UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 10, 2021

 

Jerash Holdings (US), Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   001-38474   81-4701719
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
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 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 February 10, 2021, Jerash Holdings (US), Inc. issued a press release to report its financial results for the third quarter of fiscal year 2021, ended December 31, 2020. 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 February 10, 2021

 

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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 10, 2021 By: /s/ Choi Lin Hung
    Choi Lin Hung
    Chairman of the Board of Directors,
Chief Executive Officer, President, and Treasurer

 

 

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Exhibit 99.1 

 

 

Jerash Reports Fiscal Third Quarter Results, Fourth Quarter Outlook

 

Projects 38%-Plus Year-Over-Year Revenue Growth and Increased Gross Margin in Fourth Quarter

 

Provides Initial Fiscal 2022 Revenue Guidance of $100 to $102 Million

 

Fairfield, New Jersey – February 10, 2021 – 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 third quarter of fiscal year 2021, ended December 31, 2020.

 

Third Quarter of Fiscal 2021 and Recent Highlights

Reported $20.7 million in fiscal third quarter revenue
Gross margin was 12%, impacted by less favorable product mix and higher local order shipments
GAAP net income was $0.1 million, or $0.01 per diluted share
Jerash’s factories are fully booked with customer orders through September 2021, including all capacity for higher-value jacket and outerwear products
Launched construction programs to expand production facilities
Ended the quarter with cash of $29.2 million and working capital of $50.3 million

 

Fourth Quarter of Fiscal 2021 and Fiscal 2022 Guidance

Fourth quarter revenue expected to be in excess of $20.0 million, from $14.4 million a year ago
Fourth quarter gross margin expected to be at least 18%, versus 8.7% in the year-ago quarter

Fiscal 2022 revenue initially expected to be $100 to $102 million

First and second quarter Fiscal 2022 revenue expected to be at or near record levels

 

Management Commentary

Sam Choi, Chairman and Chief Executive Officer, stated: “The third quarter performed largely as expected in our guidance issued November 12, including $1.1 million of global brand-name customer orders produced in the third quarter but shipped in the fourth quarter due to temporary COVID-19-related changes in delivery patterns. As a result, we anticipate the fiscal fourth quarter ending March 31 will show growth of more than 38% year-over-year and gross margins will return to historical averages in the high teens.”

 

“We anticipate that fiscal 2022, which begins on April 1, 2021, will return to more typical customer patterns with record revenue of $100 to $102 million for the full year based on initial orders,” said Choi. “We are now fully booked until September 2021 with just orders from our top global brand-name customers. This customer demand indicates that we would produce revenue at or near record levels in both our fiscal first and second quarters. Orders are heavily weighted to our higher-value jacket and outerwear products, which have favorable gross margins.

 

“Due to high demand for our capacity, we are expanding our existing factories through the installation of additional production lines where possible and the hiring of additional workers in our Paramount facility. We are seeking outsourced capacity and acquisition prospects within the Al Tajamouat Industrial City zone where our main factories are located so as to increase our total throughput ahead, as customers are still seeking additional capacity from Jerash. Additionally, we have restarted construction programs that had been deferred in 2020 due to the COVID-19 pandemic, including additional factory and dormitory initiatives.

 

 

 

 

 

“Finally, our PPE business is also expanding, with orders shipping to a number of customers in the Middle East, as well as interest from prospective customers. We are advancing our FDA registration programs in order to expand sales in the United States, where we believe our products can offer high quality at cost-competitive rates.”

 

Third Quarter of Fiscal 2021 Financial Results

“Fiscal third quarter sales activity was in line with our forecast, but gross margin reflected a higher mix of local orders and the pushout of more than $1.1 million in global brand-name customer orders, most of which have already shipped in the first half of the fiscal fourth quarter,” said Gilbert Lee, Chief Financial Officer. “We currently expect that fourth quarter revenue will increase by approximately 38% on a year-over-year basis, with gross margins in the high teens due to a more favorable product mix.

