Q3 2024 Jerash Holdings (US) Inc Earnings Call
Operator: www.jerashholdings.com Greetings. Welcome to Jerash Holdings' Fiscal 2024 3rd Quarter Financial Results. At this time, all participants are in a listen-only mode.
Greetings and welcome to <unk> Holdings fiscal 'twenty 'twenty, four third quarter financial results.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Roger Pondell, Investor Relations. You may begin. Thank you, Kelly, and good morning everyone.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Note that this conference is being recorded I will now turn the conference over to your host Roger <unk> Investor Relations you may begin.
Thank you Kelly and good morning, everyone. Welcome to dress Holdings fiscal 2024 third quarter conference call I'm, Roger upon dealt with bundle Wilkinson dress holdings Investor Relations firm.
Roger Pondell: Welcome to Jerash Holdings' Fiscal 2024 3rd quarter. I'm Roger Pondell with Pondell Wilkinson, Jerash Holdings' Investor Relations firm. It will be my pleasure momentarily to introduce the company's Chairman and Chief Executive Officer, Samuel Choi.
It will be my pleasure momentarily to introduce the company's chairman and Chief Executive Officer Samuel Joy.
Roger Pondell: Financial Officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan. Before I turn the call over to Sam, I want to remind our listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Since 1995, forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the risk factor section of the company's most recent form 10-K, filed with the Securities and Exchange Commission, copies of which are available on the SEC's website at www.sec.gov along with other company filings made with the SEC.
As Chief Financial Officer of Gilbert Lee.
And Eric Stang, who leads the company's operations in Jordan.
Before I turn the call over to Sam I wanted to remind our listeners that today's call may include forward looking statements within the 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 recently for <unk>. Most recent Form 10-K as filed with the Securities and Exchange Commission.
And 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.
Sam Choi: Actual results could differ materially from these forward-looking statements, and the Company undertakes no obligation to update any forward-looking statements except as acquired. And with that, it's my pleasure to turn the call over to Sam Choi. Sam.
Actual results could differ materially from these forward looking statements.
The rash holdings undertakes no obligation to update any forward looking statements, except as required by law and with that it's my pleasure to turn the call over to Sam choices Sam.
Sam Choi: Thank you, Roger. Before we reveal our fiscal third quarter results, I want to provide an update regarding the Middle East situation and how it is affecting Jerash, which I know is on everyone's mind. As we have all been reading and seeing in the news, the geopolitical turmoil has caused supply chain disruptions throughout the region, which, in return for us, has delayed shipments of war materials from Asia. We took swift and decisive action, and since December, we were able to adopt an alternative route to receive the import of raw materials through the port of Jebel Ali in the United Arab Emirates. Additionally, the Jordanian Ministry of Foreign Affairs specifically reassured our team that the government is proactive in maintaining a safe and stable environment for business, including the protection of export seawater.
Thank you Roger.
Before we review our fiscal third quarter results.
I want to provide an update regarding the middle east situation.
And how is it affecting directs which I know you saw it after one smart.
As we have all been reading and seeing in the news.
EQ political somebody has caused supply chain disruptions throughout the region, which in return for US has delayed shipments of raw materials from Asia.
We took swift and decisive action and since December we were able to adult and alternative routes to receive the imports of raw materials through the ports or jabil elite in United Arab Emirates.
Additionally.
So the Indian Ministry of Foreign Affairs.
Cody reassure our team.
The government is proactive in maintaining a safe and stable environment for businesses, including to protect single export routes.
Sam Choi: And although there was a temporary shutdown at the Haifa port, exports from Jordan at both Haifa and the port of Aqaba are now flowing as normal. While revenue was significantly down for the fiscal 2024 third quarter, due in large part to the ongoing geopolitical situation and supply chain issues in the region, we were able to achieve profitability and improve the gross margin. Importantly, orders from our customers were delayed, but they were not cancelled. We continue to make good progress attracting a fresh pipeline of orders from new customers with established global brands. We are particularly excited about our growth opportunity in Europe, where we have acquired another European-based high-end apparel brand and have begun to produce several trial orders. In addition, Vens and Dickies.
And although there was a temporary shut down at the high support exports from Jordan at both HIFU M and the poll of Aqua.
Throwing that's normal.
While western there was significantly down for the fiscal 2020 for the quarter.
Due in large part to the ongoing geopolitical situation.
