Jerash Holdings Reports Financial Results for Fiscal 2023 Fourth Quarter and Full Year

About this update from Jerash Holdings (us), Inc.

FAIRFIELD, NJ / ACCESSWIRE / June 27, 2023 / 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 2023 fourth quarter and full year, ended March 31, 2023 . Fiscal 2023 Fourth Quarter Results Fiscal 2023 fourth-quarter revenue was $23.8 million , down 23.2 percent from $30.9 million in the same period last year, primarily due to lower sales from two major U.S. customers. Revenue also was negatively impacted by approximately $3 million of orders, with shipments being deferred by customers to the fiscal 2024 first quarter. Gross profit was $2.5 million for the fiscal 2023 fourth quarter, compared with $4.7 million in the same quarter last year. Gross margin for the most recent fourth quarter decreased to 10.3 percent, from 15.1 percent in the same period last year. The decrease in gross margin was primarily driven by a lower proportion of U.S. orders and a product mix shift. Operating expenses totaled $4.3 million in the fiscal 2023 fourth quarter, compared with $4.6 million in the same period last year. The slight decrease was due to smaller stock-based compensation expenses in fiscal 2023. Operating loss was $1.8 million for the fiscal 2023 fourth quarter, compared with operating income of $126,000 for the same period last year. Total other expenses were $86,000 in the fiscal 2023 fourth quarter, compared with total other income of $148,000 in the last year's fourth quarter. Interest expenses were $268,000 in the fiscal 2023 fourth quarter, compared with $63,000 for the same quarter last year. Income tax expenses for fiscal 2023 fourth quarter were $68,000 , compared with $405,000 in the same period last year. Net loss was $2.0 million , or $0.16 per share, for the fiscal 2023 fourth quarter, compared with a net loss of $131,000 , or $0.01 per share, in the same period last year. "Revenue and gross margin for the 2023 fourth quarter continued to be impacted by fewer orders from our two major U.S. customers, as well as a shift in product mix to lower margin items. We also are comparing against a particularly strong revenue quarter a year ago," said Sam Choi , Jerash's chairman and chief executive officer. "The retail sector continues to face a weak economic environment, as consumers are limiting their spending on higher priced items. "On the positive front, our joint venture with Busana Apparel Group is progressing well. Initial feedback from Busana's global branded customers indicate their keen interest in geographically diversifying production to Jordan from Asia , in part, to take advantage of duty-free agreements with the U.S. and other countries. We anticipate production as part of the joint venture to start in the second half of the current fiscal year. "We are continuing to focus on our initiative to diversify our customer base, through our own marketing activities and through our joint venture. As well, we have begun planning the development of property acquired in 2019 to be at-the-ready as market conditions improve," Choi added. Fiscal 2023 Full Year Results Fiscal 2023 revenue decreased slightly to $138.1 million , from $143.4 million in fiscal 2022. Despite receiving orders from new customers during the year, the added revenue was not enough to offset the shortfall in sales from certain existing customers. Gross profit in fiscal 2023 totaled $21.8 million , compared with $27.3 million in fiscal 2022. Gross margin was 15.8 percent in fiscal 2023, compared with 19.1 percent in fiscal 2022. Operating expenses in fiscal 2023 were $17.4 million , compared with $16.8 million in fiscal 2022. Operating income decreased to $4.4 million in fiscal 2023, from $10.5 million in fiscal 2022. Net income amounted to $2.4 million , or $0.19 per share, in fiscal 2023, compared with $7.9 million , or $0.67 