Commencing Initial Production Ramp at Paramount Facility
NEW YORK, NY / ACCESSWIRE / August 13, 2019 / Jerash Holdings (US), Inc. (Nasdaq: JRSH) (the "Company" or "Jerash"), a producer of high-quality textile goods for leading global brands, today reported results for its fiscal 2020 first quarter ended June 30, 2019.
First Quarter Fiscal 2020 and Recent Highlights
- Reported record first-quarter revenue of $22.5 million, an increase of 23% versus $18.4 million in the first quarter of fiscal 2019, as customers continue to increase orders with Jerash;
- Generated gross margin of 20.0% in the quarter, reflecting continued production of high-quality garments offset by absorption of start up costs for the newly acquired Paramount facility;
- Reported GAAP net income of $1.5 million, or $0.14 per diluted share, compared with net loss of $885,000, or ($0.08) per share in the prior year first quarter;
- Began initial production at Jerash's fourth manufacturing facility, which is expected to achieve a 1.5 million to 1.8 million pieces per year run rate by calendar year end, bringing Jerash's expected annual capacity to more than 8.0 million pieces; and
- Continued Jerash's capacity expansion focus through an agreement to purchase land and build additional worker dormitory facilities near the Company's Jordan-based factories.
Sam Choi, Chairman and Chief Executive Officer, stated: "We are excited to set a new record for first-quarter revenue, driven by a 23% increase as our growth momentum from fiscal 2019 continues into the current fiscal year. We have a diverse pipeline of orders from both existing and prospective customers seeking to increase production with Jerash in fiscal 2020 as we continue to ramp our factory capacity for the first half cold weather clothing season and maximize order flow in our second-half warmer weather clothing season.
"To that end, we have begun initial production at our newly acquired Paramount factory facility, which is our fourth manufacturing center. We have hired our first 500 workers, who are currently fulfilling customer orders as they train in Jerash's production methodologies to ensure the best-in-class quality and on-time delivery our customers expect. We anticipate growing this facility to approximately 1,000 workers by calendar year end, which is expected to bring our total annual capacity to more than 8 million pieces, a minimum of a 23% increase year-over-year.
"While we are excited with the progress on our factory expansion to date, orders from both existing and new customers orders presently have our factories booked to maximum planned capacity through January 2020. As such, we remain diligent in our search for appropriate additional capacity growth opportunities, whether by acquisition or construction, in order to facilitate further growth. As part of these efforts, our board of directors recently approved the purchase of land near our factory facilities in Jordan on which to build additional dormitory housing for our work force. This will address both the need for further housing for our present manufacturing facilities and to support future planned expansion of our work force as we continue to grow our annual production capacity. We look forward to reporting additional progress on these initiatives."
Fiscal 2020 First Quarter Financial Results
For the first fiscal quarter 2020, Jerash reported total revenue of $22.5 million, an increase of 23% from $18.4 million in the same period in fiscal 2019. The increase in revenue reflected steady growth of sales from major customers.
Gross margin in the quarter was 20.0%, compared with 25.4% in fiscal 2019. The change in gross margin was attributable to higher average costs associated with the start up costs for the newly acquired Paramount facility. The Company estimates these costs reduced gross margin by more than 100 basis points in the fiscal first quarter and expects the impact will abate over the coming quarters as Paramount factory volumes continue to increase.
Operating expenses for fiscal 2019 were $2.6 million, compared with $5.2 million in fiscal 2019. Operating expenses included additional costs to import workers for the Paramount facility and facility start up costs. Prior year quarter operating expense included $3.2 million in non-cash stock based compensation expense associated with the Company's initial public offering.
Operating income for the fiscal first quarter 2020 was $1.9 million, compared with an operating loss of $525,000 in the prior year first quarter.
GAAP net income for the first fiscal quarter 2020 was $1.5 million, or $0.14 per diluted share, based on approximately 11.5 million diluted shares outstanding.
