Jerash Holdings (US), Inc. (JRSH) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
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.
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Operating Highlights
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.
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Risk or Challenges
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.
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Guidance & Outlook
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.
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Shareholder Return Plan
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.
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Key Q&A
Q:When we think about the revenue guide for the third quarter, is there any way you can break out how much of that is just coming from additional capacity that's come online versus how much of that is just increased order flow and demand?
A:The company does not break it down in that way. Overall capacity has increased by about 10% to 15% over the last fiscal year due to internal expansion, including adding machinery and people. The rest of the revenue increase is attributed to increased demand and orders.
Q:What needs to happen to get to 20% gross margin, and can you provide a timeline for achieving this?
A:In the near term, gross margins will remain flat or lower due to onboarding new customers and inefficiencies with new styles. The company is working on automating production processes and implementing an ERP system. Achieving a 20% gross margin is a long-term goal, expected to take a few years, likely after the 5-year plan.
Q:Inventory is up 30%. Is that year-over-year? Is this a typical seasonal build?
A:Inventory is usually higher in the first quarter and decreases in the second quarter. However, this year is different due to taking on a large-volume customer, requiring more raw materials for production during the traditionally slower third and fourth quarters. The company is fully booked and anticipates higher production.
Q:Are you looking to acquire factories within Jordan, or is there any possibility of expansion into other geographies?
A:The current focus is on the Jordan manufacturing base.
Q:Who are the customers for whom you're expanding? Are they new or existing customers?
A:The expansion is for both existing customers (e.g., North Face, New Balance) and new customers (e.g., Hansoll). Existing customers are increasing their orders, and new customers are showing significant potential. The company is also working with potential new customers and developing a long-term strategic growth plan.
Q:Where are the new customers coming from? Are they from China, Vietnam, Bangladesh, or other countries?
A:New customers include Hansoll from South Korea, supplying the U.S. The company benefits from lower tariff rates for shipping to the U.S. compared to manufacturers in China and Asia. Business to Europe is also growing due to 0 tariffs for shipping to the EU. Some orders are shifting from China and India due to higher tariffs.
Q:How is this Q4 going to be different from Q4 in previous years?
A:This Q4 will be better than previous years. Traditionally, the second half of the year has lower sales, but this year, the second half will be similar to the first half. Capacity is fully booked through February, and Q4 is expected to be strong.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct breakdown of revenue growth between additional capacity and increased demand. They also did not provide a specific timeline for achieving the 20% gross margin, only stating it would take a few years and likely after the 5-year plan.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Apparel export
Asia Apparel
Canada labor
Hansoll
Hasa progress
Head shift
Instructions pleasure
Jordanian Ministry
Officer Chief
Officer listener
PondelWilkinson
Production shipment
Relations Sir
Shipment phase
Shipping logistics
Sir floor
States tariff
Treasurer trade
United States
acquisition land
acquisition possibility
addition trade
agreement market
apparel industry
approach production
automation benefit
base product
benefit economy
brand Shipment
capacity demand
collaboration
customer base
demand partner
development
JRSH Transcript
Jerash Holdings (US), Inc. (JRSH) Q4 2026 Earnings Call Transcript
Neutral6-15
Jerash Holdings (US), Inc. (JRSH) Q3 2026 Earnings Call Transcript
Positive2-9
The earnings call reveals strong revenue growth projections, strategic collaborations, and a significant production capacity expansion, which are positive indicators. Despite some concerns about potential geopolitical tensions and reliance on debt financing, the company's strategic measures, such as automation and partnerships, are likely to drive future growth. The Q&A session highlighted stable relationships with key customers and effective cost management, further supporting a positive outlook. Although margins may face pressure, the overall sentiment remains optimistic, suggesting a potential stock price increase in the short term.
Jerash Holdings (US), Inc. (JRSH) Q2 2026 Earnings Call Transcript
Unknown11-12
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.
Jerash Holdings (US), Inc. (JRSH) Q1 2026 Earnings Call Transcript
Positive8-12
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.
JRSH Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
