Jerash Holdings (US), Inc. (JRSH) on Q4 2022 Results - Earnings Call Transcript
Operator: Good morning. And welcome to Jerash Holdings Fiscal 2022 Fourth Quarter and Full Year Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Roger Pondel. Please go ahead. Roger Pondel: Thank you, Operator. Good morning, everyone. And welcome to Jerash Holdings fiscal 2022 fourth quarter and full year conference call. I’m Roger Pondel with PondelWilkinson, Jerash Holdings’ Investor Relations Firm. It will be my pleasure momentarily to introduce the company’s Chairman and Chief Executive Officer, Sam Choi; its Chief Financial Officer, Gilbert Lee and Eric Tang, who leads the company’s Operations in Jordan. Before I turn the call over to Sam, I want to remind our listeners that today’s call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company’s control, including those set forth in the Risk Factor section of the company’s most recent Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission and copies of which are available on the SEC’s website at www.sec.gov, along with other company filings made with the SEC from time-to-time. Actual results could differ materially from these forward-looking statements. Jerash Holdings undertakes no obligation to update any forward-looking statements except as required by law. And with that, it is my pleasure to turn the call over to Sam Choi. Sam? Sam Choi: Thank you, Roger, and hello, everyone. Our fiscal 2022 fourth quarter and full year sales demonstrated, Jerash underlying foundational strength and attractiveness of its manufacturing capabilities to quibble bend. While our topline was up sharply, gross profit for the fourth quarter was impacted by product mix that includes fewer than expected jacket orders, as U.S. retailers faced the strains of a weaker economic environment due to inflation. On the positive side, we were able to quickly shift manufacturing to produce other premium brand sportswear items such as pants and polos, although these items carry lower margins. Jerash is in the fortunate position of having strong customer relationships, along with the ability to attract new customers even during the current macroeconomic environment. Our operations in Jordan offer unique benefits of free trade agreements with the U.S. and EU. Combined with our ability of producing highly complex apparels, the company is positioned as an attractive alternative manufacturing partner outside of Asia for global apparel brands. I’m happy to report that we have received orders from our first European-based high-end apparel brands. Other new customers are in the pipeline, as we continue to focus on diversifying and expanding our customer bases. We are taking conservative approach with respect to our guidance, and Gilbert will discuss those details momentarily. From a growth and topline perspective, our business outlook remains strong. Accordingly, we are continuing to explore clients to increase capacity. In April, we started expansion in one of our existing factories to add approximately 1.3 million pieces to our capacity. This expansion is expected to be completed by the end of 2022. We also have room for in-house renovation in other premises that could increase an aggregate of 2 million pieces in preparation of continuous growth in customer demands. I’ll now turn the call over to Eric Tang, who is based in Jordan and then Gilbert Lee will cover our financial results. Eric? Eric Tang: Thank you, Sam. Hello, everyone. Order volumes continue to be strong in the fiscal fourth quarter and into the new fiscal year from our current top global brand customers. Our manufacturing capacity is completely booked through December 2022. Further, we have received production inquiries from several new premium brand customers, which will allow us to further diversify our customer base. As Sam mentioned, we recently have received orders from Jerash first European based high-end apparel brand to produce jackets and other outerwear for its Sportswear division. Production from our new leased facility that we acquired and took over in August last year has now fully transitioned to manufacture products for our own customers. We continuously train our employees and enhance efficiency from this facility to further expand our capacity for new customer order and new production categories. Construction of a new dormitory for our multinational workforce is progressing on schedule and it is expected to be completed by September 2022. The high quality living space with comfort designs and the highest safety measures will have positioned us for growth and further our ESG goals. Please take a look at Jerash Holdings website to see updated videos for the dormitory and recent factory expansion. Lastly, we are proud that Jerash was featured by the World Bank throughout this week for World Refugee Day on June 20th, highlighting the company’s ongoing efforts to employ Syrian workers at its factories and providing transportation for these workers. This recognition served as a prime