Q3 2022 Jerash Holdings (US) Inc Earnings Call
Speaker 1: you
Okay.
Good morning, ladies and gentlemen, and welcome to <unk> Holdings fiscal 2022 third quarter financial results. At this time, all participants have been placed on a listen only mode. It is now my pleasure to turn the floor over to your host Roger Palmdale, Sir the floor is yours.
Speaker 2: Good morning ladies and gentlemen and welcome to the Jirash Holdings fiscal 2022 third quarter financial results. At this time all participants have been placed on a listen only mode. It is now my pleasure to turn the floor over to your host Roger Ponderle. Sir the floor is yours.
Speaker 3: Thank you, operator. Good morning, everyone, and welcome to Jerash Holdings Fiscal 2022 third quarter conference call.
Thank you operator, good morning, everyone and welcome to <unk> Holdings fiscal 2022 third quarter Conference call.
Speaker 3: I'm Roger Ponder with Ponder & Wilkinson, Girash Holdings Investor Relations.
Roger Palmdale with condo Wilkinson dress holdings Investor Relations firm it will be my pleasure momentarily to introduce the company's chairman and Chief Executive Officer, Sam Choy, along with its Chief Financial Officer, Gilbert Lee and Eric Tang, who leads the company's operation.
Speaker 3: It will be my pleasure momentarily to introduce the company's Chairman and Chief Executive Officer, Sam Choi, along with its Chief Financial Officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan.
And Jordan.
Speaker 3: Before I turn the call over to Sam, I want to remind all listeners today that this call may include forward-looking statements within the...
Before I turn the call over to Sam I want to remind all listeners today that this call may include forward looking statements within them.
Speaker 3: meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the Risk Factors section of the company's most recent Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission.
Meaning of the private Securities Litigation Reform Act of 1995, such forward looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the risk factors section of the company's most recent Form 10-K and form 10.
Q as filed with the Securities and Exchange Commission.
Speaker 3: Copies of which are available on the SEC's website at www.SEC.gov, along with other company filings made with the SEC from time to time.
Copies of which are available on the SEC's website at Www SEC Gov, along with other company filings made with the SEC from time to time.
Speaker 3: Actual results could differ materially from these forward-looking statements. And drash holdings undertakes no obligation to update any forward-looking statements except as required by law. And with that, I will turn the call over to Sam Choi. Sam? All right. Thanks, Bill. Thank you, particularly forWoods mouth cannot hear well.
Actual results could differ materially from these forward looking statements and Drash holdings undertakes no obligation to update any forward looking statements, except as required by law and with that I will turn the call over to Sam Choy Sam.
Alright, Thank you Roger.
Hello, everyone.
Speaker 4: Our fiscal 2022 third quarter results again demonstrate an excellent program.
Our fiscal 2022 third quarters with both again demonstrated excellent poll question.
Speaker 4: revenue was at a record high for any third quarter in our history.
<unk> was at a record high for any quarter in our history.
Sorry.
Speaker 4: reflecting robust shipments to our largest customers as a result of strong demand and our expanded manufacturing capacity.
Reflecting robust shipments to our largest customers.
Strong demand.
Our expanded manufacturing capacity.
Yes.
Speaker 4: Gross profit also significantly improved for the third quarter.
Gross profit also significantly improved for the third quarter.
Speaker 4: primarily because of our higher revenue and gross profit margin performance.
Primarily because of our higher revenue.
Gross profit margin performance.
Speaker 4: Our gross margin expanded to 19%, reflecting increased shipment volumes, along with increased orders from higher margin-rented products.
Our gross margin expanded to 19%, reflecting increased shipment volumes along with increased orders from higher margin branded products.
I'm happy to report that the strong momentum is continuing into our fourth fiscal quarters.
Speaker 4: I'm happy to report that the strong momentum is continuing into our fourth fiscal quarters and well into fiscal 2021.
Well into fiscal 2023.
Speaker 4: Orders received yesterday indicate that we believe we will lead to a revenue-run race for fiscal 2022 that exceeds our prior record.
Orders received year to date indicate that we believe will lead to a revenue run rate for fiscal 2022.
Our prior record.
Speaker 4: As a result, we have increased our revenue outlook for the fourth quarter, and we already are looking toward a record-setting fiscal 2023, which for us starts April 20, 2021.
As a result, we have.
We increased our revenue outlook for the fourth quarter.
We already are looking.
A record setting fiscal 2023.
Cause staff April .
During the past quarter.
Speaker 4: During the past quarter, we complete the acquisition of an operator of a 71,000 square foot manufacturing facility in the man of Georgia.
The ecosystem of our operator.
71.
<unk> square foot manufacturing facility in Amman Jordan.
Speaker 4: Our agreement to acquire the related physical premises is expected to close prior to this fiscal year-end. Eric?
Our agreement to acquire <unk>.
Physical premises leases.
<unk> is expected to close prior to this fiscal year.
Eric will provide more details in a moment.
Speaker 4: Our business outlook remains strong. Accordingly, to accommodate for expected growth ahead, we are continuing to explore plans to further increase capacity.
Our business outlook remains strong.
The need to accommodate for expected growth ahead.
<unk> two <unk>.
The increased capacity both in our existing facilities.
Speaker 4: both within our existing facilities as well as looking into other means of adding capacity, possibly building new facilities and or through leasing and acquisition.
Trial is looking into other meaningful I think capacity, possibly building, new facilities and or through leasing and acquisitions.
I'll now turn the call over to Eric <unk>, whose space in Jordan and then Lee will cover our financial results Alright, Alright.
Speaker 4: I'll now turn the call over to Eric Tang, who is based in Jordan, and then Gilbert Lee will cover our financial results. Hi, Eric. Thank you.
Thank you Sam and.
Hello, everyone.
Speaker 4: Our factories in Jordan remain extremely busy.
Our factories in Jordan remain extremely busy.
Although volumes were up substantially in the fiscal third quarter from our top global brand customers.
Speaker 4: All the volumes were up substantially in the fiscal third quarter from our top global brand customers.
Speaker 4: These are orders with higher average selling prices and margins than we experienced in the year ago period.
These are orders with higher average selling prices.
Margins than we experienced in the year ago period.
Speaker 4: And there's more good news to come, with capacity completely booked through the end of July 2022.
And there is more good news to come both capacity completely booked through the end of July 2022.
Speaker 4: As Sam mentioned, we recently completed the acquisition of a new manufacturing facility in Jordan.
As Sam.
<unk> mentioned, we recently completed the acquisition of a new manufacturing facility in Georgia.
Speaker 4: We took over operations of the facility in August , including approximately 500 employees and a dormitory. The integration has gone...
When you took over operations of the facility in August , including approximately 500 employees and the doubletree.
The integration has gone extremely smoothly.
Speaker 4: Production from this new LEOS facility continues to progress well.
Production from this new facility continues to progress well.
Speaker 4: and the facility is now fully transitioned to manufacturing products for our customers.
And the facility is now fully transition to manufacturing products for our customers.
Speaker 4: It is expected to enable Girard to produce approximately 2.5 million to 3.5 million additional garments per year.
It is expected to enable garage chipotle with approximately $2 5 million to $3 5 million additional common per year.
