Jerash Holdings (US) Inc (JRSH) 2024 Q1 法說會逐字稿

Greetings. Welcome to the Jerash Holdings Fiscal 2024 First Quarter Financial Results Conference Call. (Operator Instructions) Please note, this conference is being recorded.

問候。歡迎參加杰拉什控股 2024 財年第一季度財務業績電話會議。 （操作員說明）請注意，本次會議正在錄製中。

I will now turn the conference over to your host, Roger Pondel, Investor Relations for Jerash Holdings. You may begin.

我現在將會議交給主持人杰拉什控股公司投資者關係部的羅傑·龐德爾 (Roger Pondel)。你可以開始了。

Thank you, Holly, and good morning, everyone. Welcome to Jerash Holdings Fiscal 2024 First 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; its Chief Financial Officer, Gilbert Lee; and Eric Tang, who leads the company's operations in Jordan.

謝謝你，霍莉，大家早上好。歡迎參加 Jerash Holdings 2024 財年第一季度電話會議。我是 Jerash Holdings 投資者關係公司 PondelWilkinson 的 Roger Pondel。我很高興立即介紹該公司的主席兼首席執行官 Sam Choi；首席財務官吉爾伯特·李；埃里克·唐（Eric Tang）領導該公司在約旦的業務。

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 those set forth in the Risk Factors section of the company's most recent Form 10-K 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.

在我將電話轉交給Sam 之前，我想提醒我們的聽眾，今天的電話會議可能包含1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。此類前瞻性陳述受到多種條件的約束，其中許多條件包括：超出公司控制範圍的因素，包括公司向美國證券交易委員會提交的最新10-K 表格的風險因素部分中列出的因素，該表格的副本可在SEC 網站www.sec.gov 上獲取，以及不時向 SEC 提交的其他公司文件。

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, it is my pleasure to turn the call over to Sam Choi. Sam?

實際結果可能與這些前瞻性陳述存在重大差異，杰拉什控股公司不承擔更新任何前瞻性陳述的義務，除非法律要求。至此，我很高興將電話轉給 Sam Choi。薩姆？

Thank you, Roger, and hello, everyone. Our first quarter demonstrated resiliency in a challenging retail environment. Revenue was up slightly, although as expected, profitability was impacted principally by a product mix shift to lower-margin items. Although inflationary pressures and rising interest rates are still having an impact on consumer spending. Retail market trends are showing signs of improvement. We are starting to receive new inquiries from global brands, including test runs and sample orders.

謝謝你，羅傑，大家好。我們的第一季度在充滿挑戰的零售環境中表現出了彈性。收入略有增長，但正如預期的那樣，盈利能力主要受到產品組合轉向低利潤產品的影響。儘管通脹壓力和利率上升仍然對消費者支出產生影響。零售市場趨勢顯示出改善的跡象。我們開始收到來自全球品牌的新詢問，包括試運行和样品訂單。

On the new customer front, Timberland has grown to be a significant global brand for Jerash. Besides Timberland, we are now working on confirming the first batch of orders for Vans branded apparel, also a part of VF Corporation brands. Initial orders are scheduled to be received in mid-August with finished garments to be shifted in the third quarter.

在新客戶方面，Timberland 已成長為 Jerash 的重要全球品牌。除了 Timberland 之外，我們現在正在確認 Vans 品牌服裝的第一批訂單，該品牌也是 VF Corporation 品牌的一部分。首批訂單預計於 8 月中旬收到，成品服裝將於第三季度轉移。

Our newly added European-based high-end apparel brand continues to progress well. Orders received thus far this fiscal year have significantly increased. We are optimistic that over time, these new global brands will grow in importance for Jerash. Also, on the positive front, initial marketing by our joint venture partner, Busana Apparel Group, to its global brand customers is being well received. Jerash has begun working on pricing and sample development for more than 10 additional brands. We anticipate meaningful orders for the joint venture to begin during the fourth quarter of the current fiscal year.