example for the private business sector to help refugees settle into a new hosting country. With that, I will turn the call to Gilbert to discuss our financial results and the fiscal 2023 outlook. Gilbert, please. Gilbert Lee: Thank you, Eric. Fiscal 2022 was a record performing year for Jerash, achieving revenue of $143.4 million, up 59% from fiscal 2021. Net income jumped 91% to $7.9 million or $0.67 per share from $4.1 million or $0.37 per share in fiscal 2021. Revenue for our fiscal 2022 fourth quarter rose 30% to $30.9 million from $23.8 million in the same period last year. The increase was primarily due to higher shipments to our current customers [Technical Difficulty] due to increased capacity from our newest factory. Gross margin was lower by 445 basis points to 15.1% in the fiscal 2022 fourth quarter, compared with 19.6% in the same period last year. Gross margin was mainly impacted by fewer than expected jacket orders, which carry much higher margin. To a lesser extent margins were impacted by high material and ocean freight costs during late 2021 and early 2022. But the good news is, the ocean freight costs are now coming down since Shanghai reopened earlier this month. Operating expenses totaled $4.4 million in the fiscal 2022 fourth quarter, compared with $3.5 million in the same period last year. The increase was primarily due to increase headcount and shipments and increase in stock-based compensation and recruitment for new migrant workers, as well as higher shipping costs. Operating income for our most recent fourth quarter was $275,000, compared with $1.1 million in the same period last year. Income tax expense was $405,000, due to higher provision for annualized consolidated global income. Net loss for the fiscal 2022 fourth quarter was $130,000 or $0.01 per share after $312,000 of stock-based compensation expenses, compared with net income of $681,000 or $0.06 per share a year ago. Jerash’s balance sheet and cash position remains strong, with cash of $25 million and net working capital of $56 million at the end of March 2022. Inventory was $28 million and accounts receivable amounted to $11 million. Net cash provided by operating activities was approximately $9 million in fiscal 2022, compared with net cash used of $1.5 million in fiscal 2021. The net change reflects working capital activity, primarily due to increase in net income and inventory, and the increase in accounts receivable. In terms of our fiscal 2023 first quarter outlook, we’re projecting revenue to be in the range of $33 million to $35 million. Accordingly, we are expecting gross margin returning to the fiscal 2021 levels at around 17% to 18% for the next few quarters. As Sam mentioned, we’re taking a conservative approach to our guidance for the full year, given the inflationary environment that is affecting the U.S. retail market and consumer sentiment, along with a product mix shift pointing towards apparel items that typically carry lower margins. While customer orders remain strong, we’re anticipating that revenue growth will be marginal for the full fiscal 2023. We will continue to closely monitor developments over the next few months and plan to provide an update on our next call. Our Board of Directors approved a regular quarterly dividend of $0.05 per share to our common stockholders on June 3, 2022 to stockholders of record as of May 27th. In addition, reflecting this confidence in the company’s long-term performance, our Board has authorized a share repurchase program of up to $3 million. The program will be in effect through the end of the company’s current fiscal year, March 31, 2023. With that, we will now open up the call for questions. Operator, may we have the first question, please. Operator: Certainly. [Operator Instructions] And the first question is coming from Mike Baker from D.A. Davidson. Mike, your line is live. Please go ahead. Operator: Thank you. And your next question is coming from Mark Argento from Lake Street. Mark, your line is live. Please go ahead. Operator: Thank you. Your next question is coming from Rommel Dionisio from Aegis Capital. Rommel, your line is live. Please go ahead. Operator: Thank you. We have a follow up question from Mike Baker from D.A. Davidson. Mike… Operator: …your line is live. Please go ahead. Hello, Mike. Your line is now live. Please pose your follow up question. Operator: Thank you. This does conclude the Q&A session for today. I would now like to turn the call back to Mr. Choi for closing remarks. Sam Choi: Oh! Thank you, Operator. And thanks again to all of you for joining us today. We appreciate your support and interest in our company and we look forward to speaking with you again soon on our fiscal 2023 first quarter call. Thank you everyone. Eric Tang: Thank you. Gilbert Lee: Thank you. Roger Pondel: Thank you. Operator: Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
Jerash Holdings (JRSH) Earnings Report Highlights
- Earnings Per Share (EPS) of approximately -$0.00047, surpassing the estimated EPS of -$0.03.
