JRSH Q2 2026 Earnings Call
Unknown Speaker: Good day, everyone and welcome to the doresh Holdings. Fiscal 2026. Second quarter Financial results.
Unknown Speaker: After the presentation.
Unknown Speaker: It is now my pleasure to hand, the floor, over to your host. Raja pondell, investor relations. Sir. The floor is yours.
Unknown Speaker: Thank you very much, Matt. Good morning everyone. Welcome to dash Holdings, fiscal, 2026 second quarter conference call. I'm Roger, pondell with pondell Wilkinson gash Holdings, investor relations, firm on the call. Today from the company, our chairman and chief executive officer, Sam Choy.
Unknown Speaker: Chief Financial Officer, Gilbert Lee and Eric Tang, who leads the company's operations in Jordan before I turn the call over to Sam. I want to remind our listeners that today's call may include forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995.
Unknown Speaker: 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 10K.
Unknown Speaker: As filed with the Securities and Exchange Commission.
Unknown Speaker: 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.
Unknown Speaker: as results could differ material, forward-looking statements and your rash Holdings undertakes, no, obligation to update any forward-looking statements,
Unknown Speaker: Except as required by law. And with that behind us, I will turn the call over to Sam Choi, Sam.
Unknown Speaker: Thank you, Roger.
Unknown Speaker: Despite ongoing trade uncertainties.
Unknown Speaker: We continue to experience robust and growing demand from our long-standing customers and newly established strategic partners.
Unknown Speaker: Children is increasingly recognized as a preferred, manufacturing hub.
Unknown Speaker: For Global Brands seeking to diversify their supply, chains Beyond Asia.
Unknown Speaker: A period exports from Jordan to the United States.
Unknown Speaker: And our current effective terrorist rates of 15%. Remain significantly more favorable than other major sourcing countries.
Unknown Speaker: where,
Unknown Speaker: Race range from 20% to more than 60%.
Unknown Speaker: In addition.
Unknown Speaker: Jordan maintains free trade agreements with other key markets.
Unknown Speaker: Including the EU EU UK and Canada.
Unknown Speaker: Furthermore.
Unknown Speaker: Jordan's labor framework, which enables manufacturers to contract skilled foreign workers.
Unknown Speaker: Further and hence is our production quality and operational efficiency.
Unknown Speaker: This labor, flexibility combined with favorable, trade conditions, reinforces to rest position as an attractive, strategic sourcing partner.
Unknown Speaker: For Global Brands navigating ongoing economic shifts.
Unknown Speaker: In next June.
Unknown Speaker: Which successfully completed the expansion of our existing manufacturing facilities.
Unknown Speaker: Increasing our production capacity by approximately 15%.
Unknown Speaker: This additional capacity was much needed to support growing demand from our Global customers and strategic partners.
Unknown Speaker: Looking ahead.
Unknown Speaker: We are receiving continue request for even greater capacity.
Unknown Speaker: Which has prompted us to initiate a long-term expansion plan.
Unknown Speaker: This plan includes evaluating potential Acquisitions and developing our own land.
Unknown Speaker: This initiative is deciding to ensure that the rest remains well positioned to meet evolving market demand, and sustain our Competitive Edge in the global apparel industry.
Unknown Speaker: As part of our ongoing strategy.
Unknown Speaker: We continue to successfully diversify both our customer base and product mix.
Unknown Speaker: This efforts.
Unknown Speaker: Was aimed at enhancing year-round production stability and reducing the impact of seasonality on our business.
Unknown Speaker: A slightly lower average gross margin in the near term.
Unknown Speaker: As other volumes for our expanded product offerings continue to scale in the coming years.
Unknown Speaker: Our goal is to gradually improve gross profit margins to approximately 20%.
Unknown Speaker: We expect to achieve this through increased production Automation and the benefits of economies of scale.
Unknown Speaker: During this important period of progress, for the company, we remain Vigilant about the potential impact of regional geopolitical uncertainties and involving terrorists developments.
