JRSH

Financial Performance Overview

• Achieved record quarterly revenue of $50.2 million, up 26.7% year-over-year, with significant improvement across all profitability metrics driven by disciplined operational execution and higher-margin U.S. customer shipments.
• Gross margin expanded 100 basis points to 16.4% due to favorable product mix and automation-driven efficiency gains.
• The board approved a $0.05 per share regular quarterly dividend, payable August 24, 2026.

Competitive Advantage from New Trade Policy

• The updated U.S.-Jordan trade agreement confirming permanent zero-duty access for Jordanian apparel and textile exports to the U.S. strengthens Jerash's competitive position as a preferred manufacturing hub for global brands, increasing new customer inquiry volume significantly.

Capacity Expansion Progress

• First phase of capacity expansion is on track to add approximately 15% production capacity by the end of calendar 2026 via expansion of two existing facilities.
• Second phase of expansion will repurpose the recently acquired facility into a smart warehouse and cutting operation, convert the existing warehouse/cutting facility to new production lines, add 500 new automated sewing machines and 1,100 additional workers, and is targeted for completion mid-calendar 2027, adding 20-25% additional capacity.
• The second rural satellite factory (opened March 2026, currently 130 local jobs) is undergoing expansion to add ~5% total production capacity and reach 250 local jobs, targeted for completion by the end of fiscal 2027. Planning is underway for a third rural satellite factory that will add 500 additional local jobs.

New Business Development

• New product development with a large global garment conglomerate is in the final stage, with orders for well-known global brands expected in the near term. New customers including Urban Outfitters have been secured, with additional new brands (Lee, Rangura, Reebok, North Face) in the pipeline, with new higher average selling price products like outerwear identified as new growth opportunities.

• Revenue for the fiscal 2027 second quarter is guided to a range of $49 million to $51 million, which is roughly in line with the first quarter's record revenue, with the range subject to logistics performance amid ongoing geopolitical uncertainty.
• Gross margin for the fiscal 2027 second quarter is targeted at 14% to 15%, down from the first quarter's 16.4% to account for higher transportation costs for imported raw materials tied to regional conflict.
• Management expects long-term growth driven by new customer conversion from increased inquiry volume post-trade agreement, capacity expansion, and favorable competitive positioning, with no downward revision to long-term growth targets provided.

Jerash Holdings operates as a single-segment Jordan-based apparel manufacturing business, with no separate product segment breakdown provided in the transcript. For the fiscal 2027 first quarter, total company revenue grew 26.7% year-over-year to $50.2 million (from $39.6 million in the prior year quarter). Revenue growth was driven primarily by higher shipments to the two major U.S. customers, which contributed 15% higher order volume for the upcoming season compared to the prior year, plus continued contributions from strategic partner Hensel Group in Korea. Gross profit increased 35.7% year-over-year to $8.3 million (from $6.1 million), with a gross margin of 16.4% (up 100 basis points from 15.4% last year). Operating income rose 174% to $2.6 million (from $959,000 last year), and net income grew more than fivefold to $1.7 million (from $324,000 last year).

• Geopolitical conflict in the Middle East has caused periodic delays for export shipments out of Jordanian ports, and increased transportation costs for imported raw materials sourced from Asia, creating near-term timing and cost pressure.
• New customer onboarding creates temporary downward pressure on gross margins during the initial launch period, offsetting some of the benefit from new higher-margin product lines.
• Uncertainty around regional logistics stability could lead to actual results differing from current quarterly guidance, even with existing mitigation strategies.

Q: After the new duty-free access announcement, have you received new customer orders or inquiries, and how will you adjust capacity for any new order growth? / A: Management confirmed a large increase in new inquiries from U.S. importers following the announcement, with existing major U.S. customers already projecting 15% higher order volume for the upcoming season compared to last year. New customers including Urban Outfitters have already been secured, with an expected $5 million in first-year revenue from this customer alone, and multiple additional major brands (Lee, Rangura, Reebok, North Face) are in the sales pipeline, with new higher-value product opportunities like outerwear. The current multi-phase capacity expansion plan already in progress will provide enough incremental capacity to absorb expected new orders in the near to medium term.

Q: What is the outlook for gross margin rebound in the second half of fiscal 2027, given potential product mix changes from new higher-ASP orders? / A: Management is working to expand gross margins through efficiency improvements, better sourcing, and a shift to higher-ASP, higher-margin products from new customers. However, gross margins are facing offsetting pressures: new customers initially produce lower margins during the onboarding phase, and ongoing regional logistics disruptions have pushed up raw material transportation costs. Management did not commit to a return to 16-17% gross margins in the second half, citing these ongoing uncertainties.