JEWETT CAMERON TRADING CO LTD
For the period ended Nov 30, 2024. Filed Jan 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 30, 2024 · Filed Jan 14, 2025
JCTC$2.85-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-31; filed 2024-07-15.
0001079973-24-001053
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-30; filed 2025-01-14.
0001079973-25-000072
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 134 current paragraphs.
33 unchanged; 27 reworded; 73 added; 42 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (73)
Current report
Business Description
Current report
We are committed to improving the lives of professionals and do-it-yourselfers with innovative products that enrich outdoor spaces in their quality, performance, and ease to work with.
Current report
Pet, Fencing and Other
Current report
Corporate and administrative services
Current report
Pet, Fencing and Other Operating Segment
Current report
We have concentrated on building a customer base for Pet, Fencing and our sustainable related products. Management believes this market is less sensitive to downturns in the U.S. economy than the market for new home construction as its products serve both new and existing home and pet owners. However, the home improvement business is seasonal, with higher levels of sales occurring between February and August. Inventory buildup occurs until the start of the season in February and then gradually declines to seasonal low levels at the end of the summer.
Current report
Our wood products, distributed through JCC, are not unique and are available from multiple suppliers and retail outlets. However, the metal products that JCC manufactures and distributes may be somewhat differentiated from similar products available from other suppliers. We have been successful in garnering key patents and trademarks on multiple products that assist their ability to continue to differentiate based on design and functionality.
Current report
We own the patents and manufacturing rights connected with the Adjust-A-Gate® and Fit-Right® products, which are the gate support systems for wood, vinyl, chain link, and composite fences, in addition to our trade secret industry practices and well-known trademarked brands. We believe the ownership of these patents and trademarks is an important competitive advantage for these and certain other products. We completed our purchase of the full global trademark rights for Adjust-A-Gate® and filed its registration with the US Patent and Trademark Office in February 2023. As of the close of fiscal 2024, the Company owns 7 US Patents and 1 patent application pending in the US, CA, and MX pertaining to its fencing products.
Current report
Backlog orders have typically not been a factor in this business as customers may place firm priced orders for products for shipments to take place three to four months in the future which gives us time to order, manufacture and receive the goods at our warehouse in time to fulfil the customer’s order.
Current report
Industrial Wood Products - Greenwood
Current report
Greenwood is a wholesale distributor of a variety of specialty wood products. Current products are focused on the transportation industry. Greenwood’s total sales for fiscal 2024 and 2023 were 8% and 5%, respectively, of total Company sales.
Current report
The primary market in which Greenwood competes has decreased in economic sensitivity as users are incorporating products into the municipal and mass transit transportation sectors. However, these markets sustained some contractions in recent years due to COVID-19 as work shifted from offices to homes, and many individuals utilized public transit less due to concerns over exposure. In addition, this segment is prone to disruption of supply chain support which can impact other commodities outside of those specific to the disruption.
Current report
Greenwood utilizes contract manufacturers to supply its products. Inventory is maintained at non-owned warehouses and wood treating facilities throughout the United States and is primarily shipped to customers on a just-in-time basis. Inventory is generally not purchased on a speculative basis in anticipation of price changes as we order the products from the manufacturers and warehouses once a customer places an order with us.
Current report
Greenwood has no significant backlog of orders.
Current report
Seed Processing and Sales - JCSC
Current report
JCSC operated out of a Company-owned 11.6 acre facility located adjacent to North Plains, Oregon. JCSC processed and distributed agricultural seed. Most of this segment’s sales came from selling seed to distributors with a lesser amount of sales derived from cleaning seed. Sales of seed has seasonality, but it is most affected by weather patterns in multiple parts of the United States that utilize cyclical planting. The annual weather plays an important part in year-to-year sales volatility and specific crop demand.
Current report
We ended regular operations at JCSC effective August 31, 2023 and have sold all of our remaining seed inventory and are working to sell the remaining JCSC equipment. Seed storage operations continued through July, 2024.