The pricing issues in the region, we were able to achieve profitability and improved gross margin.
Importantly orders from our customers.
But they were a pencil.
We continued to make good progress of trucking a fresh pipeline orders from new customers with established global brands.
We are particularly excited about our growth opportunity in Europe.
Where we have gained another European based high end it will Brian and have begun to produce several trial orders.
In addition, when and Dickies, both via brands have praised trial orders for U S and European market.
Eric Tang: Both VF brands have placed trial orders for US and European markets. These are all positive indicators for the future. I will now turn the call over to Eric Tang, who is on the ground in Jordan, to talk about our operations there. Thank you. Say hello.
These are all positive indicators for the future.
I will now turn the call over to Tim who is on the ground in Jordan to talk about our operations there.
Thank you fellow Yep Hello, everyone.
Eric Tang: Hello everyone, the supply chain disruptions have slowed down our production, which in turn has resulted in delayed shipments to our customers for our fiscal first quarter. That said, our operations are currently fully active, despite some of the current external logistical challenges. We have now put contingency plans in place that will enable us to produce and ship orders as necessary. We are continuing to execute on our strategic initiative to diversify our customer base, while maintaining strong relationships with our long-established customers; order flow from our new customers is increasing steadily, and we are consistently attracting new global brands. As Sam mentioned earlier, we are excited to see further penetration into the European market; orders from our first European-based high-end apparel brand are increasing, and we have attracted yet another European-based high-end apparel brand too.
The supply chain disruptions.
No doubt all production.
Which in turn resulted in delayed shipments to our customers for our fiscal first quarter.
That's that's our operations currently fully accurate.
Despite some of the current external logistical challenges we have now.
Didn't see plans in place that will enable us to produce and ship orders as necessary.
We are continuing to execute on our strategic initiative to diversify our customer base.
While maintaining strong relationships with our long established customers.
All of this role drawbaugh with newly customers is increasing steadily and.
And we are called system, the attracting new global brands.
That's sad Mad <expletive> early up we are excited to see further penetration into the European market.
All of this from our first European based high end apparel brand are increasing.
And we have attracted up yet another European based high end apparel brand too.
Eric Tang: Following several months of new garment sampling and costing, we are now producing several trial orders. Jerash is continuing to be a trusted manufacturing partner for VF Corporation, in addition to producing apparel for his North Face and Timberland brands. We picked up Wen's and Dickie's brands during the fiscal first quarter. Both parents have placed trial orders for the U.S. and the European market.
Following several months of new job and sampling a costing we are now producing Seth road trial audits.
Iraq is continuing to be a trusted manufacturing partner for VF Corporation.
In addition to producing a payrolls for north face and Timberland brands. We picked up was that Vicki spreads during the fiscal first quarter.
Both brands have praised trial orders for the U S and the European market.
Eric Tang: We look forward to rolling out production in the new fiscal year. Orders from new customers through our joint venture with Busanda are still committed, but they are being pushed into early fiscal 2025. Meanwhile, joint marketing efforts are continuing, and we believe the partnership will flourish in the future. As well, plans are moving forward for our joint venture with New Tech Textiles to build a state-of-the-art fiber mill in Georgia.
We look forward to eroding our production in the new fiscal year.
Orders from new customers through our joint venture with Ford said that I still committed.
But they are being pushed into early fiscal 'twenty 'twenty five.
Meanwhile, John marketing athletes are continually.
And we believe the partnership will flourish in the future.
That's well trends are moving forward for our joint venture with new textile to be what state of art fiber build in Georgia.
Eric Tang: We are in active discussion and are collaborating with the Jordanian government for certain financial incentives and have identified a location for the mill, although the precise construction date has not yet been determined. Our long-term goal remains intact, namely being a trusted manufacturing partner, providing Sustainable Textile Solutions, and growing responsibly as an environmentally conscious leader in the apparel industry.
We are in active discussion and not cooperating with the Jordanian government for sudden financial incentives and has identified a location for the meal.
Although the precise construction date has not yet been determined.
Our long term goal remains intact, namely being a trusted manufacturing partner.
For Whiting sustained the boat tests style solutions and growing responsibly as Ed and Ralph mentally cause just either in the apparel industry.
