EX-99.1 2 tv500653_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

Jerash Reports Fiscal First Quarter 2019, Raises Outlook

Expects record second quarter

 

New York, New York – August 14, 2018 – Jerash Holdings (US), Inc. (Nasdaq: JRSH) (the “Company”), a producer of high quality textile goods for leading global brands, today reported results for its fiscal first quarter 2019 ended June 30, 2018, and forecast record second quarter revenue results.

 

Fiscal First Quarter 2019 and Recent Highlights:

·Reported revenue of $18.4 million in the fiscal first quarter 2019;
·Announced expectations of a record $32 million in revenue for the fiscal second quarter, supported by strong shipments in early Q2;
·Generated gross profit of 25.4%, increased from 22.7% in the first quarter of the prior year, resulting from increased production efficiency;
·Generated GAAP operating loss of $525,000, primarily the result of $3.2 million in non-cash stock-based compensation expense associated with equity awards granted at the time of the Company’s IPO, compared with operating income of $3.4 million in the prior year first quarter;
·Reported net loss of approximately $885,000, or $0.08 per share and reported adjusted net income1 of $2.7 million, or $0.25 per share, after excluding non-cash stock-based compensation and income tax expense;
·Reported adjusted EBITDA1 of $3.0 million, after add back of non-cash stock based compensation expense of $3.2 million compared to adjusted EBITDA of $3.8 million including add back of $0.1 million of non-cash stock based compensation in the prior year first quarter, and
·Increased the fiscal 2019 revenue outlook to a range of $80 million to $82 million, representing organic growth of 15.4% to 18.3% year-over-year.

 

Outlook

Jerash raised its revenue forecast to a range of $80 million to $82 million for the fiscal year ending March 31, 2019 (“fiscal 2019”), representing expected organic growth of 15.4% to 18.3% year-over-year. To date, Jerash has confirmed customer orders in excess of $68 million for fiscal 2019, representing more than 83% of the full year revenue target pre-booked.

 

Additionally, Jerash expects record revenue in the second fiscal quarter of $32 million, in line with the Company’s revised full-year sales outlook. At July 31, 2018, Jerash had shipped substantial second quarter orders, including deferred orders from the fiscal first quarter.

 

Jerash expects gross profit of approximately 27% for the remainder of the year, continuing the progress made in the last fiscal quarter.

 

Management Commentary

Choi Lin Hung, Chairman and Chief Executive Officer, stated: “We are off to a strong start in Fiscal 2019, with $18.4 million in revenue in the first quarter, significantly improved gross margin and adjusted net income1 of $0.25 per share which includes the impact of certain first-quarter shipments that were deferred to second quarter due to timing of the Ramadan holiday in 2018 and customer receiving schedules.”

 

“We are forecasting a record $32 million in second fiscal quarter sales, with a substantial portion already shipped in the first month of the quarter. This now represents the expectation of a first half revenue in excess of $50 million in sales for Jerash, another revenue record.”

 

“We are also increasing our full year revenue outlook to a range of $80 million to $82 million based on our record first half forecast and now have more than $68 million in confirmed customer orders year-to-date. Perhaps most exciting, this outlook indicates an improved first half and significant growth in the second half of the year compared with fiscal 2018. We anticipate diminished seasonality, with approximately 62% of our revenue in the first half of fiscal 2019, compared with more than 70% of revenue in the first half of fiscal 2018, as we continue to diversify and grow our business.”

 

 

 1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of these non-GAAP measures. 

 

 

 

 

 

“We remain focused on creating shareholder value through the four pillars of our strategy: continued organic growth through additional business with existing and new global customers, further improvements to production efficiency, expansion of our internal capacity and the opportunistic acquisition of complementary facilities and other garment manufacturers. “

 

“Finally, our internal expansion efforts are progressing well for both the addition of 500,000 pieces in new annual capacity, expected to come online early in 2019, as well as building out our higher margin multi-color screen printing workshop, expected to be ready for orders in approximately three months. We are also evaluating strategic acquisition opportunities and look forward to moving on the right transactions after identifying synergistic opportunities.”

