Thank you for standing by, and welcome to the Armlogi Holding Corp.'s Third Quarter and First 9 Months of Fiscal Year 2025 Earnings Call. Please note that today's call is being recorded.

I will now turn the meeting over to Matthew Abenante, Investor Relations for Armlogi Holding Corp.

Thank you, and thanks to everyone joining us today for Armlogi's earnings conference call to discuss the third quarter and first 9 months of fiscal year 2025 results. Please note that our earnings press release was issued on Wednesday, along with our quarterly report on Form 10-Q, which was also filed with the Securities and Exchange Commission. Both are available in the Investor Relations section of our website at ir.armlogy.com.

Joining us on the call today is Scott Hsu, Chief Financial Officer of the company.

The format of our call will consist of brief comments, followed by a question-and-answer session addressing the questions that were submitted by investors. We thank everyone for submitting these questions.

Before we get started, I'm going to review the safe harbor statement. Please note that today's discussion will contain forward-looking statements.

In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing.

We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to the future events or our future performance, including our financial performance and projections, our growth in revenue and earnings and our business prospects and opportunities.

You can identify forward-looking statements by those that are not historical in nature, particularly those that use the terminology such as may, should, expects, anticipates, contemplates, estimates intends, believes, plans, projected, predicts, potential or hopes or the negative of these or similar terms.

In evaluating these forward-looking statements, you should consider various factors, including our ability to change the direction of the company, our ability to keep pace with new technology and changing market needs, and the competitive environment of our business.

These and other factors may cause our actual results to differ materially from any forward-looking statements.

Forward-looking statements are only predictions.

We are not obligated to publicly update or revise any forward-looking statements, whether as a result of uncertainties or assumptions. The forward-looking statements discussed on this call and other statements made from time to time by us or our representatives may not occur, and actual results and results -- actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.

And with that, I would like to hand the call to Scott Hsu, Chief Financial Officer of Armlogi. Good morning, Scott.

Good morning, Matt, and thank you, everyone for joining us today.

Our Chairman and CEO, Aidy Chou, is unfortunately away raising company business today and [indiscernible] regards.

This quarter, we continue to see revenue growth, reflecting the sustained demand for our comprehensive logistics solutions. A particularly significant and encouraging development is the recent success in U.S.-China trade talks.

As many of you know, this has resulted in a substantial reduction in tariff fees, and we believe this will have a positive impact on our sectors and for our margins specifically.

We will touch on it more throughout the call.

Our third quarter and 9-month results reflects a period of continued revenue growth, which underscores the ongoing demand for our logistics solutions.

However, we also faced significant operational investments and market-related cost pressure that impact our profitability.

We are diligently working to optimize our expanded warehouse footprint and enhance operational efficiency across all our service lines.

A significant and encouraging development is the recent success in U.S.-China trade talks, which has resulted in a substantial reduction in tariff fees. This is a major point of optimism for Armlogi and the broader logistics sector. We anticipate that these positive trade developments will help alleviate some of the cost pressures we have been experiencing and create more favorable operating environment, while we maintain a cautious approach in our overall planning, prioritizing sustainable growth and improved profitability.

The resolutions in trade tensions allow us to look forward with greater confidence.

Our commitment to leveraging technology and providing comprehensive supply chain solutions for our clients remain steadfast as we navigate the evolving economic landscape and position Armlogi to capitalize on these new opportunities for future success.

Now let's turn to our financial performance for the third quarter and the first 9 months of the fiscal year 2025.

As a reminder, for a detailed breakdown of our financial results, I encourage you to refer to our earnings press release and our Form 10-Q, both of which are available on our Investor Relations website. My comments here will provide a high-level overview.

Third quarter ended March 31, 2025, we saw continued top line momentum with total revenue reaching $45.8 million, an increase of 19.3% compared to the same period last year. This growth reflects the continued demand for our services.

Cost of sales for the quarter were $45.6 million.

As we have discussed, these costs were higher primarily due to operational investments and the expansion of our footprint. This impacted our overall gross profit, which was $0.28 million for the quarter.

We are actively implementing measures to improve efficiency and profitability, and we anticipate that the recent positive developments in U.S.-China trade relations may contribute to alleviating some of these cost pressures in the future.

General and administrative expenses were $4.47 million, reflecting investments to support our growing operations. This resulted in a loss from operations of $4.19 million for the third quarter.

Our net loss for this quarter was $3.76 million or $0.09 per basic and diluted share.

Looking at the 9-month period ended March 31, 2025, total revenue grew 14.6% to $139.5 million, again, underscoring the sustained demand for our comprehensive logistics solutions.

Cost of sales of the 9 months were $142.3 million. This resulted in a gross loss of $2.85 million for the period.

We are focused on strategic initiatives to address the margin challenges and as mentioned, the recent positive developments in U.S.-China trade discussion are expected to contribute favorably to mitigating some of these cost pressures going forward.

