Karat Packaging Inc (KRT) 2025 Q1 法說會逐字稿

Good afternoon, and welcome to Karat Packaging's 2025 first-quarter conference call. (Operator Instructions) Please also note that this event is being recorded today.

下午好，歡迎參加 Karat Packaging 2025 年第一季電話會議。（操作員指示）另請注意，今天正在記錄此事件。

I would now like to turn the conference over to Roger Pondel with PondelWilkinson. Please go ahead, sir.

現在我想將會議交給 PondelWilkinson 的 Roger Pondel。先生，請繼續。

Thank you, operator. Good afternoon, everyone, and welcome to Karat Packaging's 2025 first-quarter conference call. I'm Roger Pondel with PondelWilkinson, Karat Packaging's Investor Relations firm, and it will be my pleasure momentarily to introduce the company's Chief Executive Officer, Alan Yu; and its Chief Financial Officer, Jian Guo.

謝謝您，接線生。大家下午好，歡迎參加 Karat Packaging 2025 年第一季電話會議。我是 Karat Packaging 投資者關係公司 PondelWilkinson 的 Roger Pondel，我很榮幸向您介紹公司執行長 Alan Yu；以及財務長郭建。

Before I turn the call over to Alan, I want to remind all 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.

在我將電話轉給艾倫之前，我想提醒所有聽眾，今天的電話會議可能包含 1995 年《私人證券訴訟改革法案》所定義的前瞻性陳述。此類前瞻性陳述受多種條件約束，其中許多條件超出了公司的控制範圍，包括公司向美國證券交易委員會提交的最新 10-K 表格中「風險因素」部分所述的條件，該表格的副本可在證券交易委員會網站 www.sec.gov 上查閱，同時還可查閱公司不時向證券交易委員會提交的其他文件。

Actual results could differ materially from those forward-looking statements, and Karat Packaging undertakes no obligation to update any forward-looking statements, except as required by law.

實際結果可能與這些前瞻性聲明有重大差異，除非法律要求，否則 Karat Packaging 不承擔更新任何前瞻性聲明的義務。

Please also note that during this call, we will be discussing adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and free cash flow, which are non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of the most directly comparable GAAP measures to the non-GAAP financial measures is included in today's press release, which is now posted on the company's website.

另請注意，在本次電話會議中，我們將討論調整後的 EBITDA、調整後的 EBITDA 利潤率、調整後的每股攤薄收益和自由現金流，這些都是美國證券交易委員會 G 條例定義的非 GAAP 財務指標。今天的新聞稿中包含了最直接可比較的 GAAP 指標與非 GAAP 財務指標的對賬，該新聞稿現已發佈在公司網站上。

And with that, I will turn the call over to CEO, Alan Yu. Alan?

說完這些，我將把電話轉給執行長 Alan Yu。艾倫？

Thank you, Roger. Good afternoon, everyone. We achieved another strong quarterly performance marked by the nearly 11% increase in sales volume and 8.4% growth in the net sales year over year. Our global strategy sourcing capabilities enabled us to take early action securing inventory from sources outside of China to countries with significantly lower tariffs and more favorable trade conditions.

謝謝你，羅傑。大家下午好。我們再次取得了強勁的季度業績，銷售額年增近 11%，淨銷售額年增 8.4%。我們的全球戰略採購能力使我們能夠儘早採取行動，從中國以外的來源獲取庫存，並將其運送到關稅明顯較低且貿易條件更為優惠的國家。

At the end of 2024, our sourcing from China was up approximately 20%, and it was down to 15% in March of this year. We're on track to further reduce imports from China to be under 10% by the end of second quarter. And due to the recent imposed extreme tariffs, we have temporarily suspended imports from most vendors in China starting mid-April.

2024年底，我們從中國的採購量增加了約20%，而今年3月則下降到了15%。我們預計在第二季末將從中國的進口量進一步減少到 10% 以下。而且由於最近徵收的極端關稅，我們從 4 月中旬開始暫停從中國大多數供應商進口。

In addition to leveraging our diverse international supplier network, our ability to quickly scale up existing domestic manufacturing operation without significant incremental CapEx is allowing us to respond promptly and effectively to the evolving market dynamic. At the end of first quarter, we had approximately $80 million in inventory, and we are strategically managing sales to customers ahead of the anticipated supply chain disruption to ensure long-term reliability in meeting customers' need.

