to Jerash's common stockholders totaled $320,000 in the fiscal year 2024 third quarter, compared with $929,000 in the same quarter last year.
*Balance Sheet, Cash Flow and Dividends*
Cash totaled $19.6 million, and net working capital was $40.5 million at December 31, 2023.
On February 5, 2024, Jerash approved a regular quarterly dividend of $0.05 per share on its common stock, payable on February 23, 2024 to stockholders of record as of February 16, 2024.
*Nine-Month Fiscal Year 2024 Results*
Revenue for the first nine months of fiscal year 2024 was $95.6 million, compared with $114.3 million in the same period last year.
Gross profit was $15.4 million for the first nine months of fiscal year 2024, compared with $19.3 million for the same period last year. Gross margin for the first nine months of fiscal year 2024 was 16.1 percent, compared with 16.9 percent in the same period last year.
Operating expenses for the first nine months of fiscal year 2024 were $13.0 million, slightly lower than the same period last year. Operating income was $2.4 million for the first nine months of fiscal year 2024, compared with $6.2 million for the same period last year.
Net income for the first nine months of fiscal year 2024 was $1.1 million, or $0.09 per diluted share, compared with $4.4 million, or $0.35 per diluted share, in the same period last year.
Comprehensive income attributable to Jerash's common stockholders was $1.0 million in the first nine months of fiscal year 2024, compared with $4.1 million in the same period last year.
*Conference Call*
Jerash will host an investor conference call to discuss its fiscal year 2024 third quarter results today, February 8, 2024, at 9:00 a.m. Eastern Time.
*Phone:* 888-506-0062 (domestic); 973-528-0011 (international)
*Conference ID:* 964050
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 U.S. Securities and Exchange Commission. These and other risks and uncertainties are detailed in the Company's filings with the U.S. 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 INCOME AND COMPREHENSIVE INCOME*
*(UNAUDITED)*
*For the Three Months Ended *
*December 31,* *For the Nine Months Ended*
*December 31,* *2023* *2022* *2023* *2022*
*Revenue, net*
$ 27,520,121 $ 43,027,047 $ 95,612,886 $ 114,289,303
Cost of goods sold
23,057,845 37,230,421 80,211,039 94,952,523
*Gross Profit*
4,462,276 5,796,626 15,401,847 19,336,780
Selling, general and administrative expenses
3,843,029 4,469,967 12,318,535 12,796,749
Stock-based compensation expenses
243,448 - 727,698 294,822
*Total Operating Expenses*
4,086,477 4,469,967 13,046,233 13,091,571
*Income from Operations*
375,799 1,326,659 2,355,614 6,245,209
*Other Income (Expenses):*
Interest expenses
(234,971 ) (248,894 ) (983,156 ) (500,331 )
Other income, net
129,877 137,432 412,627 255,481
*Total other expenses, net*
(105,094 ) (111,462 ) (570,529 ) (244,850 )
*Net income before provision for income taxes*
270,705 1,215,197 1,785,085 6,000,359
Income tax expenses
38,535 324,379 688,856 1,596,407
*Net income*
232,170 890,818 1,096,229 4,403,952
Net gain attributable to noncontrolling interest
(11,457 ) - (13,373 ) -
*Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders*
$ 220,713 $ 890,818 $ 1,082,856 $ 4,403,952
*Net income*
$ 232,170 $ 890,818 $ 1,096,229 $ 4,403,952
*Other Comprehensive Income (Loss):*
Foreign currency translation gain (loss)
99,171 37,804 (55,329 ) (296,066 )
*Total Comprehensive Income*
331,341 928,622 1,040,900 4,107,886
Comprehensive gain attributable to noncontrolling interest
(11,457 ) - (13,373 ) -
*Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders*
$ 319,884 $ 928,622 $ 1,027,527 $ 4,107,886
*Earnings Per Share Attributable to Common Stockholders:*
Basic and diluted
$ 0.02 $ 0.07 $ 0.09 $ 0.35
*Weighted Average Number of Shares*
Basic
12,294,840 12,412,922 12,294,840 12,414,546
Diluted
12,294,840 12,412,922 12,294,840 12,467,315
*Dividend per share*
$ 0.05 $ 0.05 $ 0.15 $ 0.15
*JERASH HOLDINGS (US), INC.,*
*AND SUBSIDIARIES*
*CONDENSED CONSOLIDATED BALANCE SHEETS*
*December 31,*
*2023* *March 31,*
*2023* *(Unaudited)*
*ASSETS*
*Current Assets:*
Cash
$ 19,617,630 $ 17,801,614
Accounts receivable, net
8,472,674 2,240,537
Bills receivable
152,188 87,573
Inventories
15,937,648 32,656,833
Prepaid expenses and other current assets