Current report
In July 2024, we listed the JCSC property for sale or lease. The combined size of the buildings is approximately 109,500 square feet. One of the buildings is specialized for the seed industry, while most are metal warehouse buildings with power, allowing a wide array of possible uses. The property is currently zoned “Rural Industrial” (RIND), which allows for use of the existing property, or development of the site, as approved by Washington County. We are exploring the potential to re-zone the property, or revise the existing code, to expand the list of permitted uses. The listed sale price of the property is $9,000,000. This is the current asking price, and there is no guarantee the property will sell for this amount. If we are able to complete a sale, the net proceeds will be reduced by brokers’ commissions, expenses related to the sale, and taxes.
Current report
Corporate and Administrative Services – JC USA
Current report
Company Products
Current report
The Company’s mission is to improve the lives of professionals and do-it-yourselfers with innovative products that enrich outdoor spaces. We design, source, commercialize and distribute our products. Many are patent protected and all are well crafted for their quality, performance, and ease to work with.
Current report
The Industrial Wood Products segment is conducted by Greenwood, a processor and distributor that operates out of the same facilities in North Plains, Oregon. Greenwood contracts with custom manufacturers for its products. Inventory is maintained at non-owned warehouses and wood treating facilities throughout the United States and is primarily shipped to customers on a just-in-time basis.
Current report
Fencing Products
Current report
Our fencing business crafts durable, functional fencing solutions that bolster security, privacy, and beauty. Our primary products include:
Current report
Pet Products
Current report
Our Lucky Dog® brand is dedicated to keeping pets safe and happy with exceptional quality, long-lasting products that put your pet first. Our primary pet products are:
Current report
Sustainable Products
Current report
Our newest product category is Sustainable and Post-Consumer Recycled (“PCR”) bag products. Sold under the MyEcoWorld® brand, it is making a tangible, positive difference to the planet by working to reduce conventional single-use plastic in our daily lives.
Current report
We offer two types of bag products. The Compostable bags are made with 30% corn. The PCR Products are certified to the Global Recycled Standard (GRS) to contain recycled material that has been independently verified at each stage of the supply chain, from the source to the final product, and cost less than compostable bags.
Current report
Our primary Sustainable Products are:
Current report
Industrial Wood Products
Current report
Greenwood Products specializes in engineering advanced noise and vibration reduction panels for transit buses, motor coaches, light rail cars, and boats. Our dB-Ply® proprietary acoustical panel is a cost-effective product designed to reduce vibration and sound transmission to meet mandated interior noise requirements. Greenwood’s other products include durable, high-performance structural panels tailored for a wide range of industrial applications, and Jumbo Concrete Forms designed to reduce installation time and lower job-site labor costs.
Current report
Seed Segment
Current report
During fiscal 2024, we engaged suppliers in countries outside of China, including Bangladesh, Vietnam, Malaysia, Taiwan, and Canada. Products manufactured in and imported from these countries are not subject to the China-specific tariffs, but may be subject to other duties and fees that are typically much lower than the current 25% tariff on Chinese manufactured metal products.
Current report
The incoming US Presidential administration has stated its intention to impose new or increased tariff rates on imported goods from a number of countries, including China and Canada. The details of these tariffs, including which countries, which products would be included, the new rates, and the potential timing, are currently unknown.
Current report
During the first quarter, we continued the implementation of our strategic plan to increase our sales, improve operational efficiency to lower our costs, and monetize our surplus assets, with the goal to improve our profitability.
Current report
The rollout of our new in-store displays for our Lifetime Steel Posts® (“LTP”) and the expansion of our existing Adjust-A-Gate® display units continues on schedule. At the end of August, our LTP displays were in 100 stores. During the first quarter, we ramped up the roll out and nearly doubled our in-store LTP display units to almost 200 installations as of the end of November 2024. This expansion of display units drove a 19% increase in our metal fence product sales in this quarter compared to the first quarter of fiscal 2024. These in-aisle display units are positioned adjacent to the lumber bays, which may result in additional sales of complementary wood products. Our wood product sales rose 4% in this quarter vs. the comparable quarter of the prior year. These efforts to expand our fence product displayers in stores aligns with the seasonally high fence installations during the Spring and Summer months, and is expected to have a positive impact on our sales for in the second half of fiscal 2025.
