Financial Data and Key Metrics Changes - Revenue for the fiscal 2026 third quarter grew 18% to $41.8 million from $35.4 million in the same quarter last year, driven by higher shipment volumes to major export markets, including the U.S. and a new customer in Korea [10][11] - Gross profit increased 31% to $7 million for the fiscal 2026 third quarter from $5.4 million in the same quarter last year, with gross profit margin improving to 16.9% from 15.2% [10][11] - Operating income nearly tripled to $1.9 million in the fiscal 2026 third quarter from $708,000 in the same quarter last year [11] - Net income rose to $1.2 million or $0.09 per diluted share for the fiscal 2026 third quarter from $6,000 or $0.00 per diluted share for the same quarter last year [11] Business Line Data and Key Metrics Changes - The company is expanding its manufacturing capacity by acquiring a 184,000 sq ft manufacturing building in Amman, Jordan, with an investment of approximately $5 million for renovations and equipment [4][5] - The new facility is expected to increase manufacturing capacity by at least 40% and employ up to approximately 2,500 workers [8][9] - The company is also pursuing additional facilities in rural towns to support growth objectives and local employment, which is expected to add an additional 5%-10% to total production capacity [9] Market Data and Key Metrics Changes - Buyers from major customers have submitted increased order projections for calendar year 2026, with facilities fully booked through July [9] - The company is recognized as one of the world's preferred manufacturing hubs, particularly in response to shifts in tariff policy [7] Company Strategy and Development Direction - The company plans to diversify its customer base and product mix to support stable year-round production and reduce seasonality impacts [5][10] - The long-term strategy aims to more than double current production capacities in the next five years while focusing on operational efficiency and cost control [10] - The company is working with the Jordan Ministry of Labor to develop additional facilities, enhancing local employment opportunities [9][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, expecting revenue for the fiscal 2026 fourth quarter to increase by 23%-26% over the same quarter last year [14] - The company is focused on cost controls and improving operating efficiency while implementing its long-term expansion strategy [14] - Management is closely monitoring the political situation in the region and has contingency plans in place to ensure stability in operations [43][45] Other Important Information - As of December 31, 2025, the company had cash and restricted cash totaling $13.2 million, with net working capital of $36.4 million [12] - A regular quarterly dividend of $0.05 per share was approved, payable on February 20, 2026 [13] Q&A Session Summary Question: How will the expansions impact the income statement and balance sheet? - The $5 million needed for renovations will be financed by the Housing Bank, showing up as long-term debt on the balance sheet [16][18] Question: Can you provide more detail on the other facilities being considered? - The company plans to set up two satellite factories in rural areas to create job opportunities and improve efficiency [22][23] Question: How quickly will the new capacity ramp up? - Renovations are expected to be completed by the end of 2026, with a gradual ramp-up of operations over 1-2 years [31] Question: What are the expectations for gross margins going forward? - Margins may decrease as the company returns to more complex styles, but efficiency improvements and new technology will help control costs [33] Question: What is the contingency plan regarding political instability in the region? - The company is monitoring the situation closely and has been assured that Jordan will remain stable [43][45] Question: What are the plans for cash on the balance sheet? - The company is utilizing cash for growth and working capital, with plans to consider other financing alternatives once a comfortable level is reached [46][48] Question: How is the relationship with major customers, particularly VF Corp? - There is pricing pressure due to tariffs, but the company maintains strong relationships by providing high-quality manufacturing [50][51]

Financial Data and Key Metrics Changes - Revenue for Q3 2026 increased by 18% to $41.8 million from $35.4 million in the same quarter last year, driven by higher shipment volumes to major export markets, including the U.S. and a new customer in Korea [10] - Gross profit rose by 31% to $7 million from $5.4 million year-over-year, with gross profit margin improving to 16.9% from 15.2% due to a favorable product mix and economies of scale [10][11] - Operating income nearly tripled to $1.9 million from $708,000 in the same quarter last year, while net income increased to $1.2 million or $0.09 per diluted share from $6,000 or $0.00 per diluted share [11] - Cash and restricted cash totaled $13.2 million, with net working capital at $36.4 million as of December 31, 2025 [12] Business Line Data and Key Metrics Changes - The company is expanding its manufacturing capacity by acquiring a 184,000 sq ft facility in Amman, Jordan, with an investment of approximately $5 million for renovations and equipment [4][5] - The new facility is expected to increase manufacturing capacity by at least 40%, supporting growing demand from existing customers and new business opportunities [5][9] - The company is also developing additional facilities in rural towns, which are expected to add 5%-10% to total production capacity [9] Market Data and Key Metrics Changes - The company has seen increased order projections from major customers for calendar year 2026, with facilities fully booked through July [9] - Jordan is being recognized as a preferred manufacturing hub, with many global brands diversifying their manufacturing footprint to the region [6][9] Company Strategy and Development Direction - The long-term strategy aims to more than double current production capacities in the next five years while diversifying the customer base and product mix [10] - The company is focused on cost control and operational efficiency as it implements its expansion strategy [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects, expecting Q4 2026 revenue to increase by 23%-26% year-over-year, with gross margin targets of 14%-16% [13] - The company is closely monitoring the political situation in the region and has contingency plans in place to ensure stable operations [41][45] Other Important Information - The board of directors approved a regular quarterly dividend of $0.05 per share, payable on February 20, 2026 [12] - The effective tax rate for the quarter was lower at 24%, with projections for future rates between 25%-30% as the company engages in tax planning [62][64] Q&A Session Summary Question: How will the expansions impact the income statement and balance sheet? - The $5 million for renovations and equipment will be financed by the Housing Bank, showing up as long-term debt on the balance sheet [16][18] Question: Can you provide details on the new facilities being developed? - The new satellite factories will help create job opportunities in rural areas and are expected to improve overall efficiency [21][22] Question: How quickly can the new capacity be ramped up? - Renovations are expected to be completed by the end of 2026, with a ramp-up period of 1-2 years to fully utilize the new capacity [30] Question: What is the outlook for gross margins going forward? - Margins may decrease as the company returns to more complex styles, but efficiency improvements and new technology will help control costs [33] Question: What is the contingency plan regarding political instability in the region? - The company is monitoring the situation closely and has been assured that Jordan will remain stable, with efficient operations at key ports [41][45] Question: What are the plans for cash on the balance sheet? - The company is utilizing cash for growth and working capital, with plans to consider other financing alternatives once a comfortable level is reached [46][47] Question: How is the health of the largest customers affecting pricing? - There is pricing pressure due to tariffs, but the company maintains strong relationships with customers and is seen as a reliable manufacturer [50][51]