Earnings Call Transcript
Jerash Holdings (US), Inc. (JRSH)
Earnings Call Transcript - JRSH Q3 2022
Operator, Operator
Good morning ladies and gentlemen and welcome to the Jerash Holdings' Fiscal 2022 Third Quarter Financial Results. At this time all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Roger Pondel. Sir, the floor is yours.
Roger Pondel, Investor Relations
Thank you, operator. Good morning, everyone, and welcome to Jerash Holdings, fiscal 2022 third quarter conference call. I'm Roger Pondel with PondelWilkinson, Jerash Holdings' Investor Relations Firm. It will be my pleasure momentarily to introduce the company's Chairman and Chief Executive Officer, Sam Choi, along with its 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 all listeners today that this call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the risk factor section of the company's most recent Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission, copies of which are available on the SEC's website at www.sec.gov, along with other company filings made with the SEC from time to time. Actual results could differ materially from these forward-looking statements and Jerash Holdings undertakes no obligation to update any forward-looking statements, except as required by law. And with that, I will turn the call over to Sam Choi. Sam.
Sam Choi, Chairman & CEO
Alright, thank you Roger and hello everyone! Our fiscal 2022 third quarter results again demonstrate excellent progress. Revenue was at a record high for any third quarter in our history, reflecting robust shipments to our largest customers as a result of strong demand and our expanded manufacturing capacities. Gross profit also significantly improved for the third quarter, primarily because of our higher revenue and gross profit margin performance. Our gross margin expanded to 19%, reflecting increased shipment volumes along with increased orders from higher margin branded products. I'm happy to report that the strong momentum is continuing into our fourth fiscal quarter and well into fiscal 2023. Orders received year-to-date indicate that we believe we will lead to a revenue run rate for fiscal 2022 that exceeds our prior record. As a result, we have increased our revenue outlook for the fourth quarter and we are already looking to work on a record-setting fiscal 2023, which will be past April. During the past quarter we completed the acquisition of the operator of a 71,000 square foot manufacturing facility in Amman, Jordan. Our agreement to acquire the related physical premises is expected to close prior to this fiscal year end. Eric will provide more details in a moment. Our business outlook remains strong; accordingly, to accommodate for expected growth ahead we are continuing to explore plans to further increase capacity, both in our existing facilities as well as looking into other means of adding capacity, possibly building new facilities and/or through leasing and acquisition. I'll now turn the call over to Eric Tang, who is based in Jordan, and then Gilbert Lee will cover our financial results. Hi Eric!
Eric Tang, Head of Operations
Thank you, Sam, and hello everyone. Our factories in Jordan remain extremely busy. Order volumes were up substantially in the fiscal third quarter from our top global brand customers. These are orders with higher average selling prices and margins than we experienced in the year-ago period. And there's more good news to come with capacity completely booked through the end of July 2022. As Sam mentioned, we recently completed the acquisition of a new manufacturing facility in Jordan. We took over operations of the facility in August, including approximately 500 employees and the dormitory. The integration has gone extremely smoothly. Production from this newly acquired facility continues to progress well, and the facility is now fully transitioned to manufacturing products for our customers. It is expected to enable Jerash to produce approximately 2.5 million to 3.5 million additional garments per year, adding approximately 20% to the annual capacity. We continue to train our employees and enhance efficiency from this facility to further expand our capacity for new customer orders and new production categories. Construction of a new dormitory for our multi-national workforce is also progressing very well, and is expected to be completed by the third quarter of the calendar year 2022. The high-quality living space with comfort designs and the highest safety measures will help position us for growth and further our ESG goals. Among the other key benefits Jerash provides to its employees in Jordan are free healthcare and transportation. During the height of the pandemic in 2020, we established a government-approved hospital clinic in Amman with full-time doctors and nurses to care for our sick workers when hospitals in Jordan were at that time fully at capacity. In July 2021, we worked closely with the Jordan Ministry of Health to complete COVID-19 inoculations for all employees. Just last week we started working again with the Jordan Ministry of Health to offer booster shots to our workers, the first in the apparel industry here in Jordan. With that, I will turn the call to Gilbert to discuss our financial results and the fiscal 2022 and 2023 outlook. Gilbert, please.
