Jerash Holdings Reports Fiscal 2024 Third Quarter Financial Results

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

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 [email protected] # # #(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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