Current report
To help us expand and maintain these display units, we engaged Continental Sales & Marketing, Inc. (“CSM”) in October 2024. CSM is a nationally recognized, multifaceted, strategic business partner with over 49 years of experience with national and regional home improvement retailers. In addition to capitalizing on their deep distribution relationships with retailers across the United States, CSM will also help us manage the installed units and the expected product reorders to ensure the in-store displays are well-stocked and inventory is available for consumers. Each Lifetime Steel Post® display contains 96 posts and each Adjust-A-Gate® display contains 20 units and 4 drop rods kits. A typical fence project may contain 1 or 2 gates and upwards of 24 or more posts. Each display unit will require replenishment throughout the year, which is expected to provide increased reorder demand for each product. CSM will also work to increase the online presence of our other products through our retail partners, including key national and regional home improvement retailers, which will provide additional visibility and sales opportunities to expand distribution of our various product lines.
Current report
The development of new products and upgrading and improving our existing products is an important component of our strategic plan. In December 2024, we launched our innovative new Adjust-A-Gate® Unlimited. The Unlimited is a complete gate kit that features a low profile, corner bracket solution that allows for fully adjustable gate designs that provides both professionals and DIYers with greater control to create gates tailored to their specific needs. The kit supports both horizontal and vertical gate designs and accommodates sizes up to 72 inches high and 84 inches wide with patented anti-sag technology that ensures gates stay straight and secure over time. The Adjust-A-Gate® Unlimited is sold as an all-in-one complete integrated system at a competitive price point and does not require the consumer to buy any additional parts such as latches, hinges, or other components. Adjust-A-Gate® Unlimited is the first of five new and enhanced products set to launch over the next 12 months. We are committed to continuing to innovate by improving and expanding our existing product lines in addition to adding new products that solve problems, meet unmet needs, and enrich outdoor spaces.
Current report
Demand for high performing sustainable products is growing as consumers desire high quality alternatives to disposable single-use plastics combined with bans of traditional plastics being legislated throughout the United States. Our MyEcoWorld® sustainable and Post-Consumer Recycled (PCR) bags continue to gain traction in the marketplace. MyEcoWorld® compostable bin liners and pet waste bags are building sales online and being scheduled for in-store placement at multiple grocery chains during calendar 2025. Our recently launched lower-cost PCR pet waste bags have had initial successful sales internationally.
Showing the first 40 of 73 passages. Open the source sections for the rest.
Removed paragraphs (42)
Previous report
Lawn, garden, pet and other
Previous report
Corporate and administration
Previous report
The industrial wood products segment reflects the business conducted by Greenwood Products, Inc. (Greenwood). Greenwood is a processor and distributor of industrial wood products. A major product category is treated plywood that is sold primarily to the transportation industry, including the municipal and mass transit transportation sectors.
Previous report
These new tariffs were temporarily reduced on many of the Company’s imported products in September 2019 under a deemed one-year exemption. The 25% tariff rate was restored on the Company’s products in September 2020 when the exemption expired.
Previous report
Although we were challenged with changes to the economic and business climate in the 3 rd quarter, we continue to successfully advance in our efforts to improve our operations, broaden our customer base, and sharpen our focus on our core products. This focus includes the aggressive expansion of a major in-store product placement campaign for several of our key fence products in the 4 th quarter into fiscal 2025. This program signifies an important advance in our marketing programs as we work to increase our visibility and brand recognition with consumers.
Previous report
Difficult economic conditions continued to negatively impact our operations during the 3 rd quarter, which were amplified with resurgent challenges and costs within the international supply chain. Stubbornly high inflation continues to restrain consumer spending, particularly on home improvement and pet products. Unseasonably cold and wet weather in our important Western US markets curtailed consumer spending on outdoor products during the 3 rd quarter.
