Jerash Holdings Reports Financial Results for Fiscal 2024 Fourth Quarter and Full Year

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

--Fourth Quarter Results Impacted by Production Delays Due to Red Sea Logistics Disruptions-- --Outlook for First Quarter and Fiscal 2025 Improves-- FAIRFIELD, NJ / ACCESSWIRE / June 27, 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 2024 fourth quarter and full year, ended March 31, 2024 . "Continuing attacks on ships in the Red Sea , where approximately 12 percent of the world's trade passes, again caused supply chain disruptions throughout the region," said Sam Choi , Jerash's chairman and chief executive officer. "Shipments of raw materials to Jerash were delayed, which impacted the Company's production for its global customers and, in turn, Jerash's financial performance for the fiscal fourth quarter and full year. Certain orders that could not be completed during the fourth quarter were shipped in the fiscal 2025 first quarter. "Gross margin was substantially down for the fiscal fourth quarter due to significantly higher ocean freight and transportation costs from Asia to Jordan . However, we have identified and are now aggressively increasing our sourcing of raw materials from Turkey and Egypt to circumvent shipping routes and related logistics costs. During the fourth quarter, we were able to keep our factories busy by obtaining local orders, albeit with much lower margin, keeping our workforce employed and allowing us to be ready for growth in the new fiscal year. "On a positive note, we are experiencing a tangible increase in purchase orders from long-term customers. As well, we are receiving an influx of business from new, high-profile global brands, both directly, and through our joint venture with Busana. Our manufacturing facilities currently are fully booked into the second fiscal quarter, which gives us renewed confidence as we enter the new fiscal year," Choi added. Outlook Revenue for the fiscal 2025 first quarter is expected to increase by 14-15 percent from the same quarter last year; full year revenue is expected to increase by 15-18 percent. Gross margin goal for fiscal 2025 year is currently expected to be around 13-15 percent, subject to logistics and shipping charges and final product mix of shipments. Fiscal 2024 Fourth Quarter Results Fiscal 2024 fourth quarter revenue was $21.6 million , down 9.3 percent from $23.8 million in the same quarter last year, primarily due to reduced shipments to our major customers in the U.S. caused by inadequate materials for production due to logistical disruptions and extended supply chain lead times in the Middle East . Revenue was negatively impacted by approximately $3 to $4 million of orders, with shipments delayed to the fiscal 2025 first quarter to customers in the U.S. Gross profit was $1.5 million for the fiscal 2024 fourth quarter, compared with $2.5 million in the same quarter last year. Gross margin for fiscal 2024 fourth quarter decreased to 7.0 percent, from 10.3 percent in the same period last year. The decrease in gross margin was primarily driven by higher ocean freight and transportation costs, as well as manufacturing lower margin orders from local customers, to offset the decrease in shipments to major customers in the U.S. Operating expenses totaled $4.5 million in the fiscal 2024 fourth quarter, compared with $4.3 million in the same quarter last year. Operating loss was $3.0 million for the fiscal 2024 fourth quarter, compared with operating loss of $1.8 million for the same quarter last year. Total other expenses in the fiscal 2024 fourth quarter were $134,000 , compared with $86,000 for the same quarter last year. Net loss was $3.1 million , or $0.25 per share, for the fiscal 2024 fourth quarter, compared with net loss of $2.0 million , or $0.16 per share, in the same period last year. Comprehensive loss attributable to Jerash's common stockholders totaled $3.4 million in the fiscal 2024 fourth quarter, compared with comprehensive loss totaled $1.9 million in the same quarter last year. Balance Sheet, Cash Flow and Dividends Cash and restricted cash totaled $14.0 million , and net working capital