Gilbert Lee: We are well on our way to fulfilling that mission. I will now turn the call over to Gilbert to discuss our financial results. Thank you, Eric. Revenue for our fiscal 2024 third quarter amounted to $27.5 million, compared with 43.0 million for the same period last year. The decrease was primarily due to supply chain interruptions, with fewer shipments being delivered to some of the major customers in the U.S. Gross profit was 4.5 million dollars for the fiscal 2024 third quarter compared with 5.8 million in the same quarter last year. Gross margin improved 278 basis points to 16.2% compared with 13.5% a year ago. The increase was primarily due to improved product making, as we continue to produce a larger proportion of orders for our U.S. customers that generate higher margins. Operating expenses for the fiscal 2024 third quarter were $4.1 million compared with $4.5 million in the same quarter last year. SG&A expenses were lower at $3.8 million in the fiscal year 2024 third quarter compared with $4.5 million in the same quarter last year.
We are well on our way to fulfilling that mission.
I will now turn the call over to Gilbert to discuss our financial results feel but pretty.
Thank you Eric.
Revenue for our fiscal 2024 third quarter amounted to $27 $5 million.
Compare with 43.0 million for the same period last year.
The decrease was primarily due to the supply chain interruptions.
With fewer shipments being delivered to some of the major customers in the U S.
Gross profit was $4 $5 million for the fiscal 2020 for third quarter.
<unk> was $5 8 million in the same quarter last year.
Gross margin improved 278 basis points to 16, 2% compared with 13, 5% a year ago.
The increase was primarily due to improved product mix.
We continue to produce larger proportion of orders for our U S customers that generate higher margins.
Operating expenses for the physical 2020 for third quarter were $4 1 million eight.
As compared with $4 5 million in the same quarter last year.
SG&A expenses were lower at $3 $8 million in the fiscal year 'twenty 'twenty for third quarter.
Paired with $4 5 million in the same quarter last year.
Gilbert Lee: Stock-based compensation expenses were $243,000 compared with none in the same quarter last year. Operating income totaled $336,000 in the most recent third quarter versus $1.3 million in the same period last year. Total hourly expenses were $105,000 in the fiscal 2024 third quarter. That was, and that income was $232,000 or $0.02 per diluted share in the fiscal year 2024, third quarter, compared with $891,000 or $0.07 per diluted share in the same period last year. Jerash's balance sheet and cash position remain strong, and for the fiscal year 2024 third quarter, with $21.2 million of cash and restricted cash and net working capital of $40.5 million as of December 31, 2023. Inventory was $15.9 million, and accounts receivable was $8.5 million. Net cash provided by operating activities was approximately $7.9 million for the nine months ended December 31, 2023, compared with $9.9 million for the same period last year.
Stock based compensation expenses were 243000.
There was none in the same quarter last year.
Operating income totaled 300.
In the most recent third quarter versus $1 3 million in the same.
Period last year.
Total expenses were 105000 in the physical appointments, one fourth or fifth.
Hum.
That was it.
And net income was $232000 or two cents worth.
Diluted share in the fiscal year, 2024, third quarter, compared with 891000 or seven cents per diluted share in the same period last year.
The rash is balance sheet and cash position remains strong.
And our fiscal year, 'twenty 'twenty third quarter.
With 2.1 $21.2 million of cash and restricted cash and net working capital of $40 5 million as of December 31st 2023.
Inventory was $15 9 million and accounts receivable was $8.5 million.
Net cash provided by operating activities was approximately $7 $9 million for the nine months ended December 31 2023.
Compared with $9 9 million for the same period last year.
Gilbert Lee: On February 5, 2024, our Board of Directors approved a quarterly dividend of five cents per share, payable on February 23, 2024, to stockholders of record as of February 16, 2024. Lastly, with the ongoing geopolitical uncertainties in the Middle East, it would be imprudent for us to provide formal guidance at this time on what to expect for fiscal fourth quarter. With that, we will now open up the call for questions. Operator, may we have the first question, please?
On February six 2024.
Our board of directors approved a quarterly dividend of five cents per share payable on February 23rd 2024 to stockholders of record as of February 16, 2024.
Lastly, with the ongoing geopolitical uncertainty.
In the middle East it would be important for us to provide formal guidance at this time on what to expect for fiscal fourth quarter.
With that we'll now open up the call for questions.
Operator may we have the first question. Please.
