Jerash Holdings Reports Results for Fiscal 2023 Third Quarter

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

Revenue Increases 17 Percent to $43 Million FAIRFIELD, NJ / ACCESSWIRE / February 13, 2023 / Jerash Holdings (US), Inc. ("Jerash") (NASDAQ:JRSH), which manufactures and exports custom, ready-made sportswear and outerwear for leading global brands, today announced financial results for its fiscal 2023 third quarter, ended December 31, 2022 . Third Quarter Fiscal 2023 Results Fiscal 2023 third quarter revenue increased by 16.9 percent to a record $43.0 million , from $36.8 million in the same period last year, primarily due to increases in sales to customers in Hong Kong , Jordan , and other locations. Gross profit for the fiscal 2023 third quarter was $5.8 million , compared with $6.9 million in the same quarter last year. Gross margin was 13.5 percent in the fiscal year 2023 third quarter, compared with 18.8 percent in the same quarter last year. The decrease in gross margin was primarily driven by the lower proportion of export orders to two major customers in the U.S. that typically generate higher margins. Operating expenses totaled $4.5 million in the fiscal year 2023 third quarter, compared with $4.5 million in the same quarter last year. Operating income totaled $1.3 million in the fiscal year 2023 third quarter, versus $2.4 million in the same period last year. Total other expenses were $111,000 in the fiscal year 2023 third quarter, compared with $80,000 in the same quarter last year. Interest expenses were $249,000 in the fiscal year 2023 third quarter, versus $73,000 in the same quarter last year. Net income was $0.9 million in the fiscal year 2023 third quarter, or $0.07 per diluted share, versus $1.7 million , or $0.13 per diluted share, in the same period last year. Fiscal 2023 Fourth Quarter Outlook Fiscal 2023 fourth quarter revenue is expected to be in the range of $26 million to $28 million , vs. $30.9 million reported for the fiscal fourth quarter a year ago. Gross margin goal for the full fiscal 2023 year is expected to be in the range of 16 percent to 18 percent. "Our fiscal third quarter performance demonstrated the company's ability to navigate through continued challenging market conditions in the broad retail sector," said Sam Choi , Jerash's chairman and chief executive officer. "As previously communicated, fiscal 2023 is a transitional and opportunistic year for Jerash , as we continue our initiative to diversify our customer base and product mix. "Our plans to form a joint venture with Busana Apparel Group ("Busana") are progressing well. We anticipate launching the venture early in our new fiscal year, giving us additional opportunities to serve Busana's global branded customers that have expressed interest in shifting their production from Southeast Asia to Jordan . "We also are successfully beginning to ramp up production on orders from new customers, including Timberland and Skechers. Test runs for our first European-based, high-end apparel brand have been well received, with initial shipments to begin soon," Choi added. "During this timeframe, our larger, U.S. -based global branded customers have been placing smaller orders, reflecting the current economic environment," said Gilbert Lee , chief financial officer of Jerash . "Nevertheless, we are maintaining our full staff and keeping our facilities running at full capacity by adding supplementary production of lower-margin products for other customers. "Additionally, we are able to achieve essentially the same level of business for the full 2023 fiscal year versus fiscal 2022, which experienced the highest growth rate in the company's history. We continue to attract new global brands and work closely with our existing long-term customers to be ready for anticipated growth in fiscal 2024," Lee said. Balance Sheet, Cash Flow and Dividends Cash and restricted cash totaled $26.2 million , and net working capital was $47.1 million as of December 31, 2022 . Net cash provided by operating activities was approximately $9.9 million for the nine months ended of fiscal 2023, compared with $14.6 million