 

“Based on customer orders to date, we believe that fiscal 2022, starting April 1, 2021, will reflect full recovery by our global brand-name customers, driving maximum utilization of our factory capacity and improved product mix for purposes of both revenue and gross margin results. Orders to date indicate that we are on track for fiscal 2022 revenue of $100 to $102 million, a new record for Jerash. Due to high demand, we are already producing goods that will be shipped and recognized in the fiscal first quarter, such as a $4 million jacket order from a global brand-name customer, among others.”

 

For the third quarter of fiscal 2021, Jerash reported revenue of $20.7 million, a decrease of 19% from $25.4 million in the third quarter of fiscal 2020. The change in revenue reflected a shift in customer timing related to the COVID-19 pandemic, causing several third quarter orders to ship in the fourth quarter, which delayed revenue recognition.

 

Jerash’s factories are now fully booked until September of 2021, and orders reflect increased diversification from new customers secured over the past two years. Order mix for pre-bookings in the June and September quarters is heavily weighted to global brand-name jacket and outerwear products, which generate a higher average selling price and favorable gross margin mix.

 

Jerash is also expanding revenue in its strategic partnership business supplying global brand-name customer goods to destinations in Asia through contracted relationships with factories in the region. Jerash anticipates this business will expand as the Company positions for growth in this channel in the next fiscal year. Because Jerash uses contract manufacturing relationships and only collects a portion of its margin relative to its manufacturing business relationships, these orders generate relatively lower gross profit but contribute to overall profitability with minimal incremental operating cost.

 

Gross margin for the third quarter was 12%, compared with 19% in the third quarter of fiscal 2020. The year-over-year gross margin decrease was primarily due to changes in the product mix and the delay of shipment on a higher margin global brand-name customer order. The company expects gross margins to return to historical averages in the high teens in the fourth quarter.

 

Operating expenses for the third quarter of fiscal 2021 were $2.4 million, a decrease of 9% from $2.6 million in the third quarter of fiscal 2020.

 

Operating income for the third quarter was $0.1 million. GAAP net income for the fiscal third quarter was $0.1 million, or $0.01 per diluted share.

 

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ESG Update

Jerash has undertaken additional ESG initiatives intended to strengthen its business performance while achieving social and environmental goals. The Company has launched a solar panel program to generate electricity used by its factories, with panels already installed in one of Jerash’s four factory units and installation in additional facilities in process. The solar panels are designed to produce up to half the electricity consumed at the facilities. The Company is also planting trees and other greenery native to the local areas around Jerash’s facilities as part of an environmental campaign with the support of the Ministry of Environment of Jordan to increase awareness among employees and citizens in Jordan.

 

Inside its factories, Jerash is converting to lower energy LED lighting and equipment, which will help reduce total electricity consumption and CO2 emissions and curb mercury pollution associated with traditional tube lighting that was previously used. Jerash is also examining environmental opportunities in its production processes, including environmentally friendly inks in screen printing, waste reduction programs, water conservation and recycling, chemical management, air emissions and other improvements that benefit its communities, customers and the environment.

 

Balance Sheet, Cash Flow and Dividends

Working capital was $50.3 million, and cash and restricted cash at December 31, 2020 was $29.2 million. Inventory was $19.2 million, including a significant increase in finished garments deferred for shipment in the fourth quarter, and accounts receivable were $10.3 million.

 

Jerash approved payment of a regular quarterly dividend of 5 cents per share on its common stock on or about February 23, 2021, to stockholders of record on February 16, 2021.

 

Conference Call

The Company will conduct a conference call and webcast to review its fiscal third quarter 2021 results on Wednesday, February 10, 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 December 31, 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.

