Expands Annual Capacity Estimate to 12 Million Pieces

FAIRFIELD, NJ / ACCESSWIRE / November 12, 2020 / 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 second quarter of fiscal year 2021, ended September 30, 2020.

Second Quarter of Fiscal 2021 and Recent Highlights

  • Reported $27.1 million in revenue, an increase of 45% from $18.7 million in the fiscal first quarter, reflecting rapid reinstatement of customer orders;
  • Increased gross margin to 22%, from 16% in the fiscal first quarter;
  • GAAP net income increased to $2.6 million, or $0.23 per diluted share, compared with net income of $0.8 million, or $0.07 per diluted share in the fiscal first quarter;
  • Further diversified its customer base in both order volume and revenue;
  • Reported factories are fully booked with customer orders through summer 2021;
  • Updated factory capacity to an estimated 12 million pieces per year, reflecting improved productivity and more favorable product mix; and
  • Ended the quarter with cash of $28.1 million and working capital of $51.0 million.

Management Commentary

Sam Choi, Chairman and Chief Executive Officer, stated: "Our second quarter performance improved sequentially across all of our key operating metrics, leading to quarterly net income of $0.23 per diluted share. Customers have rapidly reinstated orders and fully booked our available manufacturing capacity well into 2021. Increased orders from many of our new customers have also fueled further diversification of our customer and revenue base, a key strategic goal. Additionally, increased productivity and changes in our order mix have expanded Jerash's total annual capacity to an estimated 12 million pieces.

"In addition to the performance of our core garment business, Jerash's PPE (personal protective equipment) business continues to advance. We expanded shipments of both face masks and medical gowns in the third quarter and are currently participating in direct or partnered tenders to supply PPE products to a growing customer list.

"With both our core garment and PPE businesses expanding, we are actively seeking opportunities to further increase our annual capacity, both through contracted capacity and acquisition of additional production assets should a suitable opportunity arise. Our forecasts currently anticipate around $85 million in sales for fiscal 2021. We anticipate a strong second half similar in size to fiscal 2020, reflecting substantial recovery from the earlier COVID-19 disruptions, but with revenue recognition weighted to the fourth quarter due to potential third quarter COVID-19 mandates in Jordan and shipping delays from our supply chain."

Second Quarter of Fiscal 2021 Financial Results

"Fiscal second quarter production activity returned rapidly as customers maximized orders with Jerash and fully booked our capacity into 2021," said Gilbert Lee, Chief Financial Officer. "While revenue and gross margin improved, we were able to maintain our reduced operating expense profile, driving net income to $0.23 per diluted share."

For the second quarter of fiscal 2021, Jerash reported revenue of $27.1 million, an increase of 45% from $18.7 million in the first quarter and a decrease of 12% from $30.6 million in the second quarter of fiscal 2020. The change in revenue reflected the disruption of the COVID-19 pandemic, which slowed orders in the preceding quarter and early in the fiscal second quarter compared with the prior year fiscal second quarter, which was uninterrupted.

Orders have subsequently been reinstated by customers, with Jerash's factories now fully booked until the summer of 2021. As part of the shift in order volumes, a major customer has reduced orders for short-term delivery, but new and other existing customers have rapidly taken all available capacity, leading to increased diversification of Jerash's customer and revenue base compared with prior periods. Jerash is seeking additional factory capacity through outsourcing relationships as well as potential acquisition activity, although no targets have been identified yet, to facilitate further increases in capacity demand it anticipates ahead.

Jerash is also increasing its strategic partnership business, facilitating supply of customer garment orders into Asia through contracted relationships with factories in the region. Jerash anticipates this business will expand in the second half as the Company positions for growth in this channel in the next fiscal year.

Gross margin for the second quarter was 22%, compared with 16% in the first quarter and 24% in the second quarter of fiscal 2020. The year-over-year gross margin decrease was primarily due to changes in the product mix, including an increase in local orders as a percentage of total sales. Local orders typically have lower margin but contribute to increased net income by more fully utilizing Jerash's available production capacity.