for the same period last year. On February 3, 2023 , Jerash approved a regular quarterly dividend of $0.05 per share on its common stock, payable on February 21, 2023 , to stockholders of record as of February 14, 2023 . Share Repurchase Program On June 13, 2022 , the Company authorized a $3.0 million share repurchase program. The share repurchase program will be in effect through March 31, 2023 . As of December 31, 2022 , 156,593 shares had been repurchased at market rates with a total price of $771,894 , excluding broker commissions. Nine-Month Fiscal 2023 Results Revenue for the first nine months of fiscal 2023 was $114.3 million , compared with $112.4 million in the same period last year. Gross margin for the first nine months of fiscal 2023 was 16.9 percent, compared with 20.1 percent in the same period last year. The decrease in gross profit margin was primarily driven by a lower proportion of export orders to the U.S. that typically generate higher gross margins. Operating expenses for the fiscal 2023 year-to-date period were $13.1 million , compared with $12.3 million for the same period last year. Operating income was $6.2 million for the fiscal 2023 year-to-date period, compared with $10.4 million for the same period last year. Net income for the first nine months of fiscal 2023 was $4.4 million , or $0.35 per diluted share, compared with $8.1 million , or $0.69 per diluted share, in the same period last year. Comprehensive income attributable to Jerash's common stockholders was $4.1 million in the first nine months of fiscal 2023, which included a foreign currency translation loss of $296,000 , compared with $8.2 million in the same period last year, which included a foreign currency translation gain of $122,000 . Conference Call Jerash will host an investor conference call to discuss its fiscal 2023 third quarter results today, February 13, 2023 , at 9:00 a.m. Eastern Time . Phone: 877-545-0323 (domestic); 973-528-0016 (international) Conference ID: 242313 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 (US), Inc. 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 owns 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, 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 new variants thereof, 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 Sfetcu 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 December 31 , For the Nine Months Ended December 31 , 2022 2021 2022 2021 Revenue, net $ 43,027,047 $ 36,815,023 $ 114,289,303 $ 112,414,881 Cost of goods sold 37,230,421 29,904,287 94,952,523 89,768,624 Gross Profit 5,796,626 6,910,736 19,336,780 22,646,257 Selling, general and administrative expenses 4,469,967 4,185,812 12,796,749 11,648,591 Stock-based compensation expenses - 319,101 294,822 634,914 Total Operating Expenses 4,469,967 4,504,913 13,091,571 12,283,505 Income from Operations 1,326,659 2,405,823 6,245,209 10,362,752 Other Income (Expense): Interest expenses (248,894 ) (73,276 ) (500,331 ) (147,677 ) Other income (expense), net 137,432 (6,843 ) 255,481 (45,119 ) Total other income (expense), net (111,462 ) (80,119 ) (244,850 ) (192,796 ) Net income before provision for income taxes 1,215,197 2,325,704 6,000,359 10,169,956 Income tax expense 324,379 650,907 1,596,407 2,119,046 Net Income $ 890,818 $ 1,674,797 $ 4,403,952 $ 8,050,910 Other Comprehensive Income (Loss): Foreign currency translation gain (loss) 37,804 42,190 (296,066 ) 121,915 Comprehensive income attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 928,622 $ 1,716,987 $ 4,107,886 $ 8,172,825 Earnings Per Share Attributable to Common Stockholders: Basic $ 0.07 $ 0.14 $ 0.35 $ 0.69 Diluted $ 0.07 $ 0.13 $ 0.35 $ 0.69 Weighted Average Number of Shares Basic 12,412,922 12,290,840 12,414,546 11,654,039 Diluted 12,412,922 12,414,048 12,467,315 11,696,223 Dividend per share $ 0.05 $ 0.05 $ 0.15 $ 0.15 JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 31 , 2022 March 31 , 2022 (Unaudited) ASSETS Current Assets: Cash $ 24,627,009 $ 25,176,120 Accounts receivable, net 5,545,946 11,049,069 Tax recoverable 18,911 374,377 Inventories 26,664,044 28,255,179 Prepaid expenses and other