Operator: Certainly. At this time, we'll be conducting our question and answer session. If you would like to ask... Please press star 1 on your telephone. A confirmation tone will indicate your line.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Operator: You may press star 2 if you would like to remove your question from the line. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. Your first question is coming from Mike Baker with GAD. To pose your question, your line. Okay, thanks. Good morning.
Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Your first question is coming from Mike Baker with D. A Davidson. Please pose your question your line is live.
Okay. Thanks, good morning, so there the Red sea issues are I think perfectly understandable, if you could give us a ive two questions. One. The first is if you could give us a little bit of a better sense of what you think true underlying demand would be if you could adjust.
Mike Baker: So, the Red Sea issues are, I think, perfectly understandable. If you could give us a couple of questions, I have two. One, the first is if you could give us a little bit of a better sense of what you think true underlying demand would be if you could adjust for the Red Sea situation and the delays. In other words, maybe, you know, what does the backlog look like, and how does that sort of inform underlying demand? And then a second question, I suppose related, but maybe a different question.
For the Red Sea situation and and the delays in other words, maybe you know what does the backlog look like and how does that sort of inform underlying demand and a second question I suppose related but but maybe a different question can you talk about the do you saw that joint venture.
Sam Choi: Can you talk about the Busana joint venture and why that is being pushed out a little bit? Does that have anything to do with the Red Sea situation, or is that a different situation? Thank you.
And why that is pushed out a little bit does that have anything to do with the red sea situation or is that a different situation. Thank you.
Concerning the true underlying demand.
It is hard to it is really hard to put a number together because right now there are just so many contingencies and so many uncertainties.
Sam Choi: Concerning the true underlying demand, it is hard to, it is really hard to put a number together because right now there are just so many contingencies and so many uncertainties both in the market and also in the geographical regions, and some of the customers. They're concerned, obviously, and we keep on communicating with them. And they're not canceling any orders. They're just not certain when to ship. Sometimes they want to push off the shipment to a later date, but sometimes, because of the situation in the logistics interruption, they want to get the shipments earlier. So it is really hard to predict. But overall, their demands are still there.
In the both in the market and also in the.
Geographical region.
And.
Some of the some of the customers they are being.
They're concerned obviously.
And we get on a communicating with them.
They're not canceled any orders.
They're just not certain.
When they ship.
Sometimes they want to push push up the shipment.
To to further down the road, but sometimes because of the situation in the logistic interruption they want to get the shipments earlier so.
So it is really hard to predict but also all the demands are still there. They still wanted to get a good yeah that is a kind of proven because.
Sam Choi: They still want to get the goods. Now, that is kind of proven because some of them actually won the shipments earlier because their other concern is that they can't get the product in time for their sales in the market. So, I don't know how to really put a number together.
Some of them actually wanted to shipments fast earlier.
They are they are.
They are auto is concerned is that they can get the product in time for their sales.
In the market.
So I.
I don't know how to really putting all that together.
We signed up.
Sam Choi: We kind of have an internal projection for the fourth quarter, and it is not pretty because we don't want to put something down that we cannot achieve, and we just don't know how this thing is going to go, in which direction it's going to go. So So, But on the other hand, I think Busan is kind of also in the same boat because most of the customers are in the U.S., and So, for the calendar year 2024. Some of the marketing and sales are pushed further down to our fiscal year 2025. But the owners are still there. It's just that.
And in turn a projection for the fourth quarter.
And it is not pretty.
Because we don't want to put something down that we cannot achieve and you just don't know how this thing is going to go which direction, it's going to go.
So.
But on the other hand, I think what was then a it kind of also in the same boat.
Most of their customers in the U S.
And.
So.
For calendar year 2024.
Some of the marketing and sales push.
Further down you are two obviously, you know 24 and five.
But are they all are especially over there.
It is just that.
Eric Tang: There might be some delay. Eric, do you have anything to add or not? Oh. Yes, about Busana, actually, okay, the progress is quite convincing because we had already confirmed it, I think, two, three months ago with four or five new customers, okay, ranging from Busana's side, okay, so, unfortunately, the Red Sea crisis happened in December. Although we have already finished the costing and some trial samples with those customers, okay, so two of the customers still confirmed to go ahead with us, okay, and we will continue the production. But two of the customers said that they would try to look into the situation in the Middle East before they officially gave the PO to us. And I think we'll be able to know the situation better after one month. But I'm still optimistic about the joint venture with Busan. Okay, great. Thank you for that caller.