我們新增的歐洲高端服裝品牌繼續取得良好進展。本財年迄今為止收到的訂單大幅增加。我們樂觀地認為，隨著時間的推移，這些新的全球品牌對杰拉什的重要性將日益增強。此外，從積極的方面來看，我們的合資夥伴 Busana Apparel Group 對其全球品牌客戶的初步營銷也受到了好評。 Jerash 已開始為另外 10 多個品牌進行定價和样品開發。我們預計該合資企業將在本財年第四季度開始收到有意義的訂單。

One of our corporate initiatives has been to explore vertical integration, and I'm happy to report some good news on this front. We have been in discussion with NTX, one of the global leaders in sustainable textile dyeing solutions to form a joint venture that will provide Jerash with vertical integration manufacturing capability.

我們的企業舉措之一是探索垂直整合，我很高興報告這方面的一些好消息。我們一直在與可持續紡織染色解決方案的全球領導者之一 NTX 討論組建一家合資企業，為杰拉什提供垂直一體化製造能力。

Our plan is to bring about a new area of sustainable and innovative textile dyeing process in Jordan with our proprietary technology that according to the presentation and information from NTX could result in more than 80% water usage reduction and 50% carbon footprint reduction from traditional textile dyeing process. The proposed joint venture is expected to benefit our customers through shortening fabric sourcing lead times and will further reduce our dependency on suppliers in Southeast and Eastern Asia. The joint venture further demonstrates Jerash's commitment to sustainability and social responsibility.

我們的計劃是利用我們的專有技術在約旦引入可持續和創新紡織染色工藝的新領域，根據NTX 的介紹和信息，與傳統紡織相比，該技術可以減少80% 以上的用水量和50%以上的碳足跡染色工藝。擬議的合資企業預計將通過縮短面料採購交貨時間使我們的客戶受益，並將進一步減少我們對東南亞和東亞供應商的依賴。該合資企業進一步體現了杰拉什對可持續發展和社會責任的承諾。

I'll now turn the call over to Eric Tang to talk about our operations and also to Gilbert will then discuss financial results.

我現在將把電話轉給 Eric Tang，討論我們的運營情況，然後讓 Gilbert 討論財務業績。

Thank you, Sam. Hello, everyone. This was a busy first quarter. As we continue to plan for what we believe will be a positive and productive future and response to evolving market conditions. The spending patterns at the customer level are still geared toward lower-margin items. However, as Sam mentioned, retail trends seems to be improving, and some of our global brand customers are inquiring about additional styles for future orders.

謝謝你，薩姆。大家好。這是繁忙的第一季度。我們將繼續規劃我們認為將是積極且富有成效的未來，並應對不斷變化的市場狀況。客戶層面的消費模式仍然面向利潤率較低的商品。然而，正如 Sam 提到的，零售趨勢似乎正在改善，我們的一些全球品牌客戶正在詢問未來訂單的其他款式。

VF Corporation continues to be our major customer, and order volume from North Face is increasing. And also another brand from VF Corporation Timberland increased multiple, and we will be very soon producing for Vans, which is another VF brand. Production demand from G-III and Skechers have also been increasing.

VF Corporation 仍然是我們的主要客戶，來自 North Face 的訂單量正在增加。 VF公司的另一個品牌Timberland也增加了數倍，我們很快就會為VF的另一個品牌Vans生產。 G-III 和 Skechers 的生產需求也在不斷增加。

Our European-based high-end apparel brand is placing more orders as well, which further diversify our customer and product mix. We are excited about starting production for our joint venture customer. Test runs are underway for an array of potential global brand customers, which in turn is fulfilling our corporate initiatives of expanding our customer base and diversifying our product mix.

我們的歐洲高端服裝品牌也正在下更多訂單，這進一步使我們的客戶和產品組合更加多樣化。我們很高興能為我們的合資客戶開始生產。一系列潛在的全球品牌客戶正在進行試運行，這反過來又履行了我們擴大客戶群和多樣化產品組合的企業計劃。

Jerash is in a good position to attract premium brands, our leadership position in Jordan offers unique, meaningful benefits to customers. And our plans for vertical integration in sustainable textile solution we believe will provide Jerash with a distinct competitive advantage.

