Jerash Holdings (US), Inc. (JRSH) on Q2 2022 Results - Earnings Call Transcript
Operator: Good morning and welcome to the Jerash Holdings' Fiscal 2022 Second Quarter Financial Results. At this time, all participants are in a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor to your host Roger Pondel, Investor Relations for Jerash Holdings. Sir, the floor is yours. Roger Pondel: Thank you, Kathryn, and good morning, everyone. Welcome to the Jerash Holdings fiscal 2022 second quarter earnings call. I'm Roger Pondel with PondelWilkinson, Jerash Holdings' Investor Relations firm. It will be my pleasure momentarily to introduce you to the company's Chief Financial Officer, Gilbert Lee; and Eric Tang, who leads the company's operations in Jordan. Sam Choi, the company’s CEO unfortunately is not able to join us today because of the prior business commitment. Before I turn the call over to Gilbert, 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, 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 and 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 Gilbert Lee. Gilbert Lee? Gilbert Lee: Thank you, Roger, and hello everyone. Our fiscal 2022 second quarter results demonstrated continued strong progress. Revenue was at a record level for the second quarter, reflecting robust shipments to our largest customers as a result of strong demand and expanded capacity. Gross profits also represented a record for the second quarter, primarily due to higher revenue and gross margin performance. Our gross margin expanded to 22%, reflecting increased shipping volumes and an improved product mix in the second quarter. The robust momentum is continuing further into fiscal 2022 with orders for the year-to-date that we believe will lead to a revenue run rate for the year that will exceed our prior record. As a result, we have increased our revenue outlook for the full year. We continue to advance plans to increase capacity in our existing facilities and secure additional capacity to meet our customers needs, both by building new facilities and through leases and acquisitions. We recently completed the acquisition of operator of a 71,000 square-foot manufacturing facility in Amman, Jordan. Our agreements to acquire the related physical premises is expected to close by early next year. Eric will provide more details in a moment. I will now turn the call over to Eric Tang, who is based in Jordan. And after I will cover the financial results in further detail. Eric? Eric Tang: Thank you, Gilbert, and hello to everyone. Our factories in Jordan are extremely busy and we continue to add capacity as quickly as we can. Order volumes are up substantially and our product mix improved in the second quarter. This led to orders with higher average selling prices and margins than what we saw in the last fiscal year. Capacity is completely booked through the end of May 2022 based on orders from our largest global brand customers. As Gilbert mentioned we recently completed the acquisition of a new manufacturing facility in Jordan. Under the terms of the agreement Jerash assumed a manufacturing licenses and existing fiscal operations including all machinery equipment, 500 workers and the dormitory. We took over production of the new facility in August, and we are now manufacturing products for our own customer. Our separate agreement to acquire the land and building that house the apparel manufacturing operations is expected to close in the next month or two. The new facility is expected to enable Jerash to produce approximately 2.5 million to 3.5 million additional garments per year. That is approximately 20% to our current annual capacity is increased. In addition, the facilities give us the ability to scale up even further. construction of a new dormitory for our multinational workforce is progressing well, which is expected to be completed by the third quarter of calendar year 2022. The high-quality living space with comfort designs and highest [AST] [ph] measures will help position us for growth and further our ESG goals. With that, I will turn the call back to Gilbert to discuss our financial results and fiscal 2022 outlook. Gilbert, please. Gilbert Lee: Thank you, Eric. Our fiscal 2022 Second quarter revenue rose substantially to $46 million from $27 million in the same period last year, an increase of nearly 70%. The increase was primarily due to higher shipments to our largest customers in the quarter. The highest sales volume reflects stronger demand as well as increased capacity. Gross margin expanded 40 basis points to 22.1% in the fiscal 2022 second quarter, compared with 21.7% in the same period last year. Gross margin expansion in the quarter reflects a higher proportion of export orders which typically carry higher gross margins as well as increased production and sales volume. Operating expenses totaled $4.5 million in the fiscal 2022 second quarter, compared with 2.9 million in the same period last year. The increase is primarily reflected headcount additions to support our growth, higher shipping costs that were in proportion with increased sales volumes and expenses related to COVID-19 precaution and recruitment of new migrant workers. Operating income rose to $5.6 million in the fiscal 2022 second quarter from 3.0 million in the same period last year. Comprehensive income attributable to Jerash's common stockholders increased to 4.4 million, or $0.39 per share in the second quarter from 2.6 million or $0.23 per share in the same period last year. Our balance sheet remained strong, with cash of $26 million and net working capital of $54 million at September 30, 2021. Inventory was $21 million, and accounts receivable was $13 million. Net cash provided by operating activities was $22 million in the fiscal 2022 second quarter, compared with $9 million in the same period last year. The net change was primarily due to working capital activity. Inventories and accounts receivables decreased to normal levels in the second quarter following strong increases in the first quarter. We expect the business to generate cash from operating activities on an annualized basis. We continue to have access to supply chain financing programs with our major customers and an untapped $3 million line of credit available. As you know, we also recently completed a public offering of 1.4 million shares at a price of $7 per share. The total number of shares included 1 million shares issued and sold by the company and 400,000 shares sold by selling to shareholder. The company received net proceeds of $6.25 million from the offering, which we expect to use for working capital and expansion plans. In terms of our fiscal 2022 outlook, we're increasing revenue guidance to be in the range of $125 million to $130 million as strong demand continues, and our capacity expense. We also anticipate revenue in the fiscal 2022 third quarter to be in the range of $31 million to $33 million. Orders continue to reflect high margin jackets and other outerwear products, which are expected to support gross margins in the high teens for the full fiscal 2022 year. I would also like to remind you that operating expenses are expected to be higher in fiscal 2022, reflecting our growth and pandemics impact on last year's first half. We also anticipate stock-based compensation to be at a higher level for the rest of fiscal 2022 compared with the same period last year. While customer orders remain strong, it is important to note that potential risk from supply chain issues that some of our customers are facing could affect the timing of shipments in the near term. We'll continue to monitor developments over the next few months and give you an update on the next quarters earnings call. In addition, our Board of Directors approved a regular quarterly dividend of $0.05 per share to our common stockholders on November 2, payable on November 29, 2021 to stockholders of record as of November 22, 2021. And with that, we will now open the call for questions. Operator may we have the first question please. Operator: Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Your first question is coming from Michael Baker with D.A. Davidson. Operator: Your next question is coming from Mark Argento with Lake Street Capital. Operator: Your next question is coming from Rommel Dionisio with Aegis Capital. Operator: Your next question is coming from [Michael Woo] [ph]. Operator: You have a follow up question coming from Michael Baker. Operator: We have no further questions from the lines at this time. I would now like to turn the floor back to Gilbert Lee for closing remarks. Gilbert Lee: Thank you, Kathryn. And thanks again to everyone for joining us today and for your support and interest in our company. We look forward to speaking with you again on our fiscal 2022 third quarter earnings call. Operator: Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect 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.
