Q4 2024 Jerash Holdings (US) Inc Earnings Call
Good morning everyone and welcome to the Jerash Holdings Fiscal 2024 4th Quarter and Full Year Financial Results Conference Call.
Operator: April 2024, 4th quarter and full-year financial results conference call. At this time, all participants are in a listen-only mode, and we will open for questions following the presentation. If you should require any assistance during the conference, please press star zero on your phone, keep at.
Operator: At this time, all participants are in a listen-only mode, and we will open the floor to questions following the presentation. If you should require any assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Roger Pondel, Investor Relations at Jerash Holdings. Roger, the floor is yours.
Speaker Change: At this time all participants are in a listen only mode and we will open for questions following the presentation.
Speaker Change: If you should require any assistance during the conference, please press star zero on your phone keypad.
Operator: Please note this conference is being recorded.
Roger Pondel: I will now turn the conference over to your host, Roger Pondel, Investor Relations at Jerash Holdings.
Speaker Change: I will now turn the conference over to your host, Roger Pondel, Investor Relations at Jerash Holdings. Roger, the floor is yours.
Roger Pondel: Roger, the floor is yours. Thanks so much, Jenny. Good morning, everyone. Welcome to Jerash Holdings Fiscal 2024, 4th quarter and full year conference call. I'm Roger Pondel with Pondel Wilkinson, Jerash Holdings, Investor Relations firm.
Roger S. Pondel: Thanks so much, Jenny. Good morning, everyone.
Speaker Change: Thanks so much, Jenny. Good morning, everyone. Welcome to Jerash Holdings fiscal 2024 fourth quarter and full year conference call. I'm Roger Pondel with Pondel Wilkinson, Jerash Holdings, investor relations firm.
Roger S. Pondel: Welcome to Jerash Holdings' fiscal 2024 fourth quarter and full year conference call. I'm Roger Pondel with Pondel Wilkinson, Jerash Holdings' investor relations firm. It will be my pleasure momentarily to introduce the company's chairman and chief executive officer, Sam Choi, its chief financial officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan. Both Sam and Eric are 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 of 1995.
Roger Pondel: It will be my pleasure momentarily to introduce the company's chairman and chief executive officer, Sam Choi, chief financial officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan. Both Sam and Eric are in Jordan.
Speaker Change: It will be my pleasure momentarily to introduce the company's Chairman and Chief Executive Officer, Sam Choi.
Speaker Change: Its chief financial officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan. Both Sam and Eric are in Jordan.
Roger Pondel: 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 Securities Exchange Act of 1934. 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 factor section of the company's most recent Form 10-K, as 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 from time to time. Actual results could differ materially from those forward-looking statements, and Jerash Holdings undertakes no obligation to update any forward-looking statements, of course, except as required by law.
Roger S. Pondel: 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, as 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 from time to time. Actual results could differ materially from those forward-looking statements, and Jerash 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?
Speaker Change: 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.
Speaker Change: of 1995.
Speaker Change: Such forward-looking statements are subject to numerous conditions.
Speaker Change: many of which are beyond the company's control, including those set forth
Speaker Change: In the risk factors section of the company's most recent Form 10-K , as filed with the Securities and Exchange Commission, copies of which are available on the SEC's website.
Speaker Change: at www.sec.gov, along with other company filings made with the SEC from time to time.
Speaker Change: Actual results could differ materially from those forward-looking statements, and Jerash Holdings undertakes no obligation to update any forward-looking statements, of course, except as required by law. And with that, I will turn the call over to Sam Choi. Sam?
Sam Choi: And with that, I will turn the call over to Sam Choi. Sam? Thank you, Roger.
Sam Choi: Since October of last year, the Red Sea crisis, triggered by multiple attacks on cargo ships by healthy rebels, has continued to cause surprising disruption throughout the Middle East region. Even though an alternative shipping route has been established to receive raw materials, bottlenecks and vessel bunging caused delays, impacting production for our group of customers, and in turn, the company's financial performance for the quarter and fiscal 2024. Gross margin, likewise, was done due to the significantly higher ocean freight and transportation caused from Asia to Jordan. Despite the shipping situation, we have identified and now progressively increasing our source of raw materials from Turkey and Egypt.
Lin Hung Choi: Thank you, Roger. Since October of last year, the Red Sea Crisis... Triggered by multiple attacks on cargo ships by healthy rebels, this has continued to cause supply chain disruption throughout the Middle East region. Even though an alternative shipping route has been established to receive raw materials, bottlenecks and vessel bunching cause delays, impacting production for our global customers and, in turn, the company's financial performance for the quarter and fiscal 2024. Gross margin, likewise, was down due to the significantly higher ocean freight and transportation costs from Asia to Jordan.
Lin Hung Choi: Thank you, Roger. Since October of last year, the Red Sea Crisis...
Lin Hung Choi: triggered by multiple attacks on cargo ships by healthy rebels has continued to cause supply chain disruption throughout the Middle East region.
Lin Hung Choi: Even though an alternative shipping route has been established to receive raw materials, bottlenecks and vessel bunching cause delays.
Lin Hung Choi: impacting production for our global customers and in turn the company's financial performance for the quarter and fiscal 2024.
Lin Hung Choi: Gross margin, likewise, was down due to the significantly higher ocean freight and transportation costs from Asia to Jordan.
Lin Hung Choi: Despite the shipping situation, we have identified and are aggressively increasing our source of raw materials from Turkey and Egypt. This is allowing us to bypass the treacherous shipping routes and mitigate related logistic costs. Also, on a positive note... We are experiencing a tangible increase in purchase orders from long-term customers. Additionally, we are receiving a fresh pipeline of business from new high-profile global brands, both directly and through our joint venture with Busana.
Lin Hung Choi: Despite the shipping situation, we have identified and are aggressively increasing our source of raw materials from Turkey and Egypt.