杰拉什處於吸引優質品牌的有利位置，我們在約旦的領導地位為客戶提供了獨特、有意義的好處。我們相信，我們在可持續紡織解決方案中的垂直整合計劃將為杰拉什提供獨特的競爭優勢。

I will now turn the call over to Gilbert to discuss our financial results and the fiscal 2024 outlook. Gilbert, please.

我現在將電話轉給吉爾伯特，討論我們的財務業績和 2024 財年前景。吉爾伯特，請。

Thank you, Eric. Revenue for our fiscal 2024 first quarter amounted to $34.7 million, up 3.9% from $33.4 million for the same period last year, reflecting an increase in shipments to some of the company's major U.S. customers.

謝謝你，埃里克。 2024 財年第一季度的收入為 3470 萬美元，比去年同期的 3340 萬美元增長 3.9%，反映出該公司一些主要美國客戶的出貨量增加。

Gross profit was $5.6 million for the fiscal 2024 first quarter compared with $6.6 million in the same quarter last year. The gross margin was 16.0% compared with 19.8% a year ago, primarily reflecting a shift in product mix.

2024 財年第一季度的毛利潤為 560 萬美元，而去年同期為 660 萬美元。毛利率為16.0%，而去年同期為19.8%，主要反映產品結構的變化。

Operating expenses for the fiscal 2024 first quarter increased slightly to $4.5 million from $4.3 million last year. Operating income totaled $1.1 million in the most recent first quarter versus $2.3 million a year ago.

2024 財年第一季度的運營支出從去年的 430 萬美元小幅增加至 450 萬美元。最近第一季度的營業收入總計 110 萬美元，而去年同期為 230 萬美元。

Total other expenses were $299,000 for the most recent first quarter compared with $28,000 in the same quarter last year. The increase was primarily due to higher interest expenses occurred from participating in supply chain financing programs of certain customers. Interest expenses were $389,000 in the fiscal '24 first quarter compared with $88,000 a year ago.

最近第一季度的其他費用總額為 299,000 美元，而去年同期為 28,000 美元。增加的主要原因是參與某些客戶的供應鏈融資計劃產生的利息費用增加。 24 財年第一季度的利息支出為 389,000 美元，而去年同期為 88,000 美元。

The effective tax rate amounted to 38% for the fiscal 2024 first quarter compared with 25% last year. The increase primarily resulted from a higher corporate income tax rate in Jordan, along with higher proportion of the operating losses of a Hong Kong subsidiary and our U.S. holding company.

2024 財年第一季度的有效稅率為 38%，而去年為 25%。這一增長主要是由於約旦企業所得稅率較高，以及香港子公司和美國控股公司的經營虧損比例較高。

In the fiscal 2024 first quarter, net income was $495,000 or $0.04 per share compared with $1.7 million or $0.14 per share in the same period last year.

2024 財年第一季度，淨利潤為 495,000 美元，即每股 0.04 美元，而去年同期為 170 萬美元，即每股 0.14 美元。

Jerash's balance sheet and cash position remained strong with $20.1 million of cash and restricted cash and net working capital of $41.5 million as of June 30, 2023. Inventory was $23.8 million and accounts receivable was $6.4 million. Net cash provided by operating activities was approximately $25,000 for the quarter ended June 30 (sic) [March 30] compared with net cash used in operating activities of $473,000 for the same period last year.

截至2023 年6 月30 日，杰拉什的資產負債表和現金狀況依然強勁，現金為2010 萬美元，限制性現金和淨營運資本為4150 萬美元。庫存為2380 萬美元，應收賬款為640 萬美元。截至 6 月 30 日（原文如此）[3 月 30 日]的季度，經營活動提供的現金淨額約為 25,000 美元，而去年同期經營活動使用的現金淨額為 473,000 美元。

Even though we are starting to see some indications of improvement in retail market trends, we are taking a conservative approach to guidance and projecting revenue for fiscal 2024 full year to be maintained at a similar level as in fiscal 2023. With gross margin goal for the full fiscal 2024 to be around 15% to 16%. Our outlook is subject to final product mix of shipments as well as order flow from the new customers introduced through our joint venture with Busana.

