Jerash Holdings Reports Fiscal 2025 Third Quarter Financial Results

Rhea-AI Summary

Jerash Holdings (NASDAQ:JRSH) reported its fiscal 2025 Q3 results with revenue increasing 28.6% to $35.4 million. Despite growth, performance was affected by port congestion issues in Haifa, causing approximately $3.8 million in shipping delays and over $100,000 in storage fees. Gross profit rose 20.6% to $5.4 million, while gross margin decreased to 15.2% from 16.2% year-over-year.

The company expects Q4 FY2025 revenue to increase by 50-53% from $21.6 million last year, with gross margins projected at 15-16%. Jerash is expanding two manufacturing facilities to increase capacity by 15% by June 2025, with additional expansion plans in Al-Hasa potentially adding 5-10% capacity by year-end. The company declared a quarterly dividend of $0.05 per share, payable February 25, 2025.

Positive

• Revenue increased 28.6% YoY to $35.4 million in Q3 FY2025
• Gross profit up 20.6% to $5.4 million
• Operating income increased 88.3% to $708,000
• Manufacturing capacity expansion of 15% expected by June 2025
• Strong Q4 guidance with 50-53% revenue growth expected
• Factories fully booked through August 2025

Negative

• Net income declined to $6,000 from $232,000 YoY
• Gross margin decreased to 15.2% from 16.2% YoY
• Operating expenses increased to $4.7 million from $4.1 million
• Net loss of $696,000 for first nine months of FY2025
• Higher logistics costs due to Middle East geopolitical issues
• Effective tax rate increased to 98.6% from 14.2% YoY

Insights

Financial Analyst

The Q3 FY2025 results reveal both opportunities and challenges for Jerash Holdings. While achieving 28.6% revenue growth to $35.4 million, the company's profitability was severely impacted by geopolitical disruptions and rising costs.

Key operational metrics raise concerns:

• Gross margin declined to 15.2% from 16.2% YoY
• Operating expenses increased by 14.6% to $4.7 million
• Net income plummeted to just $6,000 from $232,000

The planned facility expansions, targeting a 15% capacity increase by June 2025 plus an additional 5-10% in Al-Hasa, demonstrate strategic foresight in capitalizing on the shift away from China. However, the timing is important as the company battles margin pressures and higher operating costs.

The maintained quarterly dividend of $0.05 per share, while showing confidence, warrants scrutiny given the compressed margins and minimal profitability. The strong balance sheet with $14.8 million cash provides some cushion, but sustained operational challenges could pressure this policy.

Looking ahead, Jerash's projected 50-53% Q4 revenue growth and fully booked capacity through August 2025 indicate strong demand. However, investors should monitor the execution of expansion plans and margin recovery, particularly as logistics costs normalize and new capacity comes online.

FAIRFIELD, NJ / ACCESS Newswire / February 11, 2025 / 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 2025 third quarter, ended December 31, 2024.

"While revenue increased by nearly 30 percent for the fiscal third quarter, results were lower than originally anticipated," Sam Choi, Jerash's chairman and chief executive officer, said. "Sales were impacted by congestion at Israel's Haifa port due to further geopolitical turmoil in the region, which, in turn, caused delays in shipments. We estimated approximately $3.8 million of finished apparel delivered at the port but not shipped until early in the fiscal fourth quarter, along with incurring more than $100,000 of port storage fees. Furthermore, we held back another $2 million of finished products in our warehouse for the same reason. We are pleased to report that the port logistics have markedly improved since late January, and ocean containers are being shipped in a more timely manner.

"On the business front, we are continuing to receive inquiries from new and existing customers that are looking to add manufacturing partners in tariff-free countries such as Jordan. Jerash's long history and reputation for quality and performance place us in an excellent position to capture greater opportunities in the years ahead.

"To support expected growth, we recently started expanding two existing manufacturing facilities, which will increase capacity by 15 percent; the project is expected to be completed by June 2025. Separately, we are actively working with the Jordanian government to expand our existing facility in Al-Hasa, which by the end of this calendar year, could add an additional five to ten percent of production capacity. We also are assessing longer-term, larger-scale expansion plans. At the present, our factories are fully booked through August of this year." Choi added.