Sam Choi: This is allowing us to bypass the treacherous shipping routes and mitigate related logistics. Also, on a positive note, we are experiencing a tangible increase in purchase orders from long-term customers. Additionally, we are receiving a fresh pipeline of businesses from new high-profile Ripple brands, both directly and through our joint venture with Rosanna. We are now increasing orders from four Ripple brands through Rosanna. Our joint marketing efforts are continuing, and believe there will be solid new business opportunities ahead. As more companies look to reduce costs by shifting their production to terrorist-free countries, such as Jordan.
Lin Hung Choi: This is allowing us to bypass the treacherous shipping routes and mitigate related logistic costs.
Lin Hung Choi: Also, on a positive note,
Lin Hung Choi: We are experiencing a tangible increase in purchase orders from long-term customers. Additionally, we are receiving a fresh pipeline of business from new high-profile global brands, both directly and through our joint venture with Bosana.
Lin Hung Choi: We are now increasing orders from four global brands through Procenta. Our joint marketing efforts are continuing, and we believe there will be solid new business opportunities ahead, as more companies look to reduce costs by shifting their production to tariff-free countries, such as Jordan, in view of the current geopolitical situation. We have decided to delay our plans to build a state-of-the-art fabric mill in Jordan with another joint venture partner, New Tech TechStars. In the long term, our objective remains being a trusted manufacturer partner providing sustainable solutions as an environmentally cautious leader in the apparel industry. I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan.
Lin Hung Choi: We are now increasing orders from four global brands through Procenta.
Lin Hung Choi: Our joint marketing efforts are continuing and believe there will be solid new business opportunities ahead as more companies look to reduce costs by shifting their production to tariff-free countries such as Jordan.
Sam Choi: In view of the current geopolitical situation, we have decided to delay our plans to be a state-of-the-art fabric mill in Jordan, with another joint venture partner, Newtech Testar. For long term, our objective remains being a trusted manufacturer partner, providing sustainable solutions as an environmentally cautious leader in the apparel industry.
Lin Hung Choi: In view of the current geopolitical situation, we have decided to delay our plans to build a state-of-the-art fabric mill in Jordan with another joint venture partner, New Tech Textile.
Lin Hung Choi: For long term, our objective remains being a trusted manufacturer partner providing sustainable solutions as an environmentally cautious leader in the apparel industry.
Eric Tang: I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan. Thank you, Sam. Hello, everyone.
Speaker Change: I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan.
Eric Tang: Thank you, Sam. Hello, everyone.
Eric Tang: The supply chain disruptions delayed our production during the fiscal fourth quarter. Since we were not able to receive an adequate supply of materials from Asia to produce orders for our major customers, approximately 16-18% of orders were delayed and shipped in the fiscal 2025 first quarter.
Eric Tang: The supply chain disruptions have delayed our production during the fiscal fourth quarter. Since we were not able to receive an adequate supply of materials from Asia to produce orders to our major customers. Approximately 16-18% of orders were delayed and shipped in the fiscal 20-25 first quarter. As Sam mentioned earlier, we are now increasing our sourcing of materials locally in the Middle East, and we have plans in place that are allowing us to produce and ship orders on a more normalized basis as we move forward. Despite the ancestral external environment, we were able to capture local orders during the fiscal fourth quarter.
Eric Tang: Thank you, Sam. Hello, everyone.
Eric Tang: The supply chain disruptions have delayed our production during the fiscal fourth quarter since we were not able to receive an adequate supply of materials from Asia to produce orders to our major customers.
Eric Tang: Approximately 16-18% of orders were delayed and shipped in the fiscal 2025 first quarter.
Eric Tang: As Sam mentioned earlier, we are now increasing our sourcing of materials locally in the Middle East, and we have plans in place that are allowing us to produce and ship orders on a more normalized basis as we move forward. Despite the unsettled external environment, we were able to capture local orders during the fiscal fourth quarter to keep our factories running and maintain our staff, in part, in anticipation of growth in the new fiscal year.
Speaker Change: As Sam mentioned earlier, we are now increasing our sourcing of materials locally in the Middle East and we have plans in place that are allowing us to produce and ship orders on a more normalized basis as we move forward.
Speaker Change: Despite the unsettled external environment, we were able to capture local orders during the fiscal fourth quarter to keep our factories running and maintain our staff, in part, in anticipation of growth in the new fiscal year.
Eric Tang: To keep our factories running and maintain our staff in part in anticipation of growth in the new fiscal year. Today, our manufacturing facilities are fully active, with orders bucked well into the fiscal second quarter. Currently, we are experiencing steady order patterns from our major customers after a protracted two-year period of economic restraint at the retail level. We also are realizing the benefits of our strategic plan to diversify our customer base, and we are now producing garments for a number of new friends and customers. Syras has been a trusted Tier 1 manufacturer and a sample-assembly partner for VF Cooperation for more than six years.
Eric Tang: Today, our manufacturing facilities are fully active, with orders booked well into the fiscal second quarter. Currently, we are experiencing steady order patterns from our major customers after a protracted two-year period of economic restraint at the retail level. We are also realizing the benefits of our strategic plan to diversify our customer base, as we are now producing garments for a number of new brand customers. Jerash has been a trusted Tier 1 manufacturer and assembly partner for VF Corporation for more than 60 years.
Speaker Change: Today our manufacturing facilities are fully active, with orders booked well into the fiscal second quarter.
Speaker Change: Currently, we are experiencing steady order patterns from our major customers after a protracted two-year period of economic restraint at the retail level.
Speaker Change: We also are realizing the benefits of our strategic plan to diversify our customer base, as we are now producing garments for a number of new brand customers.
Speaker Change: Jerash has been a trusted tier 1 manufacturer and assembly partner for VF Corporation for more than 6 years.
Eric Tang: In addition to producing apparel for VF North Face and Timberland Brands, we are now receiving purchase orders from Vans following the initial trial orders placed during the second half of last fiscal year. Orders from our first European-based high-end apparel brand are steadily increasing, and our second European-based apparel brand is starting to place orders for fiscal 2025, following several successful trial audits. We are excited to grow the European market and look forward to rolling out production for new apparel items in the new fiscal year. Proceeding into our new fiscal year, we are feeling better and breathing easier. I will now turn the call over to Gilbert to discuss our financial results.