除了利用我們多樣化的國際供應商網路之外，我們還能夠快速擴大現有的國內製造業務，而無需大量增加資本支出，這使我們能夠迅速有效地應對不斷變化的市場動態。在第一季末，我們的庫存約為 8,000 萬美元，我們正在策略性地管理對客戶的銷售，以應對預期的供應鏈中斷，確保長期可靠地滿足客戶的需求。

We believe Karat is well positioned to address ongoing supply chain challenges and navigate an uncertain trade environment. As previously announced, we implemented price increases for certain products on April 1 with higher cost of goods anticipated from more recent global tariff development. We expect to implement additional price increases to most of our products in mid-May.

我們相信 Karat 有能力應對持續的供應鏈挑戰並應對不確定的貿易環境。正如先前宣布的那樣，由於近期全球關稅狀況的變化，預計商品成本將上升，因此我們於 4 月 1 日起對部分產品實施了漲價。我們預計在五月中旬對大多數產品實施進一步提價。

Geographically, our strongest growth for the quarter came from Texas and the Midwest. Sales in California, our largest market, also continued to improve, particularly in the retail and distribution and chain sectors. We remain focused on expanding wallet and market share as well as growing our online businesses, which experienced a nearly 20% sales increase during the first quarter.

從地理位置來看，本季我們最強勁的成長來自德州和中西部地區。我們最大的市場加州的銷售額也持續改善，特別是在零售、分銷和連鎖店領域。我們仍然專注於擴大錢包和市場份額以及發展我們的線上業務，第一季我們的線上業務銷售額增長了近 20%。

We continue to strengthen our pipeline and anticipate that several large chain accounts will begin shipping in late June. Our new 187,000 square feet distribution center near our headquarters in Chino, which we expect to be fully operational this month, provides much more needed additional capacity to support anticipated growth, allowing us to add 500 new SKUs of products and additional inventory, the timing also coming at a pivotal moment with regards to the supply chain interruptions and general economic uncertainties.

我們將繼續加強我們的管道，並預計幾個大型連鎖帳戶將在 6 月底開始出貨。我們在奇諾總部附近的新配送中心佔地 187,000 平方英尺，預計本月將全面投入運營，它將提供更多所需的額外產能來支持預期的增長，使我們能夠增加 500 個新產品 SKU 和額外的庫存，而且這一時機也恰逢供應鏈中斷和總體經濟不確定性的關鍵時刻。

As mentioned on our last call, we continue to focus on lowering operating costs while growing our top line, including enhancing distribution efficiency, lowering third-party domestic shipping costs starting in March, and reducing online selling expenses. Karat has consistently proven to be a reliable supplier to our customers, not only during the height of the COVID-19 period, but also post pandemic when there was widespread product shortages.

正如我們上次電話會議中所提到的，我們將繼續致力於降低營運成本，同時增加收入，包括提高分銷效率、從 3 月開始降低第三方國內運輸成本以及降低線上銷售費用。事實證明，Karat 一直是我們客戶的可靠供應商，不僅在 COVID-19 高峰期，而且在疫情過後出現普遍的產品短缺時也是如此。

Our ability to maintain steady inventory has reinforced our reputation and resilience. We continue to generate strong operating cash flow as well as liquidity. Our Board member remains committed to a balanced capital allocation strategy between shareholder returns and long-term growth investments.

我們維持穩定庫存的能力增強了我們的聲譽和韌性。我們持續產生強勁的營運現金流和流動性。我們的董事會成員始終致力於在股東回報和長期成長投資之間實現平衡的資本配置策略。

I will now turn the call over to Jian Guo, our Chief Financial Officer, to discuss the company financial results in greater detail. Jian?

現在，我將把電話轉給我們的財務長郭建，以更詳細地討論公司財務表現。建？

Thank you, Allan. I will first provide an overview of our Q1 performance and then close with the guidance update. Net sales for the 2025 first quarter were $103.6 million, up 8.4% from $95.6 million in the prior-year quarter. As Alan mentioned, volume grew 10.9% year over year. Pricing was unfavorable by $3.9 million year over year.