Previous report
In our fencing category, we are enhancing the visibility of our key products with new in-store displays. These in-aisle display units are positioned directly beside the wood racks for greater visibility of key products which increases sales of the items and improves consumer’s choices. Since their recent initial debut in select stores, these displays have both increased our visibility and reinforced our message of quality and functionality to the consumer. We have also increased our support to our customers around these display units to manage and maintain product availability and ensure timely replenishment to prevent out of stock. Displays are rolling out to many more stores in the 4 th quarter, and we are building on this momentum by adding in-store displays for some of our other fencing products into fiscal 2025.
Previous report
Our lumber supply agreement with a major customer continues to perform well. Currently, there is a significant shortage of Western Red Cedar due to supply issues. To make up the shortfall, we have successfully shifted some of our supply to high-quality alternatives, including Sugi Cedar. Sugi fencing sells for a lower price than Western Red Cedar which negatively affects our margins. Demand from consumers may also be dampened in the 4 th quarter due to their lack of familiarity with this alternative product.
Previous report
We are also expanding our sales channels and adding new customers throughout North America. The addition of a number of new Canadian customers this year has more than doubled our sales there in the current 9 month period compared to the same period of fiscal 2023. In Mexico, we recently shipped our initial container of our MyEcoWorld Post-Consumer Recycled plastic pet poop bags to customers there. This product is an important alternative to traditional plastic bags, and the shipment is a significant milestone for this product.
Previous report
Supply chain issues have returned which are having an effect on our inventory availability. Shipping around the globe has been severely affected by shipping route diversions caused by conflict in the Red Sea and low water levels in the Panama Canal. As a result, many scheduled sailings have been delayed or cancelled, and container availability has been curtailed. A number of our recent supply orders have been delayed by these late and cancelled sailings from Asia. We are now suffering some inventory shortages and unavailability of certain products which is resulting in some missed sales and back orders awaiting container arrivals. In addition to the significant delays, the costs of ocean shipping have soared since Mid-May 2024. On May 1, 2024, new freight contracts became active and container prices quickly doubled, with the rates increasing every two weeks since then. We have notified our customers of the shipping delays and higher costs which we cannot fully absorb. Therefore, we will be temporarily increasing certain of our product prices. These price increases may reduce our sales as some of our customers may be unwilling to purchase the full amount of their usual orders at these higher prices and instead may wait to see if shipping costs fall later in 2024. Due to these supply chain issues and the higher shipping costs, we expect a negative effect on sales and margins during the fourth quarter and into fiscal 2025.
Previous report
Our margins and financial results in the 3rd quarter were negatively affected by the clearance of some older higher cost lumber, and a one-time inventory write-down of $110,293 for the liquidation of all of our remaining pet inventory located in Europe. We are continuing to sell through some of the higher cost inventory we purchased during the prior high-cost logistics period. Some of our pet products continue to sell slowly as the overall pet supply market remains depressed. However, there are some signs that the pet market in the US may have bottomed and may begin to improve in the second half of calendar 2024 into calendar 2025 if the supply chain issues do not continue to worsen.
Previous report
Our inventory as of the end of the 3 rd quarter was approximately $13.47 million compared to $17.58 million as of the end of the 2 nd quarter and $20.53 million at the end of fiscal 2023 Q3. We are continuing our efforts to concentrate on our core lines with new marketing and sales efforts, and adding new and innovative complementary products. We have engaged new suppliers in several countries outside of China. We arenow validating the processes and quality of the products from these suppliers that will complement our existing core products. Production and shipping of products will commence soon. Besides diversifying our supplier base, we expect to reduce our costs on these products by bypassing the China-specific US product tariffs.
Previous report
We successfully settled the arbitration we filed against one of our former distributors in 2021 for breach of a distribution agreement during the first quarter of fiscal 2024. We received a one-time cash payment of $2,450,000 in October under the settlement agreement. This payment covered our substantial legal fees and some of our losses due to the breach. We are pleased to have settled the case and that we will no longer have to expend time and money pursuing this case. Our costs to pursue this action have been sizeable and reduced our income from operations accordingly. Even though the costs in this case were material, we believe it is critical to defend our valuable intellectual property and will take action against any future infringements of our patents, trademarks and contractual agreements.
