Jerash Holdings Reports Financial Results for Fiscal 2024 Fourth Quarter and Full Year
Jerash Holdings (NASDAQ:JRSH) announced its financial results for Q4 and FY 2024, ending March 31, 2024. The company faced significant disruptions in the Red Sea, affecting material shipments and production. Q4 revenue dropped 9.3% to $21.6 million, and the gross margin declined to 7% due to higher logistics costs. Operating loss was $3 million, with a net loss of $3.1 million, or $0.25 per share. For the full fiscal year, revenue fell to $117.2 million, from $138.1 million in FY 2023, and the company reported a net loss of $2 million, or $0.16 per share. Despite these challenges, Jerash forecasts a 14-15% revenue increase in Q1 FY 2025 and 15-18% for the full fiscal year. The company is shifting material sourcing to Turkey and Egypt to mitigate shipping issues and has seen a rise in orders from both long-term and new high-profile customers.
- Revenue for Q1 FY 2025 expected to increase by 14-15%
- Full-year revenue for FY 2025 projected to rise by 15-18%
- Increase in orders from long-term customers and new high-profile brands
- Manufacturing facilities fully booked into the second fiscal quarter
- Q4 2024 revenue down 9.3% to $21.6 million
- Gross margin for Q4 declined to 7%, from 10.3% the previous year
- Q4 net loss of $3.1 million, or $0.25 per share
- FY 2024 revenue decreased to $117.2 million from $138.1 million
- FY 2024 net loss of $2 million, or $0.16 per share
Insights
Jerash Holdings has reported a notable decline in its financial performance for fiscal 2024, which has been significantly influenced by supply chain disruptions in the Red Sea region. A critical aspect to consider is the 9.3% reduction in fourth quarter revenue from $23.8 million last year to $21.6 million this year. This decline is compounded by a decrease in gross margin from 10.3% to 7.0%, driven by increased freight and transportation costs. Furthermore, the operating loss has worsened, moving from $1.8 million to $3.0 million, highlighting operational inefficiencies and cost pressures.
From a balance sheet perspective, the company maintains a relatively strong cash position with $14.0 million in cash and restricted cash, which offers some cushion against short-term volatility. However, the overall net working capital of $36.1 million should be closely monitored, especially given the net loss of $3.1 million for the fourth quarter.
Looking ahead, the company’s outlook appears cautiously optimistic, with an expected 14-15% increase in revenue for the fiscal 2025 first quarter and 15-18% for the full year. This projected growth could be a result of diversified sourcing strategies and increased orders from both existing and new clients, as hinted by the company's CEO.
While the financials for fiscal 2024 show a downturn, the strategic adjustments and optimistic revenue forecasts for fiscal 2025 could signify a potential turnaround. Investors should watch for updates on the company’s ability to manage logistics costs and maintain gross margins within the expected range of 13-15%.
Jerash Holdings' current situation reflects the larger industry challenges related to supply chain disruptions. The company’s pivot to sourcing raw materials from Turkey and Egypt is a strategic move to mitigate logistics risks and cost pressures. This diversification in supply chain could potentially stabilize production timelines and improve margins.
The CEO’s mention of securing new, high-profile global brands and the joint venture with Busana indicates an attempt to diversify customer base and increase market penetration. This strategic partnership could enhance Jerash’s market positioning and offer a buffer against future disruptions.
The expected increase in purchase orders into the second fiscal quarter and beyond shows a positive market response, potentially reflecting strong demand for Jerash's products. However, achieving the projected sales growth and margins will depend heavily on the successful execution of the new sourcing strategy and stability in logistics costs.
For investors, this scenario presents both risks and opportunities. Monitoring how well Jerash can navigate these supply chain challenges and leverage its market opportunities will be crucial. The company's ability to convert these strategic moves into sustained financial gains will determine the long-term investor sentiment.
--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
Gross profit was
Operating expenses totaled
Operating loss was
Total other expenses in the fiscal 2024 fourth quarter were
Net loss was
Comprehensive loss attributable to Jerash's common stockholders totaled
Balance Sheet, Cash Flow and Dividends
Cash and restricted cash totaled
On May 21, 2024, the board of directors of Jerash approved a regular quarterly dividend of
Fiscal 2024 Full Year Results
Fiscal 2024 revenue decreased to
Gross profit in fiscal 2024 totaled
Operating expenses in fiscal 2024 were
Net loss for fiscal 2024 amounted to
Comprehensive loss attributable to Jerash's common stockholders was
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; jlin@pondel.com
# # #
(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, | $ | - | $ | - | ||||
Common stock, | 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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