謝謝你，艾倫。我將首先概述我們第一季的業績，然後以指導更新作為結束。2025 年第一季淨銷售額為 1.036 億美元，較去年同期的 9,560 萬美元成長 8.4%。正如艾倫所提到的，銷量同比增長了 10.9%。定價較上年同期下降了 390 萬美元。

In terms of sales by category, over the past couple of quarters, we have observed an increasing shift in some ordering pattern from our chain accounts from direct delivery by Karat through third-party carriers to fulfillment through distribution partners. This change has increasingly blurred the distinction between sales to chains and distributors. Accordingly, starting this quarter, we're combining net sales to chain accounts and distributors into a single category and have recast the comparative period as well.

就按類別劃分的銷售而言，在過去的幾個季度中，我們觀察到我們的連鎖客戶的一些訂購模式正在發生日益轉變，從透過第三方承運商由 Karat 直接交付轉變為透過分銷合作夥伴交付。這種變化使得連鎖店銷售和分銷商銷售之間的差異越來越模糊。因此，從本季開始，我們將把連鎖帳戶和分銷商的淨銷售額合併為一個類別，並重新計算比較期間。

Sales to our chain accounts and distributors were up by 7.1%. Online sales increased 19.6% over the prior-year quarter, reflecting our continued focus on expanding this high-margin category. Sales to the retail channel decreased 3.2%. Cost of goods sold for the 2025 first quarter was $62.9 million compared with $58.0 million in the 2024 first quarter.

我們的連鎖客戶和分銷商的銷售額成長了 7.1%。線上銷售額較去年同期成長 19.6%，反映出我們持續致力於擴大這一高利潤類別。零售通路銷售額下降3.2%。2025 年第一季的銷售成本為 6,290 萬美元，而 2024 年第一季的銷售成本為 5,800 萬美元。

The increase was primarily driven by a $3.0 million of higher product cost as a result of the increase in sales volume, partially offset by more favorable vendor pricing as well as higher ocean freight and duty costs of $2.0 million, reflecting a 15.5% increase in import volume and a 4.3% increase in ocean freight container rates.

成長的主要原因是銷售量增加導致產品成本增加 300 萬美元，但部分被更優惠的供應商定價以及 200 萬美元的海運費和關稅成本增加所抵消，這反映了進口量增加 15.5% 和海運貨櫃費率增加 4.3%。

Gross profit for the 2025 first quarter increased 8.4% to $40.8 million from $37.6 million in the prior-year quarter. Gross margin remained consistent at 39.3% for the first quarter of both 2025 and 2024. Gross margin benefited from lower product costs as a percentage of net sales, mainly due to a more favorable vendor pricing, increased imports as a percentage of total product mix, and foreign currency gain, partially offset by a higher freight and duty costs as a percentage of net sales.

2025 年第一季毛利從去年同期的 3,760 萬美元成長 8.4% 至 4,080 萬美元。2025 年和 2024 年第一季的毛利率均維持在 39.3% 左右。毛利率受益於產品成本佔淨銷售額的降低，這主要歸因於更優惠的供應商定價、進口占總產品組合的百分比增加以及外匯收益，但運費和關稅成本佔淨銷售額的百分比上升部分抵消了這一影響。

Operating expenses for the 2025 first quarter increased 11.6% to $32.9 million from $29.5 million in the prior-year quarter. The increase was primarily due to a $3.4 million increase in shipping and transportation costs from higher sales volume and an increase in online sales packages as a percentage of total shipments as well as a $0.9 million increase in rent expense due to the opening of our new distribution center and lease extension in Chino.

2025 年第一季的營運費用從去年同期的 2,950 萬美元增加 11.6% 至 3,290 萬美元。成長的主要原因是銷售量增加導致運輸成本增加 340 萬美元，以及線上銷售包裹佔總出貨量的百分比增加，以及由於我們在奇諾開設新的配送中心和延長租約導致租金費用增加 90 萬美元。

Additionally, marketing expense and professional service expense also increased $0.4 million and $0.3 million compared with the prior-year quarter, respectively. The increases were partially offset by a $2.0 million non-cash impairment of a right-of-use asset during the prior-year quarter, resulting from the sublease of a warehouse in the City of Industry, California.