Speaker 4: acting approximately 20% to the annual capacity.
Approximately 20% to the annual capacity.
Speaker 4: We continue to train our employees and enhance efficiency from this facility to further expand our capacity for new customer orders and new production category.
We continue to train our employees and hence efficiency from this facility.
To further expand our capacity for new customer orders and new production categories.
Construction of a new dollar tree for our multinational.
Speaker 4: Construction of a new dormitory for our multinational workforce also is progressing very well.
No workforce also is progressing very well.
Speaker 5: and is expected to be completed by the third quarter of the calendar year 2022.
And is expected to be completed by the third quarter of the calendar year 2022.
The high quality living space with comfort the size and the highest safety measures will have positioned us for growth and further our ESG goals.
Speaker 5: The high quality living space with comfort designs and the highest safety measures will help position us for growth and further our ESG goals.
Speaker 5: Among the other key benefits Girard provides to its employees in Jordan are the free health care and transportation.
Among the other key benefits to Ross provides to its employees in Jordan, the free health care and transportation.
Speaker 5: During the height of the pandemic in 2020, we established a government-approved hospital clinic in Aan Man with full-time doctors and nurses to care for our sick workers.
During the height of the pandemic in 2020, we established a government approved hospital cleanup in unmanned.
All time doctors and nurses to care for our workers.
Speaker 5: when hospital in Jordan were at that time fully on full capacity.
When hospital in Jordan, where at that time fully on full capacity.
In July .
Speaker 5: 2021, we work closely with Jordan Ministry of Health to complete COVID-19 inculcation for all employees.
2021, we worked closely with Jordan Ministry of health to complete.
19 installation for all employees.
Speaker 5: Just last week, we started working again with the Jordan Ministry of Health to offer poster shots to our workers, our first in the apparel industry.
Just last week, we started working again with the Jordan Ministry of health to offer both the shots to our workers.
First in the apparel industry here in Jordan.
With that I will turn the call to Gilbert to discuss our financial results and the fiscal 2022 and 2020 outlook Gilbert please.
Speaker 5: With that, I will turn the call to Gilbert to discuss our financial results and the fiscal 2022 and 2023 outlook. Gilbert, please.
Thank you Eric.
Revenue for our fiscal 2022 third quarter rose substantially to $37 million from 'twenty, one mainly in the same period last year, an increase of 78%.
Speaker 6: Revenue for our fiscal 2022 third quarter rose substantially to $37 million from $21 million in
Speaker 6: an increase of 78% and a third quarter record.
Third quarter record.
Speaker 6: The increase was primarily due to higher shipments to our largest customers and stronger demand, as well as increased capacity for our customers.
The increase was primarily due to higher shipments to our largest customers and stronger demand as well as increased capacity.
Speaker 6: Growth margin expanded 710 basis points to 18.8%.
Gross margin expanded 710 basis points to 18, 8% in the fiscal 2022 third quarter compared with 11, 7% in the same quarter last year.
Speaker 6: fiscal 2022 third quarter, compared with 11.7% in the same quarter last year.
Speaker 6: Growth margin expansion in the quarter reflected higher proportion of export sales to our global brand customers in the US, which typically carry higher profit margin.
Margin expansion in the quarter reflected higher proportion of export sales to our global brand customers in the U S, which typically carry higher profit margins as well as increased production and sales volumes.
Speaker 6: as well as increased production and sales volume.
Speaker 6: Operating expenses totaled $4.6 million in the fiscal 2022 third quarter, compared with $2.4 million in the same period last year.
Operating expenses totaled $4 $6 million in this fiscal 2022 third quarter compared with $2 4 million in the same period last year.
Speaker 6: The increase was primarily due to increased headcounts after completing the acquisition of MK garments, an increase in stock-based compensation, and requ...
The increase was primarily due to increased headcount after completing the acquisition of MK garments.
An increase in stock based compensation and recruitment for new migrant workers as.
Speaker 6: as well as higher shipping costs that were in proportion with the increased sales volume.
As well as higher shipping costs that were in proportion with the increased sales volumes.
Speaker 6: Operating income for our most recent third quarter rose to $2.3 million.
Operating income for our most recent third quarter rose to $2 $3 million from $48000 in the same period last year.
Speaker 6: from $48,000 in the same period last year.
Speaker 6: Net income increased to $1.7 million, or $0.13 per diluted share in the third quarter, from $94,000, or $0.01 per diluted share a year ago.
Net income increased to $1 7 million or 13.
Per diluted share in the.
Third quarter from $94000 or <unk> per diluted share a year ago.
Speaker 6: Giraffe's balance sheet and cash position remain strong.
<unk> balance sheet and cash position remained strong with.
Speaker 6: with cash of $34 million and net working capital of $58 million at December 31, 2021.
With cash of $34 million and net working capital of $58 million at December 31, 2021.
Speaker 6: Inventory was $21 million and accounts receivable was $8 million.
Inventory was $21 million and accounts receivable was $8 million.
Speaker 6: As you know, earlier in the quarter, we completed a public offering of common stock with net proceeds of $6.3 million, which we expect to use for working capital and expansion.
As you know early in the quarter, we completed a public offering of common stock with net proceeds of $6 3 million, which we expect to use for working capital and expansion plan.
Speaker 6: Net cash provided by operating activities was $4 million in the fiscal 2022 third quarter, compared with $2 million in the same period last year.
Net cash provided by operating activities was $4 million in the fiscal 2022 third quarter compared with $2 million in the same period last year.
Speaker 6: The change was primarily due to higher profits and working capital.
<unk> was primarily due to higher profit and working capital activity.
Speaker 6: We expect the business to continue to generate cash from operating activity.
We expect the business to continue to generate cash from operating activity.
Speaker 6: and we have good assets to supply chain financing programs with our major customers.
And we have good access.
To supply chain financing programs with our major customers and an untapped $3 million nine of credit.
Speaker 6: and then untapped $3 million line of credit.
Speaker 6: In terms of our fiscal 2022 fourth quarter outlook, we're increasing revenue guidance to be in the range of $29 million to $31 million.
In terms of our fiscal 2022 fourth quarter outlook, we're increasing revenue guidance to be in the range of 29 million to $31 billion.
Speaker 6: as strong demand continues and our capacities further expand.
As strong demand continues and our capacity further expands.
Speaker 6: Based on current order flow and orders already we...
Based on current order flow and orders already received.
Speaker 6: We also anticipate that fiscal 2023 revenue will reach a new record.
We also anticipate that fiscal 2023 revenue will reach a new record.
Recent orders continue to reflect.
Speaker 6: Recent orders continue to reflect better product mix from our top global brands.
Better product mix from a top global brand customers, which are expected to support gross margins in the high teens for the fiscal 2020 to fourth quarter.
Speaker 6: which are expected to support growth margins in the high teens for the fiscal 2022 fourth quarter.
Speaker 6: I would also like to remind you that operating expenses are expected to be higher in fiscal 2023, reflecting our growth and certain impacts from the pandemic we covered.
I would also like to remind you that operating expenses are expected to be higher in fiscal 2023.
Reflecting our growth and certain impacts from the pandemic recovery.
