Kornit Digital partners with MAS Holdings for agile fashion production

ROSH-HA’AYIN, Israel - Kornit Digital Ltd. (NASDAQ: KRNT), a leader in digital fashion and textile production technologies with a market capitalization of $1.06 billion, has announced a strategic partnership with MAS Holdings, a prominent apparel manufacturer. According to InvestingPro data, Kornit maintains a strong financial position with more cash than debt on its balance sheet, positioning it well for strategic growth initiatives. The collaboration, involving MAS’s subsidiary MAS ACME USA, aims to revolutionize the fashion industry by addressing its inefficiencies with on-demand, sustainable production methods.

The partnership is expected to benefit MAS customers, retailers, and brands by enabling rapid, data-driven fashion production, enhancing sustainability, and improving profitability. The commercial agreement positions Kornit alongside MAS Holdings, a South Asian giant in fashion and sportswear manufacturing, known for its collaborations with global brands such as Victoria’s Secret, PVH, Gap, Marks & Spencer, and Nike.

This initiative is set to offer a practical alternative to the fashion industry’s challenges, including overproduction, unplanned markdowns, and supply chain inefficiencies. By combining Kornit’s digital production capabilities with MAS’s supply chain expertise and data diagnostics, the partnership will allow brands to avoid stockouts, respond to market demands with weekly US production runs, and maintain optimal inventory levels.

Ronen Samuel, CEO of Kornit Digital, emphasized the urgency for change in the fashion industry’s supply chain. He expressed confidence that the strategic agreement with MAS ACME USA will pave the way for more responsible, profitable, and agile fashion production.

The agreement promises several key advantages for brands and retailers, including on-shore supply chain flexibility, which eliminates long lead times and unresponsiveness characteristic of traditional fashion supply chains. It also aims to maximize working capital efficiency and profits by allowing brands to quickly adapt to market trends, leading to higher revenues with fewer missed sales and markdowns.

Moreover, the partnership is expected to drive truly sustainable growth through a data-driven, on-demand production model that reduces waste and costs while ensuring product availability for consumers.

Brad Ballentine, CEO of MAS ACME USA, highlighted the significance of Kornit’s digital production systems in achieving their vision of onshore, demand-driven production to swiftly meet market needs.

Based on a press release statement, this strategic agreement between Kornit Digital and MAS Holdings marks a significant step towards transforming the fashion industry into a more efficient and sustainable sector. The company’s financial health shows promise, with a strong current ratio of 11.93 and minimal debt-to-equity ratio of 0.02. For deeper insights into Kornit Digital’s valuation and growth potential, investors can access comprehensive analysis through InvestingPro, which offers exclusive access to over 10 additional ProTips and detailed financial metrics.

In other recent news, Kornit Digital has reported its first-quarter financial results, revealing a 6% year-over-year revenue increase to $46.5 million, which closely aligned with analysts’ expectations. The company posted an adjusted EBITDA loss of $3.9 million, with an EBITDA margin of -8.4%, slightly missing the consensus estimate of -7.2%. Despite these figures, the company achieved an adjusted earnings per share of $0.01, surpassing analysts’ projections of breakeven. Looking ahead, Kornit Digital has provided guidance for the second quarter, anticipating revenue between $49 million and $55 million, with the midpoint falling slightly below the consensus estimate of $52.92 million.

Needham has raised Kornit Digital’s stock target to $30 from $28, maintaining a Buy rating despite the first-quarter performance not fully meeting growth expectations. The firm’s confidence is bolstered by the company’s new Apollo high-volume production system and the success of its All-Inclusive Click (AIC) program, which contributed an annual recurring revenue of $14.5 million in Q1. Kornit Digital’s gross profit margin improved to 42.6% on a GAAP basis, up from 32.3% in the previous year, while the non-GAAP gross margin rose to 45.2% from 37.5%. The company remains optimistic about its innovative product offerings and service models, aiming to continue its growth trajectory in the digital transformation of the apparel industry.

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