Gilbert Lee, Chief Financial Officer
Thank you, Eric. Revenue for our fiscal 2022 third quarter rose substantially to $37 million from $21 million in the same period last year, an increase of 78% and the third quarter record. The increase was primarily due to higher shipments to our largest customers and stronger demand, as well as increased capacity. Gross margin expanded 710 basis points to 18.8% in the fiscal 2022 third quarter, compared with 11.7% in the same quarter last year. Gross margin expansion in the quarter reflected a higher proportion of export sales to our global brand customers in the U.S., which typically carry higher profit margins, as well as increased production and sales volumes. Operating expenses totaled $4.6 million in this fiscal 2022 third quarter, compared with $2.4 million in the same period last year. The increase was primarily due to increased head count after completing the acquisition of MK Garments, an increase in stock-based compensation and recruitment for new migrant workers, as well as higher shipping costs that were in proportion with the increased sales volumes. Operating income for our most recent third quarter rose to $2.3 million from $48,000 in the same period last year. Net income increased to $1.7 million or $0.13 per diluted share in the third quarter, from $94,000 or $0.01 per diluted share a year ago. Jerash’s balance sheet and cash position remain strong, with cash of $34 million and net working capital of $58 million at December 31, 2021. Inventory was $21 million and accounts receivable was $8 million. As you know, early in the quarter, we completed a public offering of common stock with net proceeds of $6.3 million which we expect to use for working capital and expansion plans. Net cash provided by operating activities was $4 million in the fiscal 2022 third quarter compared with $2 million in the same period last year. The change was primarily due to higher profit and working capital capacity. We expect the business to continue to generate cash from operating activities, and we have good access to supply chain financing programs with our major customers, and an untapped $3 million line of credit. In terms of our fiscal 2022 fourth quarter outlook, we are increasing revenue guidance to be in the range of $29 million to $31 million as strong demand continues and our capacity further expands. Based on current order flow and orders already received, we also anticipate that fiscal 2023 revenue will reach a new record. Recent orders continue to reflect a better product mix from our top global brand customers, which are expected to support gross margins in the high teens for the fiscal 2022 fourth quarter. I would also like to remind you that operating expenses are expected to be higher in fiscal 2023, reflecting our growth and certain impacts on the pandemic recovery. We also anticipate stock-based compensation to be at a higher level for the rest of fiscal 2022 and into fiscal 2023 compared to fiscal 2021. As mentioned last quarter, while customer orders remain strong, potential risks from supply chain issues that some of our customers are facing still linger and could affect the timing of shipments in the near term. We're taking a cautious and conservative approach and will continue to closely monitor developments over the next few months. We expect to provide an update on our next call. In addition, our Board of Directors approved a regular quarterly dividend of $0.05 per share to our common stockholders on February 22, 2022, to stockholders of record as of February 5, 2022. With that, we'll now open up the call for questions. Operator, may we have the first question please.
Operator, Operator
Certainly. Your first question is coming from Mike Baker from D.A. Davidson. Your line is live.
Mike Baker, Analyst
Hi! Thanks guys. I wanted to ask a couple of questions. First can you talk about – it's great that your sales growth is coming from the largest existing customers who were great partners for you guys. But can you talk about your efforts to diversify to other customers? What are you seeing from small or maybe up-and-coming customers? And as part of that, maybe update us on some of the tests you've done with the likes of Adidas or others. Thanks.
Sam Choi, Chairman & CEO
Thank you, Mike. Eric, do you want to answer this question about new customers coming in?
Eric Tang, Head of Operations
Okay. So actually for new customers coming in, I think if you have been watching Jerash for the past performance, you will notice that New Balance is also coming up very quickly and it will continue to grow in 2022. For new customers, we have already taken two orders from Adidas, and I think most probably they will be talking to us about new orders for the latter half of the year. We also have some new customers like Timberland and Skechers. We are also at the final stage of discussion with them. So the outlook for 2023 includes these customers.
Sam Choi, Chairman & CEO
We are not sure what the volume is going to be in the next relevant year from these new customers, but at least our existing customers are still growing strong. We will have at least as many orders from our existing customers, a new balance in the Northeast for the next coming year.
Mike Baker, Analyst
Yes, that makes sense. Okay the other question I wanted to ask is about your capacity increases and the timing on breaking ground on the new 133,000 square foot facility which you guys have talked about. Can you discuss the timing on when you break ground on that and when that should start to be operational and then how long it takes to be ramped up to fully operational?
Eric Tang, Head of Operations
Gilbert, shall I answer the question?
Gilbert Lee, Chief Financial Officer
Yeah, please Eric, go ahead.