per share, in fiscal 2022. Balance Sheet, Cash Flow and Dividends Cash and restricted cash totaled $19.4 million , and net working capital was $42.8 million as of March 31, 2023 . Net cash provided by operating activities was approximately $10.8 million for the fiscal year ended March 31, 2023 , compared with $9.0 million for last year. On May 23, 2023 , Jerash approved a regular quarterly dividend of $0.05 per share on its common stock. The dividend was paid on June 9, 2023 , to stockholders of record as of June 2, 2023 . Outlook Revenue for fiscal 2024 first quarter and full year to be maintained at the similar level as fiscal 2023. Gross margin goal for the full fiscal 2024 year is expected to be around 15-16 percent subject to final product mix of shipments. Share Repurchase Program As of March 31, 2023 , 239,500 shares had been repurchased at market rates, at a total price of $1.2 million , excluding broker commissions, under the share repurchase program authorized by the board in June 2022 . The program expired at the end of fiscal 2023. Conference Call Jerash Holdings will host an investor conference call to discuss its fiscal 2023 fourth quarter and full year results today, June 27, 2023 , at 9:00 a.m. Eastern Time . Phone: 888-506-0062 (domestic); 973-528-0011 (international) Conference ID: 873668 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 Holdings 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; [email protected] # # # (tables below) JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE- AND TWELVE-MONTHS ENDED MARCH 31, 2023 AND 2022 For the Three Months Ended March 31 , For the Fiscal Years Ended March 31 , 2023 2022 2023 2022 (Unaudited) (Unaudited) Revenue, net $ 23,774,006 $ 30,940,021 $ 138,063,309 $ 143,354,902 Cost of goods sold 21,321,046 26,254,643 116,273,569 116,023,267 Gross Profit 2,452,960 4,685,378 21,789,740 27,331,635 Selling, general and administrative expenses 4,164,229 4,247,407 16,960,978 15,895,998 Stock-based compensation expenses 119,078 312,165 413,900 947,079 Total Operating Expenses 4,283,307 4,559,572 17,374,878 16,843,077 Income (loss) from Operations (1,830,347 ) 125,806 4,414,862 10,488,558 Other (Expense) Income: Interest expenses (267,800 ) (62,899 ) (768,131 ) (210,576 ) Other income, net 181,521 211,012 437,002 165,893 Total other (expense) income, net (86,279 ) 148,113 (331,129 ) (44,683 ) Net income (loss) before provision for income taxes (1,916,626 ) 273,919 4,083,733 10,443,875 Income tax expense 67,703 405,229 1,664,110 2,524,275 Net Income (loss) (1,984,329 ) (131,310 ) 2,419,623 7,919,600 Other Comprehensive Income (Loss): Foreign currency translation gain (loss) 45,692 21,131 (250,374 ) 143,046 Comprehensive Income (Loss) Attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ (1,938,637 ) $ (110,179 ) $ 2,169,249 $ 8,062,646 Earnings (Loss) Per Share Attributable to Common Stockholders: Basic and diluted $ (0.16 ) $ (0.01 ) $ 0.19 $ 0.67 Weighted Average Number of Shares Basic 12,525,166 12,334,318 12,635,785 11,821,779 Diluted 12,525,166 12,334,318 12,675,351 11,897,717 Dividend per share $ 0.05 $ 0.05 $ 0.20 $ 0.20 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31 , 2023 March 31 , 2022 ASSETS Current Assets: Cash $ 17,801,614 $ 25,176,120 Accounts receivable, net 2,240,537 11,049,069 Bills receivable 87,573 - Tax recoverable 16,763 374,377 Inventories 32,656,833 28,255,179 Prepaid expenses and other current assets 2,947,815 3,233,592 Investment deposits - 500,000 Advance to suppliers, net 1,533,091 1,284,601 Total Current Assets 57,284,226 69,872,938 Restricted cash - non-current 1,609,989 1,407,368 Long-term deposits 841,628 419,597 Deferred tax assets, net 153,873 352,590 Property, plant and equipment, net 22,355,574 10,933,147 Goodwill 499,282 499,282 Right of use assets 974,761 1,826,062 Total Assets $ 83,719,333 $ 