Outlook

• Revenue for the fiscal 2025 fourth quarter is expected to increase by 50-53 percent, from $21.6 million in the same quarter last year.

• Revenue for the fiscal 2026 first quarter is expected to be in line with the fiscal 2025 first quarter of $40.9 million. Fiscal 2025 first quarter revenue was record high and included approximately $3-4 million of delayed shipments from the fiscal 2024 fourth quarter.

• Gross margin goal for fiscal 2025 fourth quarter is expected to be approximately 15-16 percent, subject to logistics, shipping charges and product mix.

Fiscal 2025 Third Quarter Results

Revenue for the fiscal 2025 third quarter increased 28.6 percent to $35.4 million, from $27.5 million in the same quarter last year, reflecting an increase in shipments to Jerash's major U.S. customers.

Gross profit for the fiscal 2025 third quarter increased 20.6 percent to $5.4 million, from $4.5 million in the same quarter last year. Gross margin was 15.2 percent in the fiscal 2025 third quarter, compared with 16.2 percent in the same quarter last year. The decrease was primarily driven by higher logistic costs arising from the geopolitical turmoil in the Middle East region.

Operating expenses totaled $4.7 million in the fiscal 2025 third quarter, compared with $4.1 million in the same quarter last year. The increase was primarily due to the increase in export logistic costs, as well as higher stock-based compensation expenses.

Operating income increased 88.3 percent to $708,000 in the fiscal 2025 third quarter, from $376,000 in the same quarter last year.

Total other expenses were $252,000 in the fiscal 2025 third quarter, compared with $105,000 in the same quarter last year. The increase was primarily due to higher interest expenses from supply chain financing programs provided by the two major customers.

Income tax expenses for the fiscal 2025 third quarter were approximately $450,000, compared with $39,000 for the same period in fiscal 2024. The increase was mainly due to a prior-year tax provision adjustment of approximately $274,000. The effective tax rate was 98.6 percent for the fiscal 2025 third quarter, compared with 14.2 percent for the same period in fiscal 2024.

Net income was $6,000 in the fiscal 2025 third quarter, or zero per diluted share, versus $232,000, or $0.02 per diluted share, in the same quarter last year.

Comprehensive loss attributable to the Company's common stockholders totaled $147,000 in the fiscal 2025 third quarter, compared with comprehensive income of $320,000 in the same period last year.

Nine-Month Fiscal Year 2025 Results

Revenue for the first nine months of fiscal year 2025 rose to $116.6 million, from $95.6 million in the same period last year, an increase of almost 22 percent.

Gross profit was $17.1 million for the first nine months of fiscal year 2025, compared with $15.4 million for the same period last year. Gross margin for the first nine months of fiscal year 2025 was 14.7 percent, compared with 16.1 percent last year. This was negatively impacted by the higher logistic costs during the supply chain disruption in the first quarter of this fiscal year.

Operating expenses for the first nine months of fiscal year 2025 were $16.1 million, compared with $13.0 million last year. Operating income was $1.0 million for the first nine months of fiscal year 2025, compared with $2.4 million for the same period last year.

Net loss for the first nine months of fiscal 2025 was $696,000, or $0.06 per share, compared with net income of $1.1 million, or $0.09 per share, for the same period last year.

Comprehensive loss attributable to Jerash's common stockholders for the first nine months of fiscal 2025 was $820,000, compared with comprehensive income of $1.0 million for the same period last year.

Balance Sheet, Cash Flow and Dividends

Cash and restricted cash totaled $14.8 million, and net working capital was $34.8 million as of December 31, 2024.

On February 5, 2025, Jerash's board of directors approved a regular quarterly dividend of $0.05 per share on its common stock, payable on or about February 25, 2025 to stockholders of record as of February 18, 2025.

Conference Call

Jerash will host an investor conference call to discuss its fiscal year 2025 third quarter results today, February 11, 2025, at 9:00 a.m. Eastern Time.

