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01/11 03:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A session indicate a positive outlook. Strong financial performance with improved operating income and net income, along with strategic collaborations like the Hansoll partnership, suggest growth potential. The company's expansion plans, despite some uncertainties, are aligned with customer needs and market opportunities. The tariff advantage and plans to optimize tax structure further support a positive sentiment. Although there are concerns about the timeline for expansion and tax optimization, the overall sentiment remains positive, likely resulting in a 2% to 8% stock price increase.
Revenue $39.6 million, a slight decline from $40.9 million in the same quarter last year. The decline was primarily caused by customer shipments being redirected to Aqaba port in Jordan to avoid disruptions at Haifa port in Israel, which delayed shipments on several orders.
Gross Profit $6.1 million, an increase of 31.2% from $4.6 million in the same quarter last year. The increase was driven by improved logistics and production planning, along with the resumption of import sea routes through Aqaba port, which provided shorter lead times and lower transportation costs.
Gross Margin 15.4%, up from 11.3% in the same quarter last year. The improvement was due to better logistics and production planning, as well as the resumption of import sea routes through Aqaba port.
Operating Expenses $5.1 million, down from $5.5 million in the same quarter last year. The decrease was primarily due to lower stock-based compensation expenses and reduced costs on repair and maintenance.
Operating Income $959,000, a significant improvement from an operating loss of $829,000 in the same period last year. The improvement was mainly attributable to reduced import logistics costs for raw materials, lower overtime expenses from improved logistics and production planning, lower stock-based compensation expenses, and reduced spending on repair and maintenance.
Net Income $324,000 or $0.03 per diluted share, compared to a net loss of $1.4 million or $0.11 per diluted share in the same quarter last year. The improvement was driven by the factors contributing to higher operating income and lower total other expenses.
Comprehensive Profit $328,000, compared to a comprehensive loss of $1.3 million in the same period last year. This reflects the overall improvement in financial performance.
Cash and Restricted Cash $7.5 million as of June 30, 2025. Cash was lower due to substantially higher receivable balances caused by delays and inventory shutdown at Haifa port, forcing accumulated orders to be rerouted to Aqaba port and shipped out in the final week of June. These receivables were collected in July.
Net Cash Used by Operating Activities $6.5 million for the quarter ended June 30, 2025, compared to $2.2 million for the same quarter last year. The increase was due to higher receivable balances and inventory adjustments.
New product collaborations: Successfully completed production of the first phase of a major initial order from a U.S.-based multinational retailer through collaboration with Hansoll Textile. Shipments scheduled from September 2025 to February 2026.
New product development: Working on sample orders and pricing exercises for new products for well-known brands in regions outside the U.S.
Market expansion: Steady increase in new business inquiries from global brands and strategic collaboration opportunities. Expansion of manufacturing facilities in Amman completed, increasing production capacity by 15%. Additional expansion in Al-Hasa expected to add 5%-10% capacity by early 2026.
Operational efficiency: Optimized logistics and production planning reduced costs and overtime. Resumed raw material imports through Aqaba port, leading to shorter lead times and lower transportation costs.
Financial performance: Operating income improved to $959,000 from a loss of $829,000 in the prior year. Gross profit increased by 31.2% to $6.1 million, with gross margin rising to 15.4% from 11.3%.
Strategic shifts: Focus on diversifying customer and product mix to optimize production capacity and improve margins. Evaluating long-term expansion plans while addressing geopolitical and tariff challenges.
U.S. Tariff Changes: The recently announced 15% U.S. tariff on products from Jordan poses a potential risk to the company's cost structure and competitiveness in the U.S. market.
Geopolitical Instability: Ongoing geopolitical instability in the region could disrupt operations, supply chains, and expansion plans.
Shipping Logistics: Although shipping logistics have improved, past disruptions at Haifa port and reliance on Aqaba port highlight vulnerabilities in the supply chain.
Expansion Risks: The company is undertaking multiple expansion projects, including facility expansions in Amman and Al-Hasa. Delays or cost overruns in these projects could impact production capacity and financial performance.
Customer Diversification: While the company is diversifying its customer base, reliance on a few large customers could pose risks if demand from these customers declines.
Economic Uncertainties: Economic uncertainties, including fluctuating interest rates and tax planning challenges, could impact financial stability and operational costs.
Revenue Expectations: Revenue for the fiscal 2026 second quarter is expected to be approximately $40 million to $42 million.
Gross Margin Projections: Gross margin for the fiscal 2026 second quarter is expected to be approximately 15% to 16%.
Production Capacity Expansion: The expansion of existing manufacturing facilities in Amman, completed in June, is expected to contribute to a 15% increase in production capacity starting in the second fiscal quarter. An additional expansion project in Al-Hasa is targeted for completion in early calendar year 2026, adding another 5% to 10% in total production capacity.
Strategic Growth Plans: The company is focused on diversifying its customer and product mix to optimize production capacity and deliver better margins year-round. It is also evaluating longer-term, larger-scale expansion plans for the coming year.
New Business Opportunities: The company is working on sample orders and pricing exercises with several new products for well-known brands outside the U.S., leveraging Jordan's free trade agreements to strengthen growth outlook.
Shipping and Logistics: Shipping logistics have normalized, with Haifa port in Israel fully operational and raw materials being routed through Aqaba port, enabling more reliable shipping routes to support global customers.
Quarterly Regular Dividend: On August 8, 2025, Jerash's Board of Directors approved a quarterly regular dividend of $0.05 per share on its common stock payable on August 29 to stockholders of record as of August 22.
The earnings call presents mixed signals: a decline in gross profit and net income, but a positive outlook on new customer acquisition and capacity expansion. The Q&A reveals some uncertainty, with management avoiding specific timelines for improved margins. The lack of clear guidance on revenue growth sources and long-term margin goals tempers optimism. Despite some positive developments, such as increased orders and strategic partnerships, the financial performance and guidance uncertainties suggest a neutral outlook for the stock price over the next two weeks.
The earnings call summary and Q&A session indicate a positive outlook. Strong financial performance with improved operating income and net income, along with strategic collaborations like the Hansoll partnership, suggest growth potential. The company's expansion plans, despite some uncertainties, are aligned with customer needs and market opportunities. The tariff advantage and plans to optimize tax structure further support a positive sentiment. Although there are concerns about the timeline for expansion and tax optimization, the overall sentiment remains positive, likely resulting in a 2% to 8% stock price increase.
The earnings call reflects a positive outlook with record high revenue and reduced net loss. The Q&A reveals cost-effective logistics and a promising partnership with Hansoll, which is expected to boost business. Despite geopolitical challenges, the company is well-prepared with alternative supply routes. While management was vague on gross margin projections, the overall sentiment from analysts is positive, especially with the strategic shift to higher-margin business models. The stock price is likely to increase by 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: strong revenue growth and optimistic future guidance are counterbalanced by challenges such as supply chain delays and increased costs impacting margins. The Q&A reveals potential opportunities in tariff-free production but also highlights uncertainties in expansion financing and logistics. The lack of a share repurchase program and marginal dividend further contribute to a neutral outlook. The overall sentiment is balanced with positive growth prospects but tempered by operational and financial risks, suggesting a neutral stock price movement over the next two weeks.
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