That might be something like.
Eric do you have any thing to to add or.
Oh yeah.
Yes about boot sandal actually okay. The poker is it's quite a cause businesses because oh, we have already confirmed a I think the two or three months ago with a full size, but new customer okay Ah ranging from Booz then decide okay. So, but unfortunately, the rest of the crisis happened.
In December although we have already finished the costing and some trial samples with those customer. Okay. So two off the customer still confirmed to go ahead with US Okay, and we will continue to protest it but two of the customers that stay will try to look into.
The situation in the Middle East, Okay before they Oh facility, a gift appeal to us and I think we'll be able to know about the situation maybe after one month, but we still are optimistic about the joint venture with <unk>.
Okay, great. Thank you for that color.
Eric Tang: Thank you. Okay. Your next question is coming from Mark Argento with Lake Street. Please ask your question.
Thank you okay.
Your next question is coming from Mark Argento with Lake Street. Please pose your question your line is nice.
Mark Argento: Your line is now open, yeah, good morning guys. Just kind of getting back to the you know the core um, you know issue about the supply chain, so maybe you could maybe you could explain a little more so we can slow down it. You weren't able to receive the raw materials to be able to turn those into finished goods and then ship them out? Are you having problems shipping? Just trying to understand a little bit where the bottleneck here is.
Yeah. Good morning, guys, just kind of getting back to the you know the core.
Issue about.
The supplier changed so maybe you could maybe you could explain a little more sort of a slowdown.
You know you aren't able to receive in the raw materials to be able to turn those into finished goods and ship them out or are you having problems shipping.
Just trying to understand a little bit where the bottleneck here is and then you know lastly are these you know anything that I'm, maybe there's $5 million of product you couldn't ship this quarter.
Mark Argento: And then, you know, lastly, are these things, you know, maybe there's 5 million in product you couldn't ship this quarter? You know, do you end up shipping it out? Or is it, you know, is it actually lost revenue? Just maybe kind of getting down in the weeds a little bit more would be helpful.
Do you end up shipping it out or is it is it actually lost revenue just maybe kind of getting down to the weeds, a little bit more would be helpful. Thanks.
Well.
The situation is manageable.
Many false.
Sam Choi: Thanks. Um, well. The situation is manifold. First of all, the outbound shipment at the beginning of the Red Sea crisis. There was some interruption. I think Hyde Park was shut down for a short period of time.
First of all.
Oh Bruno shipments.
At the beginning of the Oh, if the rest of the crisis.
There was some interruption.
I think the high vote ports was shut down for a short period of time.
Sam Choi: But since then, it has been reopened, and both the Haifa port, which is in Israel, and the Aqaba port are now working normally. We're facing more problems with the raw material inbound shipments because it has come, it has to come through Yemen, because the raw material comes from Asia. Going out, it goes, goes out without having to gain.
But since then it has to be in reopen and both the high support which is in Israel and the archivolt <unk> port.
Now working normally.
We're facing more of a problem about the raw material inbound shipments because it has come it has to come true Yankee.
Because the raw material comes from Asia.
Oh it goes.
It goes out.
Without passing through Yang.
Now.
Sam Choi: Since then, since December, we have established an alternative route of getting the raw materials in, which is through the UAE. And that part is working well. We just have to get it to the port in UAE and then use a truck to send the raw materials in. So the raw materials are slowly getting in. Now, we might have to pay a little bit more to get them in. I don't know.
Since then since December we have established an alternative route of getting the raw materials in.
Which is through the U a E.
And that part is working well.
We just have to get it to the court in UAE, and then and then used truck to Tuesday, and raw materials, and so raw materials has already getting in.
We might have to pay a little bit more to get it and I don't know.
Sam Choi: It all has to be negotiated and settled, but there are a few containers. Yeah, we're already on the sea. And it just cannot reach.
I'll have to has to be negotiated and settled.
But there are a few containers that.
We're already on this Oh, let's see.
And it just.
Cannot reach.
Sam Choi: So those are the raw materials that we are waiting for. And they are already trying to get to the port through the Red Sea, but they just can't reach it. But we anticipate that within the next two weeks, we should know; we should have a better picture of how to get those.
All of those other raw materials that we that we're waiting for.
And data already.