We also anticipate stock based compensation to be at a higher level for the rest of fiscal 2022 and into fiscal 2023 compared to fiscal 2021.
Speaker 6: We also anticipate stock-based compensation to be at a higher level for the rest of fiscal 2022 and into fiscal 2023 compared to fiscal 2021.
As mentioned last quarter, while customer orders remained strong potential risks from supply chain issues that some of our customers are facing still linger and could affect the timing of shipments in the near term.
Speaker 6: As mentioned last quarter, while customer orders remain strong, potential risks from supply chain issues that some of our customers are facing, the old link...
Speaker 6: and could affect the timing of shipments in the near term.
Speaker 6: We're taking a cautious and conservative approach and will continue to closely monitor developments over the next few months. We expect to provide enough.
We're taking a cautious and conservative approach and we'll continue to closely monitor developments over the next few months.
We expect to provide an update on our next call.
Speaker 6: In addition, our board of directors approved a regular quarterly dividend of 5 cents per share to our common stockholders on February 22, 2022 to stockholders of record as of February 15, 2021.
In addition, our board of directors approved a regular quarterly dividend.
Five per share to our common stockholders on February 20.
2022 to stockholders of record as of February 15, 2022.
Speaker 6: With that, we will now open up the call for questions. Tomorrow is
With that we will now open up the call for questions.
Operator, we'd have the first question please.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask about posing your question. Please pickup your handset if you're listening on speaker phone to provide optimal sound quality.
Speaker 2: Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing a question, please pick up your handset, if you're listening on speakerphone to provide optimum sound quality.
Speaker 2: Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while we poll for questions.
Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.
Speaker 2: Your first question is coming from Mike Baker from DA Davidson. Your line is live.
Your first question is coming from Mike Baker from D. A Davidson your line is live.
Speaker 7: Hey, thanks guys. I wanted to ask a couple questions. First, can you talk about, it's great that your sales growth is coming from your largest existing customers who are great partners for you guys, but can you talk about your efforts to diversify to other customers? What are you seeing from smaller, maybe up and coming customers and as part of that, maybe update us on some of the tests you've done with the likes of Adidas or others?
Hi, Thanks, guys.
I wanted to ask a couple of questions first can you talk about it's great that your sales growth is coming from your largest existing customers.
Great partners for you guys, but can you talk about your efforts to diversify to other customers. What are you seeing from smaller maybe up and coming customers and as part of that maybe update us on some of the tests you've done with the likes of Adidas or others. Thanks.
Speaker 6: Thank you, Mike. Eric, you want to answer this question about new customers?
Thank you Mike.
Eric do you want to answer this question about new customers coming in.
Speaker 5: Okay, so actually for new customers coming in, I think if you have, I mean, watched Jarage for the past performance, you will notice that new balance is also coming up very quickly and it will continue to grow in 2022. Okay. For new customer, okay, we have already take two orders from Adidas and I think most probably they will be talking to us about new orders for the later half of the year.
Okay.
That's really for new customers coming in I think if you have.
I mean, what's to rush for the past performance.
You'll notice that new policy is also coming up very quickly and it will continue to grow in 2000.
22, okay for the customer Okay. We have already take two orders from Adidas and I think most probably they will be talking to us about.
Orders for the later half of the year.
Speaker 5: And also there will be some new customers like Timberland and Sketches. We are also at the final stage of discussion with them. So the outlook for 2023, these are the outlines for the new customers.
And also there will be some new customers like timberland okay.
<unk> also at the final stage of discussion with them. So the outlook for 2020 free disorder our.
Our line for the new customer.
Excellent.
Speaker 6: Excellent. Right now, we're not sure what the volume is going to be in the next coming year from this new season of ourizTs therapy course or the complete
We're not sure.
What the volume is going to be in the in the next coming year from these new customers.
Speaker 6: But at least our existing customers are still growing strong. Uh, we will, we will have a, at least, uh, as much orders from our existing customers, a new balance in the North face.
At least our existing customers are still growing strong.
We will we will have a at least.
Yes, much orders from our existing customers.
Neil balance in the northeast.
For the next coming year.
Speaker 7: Yeah, that makes sense. OK, the other question I wanted to ask is about your capacity increases in timing on breaking ground on the new 133,000 square foot facility, which you guys have talked about. Can you discuss the timing on when you break ground on that, and when that should start to be operational, and then how long it takes to be ramped up to fully operational?
Yes that makes sense.
Okay. The.
The other question I wanted to ask is about your capacity increases and timing on breaking ground on the new 133000 square foot facility, which you guys have talked about is that can you discuss the timing on when you break ground on that.
When and when that should be start to be operational and then how long it takes to be.
Ramped up to fully operational.
Goodbye.
The question.
Yes.
Go ahead.
Speaker 5: Okay, so this new factory, okay, now we have already appointed the engineering consulting company to give us a plan and the design. I think hopefully, I mean the...
Okay. So this new factory. Okay. Now we have already appointed the engineering consulting company to give US a plan and the designed I think hopefully I mean.
Speaker 5: Maybe next month they have me finish the initial planning and design, and then we will have a board meeting to discuss to go through everything. So I think most probably, okay, our time schedule that we may be able to start in the later half of the year. Okay. And then I think that we are going to me the late meantime.
Maybe next month. They gave me finish the initial planning and design and then we will have a board meeting to discuss the go through everything.
I think the gross profit.
Okay.
Tom schedule with that.
The April to start in the later half of the year Okay.
Uh huh.
Speaker 5: We will try our best to hurry up for creating the new facility and hopefully the duration will be around one year to one and a half year. It depends on how large the size we are going to build.
We will it okay, we will try our best to hurry up to for creating the new facility and hopefully it will be the duration will be around one year to one and a half year it depends on the.
How large the size we are going to build.
Speaker 7: Okay, yeah, we'll continue to watch that to increase the capacity. Okay, great. I'll turn it over to others to ask questions.
Okay. Okay, Yes, we'll continue to watch that to increase the capacity, okay, great I'll turn it over to others to ask questions.
Okay. Thank you.
Speaker 2: Thank you. Your next question is coming from Mark Agento from Lake Street Capital. Your line is live.
Thank you. Your next question is coming from Mark Argento from Lake Street Capital. Your line is live.
Hey, guys nice quarter, just wanted to dig in a little bit in terms of some of the trends obviously.
Speaker 8: Hey guys, nice quarter. Just wanted to dig in a little bit in terms of some of the trends. Obviously, you guys benefited.
Yeah.
Speaker 8: a lot of incremental order volume. Do you think those orders that you're getting, is that because supply chain, you guys have been able to successfully navigate the supply chain so your customers have shifted more product or more production to your facilities? Or what are the underlying trends there and how sustainable do you think that they are?
A lot of incremental order volume or do you think was those orders that youre getting.
Because supply chain you guys have been able to successfully navigate the supply chain. So your customers.
Shifted more product or more production to your facilities or.
What are the underlying trends there and how sustainable do you think that they are.
Speaker 6: Well, thank you, Mark. I think you have seen or we have seen in the past few years that more and more global brands.
Well, thank you Mark.
You have seen or we have seen in the past few years.
More and more global brand customers have been shifting their production have been shipping their sourcing.