 

Fiscal 2019 First Quarter Financial Results

Jerash reported revenue of $18.4 million for the fiscal first quarter ended June 30, 2018, a 14% decrease from $21.4 million in the prior year first quarter. Revenue reflected delay of shipments due to the post Ramadan holidays which delayed shipments in the last two weeks of the first quarter this year but had a lesser effect in the prior year quarter. As supported by the level of finished goods inventory, the Company anticipates a record second quarter in excess of $32 million in revenue and has already shipped a substantial amount of these goods in the first month of the second quarter.

 

Operating expenses were $5.2 million for the fiscal first quarter of 2019, compared with $1.4 million in the prior year first quarter. Operating expenses included $3.2 million in non-cash, one-time stock-based compensation expense related to equity awards granted at the time of the Company’s May 2018 initial public offering. Excluding stock-based compensation, operating expenses were $2.0 million in the first fiscal quarter of 2019, compared with $1.4 million in the prior year quarter. The increase in ongoing operating expenses reflects increased headcount to support revenue growth and public company operating costs. We expect operating expenses to stabilize from this point forward.

 

Jerash reported adjusted EBITDA1 of $3.0 million, after add back of non-cash stock based compensation expense of $3.2 million compared to adjusted EBITDA of $3.8 million, including add back of $0.1 million of non-cash stock based compensation in the prior year first quarter.

 

GAAP net loss was $885,000 in the first quarter of fiscal 2019, compared with net income of $3.4 million in the prior year first quarter. The variance was primarily due to timing of revenue between the first and second quarter, and the increase in non-cash stock-based expenses and income tax expense in fiscal 2019. On a pro forma basis excluding stock-based compensation and tax expense, Jerash reported adjusted net income1 of $2.7 million, or $0.25 per share, compared with $3.5 million, or $0.38 per share in the prior year first fiscal quarter. Diluted shares outstanding were 10.8 million in the current quarter, and 9.3 million in the prior year first quarter. A reconciliation of GAAP to non-GAAP measures is provided in the tables accompanying this release.

 

Cash Flow and Balance Sheet

Cash at June 30, 2018 was $16.6 million, compared with $12.2 million at March 31, 2018. As of June 30, 2018, inventory was $20.0 million.

 

Conference Call

The Company will conduct a conference call and webcast to review its fiscal 2018 results on Tuesday, August 14, 2018, at 1:00 p.m. ET. Interested parties in the United States can access the call by dialing 877-407-8133; interested parties outside the United States can access the call by dialing +1-201-689-8040. 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 August 21, by calling 877-481-4010 from the United States or +1-919-882-2331 from outside the United States and entering conference ID number 36507.

 

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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, Sears, Hanes, Columbia, Land’s End, VF Corporation (which owns brands such as The North Face, Nautica, Timberland, Wrangler, Lee, Jansport, etc.), and Philip-Van Heusen (which owns brands such as Calvin Klein, Tommy Hilfiger, IZOD, Speedo, etc.). Its production facilities are made up of three factory units and two warehouses and currently employ approximately 2,900 people. The total annual capacity at its facilities is approximately 6.5 million pieces. Additional information is available at http://www.jerashholdings.com.

 

Non-GAAP Financial Information

This news release contains disclosure regarding adjusted net income, adjusted net income per share, adjusted EBITDA and adjusted EBITDA per share, which are determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures provide supplemental information that may help investors to analyze our net income without regard to the effects of income tax expense and one-time non-cash stock-based compensation. Non-GAAP financial measures have inherent limitations and are not uniformly applied by issuers. Therefore, these non-GAAP financial measures should not be considered in isolation, or as a substitute for comparable measures prepared in accordance with GAAP. The comparable GAAP financial measures and reconciliation to the comparable GAAP financial measures can be found in Appendix A to this document.

 

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”, “outlook”, “forecast” 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:

Richard J. Shaw, Chief Financial Officer

(315) 727-6791

richard.shaw@jerashholdings.com


Matt Kreps, Darrow Associates Investor Relations
(214) 597-8200
mkreps@darrowir.com

 

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JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

   June 30,   March 31, 
   2018   2018 
ASSETS          
Current Assets:          
Cash  $12,929,375   $8,597,830 
Accounts receivable   13,240,000    5,247,090 
Accounts receivable - related party   -    50,027 
Inventories   20,007,447    20,293,392 
Prepaid expenses and other current assets   1,148,119    1,533,868 
Advance to suppliers   2,968,753    1,128,079 
Total Current Assets   50,293,694    36,850,286 
           