 

Contact:

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

 

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JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    December 31,
2020
    March 31,
2020
 
    (Unaudited)        
ASSETS            
Current Assets:            
Cash   $ 25,591,022     $ 26,130,411  
Restricted cash     2,709,397       -  
Accounts receivable, net     10,287,087       5,335,748  
Inventories     19,213,770       22,633,772  
Prepaid expenses and other current assets     2,505,849       2,761,877  
Advance to suppliers, net     4,153,962       2,116,367  
Total Current Assets     64,461,087       58,978,175  
                 
Restricted cash - non-current     927,338       786,298  
Long-term deposits     219,113       253,414  
Deferred tax assets, net     139,895       139,895  
Property, plant and equipment, net     5,497,470       6,174,164  
Right of use assets     1,168,795       1,147,090  
Total Assets   $ 72,413,698     $ 67,479,036  
                 
LIABILITIES AND EQUITY                
                 
Current Liabilities:                
Credit facilities   $ 807,298     $ 235  
Accounts payable     7,927,697       6,376,320  
Accrued expenses     2,231,014       2,245,402  
Income tax payable - current     1,766,087       1,088,497  
Other payables     1,160,671       929,783  
Operating lease liabilities - current     316,068       210,081  
Total Current Liabilities     14,208,835       10,850,318  
                 
Operating lease liabilities - non-current     531,080       649,935  
Income tax payable - non-current     1,094,048       1,227,632  
Total Liabilities     15,833,963       12,727,885  
                 
Commitments and Contingencies (See Note 15)                
                 
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     15,277,176       15,235,025  
Statutory reserve     212,739       212,739  
Retained earnings     40,766,731       38,997,177  
Accumulated other comprehensive gain (loss)     8,578       (8,324 )
Total Jerash Holdings (US), Inc.’s Stockholder’s Equity     56,276,549       54,447,942  
                 
Noncontrolling interest     303,186       303,209  
Total Equity     56,579,735       54,751,151  
                 
Total Liabilities and Equity   $ 72,413,698     $ 67,479,036  

 

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JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

  

    For the Three Months
Ended December 31,
    For the Nine Months
Ended December 31,
 
    2020     2019     2020     2019  
                         
Revenue, net   $ 20,663,925     $ 25,446,708     $ 66,456,998     $ 78,585,152  
Cost of goods sold     18,253,070       20,532,888       55,111,823       61,856,272  
Gross Profit     2,410,855       4,913,820       11,345,175       16,728,880  
                                 
Selling, general and administrative expenses     2,362,603       2,590,659       7,067,109       8,134,261  
Stock-based compensation expenses     -       -       42,151       193,955  
Total Operating Expenses     2,362,603       2,590,659       7,109,260       8,328,216  
                                 
Income from Operations     48,252       2,323,161       4,235,915       8,400,664  
                                 
Other Income (Expense):                                
Other income (expense), net     66,357       5,913       126,535       (3,679 )
Total other income (expense), net     66,357       5,913       126,535       (3,679 )
                                 
Net income before provision for income taxes     114,609       2,329,074       4,362,450       8,396,985  
                                 
Income tax expense     20,273       255,805       894,169       1,185,492  
                                 
Net Income     94,336       2,073,269       3,468,281       7,211,493  
                                 
Net loss attributable to noncontrolling interest     9       -       23       4,011  
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders   $ 94,345     $ 2,073,269     $ 3,468,304     $ 7,215,504  
                                 
Net Income   $ 94,336     $ 2,073,269     $ 3,468,281     $ 7,211,493  
Other Comprehensive Income:                                
Foreign currency translation gain     16,743       695       16,902       4,452  
Total Comprehensive Income     111,079       2,073,964       3,485,183       7,215,945  
Comprehensive income attributable to noncontrolling interest     -       -       -       -  
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders   $ 111,079     $ 2,073,964     $ 3,485,183     $ 7,215,945  
                                 
Earnings Per Share Attributable to Common Stockholders:                                
Basic   $ 0.01     $ 0.18     $ 0.31     $ 0.64  
Diluted   $ 0.01     $ 0.18     $ 0.31     $ 0.63  
                                 
Weighted Average Number of Shares                                
Basic     11,325,000       11,325,000       11,325,000       11,325,000  
Diluted     11,332,552       11,450,707       11,330,950       11,477,344  
                                 
Dividend per share   $ 0.05     $ 0.05     $ 0.15     $ 0.15  

 

 

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