Jerash Holdings Reports Financial Results for Fiscal 2024 First Quarter

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

FAIRFIELD, NJ / ACCESSWIRE / August 9, 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 2024 first quarter, ended June 30, 2023 . "Our first quarter demonstrated the Company's resiliency in a challenging retail environment. Revenue was up slightly, although, as expected, profitability was impacted, principally caused by a product mix shift to lower margin items," said Sam Choi , Jerash's chairman and chief executive officer. "We are beginning to see improvement in the retail market and are receiving new inquiries from global brands, including orders to produce sample products. "The Initial marketing efforts by our joint venture partner, Busana Apparel Group , to its global customers are being well received. Jerash has begun working on pricing and sample development for more than ten new brands. We anticipate receiving meaningful orders for the joint venture during the fourth quarter of the current fiscal year. "Additionally, we have been in discussion with one of the global leaders in sustainable textile dyeing technology to form a joint venture to provide vertical integration for our customers. The plan is to bring about a new era of sustainable and innovative textile dyeing process in Jordan , with a proprietary technology that, according to the presentation and information from the potential partner, could result in more than 80 percent water usage reduction and 50 percent carbon footprint reduction from traditional textile dyeing process. The proposed joint venture is expected to benefit our customers through shortening fabric sourcing lead times and will further reduce dependency on suppliers in South East and Eastern Asia ," Choi added. Fiscal 2024 First Quarter Results Fiscal 2024 first quarter revenue advanced to $34.7 million , up 3.9 percent, from $33.4 million in the same period last year, reflecting an increase in shipments to some of the Company's major U.S. customers. Gross profit was $5.6 million for the fiscal 2024 first quarter, compared with $6.6 million in the same quarter last year. Gross margin for the most recent first quarter decreased to 16.0 percent, from 19.8 percent in the same period last year, principally due to a shift in product mix. Operating expenses totaled $4.5 million in the fiscal 2024 first quarter, compared with $4.3 million in the same period last year. Operating income totaled $1.1 million in the fiscal 2024 first quarter, versus $2.3 million in the same period last year. Total other expenses were $299,000 in the fiscal 2024 first quarter, compared with $28,000 in the same quarter last year. The increase was primarily due to higher interest expenses that occurred from participating in supply chain financing programs of certain customers. Interest expenses were $389,000 in the fiscal 2024 first quarter, compared with $88,000 a year ago. The effective tax rate amounted to 38 percent for the three months ended June 30, 2023 , compared with 25 percent for the three months ended June 30, 2022 . The increase primarily resulted from a higher corporate income tax rate in Jordan , higher proportion of the operating loss of the Company's holding company and Hong Kong subsidiary. Net income was $495,000 , or $0.04 per share, in the fiscal 2024 first quarter, compared with $1.7 million , or $0.14 per share, in the same period last year. Comprehensive income attributable to the Company's common stockholders totaled $402,000 in the fiscal 2024 first quarter, versus $1.6 million in the same period last year. Balance Sheet, Cash Flow, and Dividends Cash and restricted cash totaled $20.1 million , and net working capital was $41.5 million as of June 30, 2023 . Net cash provided by operating activities was approximately $25,000 for the quarter ended March 30, 2023 , compared with net cash used in operating activities of $473,000 for the same period last year. On August 4, 2023 , Jerash approved a regular quarterly dividend of $0.05 per share on its common stock, payable on August 23, 2023 to stockholders of record as of August 16, 2023 . Outlook Revenue for the full fiscal 2024 year is expected to be approximately the same as fiscal 2023. Gross margin goal for the full fiscal 2024 year is expected to be approximately 15-16 percent. Conference Call Jerash Holdings will host an investor conference call to discuss its fiscal 2024 first quarter results today, August 9, 2023 , at 9:00 a.m. Eastern Time . Phone: 888-506-0062 (domestic); 973-528-0011 (international) Conference ID: 666417 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; [email protected] # # #(tables below) JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) For the Three Months Ended June 30 , 2023 2022 Revenue, net $ 34,735,657 $ 33,436,561 Cost of goods sold 29,168,117 26,814,194 Gross Profit 5,567,540 6,622,367 Selling, general and administrative expenses 4,234,918 4,018,698 Stock-based compensation expenses 240,802 294,822 Total Operating Expenses 4,475,720 4,313,520 Income