General and administrative expenses for the 9 months were $10.8 million. The loss from operations for the 9-month period was $13.65 million and our net loss was $10.06 million or $0.24 per basic and diluted share.

We are managing our balance sheet prudently and focus on initiatives to improve our profitability as we move forward, especially in light of the more favorable trade environment we anticipate.

Looking ahead, we are navigating a dynamic market environment while evolving the global trade policies and the inflationary pressures have certainly [ present ] ongoing challenges. The recent successful conclusion of U.S.-China trade talks marks a significant positive development. This breakthrough resulting in reduced tariffs is expected to create a more favorable operating landscape for the logistics sector and importantly, for Armlogi.

We are proactively working to optimize our operations, managing costs and enhance our service delivery. We anticipate that this improved trade relations will contribute to alleviating some of the cost pressures we have experienced.

The full impact of the macroeconomic shifts will unfold over time, we are cautiously optimistic.

Our focus remains squarely on leveraging our expanding infrastructure and our technological capabilities to drive long-term value for you, our shareholders.

We are committed to improving our profitability, and we will continue to make strategic investments to support sustainable growth and strengthen our market position now with a more positive backdrop for international trade.

In summary, while we have navigated some headwinds, we have continued to grow our revenue demonstrating the underlying demand for our services.

We are proactively managing costs and are particularly encouraged by the significant positive development in U.S.-China trade relations, which we believe will benefit our operation and industry at large.

We remain confident to enlarge strategy, our dedicating and our ability to create value in the evolving global logistics landscape. I want to sincerely thank our shareholders for their continued support and trust in Armlogi.

With that comprehensive financial overview, I will turn it back to Matt for questions.

Thank you, Scott.

We will now move to the question-and-answer portion of the call. Thank you to everyone who has submitted questions.

Our first question, despite cost pressures, the company is continuing to show revenue growth. Could you elaborate on the key drivers behind the sustained demand for Armlogi services and how the company is working to improve profitability moving forward?

That's an excellent question. The continued revenue growth of 19.3% for the quarter and 14.6% for the 9 months, truly underscores the essential nature of our comprehensive logistics solutions and the strong relationship we have with our clients.

The demand is driven by the ongoing needs of cross-border e-commerce and the value we provide in managing complex supply chains.

Regarding profitability, we are very focused on optimizing our expanded operational footprint, enhancing efficiencies through technology and diligently managing our costs.

Furthermore, as we discussed, the recent positive development in U.S.-China trade relations with reduced tariff fees are expected to alleviate some of the external cost pressures, which should contribute favorably to our margin improvement effort over time.

We are confident in our strategic initiatives to navigate the current environment and enhance shareholder value.

The recent success in U.S.-China trade talk seems to be a significant positive. Can you provide a bit more color on how specifically Armlogi is positioned to benefit from this improved trade environment?

Certainly, the successful U.S.-China trade talks and the resulting tariff reductions are indeed very encouraging news for the entire logistics sector and particularly for a company like Armlogi, that facilitate transpacific trade.

Specifically, we anticipate several benefits.

Firstly, reduced tariffs can lower the lending cost of goods for our customers, potentially stimulating higher trade volumes.

Secondly, it reduced a significant element of uncertainty that has been impacting planning and investment for many business, which can lead to more stable and predictable demand for our services.

Thirdly, it may ease some of the direct and indirect cost pressures we have seen in the supply chain.

We are well positioned with our extensive warehouse network and the comprehensive service offering to support our clients as they capitalize on this more favorable trade environment.

We have already begun factoring this into our strategic planning to maximize these emerging opportunities.

Considering the dynamic market and the recent positive trade news, how does Armlogi view its long-term strategic positioning and its ability to capture future growth opportunities?

Yes, we are very confident in our long-term strategic positioning. Armlogi has built a robust infrastructure with a significant warehouse footprint in key U.S. locations, offering a comprehensive suite of logistics services. This allow us to be a one-stop solution for many of our clients, particularly in the cross-border e-commerce space.

The recent positive developments in U.S.-China trade talks further strengthen our outlook, creating a more stable and potentially expensive market.

Our strategy remains focused on leveraging our core strength, our infrastructure, our technology, our experienced team and our customer-centric approach.

We will continue to make prudent investments to support sustainable growth, enhance our service capabilities and expand our market reach. We believe we are well equipped to navigate the evolving landscape and capitalize on the growth opportunity ahead.

Thank you. And with that, that's our last question.

And so I want to thank everyone for participating on today's call. We look forward to providing additional updates in the near future. In the meantime, we can be reached at info@armlogi.com or you can contact me at matthew@strategic-ir.com. Thank you.

Ladies and gentlemen, that does conclude our conference today. Thank you for your participation.

You may now disconnect.