8-K
Jerash Holdings (US), Inc. (JRSH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2020
JerashHoldings (US), Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38474 | 81-4701719 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 277 Fairfield Road, Suite 338, Fairfield, NJ | 07004 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number including area code: (214) 906-0065
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.001 per share | JRSH | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 13, 2020, Jerash Holdings (US), Inc. issued a press release to report its financial results for the third quarter ended December 31, 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br><br> Number | Exhibit |
|---|---|
| 99.1 | Press Release dated February 13, 2020 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JERASH HOLDINGS (US), INC. | ||
|---|---|---|
| February 13, 2020 | By: | /s/ Choi Lin Hung |
| Choi Lin Hung | ||
| Chairman of the Board of Directors, Chief Executive Officer, President, and Treasurer |
Exhibit 99.1
Jerash Reports 36% Revenue Growth inFiscal Third Quarter
GAAP EPS $0.63 Through First 9 Months
New Customers, Capacity Expansion DriveRevenue and Net Income Growth
Fairfield, New Jersey – February 13, 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 fiscal 2020 third quarter, ended December 31, 2019.
Third Quarter Fiscal 2020 and RecentHighlights
| · | Reported $25.4 million third quarter revenue, an increase of 36.2% year-over-year, driven by increased<br>customer order volumes and the addition of new customers; |
|---|---|
| · | Generated quarterly gross margin of 19.3%, up from 17.1% in the prior-year third quarter, as volume<br>and mix continue to improve, in spite of the ongoing absorption of ramp-up costs for the acquired Paramount facility (“Paramount”); |
| --- | --- |
| · | Reported GAAP net income of $2.1 million, or $0.18 per diluted share, compared with net income<br>of $1.6 million, or $0.14 per diluted share in the prior year quarter; |
| --- | --- |
| · | Year-to-date Jerash reported $78.6 million in revenue, 21.3% gross margin and $0.63 GAAP EPS, compared<br>with GAAP EPS of $0.47 through the first nine months of fiscal 2019; |
| --- | --- |
| · | Paramount ramp progressed with over 750 employees now trained and production expected to continue<br>scaling through the remainder of Fiscal 2020; and |
| --- | --- |
| · | On track to achieve an anticipated 8.0 million pieces in annual capacity with the Paramount factory<br>assets expected to begin contributing to profitability in the fourth quarter of fiscal 2020. |
| --- | --- |
Management Commentary
Sam Choi, Chairman and Chief Executive Officer, stated: “The quarter represented our second year in a row with substantial fiscal third quarter revenue gains as we work to expand second half production and fully utilize our factory capabilities on a year-round basis. In addition to 36% revenue growth, we also increased gross margins due to improved warmer season product mix, helping drive $0.18 per share in GAAP net income for the quarter, and $0.63 per share year-to-date.
“We continue to execute on new customer orders as well as deliver increased volumes to existing customers as Jerash is increasingly recognized for its tariff-advantaged, high-quality global production capabilities. Our 23% capacity expansion via the Paramount asset acquisition is progressing well, with the second wave of new workers now in training. We expect Paramount to be fully staffed by fiscal year end, driving our total annual production capabilities to more than 8 million pieces per year, which we expect to be fully booked going forward. Additionally, we have secured land in Jordan for both dormitory and factory construction to begin in calendar 2020 to ensure we continue to meet the expected rising customer demand in the future.”
Fiscal 2020 Third Quarter FinancialResults
For the third fiscal quarter of 2020, Jerash reported total revenue of $25.4 million, an increase of $6.8 million or 36.2% from $18.7 million in the same period in fiscal 2019. The increase in fiscal third quarter sales reflected higher volumes sold to both existing and new customers, as well as increased utilization of the Company’s manufacturing capacity in the second fiscal half as the company continues to deliver on its goal of maximizing factory capacity on a year-round basis.
The Company continued its training and production ramp programs at its acquired Paramount assets, which is expected to result in total annual production capabilities for more than 8.0 million pieces by end of the fiscal year, a 23% capacity increase. Sales to new customers accounted for 7% of fiscal third quarter revenue, with additional capacity demand from those new accounts.