此外，行銷費用和專業服務費用也比去年同期分別增加了 40 萬美元和 30 萬美元。但由於轉租了位於加州工業市的一個倉庫，導致去年同期的使用權資產非現金減損 200 萬美元，部分抵銷了上述增幅。

Operating income for the 2025 first quarter was $7.8 million versus $8.1 million in the prior-year quarter. Net income for the 2025 first quarter increased 5.2% to $6.8 million from $6.5 million in the prior-year quarter. Net income margin was 6.6% in the 2025 first quarter compared with 6.8% in the prior-year quarter. Net income attributable to Karat for the 2025 first quarter was $6.4 million or $0.32 per diluted share compared with $6.2 million in the prior-year quarter or $0.31 per diluted share.

2025 年第一季的營業收入為 780 萬美元，而去年同期為 810 萬美元。2025 年第一季淨收入從去年同期的 650 萬美元成長 5.2% 至 680 萬美元。2025 年第一季淨收入利潤率為 6.6%，而去年同期為 6.8%。2025 年第一季歸屬於 Karat 的淨收入為 640 萬美元，即每股攤薄收益 0.32 美元，而去年同期為 620 萬美元，即每股攤薄收益 0.31 美元。

Adjusted EBITDA for the 2025 first quarter was $11.9 million compared with $13.5 million for the prior-year quarter. Adjusted EBITDA margin was 11.5% of net sales for the 2025 first quarter compared with 14.2% for the prior-year quarter. Adjusted diluted earnings per common share was $0.33 for the 2025 first quarter compared with $0.40 for the same quarter last year.

2025 年第一季調整後 EBITDA 為 1,190 萬美元，去年同期為 1,350 萬美元。2025 年第一季調整後的 EBITDA 利潤率為淨銷售額的 11.5%，而去年同期為 14.2%。2025 年第一季調整後每股普通股攤薄收益為 0.33 美元，去年同期為 0.40 美元。

We generated operating cash flow of $7.7 million in the first quarter and ended the quarter with $111.9 million in working capital. Our free cash flow was $6.6 million in the first quarter. As of March 31, 2025, we have financial liquidity of $46.7 million with another $23.8 million in short-term investments. On May 6, 2025, our Board of Directors approved the quarterly dividend of $0.45 per share payable May 23, 2025, to stockholders of record as of May 16, 2025.

我們在第一季產生了 770 萬美元的營運現金流，並在本季末擁有 1.119 億美元的營運資金。我們第一季的自由現金流為 660 萬美元。截至 2025 年 3 月 31 日，我們的財務流動資金為 4,670 萬美元，另有 2,380 萬美元的短期投資。2025 年 5 月 6 日，我們的董事會批准向截至 2025 年 5 月 16 日登記在冊的股東派發每股 0.45 美元的季度股息，該股息將於 2025 年 5 月 23 日支付。

Looking ahead, we expect net sales for the 2025 second quarter to increase by high single digits to low double digits over the prior-year quarter. We expect our gross margin for the 2025 second quarter to be in line with the first quarter and adjusted EBITDA margin to be in the mid-teens. Currently, we are reiterating our 2025 full-year guidance on net sales, gross margin, and adjusted EBITDA margin.

展望未來，我們預計 2025 年第二季的淨銷售額將比去年同期成長高個位數至低兩位數。我們預計 2025 年第二季的毛利率將與第一季持平，調整後的 EBITDA 利潤率將達到 15% 左右。目前，我們重申 2025 年全年淨銷售額、毛利率和調整後 EBITDA 利潤率的預期。

Alan and I now will be happy to answer your questions, and I'll turn the call back to the operator.

艾倫和我現在很樂意回答您的問題，然後我會將電話轉回給接線員。

(Operator Instructions) Jake Bartlett, Truist Securities.

（操作員指示）Jake Bartlett，Truist Securities。

Hi, guys. This is Larson on for Jake. Congrats on a strong quarter. I just had a few here that we could get through. The first one, I just wanted to touch on, I know you mentioned that you're working towards getting that China exposure down to 10%.