Unknown Speaker: These factors are being closely monitored as we advance our growth strategy to ensure resilience and long-term success.
Unknown Speaker: With that.
Unknown Speaker: I will now turn the call over to Eric, who is in charge of our operations in Jordan.
Unknown Speaker: Thank you, Sam.
Unknown Speaker: As we have noted previously, we believe the recent shifts in US, terrorist policy, have accelerated the urgency with which businesses are looking to diversify their manufacturing foot Street.
Unknown Speaker: And we are seeking ways to accommodate growing capacity. Demands,
Unknown Speaker: We have successfully completed shipping the initial phase of the major collaboration: an order of more than 3 million pairs of grow shorts from our strategic partnership with Handel Textile.
Unknown Speaker: A leading South Korea, based Global apparel group. That applies a wide range of garments to Major International retail and fashion brands.
Unknown Speaker: Shipment of second phase is now scheduled to be completed by end of November.
Unknown Speaker: Production and shipments for the rest of the order are scheduled to continue through February of 2026.
Unknown Speaker: We are actively collaborating with both hands so and its customer a leading us-based multinational and Omni Channel retail Corporation to discuss additional scenarios and Foster continued collaboration and growth together.
Unknown Speaker: Shipping Logistics in the region have returned to normal.
Unknown Speaker: Both the hyper and AAA ports are fully operational for shipping finished goods and receiving raw materials.
Unknown Speaker: We are optimistic that the nearly two-year period of transportation challenges is behind us.
Unknown Speaker: Allowing us to resume an interrupted logistic support for our Global customers.
Unknown Speaker: We continue to receive new business inquiries.
Unknown Speaker: And buyers from our major customers have submitted increased order protections for 2026.
Unknown Speaker: We are currently awaiting confirmation of purchase orders to begin trending production schedules. Beyond our current capacity which is fully booked through February.
Unknown Speaker: This new opportunities, reinforce our growth Outlook. And the next day, our strategy,
Unknown Speaker: Focusing on diversifying, both our customer base and product mix.
Unknown Speaker: This approach and enable us to optimize production capacity and drive stronger Topline performance and margins throughout the year.
Unknown Speaker: As Sam mentioned earlier, we are looking at different ways to expand our production capacity.
Unknown Speaker: The current cooperation expansion with the Jordanian Ministry of Labor to develop an extension agent to our existing facility in our huster is in progress.
Unknown Speaker: Upon completion, which is now expected in the second half of calendar year 2026.
Unknown Speaker: Should add another 5 to 10% in total production capacity.
Unknown Speaker: Additionally, we are seeking other Factory acquisition possibilities.
Unknown Speaker: As well as development of our own land.
Unknown Speaker: We look forward to keeping you updated of our progress.
Unknown Speaker: Please.
Unknown Speaker: Thank you, Eric.
Unknown Speaker: Revenue for the fiscal 2026 second quarter grew 4.3% to $42 million.
Unknown Speaker: Compared to with 40.2 million in the same quarter last year.
Unknown Speaker: The increase was primarily driven by higher shipment volumes.
Unknown Speaker: to the company's us, customers
Unknown Speaker: supported by a more, Diversified customer base, starting this fiscal year.
Unknown Speaker: Gross profit was 6.3 million for the fiscal 2026, second quarter.
Unknown Speaker: Compared with 7.1 million in the same quarter last year.
Unknown Speaker: Gross profit margin for the quarter declined to 15.0% from 17.5% in the same quarter last year, which benefited from catch-up production of some outerwear that carried higher margins, originally scheduled for the first quarter of fiscal 2025.
Unknown Speaker: The decrease was primarily driven by the diversification of broader customer base and a shift in product.
Unknown Speaker: This mix resulted in a lower average gross margin.
Unknown Speaker: Operating expenses decreased to 5.2 million in the fiscal 2026. Second quarter.
Unknown Speaker: From 5.9 million in the same quarter last year.
Unknown Speaker: The decrease was primarily due to better control of export costs.
