Jewett-Cameron Trading Company Ltd.: Jewett-Cameron Announces 2nd Quarter Financial Results

NORTH PLAINS, Ore., April 13, 2023 /PRNewswire/ -- Jewett-Cameron Trading Company Ltd. (NASDAQ: JCTCF) today reported financial results for the second quarter and six month periods of fiscal 2023 ended February 28, 2023 .

Sales for the second quarter of fiscal 2023 were $8.14 million compared to sales of $14.06 million for the second quarter of fiscal 2022. Loss from operations was ($1,210,085) compared to income from operations of $696,740 for the quarter ended February 28, 2022 . Net loss was ($972,038), or ($0.28) per share, compared to net income of $269,820, or $0.08 per share, in the year-ago quarter.

For the six months ended February 28, 2023, sales totaled $20.7 million compared to sales of $27.0 million for the six months ended February 28, 2022 . Loss from operations was ($1,216,883) compared to income from operations of $229,559 for the six months ending in February 28, 2022 . Net loss was ($1,045,798), or ($0.30) per share, compared to a net loss of ($121,322), or ($0.03) per share, for the first six months of fiscal 2022.

"We have had a slow start to our Spring and Summer selling seasons as the extended winter weather across the US has pushed back these seasonal product orders from many of our customers. The current results were also affected by a change in how we record some revenue from a major fencing customer, as many of those sales are expected to be booked in this year's third and fourth quarters instead," said CEO Chad Summers . "Our new MyEcoWorld® sustainable bag products are officially launching in the 3^rd quarter. We are optimistic about this new product line which is less seasonal and, based on our success with our sustainable poop bag product, has the potential to grow into a significant segment of our business over time."

In February 2023, our arbitration case against a former distributor for breach of the distribution agreement was decided in the Company's favor. We are seeking damages and our costs. The monetary award is pending, and the amount of any recovery is currently uncertain.

As of February 28, 2023, the Company's cash position was approximately $268 thousand, and there was $8.5 million borrowed against its $10.0 million line of credit. Subsequent to the end of the period, the Company has drawn an additional $1 million against the line. The Company is currently in discussions with its lender U.S. Bank regarding the possibility of either increasing its existing line of credit or restructuring the existing line into an asset-based lending agreement. No agreement has been reached, and there is no guarantee that there will be any change to the Company's borrowing arrangements. Based on the indications of availability of credit, the timing of accounts receivable, and the seasonality of our sales, the Company believes it will have sufficient working capital available for the remainder of fiscal 2023.

Jewett-Cameron Trading Company is a holding company that, through its subsidiaries, operates out of facilities located in North Plains, Oregon . Jewett-Cameron Company's business consists of the manufacturing and distribution of patented and patent pending specialty metal products, wholesale distribution of wood products, and seed processing and sales. The Company's brands include Lucky Dog®, for pet products; Adjust-A-Gate, Fit-Right®, Perimeter Patrol®, Infinity Euro Fence, and Lifetime Post for gates and fencing; and Early Start, Spring Gardner, Greenline®, and Weatherguard for greenhouses. Additional information about the Company and its products can be found the Company's website at www.jewettcameron.com.

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 U.S. Dollars) (Prepared by Management) (Unaudited)
	February 28, 2023			August 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	268,389		$	484,463
Accounts receivable, net of allowance of $0 (August 31, 2022 - $0)		4,261,256			7,191,646
Inventory, net of allowance of $449,707 (August 31, 2022 - $800,000)		23,079,647			20,632,313
Prepaid expenses		794,566			1,112,575
Prepaid income taxes		208,138			208,963
Total current assets		28,611,996			29,629,960
Property, plant and equipment, net		4,931,022			4,828,420
Intangible assets, net		32,822			33,358
Deferred tax assets		397,990			24,998
Total assets	$	33,973,830		$	34,516,736
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	710,174		$	1,566,047
Bank indebtedness		8,500,000			7,000,000
Accrued liabilities		1,691,501			1,856,039
Total liabilities		10,901,675			10,422,086
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, 2022 - 3,495,342 )		825,468			824,629
Additional paid-in capital		765,055			742,591
Retained earnings		21,481,632			22,527,430
Total stockholders' equity		23,072,155			24,094,650
Total liabilities and stockholders' equity	$	33,973,830		$	34,516,736

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in U.S. Dollars) (Prepared by Management) (Unaudited)
	Three Month Periods to the end of February					Six Month Periods to the end of February
	2023		2022			2023		2022
SALES	$	8,143,421	$	14,060,751		$	20,720,921	$	26,978,475
COST OF SALES		6,222,879		10,636,524			15,940,679		21,089,386
GROSS PROFIT		1,920,542		3,424,227			4,780,242		5,889,089
OPERATING EXPENSES
Selling, general and administrative expenses		1,096,090		684,116			1,922,897		1,672,403
Depreciation and amortization		88,079		84,071			199,615		153,709
Wages and employee benefits		1,946,458		1,959,300			3,874,613		3,833,418
		3,130,627		2,727,487			5,997,125		5,659,530
(Loss) income from operations		(1,210,085)		696,740			(1,216,883)		229,559
OTHER ITEMS
Other income		-		2,000			-		5,000
Interest expense		(114,530)		(30,620)			(201,082)		(50,896)
Accrual for legal claim		-		(300,000)			-		(300,000)
		(114,530)		(328,620)			(201,082)		(345,896)
(Loss) income before income taxes		(1,324,615)		368,120			(1,417,965)		(116,337)
Income tax recovery (expense)		352,577		(98,300)			372,167		(4,985)
Net (loss) income	$	(972,038)	$	269,820		$	(1,045,798)	$	(121,322)
Basic (loss) earnings per common share	$	(0.28)	$	0.08		$	(0.30)	$	(0.03)
Diluted (loss) earnings per common share	$	(0.28)	$	0.08		$	(0.30)	$	(0.03)
Weighted average number of common shares outstanding:
Basic		3,498,899		3,492,842			3,497,543		3,491,969
Diluted		3,498,899		3,492,842			3,497,543		3,491,969

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. Dollars) (Prepared by Management) (Unaudited)
	Six Month Period at the end of February,			Six Month Period at the end of February,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(1,045,798)		$	(121,322)
Items not involving an outlay of cash:
Depreciation and amortization		199,615			153,709
Stock-based compensation expense		23,303			39,386
Deferred income taxes		(372,992)			8,889
Changes in non-cash working capital items:
(Increase) decrease in accounts receivable		2,930,390			(2,050,751)
Increase in inventory		(2,447,334)			(4,238,783)
Decrease (increase) in prepaid expenses		318,009			(254,073)
Increase (decrease) in accounts payable and accrued liabilities		(1,020,411)			591,335
Decrease (increase) in prepaid income taxes		825			(5,247)
Net cash used in operating activities		(1,414,393)			(5,876,857)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(301,681)			(908,401)
Net cash used in investing activities		(301,681)			(908,401)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank indebtedness		1,500,000			6,500,000
Net cash provided by financing activities		1,500,000			6,500,000
Net decrease in cash		(216,074)			(285,258)
Cash, beginning of period		484,463			1,184,313
Cash, end of period	$	268,389		$	899,055

Contact: Chad Summers, President & CEO, [phone]

SOURCE Jewett-Cameron Trading Company Ltd.