Conference Transcript - JRSH 2026-06-17

Operator

I'm just ensuring it's not clearly right into the microphone so it picks up.

Gilbert Lee, CFO

But who advances?

Operator

Can I introduce you?

Operator

All right, everybody. I'd like to introduce our next presenter here at the Planet MicroCap Las Vegas, powered by MicroCap Club. We have Jarash Holdings.

Gilbert Lee, CFO

Thank you. Hello, everyone. Good morning. Let me introduce myself. I'm Gilbert Lee, CFO of Jarash Holdings. And let me just get right into it. I'm going to leave some time after the presentation for Q&A, so I will run through the slides first, and please just hold your questions until I finish. So here is the forward-looking statements, which I don't want to go into any details, but okay. How many of you know who Jirash is? Oh, quite a few. Anyway, but for the benefit of those who don't, let me just tell you that Jarash was the first Jordanian company that IPO in the U.S. So we are based in Jordan. All our operations are in Jordan, but we are incorporated in the U.S. and our business is really just contract manufacturing for the global premium brands. We are a garment or apparel manufacturer located in Jordan. We are a trusted partner for leading high-profile consumer brands, Brands such as The North Face, New Balance, Timberland, Hugo Boss, and so on. We just added two facilities this year. So in total, we have eight facilities located in Jordan, near Amman. And our manufacturing capabilities is state-of-the-art, And we're continuously expanding our facilities, improving our facilities. And as of this last fiscal year, our capacity was about 24 million pieces annually. And we have a successful track record of growing production capacity. We continue to grow, and we have plans to continue growing our capacity because the demand is there, and it is getting stronger and stronger. And we have a very good reputation in the garment industry. We're known for exceptional quality and delivery, on-time delivery. So just to give you a little bit of history about our company, actually, we started our business in Jordan in year 2000. That was when U.S. and Jordan signed a free trade agreement, which was the first ever free trade agreement that U.S. had with an Arab country. So in 2001, we began operating. Well, actually, in 2000, year 2000, we started with a small factory with fewer than 100 people. then 2001 the Fishery Agreement went into effect. So we went through a period more than 10 years of very slow and steady growth until 2013 and 2014 when we established our second and third facilities. Also in the same industrial zone in the mine. Then after a while, in 2018, we successfully took over some contract manufacturing business from the North Face. So the North Face started doing business with us, I believe it was in 2017, and then we got into a more significant growth period and in 2018 we IPO on Nasdaq and at that time we also signed a agreement with the Ministry of Labor in Jordan to start developing a satellite facility. Now in 2019 we acquired our fourth factory also in the same industrial zone and at the same in the same year we purchased two pieces of land in the industrial zone. One we were going to build a dormitory and the other one we we were going to use it to build another manufacturing facility now as you understand that or you remember at the end of 2019 or beginning of 2010 that's when 2020 that's when covet hit so during covet in 2020 we started at the request of the jordanian government we started making or manufacturing PPE products, all right, mask, protective equipment, and so on. So we got FDA approval, ISO designation for making the PPE products, and at the same time, we also expanded our ESG and responsible growth initiatives. then fast forward to 2021 and 2022 we began construction of a 180,000 square feet housing facility our first dormitory that we built ourselves all throughout these years we've been leasing smaller facilities for our dormitories and in 2021 we began building our facility and i think it finished in 2022 and now this facility is fully occupied housing about 2 000 to 2 300 foreign workers and the same year we also acquire a factory at the end of that year we acquire another factory that would be our sixth factory also within the same industrial zone now 2023 we began developing our market in the past it has always been to the U.S. customers. But in 2022-23, we began developing our market in Europe. As Jordan also enjoyed duty-free shipment to the EU, and we also got FTA, Free Trade Agreement, signed with the U.K. So with this benefit, we began to increase or grow our sales into the European market. In 2024 and 2025, we continue to expand our existing facilities by growing, adding more machines, adding more people. We were able to increase our capacity by 15%. But we continue to look for opportunities to add other facilities