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 The SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported):
June 27, 2023
Jerash Holdings (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:
(201) 285-7973
(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 communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
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 ☒
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. ☒
Item 2.02 Results of Operations and Financial Condition.
On June 27, 2023, Jerash Holdings (US), Inc. issued a press release to announce financial results for its fiscal year 2023 fourth quarter and full year, ended March 31, 2023. 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 Number | Exhibit |
|---|---|
| 99.1 | Press Release dated June 27, 2023 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
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. | ||
|---|---|---|
| June 27, 2023 | By: | /s/ Choi Lin Hung |
| Choi Lin Hung | ||
| Chairman of the Board of Directors,<br><br> <br>Chief Executive Officer, President, and Treasurer |
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Exhibit 99.1
Jerash Holdings Reports Financial Results
for Fiscal 2023 Fourth Quarter and Full Year
FAIRFIELD, N.J., June 27, 2023 – Jerash Holdings (US), Inc. (NASDAQ: JRSH) (the “Company” or “Jerash”), which manufactures and exports custom, ready-made, sportswear and outerwear for leading global brands, today announced financial results for its fiscal 2023 fourth quarter and full year, ended March 31, 2023.
Fiscal 2023 Fourth Quarter Results
Fiscal 2023 fourth quarter revenue was $23.8 million, down 23.2 percent from $30.9 million in the same period last year, primarily due to lower sales from two major U.S. customers. Revenue also was negatively impacted by approximately $3 million of orders, with shipments being deferred by customers to the fiscal 2024 first quarter.
Gross profit was $2.5 million for the fiscal 2023 fourth quarter, compared with $4.7 million in the same quarter last year. Gross margin for the most recent fourth quarter decreased to 10.3 percent, from 15.1 percent in the same period last year. The decrease in gross margin was primarily driven by a lower proportion of U.S. orders and a product mix shift.
Operating expenses totaled $4.3 million in the fiscal 2023 fourth quarter, compared with $4.6 million in the same period last year. The slight decrease was due to smaller stock-based compensation expenses in fiscal 2023.
Operating loss was $1.8 million for the fiscal 2023 fourth quarter, compared with operating income of $126,000 for the same period last year.
Total other expenses were $86,000 in the fiscal 2023 fourth quarter, compared with total other income of $148,000 in the last year’s fourth quarter. Interest expenses were $268,000 in the fiscal 2023 fourth quarter, compared with $63,000 for the same quarter last year.
Income tax expenses for fiscal 2023 fourth quarter were $68,000, compared with $405,000 in the same period last year.
Net loss was $2.0 million, or $0.16 per share, for the fiscal 2023 fourth quarter, compared with a net loss of $131,000, or $0.01 per share, in the same period last year.
“Revenue and gross margin for the 2023 fourth quarter continued to be impacted by fewer orders from our two major U.S. customers, as well as a shift in product mix to lower margin items. We also are comparing against a particularly strong revenue quarter a year ago,” said Sam Choi, Jerash’s chairman and chief executive officer. “The retail sector continues to face a weak economic environment, as consumers are limiting their spending on higher priced items.
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“On the positive front, our joint venture with Busana Apparel Group is progressing well. Initial feedback from Busana’s global branded customers indicate their keen interest in geographically diversifying production to Jordan from Asia, in part, to take advantage of duty-free agreements with the U.S. and other countries. We anticipate production as part of the joint venture to start in the second half of the current fiscal year.
“We are continuing to focus on our initiative to diversify our customer base, through our own marketing activities and through our joint venture. As well, we have begun planning the development of property acquired in 2019 to be at-the-ready as market conditions improve,” Choi added.
Fiscal 2023 Full Year Results
Fiscal 2023 revenue decreased slightly to $138.1 million, from $143.4 million in fiscal 2022. Despite receiving orders from new customers during the year, the added revenue was not enough to offset the shortfall in sales from certain existing customers.
Gross profit in fiscal 2023 totaled $21.8 million, compared with $27.3 million in fiscal 2022. Gross margin was 15.8 percent in fiscal 2023, compared with 19.1 percent in fiscal 2022.
