Jerash Holdings (US) Q3 2026 Jerash Holdings (US) Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 Jerash Holdings (US) Inc Earnings Call
Operator: Greetings, and welcome to the Jerash Holdings Fiscal 2026 Third Quarter Financial Results Call. At this time, all participants are on a listen-only mode, and the 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, this conference is being recorded. I will now turn the conference over to your host, Mr. Roger Pondel, Investor Relations. Sir, you may begin.
Operator: Greetings, and welcome to the Jerash Holdings Fiscal 2026 Third Quarter Financial Results Call. At this time, all participants are on a listen-only mode, and the 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, this conference is being recorded. I will now turn the conference over to your host, Mr. Roger Pondel, Investor Relations. Sir, you may begin.
Speaker #2: And the question-and-answer session will presentation. If anyone should require operator assistance during the conference, please press star keypad. And please note, this conference is being recorded.
Speaker #2: I will now turn the conference over to your host, Mr. Roger Pondel. Thank you. Zero on your telephone, operator. And hello, everyone. Good afternoon, and welcome to the Jerash Holdings fiscal 2026 third quarter conference call.
Roger Pondel: Thank you, operator, and hello, everyone. Good morning. Welcome to Jerash Holdings' Fiscal 2026 Third Quarter Conference Call. I'm Roger Pondel with PondelWilkinson, Jerash Holdings' investor relations firm. On the call today from the company are Chairman and Chief Executive Officer Sam Choi; Chief Financial Officer Gilbert Lee; Eric Tang, who leads the company's operations in Jordan; and Ringo Ng, the company's Head of Marketing. 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: Thank you, operator, and hello, everyone. Good morning. Welcome to Jerash Holdings' Fiscal 2026 Third Quarter Conference Call. I'm Roger Pondel with PondelWilkinson, Jerash Holdings' investor relations firm. On the call today from the company are Chairman and Chief Executive Officer Sam Choi; Chief Financial Officer Gilbert Lee; Eric Tang, who leads the company's operations in Jordan; and Ringo Ng, the company's Head of Marketing. 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.
Speaker #2: I'm Roger Pondel, investor relations, with the company. Our chairman and chief executive officer, Sam Choi, is also on the call today, as well as Gilbert Lee, our chief financial officer; Eric Tang, who leads the company's operations in Jordan; and Ringo Ng, the company's head of marketing.
Speaker #2: 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 Reform Act of 1995.
Speaker #2: Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the private securities litigation 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.
Roger 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, 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. Actual results could differ materially from these forward-looking statements, and Jerash Holdings undertakes no obligation to update any forward-looking statements except as required by law. And with that behind us, it is my pleasure to turn the call over to Sam Choi. Sam?
Roger 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, 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. Actual results could differ materially from these forward-looking statements, and Jerash Holdings undertakes no obligation to update any forward-looking statements except as required by law. And with that behind us, it is my pleasure to turn the call over to Sam Choi. Sam?
Speaker #2: Actual results could differ materially from these forward-looking morning. Welcome to Jerash
Speaker #1: in Jerash Holdings undertakes no Statements obligation to any forward update looking statements required by except as with behind us , I it is my pleasure .
Speaker #1: And with behind that us , I is my pleasure will . to turn the law over to Sam Choy . Sam .
Sam Choi: Thank you, Roger. Jerash achieved sharply improved financial results across both the top line and bottom lines for the fiscal Q3. The performance reflected continued growing demand from our long-standing global customers, complemented by initial large orders placed in June from our new strategic partner, Hansoll Textile in Korea. Our collaboration with Hansoll is progressing well and delivering mutual benefits as we continue to work together on additional orders for its largest customers, a US-based multinational omni-channel retail company. At the same time, our long-standing global brand customers are seeking to secure greater production capacity with Jerash. Turning to our recent announcement made just last week, we are very excited about the acquisition of our 184,000sq ft manufacturing building and land in Amman, Jordan, from the Housing Bank for Trade and Finance.
Sam Choi: Thank you, Roger. Jerash achieved sharply improved financial results across both the top line and bottom lines for the fiscal Q3. The performance reflected continued growing demand from our long-standing global customers, complemented by initial large orders placed in June from our new strategic partner, Hansoll Textile in Korea. Our collaboration with Hansoll is progressing well and delivering mutual benefits as we continue to work together on additional orders for its largest customers, a US-based multinational omni-channel retail company. At the same time, our long-standing global brand customers are seeking to secure greater production capacity with Jerash. Turning to our recent announcement made just last week, we are very excited about the acquisition of our 184,000sq ft manufacturing building and land in Amman, Jordan, from the Housing Bank for Trade and Finance.
Speaker #2: Thank
Speaker #2: . Sharon as Chief sharply improved results across top line and both the financial the call fiscal third quarter . The performance reflected continued growing demand from a long standing global customers Pondel with Pondel Wilkinson, Jerash , complemented initial large orders placed in June from our new strategic by , Hensel partner Korea .
Speaker #2: Our collaboration with and progressing well delivering benefits we Hanson is as continue to work on together additional orders for its largest , a US customers based multinational omnichannel retail company .
Speaker #2: time At , our long global customers are greater secure production capacity with . Turning to our region matches last standing are very brand about our acquisition 184,000 square foot manufacturing building and in Amman , Jordan .
Speaker #2: From the Housing Bank and finance, the same land. This represents for Jerash an important milestone to advance the company's transactions and next five-year growth strategy, as we plan to establish this facility as a Jerash new Friendship production complex, an investment of approximately $3 million in renovations and an additional $2 million in advanced manufacturing equipment.
Sam Choi: This transaction represents an important milestone as we advance the company's next five-year growth strategy. We plan to establish these facilities at Jerash's new flagship production complex through an additional investment of approximately $3 million in renovations and $2 million in advanced manufacturing equipment. Renovations are anticipated to be completed before the end of 2026. Once fully operational, this strategic investment is expected to increase our manufacturing capacity by at least 40%. This expansion will meaningfully enhance our ability to support growing demand from existing customers, while positioning the company to pursue new business opportunities. The added physical capacity and advanced technological capabilities allow us to scale responsibly while maintaining the quality and reliability our customers expect.
Sam Choi: This transaction represents an important milestone as we advance the company's next five-year growth strategy. We plan to establish these facilities at Jerash's new flagship production complex through an additional investment of approximately $3 million in renovations and $2 million in advanced manufacturing equipment. Renovations are anticipated to be completed before the end of 2026. Once fully operational, this strategic investment is expected to increase our manufacturing capacity by at least 40%. This expansion will meaningfully enhance our ability to support growing demand from existing customers, while positioning the company to pursue new business opportunities. The added physical capacity and advanced technological capabilities allow us to scale responsibly while maintaining the quality and reliability our customers expect.
Speaker #2: Renovations are and are announcement anticipated to be completed before the end of 2026 . Once fully excited operational , this strategic investment is expected to manufacturing our capacity for by at least increase expansion 40% .
Speaker #2: meaningfully enhance our ability to support demand from existing growing customers This . While positioning the company to pursue new business Since the new opportunities .
Speaker #2: Physical capacity and technological capabilities allow us to scale responsibly while maintaining the quality and reliability our customers expect. As part of our ongoing strategy, we continue to diversify both our customer base and our product mix, which supports more stable, year-round business and reduces the impact of seasonality and advanced business.
Sam Choi: As part of our ongoing strategy, we continue to diversify both our customer base and product mix, which supports more stable year-round production and reduces the impact of seasonality of business. These initiatives, combined with our planned capacity expansion, position us to accommodate growing order volumes across new and expanded product offerings. As we scale, we remain focused on driving further improvements in gross margins, while maintaining operational and cost control discipline. With that, I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan. Eric?
Sam Choi: As part of our ongoing strategy, we continue to diversify both our customer base and product mix, which supports more stable year-round production and reduces the impact of seasonality of business. These initiatives, combined with our planned capacity expansion, position us to accommodate growing order volumes across new and expanded product offerings. As we scale, we remain focused on driving further improvements in gross margins, while maintaining operational and cost control discipline. With that, I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan. Eric?
Speaker #2: This initiatives , combined with our planned capacity , positioned accommodate growing volumes and us to across product expanded offerings . As we scale , we of remain focused on further improvements gross margins while maintaining operational and cost control driving discipline .
Speaker #2: With that, I will now turn it over to Eric Tang, to cover expansion, who is in charge of our Jordan operations.