嗨，大家好。這是拉爾森 (Larson) 代替傑克 (Jake)。恭喜本季業績強勁。我這裡只有幾個我們可以解決的。第一個問題，我只是想提一下，我知道您提到您正在努力將中國業務佔比降至 10%。

I was wondering if you could just give any sort of color on that as far as some of the countries that you might be looking through. I know it's for competitive reasons, might be a little bit muted, but anything you could add there, that would be great. Just wondering if it's sort of a near-term thing where you might see an impact longer term or anything you could add for context there?

我想知道您是否可以對您可能正在研究的一些國家進行一些說明。我知道這是出於競爭的原因，可能會有點低調，但如果你能添加任何內容，那就太好了。只是想知道這是否是一種短期現象，您可能會看到其長期影響，或者您可以添加一些背景資訊嗎？

Sure, Larson. Let me answer that question. As Jian mentioned earlier, we are -- we were at about 10% as of first quarter. Our goal is actually -- we're expected to be at no more than 1% or maybe 1% or a little bit more than that by August of this year, shipment out of China. And where we move to, we're moving them majority into Malaysia, Indonesia, Vietnam, and we're adding more product into Thailand. That's where we're moving majority of the product to.

當然，拉爾森。讓我來回答這個問題。正如 Jian 之前提到的，截至第一季度，我們的成長率約為 10%。我們的目標實際上是——預計到今年 8 月份，中國出貨量將不超過 1%，或者可能略高一些。我們主要將產品轉移到馬來西亞、印尼、越南，並且為泰國添加了更多產品。我們將大部分產品轉移到那裡。

Great, thanks. Appreciate the color there.

太好了，謝謝。欣賞那裡的色彩。

Hold on. I do want to add one more thing. I'm sorry, Larson. I do want to add one more thing. We're actually looking into getting product from Middle East as well. So basically, it will be -- we want to diversify out of not just 100% out of Asia and moving to other part of the continent. That's part of our goal for this year, too.

堅持，稍等。我確實想補充一點。對不起，拉爾森。我確實想補充一點。我們實際上也在考慮從中東取得產品。所以基本上，我們希望實現多元化，不只是 100% 脫離亞洲，而是轉向亞洲大陸的其他地區。這也是我們今年的目標之一。

Great, thanks. On the pricing, how do you view the balance between -- are you guys expecting to pass the full impact of the tariffs on to customers? Are you going to absorb some of that in margins? Or how are you sort of thinking about that?

太好了，謝謝。在定價方面，您如何看待平衡—您是否希望將關稅的全部影響轉嫁給客戶？您會吸收其中的一些利潤嗎？或者您對此有何看法？

Well, we have implemented a price increase, April 1, on certain items. And we're -- we've already announced an across-the-board increase, May 19. That's on every item. it's ranging from 5% to somewhere 15%, 20%, different depending on the product itself. So that's what we're looking to do.

嗯，我們從 4 月 1 日起對某些商品實施了漲價。我們已經宣布將於 5 月 19 日全面調高工資。每件物品都是如此。根據產品本身的不同，其範圍從 5% 到 15%、20%。這就是我們想要做的。

In terms of are we absorbing all of the costs, we don't -- it's not 100%. But one thing for sure is our product basically is in high demand right now. We're seeing a lot of our competitors or importers stop importing 100%, and they're coming to us for everything. And there is -- there has been already a major shortage of product already in certain category.

至於我們是否承擔了所有成本，答案是沒有，不是 100%。但有一點可以肯定，那就是我們的產品目前需求量很大。我們看到很多競爭對手或進口商已經完全停止進口，他們所有的商品都來找我們。而且某些類別的產品已經出現嚴重短缺。

And I just wanted to add on to that just real quick. So in terms of the pricing, obviously, we have been and we remain to be very competitive on the pricing side. To add a little color to Alan's point, we did announce we are expecting to implement some price increases, but we are also looking internally aggressively at areas where we can gain more efficiency to save cost to be able to absorb, to your point, some of the price increases as well.