儘管我們開始看到零售市場趨勢有所改善的跡象，但我們正在採取保守的方法來指導和預測 2024 財年全年的收入將維持在與 2023 財年類似的水平。 2024 財年全年增長率約為15% 至16%。我們的前景取決於最終產品的發貨組合以及通過我們與 Busana 合資企業引入的新客戶的訂單流。

Lastly, on August 4, 2023, our Board of Directors approved a quarterly dividend of $0.05 per share payable on August 23 to stockholders of record as of August 16.

最後，我們的董事會於 2023 年 8 月 4 日批准了每股 0.05 美元的季度股息，將於 8 月 23 日支付給截至 8 月 16 日在冊的股東。

Our new joint venture development is off to a great start as we look forward to working with a new and diverse range of global customers and products. We're cautiously moving forward with plans to add additional capacity on our property to accommodate future growth.

我們新的合資企業發展已經有了一個良好的開端，我們期待與全球範圍內的新的、多樣化的客戶和產品合作。我們正在謹慎地推進增加我們物業容量的計劃，以適應未來的增長。

With that, we will now open up the call for questions. Operator, may we have the first question, please?

現在，我們將開始提問。接線員，我們可以問第一個問題嗎？

(Operator Instructions) Your first question for today is coming from Mark Argento with Lake Street Capital.

（操作員說明）今天您的第一個問題來自 Lake Street Capital 的 Mark Argento。

Just had a few specific ones. One, regarding the potential JV with the vertical integration partner. Can you talk a little bit more about what specifically that capability gives you what competitive advantage? And how quickly if you guys decided to move forward, could you actually implement something like that?

只是有一些具體的。第一，關於與垂直整合合作夥伴的潛在合資企業。您能否詳細談談該功能具體為您帶來了什麼競爭優勢？如果你們決定繼續前進，你們能以多快的速度真正實施類似的事情？

Sam, do you want to take that question? Or do you want me to answer it?

薩姆，你想回答這個問題嗎？或者你想讓我回答嗎？

Okay. Yes, maybe I try to talk about the vertical integration joint venture. In fact, I mean our joint partner NTX which has been in the industry for almost 20 years and they have been in separate joint venture in China, in Vietnam, in Cambodia and also Thailand. The expertise is mainly in the dyeing or waterless dyeing of fabric, which is quite innovative.

好的。是的，也許我想談談垂直整合合資企業。事實上，我指的是我們的聯合合作夥伴 NTX，該公司已在該行業工作了近 20 年，他們在中國、越南、柬埔寨和泰國都有獨立的合資企業。專長主要是在織物的染色或無水染色方面，頗具創新性。

The waterless dyeing process can save up to 80% or 90% of water usage compared with the traditional dyeing process. And also the carbon footprint emission will be much, much lesser. So it is a ESG project. And to Jerash, I mean we will set up a factory at the joint venture a separate manufacturing mills in Jordan. We will mainly supply the fabric and mainly the polyester fabric to Jerash on use.

無水染色工藝與傳統染色工藝相比，可節省高達80%或90%的用水量。而且碳足跡排放量也會少得多。所以這是一個ESG項目。對於杰拉什，我的意思是我們將在約旦的一家獨立製造工廠的合資企業中設立一家工廠。我們將主要向杰拉什供應面料，主要是滌綸面料。

And so we believe, I mean, in a certain lead time, it will be a sustainable accessibility project that the cost we estimate will be quite similar to the traditional polyester fabric. So I mean, with that vertical integration, we believe under the consolidated profit and loss account of Jerash, I mean the gross margin is much enhanced because that will include the gross margin of the fabric. And we also anticipated EBITDA will be also much enhanced.