Trying to get to the the ports are the recipe, but they just can't can reach and but we anticipate that within the next two weeks, we should know a loose you'll have a better picture of how.
To get those too but.
But.
Sam Choi: At this point, we're getting the inflow of raw materials. So there are just some delays, and those are not lost revenues.
At this point, where we're getting the inflow of raw materials. So there's just some delays and those are not lost revenue.
Sam Choi: It will just be pushed down the road. Now, um... Another situation here is that as soon as the crisis started, the shipping companies took advantage of the situation and increased the price, just like when it was during COVID. So that is another situation that we have to deal with, um... But I think we can manage that. Eric and his team are working very hard to handle that, so I don't think... I think it is just a temporary issue. Is that right, Eric? Do you have anything to add?
It will it will just be pushed down the road now.
Now.
And the other and not in a situation here is.
As soon as the crisis started this.
The shipping companies.
Took advantage of the situation and increase the price.
Like when he was during COVID-19.
So that is another situation that we have to deal with.
But I think we can manage that.
Eric and his team are working very hard to do.
Handle that so I don't think I think it is just a temporary issue.
Is that right.
Anything to add yeah, yes.
Eric Tang: Yeah, yes, I think to make it more simple for easy understanding. It is that as soon as the situation in the Red Sea occurred, so Jerash actually was the first company to change the route, so about the supply of raw materials from Asia to Jordan. The original routing is from Asia, from China, Taiwan, Vietnam, and shipping through the Agapa port; it has to go through the Red Sea. But as soon as the crisis started, we changed the routing to, rather than go through the Red Sea, we go to the port of Jabal Ali in the UAE, and then by truck from the UAE to Jordan.
Thank <unk> to make it more simple for easy understanding.
Is that as soon as the the situation and let's see okay occur. So garage actually is the first of payroll okay to change that routine so about the supplies of raw materials from Asia to Georgia. They all read you know Richard Yates from Asia.
From China, Taiwan, Vietnam, Okay, and shipping through the Alco pop what it has to go with a recipe okay, but as soon as the crisis started we changed the routines to rather to go through that that's the recipe. We go to the part of the Jebel Ali UAE and then by truck from.
<unk> two Georgia, Okay of course, it is it costing us a little bit more expensive in the logistic.
Eric Tang: Okay, of course, it is costing us a little bit more in logistics, but anyway, we can receive the container within the scheduled time we require. Okay, so one of the main reasons why we cannot want to give the forecast is because around 10 containers, okay, or 15 containers maximum at that time, okay, which were already on the sea heading to Agarwal when the crisis started. So it was started, okay, before they entered the Dead Sea, and we still did not receive any containers. I think we received two or three, okay. But why it takes another one to one and a half months before it can reach Agarwal is because they turn away. Now the shipping company gives direction that, okay, the ship, the vessel is to be, go away from the Red Sea and they will go through South Africa and then go to Jordan.
And and how we can be safe the contained in that Sketchup time be required. Okay. So the one of the reason the main reason why we cannot want to.
If the forecast is because a wrong turn containers okay.
Oh 15 contain the maximum okay at that time, Okay, which is already on the sea head into AGA about when the crisis started so it'll step that's okay before they enter into the Betsy.
And we still do not be able to receive Andy called retained us I think that we received two or three okay, but why it hits and another one to one and a half months time before it can reach alcohol is because they turned away now the shipping company gives direction. That's okay. The sip the west always to be.
Go away from Rusty and they will go to through the South Africa, and then go to Georgia. So it would take and then the one one to one to the Hoffman tongue, Okay and the overall informed the customer that this containers ideally and those raw materials will be delayed those raw materials is scheduled to.
Eric Tang: So it will take another one month to one and a half month, okay, and we also inform the customers that these containers are delayed and those raw materials will be delayed. Those raw materials are scheduled to arrive in Jordan in, I mean, December so that we can start production and ship by the end of December. So this is the reason why, okay, we cannot be able to start the production as scheduled, and it will be carried forward to the next quarter. So, as Gilbert mentioned, the customers are well aware of the situation, and they still need the garments, and the order is not canceled. Only if it is kept; the revenue will be carried forward to the next quarter.
Arrived Jordan.
In I mean in December so that we can stop production that ship by the end of December. So this is the reason why okay. We tend not be able to start the production schedule and it will be a carry forward to the next quarter. So as Stuart mentioned the.