"We are excited to report a first quarter revenue record driven by 23% year-over-year sales growth to start our seasonally strong first half of fiscal 2020," said Richard Shaw, Chief Financial Officer of Jerash. "With our legacy factories operating in a fully loaded environment and Paramount continuing to ramp up as we bring on additional new capacity, we continue to execute well against both our growth and operational metrics. Gross margin was impacted by more than 100 basis points in the quarter due to the initial start up process as we bring the Paramount factory online. We expect these impacts to lessen over the next few quarters as we increase production volumes assigned to this unit and our new employees continue to improve overall production efficiency at Paramount. We are also pleased to have reported a GAAP profitable quarter with $0.14 per share in earnings per share, and believe the Company is well positioned as we continue execute against our outlook for revenue in excess of $100 million in fiscal 2020."
Balance Sheet, Cash Flow and Dividends
Cash and restricted cash at June 30, 2019 was $16.9 million, compared with $27.8 million at March 31, 2019. As of June 30, 2019, inventory was $20.5 million, primarily comprised of fabric, work in progress and finished garments, and accounts receivable were $13.4 million, compared with $4.0 million at March 31, 2019. We collected $8 million of the outstanding A/R by July 31. Jerash approved payment of a regular quarterly dividend of 5 cents per share on the Company's common stock on or about August 19, 2019, to shareholders of record on August 11, 2019.
For fiscal 2020, Jerash anticipates continued revenue growth through both expanding business with existing customers and the addition of new customers. Total revenues for fiscal 2020 are projected to be in excess of $100 million, representing what is expected to be at least 17% organic growth over fiscal 2019.
The Company will conduct a conference call and webcast to review its fiscal first quarter 2020 results on Tuesday, August 13, 2019, at 9:00 a.m. ET. Interested parties in the United States can access the call by dialing 844-602-0380; interested parties outside the United States can access the call by dialing +1-862-298-0970. Callers should dial in at least 5 minutes prior to the all start time. A live and archived webcast will be available online in the investor relations section of Jerash's website at www.jerashholdings.com. A replay of the conference call will be available until August 20, 2019, by calling +1-919-882-2331 and entering conference ID number 51122.
About Jerash Holdings (US), Inc.
Jerash Holdings (US), Inc. (Nasdaq: JRSH) is a manufacturer utilized by many well-known brands and retailers, such as Walmart, Costco, Hanes, Columbia, VF Corporation (which owns brands such as The North Face, Timberland, Jansport, etc.), and PVH Corp. (which owns brands such as Calvin Klein, Tommy Hilfiger, IZOD, Speedo, etc.). Its production facilities are currently made up of four factory units and three warehouses and currently employ approximately 3,600 people. The total annual capacity at its facilities is expected to be approximately 8.0 million pieces by the end of calendar year 2019. Additional information is available at http://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", "outlook" and similar expressions are intended to identify forward-looking statements. Such statements reflect Jerash's current views with respect to future events and 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 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.
Richard J. Shaw, Chief Financial Officer
Matt Kreps, Darrow Associates Investor Relations
JERASH HOLDINGS (US), INC.,
SUBSIDIARIES AND AFFILIATE
CONDENSED CONSOLIDATED BALANCE SHEETS
|June 30,||March 31,|
Prepaid expenses and other current assets
Advance to suppliers
Total Current Assets
Deferred tax assets
Property, plant and equipment, net
Operating leases - right of use assets
LIABILITIES AND EQUITY
Income tax payable
Current portion of operating lease liabilities
Total Current Liabilities
Long-term portion of operating lease liabilities
Income tax payable - non-current
Commitments and Contingencies (See Note 14)
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; 11,325,000 shares issued and outstanding
Additional paid-in capital
Accumulated other comprehensive loss
Total Shareholder's Equity
Total Liabilities and Equity
JERASH HOLDINGS (US), INC.,
SUBSIDIARIES AND AFFILIATE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|For the Three Months|
Ended June 30,
Cost of goods sold
Selling, general and administrative expenses
Stock-based compensation expenses
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