Previous report
Our current focus remains growing our core product lines of fencing, Lucky Dog® brand pet containment products, and sustainable bags under the MyEcoWorld® brand. Our efforts are directed to growing our sales of both existing and new complementary products to our primary customers. We are also expanding our sales channels through the addition of new customers in our primary home improvement markets while increasing our marketing and sales efforts in several additional sectors in North America that we have identified as favorable fits for our core products. During the 3 rd quarter, we also initiated a strategic refresh of our branding to emphasize Jewett-Cameron’s combination of product quality, innovation and value which will further define our products with our customers and the consumer. We expect to unveil our updated branding and new marketing programs in the near future.
Previous report
For the three months ended May 31, 2024, sales totaled $15,896,017 compared to sales of $18,945,738 for the three months ended May 31, 2023, which is a decrease of $3,049,721, or 16%. Our current sales were negatively impacted by poor weather conditions on the West Coast and new supply issues, including shortages in red cedar fencing.
Previous report
Sales at JCC were $14,957,204 compared to sales of $17,158,549 for the quarter ended May 31, 2023, a decrease of $2,201,345, or 13%. Operating loss for JCC for the quarter ended May 31, 2024 was ($67,000) compared to operating profit of $977,922 for the quarter ended May 31, 2023. Our current results were hurt by the sharp rise in ocean shipping costs and the clearance of some older higher cost lumber inventory. We also incurred a one-time loss of $110,293 for the liquidation of all of our remaining pet inventory located in Europe.
Previous report
Sales at Greenwood for the quarter were $924,767 compared to sales of $989,166 for the three months ended May 31, 2023, which was a decrease of $64,399, or 7%. We are continuing to seek to hire additional brokers as management believes the segment can grow by opening new sales channels and broadening its customer base. For the three months ended May 31, 2024, Greenwood had an operating loss of ($237) compared to an operating profit of $25,460 for the three months ended May 31, 2023.
Previous report
Sales at JCSC were $14,046 compared to sales of $798,023 for the three months ended May 31, 2023. The regular operations at JCSC terminated on December 31, 2023 and no further significant revenue is expected from JCSC. The remaining assets are in the process of disposal before the subsidiary is wound-up. For the quarter ended May 31, 2024, JCSC had a loss from operations of ($6,350) compared to an operating loss of ($46,719) for the quarter ended May 31, 2023.
Previous report
Gross margin for the three months ended May 31, 2024 was 18.6% compared to 23.3% for the three months ended May 31, 2023. Current margins dipped due to higher shipping costs incurred during the period, the one-time sale of certain high-cost lumber inventory, and the liquidation of our remaining pet inventory located in Europe.
Previous report
Operating expenses for the three months ended May 31, 2024 were $2,895,481, which was a decrease of $266,872 from expenses of $3,162,353 in the three months ended May 31, 2023. Wages and employee benefits declined to $1,790,004 from $2,100,825 due to the lower headcount related to the closure of the seed operations. Selling, General and Administrative expenses rose to $1,026,071 from $961,566. Depreciation fell to $79,406 from $99,962. Gain on Sale of Assets was $1,450 compared to $Nil. Interest expense was $1,437 compared to expense of $152,905 due to lower amounts borrowed against the bank line of credit.
Previous report
Nine Months Ended May 31, 2024 and May 31, 2023
Previous report
For the nine months ended May 31, 2024, sales totaled $33,931,050 compared to sales of $39,666,658 for the nine months ended May 31, 2023. This represents a decrease of $5,735,608, or 14%. Consumers are maintaining their cautious outlook and are restraining their discretionary spending, with the home improvement and pet product sectors among the hardest hit. Our sales comparisons were also affected by the shut-down of JCSC, which was closed as of December 31, 2023. Revenues from JCSC were over $1.6 million higher in the nine months ended May 31, 2023 compared to the current nine-month period.