Eric Tang, Head of Operations
Okay. So this new big factory, we have already appointed the engineering consulting company to give us a plan and a design. I think hopefully, maybe next month they will finish the initial planning and design and then we will have a board meeting to discuss and go through everything. I think most probably our time schedule is such that we may be able to start in the later half of the year and we will try our best to hurry up for creating the new facility, and hopefully its duration will be around one year to 1.5 years, depending on how large the size we are going to build.
Mike Baker, Analyst
Okay, okay, yeah we'll continue to watch out for increased capacity. Okay great, I’ll turn it over to others to ask questions.
Eric Tang, Head of Operations
Okay. Thank you.
Sam Choi, Chairman & CEO
Thank you, Mike.
Operator, Operator
Thank you. Your next question is coming from Mark Argento from Lake Street Capital. Your line is live.
Mark Argento, Analyst
Hey guys! Nice quarter. Just wanted to dig in a little bit in terms of some of the trends. Obviously, you guys benefited from a lot of incremental order volume. Do you think these orders that you're getting are because of supply chain issues, so your customers have shifted more product or more production to your facilities? What are the underlying trends there, and how sustainable do you think they are?
Sam Choi, Chairman & CEO
Well, thank you Mark. I think you have seen or we have seen in the past few years that more and more global brand customers have been shifting their production, have been shipping their sourcing away from Asia, particularly China, and we are getting a lot of inquiries from new customers and pressure for increasing capacity from existing customers in the past few years. Now of course the pandemic hit in 2020 and kind of spooked everybody, but as soon as the pandemic relaxed a little and all the orders came back, this year is just a really robust year fueled by the logistical issues and the supply chain troubles and the lead time coming out from China and some Southeast Asian countries that are also impacted by the pandemic, causing their factories to shut down and not able to deliver on time to some of these global customers. I also heard that even smaller customers are trying to balance and migrate some of the production out of China. So this is an underlying trend; everybody is getting afraid of putting all their eggs in China and moving their production, balancing or diversifying their sourcing. So we'll continue to see this and that's why we're increasing our capacity, hoping to take advantage of this trend.
Mark Argento, Analyst
Great! And should really gross margins = fairly impressive year-over-year improvement and then also as you go into next year the opportunity to maintain and maybe even grow gross margins. When you’re thinking about capacity allocation, obviously there are certain products that carry higher gross margins than others, how do you guys think about allocation, especially when production capacity is a scarce resource? Are you focusing more on higher-margin type products at this point or what's the philosophy there?
Sam Choi, Chairman & CEO
Well, we're fortunate this year that the higher margin product mix and the exports to U.S. FOB orders are significantly higher or have increased this year, allowing us to have good margins and product performance. But as capacity increases and as we absorb the new customers, usually we will have to take a hit on the margin. Orders will be smaller at the beginning, we have to spend a lot of time and effort in developing samples, and efficiency will be hindered a little bit. But after we take on those new customers, everything will get back to a more normal level. Of course, as capacity is limited, we have the luxury to choose what products or what customers we produce for first and we will try to manage that and keep reasonable margins for customers or new customers who demand lower margins. Obviously, we will tend not to do business with them or allocate smaller portions of business with them. But as our sales volume increases, I imagine we will have to take on some of the lower margin business as well.
Mark Argento, Analyst
Great! Thanks. Thanks for the answers and congrats on the strong quarter.
Sam Choi, Chairman & CEO
Thank you.
Eric Tang, Head of Operations
Thank you very much.
Operator, Operator
Thank you. Your next question is coming from Rommel Dionisio from Aegis Capital. Your line is live.
Rommel Dionisio, Analyst
Yes, good morning. So a couple of questions. First, you know it's been an overall inflationary environment. I'm just wondering if you guys are seeing any cost pressure from the fabric side?
Sam Choi, Chairman & CEO
Yes, we definitely see pressure on the fabric side and I also like to let you know that we have already started sourcing fabrics in the Middle Eastern region. The lead time, which is the most critical factor for sourcing fabrics, especially for our global brand customers, has increased tremendously. We have been sourcing fabrics from China, Taiwan, Korea, Vietnam, and because of the pandemic, the lead time has been extended from those countries, with some of those countries shutting down for a period of time. This adds pressure on lead time and costs due to increased shipping costs. I'm sure you heard about this coming out of Asia, especially to North America. But even shipping from Asia to Jordan to the Middle East has also seen cost increases quite a bit. Now, of course, we can pass on the increased fabric cost and transportation cost to our customers, because they understand. Sometimes they even have to airship some of the fabric or supplies to us just to meet the deadline. So last quarter we began sourcing some of the fabrics and materials from the Middle Eastern region. We went to Turkey and Egypt and have some success. Right now, we're working on a project with Timberland, where the fabric is sourced from Turkey. The price of those fabrics will not be as low as from China, but the advantage is the lead time is much more – it's much shorter from shipping from Turkey to Jordan, compared to shipping from China, as well as the shipping costs, which would be lower. Overall, I think raw material costs will be slightly higher, but the advantage is that we can get the products and materials much faster.