Gross margin in the quarter was 19.3%, compared with 17.1% in the fiscal 2019 third quarter. The year-over-year change in gross margin reflected increased utilization and order activity. Prior year gross margin was reduced by investment in new category programs to expand business with key customers, which contributed to revenue and net income gains in the current year third quarter. Gross margins in the current year were lowered by continued higher average costs associated with the startup of the Paramount facility. Year-to-date gross margin was approximately 21.3% as the company continues to diversify orders and improve efficiency of new customer orders and new production categories.
Operating expenses for the fiscal 2020 third quarter were $2.6 million, compared with $2.2 million in fiscal 2019 and $3.1 million in the preceding quarter. Operating expenses included additional headcount costs related to Paramount staffing and expansion in the Company’s Asia based sales and marketing and support teams to continue driving customer relationship growth.
Operating income for the fiscal 2020 third quarter was $2.3 million, compared with operating income of $1.0 million in the third quarter of fiscal 2019. The sequential increase reflects the growth in total sales, improved gross margin and increased operating efficiency as Jerash increases its total production capacity and ramps its warm season production volume across its facilities.
GAAP net income for the third fiscal quarter of 2020 was $2.1 million, or $0.18 per diluted share, based on approximately 11.5 million diluted shares outstanding.
“The third quarter results demonstrated meaningful improvement in all of our key operating and profit metrics as we continue to scale production and increase efficiency for both the additional workforce and the new products added to expand our second half factory utilization,” said Gilbert Lee, Chief Financial Officer. “Jerash made a number of investments last year to launch additional categories and expand production capacity, which have had a short-term impact to gross margin. Those investments are generating returns this year, as anticipated, with higher revenue and increased profit. We continue to scale our production volumes ahead and look forward to additional contribution from the Paramount assets in the current fiscal quarter and throughout Fiscal 2021.”
Balance Sheet, Cash Flow and Dividends
Cash and restricted cash at December 31, 2019 was $27.8 million, inventory was $14.1 million, primarily comprised of fabric, work in progress and finished garments, and accounts receivable were $10.0 million. Jerash approved payment of a regular quarterly dividend of 5 cents per share on the Company’s common stock on or about February 26, 2020, to shareholders of record on February 19, 2020. Year-to-date, the company has invested $2.2 million into the purchases of the Paramount manufacturing assets and land property to further expand its production facilities and worker dormitories as part of its multi-year facilities expansion plan.
Outlook
For fiscal 2020, Jerash adjusted its outlook, which includes revenue growth through both expanding business with existing customers and the addition of new customers. Total revenues for fiscal 2020 are projected to be approximately $95 million, representing what is expected to be approximately 12% organic growth over fiscal 2019.
ConferenceCall
The Company will conduct a conference call and webcast to review its fiscal third quarter 2020 results on Thursday, February 13, 2020, at 9:00 a.m. ET. Interested parties in the United States can access the live call by dialing 844-407-9500; interested parties outside the United States can access the call by dialing +1-862-298-0850. 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. A replay of the conference call will be available until February 20, 2020, by calling +1-919-882-2331 and entering conference ID number 58803.
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, etc.). Its production facilities are currently made up of four factory units and three warehouses and it currently employs approximately 3,900 people. The total annual capacity at its facilities was approximately 8.0 million pieces as of 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”, “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. 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.