from Operations 1,091,820 2,308,847 Other Income (Expenses) Interest expenses (388,951 ) (87,842 ) Other income, net 90,227 60,242 Total other expenses, net (298,724 ) (27,600 ) Net income before provision for income taxes 793,096 2,281,247 Income tax expenses 297,981 559,865 Net income 495,115 1,721,382 Net loss attributable to noncontrolling interest 1,411 - Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 496,526 $ 1,721,382 Net income $ 495,115 $ 1,721,382 Other Comprehensive Loss Foreign currency translation loss (94,659 ) (117,660 ) Total Comprehensive Income 400,456 1,603,722 Comprehensive loss attributable to noncontrolling interest 1,411 - Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 401,867 $ 1,603,722 Earnings Per Share Attributable to Common Stockholders Basic and diluted $ 0.04 $ 0.14 Weighted Average Number of Shares Basic 12,294,840 12,336,516 Diluted 12,294,840 12,502,378 Dividend per share $ 0.05 $ 0.05 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30 , 2023 March 31 , 2023 (Unaudited) ASSETS Current Assets: Cash $ 18,459,939 $ 17,801,614 Accounts receivable, net 6,410,457 2,240,537 Bills receivable - 87,573 Tax recoverable - 16,763 Amount due from a related party 31,365 - Inventories 23,800,407 32,656,833 Prepaid expenses and other current assets 2,885,651 2,947,815 Advance to suppliers, net 3,212,701 1,533,091 Total Current Assets 54,800,520 57,284,226 Restricted cash - non-current 1,611,294 1,609,989 Long-term deposits 1,105,790 841,628 Deferred tax assets, net 153,873 153,873 Property, plant and equipment, net 23,255,357 22,355,574 Goodwill 499,282 499,282 Right of use assets 940,800 974,761 Total Assets $ 82,366,916 $ 83,719,333 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 3,571,002 $ 5,782,570 Accrued expenses 2,444,811 2,930,533 Credit facilities 3,117,337 - Income tax payable - current 1,892,181 2,846,201 Other payables 1,273,690 1,477,243 Deferred revenue 625,132 928,393 Operating lease liabilities - current 413,412 481,502 Total Current Liabilities 13,337,565 14,446,442 Operating lease liabilities - non-current 319,786 287,247 Income tax payable - non-current 417,450 751,410 Total Liabilities 14,074,801 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 23,171,848 22,931,046 Treasury stock, 239,478 shares (1,169,046 ) (1,169,046 ) Statutory reserve 410,847 410,847 Retained earnings 46,053,866 46,172,082 Accumulated other comprehensive loss (217,888 ) (123,229 ) Total Jerash Holdings (US), Inc. Stockholders` Equity 68,262,161 68,234,234 Noncontrolling interest 29,954 - Total Equity 68,292,115 68,234,234 Total Liabilities and Equity $ 82,366,916 $ 83,719,333 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended June 30 , 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 495,115 $ 1,721,382 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 608,776 630,999 Stock-based compensation expenses 240,802 294,822 Amortization of operating lease right-of-use assets 205,112 238,758 Changes in operating assets: Accounts receivable (4,169,920 ) (30,644 ) Bills receivable 87,573 - Inventories 8,856,426 (717,470 ) Prepaid expenses and other current assets 62,161 369,709 Advance to suppliers (1,679,610 ) (2,166,500 ) Changes in operating liabilities: Accounts payable (2,211,568 ) (649,556 ) Accrued expenses (485,721 ) 139,879 Other payables (203,553 ) (620,436 ) Deferred revenue (303,261 ) 137,982 Operating lease liabilities (206,702 ) (207,923 ) Income tax payable, net of recovery (1,270,858 ) 386,262 Net cash provided by (used in) operating activities 24,772 (472,736 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (61,258 ) (151,263 ) Payments for construction of properties (1,434,965 ) (1,810,075 ) Acquisition deposit - (1,267,407 ) Payments for long-term deposits (276,498 ) (151,967 ) Net cash used in investing activities (1,772,721 ) (3,380,712 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payment (614,742 ) (616,716 ) Repayment to a related party - (300,166 ) Proceeds from short-term loan 3,117,337 - Net proceeds from issuance of common stock - 1,130,046 Net cash provided by financing activities 2,502,595 213,164 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH (95,016 ) (117,852 ) NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH 659,630 (3,758,136 ) CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD 19,411,603 26,583,488 CASH, AND RESTRICTED CASH, END OF THE PERIOD $ 20,071,233 $ 22,825,352 CASH, AND RESTRICTED CASH, END OF THE PERIOD 20,071,233 22,825,352 LESS: NON-CURRENT RESTRICTED CASH 1,611,294 1,328,033 CASH, END OF THE PERIOD $ 18,459,939 $ 21,497,319 Supplemental disclosure information: Cash paid for interest $ 388,951 $ 87,842 Income tax paid $ 1,585,961 $ 531,493 Non-cash investing and financing activities Equipment obtained by utilizing long-term deposit $ 25,464 $ 244,667 Investment of noncontrolling interest $ 31,365 $ - Right of use assets obtained in exchange for operating lease obligations $ 177,068 $ 68,932 SOURCE: Jerash Holdings (US), Inc. 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