Previous report
Sales at JCC were $30,964,142 for the nine months ended May 31, 2024 compared to sales of $36,029,439 for the nine months ended May 31, 2023, which is a decrease of $5,065,297, or 14%. Revenue from our pet lines remains weak which reflects the current trend in the entire pet product industry. Sales comparisons between the current nine-month period and the year-ago period were also affected by a large one-time order for kennels in last year’s period. For the current nine-month period, JCC had income before income taxes of $384,102 compared to a loss of ($594,192) for the nine months ended May 31, 2023. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.
Previous report
Sales at Greenwood were $2,883,190 for the current nine months compared to sales of $1,928,765 for the nine months ended May 31, 2023. This represents an increase of $954,425, or 49%. Demand for Greenwood’s products from our primary transit operator customers continues to rebound from the lows incurred during the pandemic. For the nine months ended May 31, 2024, Greenwood had operating income of $41,146 compared to an operating loss of ($80,097) for the nine months ended May 31, 2023.
Previous report
Sales at JCSC for the nine months ended May 31, 2024 were $83,718 compared to sales of $1,708,454 for the nine months ended May 31, 2023. The remaining JCSC warehouse, office and infrastructure assets are being marketed for disposal in preparation of the subsidiary being wound-up. JCSC had income before income taxes of $32,242 for the current nine-month period compared to a loss of ($58,048) for the nine months ended May 31, 2023.
Previous report
JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had income before income taxes of $634,257 compared to income before income taxes of $412,394 for the nine months ended May 31, 2023. The results of JC USA are eliminated on consolidation.
Previous report
Gross margin for the nine-month period ended May 31, 2024 was 20.5% compared to 23.2% for the nine months ended May 31, 2023. Current margins dipped due to higher shipping costs incurred during the period, and the one time sale of certain high-cost lumber inventory and the liquidation of the remaining pet product inventory located in Europe.
Previous report
Operating expenses declined to $8,431,989 from expenses of $9,159,478 recorded for the nine months ended May 31, 2023. Selling, General and Administrative expenses increased slightly to $2,941,978 from $2,884,463. Wages and Employee Benefits fell to $5,221,662 from $5,975,438 due to the lower headcount from the closure of the seed operations. Depreciation and amortization declined to $268,349 from $299,577.
Previous report
In September 2023, the Company successfully settled its arbitration case against one of its former distributors for a cash payment of $2,450,000. We accounted for the one-time gain as other income. Even though the costs in this case were material, we believe it is critical to defend our valuable intellectual property and will take action against any future infringements of our patents, trademarks and contractual agreements.
Previous report
In addition to the one-time gain from the successful arbitration, other items recorded in the current nine-month period include a gain on sale of assets of $90,537, which largely is due to the sale of JCSC equipment, and net interest income of $11,527. For the nine months ended May 31, 2023, interest expense totaled ($353,987) which was related to amounts borrowed against our bank line of credit.
Previous report
Net income for the nine months ended May 31, 2024 was $912,257, or $0.26 per basic and diluted share, compared to a net loss for the nine months ended May 31, 2023 of ($310,847), or ($0.09) per basic and diluted share.
Previous report
Cash and cash equivalents totaled $1,054,704, an increase of $971,008 from cash of $83,696 as of August 31, 2023. Accounts receivable, which is based on the timing of sales and collection of payments, rose to $7,408,344 from $5,634,924. Inventory declined to $13,470,934 from $18,339,048. Prepaid expenses, which is largely related to down payments for future inventory purchases, rose by $771,684 to $1,402,472 from $630,788. A number of our orders have been produced but are delayed in China awaiting container space as the current frequency and availability of ocean shipping to North America is severely limited.
Previous report
Current liabilities declined to $3,286,155 from $5,701,276. Bank indebtedness was $Nil as of May 31, 2024 compared to $1,259,259 as of August 31, 2023 as the Company fully repaid its borrowing under the bank line of credit during the current period. Accounts payable declined to $787,563 from $2,181,194, accrued liabilities rose to $2,254,484 from $2,113,194, and income taxes payable rose to $244,108 from $147,629.