current assets 3,164,196 3,233,592 Investment deposits - 500,000 Advance to suppliers, net 6,009,897 1,284,601 Total Current Assets 66,030,003 69,872,938 Restricted cash - non-current 1,615,353 1,407,368 Long-term deposits 243,840 419,597 Deferred tax assets, net 352,590 352,590 Property, plant and equipment, net 21,227,296 10,933,147 Goodwill 499,282 499,282 Right of use assets 1,165,141 1,826,062 Total Assets $ 91,133,505 $ 85,310,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Credit facilities $ 4,406,383 $ - Accounts payable 5,948,337 4,840,225 Accrued expenses 2,849,861 3,115,953 Income tax payable - current 3,344,183 2,861,272 Other payables 1,395,597 2,278,816 Deferred revenue 296,985 - Amount due to a related party - 300,166 Operating lease liabilities - current 689,521 739,101 Total Current Liabilities 18,930,867 14,135,533 Operating lease liabilities - non-current 381,397 869,313 Income tax payable - non-current 751,410 1,001,880 Total Liabilities 20,063,674 16,006,726 Commitments and Contingencies 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; 12,377,725 and 12,334,318 shares outstanding as of December 31, 2022 and March 31, 2022 , respectively 12,534 12,334 Additional paid-in capital 22,811,968 22,517,346 Treasury stock, 156,593 and none shares as of December 31, 2022 and March 31, 2022 , respectively (771,894 ) - Statutory reserve 379,323 379,323 Retained earnings 48,806,821 46,268,110 Accumulated other comprehensive (loss) gain (168,921 ) 127,145 Total Jerash Holdings (US), Inc.'s Stockholders' Equity 71,069,831 69,304,258 Total Liabilities and Stockholders' Equity $ 91,133,505 $ 85,310,984 JERASH HOLDINGS (US) , INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended December 31 , 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 4,403,952 $ 8,050,910 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,753,941 1,511,963 Stock-based compensation expenses 294,822 634,914 Bad debt expense - 221,584 Amortization of operating lease right-of-use assets 784,699 569,078 Changes in operating assets: Accounts receivable 5,503,123 3,739,937 Inventories 1,591,135 3,553,625 Prepaid expenses and other current assets 69,401 (936,695 ) Advance to suppliers (4,725,296 ) 1,229,345 Changes in operating liabilities: Accounts payable 1,108,112 (5,028,787 ) Accrued expenses (266,092 ) 944,627 Other payables (883,219 ) (208,649 ) Deferred revenue 296,985 444,165 Operating lease liabilities (661,274 ) (612,953 ) Income tax payable, net of recovery 588,098 460,805 Net cash provided by operating activities 9,858,387 14,573,869 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (7,887,613 ) (2,317,327 ) Payments for construction of properties (3,414,172 ) - Acquisition of MK Garments - (2,700,000 ) Acquisition deposit - (500,000 ) Payment for long-term deposits (70,549 ) (1,544,792 ) Net cash used in investing activities (11,372,334 ) (7,062,119 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payment (1,865,241 ) (1,750,081 ) Share repurchase (771,894 ) - Repayment from short-term loan (1,756,360 ) (612,703 ) Payment to a related party (300,166 ) - Proceeds from short-term loan 6,162,743 - Net proceeds from issuance of common stock - 6,270,000 Net cash provided by financing activities 1,469,082 3,907,216 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH (296,261 ) 122,526 NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH (341,126 ) 11,541,492 CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD 26,583,488 22,860,463 CASH, AND RESTRICTED CASH, END OF THE PERIOD $ 26,242,362 $ 34,401,955 CASH AND RESTRICTED CASH, END OF PERIOD 26,242,362 34,401,955 LESS: NON-CURRENT RESTRICTED CASH 1,615,353 1,301,588 CASH, END OF PERIOD $ 24,627,009 $ 33,100,367 Supplemental disclosure information: Cash paid for interest $ 500,331 $ 147,677 Income tax paid $ 1,354,754 $ 1,644,546 Non-cash investing and financing activities Equipment obtained by utilizing long-term deposit $ 1,111,043 $ 322,143 Right of use assets obtained in exchange for operating lease obligations $ 190,654 $ 821,671 SOURCE: Jerash Holdings (US), Inc. 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