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JH

Jerash Holdings (US), Inc. (JRSH)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue grew 28.6% year over year to $35.4M, but results were lower than anticipated due to Haifa port congestion delaying ~$3.8M at port and ~$2.0M held back in warehouse; diluted EPS was $0.00 as an unusually high 98.6% effective tax rate offset operating gains .
  • Gross margin compressed to 15.2% (vs. 16.2% YoY; up from 11.3% in Q1) on elevated logistics costs; operating income rose 88% YoY to $0.71M despite higher SG&A and interest from supply chain financing .
  • Management guided Q4 revenue +50–53% YoY (vs. $21.6M prior year), Q1 FY2026 revenue “in line” with Q1 FY2025’s $40.9M, and Q4 GM 15–16%; factories are fully booked through August and capacity expansions of +15% by June plus Al‑Hasa +5–10% by year end are underway .
  • A $0.05 dividend was declared for payment on or about Feb 25, 2025; consensus estimates from S&P Global were unavailable at the time of analysis, limiting beat/miss assessment vs. Street .

What Went Well and What Went Wrong

What Went Well

  • Fully booked production and strengthening demand: “our factories are fully booked through August... orders from global brand customers are increasing steadily,” supported by tariff-free advantages in Jordan .
  • Capacity expansion to support growth: expanding two facilities to add ~15% capacity by June, and working with the Jordanian government to expand Al‑Hasa by 5–10% by year-end; longer-term expansion plans under assessment .
  • Customer diversification tailwinds: increasing inquiries from new and existing customers seeking tariff-free partners; working on samples/pricing for well-known European and Persian Gulf brands; “excellent position to capture greater opportunities” .

What Went Wrong

  • Logistics disruptions and delayed shipments: congestion at Haifa port led to ~$3.8M stuck at port, ~$2.0M held in warehouse, and >$100K storage fees; most delayed goods shipped in January, pushing revenue into Q4 .
  • Margin and SG&A pressure: gross margin fell to 15.2% (16.2% last year) due to higher logistics costs; SG&A rose to ~$4.2M plus $0.47M stock-based comp; interest expense increased on supply chain financing programs .
  • Tax rate spike compressing EPS: effective tax rate surged to 98.6% (vs. 14.2% YoY) mainly due to prior-year provision adjustment (~$274K), resulting in diluted EPS of $0.00 despite operating improvement .

Financial Results

Quarterly Comparison (Income Statement Metrics)

MetricQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Revenue ($USD)$27,520,121 $40,935,716 $40,240,127 $35,384,737
Gross Profit ($USD)$4,462,276 $4,639,871 $7,057,883 $5,382,790
Gross Margin %16.2% 11.3% 17.5% 15.2%
Total Operating Expenses ($USD)$4,086,477 $5,468,679 $5,923,474 $4,675,063
Operating Income ($USD)$375,799 $(828,808) $1,134,409 $707,727
Total Other Expenses, net ($USD)$(105,094) $(426,168) $(363,983) $(251,699)
Income Tax Expense ($USD)$38,535 $111,721 $105,877 $449,714
Net Income ($USD)$232,170 $(1,366,697) $664,549 $6,314
Net Income Attributable to Common ($USD)$220,713 $(1,345,216) $655,288 $(5,806)
Diluted EPS ($USD)$0.02 $(0.11) $0.05 $0.00

Balance Sheet and Operating KPIs

KPIQ1 FY2025Q2 FY2025Q3 FY2025
Cash & Restricted Cash ($USD)$12,973,872 $17,884,035 $14,782,918
Net Working Capital ($USD)$34.5M $35.2M $34.8M
Inventories ($USD)$20,727,685 $20,206,799 $19,118,133
Accounts Receivable, net ($USD)$9,400,763 $5,793,228 $7,237,959
Credit Facilities ($USD)$2,130,743 $3,570,237 $4,967,944
Dividend per Share ($USD)$0.05 $0.05 $0.05

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue YoYQ3 FY2025+35–38% YoY (guided on 11/12/24) Actual +28.6% YoY to $35.4M Lower than guidance (miss vs company outlook)
Revenue YoYQ4 FY2025None+50–53% YoY vs. $21.6M prior year New guidance (raised outlook with shipment catch-up)
RevenueQ1 FY2026NoneIn line with Q1 FY2025 ($40.9M) New guidance (maintained level)
Gross Margin GoalFY2025~14–15% (11/12/24) Q4 FY2025: 15–16% Near-term Q4 target raised vs. FY goal
Full-Year RevenueFY2025+20–25% (8/13/24) Updated to +30–35% (11/12/24) Raised (Q2)

| Dividends | Ongoing | $0.05 declared for Aug 23, 2024 and Nov 29, 2024 | $0.05 payable ~Feb 25, 2025 | Maintained |