Eric Tang: In addition to producing a payroll for VF North Face and Tipple and Brands, we are now receiving purchase orders from when following the initial trial orders praised during the second half of last year. Orders from our first European-based high-end apparel brand are steadily increasing. And our second European-based apparel brand is starting to place orders for fiscal 2025, following several successful trial orders. We are excited to grow the European market and look forward to rolling out production for new apparel items in a new fiscal year.
Speaker Change: In addition to producing apparel for VF North Face and Timberland Brands, we are now receiving purchase orders from Vans following the initial trial orders placed during the second half of last fiscal year.
Speaker Change: Orders from our first European-based high-end apparel brand are steadily increasing.
Speaker Change: and our second European-based apparel brand is starting to place orders for Fiscal 2025, following several successful trial orders.
Speaker Change: We are excited to grow the European market and look forward to rolling out production for new apparel items in the new fiscal year.
Eric Tang: Proceeding into our new fiscal year, we are feeling better and breathing easier.
Speaker Change: Initially in the new fiscal year, we felt healthier and breathed easier. I will now hand over the call to Gilbert to discuss our financial results. Gilbert, please.
Gilbert Kwong: Revenue for our fiscal 2024 fourth quarter was $21.6 million dollars, compared with $23.8 million for the same period last year. The decrease was primarily caused by inadequate materials for production due to logistical disruptions and extended supply chain lead times in the Middle East. Revenue was negatively impacted by approximately three to four million dollars of orders that were delayed to the first quarter of fiscal 2025. Gross profit was $1.5 million for the fiscal 2024 fourth quarter, compared with $2.5 million in the same quarter last year.
Gilbert Lee: I will now turn the call over to Gilbert to discuss our financial results. Gilbert, please. Thank you, Eric. Revenue for our fiscal 2024 fourth quarter was $21.6 million. Compare with $23.8 million for the same period last year. The decrease was primarily caused by inadequate materials for production due to logistical disruptions and extended supply chain decimes in the Middle East. Revenue was negatively impacted by approximately $3 to $4 million of orders that were delayed to the first quarter in fiscal 2025. Gross profit was $1.5 million for the fiscal 2024 fourth quarter compared with $2.5 million in the same quarter last year.
Gilbert Kwong: Thank you, Eric. Revenue for our fiscal 2024 fourth quarter was $21.6 million, compared with $23.8 million for the same period last year.
Gilbert: The decrease was primarily caused by inadequate materials for production due to logistical disruptions and extended supply chain lead times in the Middle East.
Gilbert: Revenue was negatively impacted by approximately $3 to $4 million of orders that were delayed to the first quarter in fiscal 2025.
Gilbert: Gross profit was $1.5 million for the fiscal 2024 fourth quarter, compared with $2.5 million in the same quarter last year.
Gilbert Lee: Gross margin decreased to 7.0 percent from 10.3 percent in the same period last year. The decrease in gross margin reflected higher ocean freight and transportation costs, as well as manufacturing lower margin orders from local customers to offset production delays for US customers. Operating expenses for the fiscal 2024 fourth quarter were $4.5 million compared with $4.3 million for the same quarter last year. SGNA expenses were higher at $4.3 million in the fiscal year 2024 fourth quarter compared with $4.2 million in the same quarter last year. Stock-based compensation expenses were $258,000 compared with $119,000 in the same quarter last year.
Gilbert Kwong: Gross margin decreased to 7.0% from 10.3% in the same period last year. The decrease in gross margin reflected higher ocean freight and transportation costs, as well as lower margin orders from local customers to offset production delays for U.S. customers.
Gilbert: Gross margin decreased to 7.0% from 10.3% in the same period last year.
Gilbert: The decrease in gross margin reflected higher ocean freight and transportation costs as well as manufacturing lower margin orders from local customers to offset production delays for U.S. customers.
Gilbert Kwong: Operating expenses for the fiscal 2024 fourth quarter were $4.5 million compared with $4.3 million for the same quarter last year. SG&A expenses were higher at $4.3 million in the fiscal year 2024 fourth quarter compared with $4.2 million in the same quarter last year. Stock-based compensation expenses were $258,000 compared with $119,000 in the same quarter of last year. Operating loss was $3 million for the fiscal 2024 fourth quarter, compared with operating loss of $1.8 million for the same quarter last year. Total audit expenses were $134,000 in the fiscal 2024 fourth quarter, compared with $86,000 in the same quarter last year.
Gilbert: Operating expenses for the fiscal 2024 fourth quarter were $4.5 million compared with $4.3 million for the same quarter last year.
Gilbert: SG&A expenses were higher at $4.3 million in the fiscal year 2024 fourth quarter, compared with $4.2 million in the same quarter last year.
Gilbert: Stock-based compensation expenses were $258,000 compared with $119,000 in the same quarter of last year.
Gilbert Lee: Operating loss was $3 million for the fiscal 2024 fourth quarter, compared with operating loss of $1.8 million for the same quarter last year. Total audit expenses were $134,000 in the fiscal 2024 fourth quarter compared with $86,000 in the same quarter last year. Net loss was $3.1 million or $0.25 cents per share for the fiscal 2024 fourth quarter compared with net loss of $2.0 million or $0.16 cents per share in the same period last year. As of March 31, 2024, Jerash had cash and restricted cash of $14.0 million, and that's working capital of $36.1 million. Inventory was $27.2 million, and accounts receivable was $5.4 million.
Gilbert: Operating loss was $3 million for the fiscal 2024 fourth quarter, compared with operating loss of $1.8 million for the same quarter last year.
Gilbert: Total audit expenses were $134,000 in the fiscal 2024 fourth quarter compared with $86,000 in the same quarter last year.