Operating expenses in fiscal 2023 were $17.4 million, compared with $16.8 million in fiscal 2022. Operating income decreased to $4.4 million in fiscal 2023, from $10.5 million in fiscal 2022.
Net income amounted to $2.4 million, or $0.19 per share, in fiscal 2023, compared with $7.9 million, or $0.67 per share, in fiscal 2022.
Balance Sheet, Cash Flow and Dividends
Cash and restricted cash totaled $19.4 million, and net working capital was $42.8 million as of March 31, 2023. Net cash provided by operating activities was approximately $10.8 million for the fiscal year ended March 31, 2023, compared with $9.0 million for last year.
On May 23, 2023, Jerash approved a regular quarterly dividend of $0.05 per share on its common stock. The dividend was paid on June 9, 2023, to stockholders of record as of June 2, 2023.
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Outlook
| ● | Revenue for fiscal 2024 first quarter and full year to be maintained at the similar level as fiscal 2023. |
|---|---|
| ● | Gross margin goal for the full fiscal 2024 year is expected to be around 15-16 percent subject to final product mix of shipments. |
| --- | --- |
Share Repurchase Program
As of March 31, 2023, 239,500 shares had been repurchased at market rates, at a total price of $1.2 million, excluding broker commissions, under the share repurchase program authorized by the board in June 2022. The program expired at the end of fiscal 2023.
Conference Call
Jerash Holdings will host an investor conference call to discuss its fiscal 2023 fourth quarter and full year results today, June 27, 2023, at 9:00 a.m. Eastern Time.
| Phone: | 888-506-0062 (domestic); 973-528-0011 (international) |
|---|---|
| Conference ID: | 873668 |
| --- | --- |
A live and archived webcast will be available online in the investor relations section of Jerash’s website at www.jerashholdings.com. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.
About Jerash Holdings (US), Inc.
Jerash Holdings manufactures and exports custom, ready-made, sportswear and outerwear for leading global brands and retailers, including VF Corporation (which owns brands such as The North Face, Timberland, and Vans), New Balance, G-III (which licenses brands such as Calvin Klein, Tommy Hilfiger, DKNY, and Guess), American Eagle, and Skechers. Jerash’s existing production facilities comprise six factory units and four warehouses, and Jerash currently employs approximately 5,000 people. Additional information is available at www.jerashholdings.com.
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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, including, but not limited to, Jerash’s current views with respect to future events and its financial forecasts, and expansion of the customer base among high-profile global brands, 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.
Contact:
PondelWilkinson Inc.
Judy Lin or Roger Pondel
310-279-5980; jlin@pondel.com
# # #
(tables below)
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JERASH HOLDINGS (US), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE- AND TWELVE-MONTHS ENDED MARCH 31, 2023 AND 2022
| Forthe Three Months Ended March 31, | Forthe Fiscal Years Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Revenue, net | $ | 23,774,006 | $ | 30,940,021 | $ | 138,063,309 | $ | 143,354,902 | ||||
| Cost of goods sold | 21,321,046 | 26,254,643 | 116,273,569 | 116,023,267 | ||||||||
| Gross Profit | 2,452,960 | 4,685,378 | 21,789,740 | 27,331,635 | ||||||||
| Selling, general and administrative expenses | 4,164,229 | 4,247,407 | 16,960,978 | 15,895,998 | ||||||||
| Stock-based compensation expenses | 119,078 | 312,165 | 413,900 | 947,079 | ||||||||
| Total Operating Expenses | 4,283,307 | 4,559,572 | 17,374,878 | 16,843,077 | ||||||||
| Income (Loss) from Operations | (1,830,347 | ) | 125,806 | 4,414,862 | 10,488,558 | |||||||