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Supply chain/logistics (Red Sea/Haifa)Q1: Red Sea disruption drove higher freight and delays; Q2: routes normalized since mid‑Aug Haifa port congestion caused ~4‑week export delays and ~$6M shipment shift to Q4; conditions improved by late January Improving into Q4; shipment catch-up expected
Tariffs/macro demandQ2: Brands accelerating shift from China, supportive of demand Tariff talk intensifying; increased inquiries and urgency from brands to add tariff‑free capacity Positive structural tailwind
Capacity expansionQ2: Exploring expansion; initial internal renovations (+7–8% capacity) Two facilities adding ~15% by June; Al‑Hasa expansion +5–10% by YE25; longer‑term greenfield options under study Capacity ramping near term; larger plans in pipeline
Customer diversification/Busana JVQ2: Producing for >20 brands; JV onboarding 4 global brands JV growth flat amid regional turmoil; trial orders progressing (e.g., Brooks Brothers, Hugo Boss) Gradual progress; upside with stability
Financial postureQ2: Higher interest from supply chain financing; dividend maintained Open to debt/equity to fund large‑scale expansion; dividend maintained Funding optionality; shareholder returns steady
Margins outlookQ1: GM 11.3% with logistics pressure; FY25 goal 12–14% Target GM ~15–16% for Q4 and maintain 15–16% going forward as new FOB programs scale Normalizing higher with mix/efficiency

Management Commentary

  • “We estimated approximately $3.8 million of finished apparel delivered at the port but not shipped until early in the fiscal fourth quarter… [and] held back another $2 million of finished products in our warehouse… port logistics have markedly improved since late January” — Sam Choi .
  • “We recently started expanding two existing manufacturing facilities, which will increase capacity by 15 percent… by June 2025… working with the Jordanian government to expand… Al‑Hasa… add an additional five to ten percent” — Sam Choi .
  • “Our factories are fully booked through August this year, and orders from our global brand customers are increasing steadily… working on sample orders… for well‑known brands in Europe and the Persian Gulf region” — Eric Tang .
  • “Our gross margin goal for the fiscal 2025 fourth quarter is expected to be approximately 15% to 16%… revenue for the fiscal 2026 first quarter is expected to be in line with the fiscal 2025 first quarter” — Gilbert Lee .
  • “We definitely need to raise some capital to support our expansion plan… maybe equity… maybe borrow some money… combination of both” — Gilbert Lee .

Q&A Highlights

  • Tariffs/demand: Management expects accelerated brand urgency to shift sourcing into tariff‑free Jordan; bookings fully through August, with internal capacity expansion adding 10–15% by end of June .
  • Conversion from trials: Typical trial‑to‑bulk order conversion is “pretty high,” often within ~6–9 months; “We have never failed any customer for the past 10 years” — Sam Choi .
  • Shipment delays flow-through: ~$6M delayed shipments largely shipped in January; included in Q4 guidance of +50–53% YoY .
  • SG&A run-rate: “low $4 million would be a good run rate” with costs tied to volume and improved logistics vs. earlier quarters .
  • Margin normalization: Logistics costs moderating; export side “getting back to normal”; near-term gross margin supported by improved routes and cost control .
  • Financing: Considering debt/equity for larger-scale expansion; open to options including development banks .

Estimates Context

  • Wall Street consensus via S&P Global for Q3 FY2025 revenue and EPS was unavailable at the time of analysis due to data access limits, so we cannot quantify beats/misses relative to Street expectations [GetEstimates error: Daily Request Limit Exceeded].
  • Given company guidance and shipment timing commentary, near-term estimate revisions may focus on Q4 revenue catch‑up (+50–53% YoY) and margin normalization to ~15–16% with logistics improvement .

Key Takeaways for Investors

  • Near-term catalyst: Q4 revenue growth of +50–53% YoY driven by January catch‑up shipments and improved port logistics; monitor margins vs. 15–16% goal as routes normalize .
  • Demand/structural tailwind: Tariff dynamics and brand diversification are accelerating inquiries; factories fully booked through August supporting volume visibility .
  • Execution focus: Capacity additions (+15% by June; Al‑Hasa +5–10% by YE25) should alleviate constraints; watch onboarding efficiency of new FOB programs and JV pipeline .
  • Cost control: SG&A run-rate guided at low $4M; logistics and financing costs (supply chain programs) remain watch items for margin and other expense line .
  • Tax normalization upside: Q3’s 98.6% effective tax rate was distorted by prior-year adjustments; normalization could lift EPS in subsequent quarters absent one‑offs .
  • Funding optionality and dilution risk: Management is open to debt/equity for larger-scale expansion; balance with ongoing $0.05 dividend support .
  • Estimate framework: With consensus unavailable, traders should anchor on company outlook (Q4/Q1) and logistics trajectory as the primary narrative drivers into the next print .