Speaker #2: Eric .
Eric Tang: Thank you, Sam. As we mentioned during our last quarterly call, the recent shifts in tariff policy have heightened the urgency for many global brands to diversify their manufacturing footprint, and many are turning to Jordan. Jordan today is being recognized as one of the world's preferred manufacturing hubs. Accordingly, since mid-2025, in response to rising capacity requirements from our customers, we have been actively pursuing opportunities to expand our production capacity. Hence, we are very thrilled with the opportunity to acquire the bank-owned manufacturing building and land, as Sam mentioned. We expect to begin renovations immediately, with completion currently anticipated before the end of 2026. Once operational, the new facility is expected to gradually employ up to approximately 2,500 workers.
Eric Tang: Thank you, Sam. As we mentioned during our last quarterly call, the recent shifts in tariff policy have heightened the urgency for many global brands to diversify their manufacturing footprint, and many are turning to Jordan. Jordan today is being recognized as one of the world's preferred manufacturing hubs. Accordingly, since mid-2025, in response to rising capacity requirements from our customers, we have been actively pursuing opportunities to expand our production capacity. Hence, we are very thrilled with the opportunity to acquire the bank-owned manufacturing building and land, as Sam mentioned. We expect to begin renovations immediately, with completion currently anticipated before the end of 2026. Once operational, the new facility is expected to gradually employ up to approximately 2,500 workers.
Speaker #3: you . Sam Thank we mentioned during . our As last quarterly call , the recent shift in tariff policy have heightened the urgency for many brands to manufacturing footprint .
Speaker #3: pursuing opportunities to expand our production capacity very thrilled with the are opportunity to acquire bank , we owned manufacturing and . As Sam , we expect to begin , building renovations mentioned with completion anticipated land of 2026 .
Speaker #3: Once operational, before the new facility is expected to gradually employ its end order volumes, demand will immediately increase. Recruiting will begin ahead of completion of renovations and before equipment is installed, allowing us to ramp up approximately 2,500 workers quickly and efficiently.
Eric Tang: As demand and order volumes increase, recruiting efforts will begin ahead of the completion of renovations and before new equipment is installed, allowing us to ramp up operations quickly and efficiently once the facility comes online. We are now completing production of the final phase of the initial order of 3 million pieces of girl shorts from Hansoll, with shipments expected to be completed during the current fiscal quarter. At the same time, we are working closely with Hansoll and its largest customer on the second purchase order for a different style. Buyers from major customers have submitted increased order projections for calendar year 2026, and we also are continuing to see new inquiries from global brands and other strategic partners. Our facilities are now fully booked through July, with customers' commitments coming in for the rest of the calendar year soon.
Eric Tang: As demand and order volumes increase, recruiting efforts will begin ahead of the completion of renovations and before new equipment is installed, allowing us to ramp up operations quickly and efficiently once the facility comes online. We are now completing production of the final phase of the initial order of 3 million pieces of girl shorts from Hansoll, with shipments expected to be completed during the current fiscal quarter. At the same time, we are working closely with Hansoll and its largest customer on the second purchase order for a different style. Buyers from major customers have submitted increased order projections for calendar year 2026, and we also are continuing to see new inquiries from global brands and other strategic partners. Our facilities are now fully booked through July, with customers' commitments coming in for the rest of the calendar year soon.
Speaker #3: Once the comes online and — we are now completing production of the final phase of the initial order to — of operations of gold.
Speaker #3: Shots from with expected to completed during the current fiscal up to 3 million pieces quarter be . same At the time , we are working closely with pencil efforts its largest customer on the second purchase Hensel different style .
Speaker #3: Buyers from major customers have submitted shipment order projections for calendar year 2026, and we also are continuing to see new inquiries from global brands and other strategic partners.
Speaker #3: Our are now fully booked through customers July coming in for the rest of the calendar year soon . We different looking at ways to expand our capacity .
Eric Tang: We are looking at different ways to expand our production capacity. Currently, we are collaborating with the Jordan Ministry of Labor to develop additional facilities in two rural towns, supporting both our growth objectives and local employment opportunities. We expect these projects to be completed within fiscal 2027. Once finished, these new facilities are expected to add an additional 5% to 10% to our total production capacity. This additional production capacity will enable Jerash to expand existing customer relationships while capturing new growth opportunities. Our long-term strategy is to more than double our current production capacity in the next five years, while continuing to focus on diversifying both our customer base and product mix. Through capacity optimization, our goal is to drive stronger, more consistent top-line growth and improve margins throughout the year.
Eric Tang: We are looking at different ways to expand our production capacity. Currently, we are collaborating with the Jordan Ministry of Labor to develop additional facilities in two rural towns, supporting both our growth objectives and local employment opportunities. We expect these projects to be completed within fiscal 2027. Once finished, these new facilities are expected to add an additional 5% to 10% to our total production capacity. This additional production capacity will enable Jerash to expand existing customer relationships while capturing new growth opportunities. Our long-term strategy is to more than double our current production capacity in the next five years, while continuing to focus on diversifying both our customer base and product mix. Through capacity optimization, our goal is to drive stronger, more consistent top-line growth and improve margins throughout the year.
Speaker #3: Currently, we are at the Jordan production ministry to develop additional facilities in two rural towns, supporting our growth objectives and opportunities. Both labor and local expect to be within this fiscal 2027.
Speaker #3: Once these new expected facilities are active, they will add an additional 5% to 10% to our total production project capacity. This completed additional finished production capacity will allow Jerash to expand existing customer relationships while capturing new growth.
Speaker #3: opportunities. Our long-term strategy is to more than double our current production capacities in the next five years, while continuing to diversify both our customer base and product mix through a focus on capacity.
Speaker #3: Our goal is to drive more stronger , consistent top line growth and improved margins throughout the year . With that , I will now turn the call over to Gilbert to discuss our financial results .
Eric Tang: With that, I will now turn the call over to Gilbert to discuss our financial results. Gilbert?
Eric Tang: With that, I will now turn the call over to Gilbert to discuss our financial results. Gilbert?
Gilbert Lee: Thank you, Eric. Revenue for the fiscal 2026 Q3 grew 18% to $41.8 million from $35.4 million in the same quarter last year. The increase was primarily driven by higher shipment volumes to the company's major export markets, including the US and a new customer in Korea. Gross profit increased 31% to $7 million for the fiscal 2026 Q3, from $5.4 million in the same quarter last year. Gross profit margin for the quarter improved to 16.9% from 15.2% in the same period last year, primarily driven by a favorable product mix from new customers and the benefits of economies of scale. Operating expenses totaled $5.1 million in the fiscal 2026 Q3, compared with $44.7 million in the same quarter last year.
Gilbert Lee: Thank you, Eric. Revenue for the fiscal 2026 Q3 grew 18% to $41.8 million from $35.4 million in the same quarter last year. The increase was primarily driven by higher shipment volumes to the company's major export markets, including the US and a new customer in Korea. Gross profit increased 31% to $7 million for the fiscal 2026 Q3, from $5.4 million in the same quarter last year. Gross profit margin for the quarter improved to 16.9% from 15.2% in the same period last year, primarily driven by a favorable product mix from new customers and the benefits of economies of scale. Operating expenses totaled $5.1 million in the fiscal 2026 Q3, compared with $44.7 million in the same quarter last year.
Speaker #3: Gilbert .
Speaker #4: Thank you. Eric. Revenue for the 2026 fiscal third quarter grew 18% to $41.8 million, from $35.4 million in the same quarter last year.
Speaker #4: The increase was primarily by driven higher shipment
Speaker #4: The company's export major markets include the US and a new optimization customer in Korea. Gross profit increased 31% to $7 million for fiscal 2026, from $5.4 million in the same quarter last year.
Speaker #4: Gross profit margin for the quarter improved to 16.9% from the same period last year, primarily by favorable product from customers and the benefits of scale. New expenses.
Speaker #4: Operating totaled driven 5.1 million in the fiscal 2026 third quarter , with same quarter of last year . The increase was quarter primarily compared due to higher sales volumes and increased recruitment costs , and partially 15.2% in offset by lower stock based compensation .
Gilbert Lee: The increase was primarily due to higher sales volumes and increased recruitment costs, and partially offset by lower stock-based compensation. Operating income nearly tripled to $1.9 million in the fiscal 2026 Q3, from $708,000 in the same quarter last year. Total other expenses were $418,000 in the fiscal 2026 Q3, compared with $252,000 in the same quarter last year. The increase was primarily due to the increase in financing needs to support business growth and exchange losses. Income tax expenses were $368,000 in the fiscal 2026 Q3, compared with $450,000 in the prior year quarter.
