Now we have the pleasure of welcoming Gilbert Lee, Chief Financial Officer of Jerash Holdings. Gilbert, thanks for joining us today. Hi, Aaron. Thank you for having me. Of course, we're looking forward to it. To kick things off, Gilbert, could you provide us with an overview of the Jerash story for some of the listeners who might be new to the name? Oh, absolutely. Do you mind if I share the screen and then show maybe a few slides? Yeah, you can go ahead and share your screen. I think you have a presentation you're going to do. Yep. Just for the people who are not familiar with Jerash, I just want to give you a brief introduction. Jerash is a contract manufacturer and trusted partner for high-profile premium global apparel brands, and we are located in Jordan. We have six factories in and near Amman, Jordan. We have state-of-the-art manufacturing facilities producing more than 20 million pieces of garments on an annual basis. We have a proven track record of prudently increasing our capacity to meet growing demands. The key of our strategy is demand first and then capacity growth. What keeps Jerash being the first choice for brands is exceptional product quality and reliable on-time delivery. Here's a slide of kind of our history and the timeline of our growth. In year 2000, remember Y2K, we started up the first factory in Jordan with fewer than 100 workers. In 2001, Jordan and the U.S. signed the first free trade agreement in the Arab world. We went through a period of very slow growth until 2013 and 2014 when we set up Jerash 2 and Jerash 3. In 2018, we succeeded an IPO and got listed on NASDAQ. In the same year, we reached an agreement with the Jordanian Ministry of Labor to set up a satellite factory in Al-Hasa, which is a town one and a half hours outside of Amman, and it later became our fifth factory. In 2019, we acquired our fourth factory in Amman, plus we bought two pieces of land in the same industrial zone for future growth. The COVID pandemic hit in 2020, and everything got put on hold. During the pandemic, we developed our PPE manufacturing business, which at the beginning was just to help the Jordanian government. We expanded our ESG and responsible growth initiatives during the pandemic. In 2021, despite still being in the pandemic, we remained operational and started building a new dormitory on a smaller piece of land to provide better accommodation for our foreign workers. Other factories are going out of business during the pandemic, and we had the opportunity to acquire our sixth factory, also within the same industrial zone. At the same time, we began establishing our sourcing and merchandising team in Jordan to expand our sales in Europe, as well as sourcing fabrics and supplies in Turkey and Egypt in order to diversify and rely less on material sourcing in Asia. This strategy paid off, and in 2023, we started significant growth in the European market coming out of the pandemic. More recently, we attracted the attention of some large Korean manufacturers. Actually, it was their U.S. customers that demanded they come to Jordan and work with Jerash. We began producing for them. This basically used up all of our capacity year-round, even the expanded capacity that we achieved at our existing facility this year. That is a very brief introduction about Jerash and its history. I just want to give the floor to Aaron for any questions. Thanks, Gilbert. That was a great overview of the story. Let's talk a bit about the customer base today of Jerash. It sounds like you've gotten some key customer wins from referral and word of mouth. Maybe provide some color in terms of the customer concentration and how that's evolved over time for you guys. Yeah, absolutely. When I first joined Jerash back in 2019, I remember at that time, we only had maybe one major customer, and that was VF, which we produced The North Face for them. They made up about, or actually over 80% of our sales. Over the years, New Balance came on board. I remember in 2019, VF made up 80% of our sales. Today, or actually at the end of 2025, last year, or our last fiscal year, VF is about 65% of our sales. That includes the brands of The North Face, Timberland, Vans. The total for VF is 65%. New Balance made up about 12%, and the rest of them are smaller customers. Our projection for this fiscal year, VF is only going to be about 54%, and New Balance will be around 14%. I think our strategy of diversifying and expanding our customer base is really going well. Although our sales with VF have not diminished, it hasn't reduced. Because we're growing other customers faster, the makeup of VF sales in proportion is smaller. Okay, great. That's really helpful there, Gilbert. You know, one of the things that we've talked about for the Jerash story is, especially in today's environment where everyone's really focused on tariffs, particularly within the apparel industry, some of the