Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jerash Holdings (US) Inc (JRSH, Financial) reported a 17.8% increase in revenue for the fiscal 2025 first-quarter, reaching $40.9 million.
- The company is experiencing good growth with manufacturing facilities operating at full capacity and orders fully booked through December.
- Jerash Holdings (US) Inc (JRSH) is receiving additional trial orders from major brands, indicating successful diversification of its customer base.
- The company anticipates a 20% to 25% revenue growth for the full year 2025, with strong order inflow expected in the second half.
- Contingency plans are in place to minimize disruptions due to regional instability, ensuring operational stability.
Negative Points
- Gross margin decreased to 11.3% from 16.0% in the same period last year, primarily due to higher raw material import costs and additional manufacturing expenses.
- The company reported a net loss of $1.4 million or $0.11 per share in the fiscal 2025 first-quarter, compared to a net income of $495,000 in the same period last year.
- Operating expenses increased to $5.5 million from $4.5 million in the same quarter last year, driven by higher logistics and labor costs.
- Supply chain disruptions led to significant added costs, including $300,000 in airfreight expenses to catch up on delayed deliveries.
- Interest expenses increased due to the supply chain financing program, reflecting higher costs associated with maintaining cash flow.
Q & A Highlights
Q: Can you explain the increase in revenue guidance from 15%-18% to 20%-25% for the full year?
A: Gilbert Lee, CFO, explained that the revenue increase is expected more in the second half of the year. The first quarter already achieved a record, and the second quarter is strong. The third and fourth quarters are anticipated to be on par with the first half due to strong orders, with factories fully booked through December 2024. The growth is attributed to new customers placing regular orders after trial orders in previous years.
Q: Are the increased orders from existing customers catching up or from new customers?
A: Gilbert Lee, CFO, stated that the increase is primarily from new customers. While the first half involves catching up on delayed orders, the second half will see growth from new customers who are now placing regular orders.
Q: What are the gross margin expectations for Q2 and the full year, given the supply chain disruptions?
A: Gilbert Lee, CFO, noted that while the first and second quarters have higher manufacturing costs, they expect stabilization after August. Cost-cutting measures are being implemented, and the second half should see improved margins, though not as high as pre-disruption levels.
Q: Are there provisions for customers to share in the incremental expenses due to supply chain disruptions?
A: Gilbert Lee, CFO, mentioned that while there is no direct compensation for additional costs, customers understand the situation and allow for some margin adjustments. Samuel Choi, CEO, added that some major customers are willing to absorb increased inbound freight charges for future orders.
Q: How is Jerash Holdings utilizing supply chain financing, given the high interest rates?
A: Gilbert Lee, CFO, explained that while they try to minimize the use of supply chain financing due to high costs, it is sometimes necessary to ensure sufficient cash flow for purchasing raw materials and covering freight costs. They are monitoring interest expenses closely.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