was $36.1 million as of March 31, 2024 . Net cash provided by operating activities was approximately $2.5 million for fiscal 2024, compared with $10.8 million in fiscal 2023. On May 21, 2024 , the board of directors of Jerash approved a regular quarterly dividend of $0.05 per share on the Company's common stock. The dividend was paid on June 7, 2024 , to stockholders of record as of May 31, 2024 . Fiscal 2024 Full Year Results Fiscal 2024 revenue decreased to $117.2 million , from $138.1 million in fiscal 2023. The decrease in revenue was primarily due to reduced shipments to the Company's two major customers in the U.S. , as well as the supply chain logistics disruptions with the Red Sea crisis. Gross profit in fiscal 2024 totaled $16.9 million , compared with $21.8 million in fiscal 2023. Gross margin was 14.4 percent in fiscal 2024, compared with 15.8 percent in fiscal 2023. Operating expenses in fiscal 2024 were $17.6 million , compared with $17.4 million in fiscal 2023. Operating loss in fiscal 2024 was $665,000 , compared with operating income of $4.4 million in fiscal 2023. Net loss for fiscal 2024 amounted to $2.0 million , or $0.16 per share, compared with net income of $2.4 million , or $0.19 per share, in fiscal 2023. Comprehensive loss attributable to Jerash's common stockholders was $2.4 million in fiscal 2024, compared with comprehensive income of $2.2 million in fiscal 2023. Conference Call Jerash Holdings will host an investor conference call to discuss its fiscal 2024 fourth quarter and full year results today, June 27, 2024 , at 9:00 a.m. Eastern Time . Phone: 888-506-0062 (domestic); 973-528-0011 (international) Conference ID: 933383 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 U.S. 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 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; [email protected] # # #(tables below) JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND TWELVE-MONTHS ENDED MARCH 31, 2024 AND 2023 For the Three Months Ended March 31 , For the Fiscal Years Ended March 31 , 2024 2023 2024 2023 (Unaudited) (Unaudited) Revenue, net $ 21,574,454 $ 23,774,006 $ 117,187,340 $ 138,063,309 Cost of goods sold 20,073,952 21,321,046 100,284,991 116,273,569 Gross Profit 1,500,502 2,452,960 16,902,349 21,789,740 Selling, general and administrative expenses 4,262,721 4,164,229 16,581,256 16,960,978 Stock-based compensation expenses 258,350 119,078 986,048 413,900 Total Operating Expenses 4,521,071 4,283,307 17,567,304 17,374,878 (Loss) income from Operations (3,020,569 ) (1,830,347 ) (664,955 ) 4,414,862 Other (Expense) Income: Interest expenses (220,440 ) (267,800 ) (1,203,596 ) (768,131 ) Other income, net 86,493 181,521 499,120 437,002 Total other expense, net (133,947 ) (86,279 ) (704,476 ) (331,129 ) Net (loss) income before provision for income taxes (3,154,516 ) (1,916,626 ) (1,369,431 ) 4,083,733 Income tax (income) expenses (16,361 ) 67,703 672,495 1,664,110 Net (loss) income (3,138,155 ) (1,984,329 ) (2,041,926 ) 2,419,623 Net loss attributable to noncontrolling interest 49,397 - 36,024 - Net (loss) income attributable to Jerash Holdings (US), Inc ???s Common Stockholders $ (3,088,758 ) $ (1,984,329 ) $ (2,005,902 ) $ 2,419,623 Net (loss) income $ (3,138,155 ) $ (1,984,329 ) $ (2,041,926 ) $ 2,419,623 Other Comprehensive (Loss) Income: Foreign currency translation (loss) gain (313,761 ) 45,692 (369,090 ) (250,374 ) Total Comprehensive (Loss) Income (3,451,916 ) (1,938,637 ) (2,411,016 ) 2,169,249 Comprehensive loss attributable to noncontrolling interest 49,397 - 36,024 - Comprehensive (Loss) Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ (3,402,519 ) $ (1,938,637) $ (2,374,992 ) $ 2,169,249 (Loss) Earnings Per Share Attributable to Common Stockholders: Basic and diluted $ (0.25 ) $ (0.16 ) $ (0.16 ) $ 0.19 Weighted Average Number of Shares Basic 12,294,840 12,525,166 12,294,840 12,635,785 Diluted 12,294,840 12,525,166 12,294,840 12,675,351 Dividend per share $ 0.05 $ 0.05 $ 0.20 $ 0.20 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2024 March 31, 2023 ASSETS Current Assets: Cash $ 12,428,369 $ 17,801,614 Accounts receivable, net 5,417,513 2,240,537 Bills receivable - 