Gilbert Kwong: The net loss was $3.1 million, or $0.25 per share, for the fiscal 2024 fourth quarter compared with a net loss of $2.0 million, or $0.16 per share, in the same period last year. As of March 31st, 2024, Jerash had cash and restricted cash of $14.0 million, and net working capital of $36.1 million. Inventory was $27.2 million, and accounts receivable was $5.4 million. Net cash provided by operating activities was approximately $2.5 million for the fiscal year ended March 31, 2024, compared with $10.8 million in fiscal 2023.
Gilbert: Net loss was $3.1 million, or $0.25 per share, for the fiscal 2024 fourth quarter compared with net loss of $2.0 million, or $0.16 per share in the same period last year.
Gilbert: As of March 31, 2024, Jerash had cash and restricted cash of $14.0 million and net working capital of $36.1 million.
Gilbert: Inventory was $27.2 million and accounts receivable was $5.4 million.
Gilbert Lee: Net cash provided by operating activities was approximately $2.5 million for the fiscal year and at March 31, 2024, compared with $10.8 million in fiscal 2023. As Sam and Eric mentioned earlier, we're seeing better order patterns into Fiscal 2025.
Gilbert: Net cash provided by operating activities was approximately $2.5 million for the fiscal year ended March 31, 2024, compared with $10.8 million in fiscal 2023.
Gilbert Kwong: As Sam and Eric mentioned earlier, we're seeing better order patterns into FSCO 2025. Our revenue for the fiscal first quarter is expected to increase by 14 to 15 percent from the prior year quarter, and full year revenue is anticipated to be up by 15 to 18 percent. Our gross margin goal for the fiscal 2025 year is expected to be approximately 13 to 15 percent. The outlook is, of course, subject to final product mix of shipments as well as order flow from new customers through our joint venture with Busana.
Speaker Change: As Sam and Eric mentioned earlier, we're seeing better order patterns into fiscal 2025.
Gilbert Lee: Our revenue for the fiscal first quarter is expected to increase by 14 to 15% from the prior year quarter, and full year revenue is anticipated to be up by 15 to 18%. Our gross margin goal for the fiscal 2025 year is expected to be approximately 13 to 15%. The outlook is, of course, subject to final product makes of shipments, as well as order flow from the new customers throughout joint venture with Busan.
Speaker Change: Our revenue for the fiscal first quarter is expected to increase by 14 to 15 percent from the prior year quarter.
Speaker Change: and full-year revenue is anticipated to be up by 15 to 18 percent.
Speaker Change: Our gross margin goal for the fiscal 2025 year is expected to be approximately 13 to 15 percent.
Speaker Change: The outlook is of course subject to final product mix of shipments as well as order flow from the new customers through our joint venture with Busana.
Gilbert Lee: On May 21, 2024, Jerash approved a regular quarterly dividend of $5 per share on its common stock. The dividend was paid on June 7, 2024, to stockholders of record as of May 31, 2024.
Gilbert Kwong: On May 21st, 2024, Jerash approved a regular quarterly dividend of $0.05 per share on its common stock. The dividend was paid on June 7, 2024, to stockholders of record as of May 31st, 2024. With that, we will now open up the call for questions, Operator.
Speaker Change: On May 21, 2024, Jerash approved a regular quarterly dividend of $0.05 per share on its common stock.
Speaker Change: The dividend was paid on June 7, 2024, to stockholders of record as of May 31, 2024. With that, we will now open up the call for questions.
Operator: With that, we will now open up the call for questions, Operator. Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation term will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the keys.
Operator: Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please pause a moment whilst we poll for questions. Thank you. Your first question is coming from Mike Baker of DA Davidson. Mike, your line is live.
Speaker Change: operator.
Speaker Change: Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please pause a moment whilst we poll for questions.
Operator: Please pause a moment whilst we pause for questions. Thank you.
Mike Baker: Your first question is coming from Mike Baker of DA Davidson. Mike, your line is live. Great, thanks. Hi, guys. How much of the sales ramp that you're seeing is, some of it is delayed from the first quarter, but it sounds like new customers, but also some of your legacy customers ramping back up. I wonder if you can parse that out a little bit, how much from each and what I'm getting at is, is this a sign that your customer is tumbling or VF Corps from particular is feeling a little bit better, starting to restock from shelves due to a better demand after, you know, as you said, what's been a couple of years of a really weak order.
Speaker Change: Thank you. Your first question is coming from Mike Baker of DA Davidson. Mike, your line is live.
Michael Allen Baker: Great, thanks. Hi guys, So, how much of the sales ramp that you're seeing is some of it delayed from the first quarter, but it sounds like new customers but also some of your legacy customers ramping back up. So, I wonder if you can parse that out a little bit, how much from each, and what I'm getting at is, is this a sign that your customers, Kimberlin or VF Corp in particular, are feeling a little bit better, starting to restock some shelves due to better demand after, you know, as you said, what's been a couple of years of really weak ordering? Just trying to understand the underlying sort Thanks.
Michael Allen Baker: Great, thanks. Hi guys, so how much of the sales ramp that you're seeing
Michael Allen Baker: Some of it is delayed from the first quarter, but it sounds like new customers, but also some of your legacy customers ramping back up. So I wonder if you can parse that out a little bit, how much from each, and what I'm getting at is...
Michael Allen Baker: Is this a sign that your customers, Timberland or VF Corp in particular, is feeling a little bit better? Starting to restock some shelves due to better demand after, you know, as you said, what's been a couple of years of really weak ordering. Just trying to understand the underlying sort of, you know, apparel demand that you're seeing.
Mike Baker: I'm just trying to understand the underlying sort of, you know, a parallel demand. You're saying thanks.
Lin Hung Choi: First of all, the Boosaner joint venture, we believe, or the projection for this coming year is about, I would say, $6 to $8 million. Is that correct? Yes, yeah, correct.
