Jewett-Cameron Announces 1st Quarter Financial Results
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Insights
Jewett-Cameron Trading Company Ltd.'s reported financial results reflect a significant decrease in sales year-over-year, from $12.5 million to $9.8 million. This 21.6% decline could be indicative of underlying challenges in their market or operational inefficiencies. The reported loss from operations has also widened substantially, from a minor $6,798 to a more concerning $789,224. However, the net income for the quarter is positive due to a one-time arbitration settlement, which is not reflective of the company's core operational performance. This discrepancy is critical for stakeholders as it may mask the need for operational improvements.
The company's cash position seems stable with $3.5 million on hand and no debt against its $10 million line of credit. This suggests that Jewett-Cameron has maintained a conservative approach to leveraging, which could be favorable in times of economic uncertainty. Nonetheless, the reliance on one-time gains to achieve profitability is not sustainable long-term and investors should monitor subsequent quarters closely for improvement in core operations.
The CEO's statement acknowledges the ongoing impact of the pandemic and inflation, which have disrupted pricing and consumer behavior, particularly in the pet segment. This sector-specific challenge is noteworthy as it indicates that not all of Jewett-Cameron's product lines are equally resilient to macroeconomic pressures. The launch of the MyEcoWorld® line of sustainable bag products represents a strategic pivot towards sustainability—a growing trend in consumer preferences. However, the success of this line will be crucial to watch, as it could offset weaknesses in other segments.
The company's focus on reaching desired inventory levels and operational strengths suggests a strategic shift towards efficiency and core product optimization. This could be a positive sign for investors, as it may lead to improved margins and profitability in the long term if executed effectively. The performance of the new product lines and the company's ability to adapt to the changing consumer landscape will be pivotal factors in assessing future business health.
The external economic factors cited by Jewett-Cameron's CEO, such as inflation and pandemic-related disruptions, have broad implications for the company's operational strategy. Inflation, in particular, can squeeze margins by increasing input costs, while simultaneously affecting consumer purchasing power. The company's ability to navigate these challenges while maintaining sufficient working capital and avoiding borrowing is commendable, yet the real test will be its capacity to return to operational profitability without one-time gains.
The pet products segment's underperformance could be reflective of a larger trend in discretionary consumer spending amidst economic uncertainty. Investors should consider the broader economic environment when evaluating the company's prospects, as recovery in consumer confidence and spending power will likely be necessary for Jewett-Cameron's segments to fully rebound. The proactive management of inventory levels and the introduction of sustainable products could position the company favorably if consumer trends shift towards environmentally conscious products post-pandemic.
Sales for the first quarter of fiscal 2024 totaled
"We are continuing to work through the effects of the pandemic and the high rate of inflation that has caused price disruptions and negatively affected consumer buying," said CEO Chad Summers. "The pet segment continues to lag, but sales of our fencing products are meeting expectations. We officially launched our new MyEcoWorld® line of sustainable bag products in the 4th quarter and sales are growing. With the exception of pet products, we are approaching the desired inventory levels for most of our primary products as we sharpen our focus on our operational strengths and core product lines."
As of November 30, 2023, the Company's cash position was
Jewett-Cameron Trading Company is a holding company that, through its subsidiaries, operates out of facilities located in
Forward-looking Statements
The information in this release contains certain forward-looking statements that anticipate future trends and events. These statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks, including but not limited to, the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry, and other factors detailed in the Company's SEC filings. Accordingly, actual results may differ, possibly materially, from predictions contained herein.