Speaker 6: have been shifting their production, have been shifting their sourcing away from Asia, particularly China. And we're getting a lot of the inquiries from new customers and pressure for increasing capacity for existing customers.
<unk> from Asia, particularly China, and we're getting a lot of inquiries from new customers and a pressure for increasing capacity for existing customers in the past few years now of course, the pandemic hit in 2020.
Speaker 6: in the past few years. Now, of course the pandemic hit in 2020 and kind of got everybody spooked. But as soon as the pandemic kind of...
And kind of got everybody speak, but as soon as the pandemic kind of.
Speaker 6: We leave a little bit and all the orders came back and now this year is just a really robust year.
We leave a little bit and all audio orders came back and now this year is just a.
Really robust year.
Speaker 6: And that was also fueled by the logistic issues, the supply chain issues and
And that was also fueled by the logistic issues in the supply chain issues and.
Speaker 6: The lead time from coming out from Asia, out from China, and some of the Southeast Asian countries are also getting hit by the pandemic.
The lead time from.
Coming from Asia.
Ill from China, and some other southeast Asian countries also getting hit by the pandemic, causing the <unk> to be shut down.
Speaker 6: causing the factories to be shut down and not able to deliver on time to some of these global cuts.
And not able to deliver on time to do some of these global customers.
Speaker 6: So, and I also heard that a lot of the even smaller customers, they're trying to balance and they're trying to migrate some of their production out of China. So this is the underlying trend, that everybody is getting afraid of putting all the eggs in China and moving their production and or at least balancing or diversifying their sourcing.
So and I also heard that a lot of the even smaller customers.
Trying to there.
We're trying to balance and trying to migrate some of their production out of China. So this is at the underlining underlying trend.
Everybody is getting.
Afraid of putting all their eggs in China, and moving the production and or at least balancing or diversifying their.
Awesome.
And.
Yeah. So.
Speaker 6: Yeah, so we'll continue to see this. And that's why we're increasing our capacity, hoping to take advantage of this trend.
We will continue to see this and that's why we're.
We are increasing our capacity hoping to take advantage of this.
Right.
Okay.
Great and then in terms of the gross margins early.
Speaker 8: Great, in terms of the gross margins, you know, fairly, you know, fairly impressive year over year improvement. And then also, you know, as you go into next year, the opportunity to maintain and maybe even grow gross margins, we're thinking about capacity allocation.
Truly impressive year over year improvement.
So as you go into next year and the opportunity.
Maintain and maybe even grow gross margins when you're thinking about it.
Capacity allocation.
Speaker 8: Obviously, there are certain products that carry higher gross margins than other products. How do you guys think about allocation, especially when production capacity is a fairly scarce resource? Are you focusing more on higher-margin-type products at this point, or what's the philosophy there? Yeah.
Obviously, there are certain products that carry higher gross margins than other products in U.
How do you guys think about.
Allocation, especially when production capacity is a fairly scarce resource are you focusing more on higher margin type products at this point or what's the philosophy there.
Well, we are fortunate this year that.
Speaker 6: the higher margin product mix and the exports to US FOB orders are significantly higher or have increased this year. So allowing us to have a pretty good margin.
The higher margin product mix.
The exports to U S. F O b orders significantly higher all have increased this year, so, allowing us to have a.
Pretty good margin and good profit performance.
Speaker 6: But as capacity increases and as we absorb new customers, usually we will have to take a
As capacity increases and as we absorbed a new customers, usually we will have to take a hit on the margin.
Speaker 6: Orders will be smaller at the beginning. We have to spend a lot of time and effort in developing samples and
Orders will be smaller at the beginning we have to spend a lot of time and effort in developing.
Samples.
<unk>.
Speaker 6: the efficiency will be hurt a little bit, but after we take on those new customers, everything will get back to a more normal level. And of course, as capacity is limited.
The efficiency of who will be hurt a little bit, but after we take on those new customers.
Everything will get back to a more normal level.
Of course.
Capacity is limited.
Speaker 6: we have the luxury to choose what products or what kind of products.
We have the luxury to choose what products or what customers. We want to we want to produce four first.
Speaker 6: we want to produce for first.
Speaker 6: And we will try to manage that and keep a very reasonable margin for customers or new customers who are demanding lower margins. Obviously we will tend to...
And we will try to manage that and keep a.
Very reasonable margin.
For customers or new customers, who are demanding lower margins, obviously, we will tend to.
Not.
Speaker 6: do business with them or do smaller portion of
Do business with them or do a smaller portion of the business with them.
Speaker 6: And so, but as our sales volume increased.
So.
But.
That's a sales volume increase.
Speaker 6: I would imagine that we will have to take on some of the lower margin business.
I would imagine that we will have to take on some of the lower margin business.
Well.
Speaker 8: Thanks for the answers and congrats on a very strong quarter.
Alright. Thanks.
Thanks for the answers.
Congrats on a very strong quarter.
Thank you thank.
Thank you very much.
Speaker 2: Thank you. Your next question is coming from Rommel Dionisio from Age's Capital.
Thank you. Your next question is coming from Rommel Dionisio from Aegis capital.
Speaker 9: Your line is live. Yes, good morning. So a couple of questions. First, you know, it's been an overall inflationary environment. I'm just wondering if you guys are seeing any cost pressure from the fabric side?
Your line is <unk>. Good morning, So a couple of questions first it's been an overall inflationary environment I'm just seeing I am wondering if you guys were seeing any cost pressure from the fabric side.
Speaker 6: Yes, we definitely see pressure on the fabric side.
Yes, we definitely see pressure on the fabric side.
And I also like to let you know that we have already started.
Speaker 6: And I also like to let you know that we have already started sourcing fabric.
Sourcing fabrics in the.
Speaker 6: in the Middle Eastern region. The lead time, which is the most
In the middle Eastern region.
The lead time.
The most.
Critical.
Sector.
Speaker 6: for sourcing fabrics, especially for our global brand.
For sourcing fabrics, especially for our global brand customers.
Speaker 6: the long lead time for getting fabrics from Asia particularly
The long lead time for getting fabrics from Asia, particularly.
Speaker 6: All along we have been sorting fabrics from China, Taiwan, Korea, Vietnam, and because of the pandemic, the lead time has been extended from those countries. And some of those countries actually have shut down for a period of time.
Yes.
All along we are insourcing fabrics from China.
Taiwan, Korea, Vietnam, and because of the pandemic.
Lead time has been extended from those from those countries and some of those countries actually have shut down.
For a period of time.
Speaker 6: So it added pressure to us.
So.
It added pressure to us.
Speaker 6: number one on the lead time and also on the costs because the shipping costs have increased tremendously. I'm sure you heard, uh, coming out of Asia, especially to North America, but, uh,
Number one on the lead time and also on the cost because the shipping costs has increased tremendously I'm sure you heard.
Coming out of Asia.
Especially to North America.
Speaker 6: even shipping from Asia to Jordan to the Middle East, the cost has increased quite a bit. Now, of course, we are able to pass on the increased fabric costs and the transportation costs to our customers because they understand
Even shifting from Asia to Jordan.
To the middle East the cost has increased quite a bit now of course, we are able to pass on the increase fabric cause in the transportation costs to our customers.
Because they understand this.