or build on the land that we purchased seven years ago. But as you understand, the war and also there were all kinds of instabilities in the region that hesitation prevents us to start the project. Finally, when we get to 2026, it seems like tariffs are behind us, the war seems to be stabilizing even though it's still going on, but in 2026 we added two more facilities. We purchased one building and we're going to turn that into a centralized cutting and centralized warehousing facility to improve the efficiency, and also we established another satellite factory at the request of the Ministry of Labor to provide employment opportunity for some rural area in Jordan. So why Why Girash? Why do business with Girash? Why invest in Girash? Girash is a very unique company. It enjoys, number one, the free trade agreements and the duty-free shipments to Europe, to UK, to US, and to many of the surrounding countries. And then we are well known in the global customer base. Global brands such as VF, VF Corp, New Balance, European brands, even Amani, we're doing business with them, Walmart, Sam's Club, everybody knows us. And we have very, very good reputation in terms of our quality as well as our delivery or our on-time delivery. And we are very prudent and very conservative in terms of utilizing our capacity, utilizing our cash flow to expand. We don't take exceptional risks. And because of our strategically location, you probably noticed in the past five or six years, global customers, they are having a strategy to migrate or diversify their manufacturing bases outside of China and outside of Asia into countries that are more stable, that are not so much affected by all this political impact. So Gerage really has been benefiting by this trend. And global customers, they already told us that they want to put more manufacturing in Jordan. So just a brief overview. We have eight facilities in Jordan. We employ over 6,300 workers. By the way, there's a rule in Jordan that you can hire up to 70% of foreign workers as long as you keep a 30% local worker employment. So we have 30% local Jordanian workers, and we employ 70% of our workers from places like India, Bangladesh, Sri Lanka, Myanmar, and so on. And all these skilled garment workers, they're very good at manufacturing garments. And we pay them the same wage and the same salary of what we pay the local workers. But they are still very willing to come over to Jordan and work for us. So Jordan itself is in a very unique situation. It is probably the most peaceful and most stable country in the Middle East. Even though next to it is Israel, and then on the other side is Iraq, Iran. On top of it is Syria. All these countries, they're having a lot of turmoil. They're having a lot of instabilities and sometimes even war. or you can sometimes see missiles flying across your head from Iran to Israel, but none of them will drop onto Jordan. I can assure you that because I've seen it multiple times. And Jordan, even though the siren will go off, but there's nowhere to run. They don't have these hideouts like in Israel that you can run into. But it's all safe, I can assure you that, because I go there all the time. And Jordan, it has a very small population. So it allows foreign workers to come and work, especially the garment sector. The government is highly supportive of the garment sector. So they allow foreign workers to come and work that keeps the manufacturing costs down. And, well, like I said, it's the global crossroad for highly skilled workforce, workforce from across the Indian Ocean. And it's recognized by a lot of the brands as an apparel manufacturing center. Duty-free, we already touched on. So the reason tariff developments and really accelerates the opportunities because, like you remember, in 2025, President Trump started this tariff war and really caused a lot of chaos amount all over the world. Everybody is getting hit by some tariffs. Eventually, it got away. It kind of faded away, and now it's okay. But the brands, they hate this kind of disruptions and uncertainties. But Jordan, having a long-term, a 20-plus-year free trade agreement with the U.S., now with the EU so people feel that Jordan is the place to go so in the past five or six years we've been getting a lot of our existing customers like VF the North Face and New Balance and so on they keep wanting to put more manufacturing in Jordan with us and also new customers like even Walmart even we We just started with a new customer, a huge supplier of Walmart in South Korea. The name is Hansel Group. They are the largest garment supplier to Walmart and they came to us last year and wanted to start doing business with us because Walmart asked them to come to Jordan and they specifically ask them to seek out Jirash. I mean, even we didn't do business directly with Walmart. Walmart tell their supplier to come work with