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED BALANCE SHEETS (Expressed in (Prepared by Management) (Unaudited) | |||||
November 30, 2023 | August 31, 2023 | ||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 3,558,168 | $ | 83,696 | |
Accounts receivable, net of allowance of | 3,365,430 | 5,634,924 | |||
Inventory, net of allowance of | 17,513,417 | 18,339,048 | |||
Prepaid expenses | 613,358 | 630,788 | |||
Total current assets | 25,050,373 | 24,688,456 | |||
Property, plant and equipment, net | 4,545,687 | 4,655,427 | |||
Intangible assets, net | 112,847 | 134,845 | |||
Deferred tax assets | 229,062 | 319,875 | |||
Total assets | $ | 29,937,969 | $ | 29,798,603 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payable | $ | 2,802,837 | $ | 2,181,194 | |
Bank indebtedness | - | 1,259,259 | |||
Income taxes payable | 349,745 | 147,629 | |||
Accrued liabilities | 1,396,519 | 2,113,194 | |||
Total liabilities | 4,549,101 | 5,701,276 | |||
Stockholders' equity | |||||
Capital stock Authorized 21,567,564 common shares, no par value 10,000,000 preferred shares, no par value Issued 3,498,899 common shares (August 31, 2023 – 3,498,899) | 825,468 | 825,468 | |||
Additional paid-in capital | 765,055 | 765,055 | |||
Retained earnings | 23,798,345 | 22,506,804 | |||
Total stockholders' equity | 25,388,868 | 24,097,327 | |||
Total liabilities and stockholders' equity | $ | 29,937,969 | $ | 29,798,603 | |
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in (Prepared by Management) (Unaudited) | |||||
Three Months Ended November 30, 2023 | Three Months Ended November 30, 2022 | ||||
SALES | $ | 9,805,841 | $ | 12,577,500 | |
COST OF SALES | 7,849,760 | 9,717,800 | |||
GROSS PROFIT | 1,956,081 | 2,859,700 | |||
OPERATING EXPENSES | |||||
Selling, general and administrative expenses | 948,481 | 826,807 | |||
Depreciation and amortization | 97,903 | 111,536 | |||
Wages and employee benefits | 1,698,920 | 1,928,155 | |||
2,745,305 | 2,866,498 | ||||
Loss from operations | (789,224) | (6,798) | |||
OTHER ITEMS | |||||
Gain on sale of property, plant and equipment | 89,655 | - | |||
Other income | 2,450,000 | - | |||
Interest expense | (6,855) | (86,552) | |||
Total other items | 2,532,800 | (86,552) | |||
Income (loss) before income taxes | 1,743,576 | (93,350) | |||
Income tax (expense) recovery | (452,035) | 19,590 | |||
Net income (loss) | $ | 1,291,541 | $ | (73,760) | |
Basic income (loss) per common share | $ | 0.37 | $ | (0.02) | |
Diluted income (loss) per common share | $ | 0.37 | $ | (0.02) | |
Weighted average number of common shares outstanding: | |||||
Basic | 3,498,899 | 3,496,202 | |||
Diluted | 3,498,899 | 3,496,202 | |||
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in (Prepared by Management) (Unaudited) | |||||
Three Months Ended November 30, 2023 | Three Months Ended November 30, 2022 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income (loss) | $ | 1,291,541 | $ | (73,760) | |
Items not involving an outlay of cash: | |||||
Depreciation and amortization | 97,903 | 111,536 | |||
Stock-based compensation expense | - | 23,303 | |||
Gain on sale of property, plant and equipment | (89,655) | ||||
Write-down of intangible assets | 21,790 | ||||
Deferred income taxes | 90,813 | (20,002) | |||
Changes in non-cash working capital items: | |||||
Decrease in accounts receivable | 2,269,494 | 1,954,249 | |||
Decrease (increase) in inventory | 825,631 | (1,370,146) | |||
Decrease in prepaid expenses | 17,430 | 488,461 | |||
Decrease in prepaid income taxes | - | 412 | |||
(Decrease) in accounts payable and accrued liabilities | (95,032) | (419,811) | |||
Increase in income taxes payable | 202,116 | - | |||
Net cash provided by (used by) operating activities | 4,632,031 | 694,242 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Proceeds on sale of property, plant and equipment | 101,700 | - | |||
Purchase of property, plant and equipment | - | (36,223) | |||
Net cash provided by (used in) investing activities | 101,700 | (36,223) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
(Repayment of) proceeds from bank indebtedness | (1,259,259) | 600,000 | |||
Net cash (used) provided by financing activities | (1,259,259) | 600,000 | |||
Net increase in cash | 3,474,472 | 1,258,019 | |||
Cash, beginning of period | 83,696 | 484,463 | |||
Cash, end of period | $ | 3,558,168 | $ | 1,742,482 | |
Contact: Chad Summers, President & CEO, (503) 647-0110
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SOURCE Jewett-Cameron Trading Company Ltd.
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