| Other (Expense) Income: | ||||||||||||
| Interest expenses | (267,800 | ) | (62,899 | ) | (768,131 | ) | (210,576 | ) | ||||
| Other income, net | 181,521 | 211,012 | 437,002 | 165,893 | ||||||||
| Total other (expense) income, net | (86,279 | ) | 148,113 | (331,129 | ) | (44,683 | ) | |||||
| Net income (loss) before provision for income taxes | (1,916,626 | ) | 273,919 | 4,083,733 | 10,443,875 | |||||||
| Income tax expense | 67,703 | 405,229 | 1,664,110 | 2,524,275 | ||||||||
| Net Income (loss) | (1,984,329 | ) | (131,310 | ) | 2,419,623 | 7,919,600 | ||||||
| Other Comprehensive Income (Loss): | ||||||||||||
| Foreign currency translation gain (loss) | 45,692 | 21,131 | (250,374 | ) | 143,046 | |||||||
| Comprehensive Income (Loss) Attributable to Jerash Holdings (US), Inc.’s Common Stockholders | $ | (1,938,637 | ) | $ | (110,179 | ) | $ | 2,169,249 | $ | 8,062,646 | ||
| Earnings (Loss) Per Share Attributable to Common Stockholders: | ||||||||||||
| Basic and diluted | $ | (0.16 | ) | $ | (0.01 | ) | $ | 0.19 | $ | 0.67 | ||
| Weighted Average Number of Shares | ||||||||||||
| Basic | 12,525,166 | 12,334,318 | 12,635,785 | 11,821,779 | ||||||||
| Diluted | 12,525,166 | 12,334,318 | 12,675,351 | 11,897,717 | ||||||||
| Dividend per share | $ | 0.05 | $ | 0.05 | $ | 0.20 | $ | 0.20 |
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JERASH HOLDINGS (US), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| March 31,<br> 2022 | ||||
|---|---|---|---|---|
| ASSETS | ||||
| Current Assets: | ||||
| Cash | 17,801,614 | $ | 25,176,120 | |
| Accounts receivable, net | 2,240,537 | 11,049,069 | ||
| Bills receivable | 87,573 | - | ||
| Tax recoverable | 16,763 | 374,377 | ||
| Inventories | 32,656,833 | 28,255,179 | ||
| Prepaid expenses and other current assets | 2,947,815 | 3,233,592 | ||
| Investment deposits | - | 500,000 | ||
| Advance to suppliers, net | 1,533,091 | 1,284,601 | ||
| Total Current Assets | 57,284,226 | 69,872,938 | ||
| Restricted cash – non-current | 1,609,989 | 1,407,368 | ||
| Long-term deposits | 841,628 | 419,597 | ||
| Deferred tax assets, net | 153,873 | 352,590 | ||
| Property, plant and equipment, net | 22,355,574 | 10,933,147 | ||
| Goodwill | 499,282 | 499,282 | ||
| Right of use assets | 974,761 | 1,826,062 | ||
| Total Assets | 83,719,333 | $ | 85,310,984 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current Liabilities: | ||||
| Credit facilities | - | $ | - | |
| Accounts payable | 5,782,570 | 4,840,225 | ||
| Accrued expenses | 2,930,533 | 3,115,953 | ||
| Income tax payable – current | 2,846,201 | 2,861,272 | ||
| Other payables | 1,477,243 | 2,278,816 | ||
| Deferred revenue | 928,393 | - | ||
| Amount due to a related party | - | 300,166 | ||
| Operating lease liabilities – current | 481,502 | 739,101 | ||
| Total Current Liabilities | 14,446,442 | 14,135,533 | ||
| Operating lease liabilities – non-current | 287,247 | 869,313 | ||
| Income tax payable – non-current | 751,410 | 1,001,880 | ||
| Total Liabilities | 15,485,099 | 16,006,726 | ||
| Stockholders’ 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; 12,534,318 and 12,334,318 shares issued; 12,294,840 and 12,334,318 shares outstanding as of March 31, 2023 and 2022, respectively | 12,534 | 12,334 | ||
| Additional paid-in capital | 22,931,046 | 22,517,346 | ||
| Treasury stock, 239,478 and none shares as of March 31, 2023 and 2022, respectively | (1,169,046 | ) | - | |
| Statutory reserve | 410,847 | 379,323 | ||
| Retained earnings | 46,172,082 | 46,268,110 | ||
| Accumulated other comprehensive (loss) gain | (123,229 | ) | 127,145 | |
| Total Jerash Holdings (US), Inc.’ Stockholders’ Equity | 68,234,234 | 69,304,258 | ||
| Total Liabilities and Stockholders’ Equity | 83,719,333 | $ | 85,310,984 |
All values are in US Dollars.