Unknown Speaker: And lower stock-based compensation expenses.
Unknown Speaker: Operating income.
Unknown Speaker: 1.09 million in the Visco 2026 second quarter was slightly lower than 1.13 million in the same quarter last year.
Unknown Speaker: Total auto expenses were $456,000 in the physical 2026 second quarter, compared with $364,000 in the same quarter last year, primarily reflecting the increase in financing needs to support business growth.
Unknown Speaker: Income tax expenses were 154,000 in the fiscal 2026 second quarter compared with 106,000 in the prior year quarter.
Unknown Speaker: The effective tax rate increased to 24.3% for the 3 months. Ended September 30th 2025 compared with 13.7% in the same quarter last year.
Unknown Speaker: Net income was 479,000 or 4 cents per diluted share in the fiscal 2026. Second quarter compared with 665,000 or 5 cents per diluted share in the same quarter last year.
Unknown Speaker: Comprehensive income.
Unknown Speaker: Attributable to the company's common stockholders totaled $440,000 in the fiscal 2026 second quarter, compared with $663,000 in the same quarter last year.
Unknown Speaker: as of September 30th 2025,
Unknown Speaker: Giraffe has cash and restrict the cash total 13.7 million and that's working capital of 35.2 million.
Unknown Speaker: Inventory was $26.3 million, and the accounts receivable amounted to $5.8 million.
Unknown Speaker: Of approximately 2.4 million for the same period in fiscal 2025.
Unknown Speaker: The decrease in net cash. Provided by operating activities was primarily driven by an increase in accounts receivable as a larger volume of foods was shipped to the end of September.
Unknown Speaker: As well as advanced payments to suppliers for orders scheduled to be completed in the physical search quarter.
Unknown Speaker: Payable on November 26th, 2025 to stockholders of record as of November 19th.
Unknown Speaker: We're enthusiastic about our business, prospects and performance ahead.
Unknown Speaker: as we looked at the near-term and Implement, our long-term expansion plans,
Unknown Speaker: At the same time, we're staying focused on cost controls.
Unknown Speaker: And enhancing operating issues.
Unknown Speaker: Looking ahead.
Unknown Speaker: We expect revenue for the fiscal 2026, third quarter to increase by 19 to 21% over the same quarter last year.
Unknown Speaker: And our growth margin for the fiscal 2026. Third quarter is expected to be approximately 13 to 15%.
Unknown Speaker: We will now open up the call for questions and I will turn the call back to the authorities.
Unknown Speaker: Certainly everyone, at this time will be conducting a question and answer session.
Unknown Speaker: If you have any questions or comments, please press star 1 on your phone at this time.
Unknown Speaker: We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
Unknown Speaker: Once again, if you have any questions or comments, please press star 1 on your phone.
Unknown Speaker: Your first question is coming from Ryan Myers from Lake Street. Capital, your line is live.
Unknown Speaker: Hey guys, thanks for taking my questions. Um, first 1 for me, you know, when we think about the revenue guide for the third quarter, is there any way you can break out? You know, how much of that is just coming from additional capacity? That's come online versus. How much of that is just increased order flow and demand.
Unknown Speaker: Um, we really don't break it down like that.
Unknown Speaker: I mean our capacity.
Unknown Speaker: Overall has increased by about 10 to 15% over the last fiscal year.
Unknown Speaker: Just by the expansion, our internal extension throughout the existing capacity by adding machinery and adding people. So that amounts to about a 15% increase in capacity.
Unknown Speaker: um, and then the rest of them would be, uh,
Unknown Speaker: Increase in demand, increasing orders during the the third quarter, I mean third quarter year to year comparison.
Unknown Speaker: Okay, makes sense. And then thinking about, you know, where the girls margins came in at and where you guys guided for the third quarter and they said earlier on the prepared remarks that the goal is to improve the gross margins of the business to 20% or so. So can you just walk us through? I mean, what needs to happen to get us from where we're at? Now through this 20%, gross margin and then maybe if you could put some sort of a timeline or timetable on getting to those kind of 20% or so gross, margins would be helpful.