advantages that you have. Can you provide the audience a better understanding of, you know, where tariffs stand today for Jordan and how it compares to other countries where competitors manufacture products? Oh, yeah, sure. I think everybody knows that the tariff situation is still kind of a very everyday. It could change. As of today, Jordan previously, Jordan was a duty-free country to the U.S. Today, it is 15% duty or 15% tariff. Comparing to all the other countries that are competitors to Jordan, like China, as of now, their effective tariff is 70%, seven-zero. Before the reciprocal tariff, it was about 20%, depending on the products. The additional tariff was 50%. Together, it's 70%. Vietnam is 38%. Okay, Bangladesh is 36%. India, because of the 50% reciprocal tariff that President Trump is adding to them, right now they're looking at 64%. The only country that is less than Jordan is Egypt. Egypt has a 10% tariff. Jordan is still hoping to negotiate down the 15% back to 10%, which is the base tariff that Mr. Trump has indicated for every country all over the world. 10% would be the base. We're still negotiating. There is still some political power that Jordan has to negotiate. Basically, that's how that's what we stand. Even Mexico is at 15%. Although with the free trade agreement between Mexico, U.S., and Canada, they're still standing on 15%. Jordan, we came out still being very competitive in terms of duty. For Jordan, we also have a duty-free agreement or free trade agreement with EU. All the European countries, we can ship to them with zero tariff. Yeah, certainly seems like Jordan's an advantage region in today's climate. Outside of the tariff and duty advantage, you know, talk about some of the other benefits for some, why someone would want to go with Jordan and particularly Jerash. Maybe the long history and reputation you guys have there. Jordan has... It is very... is very... Its reputation is the low-cost manufacturing for garments, low-cost and high-quality. Especially that Jordan allows foreign workers... It allows foreign workers to come to Jordan. The distinguishing part between Jordan and Egypt is that Jordan would allow foreign skilled labor to come to Jordan and work. Egypt doesn't allow. If you look at it, Jordan has a very small population. It doesn't even have enough workers. Egypt has a much higher population. The government policy is Egypt doesn't allow foreign workers to go. If you look at the two countries, the local workers, they're not very skillful, and their work ethics are not as good as other country workers, such as the Asian people like India, Bangladesh, Sri Lanka, and more recently, I think it's people from Burma or Myanmar. Yeah. We can import those workers to come to Jordan. I think the government allows 75% makeup of foreign workers. Those workers really provide us a very highly efficient and low-cost labor workforce. Jordan is very well recognized as a very well-established garment segment. Of course, on top of duty-free to Europe and comparably lower duty to the U.S. That's why a lot of the global brands, they are all coming to Jordan to look for capacity, to look for production. Okay, great. No, that certainly makes sense. That's complimentary to the tariff advantage that you guys already have in Jordan. Talk about the operations a bit. Going into the style, specific quality standards or production capabilities that differentiate Jerash and manufacturing jackets and outerwear, given these are more complicated styles. Can you talk about what goes into that and how that gives you guys an advantage as well? Jerash, even within Jordan, is well known for our capability of manufacturing complicated styles, outerwear jackets that require skilled laborers and very high-quality control versus some manufacturers that just do very simple garments like t-shirts, polo shirts, even pullover hoodies. Jerash is famous for making high dollar value and highly complicated garments for global brands such as The North Face and even HUGO BOSS. That's why Jerash is a manufacturer that everybody is looking to get their production in. In Egypt, their workers can produce. They have also very low-cost labor. However, most of the brands hesitate to send their more complicated garments to Egypt because their quality and their on-time delivery are not as good as Jordan. In Jordan, Jerash, even though it's not the highest volume and the largest manufacturer, is considered number one in terms of the more premium and more high dollar value garments. One thing is that the tariff rates and because of the polyester base of the outerwear, the tariff benefits or the free trade agreement benefit coming out of Jordan makes it even more beneficial to send the complicated garments to Jordan. Different material gets a different tariff rate. Cotton base are lower and polyester base are higher. Great. No, that's helpful. Thanks for that, Gilbert. One thing