Speaker 6: Sometimes they even have to air ship some of the fabrics or some of the supplies to us just to meet the deadline. So last quarter, we began saw some of the materials
Sometimes.
Even have too.
Shift some of the fabric. So some of the suppliers to us just to meet the deadline. So last quarter, we began sourcing some of the fabrics and.
Speaker 6: the fabrics and the material.
Materials from.
Speaker 6: from the Middle Eastern region. We went to Turkey and to Egypt, and we have some success.
From the Middle Eastern region, we went to Turkey and Egypt.
We have some success.
Speaker 6: And right now, we're working on a project with Timberland, where the fabric sourced from Turkey.
And right now.
We're working on the project with timberland, where their fabrics sourced from Turkey now.
Speaker 6: Now, the price of those fabrics are not going to be as low as from China. But,
Now the price of those fabrics are not going to be.
Low <unk>.
From China.
But the advantage is that.
Speaker 6: the lead time is much shortened.
The lead time is much more it's much shortened.
Speaker 6: from shipping from Turkey to Jordan, comparing to shipping from China, as well as the shipping cost would be lower. So overall, I think the raw material cost will be slightly higher. But the advantage is that we can get the products, we can get the materials.
From shifting from Turkey to Jordan, comparing some of them are shipping from China as well as the shipping cost would be lower.
So overall I.
I think the raw material costs will be slightly higher.
The advantages that we can we can get the products, we can get the materials much faster.
Okay. That's very helpful. Thank you very much and one last question.
Speaker 9: Okay, that's very helpful. Thank you very much. And one last question.
Speaker 9: You have a nice cash reserve here, I think 33 million cash balance at the end of the last quarter, which is nearly $3 a share. How do you guys think about that cash? Has your view changed as you continue to generate such strong free cash flow? You obviously pay a nice dividend, have a nice dividend yield, continue to look for acquisitions, but is the share buyback a possibility here? How do you guys think about that deployment of cash?
You've been built you have a nice cash reserve here I think $33 million cash balance at the end of last quarter.
Which is nearly $3 a share how do you guys think about.
That cash has your view changed as you continue to generate such strong free cash flow.
You, obviously pay a nice dividend have nice dividend yield.
Continuing to look for acquisitions, but as the share buyback a possibility here how do you guys think about that deployment of cash.
Speaker 6: Well, right now we don't have any plans to buy back shares. The reason that we did the...
Well right now we don't have any planes to buy back shares.
The reason that we did.
Speaker 6: the stock offering in October was to raise some capital to be used for future expansion. Right now, we're building a dormitory, which the total cost is about $8.2 million.
The stock offering in October was to raise some capital to be.
To be used for future expansion, we're going to right now we are building a dormitory.
The total cost is about $8 $2 million.
Speaker 6: And that is going to be completed within this coming or in 2022. We're also studying the
And that is going to be completed within.
This coming fall.
In 2022.
We're also studying the.
Speaker 6: the design and the engineering study for building a new factory in Jordan. So that is going to cost up to $20 million. Plus, if there is any other smaller acquisitions of additional factories or manufacturing facilities and other cost savings projects such as solar energy.
The design and engineering study for building a new factory in <unk> in Jordan.
That is going to cost up to $20 million plus.
If there is any other smaller acquisitions.
Batteries or manufacturing facilities.
And other cost savings projects such as.
Solar energy.
Speaker 6: those kind of small projects, we will use the cache that we have.
Those kind of small projects.
We will use the cash that we have on on those projects to further improve our performance and to grow and to grow our business.
Speaker 6: on those projects to further improve our performance and to grow our business. OK, it's very.
Okay. That's very helpful. Congratulations on the quarter.
Hugh.
Thank you Rommel.
Speaker 2: Thank you. Your next question is coming from Barry Posternak. Your line is live.
Thank you. Your next question is coming from Barry poster neck. Your line is live.
Hey, guys.
Speaker 2: Also, congrats on the quarter and the Q4 guidance. Was there any COVID impact in the quarter?
Also congrats on the quarter and the Q4 guidance was there any.
Covid impact in the quarter.
Amongst your employee base and.
In factory.
Speaker 6: Eric, you want to answer that? I'm sorry. I missed the question.
Eric do you want to answer that.
I'm, sorry, I missed the question.
Speaker 6: COVID on our employees.
Colby.
One.
Our employees and okay. Okay. So okay.
Speaker 5: So, actually, we monitor very closely with all our workers and staff.
Okay.
We monitor very closely with all our workers and staff. Okay. So since the happening of the pet Debbie immediately because at that time, okay. The situation in Jordan is not so optimistic so because all of the property cost Kato already in full capacity. So we immediately.
Speaker 5: So since the happening of the pandemic immediately, because at that time, okay, the situation in Jordan is not so optimistic.
Speaker 5: So because all the public hospital already in full capacity, so we immediately establish our own isolation hospital and we employ our own doctors and nurses to take care all the sick patients. OK.
Establish isolation hospital.
And we employ our own doctors and nurses to take care of the sick patients. Okay. So it is in 2000 and trying to win at the peak season of the pandemic, but since then we are still operating although the number of patients reduce rapidly okay.
Speaker 5: So it is in 2020 when at the peak season of the pandemic.
Speaker 5: But since then, we are still operating, although the number of patients reduce rapidly. Okay, last, I think, in every three months, the Ministry of Health is monitoring a visit and check the health status of our workers and staff each time maybe they will take a...
Last I think in every three months the ministry of power with monitoring visit and check the health status of our workers and staff each time, maybe they would take.
Speaker 5: 200 or 300 of our people, okay, and to test the corona, okay. So the last visit is three weeks ago, which they took 200 samples from our workers, and very good, we are all of them.
200, or 300 of our PMO, Okay and to test the Corona. Okay. So the last visit is free month, three weeks ago, which they took to understand both from our workers and a very good we are all of them are decorative.
Speaker 5: Okay, even without any cases of Omikon.
Even without any case itself only caught.
Speaker 5: So, in order to further protect...
So and.
And for the in order to further protect okay, I'll look to us against COVID-19, Okay. Apart from all the workers and stop or they took the two vaccines. Okay. Starting this month, we have a special program with Minister of Health, which is we are the first two rocks at the first apparel okay.
Speaker 5: Okay, our workers against COVID-19, apart from
Speaker 5: All the workers and staff already took the two vaccines. OK!
Speaker 5: Starting this month, we have a special program with Minister of Health, which is... we are the first... to rush the first apparel, okay, arranging with the Minister of Health to come to vaccinate our... the poster to all our 5,000 workers and staff. We already start doing it last week and we will be continue throughout this month until all our workers and staff finish the...
Ranging with the Ministry of health to come to vaccinate.
The post to all our 5000 workers and staff, we already stopped doing it last week and we will be continue throughout this months until all our workers.
Staff finished.
The poster.
Yes.
Speaker 6: Yeah, we were also the first one that got all our employees fully vaccinated with the two shots back in I think July and August . July this year, yeah, we finished the two...
So the first one that.
All our employees fully fascinated with the two shots.
Back in I think July and August we largely see yes. We finished the two the two shots.
Mhm.
