Jerash Holdings(US:JRSH)2025-02-11 22:29Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 28.6% to $35.4 million from $27.5 million in the same quarter last year, despite being impacted by approximately $6 million due to shipping delays [18][24] - Gross profit rose by 20.6% to $5.4 million, with a gross margin of 15.2%, down from 16.2% in the same quarter last year, primarily due to higher logistics costs [19][20] - Operating income increased by 88.3% to $708,000 from $376,000 in the same quarter last year [22] - Net income was $6,000, or zero per share, compared to $232,000, or $0.02 per diluted share, in the same quarter last year [24] Business Line Data and Key Metrics Changes - The company reported a significant increase in inquiries from new and existing customers looking to add manufacturing partners in tariff-free countries like Jordan [6][8] - The expansion of two existing manufacturing facilities is expected to increase processing capacity by 15% by June 2025 [10][11] Market Data and Key Metrics Changes - Export trade rules have improved since late January 2025, leading to more timely shipments [7][12] - The company is experiencing growing interest from international apparel companies, particularly from Europe and the Persian Gulf region [8][14] Company Strategy and Development Direction - Jerash Holdings aims to diversify its customer base and expand its product mix, leveraging its competitive advantage in Jordan [9][10] - The company is actively working with the Jordanian government to expand its facilities, which could add an additional 5% to 10% of production capacity by the end of 2025 [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business growth, with factories fully booked through August 2025 and expected revenue growth of 50% to 53% in Q4 2025 [25] - The geopolitical situation in the region has improved, which is expected to positively impact logistics and shipping costs [12][63] Other Important Information - The Board of Directors approved a regular quarterly dividend of $0.05 per share, payable on February 25, 2025 [26] - The company is considering various financing options, including debt and equity markets, to support its long-term expansion plans [78][79] Q&A Session Summary Question: Impact of tariffs on customer conversations - Management noted an increase in conversations with customers due to tariff concerns, with new orders anticipated to be limited by capacity growth [28][29] Question: Conversion rate from test orders to full production - The conversion rate from test orders to full production is high, with most customers placing bulk orders after trial orders, typically within six months [35][44] Question: Demand related to U.S. consumer and apparel inventories - Approximately 60% of customers have absorbed high inventory levels and are ready to place new orders, indicating a positive demand outlook [46][48] Question: Timing of delayed shipments and their impact on growth - Delayed shipments are expected to contribute to the anticipated growth of 50% to 53% in Q4 2025, with most unshipped products already shipped in January [51][52] Question: SG&A costs outlook - SG&A costs are expected to stabilize around the low $4 million range, influenced by sales volume [57][58] Question: Logistics improvements and gross margin impact - Improved logistics are expected to enhance gross margins, which are targeted to remain around 15% to 16% going forward [63][68] Question: Joint venture with Busana - The joint venture is progressing slowly due to regional turmoil, but there is potential for high-volume orders from high-end customers [71][75] Question: Financing for long-term expansion - The company is open to various financing opportunities, including potential debt and equity markets, to support its expansion plans [78][79]