Gilbert Lee: The increase was primarily due to higher sales volumes and increased recruitment costs, and partially offset by lower stock-based compensation. Operating income nearly tripled to $1.9 million in the fiscal 2026 Q3, from $708,000 in the same quarter last year. Total other expenses were $418,000 in the fiscal 2026 Q3, compared with $252,000 in the same quarter last year. The increase was primarily due to the increase in financing needs to support business growth and exchange losses. Income tax expenses were $368,000 in the fiscal 2026 Q3, compared with $450,000 in the prior year quarter.
Speaker #4: Operating Nearly income . tripled to $1.9 million in the fiscal 2026 third quarter , 708,000 in from the same quarter last . Total order expenses were 418,000 in the year 2026 third quarter , compared fiscal In the same quarter last The increase was due primarily to the increase in financing needs to business and growth exchange losses Income tax the .
Speaker #4: 2026 third quarter , compared with 450,000 in the expenses were . Net rose to $1.2 million , or diluted income share , for the fiscal third quarter from $0.09 per 6000 or diluted the same share , for quarter $0.00 per 2026 year .
Gilbert Lee: Net income rose to $1.2 million, or $0.09 per diluted share for the fiscal 2026 Q3, from $6,000 or $0.00 per diluted share for the same quarter last year. Comprehensive income attributable to the company's common stockholders advanced to $1.2 million for the third quarter from a comprehensive loss of $147,000 in the same quarter last year. Excuse me. As of 31 December 2025, Jerash had cash and restricted cash totaling $13.2 million, and net working capital was $36.4 million. Inventory was $2.6 million, and accounts receivable amounted to $7.8 million.
Gilbert Lee: Net income rose to $1.2 million, or $0.09 per diluted share for the fiscal 2026 Q3, from $6,000 or $0.00 per diluted share for the same quarter last year. Comprehensive income attributable to the company's common stockholders advanced to $1.2 million for the third quarter from a comprehensive loss of $147,000 in the same quarter last year. Excuse me. As of 31 December 2025, Jerash had cash and restricted cash totaling $13.2 million, and net working capital was $36.4 million. Inventory was $2.6 million, and accounts receivable amounted to $7.8 million.
Speaker #4: Comprehensive income attributable to the company's common stockholders advanced to $1.2 million in the third quarter from a loss of $147,000 in the same quarter last year.
Speaker #4: year for the me Excuse . As of December 31st , 2025 , Jerash had cash cash total and 13.2 million and net working capital was 36.4 million .
Speaker #4: 26 million and accounts receivable amounted to used in support 7.8 million . activities $3.5 million operating For the December 31st , compared ended in Inventory was nine months fiscal 2025 .
Gilbert Lee: Net cash used in operating activities was approximately $3.5 million for the nine months ended 31 December 2025, compared with $581,000 for the same period in fiscal 2025. The increase in net cash used in operating activities was primarily driven by higher receivables during the first nine months, along with a smaller reduction in inventory from the beginning of the year, partially offset by improved net income and modest increase in prepaid expenses and advances to suppliers. On 3 February 2026, Jerash's board of directors approved a regular quarterly dividend of $0.05 per share on its common stock, payable on 20 February 2026, to stockholders of record as of 13 February. As both Sam and Eric noted earlier, we are optimistic about our future prospects and performance ahead.
Gilbert Lee: Net cash used in operating activities was approximately $3.5 million for the nine months ended 31 December 2025, compared with $581,000 for the same period in fiscal 2025. The increase in net cash used in operating activities was primarily driven by higher receivables during the first nine months, along with a smaller reduction in inventory from the beginning of the year, partially offset by improved net income and modest increase in prepaid expenses and advances to suppliers. On 3 February 2026, Jerash's board of directors approved a regular quarterly dividend of $0.05 per share on its common stock, payable on 20 February 2026, to stockholders of record as of 13 February. As both Sam and Eric noted earlier, we are optimistic about our future prospects and performance ahead.
Speaker #4: The increase used in operating activities . driven by in net was receivables during the first with a nine months , primarily higher 2025 , smaller reduction in beginning of the along year Net cash 581,000 for the same inventory from the modest offset by net in prepaid increase expenses and suppliers to improved .
Speaker #4: February 3rd , On 2026 , advances Board of regular income quarterly approved a of with on its common stock period , payable on February 20th , was 2026 , to stockholders of record as of February cash 13 .
Speaker #4: As both Eric and I mentioned earlier, we are optimistic about our future prospects and performance ahead. We remain focused on cost controls and improving operating efficiency as we implement our long-term expansion strategy.
Gilbert Lee: We remain focused on cost controls and improving operating efficiency as we implement and execute our long-term expansion strategy. Looking ahead, we expect revenue for the fiscal 2026 Q4 to increase by 23% to 26% over the same quarter last year, and our gross margin target for the fiscal 2026 Q4 is 14% to 16%. We want to note that the Ramadan holiday this year falls at the end of March, whereas last year it occurred in early April. Depending on production and shipping schedules, some shipments may experience delay into the following quarter. We will now open up the call for questions, and I will turn the call back to the operator.
Gilbert Lee: We remain focused on cost controls and improving operating efficiency as we implement and execute our long-term expansion strategy. Looking ahead, we expect revenue for the fiscal 2026 Q4 to increase by 23% to 26% over the same quarter last year, and our gross margin target for the fiscal 2026 Q4 is 14% to 16%. We want to note that the Ramadan holiday this year falls at the end of March, whereas last year it occurred in early April. Depending on production and shipping schedules, some shipments may experience delay into the following quarter. We will now open up the call for questions, and I will turn the call back to the operator.
Speaker #4: Looking ahead, we expect the fiscal 2026 fourth quarter to increase by 23% to 26% over the same quarter last year, and our target for the fiscal 2026 fourth quarter gross margin is 14% to 16%.
Speaker #4: We want to note that Ramadan this year falls at the end of March, whereas last year it occurred early in April. Depending on shipping schedules, shipments may be affected.
Speaker #4: We did experience delays following the quarter. We will open up the call to questions, and I will turn the call back to the operator.
Speaker #4: We did experience some delays following the quarter. We will open up the call into the questions, and I will turn the call back to the operator.
Operator: Thank you. Ladies and gentlemen, at this time, we'll be conducting our 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. And you may 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 keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Mike Baker with D.A. Davidson. Your line is live.
Operator: Thank you. Ladies and gentlemen, at this time, we'll be conducting our 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. And you may 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 keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Mike Baker with D.A. Davidson. Your line is live.
Speaker #5: and at this time , we will be conducting our question and session you . gentlemen , . If you would
Speaker #5: like to ask a press please keypad now answer telephone will indicate line is in your queue confirmation tone , and you may . press two .
Speaker #5: If you star one on your touchtone to question, question from the queue, would like to remove your—pick up your handset before pressing the star—using for one moment. Speaker, while we, please.
Speaker #5: pull for star questions . Thank keys . participants equipment , coming Mike with D.A. Davidson . Your line is live first question is
Speaker #5: from
Mike Baker: Thanks, guys. Just real quick, a couple questions on how these expansions impact your income statement and balance sheet. So I guess first, how do you finance the $5 million needed for renovations? Where does—Does that just come out of cash, or do you borrow to fund that $5 million? And then, I guess, secondly, and related, where does the $2.8 million, you know, that's been financed from the Housing Bank, where does that show up? Does that show up... Is that going to show up as debt on your balance sheet? Thanks.
Mike Baker: Thanks, guys. Just real quick, a couple questions on how these expansions impact your income statement and balance sheet. So I guess first, how do you finance the $5 million needed for renovations? Where does—Does that just come out of cash, or do you borrow to fund that $5 million? And then, I guess, secondly, and related, where does the $2.8 million, you know, that's been financed from the Housing Bank, where does that show up? Does that show up... Is that going to show up as debt on your balance sheet? Thanks.
Speaker #6: Thanks ,
Speaker #6: Thanks ,
Speaker #6: Guys, just real quick—a couple on how...
Speaker #6: are impact income statement . and and balance sheet . So I guess first , you Baker how do questions the these the your $5 million needed for for renovations .