Rommel Dionisio, Analyst
Okay, that's very helpful. Thank you very much. And one last question; you know you've been building – you have a nice cash reserve here. I think $33 million cash balance at the end of last quarter, which is nearly $3 a share. How do you guys think about that cash? Has your view changed as you continue to generate such strong free cash flow? You obviously pay a nice dividend, have a nice dividend yield, continue to look for acquisitions, but is share buyback a possibility here? How do you guys think about that deployment of cash?
Sam Choi, Chairman & CEO
Well, right now we don't have any plans to buy back shares. The reason that we did the stock offering in October was to raise some capital to be used for future expansion. We're currently building a dormitory, which has a total cost of about $8.2 million and will be completed within this coming 2022. We’re also studying the design and engineering study for building a new factory in Jordan, which will cost up to $20 million. Plus if there are any other smaller acquisitions of additional factories or manufacturing facilities and other cost savings projects such as solar energy, those kinds of small projects, we will use the cash that we have for those projects to further improve our performance and to grow our business.
Rommel Dionisio, Analyst
Okay, that's very helpful. Congratulations on the quarter!
Eric Tang, Head of Operations
Thank you.
Sam Choi, Chairman & CEO
Thank you, Rommel.
Operator, Operator
Thank you. Your next question is coming from Barry Posternak. Your line is live.
Unidentified Analyst, Analyst
Hey guys! Also congrats on the quarter and the Q4 guidance. Was there any COVID impact in the quarter amongst your employee base and factory?
Sam Choi, Chairman & CEO
Eric, do you want to answer that?
Eric Tang, Head of Operations
I'm sorry, I missed the question.
Sam Choi, Chairman & CEO
COVID impact on our employees and our…
Eric Tang, Head of Operations
Okay, actually we monitor very closely with all our workers and staff. Since the onset of the pandemic, we set up an isolation hospital in our facility, employing our own doctors and nurses to take care of all the sick patients, especially when public hospitals were full. We are still operating, although the number of patients has rapidly reduced. Last, I think – in every three months the Ministry of Health visits to check the health status of our workers and staff. They take samples from our workers to test for COVID-19, and the last visit was three weeks ago, during which 200 samples were taken and everyone came back negative, even with the cases of Omicron. In order to further protect our workers from COVID-19, aside from the initial vaccinations we provided, starting this month, we have a special program with the Minister of Health, which is the first of its kind in the apparel industry here in Jordan. We are providing booster shots to all our 5,000 workers and staff. We already started this process last week and will continue until all our workers finish their booster shots.
Sam Choi, Chairman & CEO
Yeah, we were also the first ones that got all our employees fully vaccinated with two shots back in July and August.
Unidentified Analyst, Analyst
That's great. Also, given the supply chain issues that your apparel manufacturers are dealing with, are your largest customers placing any outerwear orders in the March and June quarters to build inventory early?
Sam Choi, Chairman & CEO
For winter season orders, whether they are placing orders early for this coming winter season? Eric…
Unidentified Analyst, Analyst
Yeah, earlier than in prior years.
Eric Tang, Head of Operations
Actually, we have continued to receive orders from them throughout the year. Of course, the number of orders for the summer is not that significant. But for the winter season, we are now starting production in early March and early April, which is for the winter season. We are anticipating that they will be placing around 2.8 million to 3 million pieces of jackets with us. This is nominal compared to prior years, and we also expect New Balance, another primary customer, to increase their volume of business with us too.
Unidentified Analyst, Analyst
Okay, and also on the MK Factory that was acquired, is that already operating at the margin you are targeting or is there further margin improvement expected?
Eric Tang, Head of Operations
Actually when we started in October, we found it hard to make the factory breakeven because it was a new start in October and November. However, after November, we have been in a profitable situation because all our workers have become very accustomed and familiar with the styles we are producing in other factories.