Sam Choi: First of all, the presenter, joint venture, we believe all the projection for this coming year is about, I would say, six to eight million dollars. Is that correct, Eric? Yes, yeah, correct, yeah. Okay, so that part, I think we are still trying to figure out how to improve, but we are taking purchase orders from four new customers from that is brought by Buzenna, Hilke Boss, which we have been doing business with them, actually even before Buzenna, and us joined the joint venture, and then there is Macy's, Dualards, and Brooks Brothers. So all these four, we will be taking orders from them in this fiscal 2025.
Michael Allen Baker: Thanks.
Speaker Change: First of all, the Boosaner joint venture, we believe, or the projection for this coming year is about, I would say, six to eight million dollars.
Eric Tang: Is that correct, Eric? Yes. Yeah, correct. Yeah.
Lin Hung Choi: Okay, so that part, I think we're still trying to figure out how to improve it, but we are taking purchase orders from four new customers that were brought by Busenna. Hugo Boss, which we have been doing business with them, actually even before Busenna and us joined the formed the joint venture. And then there's Macy's, Dillard's, and Brooks Barter.
Speaker Change: Okay, so that part I think we are still trying to figure out how to improve, but we are we're taking purchase orders from four new customers.
Speaker Change: that is brought by Busena. Hugo Boss, which we have been doing business with them.
Speaker Change: actually even before presented and us joined the formed the joint venture and then there is Macy's, Dillard's and Brooks Brothers.
Lin Hung Choi: So all these four, we will be taking orders from them in this fiscal year 2025. Now, our legacy customers, such as VF, which North Face, Timberland, and Vans are going to start this fiscal year. But VF, I'm looking at their increase is actually looking to increase by about 8%, compared to 2025, of course. VF is the most, uh, our number one customer. And then Neil Ballin's is also there. Let me see.
Speaker Change: So all these four, we will be taking orders from them in this fiscal 2025.
Sam Choi: Now, our legacy customers, such as VF, which North Phase and Timberland and Vance Wenz is going to start in this fiscal year, but VF, I'm looking at their increase, is actually, they are looking to increase by about 8% comparing to 2025. Of course, VF is the most; it's our number one customer, and then New Balance is also, let me see. I think New Balance is about the same, comparing to 2024, but Hilke Boss has a significant increase, about 17%. But we have a bunch of other customers that are going to have significant growth, other than this three.
Speaker Change: Now, our legacy customers, such as VF, which North Face and Timberland and Vans is going to start.
Speaker Change: in this fiscal year. But VEF, I'm looking at their increase, is actually, they're looking to increase by about 8% comparing to 2025.
Speaker Change: Of course.
Speaker Change: VF is the most, the...
Speaker Change: is our number one.
Speaker Change: customer, and then New Balance.
Speaker Change: is also.
Speaker Change: Let me see.
Lin Hung Choi: I think the meal balance is about the same, compared to 2024, but Hugo Boss has a significant increase, about 17%. But we have a bunch of other customers that are going to, have significantly grown, other than these three. So. That's why we're projecting double-digit growth in 2025, especially in the first two quarters. Anything to add, Eric?
Speaker Change: www.mytrendyphone.co.uk
Speaker Change: I think meal balance is about the same comparing to 2024.
Speaker Change: But Hugo Boss has a significant increase, about 17%.
Speaker Change: but we have a bunch of other customers that are going to.
Speaker Change: have significant growth.
Sam Choi: So that's why we're projecting double-digit growth in 2025, especially in the first two quarters.
Speaker Change: other than these three.
Speaker Change: So...
Speaker Change: especially in the first two quarters.
Eric Tang: Anything to add? Yes, I think more or less the same. Also, our projection, apart from VF, we have additional growth in the coming year, New Balance. We also have additional growth also. So this is the reason why our projection for the new fiscal year is a bit higher than before, two-digit higher. Yeah, make sense.
Eric Tang: Yes, I think more or less the same, also our projection, apart from that we have additional growth in the coming year, new balance, we also have additional growth, so this is the reason why our projection for the new fiscal year is a bit higher than before, two digits higher.
Speaker Change: Anything to add, Eric?
Eric Tang: Yes, I think more or less the same. Also, our projection, apart from VF, we have additional growth in the coming year. New Balance, we also have additional growth also. So this is the reason why our projection for the new fiscal year is a bit higher than before, two digits higher.
Michael Allen Baker: Yeah, that makes sense. One more, if I could.
Mike Baker: One more, if I could, the gross margin outlook for next year, I guess it is about flat on a year-of-year basis, but obviously much lower than what you've done in the past. Now, I guess I understand the reasons: the red tea disruption and higher freight cost, etc. I guess the question is, how much of that gross margin degradation versus past years you think is permanent because you have to find different routes and the like, or how much you think is just due to the temporary disruption and can eventually come back to where it once was.
Speaker Change: Yeah, makes sense. One more if I could.
Gilbert Kwong: The gross margin outlook for next year, I guess it is about flat on a year-over-year basis, but obviously much lower than what you've done in the past. Now, I guess I understand the reasons, the Red Tee disruption and higher freight costs, etc. I guess the question is, how much of that gross margin degradation versus past years do you think is permanent because you have to find different routes and the like, or how much do you think is just due to the temporary disruption and can eventually come back to where it once was?
Speaker Change: The Gross Margin Outlook for next year.
Speaker Change: I guess it is about flat on a year-over-year basis, but obviously much lower than...
Speaker Change: What you've done in the past, now I guess I understand the reasons, the Red Tee disruption and higher freight costs, etc. I guess the question is, how much of that gross margin degradation versus past years do you think is permanent?
Speaker Change: because you have to find different routes and the like, or how much you think is just due to the temporary disruption and can eventually come back to where it once was.
Gilbert Kwong: We're anticipating the freight cost is definitely going to be higher because the crisis is still going on and we don't know when it's going to end. Even though we now have a route that can kind of consistently get the containers into Jordan, we're going to have to pay a higher cost. I mean, even during the past, for six months. Some of the containers were stuck, and we spent like three to four times as much as normal to get those containers in.