2,582,886 2,964,578
Advance to suppliers, net
2,644,108 1,533,091
*Total Current Assets*
49,407,134 57,284,226
Restricted cash - non-current
1,608,784 1,609,989
Long-term deposits
782,697 841,628
Deferred tax assets, net
153,873 153,873
Property, plant and equipment, net
24,796,611 22,355,574
Goodwill
499,282 499,282
Right of use assets
541,612 974,761
*Total Assets*
*$* *77,789,993* *$* *83,719,333*
*LIABILITIES AND EQUITY*
*Current Liabilities:*
Accounts payable
$ 2,401,586 $ 5,782,570
Accrued expenses
2,898,142 2,930,533
Income tax payable - current
1,736,484 2,846,201
Other payables
1,619,636 1,477,243
Deferred revenue
905 928,393
Operating lease liabilities - current
280,363 481,502
*Total Current Liabilities*
8,937,116 14,446,442
Operating lease liabilities - non-current
196,456 287,247
Income tax payable - non-current
417,450 751,410
*Total Liabilities*
*9,551,022* *15,485,099*
*Equity*
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding
$ - $ -
Common stock, $0.001 par value; 30,000,000 shares authorized; 12,534,318 shares issued, 12,294,840 shares outstanding
12,534 12,534
Additional paid-in capital
23,658,744 22,931,046
Treasury stock, 239,478 shares
(1,169,046 ) (1,169,046 )
Statutory reserve
410,847 410,847
Retained earnings
45,410,712 46,172,082
Accumulated other comprehensive loss
(178,558 ) (123,229 )
*Total Jerash Holdings (US), Inc.' Stockholders' Equity*
68,145,233 68,234,234
Noncontrolling interest
93,738 -
*Total Equity*
68,238,971 68,234,234
*Total Liabilities and Equity*
*$* *77,789,993* *$* *83,719,333*
*JERASH HOLDINGS (US), INC.,*
*AND SUBSIDIARIES*
*CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS*
(UNAUDITED)
*For the Nine Months Ended December 31,* *2023* *2022*
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$ 1,096,229 $ 4,403,952
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,881,853 1,753,941
Stock-based compensation expenses
727,698 294,822
Bad debt recovery
(187,762 ) -
Amortization of operating lease right-of-use assets
601,727 784,699
Changes in operating assets:
Accounts receivable
(6,044,375 ) 5,503,123
Bills receivable
(64,614 ) -
Inventories
16,719,185 1,591,135
Prepaid expenses and other current assets
350,324 424,867
Advance to suppliers
(1,111,017 ) (4,725,296 )
Changes in operating liabilities:
Accounts payable
(3,380,984 ) 1,108,112
Accrued expenses
(32,390 ) (266,092 )
Other payables
142,393 (883,219 )
Deferred revenue
(927,488 ) 296,985
Operating lease liabilities
(460,508 ) (661,274 )
Income tax payable, net of recovery
(1,443,317 ) 232,632
*Net cash provided by operating activities*
7,866,954 9,858,387
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment
(824,305 ) (587,613 )
Payments for construction of properties
(3,158,501 ) (3,414,172 )
Acquisition of Ever Winland
- (5,100,000 )
Acquisition of Kawkab Venus
- (2,200,000 )
Payment for long-term deposits
(281,153 ) (70,549 )
*Net cash used in investing activities*
(4,263,959 ) (11,372,334 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments
(1,844,226 ) (1,865,241 )
Investment of noncontrolling interest
31,365 -
Share repurchase
- (771,894 )
Repayment from short-term loan
(4,937,633 ) (1,756,360 )
Repayment to a related party
- (300,166 )
Proceeds from short-term loan
4,937,633 6,162,743
*Net cash (used in) provided by financing activities*
(1,812,861 ) 1,469,082
*EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH*
24,677 (296,261 )
*NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH*
1,814,811 (341,126 )
*CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD*
19,411,603 26,583,488
*CASH, AND RESTRICTED CASH, END OF THE PERIOD*
$ 21,226,414 $ 26,242,362
CASH, AND RESTRICTED CASH, END OF THE PERIOD
21,226,414 26,242,362
LESS: NON-CURRENT RESTRICTED CASH
1,608,784 1,615,353
CASH, END OF THE PERIOD
$ 19,617,630 $ 24,627,009
*Supplemental disclosure information:*
Cash paid for interest
$ 983,156 $ 500,331
Income tax paid
$ 2,163,732 $ 1,354,754
*Non-cash investing and financing activities*
Equipment obtained by utilizing long-term deposit
$ 355,160 $ 236,735
Acquisition of Kawkab Venus by utilizing long-term deposit
$ - $ 500,000
Right of use assets obtained in exchange for operating lease obligations
$ 177,068 $ 190,654
*SOURCE:* Jerash Holdings (US), Inc.
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