I want to go back to that you alluded to was capacity. You talked about facilities being fully booked. Can you provide some more color on that? What specific customer diversification or contract terms underpin this visibility, particularly amid the tariff-driven demand shifts? Sure. More recently, we started partnering with, I would say, it is the number two manufacturer in Korea, but it is the number one garment supplier to Walmart. This manufacturer, Walmart actually demanded them to come to Jordan and work with Jerash. They said, okay, previously, this manufacturer, the name is Hansae. Hansae, previously, had their own factories in Asia, but a lot of the sourcing previously was from China. Because of the trade war, because of the tariff situation, Walmart demanded them to find capacity, find production in Jordan, in duty-free countries. Walmart actually suggested them to come talk to Jerash. They gave Hansae like a six-month or 12-month window to migrate the operation, migrate the production out of China. They have no choice, but if they want to build a factory in Jordan, it will take them two years at least. They have to work with Jerash. We started talking to them, and we actually started manufacturing for them a trial order, which is like three million pieces of girl shorts. They basically took up all our capacity, or everything that's left. It helped us because we have always been trying to fill up our off-season or the slow season capacity. Our heavy season is always the fall and the winter, actually from summer to the fall, when we produce the outerwear for The North Face. That is always our fully booked capacity. The winter seasons or the winter months, we always look for lower value, lower margin productions. Now Hansae came in and took up all our capacity. Now we're facing a dilemma of what customers do we work with. Some customers that we worked with before, they are loyal customers, but their pricing is lower and their margins are lower. We're facing some difficulties trying to, I mean, we have to compare. In the long run, I think Hansae is going to be a great partner. They indicated that there are more businesses that they want to put in Jordan. We have a piece of land that we have bought about six years ago, 2019, I believe. We have always wanted to build a new factory on that land, but because of COVID, because of the Red Sea, and then the Gaza situation, all this instability kind of put everything on hold. Now, with things getting more stable and new business, new demands are coming in like crazy, we're kind of just pulling back out this project. It is a matter of who we want to partner with and whether we want to do it ourselves, do another capital raise, or use some money that we borrow from the bank to build it. Building capacity is going to be our biggest priority right now because we have the demand. We have the demand that we cannot really fulfill. I can tell you that actually, all our factories are fully booked until the summer of next year, summer of 2026. Summer months have always been crazy. If we get it fully booked until February or March of next year, we might as well say that it's fully booked through the fall of next year. Yeah, it's helpful color, Gilbert. I know you've mentioned some of the contemplation involved in whether or not you take that step to expand capacity. It sounds like now it's a combination of the increasing overwhelming demand you're getting in combination with some level of stability, at least you might be seeing in the region, that's given you a little bit more of the confidence to maybe make that go-ahead step. Absolutely. Okay. All right. That's good to hear. Is it fair to say when we think about, you know, growth drivers, the biggest driver for growth on the top line is going to be capacity expansion? There are some mixed drivers you could have, but it sounds like you have to weigh the dynamics of maybe some higher sales and margin versus some of those longstanding consumers. It looks like the capacity expansion is going to be the main driver of top line growth, or are there others? The top line growth is definitely limited by our capacity. We have to solve that problem. We did some internal expansions, like in our existing facilities, we added some production lines, we added some workers, we brought in some new foreign workers. In our satellite factory in Al-Hasa, we are currently fixing to build another building, have another extension in the desert, and hiring more of the local workers over there. The government also gave us permission to bring in, I think, 1,500 foreign workers to put in our main facilities in Amman. Plus, we're going to move some foreign workers to Al-Hasa to help improve the efficiency over there. That is going to take some time. I think right now we're looking at maybe the middle of next year for that to come online, the extension of the Al-Hasa facility. At the same