Sam Choi: We're anticipating the free course is definitely going to be higher because the crisis is still going on, and we don't know when it's going to end. Even though we now find a route that can kind of pre-consistently get the containers into Jordan, but we're going to have to pay higher cost. During the past 46 months, some of the containers were stuck, and we spent three to four times as much as normal to get those containers in. That's part of the reason why the margin was so low in the fourth quarter. Going forward, at least in the foreseeable future, we anticipate the shipping cost to be higher, and the other reason is that now we're seeing some pretty competitive situation in the market.
Speaker Change: We're anticipating the freight cost is definitely going to be higher.
Speaker Change: because the crisis is still going on.
Speaker Change: and we don't know when it's going to end. Even though we now find a route that can kind of pretty consistently getting the containers.
Speaker Change: into Jordan, but we're going to have to pay a higher cost. I mean even during the past four to six months
Speaker Change: Some of the containers were stuck and we spent like three to four times.
Speaker Change: as much as normal to get those containers in.
Speaker Change: And that's part of the reason why the margin was so low in the fourth quarter.
Gilbert Kwong: And that's part of the reason why the margin was so low in the fourth quarter. But Going forward, at least in the foreseeable future, we anticipate the shipping cost to be higher. And the other reason is that now we're seeing some pretty competitive situations in the market. So we're getting pricing pressure from our customers, and we're pricing our products very competitively. So even though, and also with some new customers that we're bringing in, those customers, at least at the beginning, the overall margin is not going to be great, it's not going to be as great as... with our legacy customers because we have to spend extra money on developing the products and developing the process of doing those new orders. So we're trying to be more conservative in terms of projecting the margin.
Speaker Change: Going forward, at least in the foreseeable future, we anticipate a
Speaker Change: the shipping cost to be to be higher. And the other reason is that now we're seeing some pretty competitive
Sam Choi: We're getting pricing pressure from our customers, and we're pricing our products very competitively. Even though, and also with some new customers that we're bringing in, those customers, these at the beginning, the overall margin is not going to be great; it's not going to be as great as our legacy customers because we have to spend extra money on developing the products and developing the process of doing those new orders. So, we're trying to be more conservative in terms of projecting the margin.
Speaker Change: situation in the market. So we were getting pricing pressure from our customers and we were pricing our products very competitively.
Speaker Change: So even though, and also with some new customers that we're bringing in, those customers
Speaker Change: At least at the beginning, the overall margin is not going to be great. It's not going to be as great as...
Speaker Change: as our legacy customers, because we have to spend extra money on developing the products and developing the process of doing those new orders. So we're trying to be more conservative in terms of projecting the margin.
Mike Baker: Next time, thank you.
Mark Argento: Thank you very much. Your next question is coming from Mark Argento of Lake Street. Mark, your line is live. Yeah, hi guys. Just a couple of additional questions for you. Again, what you had just mentioned kind of costs, and my question was around inflation. Obviously, inflation worldwide is obviously running rampant right now. You just touched a little bit on kind of pricing. What are you seeing, our card? Your customers are being more aggressive in terms of pricing. But are you guys able to take some price and keep up and maintain that margin? What are you seeing from the impact of just broad-based inflation on the business?
Speaker Change: Okay. Next time.
Speaker Change: Thank you very much. Your next question is coming from Mark Argento of Lake Street. Mark, your line is live.
Unnamed: Hi guys. Just a couple of additional questions for you. Gilbert, you had just mentioned some costs. And my question was around inflation, obviously. Inflation worldwide is obviously running rampant right now. You just touched a little bit on that kind of price.
Mark Nicholas Argento: Yeah, hi guys. Just a couple additional questions for you. Gilbert, you had just mentioned kind of costs and my question was around
Mark Nicholas Argento: Inflation, obviously inflation worldwide is obviously running rampant right now. You just touched a little bit on kind of pricing. What are you seeing? Obviously, your customers are being more aggressive in terms of pricing.
Mark Nicholas Argento: But are you guys able to, you know, take some price and keep up and maintain that margin? What are you seeing, you know, from the impact of kind of just broad based inflation on the business?
Sam Choi: Well, the inflation is definitely there, but it is affecting our costs. Besides the shipping costs, but everything else is increasing. I think our inflation, at least on the operating side, the labor costs in Jordan. and also other operating costs. Those are increasing too.
Gilbert Kwong: Well, inflation is... It's definitely there, but it is affecting our costs. I don't know, besides the shipping costs, but everything else is increasing. I think our inflation, at least on the operating side, the labor costs in Jordan, and also other operating costs, those are increasing too. Now, we're looking at very diligently trying to cut costs in our operations. For example, the new dorm is now, and we're occupying the new dorm. So I think in fiscal 2025, we will be able to save some of the rent or leasing costs for the old dorms when we vacate the old dorms and start paying rent.
Speaker Change: Well, the inflation is...
Speaker Change: It's definitely there, but it is affecting our costs.
Speaker Change: besides the shipping costs, but everything else is increasing. I think our inflation, at least on the operating side, the labor cost in Jordan,
Speaker Change: and also other operating costs.
Sam Choi: Now, we're looking at very diligently trying to cut costs in our operations. Like, the new dorm is now we we're occupying the new dorm. So I think in fiscal 2025 we will be able to save some of the rent or leasing costs for the old dorms when we vacate the old dorms and start paying rent. So in that area, we could save some money and hopefully help the margin. However, the retail market is, like I said before, it's getting quite competitive. In order to attract new customers and to increase our volume with existing customers, we're going to have to price very competitively.
Speaker Change: those are increasing too. Now, we're looking at very diligently trying to cut costs in our operations.
Speaker Change: like the new dorm is now, we're occupying the new dorm.
Speaker Change: So...
Speaker Change: I think in fiscal 2025, we will be able to save some of the rent or leasing costs for the old dorms when we vacate the old dorms and start paying rent. So in that area, we could save some money and hopefully help the margin.