Speaker #6: Where does does your that just come out of or or do fund to secondly , in in , where does And then I guess related in the 2.8 million for the know , for from the , to the that's being , you you financed from the bank , where housing does that show Does that up ?
Speaker #6: Show up? Is that going to be on your own debt, your balance sheet? Thanks.
Gilbert Lee: Thank you, Mike. The first question about the $5 million that we estimated cost for renovation as well as equipment installation. The total is $5 million, which includes the renovation, which is $2 million. No. The renovation is $3 million, and the equipment is $2 million. This $5 million is going to be financed by the Housing Bank also. But it is separately applied for, because the Housing Bank is going to apply from the Central Bank, which provides a subsidy on the interest rate, which we will get a lower than market interest rate for this $5 million loan. And this will show up on our balance sheet as long-term debt. I think the repayment is 8 years, but we have a 1-year grace period.
Gilbert Lee: Thank you, Mike. The first question about the $5 million that we estimated cost for renovation as well as equipment installation. The total is $5 million, which includes the renovation, which is $2 million. No. The renovation is $3 million, and the equipment is $2 million. This $5 million is going to be financed by the Housing Bank also. But it is separately applied for, because the Housing Bank is going to apply from the Central Bank, which provides a subsidy on the interest rate, which we will get a lower than market interest rate for this $5 million loan. And this will show up on our balance sheet as long-term debt. I think the repayment is 8 years, but we have a 1-year grace period.
Speaker #4: Mike The first question Thank you . . the $5 million that we cost estimated for renovation , as as well equipment , installation , total which includes the is 5 million , which the no .
Speaker #4: The renovation , And And the also equipment is 2 million . is 3 million . 5 million is going to be bank . is 2 million .
Speaker #4: Also, this housing is applied for separately from the bank housing, but we are going to apply because the central bank provides a subsidy on the rate, which means we will get a lower rate for the $5 million loan.
Speaker #4: bank And show up on our balance long term market sheet as . I think interest debt the repayment is eight years , but a period , which we words , we have a don't have to pay back the until this of .
Speaker #4: Interest principal $2.8 million for the building and is to be land the a going by the this will housing. In other bank and that is 2027.
Gilbert Lee: In other words, we don't have to pay back the principal until February 2027. Now, the $2.8 million for the building and the land is going to be a mortgage by the Housing Bank, and that is also an 8-year loan. The interest rate, I believe, is 8%, and also there will be a grace period. So the first year, we only have to pay quarterly interest, but then it will start repayment of the principal a year later.
Gilbert Lee: In other words, we don't have to pay back the principal until February 2027. Now, the $2.8 million for the building and the land is going to be a mortgage by the Housing Bank, and that is also an 8-year loan. The interest rate, I believe, is 8%, and also there will be a grace period. So the first year, we only have to pay quarterly interest, but then it will start repayment of the principal a year later.
Speaker #4: Long. The rate, I believe, interest is 8%. And also, there is a grace for the first year. We only—the period.
Speaker #4: Interest will be paid, then repayment of the principal will start quarterly later this year.
Speaker #4: . that makes
Mike Baker: Okay, that makes sense. So total then it's gonna... And so that's gonna show up on the balance sheet, debt mortgage. So total is gonna be $7.8 million showing up in ter- for-
Mike Baker: Okay, that makes sense. So total then it's gonna... And so that's gonna show up on the balance sheet, debt mortgage. So total is gonna be $7.8 million showing up in ter- for-
Speaker #6: sense .
Speaker #6: Gonna be, and so, and that's going to... on the sheet, that balance. So, total is going to—total. Then it's in for...
Gilbert Lee: Yeah, approximately $7.8 million. Yeah. Right.
Gilbert Lee: Yeah, approximately $7.8 million. Yeah. Right.
Speaker #4: Approximately $8 million. Yeah.
Mike Baker: Okay. Fair enough. If I could ask one more, a little more detail, if you wouldn't mind, on those other... I think you said 2 other facilities that you're thinking about. It sounds like they're smaller because it'll increase capacity by 5 to 10%. But, can you, yeah, just a little bit more detail on, the size of those facilities and, and I guess similarly, you know, how those would be financed.
Mike Baker: Okay. Fair enough. If I could ask one more, a little more detail, if you wouldn't mind, on those other... I think you said 2 other facilities that you're thinking about. It sounds like they're smaller because it'll increase capacity by 5 to 10%. But, can you, yeah, just a little bit more detail on, the size of those facilities and, and I guess similarly, you know, how those would be financed.
Speaker #7: okay . Fair
Speaker #6: If I could, one more—$7.8 million showing up in a little more detail if you wouldn’t mind. Show up other, I think, you on those, said two other.
Speaker #6: that you're Sounds like they're thinking about . smaller it'll because Right by 5 to 10% . But ask can little bit you . more Yeah , just a the on size of those detail capacity And , the facilities .
Speaker #6: You know, how are facilities financed?
Gilbert Lee: Yeah. If you remember, a few years ago, we worked with the Department of, or the Ministry of Labor to start up a satellite factory in a rural area, which is about 1.5 hours outside of Amman, and that has been quite successful. Now, this is mainly to help the Department of Labor to promote business in rural area, and also to create job opportunities for those areas that have high unemployment rates.
Gilbert Lee: Yeah. If you remember, a few years ago, we worked with the Department of, or the Ministry of Labor to start up a satellite factory in a rural area, which is about 1.5 hours outside of Amman, and that has been quite successful. Now, this is mainly to help the Department of Labor to promote business in rural area, and also to create job opportunities for those areas that have high unemployment rates.
Speaker #4: you
Speaker #4: a
Speaker #4: A few years ago, we worked with the Department of Labor, and I guess those would be similarly with the Ministry.
Speaker #4: ago ,
Speaker #4: To start up a, yeah, satellite - if factory - in a rural area, it's one and a half hours from Amman. And that has area, which is successful.
Speaker #4: Now, quite, this about is mainly to help the Department of Labor business in rural areas and to create job opportunities in those areas, also to promote have for high unemployment, that rates.
Gilbert Lee: So, by working with the Department of Labor, they will work with us, cooperate with us to give us the privilege or the permits to import foreign workers, which we depend on, because those are skillful workers, and we import a lot of those, and we accommodate them in our industrial city, and that has been working out very well for us. So just to, as a win-win cooperation with the Jordanian government, we agree to set up another two satellite factories in rural areas, not too far from our main industrial zone, maybe an hour or two hours away. But that will allow us to hire more local workers, which will keep the Ministry of Labor happy and continue to cooperate with us when we need their help.
Gilbert Lee: So, by working with the Department of Labor, they will work with us, cooperate with us to give us the privilege or the permits to import foreign workers, which we depend on, because those are skillful workers, and we import a lot of those, and we accommodate them in our industrial city, and that has been working out very well for us. So just to, as a win-win cooperation with the Jordanian government, we agree to set up another two satellite factories in rural areas, not too far from our main industrial zone, maybe an hour or two hours away. But that will allow us to hire more local workers, which will keep the Ministry of Labor happy and continue to cooperate with us when we need their help.
Speaker #4: So, by and of, the Department of Labor work with us—give us the permits, or cooperate with us—to give us the privilege for workers, which is because those we are skillful workers.
Speaker #4: And on , those , and in them we we we import has well for very that to us . win win foreign cooperation been to set up another just industrial factories in to areas from not main industrial zone .
Speaker #4: agree Maybe or an hour two hours away . allow us to lot of hire more workers , But that accommodate will which the So of Labor happy continue to cooperate us and we need help our .
Gilbert Lee: But, our goal is to utilize those to train up our local workers, as well as, to work on some not so complicated garment styles and improve our overall efficiency. So I think overall, this is going to be a cost savings to us because those local workers, they don't need to take a long commute, and we, of course, provide them transportation, and that will help us save our transportation costs. So those are smaller scale kind of factories, just like the one that we started a few years ago. And, the amount of capacity that they will bring is not going to be like one of the main factories that we have in mind. Does that answer your question? Yes. Thank you. Understood. Very clear. And, Eric, do you have anything to add?
Gilbert Lee: But, our goal is to utilize those to train up our local workers, as well as, to work on some not so complicated garment styles and improve our overall efficiency. So I think overall, this is going to be a cost savings to us because those local workers, they don't need to take a long commute, and we, of course, provide them transportation, and that will help us save our transportation costs. So those are smaller scale kind of factories, just like the one that we started a few years ago. And, the amount of capacity that they will bring is not going to be like one of the main factories that we have in mind. Does that answer your question?
