Jerash Holdings(US:JRSH)2020-08-13 19:18Financial Data and Key Metrics Changes - Revenue for the first quarter of fiscal 2021 was $18.7 million, representing a decline of approximately 17% year-over-year, which is less than the broader industry trends [24][25] - Gross margin decreased to 16.3% from 20% in the prior year quarter due to lower factory volumes and changes in product mix [27] - Operating expenses decreased by 27.9% to $1.9 million compared to $2.6 million in the previous first quarter [27] - Net income was reported at $0.07 per share [27] - Cash and restricted cash at June 30 was $18.5 million, down from $26.9 million at March 31, but cash flow improved by $2.5 million compared to the same quarter in the prior year [28][29] Business Line Data and Key Metrics Changes - Approximately 16% of revenue in the first quarter was attributed to new customers, including New Balance and DICK'S Sporting Goods [24][14] - Revenue from legacy customers decreased year-over-year, with the largest customer, VF North Corporation (North Face), experiencing a 35% decline [15][25] - The company is seeing a shift in orders from existing customers, with 80% of original orders reinstated for the upcoming winter season [69] Market Data and Key Metrics Changes - The company is expanding its presence in the PPE market, producing masks and other supplies, and has received temporary approval from Jordan's FDA for manufacturing and export [32][31] - The global PPE market is estimated at $16 billion, with Europe and Asia representing a significant portion of this market [58] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and expanding into the PPE market, which is seen as a long-term strategic development [73][31] - Jerash is actively looking for acquisitions and partnerships to expand its business in both garments and PPE [36] - The company is leveraging its cost advantages from duty-free imports from Jordan to attract customers looking to reduce costs [16][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential growth in revenue and gross margin in the upcoming quarters, with expectations of approximately $25 million in revenue for the quarter ending September 30, representing a 34% sequential growth [30] - The management highlighted the resilience of the business and the effectiveness of their operations during the pandemic [23][18] Other Important Information - The company has implemented additional safety protocols in its factories to protect workers during the pandemic [20] - Jerash has incorporated a new entity dedicated to PPE manufacturing, which is expected to enhance its market opportunities [32] Q&A Session Summary Question: What percentage of capacity is currently being utilized? - Management indicated that the factories are currently running at 100% capacity, with some overbooking of about 10% [41] Question: How has the sales process changed during COVID-19? - The sales process has adapted with increased reliance on remote communication, although direct contact with customers has been limited due to travel restrictions [56] Question: What is the market potential for PPE in the Middle East and Europe? - The global PPE market is estimated at $16 billion, with Europe and Asia being significant contributors [58] Question: What is the production potential in Jordan? - The company has the capacity to increase production, with a new factory that can accommodate additional orders [63] Question: How is the competition in the PPE market in Jordan? - The company is performing better than competitors, with several factories shutting down due to reduced orders [78][80]