85,310,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Credit facilities $ - $ - Accounts payable 5,782,570 4,840,225 Accrued expenses 2,930,533 3,115,953 Income tax payable - current 2,846,201 2,861,272 Other payables 1,477,243 2,278,816 Deferred revenue 928,393 - Amount due to a related party - 300,166 Operating lease liabilities - current 481,502 739,101 Total Current Liabilities 14,446,442 14,135,533 Operating lease liabilities - non-current 287,247 869,313 Income tax payable - non-current 751,410 1,001,880 Total Liabilities 15,485,099 16,006,726 Stockholders' 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 and 12,334,318 shares issued; 12,294,840 and 12,334,318 shares outstanding as of March 31, 2023 and 2022, respectively 12,534 12,334 Additional paid-in capital 22,931,046 22,517,346 Treasury stock, 239,478 and none shares as of March 31, 2023 and 2022, respectively (1,169,046 ) - Statutory reserve 410,847 379,323 Retained earnings 46,172,082 46,268,110 Accumulated other comprehensive (loss) gain (123,229 ) 127,145 Total Jerash Holdings (US), Inc. Stockholders' Equity 68,234,234 69,304,258 Total Liabilities and Stockholders' Equity $ 83,719,333 $ 85,310,984 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal Years Ended March 31 , 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 2,419,623 $ 7,919,600 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,430,692 2,149,419 Stock-based compensation expenses 413,900 947,079 Bad debt expense - 221,584 Amortization of operating lease right-of-use assets 989,220 803,056 Changes in operating assets: Accounts receivable 8,808,532 762,614 Bills receivable (87,573 ) - Inventories (4,401,654 ) (3,219,213 ) Prepaid expenses and other current assets 285,782 (904,305 ) Advance to suppliers (248,490 ) 1,752,091 Deferred tax assets 198,717 (203,928 ) Changes in operating liabilities: Accounts payable 942,345 (3,082,614 ) Accrued expenses (185,421 ) 783,087 Other payables (801,574 ) 823,608 Deferred revenue 928,393 - Operating lease liabilities (977,584 ) (759,919 ) Income tax payable, net of recovery 92,226 971,386 Net cash provided by operating activities 10,807,134 8,963,545 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (722,770 ) (2,955,328 ) Payments for construction of properties (5,084,044 ) (2,098,323 ) Acquisition of MK Garments - (2,700,000 ) Acquisition of Ever Winland (5,100,000 ) - Acquisition of Kawkab Venus (2,200,000 ) - Acquisition deposit - (500,000 ) Payment for long-term deposits (668,337 ) (419,597 ) Net cash used in investing activities (13,775,151 ) (8,673,248 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payment (2,484,127 ) (2,366,796 ) Share repurchase (1,169,046 ) - Repayment from short-term loan (7,197,995 ) (612,703 ) Repayment to a related party (300,166 ) (1,763 ) Proceeds from short-term loan 7,197,995 - Net proceeds from issuance of common stock - 6,270,000 Net cash (used in) provided by financing activities (3,953,339 ) 3,288,738 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH (250,529 ) 143,990 NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH (7,171,885 ) 3,723,025 CASH, AND RESTRICTED CASH, BEGINNING OF THE YEAR 26,583,488 22,860,463 CASH, AND RESTRICTED CASH, END OF THE YEAR $ 19,411,603 $ 26,583,488 CASH, AND RESTRICTED CASH, END OF THE YEAR 19,411,603 26,583,488 LESS: NON-CURRENT RESTRICTED CASH 1,609,989 1,407,368 CASH, END OF THE YEAR $ 17,801,614 $ 25,176,120 Supplemental disclosure information: Cash paid for interest $ 768,131 $ 210,576 Income tax paid $ 1,747,635 $ 1,762,254 Non-cash investing and financing activities Equipment obtained by utilizing long-term deposit $ 237,412 $ 321,862 Acquisition of Kawbab Venus by utilizing long-term deposit $ 500,000 $ - Right of use assets obtained in exchange for operating lease obligations $ 190,654 $ 1,022,172 SOURCE: Jerash Holdings (US), Inc. 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