因此，我們相信，我的意思是，在一定的交貨時間內，這將是一個可持續的無障礙項目，我們估計的成本將與傳統的聚酯織物非常相似。所以我的意思是，通過這種垂直整合，我們相信在杰拉什的綜合損益表下，我的意思是毛利率大大提高，因為這將包括面料的毛利率。我們還預計 EBITDA 也將大幅提高。

And we will keep the -- because we just signed the MOU, and then we will have a joint share with joint venture agreement very soon. By that time, we will give some indication on the financial impact on Jerash. Yes, that is the basic idea on this vertical integration joint venture.

我們將保留——因為我們剛剛簽署了諒解備忘錄，然後我們很快將通過合資協議簽訂共同股份。到那時，我們將就杰拉什的財務影響給出一些指示。是的，這就是這個垂直一體化合資企業的基本理念。

Yes. Thank you, Sam. I think I would like to add that this is an ESG initiative and everybody is very excited about this, including the Jordanian government. This is probably one of the first fabric mills that is going to be built and established in Jordan because as we know, Jordan has very little supply of water. And all along water has been the major issues for having a fabric mill.

是的。謝謝你，薩姆。我想補充一點，這是一項 ESG 舉措，每個人都對此感到非常興奮，包括約旦政府。這可能是約旦最早建造和建立的面料廠之一，因為眾所周知，約旦的水供應很少。一直以來，水一直是布廠面臨的主要問題。

And so the Jordanian government, they are going to be very supportive with all kinds of incentives and the participation of in terms of land, in terms of tax abatement. And financing entities such as the World Bank is also very interested about this project and want to support us.

因此，約旦政府將非常支持各種激勵措施以及土地和減稅方面的參與。而世界銀行等金融機構也對這個項目非常感興趣，想要支持我們。

So I think this is going to also besides providing us a better earnings and better profitability, growth in sales, it also will project Jerash as in having an image of being socially responsible and focus on sustainability. It is a new, innovative and proven technology. So everybody is very excited about it. And we believe that with this joint venture and with this vertical setup, we will be able to attract more global customers, global brands who are also focused on ESG.

因此，我認為這除了為我們提供更好的收入和更好的盈利能力以及銷售增長之外，還將塑造杰拉什具有社會責任感和注重可持續發展的形象。這是一項新的、創新的、經過驗證的技術。所以大家都對此非常興奮。我們相信，通過這家合資企業和這種垂直設置，我們將能夠吸引更多同樣關注 ESG 的全球客戶和全球品牌。

That's very exciting. Just one just quick follow-up. In terms of timing, how quickly if you move to a JV get going, assuming you have to build out a facility, is this a calendar year 2025, 2026. How quickly could you see something like this come online?

這非常令人興奮。只是一個快速跟進。就時間而言，如果你搬到一家合資企業，假設你必須建造一個設施，那麼現在是 2025 年、2026 年嗎？你能多快看到這樣的東西上線？

Oh, it is going to be very quickly. Actually, we are already drafting the JV agreement as we speak. And both sides want to sign the JV as soon as possible. And we have been also talking with financing people. It's just a matter of who we want to work with to get the financing.

噢，會很快的。事實上，我們現在已經在起草合資協議了。雙方都希望盡快簽署合資協議。我們也一直在與融資人士進行交談。這只是我們想與誰合作以獲得融資的問題。

And of course, NTX is going to contribute up to their -- up to their proportion of the joint venture. And Jerash is going to have the majority of the holding of the joint venture company. So it will be consolidated with our company. And we have already looked at sites, governments are on board. So once we sign the joint venture, it's going to move quite quickly.

當然，NTX 將為其在合資企業中所佔的比例做出貢獻。杰拉什將擁有合資公司的大部分股權​​。因此它將與我們公司合併。我們已經考察了地點，政府也參與其中。因此，一旦我們簽署了合資企業的協議，事情就會進展得很快。

Tentatively, we expect the production of the separate mill will be June 2024, the first production. That means about 10 months later.