Restricted cash   3,672,891    3,598,280 
Property, plant and equipment, net   2,983,853    2,819,715 
Total Assets  $56,950,438   $43,268,281 
           
LIABILITIES AND  EQUITY          
           
Current Liabilities:          
Credit facilities  $7,059,533   $980,195 
Accounts payable   1,134,393    4,776,812 
Accrued expenses   1,234,796    1,175,427 
Income tax payable   175,000    112,000 
Other payables   747,011    878,987 
Total Current Liabilities   10,350,733    7,923,421 
           
Income tax payable – non current   1,591,000    1,288,000 
Total  Liabilities   11,941,733    9,211,421 
           
Commitments and Contingencies          
           
Equity          
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding   -    - 
Common stock, $0.001 par value; 15,000,000 shares authorized; 11,325,000 shares and 9,895,000 shares issued and outstanding as of June 30, 2018 and March 31, 2018, respectively.   11,325    9,895 
Additional paid-in capital   14,568,859    2,742,158 
Statutory reserve   71,699    71,699 
Retained earnings   30,062,765    30,948,006 
Accumulated other comprehensive loss   (15,692)   (24,502)
Total Shareholder's Equity   44,698,956    33,747,256 
           
Noncontrolling interest   309,749    309,604 
Total Equity   45,008,705    34,056,860 
           
Total Liabilities and Equity  $56,950,438   $43,268,281 

 

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JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

   For the Three Months Ended
June 30,		 
   2018   2017 
Revenue, net  $18,363,085   $21,350,158 
Cost of goods sold   13,703,294    16,497,614 
Gross Profit   4,659,791    4,852,544 
           
Selling, general and administrative expenses   5,184,620    1,417,556 
(including stock based compensation of $3,205,980 and $116,578 for the three months ended June 30, 2018 and 2017, respectively)          
           
Total Operating Expenses   5,184,620    1,417,556 
           
(Loss) Income from Operations   (524,829)   3,434,988 
           
Other Income (Expense):          
Other income (expense), net   5,580    (6,316)
Total other income(expense), net   5,580    (6,316)
           
Net (Loss) Income before provision for income taxes   (519,249)   3,428,672 
           
Income tax expense   (366,000)   - 
           
Net (Loss) Income   (885,249)   3,428,672 
           
Net loss attributable to noncontrolling interest   8    2,818 
Net (loss) income attributable to Jerash Holdings (US), Inc.'s Common Shareholders  $(885,241)  $3,431,490 
           
Net (Loss) Income  $(885,249)  $3,428,672 
Other Comprehensive Income (Loss):          
Foreign currency translation gain (loss)   8,963    (22,316)
Total Comprehensive (Loss) Income   (876,286)   3,406,356 
Comprehensive (gain) loss attributable to noncontrolling interest   (145)   3,087 
Comprehensive (Loss) Income Attributable to Jerash Holdings (US), Inc.'s Common Shareholders  $(876,431)  $3,409,443 
           
(Loss) Earnings Per Share Attributable to Common Shareholders:          
Basic  $(0.08)  $0.37 
Diluted  $(0.08)  $0.37 
Weighted Average Number of Shares:          
Basic   10,822,143    9,315,467 
Diluted   10,822,143    9,315,467 

 

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JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Three Months Ended
June 30,		 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income (loss)  $(885,249)  $3,428,672 
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:          
Depreciation and amortization   319,310    287,784 
Stock-based compensation expense   3,205,980    116,578 
Changes in operating assets:          
Accounts receivable   (7,986,340)   (15,282,375)
Accounts receivable – related party   50,026    1,677,582 
Inventories   295,875    3,566,791 
Prepaid expenses and other current assets   78,141    (88,249)
Advance to suppliers   (1,839,199)   - 
Changes in operating liabilities:          
Accounts payable   (3,642,986)   2,017,779 
Accrued expenses   (428,783)   51,737 
Other payables   355,199    (21,397)
Income tax payable   366,000    - 
Net cash used in operating activities   (10,112,026)   (4,245,098)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchases of property, plant and equipment   (481,807)   (184,898)
Other receivable - related party   -    336,746 
Net cash (used in) provided by investing activities   (481,807)   151,848 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term loan   6,075,835    - 
Due from shareholders   -    692,500 
Change in restricted cash   (72,788)   - 
Net proceeds from issuance of Common stock   8,930,300    1,211,707 
Warrants issued to the underwriter   30      
Net cash provided by financing activities   14,933,377    1,904,207 
           