Unknown Speaker: If Sam has indicated uh, in the near term, the gross margin will going to be uh, still at a relatively flat or lower. Um, comparing to what we have been before because we're taking on some new customers. Uh, usually when we take on new customers and the, the new Styles and uh
Unknown Speaker: New ways of making those products will cost us to be, uh, a little bit.
Unknown Speaker: Less efficient, but at the same time, we're also working on automating. Uh,
Unknown Speaker: Many of our uh, production processes.
Unknown Speaker: Uh, also implementing Erp system but all these uh, will take a while. So it is a long-term goal that we get back to um,
Unknown Speaker: About 20% in gross margin but it, it will take a few years. Our goal is to get back there uh, with expansion with increasing, uh, volume and just by uh, economies of scale and eventually currently after our 5-year plan, we will be able to gradually get back to about 20% gross margin.
Unknown Speaker: Thank you for taking my questions.
Unknown Speaker: Sure.
Unknown Speaker: Thank you. Your next question is coming from Keegan Cox. From da Davidson your line is live.
Unknown Speaker: Hi guys, Keegan on from Mike Baker.
Unknown Speaker: Hello. Yeah, I just had an inventory or an inventory related question. Um, inventory is up 30%.
Unknown Speaker: Is that a year-over-year, is that kind of a typical seasonal build, like you usually work inventory down from 22 to 32, at least from what I'm looking at. So, if you can just give some context on that number, it would be great.
Unknown Speaker: Um, well.
Unknown Speaker: The inventory.
Unknown Speaker: is usually uh, relatively higher in the
Unknown Speaker: uh,
Unknown Speaker: what the, the
Unknown Speaker: the first quarter, and then,
Unknown Speaker: Yeah, in second quarter it will go down.
Unknown Speaker: But um, but this year is relatively, it's kind of different because we're taking on a large volume customer. And we have to, uh, we have to procure a lot more raw material to be ready for production, during our, uh, traditional weekly slower season, which is the third quarter and the fourth quarter. But now we're fully booked and we anticipate to have, um, a lot more production, utilizing a lot, more raw material, and, and supplies in the upcoming quarter.
Unknown Speaker: Got it. And then just to follow up on what you talked about regarding acquisitions or expansions in the press release and on the call so far. As you think about that, are you looking to acquire factories within Jordan, or is there any possibility of expansion into other geographies?
Unknown Speaker: As of now, our plan is more focusing on, uh, our Jordan, manufacturing base.
Unknown Speaker: Perfect, thank you.
Unknown Speaker: Thank you. Your next question is coming from Igor. No offset from layers. Capital, your line is live.
Unknown Speaker: Hi. Hello. And thank you for taking my questions. Uh, so my first question is about your expansion. Maybe you can provide a little bit more details of, uh, who, uh, the customers are for whom you expanded. Is the new customer mostly, or are these existing customers, which you already have, who shifted the volume, uh, to Jordan?
Unknown Speaker: Or to your factories.
Unknown Speaker: Well, we uh we we see it increasing uh orders and increasing projections from our existing customer as well as new customers and potential new customers that are um just coming here. Coming to our to our
Unknown Speaker: Company and asked for, uh, uh, ways of, uh, collaborations. So, um, our existing customer as, you know, uh, North Face, New Balance, they they are all increasing, uh, what they want to do, uh, in Georgia.
Unknown Speaker: So on that end, we we will try to continue to gradually grow with those uh, existing Legacy customers.
Unknown Speaker: But uh, new customers like Hanzo uh, which is the the Korean base.
Unknown Speaker: Uh, retail, um, the Korean-based manufacturer that, uh, they just started doing business with us. But, uh, the potential is huge. Um,
Unknown Speaker: Like Eric said, we just finished the first phase of the production of 3.7 million uh, pieces of uh, girl shorts. And we're getting, we're still getting new orders from them. Um,
Unknown Speaker: So the increase or the expansion plan is really.