Contact:
Matt Kreps, Darrow Associates Investor Relations
(214) 597-8200
JERASH HOLIDINGS (US), INC.,
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash | 26,971,805 | $ | 27,182,158 | ||
| Accounts receivable | 10,003,638 | 4,020,369 | |||
| Inventories | 14,132,051 | 21,074,243 | |||
| Prepaid expenses and other current assets | 3,288,455 | 2,630,727 | |||
| Advance to suppliers | 4,948,507 | 443,395 | |||
| Total Current Assets | 59,344,456 | 55,350,892 | |||
| Restricted cash | 796,876 | 652,310 | |||
| Long-term deposits | - | 810,172 | |||
| Deferred tax assets | 81,344 | 81,461 | |||
| Property, plant and equipment, net | 5,656,822 | 2,356,262 | |||
| Right of use assets | 1,262,633 | - | |||
| Total Assets | 67,142,131 | $ | 59,251,097 | ||
| LIABILITIES AND EQUITY | |||||
| Current Liabilities: | |||||
| Credit facilities | 40,719 | $ | 648,711 | ||
| Accounts payable | 4,673,971 | 3,378,258 | |||
| Accrued expenses | 2,067,515 | 1,539,147 | |||
| Income tax payable | 999,792 | 1,164,238 | |||
| Other payables | 1,193,918 | 855,527 | |||
| Operating lease liabilities – current | 257,832 | - | |||
| Total Current Liabilities | 9,233,747 | 7,585,881 | |||
| Operating lease liabilities – non-current | 665,602 | - | |||
| Income tax payable – non-current | 1,269,503 | 1,403,087 | |||
| Total Liabilities | 11,168,852 | 8,988,968 | |||
| Commitments and Contingencies | |||||
| Equity: | |||||
| 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 | 15,150,722 | 14,956,767 | |||
| Statutory reserve | 212,739 | 212,739 | |||
| Retained earnings | 40,303,489 | 34,786,735 | |||
| Accumulated other comprehensive loss | (9,988 | ) | (14,440 | ) | |
| Total Stockholder's Equity | 55,668,287 | 49,953,126 | |||
| Noncontrolling interest | 304,992 | 309,003 | |||
| Total Equity | 55,973,279 | 50,262,129 | |||
| Total Liabilities and Equity | 67,142,131 | $ | 59,251,097 |
All values are in US Dollars.
****
JERASH HOLDINGS (US), INC.,
CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
| For the Three Months Ended<br> December 31, | For the Nine Months Ended<br> December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||
| Revenue, net | $ | 25,446,708 | $ | 18,677,164 | $ | 78,585,152 | $ | 70,504,646 | ||
| Cost of goods sold | 20,532,888 | 15,477,534 | 61,856,272 | 54,296,244 | ||||||
| Gross Profit | 4,913,820 | 3,199,630 | 16,728,880 | 16,208,402 | ||||||
| Selling, general and administrative expenses | 2,590,659 | 2,173,022 | 8,134,261 | 6,250,104 | ||||||
| Stock-based compensation expenses | - | - | 193,955 | 3,399,934 | ||||||
| Total Operating Expenses | 2,590,659 | 2,173,022 | 8,328,216 | 9,650,038 | ||||||
| Income from Operations | 2,323,161 | 1,026,608 | 8,400,664 | 6,558,364 | ||||||
| Other Income (Expense): | ||||||||||
| Other Income (expense), net | 5,913 | 20,885 | (3,679 | ) | 19,633 | |||||
| Total other income (expense), net | 5,913 | 20,885 | (3,679 | ) | 19,633 | |||||
| Net Income before provision for income tax | 2,329,074 | 1,047,493 | 8,396,985 | 6,577,997 | ||||||
| Income tax expense (benefit) | 255,805 | (578,000 | ) | 1,185,492 | 1,251,000 | |||||
| Net income | 2,073,269 | 1,625,493 | 7,211,493 | 5,326,997 | ||||||
| Net loss attributable to noncontrolling interest | - | 721 | 4,011 | 746 | ||||||
| Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders | $ | 2,073,269 | $ | 1,626,214 | $ | 7,215,504 | $ | 5,327,743 | ||
| Net Income | $ | 2,073,269 | $ | 1,625,493 | $ | 7,211,493 | $ | 5,326,997 | ||
| Other Comprehensive Income: | ||||||||||
| Foreign currency translation gain | 695 | 311 | 4,452 | 10,091 | ||||||
| Total Comprehensive Income | 2,073,964 | 1,625,804 | 7,215,945 | 5,337,088 | ||||||
| Comprehensive loss income attributable to noncontrolling interest | - | 720 | - | 592 | ||||||
| Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders | $ | 2,073,964 | $ | 1,626,524 | $ | 7,215,945 | $ | 5,337,680 | ||
| Earnings Per Share Attributable to Common Stockholders: | ||||||||||
| Basic | $ | 0.18 | $ | 0.14 | $ | 0.64 | $ | 0.48 | ||
| Diluted | $ | 0.18 | $ | 0.14 | $ | 0.63 | $ | 0.47 | ||
| Weighted Average Number of Shares | ||||||||||
| Basic | 11,325,000 | 11,325,000 | 11,325,000 | 11,158,600 | ||||||
| Diluted | 11,450,707 | 11,393,179 | 11,477,344 | 11,283,812 |