Jerash Holdings (US), Inc. (JRSH) on Q1 2022 Results - Earnings Call Transcript
Operator: Greetings and welcome to Jerash Holdings' Financial Results for Fiscal 2022 First Quarter Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host Roger Pondel, Investor Relations for Jerash Holdings. Thank you sir, you may begin. Roger Pondel: Thank you operator, and good morning everyone. Welcome to the Jerash Holdings fiscal 2022 first quarter 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; it's Chief Financial Officer, Gilbert Lee; and Eric Tang, who leads the company's operations direct from Jordan. Before I turn the call over to Sam, I want to remind all 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 Sam Choi. Sam? Choi Lin Hung: Thank you Roger and hello everyone. Our fiscal 2022 first quarter results demonstrate excellent progress. Revenue was at a record level for first quarter. We're tracking robust shipments to our largest customers as a result of strong demand amid the reopening of the U.S. economy. Gross profit also represents a record for the first quarter, primarily due to higher revenue and gross margin performance. Our gross margin continued to run in the high teens reflecting increased shipment volumes and an improved product mix in the first quarter. Our robust momentum is continuing further into fiscal 2022 with orders for the first nine months of the year that we believe will lead to a revenue run rate for a year that would exceed our prior record. As a result, we have increased our revenue outlook for the full year which Gilbert will discuss shortly. We continued to advance plans to increase capacity in our existing facilities and secure additional capacity to meet our customer's demands both by building new facilities and through leases and acquisitions. We recently announced the signing of definitive agreements to acquire both the operator of about 71,000 square feet manufacturing facility in Amman, Jordan and relay the physical premises. We expect to close this acquisition soon. Eric will provide more details in a moment. I will now turn the call over to Eric Tang who is based in Jordan and then to Gilbert Lee who will cover our financial results. Eric. Eric Tang: Thank you Sam, hello everyone. Our factories in Georgia is extremely busy and we continue to add capacity as quickly as we can. All the volumes are up substantively and customers have returned to more typical ordering patterns. As anticipated, our product mix improved in the first quarter leading to orders of higher average selling prices and margins that we saw in the last fiscal year. Moreover, this positive momentum is continuing. Capacity is completely booked through the end of January 2022 based on orders from our four largest global brand customers alone. Bookings remained heavily weighted towards jacket and other outerwear products that have higher ASP and margins. As Sam mentioned we recently signed agreements to expand our manufacturing capacity in Jordan. This particular acquisition is in two stages. First, we signed an agreement to acquire the operating company of 71,000 square foot apparel manufacturing plant. Under the terms of the first agreement, Jerash assumes the manufacturing licenses and existing physical operations including all machinery equipment, 500 workers and employees, and the dormitory. We have taken over production at the new facility as of August 1st and we have begun manufacturing products for our customers. However, because the seller has yet to complete production for its primary orders, we are allowing them to temporarily maintain one production line which in turn has delayed form of closing of the first part of the acquisition until September. Second, we signed a separate agreement to acquire the land at the building that housed the apparel manufacturing operations. We expect this part of the deal to close in November 2021. The new facility is expected to enable Jerash to produce approximately 2.5 million to 3.5 million additional garments per year adding approximately 20% to our current annual capacity. In addition, the facility gives us the ability to scale up even further. Customers already are placing orders that are expected to fully book the new factory through January 2022. As mentioned last quarter we began the construction of a high quality living space for expanding multi-national work force with the highest safety and comfort designs that will help position us for growth and further our ESG goals. Finally, we recently announced plans to double worker capacity at our facility in Al Hasa as part of a special humanitarian project with the Jordanian government that began in 2018. We are very proud of our progress on this project despite the unprecedented disruption caused by the pandemic. The facility currently employs 300 people there and we plan to increase this to 600 by end of 2021. With that I will turn the call over to Gilbert Lee to discuss our financial results and fiscal 2022 outlook. Gilbert please. Gilbert Lee: Thank you Eric and good morning everyone. Our fiscal 2022 first quarter revenue rose potentially to $30 million from $19 million in the same period last year, an increase of nearly 60%. The increase was primarily due to higher shipments to our largest customers in the quarter. The highest sales volume reflects stronger demand as the U.S. economy continues to recover from the pandemic. Gross margin expanded 250 basis points to 18.8% in the fiscal 2022 first quarter compared with 16.3% in the same period last year. Gross margin expansion in the quarter refracted the higher proportion of export orders which typically carry higher profit margins as well as increased production and sales volumes. Operating expenses totaled $3.3 million in the fiscal 2022 first quarter compared with $1.9 million in the same period last year. The increase primarily reflect high tech [ph] 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 was $2.3 million in the fiscal 2022 first quarter compared with $1.2 million in the same period last year. Comprehensive income attributable to Jerash’s common stockholders was 2.0 million or $0.17 per share in the first quarter compared with approximately $813,000 or $0.07 per share in the same period last year. Our balance sheet remains strong with cash and restricted cash up $9 million and net working capital of 51 million at June 30, 2021. Inventory was $31 million and accounts receivable was 20 million. Net cash used in operating activities was $11 million in the fiscal 2022 first quarter compared with $8 million in the same period last year. The net change was primarily due to working capital activity. Inventories increased in the first quarter primarily reflecting seasonal activity and strong demand. Accounts receivable also increased in the first quarter due to strong demand, particularly in the month of June. To date we have collected more than 80% of receivables at the end of June. We continue to expect the business to generate cash from operating activities on an add new basis. We also have been granted supply chain financing programs by our major customers and an untapped $3 million line of credit available. In terms of our fiscal 2022 outlook, we are increasing our revenue guidance to be in the range of $115 million to $120 million as strong demand continues at our capacity expense. We also anticipate revenue in the fiscal 2022 second quarter to exceed $40 million. Orders continue to be heavily weighted towards high margin jackets and other outerwear products. We expect this patent to support gross margins in the high teens for the full fiscal 2022 year. I would also like to point out that operating expenses are expected to be higher in fiscal 2022, reflecting our growth and the pandemic’s 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 the delta variant of COVID-19 could constrain our ability to add workers needed to run our factories at full capacity. To a certain extent we already have reflected this risk in our updated outlook. We'll continue to monitor pandemic developments over the next few months, and give you an update on the next quarter's earnings call. Our fiscal 2022 first quarter results represent a strong start to the year. This robust momentum is leading to what we believe will be a record year for the company. We look forward to keeping you apprised of our progress as the year unfolds. Lastly, our Board of Directors approved a regular quarterly dividend of $0.05 per share to our common shareholders payable on August 24, 2021, to stockholders of record as of August 17, 2021. And with that, we will now open up the call for questions. Operator, may we have the first question please. Operator: Thank you. [Operator Instructions]. Our first question comes from the line of Mark Argento with Lake Street Capital. Please proceed with your question. Operator: Our next question comes from the line of Rommel Dionisio with Aegis Capital. Please proceed with your question. Operator: Our next question comes from Michael Woo, a Private Investor. Please proceed with your question. Operator: [Operator Instructions]. Our next question comes from the line of Barry Pasternack, a Private Investor. Please proceed with your question. Operator: We have no further questions at this time. Mr. Choi, I would now like to turn the floor back over to you for closing comments. Choi Lin Hung: Okay. Thank you, operator 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 second quarter earnings call. Thank you very much. Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day. Choi Lin Hung: Thank you. Gilbert Lee: Thank you.
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.