87,573 Inventories 27,241,573 32,656,833 Prepaid expenses and other current assets 2,746,068 2,964,578 Advances to suppliers, net 3,086,137 1,533,091 Total Current Assets 50,919,660 57,284,226 Restricted cash - non-current 1,608,498 1,609,989 Long-term deposits 802,306 841,628 Deferred tax assets, net 158,329 153,873 Property, plant, and equipment, net 24,998,096 22,355,574 Goodwill 499,282 499,282 Operating lease right of use assets 1,259,395 974,761 Total Assets $ 80,245,566 $ 83,719,333 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 6,340,237 $ 5,782,570 Accrued expenses 4,175,843 2,930,533 Income tax payable - current 1,647,199 2,846,201 Other payables 2,234,870 1,477,243 Deferred revenue 10,200 928,393 Operating lease liabilities - current 370,802 481,502 Total Current Liabilities 14,779,151 14,446,442 Operating lease liabilities - non-current 618,302 287,247 Income tax payable - non-current 417,450 751,410 Total Liabilities 15,814,903 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, and 12,294,840 shares outstanding 12,534 12,534 Additional paid-in capital 23,917,094 22,931,046 Treasury stock, 239,478 shares (1,169,046 ) (1,169,046 ) Statutory reserve 413,821 410,847 Retained earnings 41,704,238 46,172,082 Accumulated other comprehensive loss (492,319 ) (123,229 ) Total Jerash Holdings (US), Inc. ' Stockholders' Equity 64,386,322 68,234,234 Noncontrolling interest 44,341 - Total Equity 64,430,663 68,234,234 Total Liabilities and Equity $ 80,245,566 $ 83,719,333 JERASH HOLDINGS (US) , INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal Years Ended March 31 , 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $ (2,041,926 ) $ 2,419,623 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 2,539,736 2,430,692 Stock-based compensation expenses 986,048 413,900 Bad debt recovery (187,762 ) - Amortization of operating lease right-of-use assets 759,764 989,220 Changes in operating assets: Accounts receivable (2,989,214 ) 8,808,532 Bills receivable 87,573 (87,573 ) Inventories 5,415,260 (4,401,654 ) Prepaid expenses and other current assets 187,140 285,782 Advance to suppliers (1,553,046 ) (248,490 ) Deferred tax assets (4,456 ) 198,717 Changes in operating liabilities: Accounts payable 557,667 942,345 Accrued expenses 1,245,310 (185,421 ) Other payables 757,627 (801,574 ) Deferred revenue (918,193 ) 928,393 Operating lease liabilities (824,043 ) (977,584 ) Income tax payable (1,532,944 ) 92,226 Net cash provided by operating activities 2,484,541 10,807,134 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (1,241,226 ) (722,770 ) Payments for construction of properties (3,600,948 ) (5,084,044 ) Acquisition of Ever Winland - (5,100,000 ) Acquisition of Kawkab Venus - (2,200,000 ) Payment for long-term deposits (300,762 ) (668,337 ) Net cash used in investing activities (5,142,936 ) (13,775,151 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payments (2,458,968 ) (2,484,127 ) Investment of noncontrolling interest 31,365 - Share repurchase - (1,169,046 ) Repayment from short-term loan (7,545,829 ) (7,197,995 ) Repayment to a related party - (300,166 ) Proceeds from short-term loan 7,545,829 7,197,995 Net cash used in financing activities (2,427,603 ) (3,953,339 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH (288,738 ) (250,529 ) NET DECREASE IN CASH AND RESTRICTED CASH (5,374,736 ) (7,171,885 ) CASH, AND RESTRICTED CASH, BEGINNING OF THE YEAR 19,411,603 26,583,488 CASH, AND RESTRICTED CASH, END OF THE YEAR $ 14,036,867 $ 19,411,603 CASH, AND RESTRICTED CASH, END OF THE YEAR 14,036,867 19,411,603 LESS: NON-CURRENT RESTRICTED CASH 1,608,498 1,609,989 CASH, END OF THE YEAR $ 12,428,369 $ 17,801,614 Supplemental disclosure information: Cash paid for interest $ 1,203,596 $ 768,131 Income tax paid, net $ 2,253,410 $ 1,747,635 Non-cash investing and financing activities Equipment obtained by utilizing long-term deposit $ 354,917 $ 237,412 Acquisition of Kawkab Venus by utilizing long-term deposit $ - $ 500,000 Operating lease right of use assets obtained in exchange for operating lease obligations $ 1,058,820 $ 190,654 SOURCE: Jerash Holdings (US), Inc. 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