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JH

Jerash Holdings (US), Inc. (JRSH)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue rose 35.6% to $29.3M, but missed S&P Global consensus of ~$32.7M; diluted EPS was -$0.01 versus consensus +$0.01, driven by ~$3–4M of shipments deferred due to Haifa port disruptions and elevated interest/tax expense headwinds . Revenue Consensus Mean $32.7M*; Primary EPS Consensus Mean $0.01*.
  • Gross margin expanded sharply to 17.9% (vs. 7.0% YoY), reflecting higher production volumes, economies of scale, and mix shift benefits; operating income turned positive at $0.43M versus a loss last year .
  • Management guided Q1 FY2026 revenue to ~$38–$40M and GM to ~15–16%, with routing through Aqaba lowering Jerash’s trucking cost but extending customer lead times; factories are fully booked through December 2025 .
  • Strategic update: Jerash secured a major initial order via Hansoll (Walmart/Sam’s Club supplier)—3.2M pieces girls’ shorts (~$6.5M) with broader collaboration potential—and plans to dissolve the Busana JV by April 2027 to focus on direct customers .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expansion to 17.9% from 7.0% YoY on higher production volume and economies of scale; operating income improved to $0.43M from a loss, despite logistics issues .
    • Strategic customer wins: “secured a major initial order… through a strategic collaboration with Hansoll Textile,” with production starting in August and FOB deliveries in Q3–Q4 calendar 2025; factories “fully booked through the end of December” .
    • Cost advantage in rerouting exports: trucking to Aqaba costs ~$1,200 per truck vs. Haifa ~$3,200; Jerash’s logistics costs decline even as lead times extend for customers .

  • What Went Wrong

    • Revenue miss vs. consensus due to ~$3–4M of finished goods not booked until Q1 FY2026, stemming from Haifa port congestion/bombing; Q4 revenue $29.3M vs. ~$32.7M consensus . Revenue Consensus Mean $32.7M*.
    • Elevated other expense and tax: other expense rose to $254K (vs. $134K), mainly higher interest on supply chain financing/short-term debt; tax expense ~$324K with a high effective rate due to prior-year adjustments and reinstated non-deductibles .
    • Customer lead times lengthened when shipping via Aqaba (~10–12 days longer vs. Haifa), potentially impacting order timing and quarterly revenue recognition .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$40.24 $35.38 $29.25
Gross Margin %17.5% 15.2% 17.9%
Operating Income ($USD Millions)$1.13 $0.71 $0.43
Net Income ($USD Millions)$0.66 $0.006 -$0.144
Diluted EPS ($USD)$0.05 $0.00 -$0.01
Q4 YoY ComparisonQ4 2024Q4 2025
Revenue ($USD Millions)$21.57 $29.25
Gross Margin %7.0% 17.9%
Operating Income ($USD Millions)-$3.02 $0.43
Net Income ($USD Millions)-$3.14 -$0.144
Diluted EPS ($USD)-$0.25 -$0.01
Estimates vs. Actual (Q4 2025)Consensus*Actual
Revenue ($USD Millions)$32.70*$29.25
Diluted EPS ($USD)$0.01*-$0.01
# of Estimates (Revenue / EPS)2 / 2*—

Values with asterisk (*) retrieved from S&P Global.

KPIs and Balance Sheet Snapshot

KPIQ2 2025 (9/30/24)Q3 2025 (12/31/24)Q4 2025 (3/31/25)
Cash & Restricted Cash ($USD Millions)$17.88 $14.78 $15.06
Accounts Receivable ($USD Millions)$5.79 $7.24 $3.08
Inventory ($USD Millions)$20.21 $19.12 $27.70
Net Working Capital ($USD Millions)$35.2 $34.8 $34.6
Total Equity ($USD Millions)$63.46 $63.18 $62.87