我只是想快速補充這一點。因此，就定價而言，顯然我們在定價方面一直非常有競爭力，而且仍然會如此。為了為艾倫的觀點增添一些色彩，我們確實宣布了我們預計將實施一些價格上漲，但我們也在積極尋找可以提高效率的領域，以節省成本，以便能夠吸收部分價格上漲。正如你所說。

Great. Appreciate that. And then on -- how do you guys think about reciprocal tariffs? Is that factored into guidance? Or what do you think that means for the business?

偉大的。非常感謝。那麼──你們如何看待互惠關稅？這是否已納入指導範圍？或者您認為這對企業意味著什麼？

Right. Well, currently, we're just doing business as we go because as everyone knows that the situation changes not by the month or by the quarter. The situations are being changed by the days. So we -- it's hard for anybody to prepare anything, to think of any reciprocal tariff because we don't even know that's going to happen. And if it happens, we don't know what's going to happen. So it's not just us. Basically, it's really hard to plan anything like this at this point.

正確的。嗯，目前，我們只是在按部就班地做生意，因為眾所周知，情況不會按月或按季度變化。情況正在一天天發生變化。因此，我們——任何人都很難準備任何事情，考慮任何互惠關稅，因為我們甚至不知道這是否會發生。如果發生這種情況，我們不知道會發生什麼。所以這不只是我們的問題。基本上，目前很難計劃任何這樣的事情。

Yes, fair point. And then just a few more here. So would you say -- do you think it's fair to say that you are in a position where the tariffs are almost a net benefit because you guys are actually -- have been, let's say, quicker to the ball on getting the sourcing outside of China compared to competitors where you might be able to take share now?

是的，說得對。這裡還有更多。那麼，您是否認為可以公平地說，您現在的處境是關稅幾乎帶來淨收益，因為與現在可能搶佔市場份額的競爭對手相比，你們實際上已經更快地在中國境外獲取了採購機會？

Yes. I think that we have been prepared. It's just that it came earlier than we planned it. That's all.

是的。我認為我們已經準備好了。只是它比我們計畫的來得早。就這樣。

Yes, fair enough. And the last one here, just how much -- so did you say that the freight costs that you're seeing in the quarter were actually higher this past quarter? Or was that lower?

是的，很公平。最後一個問題，具體是多少——那麼您是否說本季看到的運費實際上比上個季度更高？或更低？

Again, everything changes. Last quarter, the first quarter, the freight was lower than the fourth quarter. Upcoming quarter, second quarter, the freight is looking higher than the first quarter, but this is only this month. We don't know if something is going to change because all the shipments are delayed or actually they stop shipping and it's going to get very competitive. So price may come down next week. So everything is so fluctuating right now, yes.

再一次，一切都改變了。上個季度，也就是第一季度，運費比第四季要低。在即將到來的第二季度，貨運量看起來會高於第一季度，但這只是本月。我們不知道情況是否會改變，因為所有貨物都會延遲，或者實際上他們會停止運輸，競爭會變得非常激烈。因此下週價格可能會下降。是的，現在一切都在波動。

Yes. Yes, fair point. And then just to wrap up here, you mentioned before that there is some cost-saving initiatives that you're looking at internally. Is there anything that you could share as an example, something like that, that would be good to contextualize?

是的。是的，說得對。最後總結一下，您之前提到過，您正在內部研究一些節省成本的措施。能分享一些類似的例子嗎？這些例子有助於理解上下文嗎？

Yes. I think Jian can go over it on the cost-saving initiatives that we have.

是的。我認為 Jian 可以談談我們採取的成本節約措施。

Yes, sure. So one good example is when we look at our controllable variable cost, one big component is shipping and transportation cost. So basically, the cost that we incur -- that we spend with our third-party carrier, the partners to distribute products to our customers. So this is one area that we have been looking very aggressively in terms of negotiating with our vendors.

是的，當然。一個很好的例子是，當我們查看可控變動成本時，其中一個重要組成部分是運輸成本。所以基本上，我們產生的成本——是我們與第三方承運商、合作夥伴一起向客戶分銷產品所花費的成本。因此，這是我們在與供應商談判時一直積極關注的領域。

We recently launched a project where we are getting some savings. We are seeing some initial savings starting in the month of March by switching out some of our third-party carriers. So we've seen encouraging results from the month of March already, and we'll be prepared to provide another update in our next quarter's call.

