Executive Summary

Q2 FY2026 revenue grew 4.3% YoY to $42.0M, gross margin compressed to 15.0% (vs. 17.5% LY) on mix and onboarding new customers, and diluted EPS was $0.04; management guided Q3 revenue to +19–21% YoY with GM ~13–15% .
Results came in modestly above revenue consensus ($41.0M*) but below EPS consensus ($0.095*); EBITDA also trailed ($2.7M* est. vs. $1.85M* actual) as mix and higher financing needs weighed on profitability .
Capacity expansion completed in late June added ~15% capacity; facilities remain fully booked through February 2026, and management is evaluating further expansions/acquisitions in Jordan to support multi‑year demand .
Near‑term margin pressure reflects diversified customer/product mix and new program ramps; management targets a gradual return toward ~20% GM over a multi‑year horizon via automation and scale benefits .

Note: Asterisked values are from S&P Global consensus/actuals.

What Went Well and What Went Wrong

What Went Well
- Demand and top-line: Revenue +4.3% YoY to $42.0M on increased U.S. shipments and a more diverse customer base; Q3 revenue guide +19–21% YoY underlines sustained momentum .
- Execution and capacity: ~15% capacity expansion completed in June; factories fully booked through February, supporting near-term volumes .
- Logistics normalization: Regional shipping logistics have returned to normal with Haifa and Aqaba ports fully operational, reducing lead times and costs .
- Management quote: “Jordan is increasingly becoming a preferred destination for global brands seeking to diversify… beyond Asia.” — Sam Choi, CEO .
What Went Wrong
- Margin compression: GM fell to 15.0% (vs. 17.5% LY) due to mix/customer diversification and absence of prior-year outerwear catch-up; Q3 GM guided lower at 13–15% .
- Profitability vs. expectations: EPS $0.04 missed consensus $0.095*, and EBITDA ~$1.85M* missed $2.7M* est., reflecting mix and higher financing needs .
- Higher other expenses and taxes: Other expenses rose to $456K (vs. $364K LY) on financing needs; effective tax rate increased to 24.3% in Q2 .

Financial Results

Metric	Q4 2025	Q1 2026	Q2 2026
Revenue ($)	$29,251,426	$39,629,308	$41,968,534
Gross Margin (%)	17.9%	15.4%	15.0%
Operating Income ($)	$433,515	$958,996	$1,089,388
Net Income ($)	$(144,095)	$323,630	$479,303
Diluted EPS ($)	$(0.01)	$0.03	$0.04
EBITDA ($)	N/A	$1,702,783*	$1,852,394*

Asterisked values are from S&P Global.

Vs. estimates

Metric	Q1 2026 Actual	Q1 2026 Consensus	Result	Q2 2026 Actual	Q2 2026 Consensus	Result
Revenue ($)	39,629,308	38,850,000*	Beat	41,968,534	41,000,000*	Beat
EPS (Primary, $)	0.03	0.075*	Miss	0.04	0.095*	Miss
EBITDA ($)	1,702,783*	2,500,000*	Miss	1,852,394*	2,700,000*	Miss

Asterisked values are from S&P Global.

KPIs and Balance Sheet Highlights

KPI	Q1 2026 (6/30/25)	Q2 2026 (9/30/25)
Cash & Restricted Cash ($)	7,501,624	13,702,853
Cash (excl. restricted) ($)	5,796,830	12,002,314
Net Working Capital ($)	34,600,000	35,200,000
Accounts Receivable ($)	9,979,463	5,798,578
Inventory ($)	27,317,026	26,256,890
Dividend per Share ($)	0.05 (paid Aug 29, 2025)	0.05 (payable Nov 26, 2025)
Capacity	+15% capacity completed in June; fully booked through Feb 2026	Fully booked through Feb 2026; further expansion in evaluation

Segment breakdown: Not provided; company reports as a single operating segment across apparel manufacturing .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth (YoY)	Q3 FY2026	—	+19% to +21% YoY	New
Gross Margin (%)	Q3 FY2026	—	~13% to 15%	New
Revenue ($)	Q2 FY2026	$40M–$42M (guided on Aug 12)	N/A (actual delivered $42.0M)	Met prior guide
Gross Margin (%)	Q2 FY2026	~15%–16% (guided on Aug 12)	N/A (actual 15.0%)	Met prior guide (low end)
Dividend ($/share)	Ongoing	$0.05 (Aug 29, 2025)	$0.05 (Nov 26, 2025)	Maintained