Previous report
External sources of liquidity have previously included a line of credit from U.S. Bank. The line was $10,000,000 until February 28, 2024. On February 29, 2024, the line was renewed at the reduced amount of $5,000,000 at the Company’s request. During the first quarter of fiscal 2024, the Company fully repaid the balance borrowed against the line and had the full amount of $5,000,000 available as of May 31, 2024. Borrowing under the line of credit was secured by an assignment of accounts receivable and inventory. Interest was calculated based on the one-month Secured Overnight Financing Rate (SOFR) plus 157 basis points, which as of May 31, 2024 was 6.89% (5.33% + 1.57%). The line with US Bank expired on June 30, 2024. The Company has now established a new $6,000,000 asset-based line of credit with Northrim. Interest is computed at the prime rate plus 4.75%with a floor of 11% and is secured by certain assets of the Company. The agreement expires on June 30, 2025, and there is currently no money borrowed against the Northrim line.
Previous report
During the nine months ended May 31, 2024, the Company issued 5,903 common shares to officers, directors and employees under the Company’s Restricted Share Plan. The value of these shares was $32,064.
Previous report
Beginning in fiscal 2021 and continuing into fiscal 2024, the rising and persistently high inflation rate in both the United States and worldwide has led to a substantial increase in many of the Company’s costs. These include raw materials, energy, manufacturing and transportation/logistical product costs, and many general and administrative costs, including labor.
Previous report
These higher costs have negatively affected the Company’s gross margins. Typically, the Company passes cost increases on to the customer, and is currently raising its product prices as much as the market will bear. Retailers are currently more receptive to such increases than in the past due to a mutual understanding of the current inflationary environment and the objective reasons for such. Since the ability of the Company to pass through all of the current increase in its product costs to its customers are somewhat limited and occur after such costs are first incurred. The recent sudden surge in shipping costs, particularly for ocean freight, have further pressured the Company’s margins and ability to pass on those increased costs to its customers. Therefore, management expects that its gross margins will remain under pressure in fiscal 2024.
Previous report
The increases in interest rates as a result of the higher level of inflation in the US economy has also had a negative effect on the Company’s interest expense paid for its borrowing under its line of credit. The interest rate under the line has risen in conjunction with the increase in the prevailing interest rates and was 6.89% as of May 31, 2024. The Company repaid the remaining amount borrowed under the line in October 2023, and currently has no bank borrowing under its new line of credit established in June 2024.
Previous report
The inability of our third-party manufacturers in China and elsewhere to manufacture or deliver products to us in a timely manner, if it all.
Previous report
Isolation requirements may prevent our employees from being able to report to work or being required to work from home or other off-site location which may prevent us from accomplishing certain functions, including receiving products from our suppliers and fulfilling orders for our customers, which may result in an inability to meet our obligations.
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Reworded paragraphs (27)
Previous wording
These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying consolidated financial statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of May 31, 2024 and August 31, 2023 and its results of operations and cash flows for the three and nine month periods ended May 31, 2024 and 2023 in accordance with U.S. GAAP. Operating results for the three and nine month periods ended May 31, 2024 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2024. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year historically being slower than the final two quarters of the fiscal year.
Current wording
These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying consolidated financial statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of November 30, 2024 and August 31, 2024 and its results of operations and cash flows for the three month periods ended November 30, 2024 and 2023 in accordance with U.S. GAAP. Operating results for the three month period ended November 30, 2024 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2025. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year historically being slower than the final two quarters of the fiscal year.
Previous wording
JC USA Inc. (“JC USA”) is the parent company for the wholly-owned subsidiaries as described above. JC USA provides professional and administrative services, including warehousing, accounting and credit services, to its subsidiary companies.
Current wording
JC USA is the parent company for Greenwood, JCC and JCSC as described above. JC USA operates out of our offices in North Plains, Oregon and provides professional and administrative services, including warehousing, accounting and credit services, to JCTC’s subsidiary companies.