我們最近啟動了一個項目，並獲得了一些節省。從三月開始，透過更換一些第三方營運商，我們看到了一些初步的節省。因此，我們已經看到了三月令人鼓舞的結果，我們將準備在下一季的電話會議上提供另一個更新資訊。

Wonderful. Thanks, guys. Appreciate it.

精彩的。謝謝大家。非常感謝。

You're welcome.

不客氣。

(Operator Instructions) Ryan Meyers, Lake Street.

（操作員指示）Ryan Meyers，Lake Street。

Hey, guys, thanks for taking my questions. First one for me, I just want to make sure I get a good understanding of the gross margins for the year. So you commented that you expect the second quarter gross margins to be largely flat with the first quarter. But if we look at the second half, that obviously implies sort of a step down in gross margins just to get to the range of the guidance that you gave. Just any dynamics that you want to call out there as far as what you can potentially see in the second half of the year on the gross margin side?

嘿，夥計們，謝謝你們回答我的問題。對我來說，首先我只是想確保我對今年的毛利率有一個很好的了解。所以您評論說，您預計第二季的毛利率將與第一季基本持平。但如果我們看一下下半年，這顯然意味著毛利率會下降，才能達到您給出的指引範圍。就今年下半年毛利率可能出現的情況而言，您有什麼動態嗎？

Jian, can you answer that question?

建，你能回答這個問題嗎？

Yes, I can take that. Hi, Ryan, thanks for the question. So you are absolutely right. So at this point, we do expect our second-quarter gross margin to be consistent with the first quarter. We are saying that because we have good visibility into our gross margin even with -- I know, obviously, we've been talking about the tariff and the freight cost. And obviously, we're sitting in early part of May.

是的，我可以接受。你好，Ryan，謝謝你的提問。所以你完全正確。因此，目前我們確實預計第二季的毛利率將與第一季保持一致。我們之所以這麼說，是因為我們對自己的毛利率有很好的了解——我知道，顯然我們一直在談論關稅和運費。顯然，我們現在正處於五月初。

I'd say we have good visibility because our inventory turns roughly about -- it takes about roughly 60 days to turn. That's the reason why we have a good idea, just based on all the freight costs, what we have paid over the past couple of months. I mean, that gives us a good idea of what the second quarter gross margin looks like. So that's on the second quarter.

我想說我們有很好的可見性，因為我們的庫存週轉率大約是 - 大約需要 60 天。這就是為什麼我們能根據過去幾個月支付的所有運費得出一個好主意。我的意思是，這讓我們對第二季的毛利率有了很好的了解。這就是第二季的情況。

In terms of the full year, yes, you are right. We -- at this point, obviously, tariff is open, right? It's a little up in the air, but we did build some cushion, some -- we have some scenario analysis in terms of kind of how margin is going to be compressed a little bit in the second half of the year because of the duties, the tariffs that we would expect to pay and depending on, obviously, how the negotiations go. So you're absolutely right. We do have -- we're building some conservatism in the second half of -- in the model for the gross margin in the second half.

就全年而言，是的，你是對的。我們──此時，顯然關稅是開放的，對嗎？這有點不確定，但我們確實建立了一些緩衝，我們對利潤率在下半年會如何受到擠壓進行了一些情景分析，因為關稅，我們預計要支付的關稅，顯然取決於談判的進展情況。所以你完全正確。我們確實——我們正在為下半年的毛利率模型建立一些保守主義。

Got it. That makes sense. And then my next question, I was curious to see that you guys ramped up domestic manufacturing. Can you maybe give us what the mix of the revenue during the quarter came from domestic manufacturing and then maybe how you expect that to play out through the year?

知道了。這很有道理。我的下一個問題是，我很好奇你們如何加強國內製造業。您能否告訴我們本季來自國內製造業的收入組成情況，以及您預計全年收入組成如何？

In the first quarter, we didn't actually ramp up much of the domestic manufacturing. It was pretty much stable. But in starting recently, we've seen that there is a shortage in the household increase in demand, overwhelmingly increased in demand on our products. So we're turning out machines that we didn't have them on before.