Phone: 888-506-0062 (domestic); 973-528-0011 (international)

Conference ID: 383333

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 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 6,000 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
jlin@pondel.com

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(tables below)

JERASH HOLDINGS (US), INC.,
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

		For the Three Months Ended December 31,								For the Nine Months Ended December 31,
		2024				2023				2024				2023
Revenue, net		$	35,384,737			$	27,520,121			$	116,560,580			$	95,612,886
Cost of goods sold			30,001,947				23,057,845				99,480,036				80,211,039
Gross Profit			5,382,790				4,462,276				17,080,544				15,401,847
Selling, general and administrative expenses			4,200,975				3,843,029				14,650,105				12,318,535
Stock-based compensation expenses			474,088				243,448				1,417,111				727,698
Total Operating Expenses			4,675,063				4,086,477				16,067,216				13,046,233
Income from Operations			707,727				375,799				1,013,328				2,355,614
Other Expenses:
Interest expenses			(364,939	)			(234,971	)			(1,348,291	)			(983,156	)
Other income, net			113,240				129,877				306,441				412,627
Total other expenses, net			(251,699	)			(105,094	)			(1,041,850	)			(570,529	)
Net income (loss) before provision for income taxes			456,028				270,705				(28,522	)			1,785,085
Income tax expenses			449,714				38,535				667,312				688,856
Net income (loss)			6,314				232,170				(695,834	)			1,096,229
Net gain (loss) attributable to noncontrolling interest			(12,120	)			(11,457	)			100				(13,373	)
Net (loss) income attributable to Jerash Holdings (US), Inc.'s Common Stockholders		$	(5,806	)		$	220,713			$	(695,734	)		$	1,082,856
Net income (loss)		$	6,314			$	232,170			$	(695,834	)		$	1,096,229
Other Comprehensive Income (Loss):
Foreign currency translation (loss) income			(140,969	)			99,171				(124,473	)			(55,329	)
Total Comprehensive (Loss) Income			(134,655	)			331,341				(820,307	)			1,040,900
Comprehensive (gain) loss attributable to noncontrolling interest			(12,120	)			(11,457	)			100				(13,373	)
Comprehensive (Loss) Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders		$	(146,775	)		$	319,884			$	(820,207	)		$	1,027,527
Earnings/(Loss) Per Share Attributable to Common Stockholders:
Basic and diluted		$	(0.00	)		$	0.02			$	(0.06	)		$	0.09
Weighted Average Number of Shares
Basic			12,294,840				12,294,840				12,294,840				12,294,840
Diluted			12,294,840				12,294,840				12,294,840				12,294,840
Dividend per share		$	0.05			$	0.05			$	0.15			$	0.15

JERASH HOLDINGS (US), INC.,
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		December 31, 2024				March 31, 2024
		(Unaudited)
ASSETS
Current Assets:
Cash		$	13,219,109			$	12,428,369
Accounts receivable, net			7,237,959				5,417,513
Inventories			19,118,133				27,241,573
Prepaid expenses and other current assets			3,676,154				2,746,068
Advance to suppliers, net			7,862,708				3,086,137
Total Current Assets			51,114,063				50,919,660
Restricted cash - non-current			1,563,809				1,608,498
Long-term deposits			1,109,073				802,306
Deferred tax assets, net			158,329				158,329
Property, plant, and equipment, net			24,394,170				24,998,096
Goodwill			499,282				499,282
Operating lease right of use assets			997,989				1,259,395
Total Assets		$	79,836,715			$	80,245,566
LIABILITIES AND EQUITY
Current Liabilities:
Credit facilities		$	4,967,944			$	-
Accounts payable			3,888,084				6,340,237
Accrued expenses			3,840,591				4,175,843
Income tax payable - current			1,128,634				1,647,199
Uncertain tax provision			273,582				-
Other payables			1,825,970				2,234,870
Deferred revenue			58,642				10,200
Operating lease liabilities - current			325,615				370,802
Total Current Liabilities			16,309,062				14,779,151
Operating lease liabilities - non-current			344,412				618,302
Income tax payable - non-current			-				417,450
Total Liabilities			16,653,474				15,814,903
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			25,334,205				23,917,094
Treasury stock, 239,478 shares			(1,169,046	)			(1,169,046	)
Statutory reserve			413,821				413,821
Retained earnings			39,164,278				41,704,238
Accumulated other comprehensive loss			(616,792	)			(492,319	)
Total Jerash Holdings (US), Inc.' Stockholders' Equity			63,139,000				64,386,322
Noncontrolling interest			44,241				44,341
Total Equity			63,183,241				64,430,663
Total Liabilities and Equity		$	79,836,715			$	80,245,566