Speaker #4: Utilize those to train up local workers, as we keep to the local Ministry. But some of our garments have complicated styles, and overall, as we think.
Speaker #4: be a , this is So I those workers , savings to don't need us local they work going to not so two satellite on long .
Speaker #4: take this
Speaker #4: a
Speaker #4: And we, of course, we provide transportation. It helps us save on our rural transportation costs. Those who commute will kind of go to factories far away, the ones that we just like—that we help over the years, our—
Speaker #4: And that
Speaker #4: And that
Speaker #4: And that
Speaker #4: And the capacity that they have, like the few factories that we have, will bring that. Does that answer your question?
Mike Baker: Yes. Thank you. Understood. Very clear. And, Eric, do you have anything to add?
Speaker #6: Thank you .
Speaker #6: Understood . .
Speaker #6: clear
Speaker #4: And Eric ,
Speaker #4: Do you have anything to add, Very?
Speaker #4: add
Speaker #4: ?
Eric Tang: Oh, also, because we have this kind of satellite project, which helped the Jordanian government to increase the job opportunities in the rural area. So this is the reason why Housing Bank can get for Jerash from the Central Bank of Jordan a subsidy of the interest rate in our financing $2 million of our machinery and renovation cost.
Eric Tang: Oh, also, because we have this kind of satellite project, which helped the Jordanian government to increase the job opportunities in the rural area. So this is the reason why Housing Bank can get for Jerash from the Central Bank of Jordan a subsidy of the interest rate in our financing $2 million of our machinery and renovation cost.
Speaker #3: Oh overall
Speaker #3: this kind is not
Speaker #3: project which helped the we have Jordanian to and of market job opportunities increase the area . So government satellite in the this is reason the Jerash housing the from the can for central in our Bank interest subsidy financing the couple of millions of in get from machinery
Speaker #3: rate
Speaker #3: our renovation costs
Gilbert Lee: Yeah, that's right. Got it.
Mike Baker: Yeah, that's right. Got it.
Speaker #4: right
Speaker #7: Got it
Operator: Thank you. Our next question is coming from Ryan Meyers with Lake Street Capital Markets. Your line is live.
Operator: Thank you. Our next question is coming from Ryan Meyers with Lake Street Capital Markets. Your line is live.
Speaker #5: Thank you
Speaker #5: Coming. Your line is, 'Yeah, that's.'
Speaker #5: . coming Your line is
Speaker #5: question
Speaker #5: from Ryan with Lake
Speaker #5: Capital
Speaker #5: Capital Markets .
Ryan Meyers: Hey, guys. Thanks for taking my questions. First one for me. So with the 40% capacity, that sounds like it'll come online, you know, towards the end of this year into next year. You know, just curious, how quickly will you guys be able to ramp that up? You know, how much of that is new versus existing business? How much visibility do you have into that? Just, you know, as we should think about, you know, how you're going to be able to kind of start recognizing revenue through that facility. Just the details there would be helpful.
Ryan Meyers: Hey, guys. Thanks for taking my questions. First one for me. So with the 40% capacity, that sounds like it'll come online, you know, towards the end of this year into next year. You know, just curious, how quickly will you guys be able to ramp that up? You know, how much of that is new versus existing business? How much visibility do you have into that? Just, you know, as we should think about, you know, how you're going to be able to kind of start recognizing revenue through that facility. Just the details there would be helpful.
Speaker #5: live
Speaker #8: guys . Thanks Hey , Myers my
Speaker #8: First one for questions with . the
Speaker #8: , that sounds for taking like it'll come me . online , towards the end 40% capacity of this So next year curious year .
Speaker #8: guys be able to how
Speaker #8: How much is that? That is—
Speaker #8: How that ? have into
Speaker #8: How
Speaker #8: visibility into do you you know , . existing as we should quickly will you know , scale Just , just you recognizing able
Speaker #8: Details there would just going to be helpful, the...
Speaker #8: Details there would just going to be helpful up? Well, about...
Gilbert Lee: Well, I think we anticipate the renovation to be finished by the end of this calendar year, so by the end of 2026. And, like Eric said, we will start recruiting for new workers and start training them before the renovation is complete and before the equipments are installed. So we're, we're all, we're going to take the slower season to kind of integrate the new workers and also the new capacity into our production. So, hopefully, by the end of this fiscal year or the beginning of next, not, by the end of this calendar year or the beginning of 2027, we'll be able to be online, this new facility.
Gilbert Lee: Well, I think we anticipate the renovation to be finished by the end of this calendar year, so by the end of 2026. And, like Eric said, we will start recruiting for new workers and start training them before the renovation is complete and before the equipments are installed. So we're, we're all, we're going to take the slower season to kind of integrate the new workers and also the new capacity into our production. So, hopefully, by the end of this fiscal year or the beginning of next, not, by the end of this calendar year or the beginning of 2027, we'll be able to be online, this new facility.
Speaker #4: I think we
Speaker #4: anticipate the
Speaker #4: to be business ?
Speaker #4: to be business ?
Speaker #4: End of year, so the
Speaker #4: . like finished said ,
Speaker #4: Eric, for through that new renovation, be new—one of the main calendar before training renovation, them is the workers, and before them, equipment are we will.
Speaker #4: going to 2026 and take the kind to of . So So the new workers and the integrate into production capacity . So
Speaker #4: hopefully end of this beginning And the we're , not by the a also , by the , we're calendar beginning of 2027 , to able to by the slower new .
Speaker #4: hopefully end of this beginning And the we're , not by the a also , by the , we're calendar beginning of 2027 , to able to by the slower new . online facility .
Gilbert Lee: That will increase our capacity up to or at least 40% once it is fully occupied and 2,500 workers brought in. So I think this whole process is probably going to take a year to two year to complete.
Gilbert Lee: That will increase our capacity up to or at least 40% once it is fully occupied and 2,500 workers brought in. So I think this whole process is probably going to take a year to two year to complete.
Speaker #4: And that This the season capacity year or the up will of this , fully . or brought in . So I think this process is 40% .
Speaker #4: And be occupied fully year.
Speaker #4: complete
Ryan Meyers: Okay. Got it. That's helpful. And then just thinking about gross margins for the quarter came in pretty healthy. You know, can you just walk us through, you know, how much of that was the higher overall product mix or just economies of scale? And then maybe how we should think about gross margins going forward and kind of where that balances out at?
Ryan Meyers: Okay. Got it. That's helpful. And then just thinking about gross margins for the quarter came in pretty healthy. You know, can you just walk us through, you know, how much of that was the higher overall product mix or just economies of scale? And then maybe how we should think about gross margins going forward and kind of where that balances out at?
Speaker #8: Okay, that's then about gross. And got it. For the pretty, came in margins. Can you—
Speaker #8: through how much of
Speaker #8: that walk us just thinking
Speaker #8: Higher quarter, healthy about new, think increase our forward gross margins, where that is, economies of overall, just at.
Speaker #8: product just
Speaker #8: . volume out
Gilbert Lee: Well, this past quarter, we focused a lot on the high volume orders that we're doing with Hansoll. And that turned out to be a really great enhancement to our efficiency because it is just not that simple, but we don't have to change over the styles from styles, and it's just one product that we just keep running. So it improves our efficiency a lot and also the economies of scale, because we utilize our full capacity. And overall, the per unit cost definitely, especially the fixed cost per unit, will go down. So that turns out to be improving our margin.
Gilbert Lee: Well, this past quarter, we focused a lot on the high volume orders that we're doing with Hansoll. And that turned out to be a really great enhancement to our efficiency because it is just not that simple, but we don't have to change over the styles from styles, and it's just one product that we just keep running. So it improves our efficiency a lot and also the economies of scale, because we utilize our full capacity. And overall, the per unit cost definitely, especially the fixed cost per unit, will go down. So that turns out to be improving our margin.
Speaker #4: past
Speaker #4: Focused as well. This way, we—with Hansel—
Speaker #4: the high that we should, with, to
Speaker #4: we're doing with
Speaker #4: And on and kind of orders turned out, styles balance, and it's been a enhancement from our one efficiency running. It's great, that quarter, our overall unit per, and also because we really scale our full capacity by the quarter, very much the efficiency running.
Speaker #4: Because it's simple. Not a lot.
Speaker #4: Definitely. So it, especially the per unit fixed cost, will be going to improve our margin as we have a lot of styles over the next fiscal term. So that change is probably going to turn out to be difficult, especially with multiple styles, and it will be going back into the long term.