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JERASH HOLDINGS (US), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
| For<br> the Fiscal Years Ended<br><br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net Income | $ | 2,419,623 | $ | 7,919,600 | ||
| Adjustments to reconcile net income to net cash<br> provided by operating activities: | ||||||
| Depreciation and amortization | 2,430,692 | 2,149,419 | ||||
| Stock-based compensation expenses | 413,900 | 947,079 | ||||
| Bad debt expense | - | 221,584 | ||||
| Amortization of operating lease right-of-use assets | 989,220 | 803,056 | ||||
| Changes in operating assets: | ||||||
| Accounts receivable | 8,808,532 | 762,614 | ||||
| Bills receivable | (87,573 | ) | - | |||
| Inventories | (4,401,654 | ) | (3,219,213 | ) | ||
| Prepaid expenses and other current assets | 285,782 | (904,305 | ) | |||
| Advance to suppliers | (248,490 | ) | 1,752,091 | |||
| Deferred tax assets | 198,717 | (203,928 | ) | |||
| Changes in operating liabilities: | ||||||
| Accounts payable | 942,345 | (3,082,614 | ) | |||
| Accrued expenses | (185,421 | ) | 783,087 | |||
| Other payables | (801,574 | ) | 823,608 | |||
| Deferred revenue | 928,393 | - | ||||
| Operating lease liabilities | (977,584 | ) | (759,919 | ) | ||
| Income tax payable, net<br> of recovery | 92,226 | 971,386 | ||||
| Net cash<br> provided by operating activities | 10,807,134 | 8,963,545 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Purchases of property, plant and equipment | (722,770 | ) | (2,955,328 | ) | ||
| Payments for construction of properties | (5,084,044 | ) | (2,098,323 | ) | ||
| Acquisition of MK Garments | - | (2,700,000 | ) | |||
| Acquisition of Ever Winland | (5,100,000 | ) | - | |||
| Acquisition of Kawkab Venus | (2,200,000 | ) | - | |||
| Acquisition deposit | - | (500,000 | ) | |||
| Payment for long-term deposits | (668,337 | ) | (419,597 | ) | ||
| Net cash<br> used in investing activities | (13,775,151 | ) | (8,673,248 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Dividend payment | (2,484,127 | ) | (2,366,796 | ) | ||
| Share repurchase | (1,169,046 | ) | - | |||
| Repayment from short-term loan | (7,197,995 | ) | (612,703 | ) | ||
| Repayment to a related party | (300,166 | ) | (1,763 | ) | ||
| Proceeds from short-term loan | 7,197,995 | - | ||||
| Net proceeds from issuance<br> of common stock | - | 6,270,000 | ||||
| Net cash<br> (used in) provided by financing activities | (3,953,339 | ) | 3,288,738 | |||
| EFFECT OF EXCHANGE RATE CHANGES<br> ON CASH AND RESTRICTED CASH | (250,529 | ) | 143,990 | |||
| NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH | (7,171,885 | ) | 3,723,025 | |||
| CASH, AND RESTRICTED CASH, BEGINNING<br> OF THE YEAR | 26,583,488 | 22,860,463 | ||||
| CASH, AND RESTRICTED CASH, END<br> OF THE YEAR | $ | 19,411,603 | $ | 26,583,488 | ||
| CASH, AND RESTRICTED CASH, END OF THE YEAR | 19,411,603 | 26,583,488 | ||||
| LESS: NON-CURRENT RESTRICTED CASH | 1,609,989 | 1,407,368 | ||||
| CASH, END OF THE YEAR | $ | 17,801,614 | $ | 25,176,120 | ||
| Supplemental disclosure information: | ||||||
| Cash paid for interest | $ | 768,131 | $ | 210,576 | ||
| Income tax paid | $ | 1,747,635 | $ | 1,762,254 | ||
| Non-cash investing and financing activities | ||||||
| Equipment obtained by utilizing<br> long-term deposit | $ | 237,412 | $ | 321,862 | ||
| Acquisition of Kawbab Venus<br> by utilizing long-term deposit | $ | 500,000 | $ | - | ||
| Right of use assets obtained<br> in exchange for operating lease obligations | $ | 190,654 | $ | 1,022,172 |
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