我們暫定預計該獨立工廠將於 2024 年 6 月首次投產。這意味著大約10個月後。

Aggressive time line, but very exciting. Just one follow-up or just one quick one in terms of the operating business. Obviously, you guys just reported your -- I guess it was your Q4 back in May. So we got an update then. It seems like just the tone of the call -- it seems like maybe things are improving a little bit in terms of the end market, with customers and just looks like orders are kicking back in a little bit from some of the big guys. Can you just characterize what's changed in the last couple of months, if anything?

時間線緊張，但非常令人興奮。就經營業務而言，只需一項後續行動或一項快速行動。顯然，你們剛剛報告了你們的——我想這是你們五月份的第四季度。所以我們當時得到了更新。看起來這只是電話的基調——終端市場、客戶方面的情況似乎正在有所改善，而且看起來一些大公司的訂單有所回升。您能否描述一下過去幾個月發生了什麼變化（如果有的話）？

Eric, maybe you can answer this, what you're seeing in terms of the market turning around or order flows coming from key customers and also potential new customers?

埃里克，也許你可以回答這個問題，你在市場好轉或來自主要客戶和潛在新客戶的訂單流方面看到了什麼？

Yes. Hopefully, recently, we had meetings with several brands who are the major customers of Jerash. All of them, okay, was that the market is, okay, are those still weak, but it still -- it's already improving. And they are also -- okay, I mean, that the inventory level are already down to a certain level that very soon, they are going to place additional orders.

是的。希望最近我們與杰拉什的主要客戶幾個品牌進行了會面。所有這些都是市場仍然疲軟，但它仍然已經在改善。他們還——好吧，我的意思是，庫存水平已經下降到一定水平，很快他們就會下額外的訂單。

So we are expecting some of our major customers will place more orders to Jerash, okay. And actually, according to our -- the forecast we got from the first 2 customers, which is VF and New Balance, okay, the order projection for the whole year, already slightly more than last year. So they told us that it will be improving, okay, maybe after another 1 or 2 quarters.

所以我們預計我們的一些主要客戶會向杰拉什下更多訂單，好吧。實際上，根據我們從前 2 個客戶（VF 和 New Balance）那裡得到的預測，全年的訂單預測已經比去年略多了。所以他們告訴我們，情況將會有所改善，好吧，也許再過一兩個季度。

Yes. I think we are seeing some positive signs in the global retail market and customers are starting to feel less cautious, but I think they are still cautious because if you remember, right after the pandemic every customer, everybody just order a ton load of products. And that's why they got stuck last year with a lot of inventory and had to reduce their orders. They don't want to make the same mistake again.

是的。我認為我們在全球零售市場看到了一些積極的跡象，顧客開始不再那麼謹慎，但我認為他們仍然很謹慎，因為如果你還記得的話，在大流行之後，每個顧客，每個人都只是訂購了大量的產品。這就是為什麼他們去年陷入大量庫存，不得不減少訂單的原因。他們不想再犯同樣的錯誤。

And besides, we are already past the pandemic and logistics issues is way past us. So they're not afraid of not getting sufficient products for the retail stores. So they have been optimistic, but cautiously optimistic with the future. So I think we're seeing signs of improvement. But again, we're still going to be cautious about the next 12 months.

此外，我們已經度過了疫情大流行，物流問題也已經過去了。因此，他們並不擔心零售店無法獲得足夠的產品。所以他們一直很樂觀，但對未來持謹慎樂觀的態度。所以我認為我們看到了改善的跡象。但同樣，我們對未來 12 個月仍持謹慎態度。

We believe that starting from the fourth quarter of our fiscal year, which is the Q1 of the calendar year of 2024. And by that time, we should also see some orders that we will be producing for our joint venture with Busana.

我們相信，從我們財年的第四季度（即 2024 年的第一季度）開始。到那時，我們還應該看到我們將為與 Busana 的合資企業生產的一些訂單。

In fact, I mean -- in fact based on sample developments for the fiscal 2025, we do believe, I mean, 2024 fiscal, I think is the worst. But for the fiscal 2025 based on the customer inquiries and the product development for them and also some new customer and also the joint venture with Busana, we do believe, I mean 2025 fiscal will be a good year compared with the past.