Gilbert Lee: Going forward, we're kind of probably going back into working on more difficult styles, especially with our long-term customers, and the volume will be lower and multiple styles. So we anticipate the margin will somewhat be lower than this current quarter. However, I think we have been working on some efficiency improvements. We have, in some of our facilities, we have installed hangar systems to help the efficiency, and we're looking at other kinds of technological improvements to help us reduce the overall cost in manufacturing, but to be more automated in our factory and also in our warehouses. So I think the improvement will come. And our new facility, the new building that we bought, we're going to install the state-of-the-art equipment and utilize more automation.
Gilbert Lee: Going forward, we're kind of probably going back into working on more difficult styles, especially with our long-term customers, and the volume will be lower and multiple styles. So we anticipate the margin will somewhat be lower than this current quarter. However, I think we have been working on some efficiency improvements. We have, in some of our facilities, we have installed hangar systems to help the efficiency, and we're looking at other kinds of technological improvements to help us reduce the overall cost in manufacturing, but to be more automated in our factory and also in our warehouses. So I think the improvement will come. And our new facility, the new building that we bought, we're going to install the state-of-the-art equipment and utilize more automation.
Speaker #4: customers anticipate the So we lower quarter have working the forward . we However , current kind be the our facilities , we have We installed have hanger systems than this some efficiency , the we're some of other to think I on working help improvements .
Speaker #4: Been at kinds and also our efficiency to be. So I think automated help warehouses in our new facility that we will be going in.
Speaker #4: And to utilize and install more state-of-the-art improvement, we bought this to keep us improving and controlling costs, so that is going to reduce costs and improve us more.
Gilbert Lee: So this one is going to help us in controlling our costs and improving the output.
Gilbert Lee: So this one is going to help us in controlling our costs and improving the output.
Speaker #4: our
Speaker #4: output . the cost
Igor Novgorodtsev: Got it. Thanks for taking my questions. Thank you.
Ryan Meyers: Got it. Thanks for taking my questions. Thank you.
Speaker #8: it .
Speaker #8: it .
Speaker #8: questions . my
Speaker #8: Thank you
Operator: Thank you. Our next question is coming from Igor Novgorodtsev with Lares Capital. Your line is live.
Operator: Thank you. Our next question is coming from Igor Novgorodtsev with Lares Capital. Your line is live.
Speaker #5: Thank
Speaker #5: you
Speaker #5: you
Speaker #5: Overall, our—your question is...
Speaker #5: Next, we're coming to help.
Speaker #5: Igor in Novgorodov
Speaker #5: line
Speaker #5: Live. Got it. Thanks for taking... Apologies, please, because—one moment, sir.
Igor Novgorodtsev: Good morning, and thank you for taking my questions, and congratulations on a very strong quarter.
Igor Novgorodtsev: Good morning, and thank you for taking my questions, and congratulations on a very strong quarter.
Speaker #9: Good you for
Speaker #9: And
Speaker #9: congratulations . from My is
Speaker #9: on a very
Speaker #9: quarter
Gilbert Lee: Thank you.
Gilbert Lee: Thank you.
Igor Novgorodtsev: My first question is, several years ago, obviously, you had a great disruption be-
Igor Novgorodtsev: My first question is, several years ago, obviously, you had a great disruption be-
Speaker #9: Obviously ,
Speaker #9: you had several years
Speaker #9: .
Speaker #9: .
Operator: Apologies, sir. One moment, please.
Operator: Apologies, sir. One moment, please.
Igor Novgorodtsev: Hello?
Igor Novgorodtsev: Hello?
Operator: One moment, please. Sorry, Igor, we have your line back, sir.
Operator: One moment, please. Sorry, Igor, we have your line back, sir.
Speaker #5: . questions .
Igor Novgorodtsev: Okay. Sorry. I'll start my question again. So, last couple of years, you had great disruption because of the war in Gaza. So now with the situation is up in the air again between, you know, US, Iran, and, you know, Israel, and not everybody is sure what's going to happen. What is your contingency plan? What is you're gonna do different this time now that it's more anticipated?
Igor Novgorodtsev: Okay. Sorry. I'll start my question again. So, last couple of years, you had great disruption because of the war in Gaza. So now with the situation is up in the air again between, you know, US, Iran, and, you know, Israel, and not everybody is sure what's going to happen. What is your contingency plan? What is you're gonna do different this time now that it's more anticipated?
Speaker #5: Sir, sorry, Igor. We have—and
Speaker #9: question . Okay . again I'll start years , ago . Sorry . great of , last situation disruption now in the the morning .
Speaker #9: war air, and thank Iran and so
Speaker #9: Gaza
Speaker #9: Gaza take
Speaker #9: Gaza take
Speaker #9: again
Speaker #9: You know, do this to us. One moment, line back. Israel, you had.
Speaker #9: You know, do this to us. One moment, line back. Israel, you had everybody. Eric, what's—
Speaker #9: Is sure not—is contingency up plan? Because of the going to.
Speaker #9: different going
Gilbert Lee: Eric or Sam, do you want to take this one? Yeah, Eric first, please. Yeah.
Gilbert Lee: Eric or Sam, do you want to take this one? Yeah, Eric first, please. Yeah.
Speaker #4: or
Speaker #4: want to
Speaker #2: Eric, of the stable in the
Speaker #2: First place, yeah, yeah. Couple.
Eric Tang: So, I think, because we are closely monitoring the political situation here, so we are almost every month. Okay, as one of the biggest investor in Jordan, we also have meetings with the Ministry of Foreign Affairs to monitor the, the very sensitive political situation here, especially, okay, about of the possibility of the occurrence of the war in Iran. But still now, okay, according to the latest information, everything is still very stable in the region. And, okay, we don't know whether, whether the war will happen, but even though it has happened, we are been assured, our government has been assured that Jordan, it will not affect Jordan. Jordan will be still the most safest haven in the region of the Middle East.
Eric Tang: So, I think, because we are closely monitoring the political situation here, so we are almost every month. Okay, as one of the biggest investor in Jordan, we also have meetings with the Ministry of Foreign Affairs to monitor the, the very sensitive political situation here, especially, okay, about of the possibility of the occurrence of the war in Iran. But still now, okay, according to the latest information, everything is still very stable in the region. And, okay, we don't know whether, whether the war will happen, but even though it has happened, we are been assured, our government has been assured that Jordan, it will not affect Jordan. Jordan will be still the most safest haven in the region of the Middle East.
Speaker #3: I
Speaker #3: because and of the basically
Speaker #3: because and of the
Speaker #3: we are
Speaker #3: we is your
Speaker #3: , we
Speaker #3: , we
Speaker #3: investor in time now
Speaker #3: Investor in Time Now Jordan, we know that it's one of the biggest ministries of affairs.
Speaker #3: the more
Speaker #3: the more meetings with
Speaker #3: Monitor here, my this.
Speaker #3: political ?
Speaker #3: Iran , but And about region . though it our major we are we are especially . being be know . It's whether
Speaker #3: Jordan , it so
Speaker #3: Jordan , it so real
Speaker #3: Jordan, it’s so real, Jordan.
Speaker #3: Jordan, it's so real, Jordan.
Speaker #3: will not East .
Speaker #3: will not East .
Speaker #3: still the affect the
Speaker #3: still the
Speaker #3: most between , So
Eric Tang: Okay, we are closely monitoring the situation, and we are also closely relaying this information to our major buyers.
Eric Tang: Okay, we are closely monitoring the situation, and we are also closely relaying this information to our major buyers.
Speaker #3: region
Speaker #3: monitoring and see the
Speaker #3: Monitoring and seeing the situation, and that the debt.
Igor Novgorodtsev: Okay. I was more concerned about the delivery and closure of the Haifa Port and so on. So basically, you had a real issue shipping stuff in and shipping stuff out, so I assume that you have contingency plan now because we don't know just how it's gonna go.
Igor Novgorodtsev: Okay. I was more concerned about the delivery and closure of the Haifa Port and so on. So basically, you had a real issue shipping stuff in and shipping stuff out, so I assume that you have contingency plan now because we don't know just how it's gonna go.
Speaker #9: more about the has
Speaker #9: more about the has
Speaker #9: closure
Speaker #9: port and
Speaker #9: issue stuff that more
Speaker #9: know
Eric Tang: Nowadays, currently, for the past six months, the Haifa Port and the Aqaba Port are working very efficiently and very stable, not like before. So we, for the past six months, okay, so we don't encounter any obstacle in the delivery of our export container.
