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01/11 03:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $42 million for the fiscal 2026 second quarter, a 4.3% increase from $40.2 million in the same quarter last year. The increase was primarily driven by higher shipment volumes to U.S. customers and a more diversified customer base.
Gross Profit $6.3 million for the fiscal 2026 second quarter, compared to $7.1 million in the same quarter last year. This represents a decline in gross profit margin to 15.0% from 17.5%, primarily due to diversification of the customer base and a shift in product mix.
Operating Expenses $5.2 million for the fiscal 2026 second quarter, down from $5.9 million in the same quarter last year. The decrease was primarily due to better control of export costs and lower stock-based compensation expenses.
Operating Income $1.09 million for the fiscal 2026 second quarter, slightly lower than $1.13 million in the same quarter last year.
Total Other Expenses $456,000 for the fiscal 2026 second quarter, compared to $364,000 in the same quarter last year. The increase was primarily due to higher financing needs to support business growth.
Income Tax Expenses $154,000 for the fiscal 2026 second quarter, compared to $106,000 in the prior year quarter. The effective tax rate increased to 24.3% from 13.7% in the same quarter last year.
Net Income $479,000 or $0.04 per diluted share for the fiscal 2026 second quarter, compared to $665,000 or $0.05 per diluted share in the same quarter last year.
Comprehensive Income $440,000 for the fiscal 2026 second quarter, compared to $663,000 in the same quarter last year.
Cash and Restricted Cash $13.7 million as of September 30, 2025.
Net Working Capital $35.2 million as of September 30, 2025.
Inventory $26.3 million as of September 30, 2025.
Accounts Receivable $5.8 million as of September 30, 2025.
Net Cash Provided by Operating Activities $318,000 for the 6 months ended September 30, 2025, compared to $2.4 million for the same period in fiscal 2025. The decrease was primarily driven by an increase in accounts receivable and advanced payments to suppliers.
Diversification of product mix: Efforts to diversify product mix to enhance year-round production stability and reduce seasonality impact. Expanded product offerings are expected to scale order volumes in the coming years.
Collaboration with Hansoll Textile: Major collaboration order of over 3 million pairs of girl shorts with Hansoll Textile, with shipments scheduled through February 2026.
Jordan as a manufacturing hub: Jordan recognized as a preferred manufacturing hub for global brands due to favorable trade conditions and labor flexibility. Free trade agreements with the EU, U.K., and Canada enhance market positioning.
Increased demand from global customers: Growing demand from long-standing customers and new strategic partners, with increased order projections for 2026.
Facility expansion: Completed expansion of manufacturing facilities in June, increasing production capacity by 15%. Additional expansion plans include acquisitions and developing own land.
Production automation and economies of scale: Plans to improve gross profit margins to approximately 20% through increased production automation and economies of scale.
Logistics normalization: Shipping logistics in the region have returned to normal, with fully operational Haifa and Aqaba ports.
Long-term expansion plan: Initiated a long-term expansion plan to meet growing market demand, including evaluating acquisitions and developing own land.
Collaboration with Jordanian Ministry of Labor: Developing an extension adjacent to the existing facility in Al-Hasa, expected to add 5%-10% production capacity by the second half of 2026.
Trade uncertainties: Ongoing trade uncertainties could impact the company's operations and strategic objectives.
Geopolitical uncertainties: Potential regional geopolitical uncertainties could affect the company's growth strategy and resilience.
Tariff developments: Evolving tariff policies may pose challenges to the company's operations and profitability.
Gross margin pressure: A slightly lower average gross margin is expected in the near term due to diversification of customer base and product mix.
Financing needs: Increased financing needs to support business growth have led to higher total other expenses.
Logistics challenges: Although shipping logistics have returned to normal, past transportation challenges highlight potential risks in supply chain disruptions.
Capacity constraints: Current production capacity is fully booked through February, and additional capacity is needed to meet growing demand.
Expansion risks: Long-term expansion plans, including acquisitions and land development, carry inherent risks and uncertainties.
Economic uncertainties: Broader economic shifts could impact the company's operations and strategic plans.
Long-term expansion plan: Jerash Holdings has initiated a long-term expansion plan to address growing capacity demands. This includes evaluating potential acquisitions and developing its own land to ensure the company remains well-positioned to meet evolving market demand and sustain its competitive edge in the global apparel industry.
Production capacity expansion: The company successfully completed a 15% increase in production capacity in late June and is planning further expansions. This includes a collaboration with the Jordanian Ministry of Labor to develop an extension adjacent to the existing facility in Al-Hasa, expected to add 5% to 10% in total production capacity by the second half of calendar year 2026.
Gross profit margin improvement: Jerash aims to gradually improve gross profit margins to approximately 20% in the coming years through increased production automation and economies of scale. However, a slightly lower average gross margin is expected in the near term due to diversification of the customer base and product mix.
Revenue growth projection: Revenue for the fiscal 2026 third quarter is expected to increase by 19% to 21% over the same quarter last year.
Gross margin projection: Gross margin for the fiscal 2026 third quarter is expected to be approximately 13% to 15%.
Strategic collaboration and order fulfillment: Jerash is collaborating with Hansoll Textile and its customer, a leading U.S.-based multinational retail corporation, to fulfill a major order of over 3 million pairs of girl shorts. Shipments are scheduled to continue through February 2026, with discussions underway for additional synergies and growth opportunities.
Market demand and customer diversification: The company continues to receive increased order projections for 2026 and is awaiting confirmation of purchase orders to plan production schedules beyond its current capacity, which is fully booked through February. Efforts to diversify the customer base and product mix are expected to optimize production capacity and drive stronger top-line performance and margins.
Dividend Declaration: On November 7, 2025, Jerash's Board of Directors approved a regular quarterly dividend of $0.05 per share on its common stock, payable on November 26, 2025, to stockholders of record as of November 19.
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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