Jerash Holdings(US:JRSH)2023-11-13 22:25Financial Data and Key Metrics Changes - Revenue for the fiscal 2024 second quarter was $33.4 million, down from $37.8 million in the same period last year, primarily due to fewer shipments to major US customers [7] - Net income decreased to $369,000 or $0.03 per share, compared to $1.8 million or $0.14 per diluted share in the same period last year [8] - Gross profit was $5.4 million with a gross margin of 16.1%, down from $6.9 million and 18.3% respectively, driven by a shift in customer mix towards lower profit margin orders [38] - Operating income totaled $888,000, down from $2.6 million in the same period last year [38] - Net cash provided by operating activities was approximately $8.2 million for the six months ended September 30, 2023, compared to $9.6 million for the same period last year [39] Business Line Data and Key Metrics Changes - The joint venture with Busana is projected to generate about $8 million to $9 million in new orders over the next 12 months, with significant contributions expected starting in the fiscal fourth quarter [2][12] - Timberland has significantly increased its orders, becoming the second largest brand for the company, while the first European-based high-end apparel brand is also expected to double orders in the second half of fiscal 2024 [13][36] Market Data and Key Metrics Changes - The retail market conditions in the US and Europe have been slow to recover, impacting the company's business compared to the prior year [12] - Orders from existing customers are shifting towards lower-margin products, affecting overall revenue and margins [20][21] Company Strategy and Development Direction - The company is focusing on vertical integration and sustainable textile solutions, positioning itself as a leader in ESG textile manufacturing [3][6] - Plans to build a state-of-the-art fabric facility in Jordan are set to begin construction in 2024, with an estimated capital expenditure of $25 million to $30 million [3][22] - The company aims to maintain its workforce by accepting lower-margin orders to keep production capacity intact for when higher-margin orders return [50] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending in the US remains weak, affecting order volumes and product mix [20][21] - The company is taking a conservative approach to revenue guidance for fiscal 2024, projecting a decline of about 3% to 5% from the previous fiscal year [39] - Management expressed optimism about future growth driven by the Busana joint venture and the potential for higher-margin orders [59] Other Important Information - The company maintains a strong balance sheet with $22.8 million in cash and restricted cash, and net working capital of $40.5 million as of September 30, 2023 [8] - A quarterly dividend of $0.05 per share was approved by the Board of Directors, payable on November 28, 2023 [19] Q&A Session Summary Question: What are you hearing from your big customers in the US regarding consumer spending and holiday outlook? - Management indicated that the slow recovery of the consumer market is primarily causing results to be less than expected, with orders shifting towards lower-margin products [20][21] Question: Can you provide details on the new joint venture for textiles, including construction timelines and funding? - Construction is expected to begin in calendar year 2024, with total projected capital expenditures of $25 million to $30 million, funded proportionally by the joint venture partners [22][23] Question: What is the expected revenue from the Busana partnership in Q4? - Management projected a few million in orders from Busana in Q4, with total expected revenue from the partnership being $8 million to $9 million over the next 12 months [27][47] Question: How is the company managing production capacity and staffing? - The company is fully booked through the end of the fiscal year and is maintaining production staff by accepting lower-margin orders to ensure capacity for future higher-margin orders [49][50]