Jerash Holdings (US), Inc. Common Stock 2027 Q1 Earnings Call

The floor is yours. Thanks so much, operator.

Good morning, everyone. Welcome to Jerash Holdings Fiscal 2027 first quarter conference call. I am Roger Pondel with PondelWilkinson, Jerash Holdings investor relations firm. On the call today from the company, our Chief Executive Officer, Sam Choi, Chief Financial Officer, Gilbert Lee, and Eric Tang, who leads the company's operations in Jordan. Also, Ringo Ng, the company's Head of Marketing, will be on the call for the Q&A session. 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.

Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including the fourth 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. With that, it is my pleasure to turn the call over to Sam Choi.

Sam? Thank you, Roger. We are pleased to report another quarter of exceptional financial performance, highlighted by record revenue, improved gross margins, and a significant increase in profitability.

These strong results reflect the continued advantages of our Jordan-based manufacturing platform, combined with disciplined execution on delivery, quality, and operational efficiency. Fiscal first quarter revenue reached a record level of more than $15 million, representing growth of nearly 27% compared with the prior year period. We are pleased to see increased order volumes from our two largest U.S. customers, along with continued contributions from the company's strategic partner, Hansol Group in Korea. As customer demand continues to grow, we are expanding our production capacity in a disciplined manner while maintaining the quality, reliability, and service standards our customers expect. The strong momentum in our business reinforces our confidence in Jerash's ability to scale efficiently and deliver sustainable growth.

In addition to our operational achievements, we are encouraged by recent trade developments that further strengthen our competitive position in the marketplace. The newly announced duty-free access for Jordanian apparel and textile exports to the U.S. is a meaningful advantage for Jerash and reinforces our standing as a preferred manufacturing source for leading global brands and retailers. We believe this favorable trade environment will support future growth, create opportunities to attract new customers and strategic partners, and enhance our ability to deliver long-term value for our customers and shareholders. While our outlook remains positive, we are closely monitoring geopolitical developments in the Middle East that could affect near-term regional market conditions, including export logistics and transportation costs for raw materials sourced from Asia.

Although these factors may create periodic challenges, we believe our strong customer relationships, operational flexibility, and growing attractiveness in the marketplace position us well to navigate a dynamic environment and continue supporting our customers' needs effectively. We remain focused on executing our growth strategy, investing in capacity and capabilities, and leveraging the unique advantages of our manufacturing platform. With an expanded customer base, product mix, and favorable trade conditions, we believe Jerash is well-positioned to capitalize on emerging opportunities in the years ahead. With that, I will now turn the call over to Eric Tang, who is in charge of our operations in Jordan.

Hi, Eric. Thank you, Sam.

We had a very active fiscal first quarter driven by increased production for our two largest customers and new style orders placed by Hansol. We continue to actively respond to a growing volume of inquiries, particularly following the recent U.S.-Jordan trade agreement announced in July. By reinforcing the benefits of the original 2001 free trade agreement with zero duty for Jordanian apparel and textile exports, the new agreement further enhanced Jordan's attractiveness as a sourcing hub for the U.S. market. As one of the country's leading apparel manufacturers, Jerash is uniquely positioned to capitalize on this favorable trade environment and convert new opportunities into long-term customer relationships. We are pleased to have received additional orders from Hansol, including expanded product categories and higher unit sales price.

Additional product development through another large garment conglomerate is progressing towards its final stage, with order placements for a well-known global brand anticipated in the near term. If completed as anticipated, these orders could further support our growth momentum in fiscal 2027. Turning to our previously announced expansion plans, we are on target to add approximately 15% of production capacity by the end of calendar year 2026, expanding two of our existing manufacturing facilities with additional production lines and 500 additional workers. The next stage of our expansion involves repurposing our most recently acquired facility into a smart warehouse and cutting operation, while also adding production lines. As part of this expansion, we are converting the facilities that currently serve as our warehouse and cutting department for additional production.

These initiatives are expected to enhance our operating capability with 500 new state-of-the-art sewing machines and automation, supported by approximately 1,100 additional workers. The second phase is expected to increase capacity by approximately 20% to 25%, with completion targeted for around mid-calendar year 2027. Our partnership with the Jordanian Ministry of Labour to add capacity in rural communities continue to move forward. Our second satellite factory, which opened in March 2026, now supports 130 local jobs. We are currently expanding the site with additional floors, a project expected to increase overall production capacity by approximately 5% and bring employment at the facility to as many as 250 local workers. We expect this expansion to be completed by the end of fiscal year 2027.

In addition, we continue to work closely with the Ministry of Labour on plans for a third satellite factory to create approximately 500 additional jobs in the surrounding community, which is about one hour away from Jerash's first satellite operation in Az-Zarqa. Together, these initiatives support Jerash's growth objectives while also contributing to local employment and economic development. At the same time, we are managing through near-term logistic challenges related to the ongoing conflicts in the Middle East. Export shipments out of Haifa ports are experiencing periodic delays, and the cost of transporting imported raw materials from Asia has increased since the conflict resumed in July. While this condition may increase some timing and cost pressure, we are working closely with our customers and suppliers and keep production flexibility to mitigate disruptions and maintain reliable delivery schedules. Overall, we see growth opportunities ahead.

Our strategic capacity expansion plans, combined with Jordan's competitive trade advantages and our reputation for quality and reliability, continue to enhance our position in the global apparel supply chain. With that, I will now turn the call over to Gilbert to discuss our financial results.