Jerash Holdings Reports Fiscal 2024 Second Quarter Financial Results

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

FAIRFIELD, NJ / ACCESSWIRE / November 13, 2023 / 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 second quarter, ended September 30, 2023 . "Our second quarter performance again demonstrated Jerash's ability to attract new customers and prove our resiliency in a challenging apparel environment," said Sam Choi , Jerash's chairman and chief executive officer. "Retail market conditions for global brands in the U.S. and Europe have been slow to recover, which, in turn, is impacting our business compared with the prior year, with a product mix shift to lower priced items, which carry lower margins. Nevertheless, our revenue and gross margin remained largely stable. "Good progress was made during the quarter with our Busana partner. Thus far, five premium customers have committed to placing orders. Current projections from the joint venture over the next twelve months call for about $8 to $9 million in new orders, starting in a meaningful way in our fiscal fourth quarter. "Additionally, Jerash's initiative to diversify its own customer base is proving effective. We are continuing to receive inquiries from high-profile global brands, with new garment sampling and costing underway. We also are enthusiastic about the opportunity created by our recently established joint venture with Newtech Textile (HK) Limited , a subsidiary of Newtech Textile Technology Development (Shanghai) Co. Limited , a textile innovation and solutions company. We are aiming to utilize technology that is expected to reduce water usage by approximately 90%, energy consumption by approximately 65%, and carbon footprint by over 50% in comparison with traditional textile dyeing processes. To achieve this, we plan to build a fabric facility in Jordan , with construction to begin in 2024, and Jerash is emerging as Jordan's leader in ESG textile manufacturing, which is in keeping with our longstanding commitment to sustainability and responsible growth," Choi added. Fiscal Year 2024 Second Quarter Results Revenue for the fiscal year 2024 second quarter was $33.4 million , compared with $37.8 million in the same quarter last year. The decrease was primarily due to fewer shipments being delivered to some of the major customers in the U.S. , partially offset by shipments to other new geographic locations, including Hong Kong and Germany . Gross profit for the fiscal year 2024 second quarter was $5.4 million , compared with $6.9 million in the same quarter last year. Gross margin was 16.1 percent in the fiscal year 2024 second quarter, compared with 18.3 percent in the same quarter last year. The decrease in gross margin was primarily driven by a shift in customer mix with lower profit margin orders. Operating expenses totaled $4.5 million in the fiscal year 2024 second quarter, compared with $4.3 million in the same quarter last year. Selling, general and administrative expenses were $4.2 million in the fiscal year 2024 second quarter, slightly lower than the same quarter last year. Stock-based compensation expenses for the fiscal year 2024 second quarter were $243,000 , compared with none in the same quarter last year. Operating income totaled $888,000 in the fiscal year 2024 second quarter, versus $2.6 million in the same quarter last year. Total other expenses were $167,000 in the fiscal year 2024 second quarter, compared with $106,000 in the same quarter last year. The increase was primarily due to higher interest expenses arisen from participating in supply chain financing programs of certain customers, partially offset by income from fixed deposits in banks. Net income was $369,000 in the fiscal year 2024 second quarter, or $0.03 per diluted share, versus $1.8 million , or $0.14 per diluted share, in the same quarter last year. Comprehensive income attributable to Jerash's common stockholders totaled $306,000 in the fiscal year 2024 second quarter, which included a foreign currency translation loss of $60,000 , compared with $1.6 million in the same quarter last year, which included a foreign currency translation loss of $216,000 . Balance Sheet, Cash Flow and Dividends Cash totaled $21.2 million , and net working capital was $40.5 million as of September 30, 2023 . On November 3, 2023 , Jerash approved a regular