事實上，我的意思是——事實上，根據 2025 財年的樣本發展，我們確實相信，我的意思是，我認為 2024 財年是最糟糕的。但對於 2025 財年，根據客戶詢問和產品開發以及一些新客戶以及與 Busana 的合資企業，我們確實相信，我的意思是，與過去相比，2025 財年將是一個好年頭。

Your next question for today is coming from Matthew Hayes at D.A. Davidson.

今天你們的下一個問題來自 D.A. 的 Matthew Hayes。戴維森。

This is Matthew Hayes on for Michael Baker, D.A. Davidson. There was an article on the Wall Street Journal out a couple of days ago citing the difficulty of apparel manufacturers retaining young workers in countries like China, India and Vietnam causing upward wage pressures on labor. I was wondering if you're seeing a similar development happen in Jordan. Do you still see the $4.2 million level as a sort of quarterly run rate on the SG&A line?

我是馬修·海耶斯 (Matthew Hayes)，為檢察官邁克爾·貝克 (Michael Baker) 發言。戴維森。幾天前《華爾街日報》刊登了一篇文章，指出中國、印度和越南等國家的服裝製造商很難留住年輕工人，導致勞動力工資上漲的壓力。我想知道您是否在約旦看到類似的發展。您是否仍將 420 萬美元水平視為 SG&A 線上的季度運行率？

Yes. Maybe Eric, there's still, of course, there are inflation in Jordan as well. But I guess we're not seeing as much impact in our operating expenses. There will be some increases, I believe, but I think the $4.2 million quarterly operating expenses is still a pretty good gauge. Eric, what do you think? What are you seeing in Jordan?

是的。也許埃里克，當然，約旦仍然存在通貨膨脹。但我想我們的運營支出並沒有受到太大影響。我相信會有一些增長，但我認為 420 萬美元的季度運營費用仍然是一個相當不錯的指標。埃里克，你覺得怎麼樣？你在約旦看到了什麼？

Yes. I agree with what you said because large portion of our operating expenses fall into the salary of the migrant and local workers because we have 5,200 workforce currently. So the basic salary, the government already announced will remain the same, and we will not be increased until, I mean, another fiscal year. So the salary and including over time, of our workers, I think it will be remain stable as before. So I'm pretty sure, I'm very confident that our operating expense will not be much different compared in the future -- in the coming fiscal year.

是的。我同意你的說法，因為我們目前有5200名員工，所以我們的運營費用很大一部分都花在了農民工和當地工人的工資上。因此，政府已經宣布的基本工資將保持不變，並且直到下一個財政年度才會增加。因此，我認為我們工人的工資（包括隨著時間的推移）將像以前一樣保持穩定。因此，我非常確定，我非常有信心，我們的運營費用與未來（下一個財年）相比不會有太大差異。

Okay. That's helpful. And then my one other question has to do with your tax rate. It came in at 38% this quarter and I believe, on listening, I think I thought that it had to do with the loss of one of your Hong Kong subsidiaries. Is there any way you could kind of unpack that for us to kind of help us think how to think about the tax rate going forward? Is 38% is kind of the new normal or is this was a onetime thing? Any color you could provide there would be appreciated.

好的。這很有幫助。我的另一個問題與你們的稅率有關。本季度的比率為 38%，我相信，聽完之後，我認為這與你們香港子公司的虧損有關。您有什麼辦法可以為我們解開這個問題，幫助我們思考如何考慮未來的稅率嗎？ 38% 是一種新常態還是曾經的事情？您可以提供任何顏色，我們將不勝感激。

Well, I think the -- just to kind of explain it very -- in a very simple term. We pay most of our taxes to the Jordanian government because our operating -- our operations are in Jordan. So the income mostly in Jordan. And our Hong Kong subsidiary, which is Treasure Success is primarily a sales and marketing, administrative, shipping and auditing. So we have a staff in Hong Kong, and we don't really have much income, even though there is some income in terms of developing samples, in our subsidiary. But we don't really pay much taxes, but we have a significant amount of overhead and losses in Hong Kong as well as in the U.S., our corporate headquarters and our holding company in the U.S.