Segment breakdown: Not disclosed; Jerash does not report by segments in press releases/8-Ks .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY2025+50–53% YoY from $21.6M (i.e., ~$32.4–$33.1M) Actual: $29.3M Lower than guide
Gross Margin %Q4 FY2025~15–16% Actual: 17.9% Raised vs. goal
RevenueQ1 FY2026“In line” with FY2025 Q1 $40.9M ~$38–$40M Moderated
Gross Margin %Q1 FY2026Not previously specified~15–16% New guide
DividendOngoing$0.05 per share (approved Feb 5, 2025; paid Feb 25) $0.05 per share (approved May 20, 2025; paid Jun 6) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Logistics/portsNormalization since mid-August; fully booked into 1H CY2025 Haifa congestion; ~$3.8M delayed; $100K storage; improving late Jan Haifa bombing; ~$3–4M deferred to Q1; reroute via Aqaba; lower Jerash trucking costs Volatile; mitigation improving cost
Tariffs/macroBrands diversifying from Asia; Jordan’s advantages Guidance notes demand; tariff narrative rising Heightened urgency post “liberation date”; Jordan competitive at ~10% tariff; customer visits rising Positive demand tailwind
Customer diversification20+ brands; broader product mix New inquiries Europe/Persian Gulf; fully booked through Aug Hansoll collaboration; Walmart/Sam’s Club link; fully booked through Dec Accelerating
Business model mixFOB > CM margin benefit emerging SG&A run-rate ~$4M; costs elevated Shift to FOB expected to lift ASP/margins; CM largely foregone Mix improving margins
Capacity expansionPlanning new capacity; warehouse/factory options Two facility expansions to add ~15%; Al-Hasa +5–10% Amman expansion completed; onboarding workers; ~15% capacity lift from Q2 FY2026; Al-Hasa extension targeted early CY2026 Near-term capacity lift
JV/partnershipsBusana JV contributing modestly JV progress limited Dissolution by April 2027; pivot to direct customers; Hansoll deal secured Strategic refocus
Tax/interestInterest expenses rising with volume Effective tax ~98.6% due to adjustments Elevated tax due to prior-year adjustments; intent to consult experts; other expense up on financing programs Normalization expected

Management Commentary

  • “Revenue continues to be impacted by logistics challenges at Israel’s Haifa port… we are seeking alternate shipping routes through the Aqaba port in Jordan… our factories are fully booked through the end of December 2025” — Sam Choi, CEO .
  • “The expansion… in Amman… increase our production capacity by approximately 15% starting in the second fiscal quarter… collaborating… to develop an extension… Al-Hasa… an additional 5–10%… targeted for early calendar year 2026” — Eric Tang, Head of Jordan Operations .
  • “We will forego… CM business and take on more FOB business… improve ASP… and gross margin percentage” — Gilbert Lee, CFO .
  • “To Aqaba is about $1,200 per truckload vs. Haifa about $3,200… we pay less in logistic costs…” — Gilbert Lee and Eric Tang .

Q&A Highlights

  • Logistics reroute economics: trucking to Aqaba significantly cheaper than Haifa; lead times ~10–12 days longer for customers .
  • Order timing clarifications: ~$3–4M shipments deferred from Q4 FY2025 recognized in Q1 FY2026; no cancellations, purely timing .
  • Strategic moves: dissolution of Busana JV after limited progress; direct business strengthening; Hansoll partnership linked to Walmart/Sam’s Club, initial 3.2M pieces (~$6.5M) with monthly volume potential in 2026 .
  • Margins outlook: greater FOB mix and efficiency expected to sustain healthy GM (~15–16%) despite buyer pricing pressure; fully booked limits CM reliance .
  • Capacity and financing: longer-term factory/warehouse build (potential $20–$30M) deferred given geopolitics; exploring financing options .

Estimates Context

  • Q4 FY2025: Revenue $29.25M versus S&P Global consensus ~$32.7M (miss); diluted EPS -$0.01 versus +$0.01 consensus (miss); limited sample size with two estimates each. Primary drivers: Haifa port disruptions deferring ~$3–4M shipments, higher interest expenses and tax adjustments . Revenue Consensus Mean $32.7M*; Primary EPS Consensus Mean $0.01*; Revenue - # of Estimates 2*; Primary EPS - # of Estimates 2*.

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Q4 missed consensus on revenue/EPS due to port-driven timing, but underlying demand is robust (fully booked through December) and Q1 FY2026 guide of $38–$40M supports continuity; watch shipping normalization and Aqaba throughput .
  • Margin trajectory: FOB mix and scale are driving margin recovery (Q4 GM 17.9% vs. 7.0% YoY); Q1 GM guide at ~15–16% implies continued improvement despite pricing pressure .
  • Strategic catalysts: Hansoll/Walmart-linked orders (initial ~3.2M pieces, ~$6.5M) and capacity expansion (~15% lift from Q2 FY2026) can expand revenue base and stabilize utilization beyond seasonality .
  • Cost dynamics: Rerouting to Aqaba lowers Jerash’s trucking cost (Aqaba ~$1,200 vs. Haifa ~$3,200 per truck), offset by longer lead times for customers; interest expenses tied to supply chain financing should abate with planning and rate environment .
  • Balance sheet prudence: Working capital steady (~$34.6M), inventory elevated ($27.7M) ahead of shipments; dividend maintained at $0.05; monitor use of financing programs and potential capex timing .
  • Risk monitor: Geopolitical volatility (Haifa disruptions) and tariff policy shifts remain key variables; management highlighted multiple import routes and regional sourcing (Turkey/Egypt) to mitigate supply risk .
  • Model implications: Reduce Q4 estimates post-miss; maintain FY2026 margin assumptions near 15–16% and reflect higher FOB mix; update revenue cadence for deferred shipments and capacity ramp from Q2 FY2026 .