Gilbert Kwong: So in that area, we could save some money and hopefully help the margin. However, the retail market is, like I said before, becoming quite competitive. In order to attract new customers and to increase our volume with existing customers, we're going to have to price very competitively. So to answer your question, I don't see that we will be able to raise our prices for our existing customers and improve our margin, at least in the next year or so.
Speaker Change: However, the retail market is, like I said before, is getting quite competitive.
Speaker Change: in order to attract new customers and to increase our volume with existing customers, we're going to have to price very competitively.
Sam Choi: So, to answer your question, I don't see that we will be able to raise our prices to our existing customers and improve our margin, at least in the next year or so. All right. So if the vendors' retail taking prices up 10% on a garment, then your price delivered, are you able to maintain that? Are you taking a lot of that hit right now? Are you able to raise prices at least to stay kind of consistent with inflation? Are you guys kind of losing margin because of inflation? Sounds like a ladder. Yeah, I think overall it's a ladder, but in certain customers the margins are increasing.
Speaker Change: So, to answer your question, I don't see that we will be able to raise our prices.
Speaker Change: to our existing customer and improve our margin at least in the next year or so.
Unnamed: Alright, so if the vendors are taking prices up 10% on a garment, I mean, yeah, your price delivered is, are you able to, you know, maintain that? Are you taking a lot of that, that hit right now? Are you, you know, able to raise prices at least to stay, you know, kind of consistent with inflation? Are you guys kind of losing margin because of inflation sounds like a lot?
Speaker Change: all right so so I if you know if the vendors retail taking prices up 10% on a garment
Speaker Change: [inaudible]
Gilbert Kwong: Yeah, it's I think overall, it's the latter. But for certain customers, the margins are increasing. So it is It all depends on the brand.
Speaker Change: Margin Because of Inflation. Sounds like the latter.
Speaker Change: Yeah, I think overall it's the latter, but in certain customers, the margins are increasing, so it is...
Eric Tang: So it all depends on the brand; it all depends on the customer. Like customers such as Hugo Boss, the margins are very good. But VF, I think we're improving margin on Timberland, especially right now where we're trying to source our fabrics from Egypt and from Turkey. So, in that sense, we should be able to improve our margin with Timberland. For TNF or North Face, their margin is actually holding, but it is going to be very difficult to get their margins up. Is that the pre-aircraft, Eric? Anything to ask? Yeah, very accurate. Yeah.
Lin Hung Choi: It all depends on it, like customers such as Hugo Boss, their margins are very good. [inaudible] I think we're improving margins on Timberland, especially right now, where we're trying to source our fabrics from Egypt and from Turkey. So in that sense, we should be able to improve our margin with timber for TNF or North Face. The margin is actually holding, but it is going to be very difficult to get the margins. Is that pretty accurate, Eric? Do you have anything to add?
Speaker Change: it all depends on the brand, it all depends on the customer.
Speaker Change: like customers such as Hugo Boss, their margins are very good, but VF
Speaker Change: I think we're improving margin on timberland, especially right now where we're trying to source our fabrics from Egypt and from Turkey. So, in that sense,
Speaker Change: We should be able to improve our margin with Timberland.
Speaker Change: for TNF or North Face.
Speaker Change: Their margin is actually holding, but it is going to be very difficult to get their margins up.
Speaker Change: Is that pretty accurate, Eric?
Eric Tang: Yes, very accurate. But in addition, in order to increase more revenue, we are also implementing several saving plans for cost reduction, such as we are going to install more solar energy systems in order to reduce the cost of electricity here because here in Jordan, the cost of electricity is pretty expensive. Also, we are trying to use, for the boiler, we are trying to do some water and diesel saving. This has already been reinstalled in one of our factories, and this is also one of the cost-saving measures. And for the production line, we are trying to bring in more automatic machines in order to save the number of production people. For all the cost-saving plans we are currently carrying out,
Eric Tang: In addition, in order to increase more revenue, we are also implementing several saving plans for cost reduction, such as we are going to install more solar energy systems in order to reduce the cost of the electricity here, because here is Jordan. The cost of electricity is pretty much expensive. Also, we are trying to use for the boiler. Okay, we are trying to do some water and diesel saving. Okay, this is already re-installed in one of our factories, and we are also, this is also one of the cost saving measures. And for the production line, we are trying to bring in more automatic machines in order to save, okay, and the number of production people.
Eric Tang: Do you have anything to add? Yes, very accurate.
Eric Tang: In addition, in order to increase more revenue, we are also implementing several saving plans for cost reduction, such as we are going to install more solar energy systems in order to reduce the cost of electricity here, because here in Jordan, the cost of electricity is pretty much expensive.
Eric Tang: Also, we are trying to use, for the boiler, okay, we are trying to do some water and diesel saving. Okay, this is already reinstalled in one of our factory and we are also, this is also one of the cost saving measure.
Eric Tang: For the production line, we are trying to bring in more automatic machines in order to save the number of production people. For all the cost saving plans, we are currently carrying out.
Eric Tang: For all the cost saving plan, we are currently okay, carry out. Thank you very much.
Unnamed: Thanks guys, I appreciate it. Good luck.
Speaker Change: Thanks guys, appreciate it. Good luck.
Operator: Just a reminder: if you have any remaining questions, you can press over here in the U.S. Just two quick questions.
Speaker Change: Thank you. Thank you very much. Just a reminder though if you have any remaining questions you can press star 1 on your phone keypad now.
Operator: Thank you. Our next question is coming from Mike Distler of AMNX. Mike, your line is live.
Speaker Change: Our next question is coming from Mike Disler of AMNX. Mike, your line is live.
Michael Allen Baker: Yes, good afternoon over there, gentlemen. Gilbert here in the U.S. Just two quick questions. First, well, actually just one question.
Michael Allen Baker: Yes, good afternoon over there, gentlemen.
Gilbert: Gilbert here in the U.S.