Operating expenses for the second quarter of fiscal 2021 were $2.9 million, an increase of 51% from $1.9 million in the first quarter and a decrease of 8% from $3.1 million in the second quarter of fiscal 2020.

Operating income for the second quarter was $3.1 million, an increase of 168% from $1.2 million in the first quarter and a decrease of 26% from $4.2 million in the second quarter of fiscal 2020.

GAAP net income for the second fiscal quarter was $2.6 million, or $0.23 per diluted share, an increase from $0.8 million, or $0.07 per diluted share, in the fiscal first quarter and a decrease from net income of $3.6 million, or $0.31 per diluted share in the second quarter of the prior year.

COVID-19 Update

Jerash was impacted in both the March and June quarters by business closure mandates across the country of Jordan beginning March 18, 2020. As a result of the shutdown, shipments were delayed and production at the factories halted until the government approved re-opening. Jerash's dormitory workforce was allowed to resume production within the industrial zone on April 4, but local employees were not allowed to return until June 1. Jerash enacted a number of additional screening, cleaning and monitoring programs designed to protect the health and well-being of its workforce. Jerash has been recognized as a model employer by the country of Jordan for its efforts, and no cases of COVID-19 were reported among its employees in Jordan. No shutdowns were enacted in the September quarter, but Jerash has seen delays in supply chain orders, including materials related to orders originally expected to ship in the December quarter. As a result of these delays, Jerash expects that the timing of several orders originally slated to ship before the calendar year end will instead ship during the March quarter, delaying revenue recognition from the fiscal third to the fiscal fourth quarter on these shipments.


Jerash anticipates total revenue for fiscal 2021, ending March 31, 2021, to be around $85 million, compared with total revenue of $93 million in fiscal 2020. The change in full year revenue reflects the initial impact of COVID-19 offset by rapid recovery and reinstatement of customer orders.

Additionally, Jerash anticipates that revenue in the second half of fiscal 2021 will be approximately equal to revenue in the prior year second half, but that revenue will be weighted to the fourth quarter rather than third quarter due to delays in the supply chain and potential COVID-19 mandates in Jordan that may delay customer shipments and the associated recognition of revenue.

Balance Sheet, Cash Flow and Dividends

Working capital increased to $50.9 million sequentially, from $48.7 million at June 30, 2020. Cash and restricted cash at September 30, 2020 was $28.1 million, up from $18.5 million at June 30. Inventory was $10.3 million, primarily comprised of fabric, work in progress and finished garments, and accounts receivable were $19.9 million.

Jerash approved payment of a regular quarterly dividend of 5 cents per share on its common stock on or about November 23, 2020, to stockholders of record on November 16, 2020.

Conference Call

The Company will conduct a conference call and webcast to review its fiscal second quarter 2021 results on Thursday, November 12, 2020, at 9:00 a.m. ET. Interested parties can access the call by dialing +1-201-689-8049. Callers should dial in at least 5 minutes prior to the call start time. A live and archived webcast will be available online in the investor relations section of Jerash's website at www.jerashholdings.com.

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, New Balance, G-III, American Eagle, and VF Corporation (which owns brands such as The North Face, Timberland, JanSport, etc.). Its production facilities comprise four factory units, one workshop, and three warehouses and it currently employs approximately 4,200 people. The total annual capacity at its facilities was approximately 12.0 million pieces as of September 30, 2020. 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 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. In addition, there is uncertainty about the further spread of the COVID-19 virus or the occurrence of another wave of cases and the impact it may have on the Company's operations, the demand for the Company's products, global supply chains and economic activity in general. These and other risks and uncertainties are detailed in the Company's filings 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.