Unknown Speaker: For.
Unknown Speaker: All the existing customer the new customers that we have on boarded in the past.
Unknown Speaker: Year or months. And as well as new customers that we are that we're still uh working with
Unknown Speaker: so,
Unknown Speaker: The demand is definitely, uh, real, and we're seeing it in the next few years.
Unknown Speaker: So that's why we now really focus on uh, developing our long-term uh, strategic growth plan.
Unknown Speaker: and we will, uh, we will make announcements about
Unknown Speaker: our growth plan in the, in the upcoming months. But as of now, uh, we're
Unknown Speaker: Close that to everybody.
Unknown Speaker: Also, if you can just give me uh sort of uh snapshot of a pre- tariff versus post tariff abroad. Obviously a lot of things has changed in the United States. Uh, the customers such a timing to you, now, where they coming from. So you just mentioned Asia, but what specific countries is just China or this is also like Vietnam and Bangladesh if you can just give us, uh, some better idea, uh, where the coming from, where the reducing their footprint, and the world to expand, uh, at your factories.
Unknown Speaker: Well, we have new customer, well, Hansel, even though they're based in South Korea, they're supplying, the US.
Unknown Speaker: So we're still, um, producing in Jordan and shipping, uh, products to the US. That's why, um, the advantage for us is because we have lower Terror rates.
Unknown Speaker: Uh, for shipping to the US, comparing to manufacturers in China in Asia. So that's why everyone is uh, focusing on coming to Jordan.
Unknown Speaker: um,
Unknown Speaker: And at the same time, we'll also be growing our shipping to Europe.
Unknown Speaker: Because we have zero tariffs, zero Duty for shipping duties.
Unknown Speaker: So, our business to uh, to Europe is also growing rapidly.
Unknown Speaker: Okay. And you said I think. Yeah. Eric.
Unknown Speaker: Yeah, in fact to our understanding, I mean, uh, the customer would like to shift some of their orders from China or even India because Indian terrorists, they reciprocal prep terrorists to the USA has been increased substantially some. So, so so, I mean, some others, um, are calling to our understanding were shifted, uh, from China and India. Yeah.
Unknown Speaker: Okay. Um, so my last question is about your Q4. Traditionally, Q4 has been a weak quarter for you because there's just not a lot of water, so you took up on local orders. I understand that this Q4 is looking quite a bit different.
Unknown Speaker: Batter basically. So you can just maybe tell me a little bit about uh, I understand, you know, provide the guidance. Yes, for a, a Q4, but maybe at least qualitatively how this Q4 going to be different from Q4 uh, last couple of years?
Unknown Speaker: Yeah. Uh,
Unknown Speaker: This year is going to be different. I mean, you're right, so uh,
Unknown Speaker: In the past, we're quite seasonal. And it's the first half of the Year usually has a much higher.
Unknown Speaker: Sales and second half. But this year uh is going to be uh, quite similar. The second half of the year will be quite similar to the first half. It's not still not as high as the first half. But uh as Eric had indicated, uh we our capacity is fully booked through the end of February and our year end is March
Unknown Speaker: So it is it's likely that um, that our Q4 would be, uh, would be still pretty good quarter.
Unknown Speaker: Okay, thank you.
Unknown Speaker: Thank you.
Unknown Speaker: You're welcome.
Unknown Speaker: That concludes our Q&A session. I'll now hand the conference back to CEO, Sam Choy for closing remarks, please go ahead.
Unknown Speaker: Thank you, operator, and thanks to all of you for joining us today.
Unknown Speaker: Our business is clearly moving in the right direction. We appreciate your continued support and interest in Dior.
Unknown Speaker: And look forward to speaking with you soon about our progress.
Unknown Speaker: Thank you all of you.
Unknown Speaker: Thank you.
Unknown Speaker: Thank you. Everyone, including today's event.
Unknown Speaker: Thank you.
Unknown Speaker: Thank you.
Unknown Speaker: Thank you very much.