Unidentified Analyst, Analyst
Okay, great. And last question; the further capacity expansion you mentioned - that was mentioned for the fourth quarter, is that coming from just squeezing out more production out of existing factory floor space, or is it coming from the MK acquisition or what? I think it was mentioned that there was going to be some further capacity expansion in the current quarter, Q4.
Sam Choi, Chairman & CEO
In Q4, the only capacity expansion we would have is from the absorption of MK's capacity. That will be a comparison from the fourth quarter of last year. We will continue to add more capacity at our existing facilities including MK. I think we have a project to expand one of our existing factories and add additional production lines there. And for MK, if we want to, we could also add additional workers. I think we absorbed 500 workers, but we could put in more workers and add more machines in that facility to get it up to 800 workers. But right now we haven't really started that yet, but it is a possibility. And the only additional major capacity increase we have planned is to build on the piece of land that we purchased two years ago and build a new manufacturing facility. Once it’s finished, it could add another 40% to 50% in capacity.
Unidentified Analyst, Analyst
Right, okay great. Thank you.
Eric Tang, Head of Operations
Thank you very much.
Sam Choi, Chairman & CEO
You're welcome.
Operator, Operator
Thank you. Your next question is coming from Mike Baker from D.A. Davidson. Your line is live.
Mike Baker, Analyst
Okay, thanks. One quick follow-up. In the past, you've talked to us about long-term gross margins in the high teens, EBITDA approaching 10%, margins are higher. With what you're seeing now, with some of the higher margin trends you're seeing, is that still the right way to think about it? And how do we think about – you know you talked about more costs coming. How do we think about EBITDA in the fourth quarter and then in 2023? Thanks.
Sam Choi, Chairman & CEO
Well, I think for the fourth quarter, we’re still seeing margins at the high teens, which should be comparable to what we see in Q3. But in terms of EBITDA, since the sales volume for Q4 would be lower than what we saw in Q3, I think EBITDA would be somewhat lower, probably not at the 10% level.
Mike Baker, Analyst
When you say lower, you mean lower on a percentage rate or dollar basis or...
Sam Choi, Chairman & CEO
Lower on the percentage.
Mike Baker, Analyst
Lower on a percentage basis, okay. And how do we think about 2023?
Sam Choi, Chairman & CEO
2023, right now we don't have any ideas about what the growth percentage will be, because orders are still being placed. However, it will definitely be higher than 2022. We are confident of that because we have a full year of capacity from MK and if we can squeeze any additional capacity from other existing facilities. But I don't think it will be like the growth we saw this year.
Mike Baker, Analyst
I thought you were talking about top line.
Sam Choi, Chairman & CEO
Yes, top line. And bottom line, I think all expenses and margin will be similar, and it's still going to be in the high teens quarterly. We'll have some fluctuations depending on which customer and what products we are producing, and operating expenses will be similar to this year.
Mike Baker, Analyst
Okay, that's very helpful. Thank you. I appreciate that.
Sam Choi, Chairman & CEO
Thank you.
Operator, Operator
Thank you. Your next question is coming from Joe. Your line is live.
Unidentified Analyst, Analyst
Hello! Hi, I'm a retail shareholder in the company and I wanted to know more about the company's qualification as an ESG company in terms of the divestment strategies going forward today with funds interested in companies that have social governance and environmental concerns. I mean what can you – I don't know if we meet the qualifications, but can you explain to me if you do meet the qualifications, what do you have to do to continually qualify for those qualifications?
Sam Choi, Chairman & CEO
Okay, we have some – we are always focused on ESG and I don't know if we are qualified or what kind of qualifications we have to achieve, but all our customers, at least the major ones like VF, North Face, and New Balance, value us as a manufacturer, as a supplier that is fully focused on providing or trying to improve on ESG. They come to audit our facilities every year, always giving us very high remarks and putting us at a premium level in terms of achieving their requirements, whether it be how we treat our employees or how we run our facilities. We have projects like adding solar panels and using recycled water, all kinds of activities that we do to avoid damaging the environment. We will continue to do that.
Unidentified Analyst, Analyst
I can understand that your customers would probably want to get involved in doing their inspections on that. But my concern is, what about the funds and the managers of funds that would be important investors to the company? Do they also look over your ESG responsibilities?
Sam Choi, Chairman & CEO
So far we haven't really discussed any expectations or taken any interest in how we perform regarding ESG with our investors. However, we will continue to improve our communication with our investors to ensure they understand and value what we are doing.
Unidentified Analyst, Analyst
Do you anticipate at all with any possible labor shortages in Jordan once the pandemic is over with?