Matt Kreps, Darrow Associates Investor Relations
(214) 597-8200


  September 30, 2020     March 31, 2020  
Current Assets:
  $ 27,334,093     $ 26,130,411  
Accounts receivable, net
    19,924,392       5,335,748  
    10,304,880       22,633,772  
Prepaid expenses and other current assets
    2,044,054       2,761,877  
Advance to suppliers, net
    2,793,782       2,116,367  
Total Current Assets
    62,401,201       58,978,175  
Restricted cash
    786,298       786,298  
Long-term deposits
    133,727       253,414  
Deferred tax assets, net
    139,895       139,895  
Property, plant and equipment, net
    5,773,159       6,174,164  
Right of use assets
    952,900       1,147,090  
Total Assets
  $ 70,187,180     $ 67,479,036  
Current Liabilities:
Credit facilities
  $ 932,152     $ 235  
Accounts payable
    4,952,525       6,376,320  
Accrued expenses
    2,485,531       2,245,402  
Income tax payable - current
    1,771,922       1,088,497  
Other payables
    1,142,369       929,783  
Operating lease liabilities - current
    218,583       210,081  
Total Current Liabilities
    11,503,082       10,850,318  
Operating lease liabilities - non-current
    555,144       649,935  
Income tax payable - non-current
    1,094,048       1,227,632  
Total Liabilities
    13,152,274       12,727,885  
Commitments and Contingencies
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
    11,325       11,325  
Additional paid-in capital
    15,277,176       15,235,025  
Statutory reserve
    212,739       212,739  
Retained earnings
    41,238,636       38,997,177  
Accumulated other comprehensive loss
    (8,165 )     (8,324 )
Total Jerash Holdings (US), Inc.'s Stockholder's Equity
    56,731,711       54,447,942  
Noncontrolling interest
    303,195       303,209  
Total Equity
    57,034,906       54,751,151  
Total Liabilities and Equity
  $ 70,187,180     $ 67,479,036  


  For the Three Months Ended
September 30,
    For the Six Months Ended
September 30,
  2020     2019     2020     2019  
Revenue, net
  27,086,318     30,611,119     45,793,073     53,138,444  
Cost of goods sold
    21,203,568       23,308,762       36,858,753       41,323,384  
Gross Profit
    5,882,750       7,302,357       8,934,320       11,815,060  
Selling, general and administrative expenses
    2,853,679       2,919,920       4,704,506       5,543,602  
Stock-based compensation expenses
    -       193,955       42,151       193,955  
Total Operating Expenses
    2,853,679       3,113,875       4,746,657       5,737,557  
Income from Operations
    3,029,071       4,188,482       4,187,663       6,077,503  
Other Income (Expense):
Other income (expense), net
    62,917       (5,059 )     60,178       (9,592 )
Total other income (expense), net
    62,917       (5,059 )     60,178       (9,592 )
Net income before provision for income taxes
    3,091,988       4,183,423       4,247,841       6,067,911  
Income tax expense
    531,896       594,687       873,896       929,687  
Net Income
    2,560,092       3,588,736       3,373,945       5,138,224  
Net loss attributable to noncontrolling interest
    8       4,011       14       4,011  
Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders
  2,560,100     3,592,747     3,373,959     5,142,235  
Net Income
  2,560,092     3,588,736     3,373,945     5,138,224  
Other Comprehensive Income:
Foreign currency translation gain
    712       2,946       159       3,757  
Total Comprehensive Income
    2,560,804       3,591,682       3,374,104       5,141,981  
Comprehensive income attributable to noncontrolling interest
    -       -       -       -  
Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders
  2,560,804     3,591,682     3,374,104     5,141,981  
Earnings Per Share Attributable to Common Stockholders:
  0.23     0.32     0.30     0.45  
  0.23     0.31     0.30     0.45  
Weighted Average Number of Shares
    11,325,000       11,325,000       11,325,000       11,325,000  
    11,329,953       11,507,071       11,330,081       11,496,803  
Dividend per share
  0.05     0.05     0.10     0.10  


SOURCE: Jerash Holdings (US), Inc.

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