第一季度，我們其實並沒有大幅增加國內製造業。它相當穩定。但最近我們發現，家庭需求增加，導致我們產品的需求大幅增加。因此，我們正在生產以前沒有的機器。

And also, we're adding -- asking our employees to come in and work over time to produce more product because we are -- as I mentioned earlier, there has been shortages in the market already. And basically, our products are being really -- we're actually telling customers not to stock up inventories and we're not allowing people to buy four.

此外，我們也要求員工加班生產更多產品，因為正如我之前提到的，市場已經出現短缺。基本上，我們的產品實際上是——我們實際上是在告訴客戶不要囤積庫存，而且我們不允許人們購買四件。

So this will not disrupt our inventory level, but we do need to build additional inventory because we are seeing more and more customers giving us a forecast that they will be taking inventory from us by stopping importing from what they've been doing. So that's where we're at right now. But in terms of percentage wise, we actually don't have that yet.

因此，這不會擾亂我們的庫存水平，但我們確實需要建立額外的庫存，因為我們看到越來越多的客戶預測他們將透過停止進口來從我們這裡獲取庫存。這就是我們現在的處境。但從百分比來看，我們其實還沒有達到這個水準。

Got it. That makes sense. And then the last question for me, this is more of a bigger picture industry type question. When you think about the volume that you guys have continued to drive over the last couple of quarters, I would assume that you've continued to take a significant amount of market share. So Alan, what would you attribute that to? Is that just really your guys' ability to get your customers the inventory they want, or is there anything else that's worth noting there?

知道了。這很有道理。對我來說，最後一個問題更像是一個更大的行業類型的問題。當你考慮到你們在過去幾季持續推動的銷售時，我會認為你們已經繼續佔據了相當大的市場份額。那麼艾倫，您認為這是什麼原因造成的呢？這真的就是你們為客戶提供他們想要的庫存的能力嗎，還是還有其他值得注意的？

Well, one thing is credibility. We built a great relationship during the COVID period that we're a stable company and reliable. We will make sure that we're prepared for anything happens. And good thing is that because of our additional warehouse in Chino that we signed up in March, we were able to build additional inventory cushion just for the upcoming summer.

嗯，一件事是可信度。在疫情期間，我們建立了良好的關係，表明我們是一家穩定且值得信賴的公司。我們將確保做好應對任何可能發生的情況的準備。好消息是，由於我們三月在奇諾簽約了額外的倉庫，我們能夠為即將到來的夏季建立額外的庫存緩衝。

And that's when our new President Trump announced the tariff in April -- early April, everybody start to scramble, but that's too late. But we started to gear up back in March. Didn't expect it's going to be this much, the tariff. Then much is going to be -- the volume increase in our sales part is going to be that much. But the good thing is we're ready and our customers are happy that we're ready. And because we built an existing relationship with a lot of these clients, now they're in need and they've come to us. And basically, we're doing our best to help whatever we can, yes.

就在那時，我們的新總統川普在四月初宣布了關稅，每個人都開始爭先恐後，但為時已晚。但我們早在三月就開始做好準備。沒想到關稅會這麼高。那麼我們的銷售量就會大幅增加。但好消息是我們已經做好了準備，我們的客戶也為我們做好準備而感到高興。由於我們與許多客戶建立了現有的關係，現在他們有需要，所以就來找我們。基本上，我們正​​在盡力提供力所能及的幫助，是的。

Got it. Thank you for taking my questions.

知道了。感謝您回答我的問題。

[You're welcome, Ryan.]

[別客氣，瑞安。 ]

And this concludes our question-and-answer session. I'd like to turn the conference back over to Alan Yu for any closing remarks.

我們的問答環節到此結束。我想將會議交還給 Alan Yu 做最後發言。

Well, thank you, everybody, for joining our earnings conference call in the first quarter of 2025. We look forward to seeing all of you on the next quarterly meeting. Thank you very much. Have a nice day. Bye-bye.

好吧，感謝大家參加我們 2025 年第一季的財報電話會議。我們期待在下次季度會議上見到大家。非常感謝。祝你今天過得愉快。再見。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

會議現已結束。感謝您參加今天的演講。現在您可以斷開線路了。