Speaker 2: That's great. Also, given the supply chain issues that apparel manufacturers are dealing with, are your largest customers placing any outerwear orders in the March and June quarters to build inventory early?
That's great.
So given the supply chain issues that.
Our apparel manufacturers are dealing with are your largest customers, placing any outerwear orders in the March and June quarters to build inventory early.
Uh huh.
For winter season orders, whether their orders early too for this coming winter season, Eric earlier earlier than in prior years.
Speaker 6: For winter season orders, whether they're orders early for this coming winter season? Eric? Yeah, earlier than in prior years.
Yes.
Okay.
Yeah.
Speaker 5: Actually, we have a space here or please placing order to us throughout I mean the year of course the number of I mean to the normal for this I mean it's I mean not that speak okay for the summer but in winter season okay
Actually we have crazy.
Placing order to us throughout the year of course, the number of.
I mean, no more orders I mean, it's a I mean.
Not that spec, okay for the somewhat but.
And when the season, Okay, which okay. We are now.
Speaker 5: Okay, we are now start producing in the late March.
Stop producing in the late March.
Speaker 5: and early April , which is for the winter season. We are expecting them, they are placing more than, or we have, they are placing around 2.8 to 3 million pieces of gas ejected to us. Okay, this is a, it is a nominate situation for the past couple of years.
Early April which is for the winter season, we are expecting them Theyre appraising I've been more than FY <unk>.
Placing around two to 3 million pieces of.
Jackup to US Okay. This is.
No. It is nominal situations for the past couple of years and also this year. We are also expecting new balance and that the second primary customers. Okay, we'll be increasing the volume of business school.
Two.
Okay.
Speaker 2: Okay, and also on the MK factory that was acquired, is that already operating at the margin you were targeting or is there some further margin improvement expected?
Okay and also on the MK factory that was acquired is that already operating at the margin you are targeting or is there further.
Further margin improvement expected.
Speaker 5: Actually, when we start in October , okay, so we hardly need to make the factory big even because it is a new start in October and November . But after November , okay, we are already in a profitable situation because all our workers already very accustomed and familiar with the styles we are producing in other factories.
Actually when we started in October okay. Okay. So we heartbeat to make the factory, but even because it is a new start in October and November but after November . Okay. We are already in a profitable situation because all our work is already very accustomed and familiar with the styles we are producing.
In other factories.
Okay, Great and last question.
Speaker 2: Okay, great. And last question, the further capacity expansion that was mentioned for the fourth quarter, is that coming from just squeezing out more production out of existing factory floor space or is it coming from the MK acquisition or what?
<unk>.
The further capacity expansion you mentioned that was mentioned four for the fourth quarter.
Is that coming from just squeezing out more production out of existing factory floor space or is it coming from the <unk> acquisition.
Or what.
Okay.
Speaker 2: I think it was mentioned that there was going to be some further capacity expansion in the current quarter, Q4. Thank you
I think it was mentioned that there was going to be some further capacity expansion in.
In the current quarter Q4.
In Q4.
Sure.
Speaker 6: The only capacity expansion would be the absorption of MK.
The only capacity expansion would be.
So option.
Okay.
Speaker 6: capacity or in case the facility.
The entity MKS.
The facility.
Speaker 6: That will be a comparison from the fourth quarter of last year. Oh, okay. So the year over year. We'll continue to add more capacity.
That will be a comparison from the fourth quarter of last year Oh, Okay.
The year over year.
Yes, we will continue to add.
<unk> capacity.
Speaker 6: at our existing facilities, including MK. I think we have a project to expand one of our existing factories and add additional production lines in that.
At our existing facilities, including MTA.
We have a project to expand one of our factories window, how existing gradually and add additional production lines in that.
Speaker 6: And MK, if we want to, we could also add additional workers.
M. K, if we wanted to we could also add additional workers.
Speaker 6: I think we absorbed 500 workers, but we can add that. We can put more workers and add more machines in that facility to get it up to 800 workers.
I think we absorbed 500 workers, but we can at that.
We can put more workers in that more machines in that facility to get it up to 800 workers.
Speaker 6: But right now we haven't really started that yet, but that is a possibility.
But right.
Right now we haven't we haven't restarted that yet but that is a possibility in the only the only additional <unk>.
Speaker 6: And the only additional major capacity increase currently that we have planned is to build on the piece of land that we have purchased two years ago and build a new manufacturing facility. And that one, once it's finished, it could add another 40% to 50% of capacity. Right.
Major capacity increase currently that we have planned is to bill on the.
Bill on the piece of land that we have purchased two years ago.
Bill.
Our new manufacturing facility and that one once it's finished it could add another 40% to 50% of capacity.
Right, Okay, great. Thank you.
Thank you very much you are welcome.
Speaker 2: Thank you. Your next question is coming from Mike Baker from DA Davidson. Your line is live.
Thank you. Your next question is coming from Mike Baker from D. A Davidson your line is live.
Speaker 7: Okay, thanks. One quick follow-up. In the past, you've talked to us about long-term gross margins of the high teens, EBITDA approaching 10% margins or higher. With what you're seeing now, some of the higher margin trends you're seeing, is that still the right way to think about it? You talked about more costs coming. How do we think about EBITDA in the fourth quarter and then in 2023?
Okay. Thanks, one quick follow up.
In the past we've talked to us about.
Long term gross margins in the high teens EBITDA approaching 10% margins are higher.
With what Youre seeing now.
Some of the higher margin trends Youre seeing is that still the right way to think about it and how do we think about you talked about more costs coming how do we think about EBITDA in the fourth quarter and then in 2023.
Speaker 6: Well, I think fourth quarter, we should still see the margin at the high team.
Well I think fourth quarter.
We should still seeing which you still see the margin at the high teens.
Which should.
Speaker 6: should be comparable to what we see in Q3.
It should be comparable to what we see in Q3.
Speaker 6: But in terms of EBITDA, because the sales volume for Q4 would be lower than what we saw in Q3, I think EBITDA would be somewhat lower.
But in terms of EBITDA, because the sales volume for Q4.
Would be lower than what we saw in Q3, I think EBITDA would be somewhat lower.
Speaker 6: probably not at the 10% level.
Probably not.
Got it.
Probably not at the 10% level.
Speaker 7: When you say lower, you mean lower on a percentage rate or dollar basis? Lower on the percentage rate. Lower on the percentage rate, okay. How do we think about 2023?
And when you say lower you mean lower on a percentage rate or a dollar based on all of them are presumably.
Lower on a per cent okay.
And how do we think about.
2023.
2023.
Right now we.
Speaker 6: we don't have any idea what the growth percentage is going to be because orders are still being placed.
We don't we don't have any idea of what the.
Oil percentage is going to be.
Because all of those are still.
Being place.
<unk>.
Speaker 6: But it will definitely be higher than 2022. We're confident of that because we have a full year of capacity from MK. And we're confident of that because we have a full year of capacity from MK.
But it will definitely be higher than 2022, we are cognizant of that because we have.
A full year of capacity from from MK.
And if we have any additional capacity that we could squeeze out.
Speaker 6: if we have any additional capacity that we could squeeze out from our other existing facilities.
At existing facilities.
Speaker 6: But I don't think it will be like the growth that we saw this year.