- Actual revenue of approximately $35.38 million, slightly below the estimated revenue of $35.4 million.
- Negative price-to-earnings (P/E) ratio of approximately -12.08, indicating current losses but a strong liquidity position with a current ratio of 3.13.
Jerash Holdings (NASDAQ:JRSH) is a company that specializes in manufacturing and exporting custom sportswear and outerwear for major global brands. On February 11, 2025, JRSH reported its earnings before the market opened, revealing an EPS of approximately -$0.00047, which was better than the estimated EPS of -$0.03. However, JRSH's actual revenue was approximately $35.38 million, slightly below the estimated revenue of $35.4 million.
During the Q3 2025 earnings conference call, CEO Sam Choi and CFO Gilbert Lee discussed the financial performance. Despite a nearly 30% increase in revenue for the quarter, the results fell short of expectations due to congestion at Israel's Haifa port, which delayed shipments worth $3.8 million until early in the fiscal fourth quarter.
JRSH's financial metrics reveal some challenges. The company has a negative price-to-earnings (P/E) ratio of approximately -12.08, indicating current losses. Its price-to-sales ratio is 0.33, meaning the stock is valued at 33 cents for every dollar of sales. The enterprise value to sales ratio is 0.24, suggesting a total valuation of 24 cents for every dollar of sales.
The company's financial health is further highlighted by its earnings yield of -8.28%, indicating financial difficulties. However, JRSH has a low debt-to-equity ratio of 0.01, showing minimal reliance on debt. Additionally, the company maintains a strong liquidity position with a current ratio of 3.13, indicating it has more than three times the current assets compared to its current liabilities.
Jerash Holdings (JRSH) Earnings Report Highlights
- Earnings Per Share (EPS) of approximately -$0.00047, surpassing the estimated EPS of -$0.03.
- Actual revenue of approximately $35.38 million, slightly below the estimated revenue of $35.4 million.
- Negative price-to-earnings (P/E) ratio of approximately -12.08, indicating current losses but a strong liquidity position with a current ratio of 3.13.
Jerash Holdings (NASDAQ:JRSH) is a company that specializes in manufacturing and exporting custom sportswear and outerwear for major global brands. On February 11, 2025, JRSH reported its earnings before the market opened, revealing an EPS of approximately -$0.00047, which was better than the estimated EPS of -$0.03. However, JRSH's actual revenue was approximately $35.38 million, slightly below the estimated revenue of $35.4 million.
During the Q3 2025 earnings conference call, CEO Sam Choi and CFO Gilbert Lee discussed the financial performance. Despite a nearly 30% increase in revenue for the quarter, the results fell short of expectations due to congestion at Israel's Haifa port, which delayed shipments worth $3.8 million until early in the fiscal fourth quarter.
JRSH's financial metrics reveal some challenges. The company has a negative price-to-earnings (P/E) ratio of approximately -12.08, indicating current losses. Its price-to-sales ratio is 0.33, meaning the stock is valued at 33 cents for every dollar of sales. The enterprise value to sales ratio is 0.24, suggesting a total valuation of 24 cents for every dollar of sales.
The company's financial health is further highlighted by its earnings yield of -8.28%, indicating financial difficulties. However, JRSH has a low debt-to-equity ratio of 0.01, showing minimal reliance on debt. Additionally, the company maintains a strong liquidity position with a current ratio of 3.13, indicating it has more than three times the current assets compared to its current liabilities.