The customer is well aware of the situation and they still need the governments and the order is not 10. So only it has kept the rest of the deal will be carried forward to the next quarter.
Quarter, Okay, I hope it will be more clear like this.
Eric Tang: Okay. I hope it will be more clear like this. No, that's, that's super helpful.
No that's.
Mark Argento: And then obviously, you're communicating with your customers; do you sense that they're moving orders to other manufacturers at this point? Or are they still committed to the, you know, to you guys and Jordan from a, you know, manufacturing capacity perspective going forward? What is the attitude of the customer here? Yeah, in the current situation, no customers have given or informed us that they are going to move any orders to another apparel company in Jordan because all the apparel companies suffer the same situation. And up till now, they did not consider moving out of Jordan or giving the orders to other countries as well, because to them, Jordan is still their best, I mean, desirable place for manufacturing. Appreciate the color, guys, and good luck.
Super Helpful. And then obviously you are communicating with their customers do you sounds like they're moving orders to other manufacturers at this point or are they still committed to that.
Now to you guys and in Jordan.
Bob.
You know a manufacturing capacity perspective going forward whats your attitude of the customer there.
Yeah at the current situation no customers have given or informed us that they are going to move and the oldest two and leather apparel in Jordan because only a pair was up about the same situation and up till now they look to consider moving out from.
Jordan or giving the orders to other countries as well mhm, because two of them Jordan, there's still a bit but I mean desirable places for manufacturing.
Okay.
I appreciate the color guys and good luck.
Thank you. Thank you.
Your next question is coming from Todd Fowler with Aegis financials. Please place your question your line of sight.
Eric Tang: Thank you. Thank you. Todd. Hey guys,
Hey, guys good.
Unnamed Caller: Good work, despite the challenging times. I noticed that in the last four quarters, you've continued to pay your dividend of five cents a share, but you haven't quite had the earnings per share of five cents. I was wondering if you'd thought about investing the close to 20 million in cash, short-term treasuries.
Good work, despite the challenging times unnoticed.
I noticed sit in the last four quarters. Your you've continued to pay your dividend of five cents a share but you haven't quite had the earnings per share of five cents. I was wondering if you've thought about investing the close to $20 million in cash and short term treasuries. It looks like that could add an extra penny or two.
Unnamed Caller: It looks like that could add an extra penny or two and hopefully get you back to even when you're paying that dividend. Hello. Hello? Yeah. Were you able to hear me? Yeah, it's just cutting off a little bit.
<unk> per share to your earnings and hopefully gets you back to even when you're paying that dividend of five cents a share.
Hello.
Hello.
Hello.
Yeah Yeah.
Yeah.
Were you able to hear me.
Oh yeah.
It just cutting off.
Oh I'm.
I'm sorry.
Would you like new remote my question.
Yeah, Who's at least hot I'm really sorry about that.
Okay I, just you know just thinking about it.
Talking about the dividend payments.
Unnamed Caller: I'm sorry. Would you like me to repeat my question? Yeah, would you please talk? I'm really sorry about that.
And then in the law.
<unk> profitability.
Is that what your question is about well. My question was you have the $20 million in cash and I don't notice any significant interest income have you considered investing that in some short term securities with interest rates pretty high around the world, where you could boost your interest income and hopefully get your earnings back at least.
Gilbert Lee: Okay, I just... You were talking about dividend payment and the lack of possibility. Is that what your question is about? Yeah, we do. We do have investments, not in securities, not in short-term securities, but we have fixed deposits at Benny Bang for the cash that we don't use, and we're earning pretty good interest on those deposits. So that kind of offsets some of the interest expenses that we have to pay for raw material purchases and for supply chain financing, but, in terms of significant income coming from short-term investments, there is no such thing. We don't speculate in the market. We don't invest in any short-term security. Do you invest in any U.S. treasuries or anything like that that could provide a higher yield for you?
Even with the dividend.
Yeah, we do we do have investments.
Not in Securities No instructions securities, but we.
We have fixed deposit.
At.
Many banks.
For the cash that we don't use and earn a pretty good interest on those deposits.
So that kind of offset some of the interest expenses.
He has to pay for our raw material purchases.
For our supply chain and anything but.
But.
In terms of Smith again.
Income coming from short term investments.
Oh.
There is no.
There's no such thing.
We don't speculate in the market and we know it.