quarterly dividend of $0.05 per share on its common stock, payable on November 28, 2023 , to stockholders of record as of November 14, 2023 . Six-Month Fiscal Year 2024 Results Revenue for the first six months of fiscal year 2024 was $68.1 million , compared with $71.3 million in the same period last year. Gross profit was $10.9 million for the first six months of fiscal year 2024, compared with $13.5 million for the same period last year. Gross margin for the first six months of fiscal year 2024 was 16.1 percent, compared with 19.0 percent in the same period last year. Operating expenses for the first six months of fiscal year 2024 were $9.0 million , compared with $8.6 million for the same period last year. Operating income was $2.0 million for the first six months of fiscal year 2024, compared with $4.9 million for the same period last year. Net income for the first six months of fiscal year 2024 was $864,000 , or $0.07 per diluted share, compared with $3.5 million , or $0.28 per diluted share, in the same period last year. Comprehensive income attributable to Jerash's common stockholders was $710,000 in the first six months of fiscal year 2024, which included a foreign currency translation loss of $155,000 , compared with $3.2 million in the same period last year, which included a foreign currency translation loss of $334,000 . Middle East Situation Since the inception of the turmoil in the Middle East , Jerash has been closely monitoring the situation and keeping its customers informed. Currently, production is ongoing as usual, with no changes to customer orders or commitments, and both ports that the Company uses for import and export, in Aqaba and Haifa , are operating normally. However, in the event of any potential impact on the ports, Jerash has prepared a contingency plan, approved by its major customers, to temporarily relocate production to alternate regions. Outlook Revenue for the full fiscal year 2024 is expected to be down approximately 3 to 5 percent from last fiscal year, reflecting product mix shift to lower priced items. Gross margin goal for the full fiscal year 2024 is expected to be approximately 15 to 16 percent. Conference Call Jerash will host an investor conference call to discuss its fiscal year 2024 second quarter results today, November 13, 2023 , at 9:00 a.m. Eastern Time . Phone: 877-545-0523 (domestic); 973-528-0016 (international) Conference ID: 272995 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 [email protected] # # # (tables below) JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) For the Three Months Ended September 30 , For the Six Months Ended September 30 , 2023 2022 2023 2022 Revenue, net $ 33,357,108 $ 37,825,695 $ 68,092,765 $ 71,262,256 Cost of goods sold 27,985,077 30,907,908 57,153,194 57,722,102 Gross Profit 5,372,031 6,917,787 10,939,571 13,540,154 Selling, general and administrative expenses 4,240,588 4,308,084 8,475,506 8,326,782 Stock-based compensation expenses 243,448 - 484,250 294,822 Total Operating Expenses 4,484,036 4,308,084 8,959,756 8,621,604 Income from Operations 887,995 2,609,703 1,979,815 4,918,550 Other Income (Expenses): Interest expenses (359,234 ) (163,595 ) (748,185 ) (251,437 ) Other income, net 192,523 57,807 282,750 118,049 Total other expenses, net (166,711 ) (105,788 ) (465,435 ) (133,388 ) Net income before provision for income taxes 721,284 2,503,915 1,514,380 4,785,162 Income tax expenses 352,340 712,163 650,321 1,272,028 Net income 368,944 1,791,752 864,059 3,513,134 Net gain attributable to noncontrolling interest (3,327 ) - (1,916 ) - Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 365,617 $ 1,791,752 $ 862,143 $ 3,513,134 Net income $ 368,944 $ 1,791,752 $ 864,059 $ 3,513,134 Other Comprehensive Loss: Foreign currency translation loss (59,841 ) (216,210 ) (154,500 ) (333,870 ) Total Comprehensive Income 309,103 1,575,542 709,559 3,179,264 Comprehensive loss attributable to noncontrolling interest (3,327 ) - (1,916 ) - Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 305,776 $ 1,575,542 $ 707,643 $ 3,179,264 Earnings Per Share Attributable to Common Stockholders: Basic and diluted $ 0.03 $ 0.14 $ 0.07 $ 0.28 Weighted Average Number of Shares Basic 12,294,840 12,498,431 12,294,840 12,416,823 Diluted 12,294,840 12,498,431 12,294,840 12,485,512 Dividend per share $ 0.05 $ 0.05 $ 0.10 $ 0.10 JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30 , 2023 March 31 , 2023 (Unaudited) ASSETS Current Assets: Cash $ 21,201,642 $ 17,801,614 Accounts receivable, net 5,201,679 2,240,537 Bills receivable - 87,573 Tax recoverable - 16,763 Inventories 18,713,863 32,656,833 Prepaid expenses and other current assets 2,132,934 2,947,815 Advance to suppliers, net 3,443,334 1,533,091 Total Current Assets 50,693,452 57,284,226 Restricted cash - non-current 1,608,074 1,609,989 Long-term deposits 749,154 841,628 Deferred tax assets, net 153,873 153,873 Property, plant and equipment, net 24,682,883 22,355,574 Goodwill 499,282 499,282 Right of use assets 718,418 974,761 Total Assets $ 79,105,136 $ 83,719,333 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 4,252,112 $ 5,782,570 Accrued expenses 2,679,485 2,930,533 Income tax payable - current 1,458,777 2,846,201 Other payables 1,211,812 1,477,243 Deferred revenue 232,387 928,393 Amount due to a noncontrolling interest 31,677 - Operating lease liabilities - current 345,171 481,502 Total Current Liabilities 10,211,421 14,446,442 Operating lease liabilities - non-current 246,341 287,247 Income tax payable - non-current 417,450 751,410 Total Liabilities 10,875,212 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 23,415,296 22,931,046 Treasury stock, 239,478 shares (1,169,046 ) (1,169,046 ) Statutory reserve 410,847 410,847 Retained earnings 45,804,741 46,172,082 Accumulated other comprehensive loss (277,729 ) (123,229 ) Total Jerash Holdings (US), Inc. ' Stockholders' Equity 68,196,643 68,234,234 Noncontrolling interest 33,281 - Total Equity 68,229,924 68,234,234 Total Liabilities and Equity $ 79,105,136 $ 83,719,333 JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended September 30 , 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 864,059 $ 3,513,134 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,224,322 1,184,940 Stock-based compensation expenses 484,250 294,822 Bad debt recovery (66,980 ) - Amortization of operating lease right-of-use assets 416,090 548,849 Changes in operating assets: Accounts receivable (2,894,162 ) 7,018,987 Bills receivable 87,573 - Inventories 13,942,970 (8,171,427 ) Prepaid expenses and other current assets 814,878 336,710 Advance to suppliers (1,910,244 ) (986,600 ) Changes in operating liabilities: Accounts payable (1,530,458 ) 5,696,686 Accrued expenses (251,048 ) 679,586 Other payables (265,431 ) (749,837 ) Amount due to noncontrolling interest 312 - Deferred revenue (696,006 ) 465,405 Operating lease liabilities (336,984 ) (455,604 ) Income tax payable, net of recovery (1,704,261 ) 262,106 Net cash provided by operating activities 8,178,880 9,637,757 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant, and equipment (635,878 ) (379,600 ) Payments for construction of properties (2,575,669 ) (2,641,614 ) Acquisition of Ever Winland - (5,100,000 ) Acquisition of Kawkab Venus - (2,200,000 ) Payment for long-term deposits (247,610 ) (129,650 ) Net cash used in investing activities (3,459,157 ) (10,450,864 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payments (1,229,484 ) (1,243,432 ) Investment of noncontrolling interest 31,365 - Share repurchase - (547,713 ) Repayment from short-term loan (3,118,339 ) (901,055 ) Repayment to a related party - (300,166 ) Proceeds from short-term loan 3,118,339 2,007,185 Net cash used in financing activities (1,198,119 ) (985,181 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH (123,491 ) (334,064 ) NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH 3,398,113 (2,132,352 ) CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD 19,411,603 26,583,488 CASH, AND RESTRICTED CASH, END OF THE PERIOD $ 22,809,716 $ 24,451,136 CASH, AND RESTRICTED CASH, END OF THE PERIOD 22,809,716 24,451,136 LESS: NON-CURRENT RESTRICTED CASH 1,608,074 1,437,339 CASH, END OF THE PERIOD $ 21,201,642 $ 23,013,797 Supplemental disclosure information: Cash paid for interest $ 748,185 $ 251,437 Income tax paid $ 2,371,705 $ 1,096,934 Non-cash investing and financing activities Equipment obtained by utilizing long-term deposit $ 358,620 $ 232,877 Acquisition of Kawkab Venus by utilizing long-term deposit $ - $ 500,000 Right of use assets obtained in exchange for operating lease obligations $ 177,068 $ 68,932 SOURCE: Jerash Holdings (US), Inc. 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