JERASH HOLDINGS (US), INC.,
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		For the Nine Months Ended December 31,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income		$	(695,834	)		$	1,096,229
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation			1,968,992				1,881,853
Stock-based compensation expenses			1,417,111				727,698
Credit loss recovery			(17,054	)			(187,762	)
Amortization of operating lease right-of-use assets			447,646				601,727
Uncertain tax provision			(273,582	)			-
Changes in operating assets:
Accounts receivable			(1,803,392	)			(6,044,375	)
Bills receivable			-				(64,614	)
Inventories			8,123,439				16,719,185
Prepaid expenses and other current assets			(930,084	)			350,324
Advance to suppliers			(4,776,571	)			(1,111,017	)
Changes in operating liabilities:
Accounts payable			(2,452,154	)			(3,380,984	)
Accrued expenses			(335,251	)			(32,390	)
Other payables			(408,900	)			142,393
Deferred revenue			48,442				(927,488	)
Operating lease liabilities			(505,317	)			(460,508	)
Income tax payable			(388,766	)			(1,443,317	)
Net cash (used in) provided by operating activities			(581,275	)			7,866,954
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment			(491,676	)			(824,305	)
Payments for construction of properties			(585,715	)			(3,158,501	)
Payment for long-term deposits			(594,442	)			(281,153	)
Net cash used in investing activities			(1,671,833	)			(4,263,959	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments			(1,844,226	)			(1,844,226	)
Investment of noncontrolling interest			-				31,365
Repayment from short-term loan			(9,288,656	)			(4,937,633	)
Proceeds from short-term loan			14,256,600				4,937,633
Net cash provided by (used in) financing activities			3,123,718				(1,812,861	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH			(124,559	)			24,677
NET INCREASE IN CASH AND RESTRICTED CASH			746,051				1,814,811
CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD			14,036,867				19,411,603
CASH, AND RESTRICTED CASH, END OF THE PERIOD		$	14,782,918			$	21,226,414
CASH AND RESTRICTED CASH, END OF THE PERIOD		$	14,782,918			$	21,226,414
LESS: NON-CURRENT RESTRICTED CASH			1,563,809				1,608,784
CASH, END OF THE PERIOD		$	13,219,109			$	19,617,630
Supplemental disclosure information:
Cash paid for interest		$	1,348,291			$	983,156
Income tax paid		$	1,329,150			$	2,163,732
Non-cash investing and financing activities
Equipment obtained by utilizing long-term deposit		$	289,451			$	355,160
Operating lease right of use assets obtained in exchange for operating lease obligations		$	186,726			$	177,068

SOURCE: Jerash Holdings (US), Inc.

View the original press release on ACCESS Newswire

FAQ

What was Jerash Holdings (JRSH) revenue growth in Q3 FY2025?

Jerash Holdings reported a 28.6% revenue increase to $35.4 million in Q3 FY2025, compared to $27.5 million in the same quarter last year.

How much manufacturing capacity expansion is JRSH planning for 2025?

JRSH is expanding two facilities to increase capacity by 15% by June 2025, with additional expansion in Al-Hasa potentially adding 5-10% capacity by end of 2025.

What is JRSH's Q4 FY2025 revenue guidance?

JRSH expects Q4 FY2025 revenue to increase by 50-53% from $21.6 million in the same quarter last year.

How did port congestion affect JRSH's Q3 FY2025 performance?

Port congestion in Haifa delayed approximately $3.8 million in shipments and resulted in over $100,000 in port storage fees, with an additional $2 million of products held in warehouse.

What dividend did JRSH declare for Q3 FY2025?

JRSH declared a quarterly dividend of $0.05 per share, payable on February 25, 2025, to stockholders of record as of February 18, 2025.