I don't think it will be like the growth that we saw this year.
That you were talking about top line.
Yes top line.
Speaker 6: Yeah, top line. And bottom line, I think all the expenses margin will be similar.
Bottom line I think all the expenses.
Margin will be will be similar.
And.
It's still going to be in the high teens.
Speaker 6: Quarterly, we'll have some fluctuations depending on which customer and what products we're producing.
Quarterly we will have some fluctuations depending on.
Which customer and what products we are producing.
So.
Speaker 6: and operating expenses will be similar to this year.
And operating expenses will be similar to this year.
Okay. That's very helpful. Thank you I appreciate that.
Thank you.
Speaker 2: Thank you. Your next question is coming from Joe for Nikola. Your line is live.
Thank you. Your next question is coming from Joe for Nicola Your line is live.
Hello.
Speaker 10: Hello. Hello. Yeah, I I'm a retail shareholder.
Hello.
I'm a retail.
Shareholder of the company and I want to know more about that.
Speaker 10: And I want to know more about the company's qualifications as an ESG company in terms
The company's qualification is it ESG company in terms of.
Speaker 10: of the investment strategies going forward today with the funds interested in companies to have you know.
The investment strategies going forward today with the funds interested in companies to have.
Social governance and.
Speaker 10: environmental concerns. I mean, what can you, I don't know if we meet the qualifications, but can you explain to me?
Environmental concerns I mean, what can you I don't I don't know if we meet the qualifications, but can you explain to me.
If you do meet the qualifications what do you have to do to continue to qualify for those specifications.
Speaker 10: If you do meet the qualifications, what do you have to do to continually qualify for those qualifications? If you do meet the qualifications, what do you have to do to continually qualify for
Okay, we have some.
Speaker 6: We're always focused on ESG.
We're always focused on ESG and.
Speaker 6: I don't know if we're qualified or what kind of qualifications that we have to achieve, but all our customers are very focused.
I don't know if were qualified or what kind of qualifications that we have to achieve but all our customers are very focused.
At least the major customers like.
Speaker 6: the major customers like VF, North Face and New Balance.
Yes.
North as a new balance.
They value us.
As a manufacturer as a supplier.
Speaker 6: as a manufacturer, as a supplier that is fully focused on providing or half hour
That is fully focus on providing.
Sure.
Half hour.
Yeah.
Trying to improve on ESG.
Speaker 6: trying to improve on ESG. So.
So.
<unk>.
Speaker 6: They come to audit our facilities every year, and they always give us very high remarks.
They come to the come to audit our facilities every year and they always give us very high remarks.
<unk>.
Speaker 6: put us on like the premiere and the.
Put us on like.
Premier in the premium end.
Speaker 6: at a high level in terms of achieving their requirements.
At a high level in terms of achieving their requirements.
Speaker 6: whether to treat our, how we treat our employees, how we run our facilities. And we have projects like adding solar panels and using solar panels to make our facilities more accessible.
To treat.
How we treat our employees.
How we run our facilities and we have a <unk>.
Projects like adding solar panels and are using.
Speaker 6: using the recycled water and all kinds of activities that we do.
Using the <unk>.
Recycle water and.
All kinds of.
Okay entities that we do.
In order to.
Not put any damage to the environment.
Speaker 10: I can understand that your customers would probably want to get involved doing their inspections, all that, but my concern is what about the funds and the managers of funds that are important investors to the company? Do they also look over your ESG responsibilities? Do they look over your ESG responsibilities?
I can understand we will continue to do that yes, I can understand that your customers would probably want to get involved with doing there.
And all that but my my concern is what about the funds and the managers of funds.
That would.
That are important investors to the company.
Do they also look over here.
ESG responsibilities.
Well, so far we haven't really.
<unk>.
We haven't really discussed or.
Any other investors.
We put any day.
Demand on.
Or have taken any interest.
Speaker 6: how we do in our ESG, but we'll continue to improve our communication with our investors.
And how we do you know ESG, but look we will continue to improve our.
Our communication with our investors to make sure that they understand and value what we're doing.
Speaker 6: to make sure that they understand and value what we do.
Mhm.
Speaker 10: Do you anticipate at all with any possible labor shortages in Jordan?
Do you anticipate at all any possible labor shortages.
And Jordan.
Once the pandemic is.
Over with.
Speaker 6: No, we don't anticipate any labor shortages. In fact, we're doing, even in our expansion, we're working with the government to...
No we don't anticipate any labor shortages in fact, what we're doing.
Even at.
Expansion.
We're working with the government to provide more job opportunities to.
Speaker 6: to some of the less advantaged.
Some of the less advantage.
Speaker 6: people or areas, some of the high unemployment rate rural areas where we're starting to provide them job opportunities and even to Syrian refugees that are...
People or areas.
Some of the high and the employee.
Unemployment rate.
Areas, where we're starting to provide job opportunities and even to a Syrian refugees.
Speaker 6: There are about a million Syrian refugees in Jordan, and a lot of them don't have jobs. And what we're doing is work with the UN, and we have programs to provide jobs to those Syrian refugees.
There are there are about a million during refugees in Jordan and a lot of them don't have jobs and what we're doing is work with the U N.
We have programs to provide jobs to those Syrian refugees.
Speaker 6: And we also are very
We will also.
Barry.
Speaker 6: in bringing migrant workers overseas workers from India, Bangladesh, Sri Lanka to Jordan and work in our fashion.
Vessel in bringing migrant workers overseas workers from India, Bangladesh, Sri Lanka from.
Jordan and work in our factories.
Speaker 6: About 75% of our workers are from those overseas.
75% of our work.
It goes from those overseas.
From those other countries.
Speaker 10: Yeah, I can understand the the workers from
Yes, I can understand.
The work is from.
Bangladesh and Pakistan there.
Speaker 10: Bangladesh and Pakistan.
Speaker 10: they're foreign workers. But the Syrian refugees have a different status. And my question for you, Lee, is, is the Syrian refugee
The foreign <unk>.
Workers, but the Syrian refugees have a different status.
My question for you really.
Speaker 10: Will the Jordanian government recognizes the Syrian refugees once they're working and have housing that you provide for them?
Will the Jordanian government represent recognizes the Syrian refugees wants to work you didn't have housing that you provide for them in some cases.
Speaker 10: uh... citizenship of jordan or they will never have
Citizenship of Jordan or they will never have citizenship.
Well that part I don't know, but the Syrian refugees they don't really.
Speaker 6: Well, that part I don't know. But the Syrian refugees, they don't really, we don't provide housing for them. They have to stay in the refugee camps. And what we provide is free transportation. We hire buses to go to where they live.
We don't provide housing for them they have to stay in the in a refugee camps.
And what we provide is free transportation.
We hire buses to go to where they live which is the refugees cans.
Speaker 6: the refugee camps and the nearest one is about an hour away from our factory. And we provide them free transportation. We also provide them.
And the newest one is about an hour away from that will come out factory and we provide them free transportation.
We also provide them.
Speaker 6: Of course, medical health if they need it, and as well as child care if they need to bring some of the small kids with them to work. We actually have a.
<unk> medical.
Help if they need it and as well as childcare.
Need to bring some of the small kids with them to work.
Actually have.