Mark Argento: First of all, actually just one question, really. Just, I'm glad you tabled the new mill to join venture for at least short term, intermediate term. That sounds like a smart capital outweigh. And I just want to make sure that you have available, you said 14 million approximately in cash available plus 36 million accessible. Is your available capital no issue going forward, just for the next six to nine months kind of thing? You're good to go. No, we believe we will be able to generate sufficient operating cash. And I mean, if we look at in last fiscal, the prior fiscal year, 23, we generated almost 11 million dollars in operating cash.
Michael Allen Baker: Really, just I'm glad you tabled the new mill, the joint venture, for at least the short-term, intermediate term. That sounds like a smart capital outlay. And I just want to make sure that you have available, you said $14 million approximately in cash available, plus $36 million accessible. Is your available capital no issue going forward, just for the next six to nine months kind of thing? You're good to go?
Michael Allen Baker: Just two quick questions. First, well actually just one question. Really, just I'm glad you tabled the new mill, the joint venture, for at least short term, intermediate term. That sounds like a...
Michael Allen Baker: Smart Capital Outlay, and I just want to make sure that you have...
Speaker Change: Available, you said $14 million approximately in cash available plus $36 million accessible. Is your available capital no issue going forward just for the next six to nine months kind of thing? You're good to go? No.
Gilbert Kwong: We believe we will be able to generate sufficient operating cash. I mean, if we look at last fiscal, well, the prior fiscal year 23, we generated almost $11 million in operating cash. Of course, this year it is down to $2.5 million.
Speaker Change: We believe we will be able to generate sufficient operating cash and I mean if we look at
Speaker Change: In the prior fiscal year, 2023, we generated almost $11 million in operating cash. Of course, this year, it's down to $2.5 million.
Gilbert Lee: Of course, this year is down to 2.5 million dollars. But, but also last prior fiscal year, we spend a lot of money finishing up the dormitory and also doing some internal expansion upgrading and also expanding our capacity in fiscal 2023. And some of them flow over to fiscal 2024. So in 24, we spend about 5.1 million dollars in that area. So that that's primarily why our cash flow decreased by 5.3 million, 5.4 million dollars in fiscal 2024. So, and we don't have any debt. We don't have to pay back anything. So we believe with the improved profitability in 2025, sales growing at 15 or whatever up to 20%.
Gilbert Kwong: But also, in the prior fiscal year, we spent a lot of money finishing up the dormitory and also doing some internal expansion, upgrading, and also expanding our capacity in fiscal 2023, and some of them will flow over to fiscal 2024. So in 2024, we spent about $5.1 million in that area. So that's primarily why our cash flow decreased by $5.3 million, to $5.4 million, in fiscal 2024. So, and because we don't have any debt, we don't have to pay back anything.
Speaker Change: but
Speaker Change: but also...
Speaker Change: In the prior fiscal year, we spent a lot of money finishing up the dormitory and also doing some internal expansion, upgrading, and also expanding our capacity in fiscal 2023, and some of them
Speaker Change: flow over to fiscal 2024. So in 2024, we spend about $5.1 million in that area.
Speaker Change: So that's primarily why our cash flow decreased by $5.3 million, $5.4 million in fiscal 2024.
Speaker Change: So, and we don't have any debt.
Gilbert Kwong: So, we believe with the improved profitability in 2025, sales growing at 15 or whatever, up to 20%, it will bring a lot of cash flow into our accounts. And we're right now not looking at having any significant amount of capital expenditure in this fiscal year, the delay of the fabric mill. And on that, we still have the option of raising capital or borrowing money. So we don't believe that this cash is going to be
Speaker Change: we don't have to pay back anything. So we believe with the improved profitability in 2025, sales growing at 15 or whatever up to.
Gilbert Lee: And it will bring a lot of cash flow into our into our account. And and we're right now not looking at having any significant amount of capital expenditure in this fiscal year, the delay of the fabric mill. And on that, we still have the option of raising capital or borrowing money. So we don't believe it is cash is going to be a problem for us.
Speaker Change: 20%, it will bring a lot of cash flow into our account.
Speaker Change: And we're right now not looking at...
Speaker Change: having any significant amount of capital expenditure in this fiscal year.
Speaker Change: the delay of the of the fabric mill and on that we still have the option of raising capital or borrowing money so we don't we don't believe it is cash is going to be a problem for us
Michael Allen Baker: Okay, that's terrific. And thank you. Thanks, Gilbert. Sam, Eric, keep up the good work.
Mark Argento: Okay, that's terrific. And thank you. Thanks, Gilbert. Sam, keep up the good work. Thank you very much, all. Have a good day. Thank you.
Speaker Change: Okay, that's terrific, and thank you. Thanks, Gilbert.
Lin Hung Choi: Thank you very much, everyone. Have a good day. Thank you. Thank you. Thank you very much. Well, we have reached the end of our question and answer session. I will now hand the microphone back over to Sam for some closing comments.
Speaker Change: Sam, Eric, keep up the good work. Thank you very much, all. Have a good day. Thank you. Thank you. Bye-bye. Thank you very much. Well, we have reached the end of our question and answer session. I will now hand back over to Sam for some closing comments.
Operator: Thank you very much.
Sam Choi: Well, we have reached the end of our question-and-answer session. I will now hand back over to Sam.
Sam Choi: Thank you very much, Operator. And thanks to all of you for joining us today and for our continuous support and for your continuous support. We look forward to speaking with you in the next quarter. Thank you.
Lin Hung Choi: Thank you very much, Operator. And thanks to all of you for joining us today and for your continuous support. We look forward to speaking with you next quarter.
Lin Hung Choi: Thank you very much, Operator, and thanks to all of you for joining us today and for our continuous support, and for your continuous support. We look forward to speaking with you next quarter. Thank you.
Operator: Thank you very much, everyone. This does conclude today's conference. You may now disconnect your phone lines and have a wonderful day. Thank you for your participation.
Operator: Thank you. Thank you very much everyone. This does conclude today's conference. You may now disconnect your phone lines and have a wonderful day. Thank you for your participation.
Operator: Thank you very much. Have a wonderful day!