time, we are also working on doing some automation on our existing production lines so that we'll be more efficient. Then looking at every position that we have on our existing production lines to create more efficiency, as well as cost reduction initiatives so that we will probably lower some of our G&A expenses, lower some of the manufacturing overheads. Everything, all these initiatives will put money on the bottom line. I think the major growth opportunity will be just to expand our capacity. Yeah, that was a good segue into my next question. On profitability, right? How should we think about the evolution of the gross margin and then also on the overall profitability of the business? It sounds like you're alluding to some of the levers you have to drive some expansion just now. Yeah, because when you grow your overall production and grow your overall capacity, you will benefit by lowering the unit costs. All the fixed costs are the same. The rent, the insurance, and whatever, the fixed salaries, they're all the same. Just by increasing your capacity, increasing your output, your overhead per unit will be reduced. Okay, great. Thanks for that. All right, last question for me real quick. Thinking about the balance sheet and CapEx, you alluded to this earlier, but just one more to dive in on it. How should we think about the potential CapEx you'd have to expand and how we think about the balance sheet today? This year, I think we didn't really plan for any significant CapEx for expansion. The automation that we talked about or that I talked about earlier, it only required maybe less than $1 million. Some of the internal expansion we already done, adding machineries, fixing up the buildings and so on, those are very minimal. Maybe we're looking at just a few million dollars in CapEx for this fiscal year. Whether we're going to build a brand new building on the piece of land that we have, that is going to cost at least $20 million- $30 million. We still don't have a solid plan on how to do that yet. Even though we do have the engineering study, the architectural design, we want to build kind of like a hybrid of manufacturing facility, warehouses, and accommodation facility, like a small dormitory for the additional workers. That will require more capital. We're probably looking at maybe working in partnership with some of the customers, some of the potential. We really need to kind of solidify the commitment, the sales commitments, the demand from all these customers before we decide on building. For this one, we're probably looking at maybe next fiscal year, the fiscal year 2027, to start this project. However, the Al-Hasa, the satellite factory in the desert, we're definitely going to do it. The cost of it may be around $1 million- $2 million because the Jordanian government is subsidizing on this project. For us, it's only going to be maybe $2 million U.S. dollars. That is going to, we hope to finish that probably the summer of next calendar year in 2026. Okay, great. Appreciate that, Gilbert. A couple quick rapid-fire Q&A before we close things out here. M&A, is that, you know, part of the strategy for you guys? Or are you going to be focusing more on organic growth? Right now, we're looking at organic growth. For M&A, there might be some factories that are available for purchase. There's actually one factory that we're currently looking at, but we want to rent instead of buying. I think we want to preserve our cash for the time being. You never know if there are some properties that are available or businesses that are available and at a very reasonable price and we need the immediate capacity, then yeah, we'll go ahead. Right now, there's nothing like that on the horizon. Okay, great. What about if you think geographic mix on the sales, not where production is? Most of your customers in the U.S. today, are you looking to expand or diversify into Europe or other regions? No, we are looking to diversify. Our European market, our European sales have grown significantly in the past year or two, and we are onboarding new customers from Europe. However, the U.S. is still very strong. VF, New Balance, they're still wanting to have more capacity, wanting to do more with us. We're also trying to open the markets in the Middle East, in the Gulf area, like areas like Dubai, UAE. Yeah, we're going to diversify our geographical sales and markets. Okay, great. All right, Gilbert, let me go ahead and pass things over to you before I close things out. Any closing remarks from you, Gilbert? No, actually, I think I have talked about everything that I want to say, but really thank you so much for you and for everyone for your support. Of course, absolutely. Again, Gilbert Lee, Chief Financial Officer of Jerash, traded on the NASDAQ, ticker JRSH. Gilbert, thanks so much for joining us. Thank you everyone else for tuning in. Hope you guys have a great day. Thanks, Aaron.