Earnings Call Themes & Trends

Topic	Q4 FY2025 (Prev-2)	Q1 FY2026 (Prev-1)	Q2 FY2026 (Current)	Trend
Supply chain/logistics	Haifa port disruptions; reroutes to Aqaba; some shipments deferred to Q1 FY26	Logistics normalized; Aqaba resumed; Haifa operational again	“Shipping logistics … returned to normal” with Haifa/Aqaba fully operational	Improving/normalizing
Capacity/expansion	Expansion completed; 15% capacity to contribute in Q2 FY26; fully booked through Dec 2025	15% capacity ramping; fully booked through Feb 2026; Al Hasa extension planned (5–10%)	Fully booked through Feb 2026; evaluating acquisitions and own‑land development in Jordan	Expanding
Customer/mix	Growing demand, new inquiries; Hansoll collaboration announced	First phase major Hansoll order (3.2M pcs) commencing; EU customer additions	First phase shipped; second phase done by Nov; production through Feb 2026; broader diversification	Broadening
Tariffs/macro	Monitoring geopolitical risks; Haifa impact	Jordan at 15% tariff but still advantageous vs. Asia; gov’t negotiating lower rates	Reinforces tariff advantage vs. 20–60% alternatives; vigilance on geopolitical/tariff dynamics	Advantage sustained
Profitability/margins	GM improved YoY in Q4 on scale	GM 15.4%; cost efficiencies/logistics improvement	GM 15.0%; guide 13–15% for Q3; LT goal ~20% with automation/scale	Near‑term pressure; LT recovery

Management Commentary

“Jordan is increasingly becoming a preferred destination for global brands seeking to diversify their manufacturing partnerships beyond Asia.” — Sam Choi, CEO .
“We successfully completed the expansion… increasing our production capacity by approximately 15%... we have initiated a long‑term expansion plan… including potential acquisitions and facility development on our own land.” — Sam Choi .
“While we anticipate these changes will strengthen our long‑term growth, we do expect a slightly lower average gross margin in the near term… Our goal is to improve gross profit margins through increased production automation and the benefits of economies of scale.” — Sam Choi .
“We are receiving continued requests for even greater capacity… fully booked through February… evaluating potential acquisitions… and developing our own land.” — Management prepared remarks .

Q&A Highlights

Growth drivers: Q3 revenue growth reflects both ~10–15% capacity increase and stronger demand; company does not break out contribution precisely .
Margin trajectory: Path back to ~20% GM is multi‑year driven by automation, ERP implementation, and scale; near term margins remain lower due to onboarding new customers and mix .
Inventory build: Higher inventory YoY reflects procurement for a large program and production needs during typically slower Q3/Q4, with facilities fully booked through February .
Expansion focus: Near‑term expansion is focused within Jordan; evaluating factory acquisitions and own‑land development; Al Hasa extension expected to add 5–10% capacity .
Seasonality shift: Q4 historically soft, but FY26 Q4 expected to be “a pretty good quarter” given bookings through February .
Tax rate: Effective tax rate increased to 24.3% in Q2; management working on optimizing global tax structure .

Estimates Context

Q2 FY2026 vs. consensus: Revenue $42.0M beat $41.0M*; EPS $0.04 missed $0.095*; EBITDA ~$1.85M* missed $2.7M* .
Q1 FY2026 vs. consensus: Revenue $39.6M beat $38.85M*; EPS $0.03 missed $0.075*; EBITDA ~$1.70M* missed $2.5M* .
Forward lens: Company guides Q3 GM to 13–15% and Q3 revenue growth +19–21% YoY, suggesting consensus EPS for Q3 ($0.015*) will be sensitive to mix and margin execution; watch for estimate revisions aligning with the lower GM guide .

Asterisked values are from S&P Global.

Key Takeaways for Investors

Top-line momentum intact with Q3 revenue guided +19–21% YoY and facilities fully booked through February; near‑term growth is constrained more by capacity than demand .
Profitability remains the swing factor: margin compression (mix/new customers) drove EPS/EBITDA misses vs. consensus; focus on execution of automation and scale to support LT GM recovery toward ~20% .
Capacity adds are real and compounding: 15% increase completed and further additions (Al Hasa +5–10% potential, acquisitions/own‑land build‑out) could support multi‑year revenue inflection if demand persists .
Tariff advantage is durable relative to Asia (Jordan ~15% vs. 20–60% alternatives) and logistics normalized—both underpin share gains with global brands .
Working capital and financing: Higher other expenses reflect growth‑related financing; monitor AR/inventory turns and cash generation as volume ramps .
Capital return steady: Quarterly dividend maintained at $0.05/share; signals confidence while balancing growth investments .
Near‑term trading setup: Expect estimate dispersion around Q3 on GM range (13–15%); stock likely reacts to updates on order momentum, capacity announcements, and evidence of margin stabilization .

Sources: Q2 FY2026 8‑K press release and exhibits ; Q2 FY2026 earnings call transcript ; Q1 FY2026 8‑K/press release and transcript ; Q4 FY2025 8‑K . Asterisked estimate/EBITDA values retrieved from S&P Global.

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