Jirash. So the tariff thing is really stimulating a lot of additional demands. And it actually has started five or six years ago. Our competitive advantage about the tariffs, we're still having a 10% so-called tariff before it was zero, and duty is still zero percent. But comparing to China, you can see that China, depending on what type of products, what kind of material, it would be between 33% to 50% tariff and duty. And India is between 12.5% to 42%. Same thing for Vietnam and Indonesia, it's the lowest, but still 19%. So these are the brands that we have been working for. North Face, Vans, which is part of VF. New Balance, Hugo Boss, Skechers, Timberland, which is also part of VF. Calvin Klein, Adidas, and so on. So this is the product mix that we do. 25% are outerwear jackets, and those are the more complicated, the higher ASP, higher margin type of products. Now we also do a lot of pants and shorts. One big order from last year from Hensel was all on girls shorts. That was 3.5 million pieces of girls shorts. And we finished that order in February and shipped it. And that order will continue. Thank you. So our business strategy is to continue to increase our capacity, and by diversifying our customer mix and also our product mix, now we're better balancing the utilization of our capacity. In the past, it's always been the first half of the fiscal year has higher sales because because we're producing for the North Face, for the winter jacket. But then the second half usually will have a lower sales. But now, with working with Hansel, we're producing even in the second half. This past fiscal year, our second half sales is actually higher than the first half sales. Social responsibility, environmental awareness, This has always been ingrained in our culture. So just briefly on the financial Q4 of this past fiscal year 26, we grew, I think it was 40-some percent from the previous quarter, and gross margin maintained at 17-plus percent. So I can see that fiscal year 26 was really a turnaround year. In the previous two years, we were hit by the war, tariffs, logistics issues, but 26, it became stabilized, and we added new customers. So going forward, I can just see that Giraffe will continue to be very, very successful, and will continue to grow our capacity and continue to add new customers and new sales. Revenue, fiscal $25 million, $145 million, $26 million, and our goal is to get to over $200 million as soon as we can. Like I said, the last two years was not too good, 24 and 25 we lost money, but 26 we turned We continue to have a very strong balance sheet. We used more money this past year absorbing new business, but we always can produce sufficient operating cash. That's the balance sheet. As you can see, cash dropped slightly, but I'm pretty sure it will go back up. And we have secure credit facilities within Jordan to support our working capital. Why invest in garage holdings? Because the opportunities is there. We are seeing a lot of growth opportunity. We're very carefully and gradually increasing our capacity by adding new buildings, by expanding within our existing facilities, and also by introducing automation and more high-tech type of machineries to improve our efficiency. Thank you very much. I know I use more time than I was supposed to, but if you have any questions, maybe I can take one or two, or you can visit our booth at, what, 425?

Operator

Yeah, I'm happy to talk with you.

Gilbert Lee, CFO

Well, I would never say that it is safe to use one quarter to extrapolate. But you're right. Q4 of 26 would be a good year to be as a reference. I mean, a good quarter to be as a reference. But overall, for the fiscal year 26, by the way, our fiscal year ends on March 31st. So 26 actually started from April of 25 throughout March of 26. So we continue to improve our efficiency throughout the year until the first calendar quarter or our last physical quarter of 26, it was a good quarter. and we anticipate that it will continue on. Now, well, the Bosana JV was initiated about three years ago, and at the time we were going to rely on them to bring new customers to our mix. However, it didn't work out that way. We didn't lose money on that. However, we just see that it's not going to work. I mean, they, I'm sure they have their own agendas, and we just decided to part ways. So, but at the same time, we're seeing other customers, other new customers wanting to start doing business with us. So we just say, oh, we don't really need Busana. And Hansel from South Korea is a good example. they're bringing huge volume of business which in turn actually help our efficiency because we don't have to change the styles that often we would much rather do this than doing small quantities of many many different styles so yeah I think going forward that would be the way to go no we're not okay thank Thank you very much for your attention.