Jerash Holdings ((JRSH)) has held its Q3 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
Jerash Holdings recently held its fiscal 2025 third-quarter earnings call, presenting a mixed sentiment. While the company celebrated substantial revenue growth and successful expansion plans, it grappled with significant challenges, including shipping delays, increased costs, and an unexpectedly high tax rate, which all contributed to minimal net income for the quarter.
Revenue Growth
Jerash Holdings reported an impressive revenue increase of 28.6% for the fiscal 2025 third quarter, reaching $35.4 million compared to $27.5 million in the same quarter last year. This growth highlights the company’s strong market position and effective strategies in capturing increased demand.
Operating Income Increase
The company also saw a significant rise in operating income, which climbed by 88.3% to $708,000 in the fiscal 2025 third quarter, up from $376,000 in the prior year. This increase reflects the company’s efficient operational management despite the challenging economic conditions.
Expansion Plans
Jerash Holdings is actively expanding its manufacturing capabilities, with current expansions expected to increase capacity by 15% by June. Additionally, future plans include further expansion in Al-Hasa to boost production capacity by another 5%-10% by the end of 2025. These efforts aim to accommodate growing demand and capitalize on new market opportunities.
High Demand and Full Bookings
The company reported full bookings through August, driven by increasing orders from global brand customers. This demand surge is further supported by the tariff-free advantage of exporting from Jordan, positioning Jerash Holdings favorably in the competitive apparel industry.
Shipping Delays
Jerash Holdings’ sales were impacted by shipping delays, primarily due to congestion at Israel’s Haifa Port caused by geopolitical turmoil. These disruptions affected shipments valued at approximately $6 million, highlighting the vulnerability of global supply chains to geopolitical events.
Increased Costs
Higher logistics costs, attributed to geopolitical turmoil, resulted in a decrease in gross margin from 16.2% to 15.2% compared to the previous year. This increase in costs underscores the challenges faced by the company in maintaining profitability amidst external pressures.
High Effective Tax Rate
The company confronted a steep increase in income tax expenses for the fiscal 2025 third quarter, with an effective tax rate soaring to 98.6% compared to 14.2% in the same period of fiscal 2024. This increase significantly impacted the bottom line, leading to minimal net income for the quarter.
Minimal Net Income
Net income for the fiscal 2025 third quarter was a mere $6,000, a stark contrast to $232,000 in the same quarter last year. This decline underscores the financial challenges faced by Jerash Holdings, despite its operational achievements.
Forward-Looking Guidance
Looking ahead, Jerash Holdings expects a robust revenue growth of 50-53% for the fourth quarter compared to the prior year. The company is targeting a gross margin of approximately 15-16%. Furthermore, Jerash Holdings announced a regular quarterly dividend of $0.05 per share, payable on February 25, 2025, reflecting its commitment to returning value to shareholders.
In conclusion, Jerash Holdings’ earnings call presented a mixed picture of substantial revenue growth and operational success tempered by external challenges such as geopolitical tensions and increased costs. While the company is expanding its capacity and expects significant revenue growth in the fourth quarter, the high tax rate and shipping delays remain concerns for future profitability.