Eric Tang: Nowadays, currently, for the past six months, the Haifa Port and the Aqaba Port are working very efficiently and very stable, not like before. So we, for the past six months, okay, so we don't encounter any obstacle in the delivery of our export container.
Speaker #9: go
Speaker #3: Aqaba working
Speaker #3: Very concerned efficiently, and port are Jordan will.
Speaker #3: Not also
Speaker #3: we
Speaker #3: the
Speaker #3: we don't delivery of
Speaker #3: Obstacle of the Haifa, okay, closely.
Speaker #3: So I—okay, going to the—
Igor Novgorodtsev: Okay. My other question is, I see that your expansion and purchase is going to be financed with debt, and I understand that the rates are quite attractive. But you still have quite a bit of cash on your balance sheet, which doesn't quite earn anything close to 8% that you're going to be paying on your debt. What are you planning to do with cash?
Igor Novgorodtsev: Okay. My other question is, I see that your expansion and purchase is going to be financed with debt, and I understand that the rates are quite attractive. But you still have quite a bit of cash on your balance sheet, which doesn't quite earn anything close to 8% that you're going to be paying on your debt. What are you planning to do with cash?
Speaker #9: Expansion purchase is also sheet, to are your financed.
Speaker #9: Rates are some of the quite
Speaker #9: Rates are some of the quite
Speaker #9: Rates are some of the quite stable.
Speaker #9: Rates are some of the quite stable. Utilizing, going
Speaker #9: You still extensively—with what I do—with
Speaker #9: have shipping that
Speaker #9: doesn't out .
Speaker #9: be paying
Gilbert Lee: Well, Larry, actually, we have been utilizing our cash more extensively in the past year or so because of our growth in business and some of the new customers. For our old customers, such as VF and New Balance, they have supplier financing programs that we could rely on to get early payments on the receivables. But new customers, and we have to use more cash to finance our purchasing and also our operating expenses. But once we get used to dealing with these new major customers, I think the cash flow will be much easier. And right now, we're working with some banks, some local banks, to finance the receivables, finance the LC that our customers are providing us.
Gilbert Lee: Well, Larry, actually, we have been utilizing our cash more extensively in the past year or so because of our growth in business and some of the new customers. For our old customers, such as VF and New Balance, they have supplier financing programs that we could rely on to get early payments on the receivables. But new customers, and we have to use more cash to finance our purchasing and also our operating expenses. But once we get used to dealing with these new major customers, I think the cash flow will be much easier. And right now, we're working with some banks, some local banks, to finance the receivables, finance the LC that our customers are providing us.
Speaker #4: cash
Speaker #4: in the cash New
Speaker #4: our
Speaker #4: new they with so quite a bit major of this have dealing , we new Because customers , such old we're they
Speaker #4: As cash, cash on that take.
Speaker #4: VF and have been well. Actually,
Gilbert Lee: So cash, cash flow is fine. It's just that we might have to take on a little bit more short-term debt, and for the expansion, we will have to take on some long-term debt. But it's okay. I think for the time being, we will rely on debt to finance our growth, our working capital growth, and also our expansion. But once we reach a more comfortable level, we will consider other financing alternatives.
Gilbert Lee: So cash, cash flow is fine. It's just that we might have to take on a little bit more short-term debt, and for the expansion, we will have to take on some long-term debt. But it's okay. I think for the time being, we will rely on debt to finance our growth, our working capital growth, and also our expansion. But once we reach a more comfortable level, we will consider other financing alternatives.
Speaker #4: Cash, receivables with customers' expansion—the more LC, working fine, reach that.
Speaker #4: On flow year or debt bit, and right short, we will quite much easier have for the expansion.
Speaker #4: On flow year, or debt bit, and right short, we will quite much easier. Have for the be to take term balance, term programs that now we debt to—we're supplier.
Speaker #4: more last flow are us providing have to a little . So financing comfortable affecting cash is everyone else . suppliers . . But It's just market to level alternatives once
Speaker #4: , we is
Speaker #4: will . to Is Okay
Speaker #4: will . to
Igor Novgorodtsev: ... Okay. My last question is about the health of your still largest customers, VF Corp. Obviously, they had a lot of turmoil the last few years. How are they doing? Do you still experience a lot of pricing pressure from them? And maybe you can talk a little bit about your relationship to them.
Igor Novgorodtsev: ... Okay. My last question is about the health of your still largest customers, VF Corp. Obviously, they had a lot of turmoil the last few years. How are they doing? Do you still experience a lot of pricing pressure from them? And maybe you can talk a little bit about your relationship to them.
Speaker #9: about a via reacting question
Speaker #9: the
Speaker #9: still lot of
Speaker #9: still
Gilbert Lee: Well, let me try to give you a big picture, but then Eric and Sam could add to it. I think we do experience some pricing pressure from our customers. But I think that is because of the tariff situation that is affecting everybody. So it's not just affecting our customers; it is affecting everyone else, even other suppliers. It's affecting our competitors. So the market is reacting to it. But the good thing is we are considered as a highly capable, and we deliver high quality and very reliable manufacturer in Jordan.
Gilbert Lee: Well, let me try to give you a big picture, but then Eric and Sam could add to it. I think we do experience some pricing pressure from our customers. But I think that is because of the tariff situation that is affecting everybody. So it's not just affecting our customers; it is affecting everyone else, even other suppliers. It's affecting our competitors. So the market is reacting to it. But the good thing is we are considered as a highly capable, and we deliver high quality and very reliable manufacturer in Jordan.
Speaker #4: Let me—we have competitors only. The choice, or might we, the—
Speaker #4: Let me—we have competitors only; the choice, or they might want a few good manufacturers if they want to be in Jordan.
Speaker #4: So
Gilbert Lee: So sometimes our customers, even though they try to put pressure on us, and but they know we may be their only choice or, but we might be one of their few choices if they want to have productions in Jordan. So there is a, there's always a power or going back and forth between our customers and us. But I think overall, we strike a balance, and we will continue to do business. If it doesn't make sense, then nobody will do business, okay? I think overall, as long as we provide competitive pricing, good quality, and good service, everybody will be in good shape.
Gilbert Lee: So sometimes our customers, even though they try to put pressure on us, and but they know we may be their only choice or, but we might be one of their few choices if they want to have productions in Jordan. So there is a, there's always a power or going back and forth between our customers and us. But I think overall, we strike a balance, and we will continue to do business. If it doesn't make sense, then nobody will do business, okay? I think overall, as long as we provide competitive pricing, good quality, and good service, everybody will be in good shape.
Speaker #4: and will then long as . the pricing Okay , I provide reliable overall , as competitive and quality and be in good
Speaker #4: think
Speaker #4: think
Speaker #4: good add a
Speaker #4: good
Speaker #4: good
Igor Novgorodtsev: Okay, thank you.
Igor Novgorodtsev: Okay, thank you.
Gilbert Lee: So I would like to-
Gilbert Lee: So I would like to-
Igor Novgorodtsev: Oh, okay. Go ahead, sir. Sorry.
Igor Novgorodtsev: Oh, okay. Go ahead, sir. Sorry.
Speaker #9: you . shape
Speaker #9: I . And
Gilbert Lee: Yeah. So I would like to add a few points as well in terms of the pricing pressure from customers. First of all, I mean, the tariff situation in Jordan compared with other countries in the world, I mean, except Egypt, they enjoy 10% reciprocal tariff, but Jordan enjoys 15%, will be amongst the lowest among all other countries, in addition to the basic duty-free, I mean, privilege. That's one point. Other point is, I mean, yes, the customer will give pressure on the FOB price because of the tariff, but I mean, of the total garment breakdown, cost breakdown, I mean, trims and fabric, they also will give some room for us in terms of pricing.
Gilbert Lee: Yeah. So I would like to add a few points as well in terms of the pricing pressure from customers. First of all, I mean, the tariff situation in Jordan compared with other countries in the world, I mean, except Egypt, they enjoy 10% reciprocal tariff, but Jordan enjoys 15%, will be amongst the lowest among all other countries, in addition to the basic duty-free, I mean, privilege. That's one point. Other point is, I mean, yes, the customer will give pressure on the FOB price because of the tariff, but I mean, of the total garment breakdown, cost breakdown, I mean, trims and fabric, they also will give some room for us in terms of pricing.