But in any short term.
Good news.
So even in do you invested in the U S treasuries or anything like that that could provide a higher yield for you.
Yeah.
Gilbert Lee: We could consider that, but at this point, we have not. Okay, and my second question... We do have to keep a certain amount of cash and working capital for a working capital program. Sure. And then my second question kind of relates to other possibilities for transport. I know when I was over there and visited you guys, I think it was 2000.
We consider that but at this point we have not.
Okay, and Miami, we do we do have to keep certain.
The amount of cash in working capital.
For working capital purposes.
Sure and then my second question kind of relates to other possibilities for transport I know when I was over there and visited you guys. I think it was 2019 are the kingdom of Jordan had announced a large rail railway system in transport system that they have.
Unnamed Caller: In 2019, the Kingdom of Jordan announced a large railway system and transport system that they were building. They had started that in 2011, I think it was called the FESDA system, and it was supposed to link Saudi Arabia, Syria, Iraq, and Aqaba. Is there any progress that's been made on that, and is there any possibility for rail transport? to help you guys out with all the raw material imports.
We're building and they started that in 2011 I think it was called the <unk>.
As the system and it was supposed to link to Saudi Arabia, Syria, Iraq in AR and AR.
The October is there any.
Progress that's been made on that and is there any possibility for rail transport to to help you guys out.
Although the raw material imports.
Unnamed Caller: Yeah, I know that if they, you know, completed that link to Saudi Arabia or possibly Turkey, they talked about expanding that. That might give you some other possibilities to use other ports and transport raw materials. Eric, have you heard anything? Yeah, absolutely. At that time, there was such a big, cross-country, big railway project which involved Saudi Arabia, Jordan, a lot of countries, neighboring countries to connect, to improve logistics. OK, it was seriously considered in 2019.
Yeah, I know that if they completed that link to Saudi Arabia, where possibly in Turkey that I talked about expanding that that might give you. Some other possibilities to use other ports and transport raw materials by rail.
That ought to be aware of anything.
Yeah, absolutely yeah.
Uh huh, okay at that time that such a I mean cross country, a big Red where he project, which are in work so.
The Arabia, Jordan lots of countries neighboring country to connect.
To improve the logistics, okay. It was a serious consider in 2019, but after that one day you are almost Richard agreement the Caribbean desktop it took about three years and okay. They will hold the project until recently, okay. They Oh. They also open to discussion again this is the law.
Eric Tang: But after that, when they almost reached agreement, the corona started for three years, and OK, they will hold the project. Until recently, OK, they are also open to discussion again.
Eric Tang: This is the latest development. Okay, and is there any possibility that that could be completed in the next couple of years, or is that too far away to even speculate? It is my opinion that it is quite too far away. Even though they can confirm the project this year, I think it at least took three to five years to finish the project.
This development.
Okay and is there any possibility that that could be completed in the next couple of years or is that too far away to even speculate on.
My opinion, that's it is quite too far away, even though they've had confirmed the project. This year I think it at least took the three three to five years to finish the project.
Eric Tang: Okay, I appreciate the update. Thank you very much. Thank you. We've reached the end of the question and answer session. I would now like to turn the call back over to the CEO, Sam Choi, for closing remarks. Thank you, operator, and thanks to all of you for joining us today and for your continuous support. We are grateful that day-to-day life in Jordan remains normal.
Okay I appreciate the update thank you very much.
Thanks, guys.
We have reached the end of the question and answer session I would now like to turn the call back over to the CEO, Sam Choi for closing remarks.
Thank you a breakdown and thanks to all of you for joining us today.
And for your continuous support.
Well, we are grateful dead. Thank today lives in Jordan remains normal.
Sam Choi: Our hearts go out to the innocent victims on all sides of the Middle East conflict, and we are hopeful for a near-term resolution. We look forward to speaking with you next quarter. Thank you. Thank you, everyone. Thank you. This concludes today's conference, and you may disconnect your phone lines at this time. Thank you for your participation, and have a wonderful day. Thank you.
Our Hearts go out to the victims on all sides of the middle East conflict.
We are hopeful for a near term resolution.
Look forward to speaking with you next quarter. Thank you.
Thank you everyone.
Thank you.
This concludes today's conference and you may disconnect. Your phone lines at this time. Thank you for your partition and have a wonderful day.
Thank you.