Jerash Holdings (US), Inc. Q3 FY2023 earnings call

• Navigated challenging market conditions, achieved record third quarter revenue. - Ramped up production for Timberland and Skechers, and test runs for first European-based high end apparel brand were well received. - Joint venture with Busana Apparel Group proceeding well, anticipated to launch early in new fiscal year. - Gaining visibility into athleisure wear and technical clothing segments. - Maintaining full staff and facilities by adding supplementary production, expanding factory capacity for joint venture, and sourcing fabric from MENA region.

Fiscal 2023 third quarter revenue increased 17% to a record $43 million from $36.8 million in the same period last year. Gross margin was 13.5% in Q3 compared to 18.8% in the same quarter last year. For the fourth quarter, revenue is expected to be in the range of $26 million to $28 million. The full year gross margin goal is maintained in the range of 16% to 18%.

• Fourth quarter revenue expected to be $26 million to $28 million. - Maintaining full year gross margin goal of 16% to 18%. - Confident in growth in fiscal 2024 from newer and long term customers, as well as joint venture.

• Challenging retail environment with larger customers having smaller orders and working through economic and inflation recovery. - Initial new customer orders are in relatively small quantities with generally lower margins. - Some competitive factories in Jordan closing down, affecting labor base.

Q: Mike Baker asked about the state of larger customers' inventory and the situation compared to three months ago, and about 2024 growth confidence and fourth quarter guidance.

A: Eric Tang said major buyers are seeing sales growth but still not optimistic about coming months, waiting to reduce inventory. Gilbert Lee talked about on-boarding new customers like European premium brand and joint venture, and fourth quarter guidance explained by mix of orders.

Q: Mark Argento asked about Busana joint venture economics, capacity expansion.

A: Gilbert Lee and Eric Tang discussed joint venture as separate company, capacity expansion by adding floors and machinery to existing buildings, expecting completion by July.

Q: Aaron Grey asked about supplemental sales and new brands.

A: Gilbert Lee explained supplemental sales were to utilize capacity and keep workers, and new brands like Timberland, Skechers, and European premium brand with ramp-up timing.

Q: Rommel Dionisio asked about fabric sourcing from MENA and labor impact.

A: Gilbert Lee talked about fabric sourcing from MENA for reduced dependency and quicker logistics, Eric Tang mentioned easier labor sourcing due to competitive factories closing down.