Speaker #9: Sorry . .
Speaker #9: Sorry . .
Speaker #2: Yeah
Speaker #2: Yeah
Speaker #2: Yeah
Speaker #2: well the in the except would . ahead . Thank of the Egypt , they enjoy tariff ,
Speaker #2: in points as
Speaker #2: in points as Okay .
Speaker #2: in points as
Speaker #2: In Jordan, everybody—customers—compared with others. So, pricing is okay from Jordan.
Speaker #2: 15% will lowest and amongst all other . , privilege . In addition to basic duty but . the I one point . That's price tariff will is , I point on the give mean , mean , among of yes , the the pressure of the customer countries total breakdown FOB because .
Speaker #2: Other
Speaker #2: and I , trims mean government , they and some trims , they cost will lower But also the pricing room us So I mean that breakdown , will price .
Gilbert Lee: So, I mean, although we got pressure from customer in terms of the FOB price, but other costs, like fabric and trims, they also will lower the price. So, I mean, that will counterbalance the overall reduction in price, in pricing pressure from customers. Yeah.
Gilbert Lee: So, I mean, although we got pressure from customer in terms of the FOB price, but other costs, like fabric and trims, they also will lower the price. So, I mean, that will counterbalance the overall reduction in price, in pricing pressure from customers. Yeah.
Speaker #2: of
Speaker #2: we
Speaker #2: we
Speaker #2: customer
Speaker #2: terms of
Speaker #2: Counterbalance the overall fabric FOB reduction Jordan enjoys in GOT pricing pressure from customers. Terms for in price, yeah, be in.
Igor Novgorodtsev: Okay. Thank you very much, and again-
Igor Novgorodtsev: Okay. Thank you very much, and again-
Igor Novgorodtsev: Congratulations on an excellent quarter.
Gilbert Lee: Yes.
Gilbert Lee: Yes.
Igor Novgorodtsev: Congratulations on an excellent quarter.
Speaker #9: Okay . Thank you countries the very much . And again ,
Gilbert Lee: Thank you.
Gilbert Lee: Thank you.
Eric Tang: Thank you.
Eric Tang: Thank you.
Speaker #9: quarter. Thank you. Thank
Igor Novgorodtsev: Thanks.
Igor Novgorodtsev: Thanks.
Operator: Thank you. Our next question is coming from Barry Pasternack, who is an investor. Your line is live.
Operator: Thank you. Our next question is coming from Barry Pasternack, who is an investor. Your line is live.
Speaker #11: Thank you .
Speaker #5: Thank you
Speaker #5: next question is coming from
Speaker #5: Pasternak
Speaker #5: an
Speaker #5: investor . Your
Barry Pasternack: Hey, guys. Thanks for taking my call. Congrats on the quarter. It looks like your tax rate was 24% for the quarter, which was lower than recent quarters. As I recall, on a previous call, you mentioned that you were working with a tax consulting firm on tax strategy. Could you talk about whether any progress has made, been made on that front and how you're thinking about, or, you know, whether that's part of the reason for the lower tax rate this quarter and how you're thinking about the tax rate going forward?
[Analyst]: Hey, guys. Thanks for taking my call. Congrats on the quarter. It looks like your tax rate was 24% for the quarter, which was lower than recent quarters. As I recall, on a previous call, you mentioned that you were working with a tax consulting firm on tax strategy. Could you talk about whether any progress has made, been made on that front and how you're thinking about, or, you know, whether that's part of the reason for the lower tax rate this quarter and how you're thinking about the tax rate going forward?
Speaker #5: live costs fabric .
Speaker #12: Hey guys. Thanks for taking my question.
Speaker #12: Congrats on the quarter. It looks like
Speaker #12: your tax , although , but rate was 24% for the quarter , was which call . lower than quarters . free previous call , you As I recent on a mentioned that you with a were working .
Speaker #12: consulting firm
Speaker #12: Tax strategy. Could you talk about whether—
Speaker #12: reason for Plus
Gilbert Lee: Well, the effective tax rate was lower this quarter, primarily because we have higher income. In the past, our consolidated income was suffering because of some disruptions, because of, as you know, the past two years have not been good. But we still have to pay taxes. So, that kind of hit our effective tax rate. Plus, we had to make some adjustments for the Subpart F income because of our global operations. So, but that is behind us. So going forward, our effective tax rate should be normalized. And yes, we have engaged a tax consultant to help us do some tax planning to see where we could save some tax expenses.
Gilbert Lee: Well, the effective tax rate was lower this quarter, primarily because we have higher income. In the past, our consolidated income was suffering because of some disruptions, because of, as you know, the past two years have not been good. But we still have to pay taxes. So, that kind of hit our effective tax rate. Plus, we had to make some adjustments for the Subpart F income because of our global operations. So, but that is behind us. So going forward, our effective tax rate should be normalized. And yes, we have engaged a tax consultant to help us do some tax planning to see where we could save some tax expenses.
Speaker #4: Well , the income was suffering this because of some disruptions , of because forward know , the past years two have not have not been good .
Speaker #4: the effective tax
Speaker #4: Lower quarter tax, primarily because the rate we have is higher.
Speaker #4: And now, in the, our
Speaker #4: But we still have to pay taxes. So that kind of hit our—
Speaker #4: Effective tax rate, we make some.
Speaker #4: adjustments for the subpart F income because of global operations . So our that is behind us . So going forward our thinking our effective tax should should be be And yes , engaged tax normalized .
Speaker #4: Consultant to us do some tax rate planning to see where we could save some help tax, but that is—we still, that is still being on.
Gilbert Lee: But that is still being worked on. So, I think in the future, we will try and utilize some better planning so that our effective tax rate will improve.
Gilbert Lee: But that is still being worked on. So, I think in the future, we will try and utilize some better planning so that our effective tax rate will improve.
Speaker #4: So I going in the we will we will try work and utilize some better planning so that our effective tax rate we will , will improve .
Barry Pasternack: Okay, great. Would 24% or let's say under 30%, how would... Under 30% going forward, or what would be the estimate for the effective book tax rate?
[Analyst]: Okay, great. Would 24% or let's say under 30%, how would... Under 30% going forward, or what would be the estimate for the effective book tax rate?
Speaker #12: Okay, great. Would—would you
Speaker #12: 24% or under, let's say 30% expenses, under 30% going forward. Or, what would be the estimate for the effective tax rate?
Gilbert Lee: Right now, I think we're projecting between 25% to 30%.
Gilbert Lee: Right now, I think we're projecting between 25% to 30%.
Speaker #4: Right now, I think we're projecting between, I think, 25 to 30%.
Barry Pasternack: Okay. All right. Thanks very much.
[Analyst]: Okay. All right. Thanks very much.
Speaker #12: Okay. All right. Thanks very much.
Operator: Thank you. Ladies and gentlemen, this does conclude today's question and answer session, so I would like to turn the call back over to Mr. Choi for any closing remarks.
Operator: Thank you. Ladies and gentlemen, this does conclude today's question and answer session, so I would like to turn the call back over to Mr. Choi for any closing remarks.
Speaker #5: Thank you future . Ladies and gentlemen . This does conclude today's question and answer session . So I would like to turn the call back over to Mr. Choi for any closing remarks .
Gilbert Lee: Thank you very much, operator. So thanks to all of you for joining us today. We appreciate your continued support and interest in Jerash and look forward to speaking with you soon about our progress. Thank you very much.
Sam Choi: Thank you very much, operator. So thanks to all of you for joining us today. We appreciate your continued support and interest in Jerash and look forward to speaking with you soon about our progress. Thank you very much.
Speaker #2: Thank you very much, operator. So, thanks to all of you for joining us today. We appreciate your continued support and interest in Jerash, and look forward to speaking with you soon about our progress.
Eric Tang: Thank you.
Eric Tang: Thank you.
Speaker #2: Thank you very much .
Speaker #3: Thank you .
Operator: Thank you. Ladies and gentlemen-
Operator: Thank you. Ladies and gentlemen-
Speaker #5: Thank you, ladies and gentlemen.
Gilbert Lee: Thank you. Thank you all.
Gilbert Lee: Thank you. Thank you all.
Speaker #2: all Thank you .
Operator: Thank you.
Gilbert Lee: Yeah. Thank you.
Operator: Thank you.
Gilbert Lee: Yeah. Thank you.
Speaker #5: Thank Thank
Operator: This does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.
Operator: This does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.