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (7,999)   (6,203)
           
NET INCREASE (DECREASE) IN CASH   4,331,545    (2,195,246)
           
CASH, BEGINNING OF THE PERIOD   8,597,830    3,654,373 
           
CASH, END OF THE PERIOD  $12,929,375   $1,459,127 
           
Non-cash financing activities          
Warrants issued to underwriters in connection with the IPO in fiscal 2019 and the private placement in fiscal 2018  $160,732   $107,900 
Prepaid stock issuance cost netted with proceeds from the IPO in fiscal 2019 and the private placement in fiscal 2018  $308,179   $239,105 

 

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APPENDIX A – Reconciliation of Non-GAAP Financial Measures

JERASH HOLDINGS (US), INC.,
SUBSIDIARIES AND AFFILIATE

RECONCILIATION OF EBITDA AND PER SHARE AMOUNTS – UNAUDITED

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

   Three Months Ended
June 30,		 
   2018   2017 
Net income (loss)  $(885)  $3,429 
           
Income taxes   366    -- 
Interest expense   43    -- 
Depreciation and amortization   319    288 
Stock-based compensation expense   3,206    117 
           
Adjusted EBITDA  $3,049   $3,834 
Adjusted Earnings Per Share          
Basic and Diluted  $0.28   $0.41 
Weighted Average Number of Shares          
Basic and Diluted   10,822    9,315 

 

JERASH HOLDINGS (US), INC.,
SUBSIDIARIES AND AFFILIATE

RECONCILIATION OF ADJUSTED NET INCOME AND PER SHARE AMOUNTS – UNAUDITED

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

   Three Months Ended
June 30,		 
   2018   2017 
Net income (loss)  $(885)  $3,429 
           
Stock-based compensation expense   3,206    117 
Income taxes   366    -- 
Adjusted Net Income  $2,687   $3,546 
Adjusted Earnings per Share          
Basic and Diluted  $0.25   $0.38 
Weighted Average Number of Shares          
Basic and Diluted   10,822    9,315 

 

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JERASH HOLDINGS (US), INC

QUARTERLY HISTORICAL INFORMATION

 

   FY 2019 
   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   YTD 
$ in 000s  6/30/2018A   9/30/2018   12/31/2018   3/31/2019     
                     
Revenue  $18,363   $-   $-   $-   $18,363 
Cost of revenue   13,703    -    -    -    13,703 
Gross profit   4,660    -    -    -    4,660 
    25.4%                  25.4%
Expenses                         
Selling, general and administrative expenses   5,185    -    -    -    5,185 
Total operating expenses   5,185    -    -    -    5,185 
                          
Profit (loss) from operations   (525)   -    -    -    (525)
                          
Other income (expense)                         
Other income (expense) net   6    -    -    -    6 
Total other income (expense), net   6    -    -    -    6 
                          
Net income (loss) before taxes   (519)   -    -    -    (519)
Income tax (expense)   (366)   -    -    -    125 
Net income (loss)  $(885)  $-   $-   $-   $(394)
Net loss attributable to noncontrolling interest   -    -    -    -    - 
Net income (loss) attributable to Jerash Holdings (US), Inc.'s Common Shareholders  $(885)  $-   $-   $-   $(885)
                          
Net Income (Loss)  $(885)  $-   $-   $-   $(885)
Other Comprehensive Income (Loss)   -    -    -    -    - 
Foreign currentcy translation gain (loss)   9    -    -    -    9 
Total Comprehensive Income (Loss)   (876)   -    -    -    (876)
Comprehensive (gain) loss attributable to noncontrolling interest   -    -    -    -    - 
Comprehensive Income (Loss) Attributable to Jerash Holdings (US), Inc.s Common Shareholders  $(876)  $-   $-   $-   $(876)
                          
Earnings (Loss) Per Share Attributable to Common Shareholders                         
Basic  $(0.08)                 $(0.08)
Diluted  $(0.08)                 $(0.08)
                          
Basic Shares Outstanding   10,822    -    -    -    - 
Diluted Shares Outstanding   10,822    -    -    -    - 
                          