嗯，我認為——只是為了用一個非常簡單的術語來解釋它。我們向約旦政府繳納大部分稅款，因為我們的業務是在約旦進行的。所以收入大部分在約旦。我們的香港子公司 Treasure Success 主要負責銷售和營銷、行政、運輸和審計。所以我們在香港有員工，我們的子公司實際上沒有多少收入，儘管在開發樣品方面有一些收入。但我們實際上繳納的稅款並不多，但我們在香港以及美國、我們在美國的公司總部和控股公司都有大量的管理費用和損失。

So -- we don't -- we cannot offset the Jordanian taxes that we pay with our losses in Hong Kong and in U.S. So when the proportion -- when the income comparing to the losses, the proportion shift and we have a higher proportion of losses versus a smaller proportion of income in Jordan, then your effective tax rate just went up.

所以，我們不能用我們在香港和美國的損失來抵消我們支付的約旦稅。所以當收入與損失相比時，比例會發生變化，我們的比例會更高在約旦，損失與收入的比例較小，那麼您的有效稅率就會上升。

Now as we have globally or consolidated net income or income before tax to go back to the normal level, which means we will make more money in Jordan, then the average or the effective tax rate for the consolidated company will come back down.

現在，由於我們的全球或合併淨收入或稅前收入恢復到正常水平，這意味著我們將在約旦賺更多的錢，那麼合併公司的平均或有效稅率將會回落。

Now we are also looking at ways, but we will have to talk with our test consultants in the U.S. first to see if there are some ways of shifting some of the income to our subsidiaries, which we can do some billings from our Hong Kong subsidiary and offset some of the losses over there, which we are going to look into that with our tax consultants and look at ways to lower the effective tax rate.

現在我們也在想辦法，但是我們得先和我們在美國的測試顧問談談，看看是否有一些方法可以將一些收入轉移到我們的子公司，我們可以從我們的香港子公司做一些帳單並抵消那裡的一些損失，我們將與我們的稅務顧問一起研究這一問題，並尋找降低有效稅率的方法。

Okay. And do you anticipate making more money in Jordan in proportion to the corporate losses incurred in Hong Kong and the U.S. over the next 3, 4 quarters? Or how do you see that proportion playing out?

好的。您預計未來 3、4 個季度在約旦賺到的錢是否與香港和美國企業損失的比例相比？或者您如何看待這個比例？

Well, I think in fiscal 2024, we're not going to see much improvement in this situation. But we will try to look at how we could reduce our operating expenses and make more money in Jordan as well as controlling our expenses in the other subsidiaries such as U.S. and Hong Kong.

嗯，我認為在 2024 財年，這種情況不會有太大改善。但我們將嘗試研究如何減少我們在約旦的運營費用並賺更多的錢，並控制我們在美國和香港等其他子公司的費用。

So it may come down slightly. But I think until we can increase our revenue, increase our bottom line, our operating expense -- income for the consolidated company disproportion of income and losses will continue.

所以可能會略有下降。但我認為，在我們能夠增加收入、增加利潤之前，我們的運營費用——合併後公司的收入與虧損之間的不成比例將繼續存在。

(Operator Instructions) We have reached the end of the question-and-answer session, and I will now turn the call over to Sam Choi for closing remarks.

（操作員指示）問答環節已經結束，我現在將電話轉交給 Sam Choi 進行總結髮言。

Thank you, Holly, and thanks to all of you for joining us today and for your continued support to Jerash. We look forward to speaking with you next quarter and reporting on our business progress. Thank you. Thank you everyone.

謝謝你，霍莉，感謝大家今天加入我們並感謝你們對杰拉什的持續支持。我們期待下個季度與您交談並報告我們的業務進展。謝謝。謝謝大家。

Thank you. Bye-bye.

謝謝。再見。

Thank you. This does conclude today's event. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.

謝謝。今天的活動到此結束。此時您可以斷開線路，度過美好的一天。感謝您的參與。