Sam Choi, Chairman & CEO
No, we don't anticipate any labor shortages. In fact, we are doing – even in our expansion, we are working with the government to provide more job opportunities to some of the less advantaged areas where there are high unemployment rates, as well as to Syrian refugees. There are about 1 million Syrian refugees in Jordan, many of whom do not have jobs. We are working with the U.N. to provide job opportunities to those Syrian refugees. We have been quite successful in bringing migrant workers from countries like India, Bangladesh, and Sri Lanka to Jordan to work in our factories. About 75% of our workers come from those countries.
Unidentified Analyst, Analyst
I can understand the workers from Bangladesh and Pakistan because they are foreign workers. But the Syrian refugees have a different status. My question for you is, will the Jordanian government recognize the Syrian refugees once they are working and have housing that you provide for them in some cases, citizenship of Jordan or will they never have citizenship?
Sam Choi, Chairman & CEO
Well, that part I don't know. But the Syrian refugees have to remain in the refugee camps. What we provide is free transportation. We hired buses to go to where they live, which is the refugees' camps, about an hour away from our factory. We also provide medical help if they need it, and childcare if they need to bring small children to work. We have childcare centers in our facilities to help take care of their children.
Unidentified Analyst, Analyst
Didn’t you say earlier in your presentation that you are funding new dormitories for workers?
Sam Choi, Chairman & CEO
Yes, but the dormitories are mainly for overseas workers, not for the refugees. The refugees have to stay in the refugee camps.
Eric Tang, Head of Operations
No, not by us. The refugees’ camps are supported by the UNSCO. So according to the regulations, all refugees, regardless of their country, are not allowed to stay outside the refugee camps. While as an employer we provide job opportunities and transportation to them, we bring them early morning to our factory and return them in the afternoon to the camps. The Jordanian government pays them a salary equivalent to what local Jordanians receive, but they do not receive citizenship, only residency as refugees.
Unidentified Analyst, Analyst
Let me ask you this question: dealing with the percentage of employees that are Syrian refugees and the percentage of employees that are Jordanian citizens and the percentage of employees that are visiting foreigners, such as Bangladesh and Pakistan and elsewhere in the world. Can you break those percentages down and what is the turnover rate? The turnover rate would mean something that would cause minor disruptions, possibly major disruptions. How do you handle that, because you always have to be training all the time as new employees come in. Is there a way of determining that or is that a proprietary strategy?
Eric Tang, Head of Operations
For our 5,000 workers and staff, around 75% are migrant workers. The balance is 25%, comprising local Jordanians and Syrian refugees. Currently, only around 180 Syrian refugees are working in Jerash factories, and we have, I think, around 900 Jordanian workers. The Jordanians tend to be quite stable, as this is a long-term job for them. However, for the migrant workers, the initial contract usually lasts three years. After three years they have the choice to either leave for home or take a vacation and return for another contract. According to our statistics, about 75% to 80% of our workers are willing to continue after the first contract. Usually, they fulfill at least two to three contracts before they finally go back home. This is important because if they leave after their first contract, we will need to train new workers again, but this hasn’t been much of a situation since we typically bring in very experienced machine operators. We interview them and evaluate their performance before bringing them to Jordan.
Operator, Operator
Thank you. Your next question is coming from Mike Disler. Your line is live.
Unidentified Analyst, Analyst
Yes, I just – first off Sam, Gilbert, Eric, you know I’ve been on these calls for years.
Sam Choi, Chairman & CEO
Hello!
Unidentified Analyst, Analyst
Hi Gilbert! How are you doing? I just want to say, most every question possible has been answered and asked. So you know I’m really calling congratulations on the quarter. And you should know that the shareholders, both large and small, I'm sure appreciate the depth and transparency of your calls, and that’s it. I just – I got nothing more to add. You've answered every question. You guys are just doing a great job and we all appreciate it. Thank you very much.
Sam Choi, Chairman & CEO
Thank you very much.
Eric Tang, Head of Operations
Thank you.
Operator, Operator
Thank you. There are no further questions in the queue. I will now hand the conference back to Mr. Sam Choi, CEO for closing remarks. Please go ahead.
Sam Choi, Chairman & CEO
Thank you, operator. And thanks again to all of you for joining us today. We appreciate your support and interest in our company and look forward to speaking with you again on our fiscal 2022 fourth quarter call. Thank you, everyone.
Gilbert Lee, Chief Financial Officer
Thanks. Thank you.
Operator, Operator
Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day! Thank you for your participation.