Adjusted                         
Net Income (Loss)  $(885)  $-   $-   $-   $(525)
Add back stock based compensation   3,206    -    -    -    3,206 
Add back income taxes   366                   366 
Adj. Net Income  $2,687   $-   $-   $-   $2,687 
                          
Adjusted Earnings (Loss) Per Share Attributable to Common Shareholders                         
Basic  $0.25                  $0.25 
Diluted  $0.25                  $0.25 
                          
Adjusted                         
Net Income (Loss)  $(885)                 $(885)
Add back income taxes   366                   366 
Add back interest expense   43                   43 
Add back depreciation and amortization   319                   319 
Add back stock based compensation   3,206                   3,206 
Adjusted EBITDA  $3,049    -    -    -   $3,049 
                          
Adjusted EBITDA Per Share Attributable to Common Shareholders                         
Basic  $0.28                  $0.28 
Diluted  $0.28                  $0.28 

 

 

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   FY 2018 
   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   YTD 
$ in 000s  6/30/2017A   9/30/2017A   12/31/2017A   3/31/2018A     
                     
Revenue  $21,350   $27,549   $11,544   $8,853   $69,296 
Cost of revenue   16,498    20,334    7,791    6,719    51,342 
Gross profit   4,852    7,215    3,753    2,134    17,954 
    22.7%   26.2%   32.5%   24.1%   25.9%
Expenses                         
Selling, general and administrative expenses   1,417    1,458    1,558    1,686    6,119 
Total operating expenses   1,417    1,458    1,558    1,686    6,119 
                          
Profit (loss) from operations   3,435    5,757    2,195    448    11,835 
                          
Other income (expense)                         
Other income (expense) net   (6)   (5)   12    (33)   (32)
Total other income (expense), net   (6)   (5)   12    (33)   (32)
                          
Net income (loss) before taxes   3,429    5,752    2,207    415    11,803 
Income tax (expense)   -    -    -    (1,400)   (1,400)
Net income  $3,429   $5,752   $2,207   $(985)  $10,403 
Net loss attributable to noncontrolling interest   3    -    -    4    7 
Net income (loss) attributable to Jerash Holdings (US), Inc's Common Shareholders  $3,432   $5,752   $2,207   $(981)  $10,410 
                          
Net Income (Loss)  $3,429   $5,752   $2,207   $(985)  $10,403 
Other Comprehensive Income (Loss)   -    -    -    -    - 
Foreign currentcy translation gain (loss)   (22)   46    (54)   14    (16)
Total Comprehensive Income (Loss)   3,407    5,798    2,153    (971)   10,387 
Comprehensive (gain) loss attributable to noncontrolling interest   3    0    1    3    7 
Comprehensive Income (Loss) Attributable to Jerash Holdings (US), Inc.'s Common Shareholders  $3,410   $5,798   $2,154   $(968)  $10,394 
                          
Earnings (Loss) Per Share Attributable to Common Shareholders                         
Basic  $0.37   $0.61   $0.22   $(0.10)  $1.07 
Diluted  $0.37   $0.61   $0.22   $(0.10)  $1.07 
                          
Basic Shares Outstanding   9,315    9,577    9,684    9,736    9,736 
Diluted Shares Outstanding   9,315    9,577    9,684    9,736    9,736 
                          
Adjusted                         
Net Income (Loss)  $3,429   $5,757   $2,195   $448   $11,835 
Add back stock based compensation   117    -    -    -    117 
Add back income taxes   -                   - 
Adj. Net Income  $3,546   $5,757   $2,195   $448   $11,946 
                          
Adjusted Earnings (Loss) Per Share Attributable to Common Shareholders                         
Basic  $0.38   $0.60   $0.23   $0.05   $1.23 
Diluted  $0.38   $0.60   $0.23   $0.05   $1.23 
                          
Adjusted                         
Net Income (Loss)  $3,429   $5,757   $2,195   $448   $11,829 
Add back income taxes   -    -    -    1,400    1,400 
Add back interest expense   -         4    23    27 
Add back depreciation and amortization   288    300    311    318    1,217 
Add back stock based compensation   117                   117 
Adjusted EBITDA  $3,834    6,057    2,510    2,189   $14,590 
                          
Adjusted EBITDA Per Share Attributable to Common Shareholders                         
Basic  $0.41   $0.63   $0.26   $0.22   $1.50 
Diluted  $0.41   $0.63   $0.26   $0.22   $1.50 

 

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