Childcare centers in our facilities to help them take care of it.
Speaker 10: our facilities to help them take care of the children. Didn't you say earlier in your presentation that you are funding new dormitories for the work?
Children.
Did you say earlier in your presentation that you're funding dormitories, new dormitories for workers.
Speaker 6: Yes, but the dormitories are mainly just for the overseas work.
Yes, but the dormitories, mainly just for the oversea workers.
Speaker 6: they're not for the refugees. The refugees, they have to stay in the refugee camp.
They are not for the refugees the refugees.
<unk>.
Speaker 10: alright so the uh... refugee camps are dead uh... supported by the Jordanian government not by you
Alright, so the refugee camps our den.
Supported by the Jordanian government and not by you.
No.
Speaker 5: The refugees cam is actually supported by the U L FC o, So the, according to the regulations, or refugees, irrespective of any country, is not allowed to state elsewhere. I mean, I was side the refugees cam, So we will.
So references cabinets actually supported by the U F C O. So they okay. According to the regulations, okay. All replicates irrespective of any country. Okay is not allowed to state elsewhere I mean outside the.
That's what she's a cat so we will be Wow, that's the employer, we provide them the job opportunities, we provide a free spots flotation to them. We bring them early morning to our factory and often don't fall crop, we bring them back to the concentration camp.
Speaker 5: be while as an employer we provide them the job opportunities, we provide the free transportation to them, we bring them early morning to our factory, at afternoon four o'clock we bring them back to the concentration camp, no sorry the refugees camp.
Sorry, the refugee camp.
Speaker 5: and the Jordanian government agreed to pay them salary which is the same as the Jordanian local people here but the Jordanian government is not giving them citizenship and it's only giving them a residency in terms of as a refugee.
And.
Income from mine agreed to pay them salary, which is the same as the Jordanian local people here, but the Jordanian come from is not giving them citizenship and it only keeping them abreast of the Tennessee, Okay in terms of the refugees.
Speaker 10: so let me ask you this question dealing with the percentage of employees that are syrian refugees and the percentage of employees that are germanian citizens and the percentage of employees visiting foreigners such as bangladesh and pakistan and elsewhere in the world but can you break those percentages down and what is the turnover rate the turnover you know turnover rate would be something that would cause uh... maybe minor disruptions in the business maybe major disrupt
So let me ask you. This question dealing with the percentage of employees that are Syrian refugees and the percentage of employees that are your data and citizens and the percentage of employees.
Visiting foreigners, such as Bangladesh, and Pakistan and elsewhere in the World can you break those percentages down and where does the turnover rate the turnover.
Turnover rate would be something that would cause maybe minor disruptions in the business, maybe major disruptions basically I wouldn't know how you guys handle that because you always have to be training all the time with new employees come in is there a way of determining that but was that a proprietary strategy.
Speaker 10: I wouldn't know how you guys handle that because you'll always have to be training all the time as new employees come in. Is there a way of determining that or is that a proprietary strategy?
Four of our five 5000.
Speaker 5: for our 5,000 workers and staff.
Cause that staff.
Speaker 5: Around 75 percent migrant workers and staff 75 percent the balance 25 percent Okay is from local Jordanian and also Syrian refugees For Syrian refugees currently only occupy a very small number 180 Syrian refugees working in a garage factory and the balance we have I think around 900 Jordanian workers and staff working with us
75% migrant workers and staff, 75%.
25%, Okay is from local Jordanian and also Syrian refugees because he ran the rest which is currently only occupy a very small number what it keep Syrian refugees working in Geraci factory and the balance we have I think around 900 draw Danielle.
I mean workers and stop working.
Yes.
Speaker 5: So the Jordanians, okay, they are quite stable because this is a long-term job for them. But for the migrant workers, okay, our contract is usually three years. Okay, I mean the initial contract. Okay, after three years they have the choice to leave, okay, our factory and go back to their country or they will take a vacation and come back again for another tour.
The Jordanian okay. They are quite stable because this is a long term job for them, but for the migrant workers. Okay. Our contract it's usually three years okay.
I mean, the initial contract okay. After three yes, they have the choice to leaf.
Our factory and go back to their country or they will pick a vacation and come back in for another two or.
Speaker 5: So according to our statistics, okay, 80% or 75% of our workers are willing to continue after the first contract. And normally they will fulfill at least two to three contracts before they finally go back to the country. Okay, so your question is very good because...
So according to our statistics okay.
3% or 75% of our workers are willing to to to continue after the first contract and normally they will fulfill at least two to three contracts before they finally go back to the to the country.
So.
Your question is very good because if the.
Speaker 5: the uh... they go back after finish the first contract and we have with newcomers we need to uh... train them again okay this is not the situation because usually we are bringing very experienced uh... fact uh... operators of the machines we interview them and we see them uh... we saw the performance before we bring them here to Jordan to work for us
They go back after finished the first contract and we have we have newcomers we need to train them again okay.
This is not the situation because usually we are bringing very experience.
Facts are operators of the machines, we integrate with them and we see them.
We saw the performance before we bring them here to Jordan to work for US and also most of them finished maybe six seven years or some 10 more than 10 years. So I think that I can answer your questions.
Speaker 5: and also most of them finish maybe six, seven years or some more than ten years.
Speaker 5: So I think that I have answered your questions.
Thank you. Your next question is coming also Mike Distler.
<unk>.
Speaker 9: Yes, I just first off Sam Gilbert, Eric, you know, I've been on this call for years.
Yes, I, just first off Sam Gilbert Eric.
Hello.
Speaker 9: Yeah, yeah. How are you? Oh, hi Gilbert. How you doing? I just want to say most every question possible has been answered and asked. So, you know, I'm really calling congratulations on the quarter. And you should know that the shareholders. Both large and small, I'm sure appreciate the.
How are you.
Hi, Hubert how are you doing I just wanted to say most every question possible has been answered and asked.
Im really call and congratulations on the quarter.
And you should know that the shareholders.
Both large and small I'm sure.
I appreciate the.
Speaker 9: the level, the depth, the transparency of your calls. And that's it. I just, I got nothing more to add. You've answered every question. You guys are just doing a killer job and we all appreciate it. Thank you very much. Thank you very much. Thank you.
The level the depth and the transparency of your calls and that's it.
Got nothing more to add you've answered every question you guys are just doing.
Killer job and we all appreciate it. Thank you very much. Thank you very much. Thank you.
Yeah.
Thank you there are no further questions in the queue I will now hand, the conference back to Mr. Sam Choice CEO for closing remarks. Please go ahead.
Speaker 2: Thank you. There are no further questions in the queue. I will now hand the conference back to Mr. Sam Choi, CEO , for closing remarks. Please go ahead.
Speaker 4: I thank you, operator, and thanks again to all of you for joining us today. We appreciate your support and interest in our company and look forward to speaking with you again on our fiscal 2022 fourth quarter call. Thank you, everyone.
Thank you operator, and thanks again to all of you for joining us today.
Appreciate your support and interest in our company and look forward to speaking with you again on our fiscal 2020 to fourth quarter.
Hello.
Thank you.
Yeah.
Thanks, Thank you.
Okay.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.
Speaker 2: Thank you ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Thank you.