Previous wording
The lawn, garden, pet and other segment reflects the business of Jewett-Cameron Company (JCC), which is a wholesaler of wood products and a manufacturer and distributor of specialty metal products. JCC operates out of a 5.6 acre owned facility located in North Plains, Oregon that includes offices, a warehouse, and a paved yard. This business is a wholesaler, and a manufacturer and distributor of products that include an array of pet enclosures, kennels, and pet welfare and comfort products, proprietary gate support systems, perimeter fencing, greenhouses, and fencing in-fill products made of wood, metal and composites. Examples of the Company’s brands include Lucky Dog®, for pet products; Adjust-A-Gate®, Fit-Right®, Perimeter Patrol®, and Lifetime Post® for gates and fencing; Early Start, Spring Gardner™, Greenline®, and Weatherguard for greenhouses, and MyEcoWorld® for sustainable bag products. JCC uses contract manufacturers to manufacture these products. Some of the products that JCC distributes flow through the Company’s facility in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers, eCommerce partners, on-line direct consumers as well as other retailers.
Current wording
The Fencing, Pet and Other businesses are conducted by JCC, which operates out of a 5.6 acre owned facility located in North Plains, Oregon that includes offices, a warehouse, and a paved yard. JCC uses contract manufacturers to make all products. Some of the products that JCC distributes flow through our distribution center located in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers, eCommerce providers, other retailers, and direct sales to consumers.
Previous wording
The seed processing and sales segment reflects the business of Jewett-Cameron Seed Company (JCSC). JCSC processes and distributes agricultural seed. Most of this segment’s sales come from selling seed to distributors with a lesser amount of sales derived from cleaning seed. JCSC ended all active operations effective December 31, 2023 in preparation of being wound-up.
Current wording
The Company formerly operated agricultural seed processing, distribution and sales through JCSC. Most of this segment’s sales were derived from selling seed to distributors with a lesser amount of sales derived from cleaning seed. During the fiscal year ended August 31, 2023, the Company decided to close its JCSC seed subsidiary effective August 31, 2023. JCSC has now been wound up and all remaining assets have been transferred to JC USA.
Previous wording
The majority of the Company’s metal products are currently manufactured in China and are imported into the United States. The Office of the United States Trade Representative (“USTR”) instituted new tariffs on the importation of a number of products into the United States from China effective September 24, 2018. These new tariffs are a response to what the USTR considers to be certain unfair trade practices by China. The tariffs began at 10%, and subsequently were increased to 25% as of May 10, 2019. A number of the Company’s products manufactured in China have been subject to duties of 25% when imported into the United States.
Current wording
Our metal and other products have historically been mostly manufactured in China and are imported into the United States. The Office of the United States Trade Representative (“USTR”) instituted new tariffs on the importation of a number of products into the United States from China effective September 24, 2018. These new tariffs are a response to what the USTR considers to be certain unfair trade practices by China. The tariffs began at 10%, and subsequently were increased to 25% as of May 10, 2019. A number of our products manufactured in China remain subject to duties of 25% when imported into the United States.
Previous wording
Jewett-Cameron Seed’s active operations ended on schedule on December 31, 2023. The majority of the segment’s equipment has been sold, with the remainder being marketed aggressively for final disposal. JCSC owns 11.7 acres of land and 105,000 square feet of buildings at the site in Hillsboro, Oregon which is one of the fastest growing cities in Oregon. The land is situated at a major interchange immediately adjacent to US Highway 26, which is one of the region’s busiest roadways. The Company is pursuing listing the property for future sale and is actively investigating current and potential alternate zoning from the current rural industrial classification. This would provide interested parties with greater flexibility of development options. There is a high level of interest from the cities immediately adjacent to the property in the potential expansion of their urban growth boundaries and the communities are investigating those potential options. Due to its strategic location, this property would potentially be included within the expanded area. Should such an expansion be approved and/or a rezoning occur, it would likely increase the land’s value and potentially maximize any return we receive for the sale of this surplus asset.
Current wording
Active operations at JCSC ended as of December 31, 2023, and the final seed storage ended in July 2024. With the final closure of the segment, the 11.6 acres of land and 105,000 square feet of buildings were listed for sale at a price of $9,000,000, which is a competitive price based on comparable properties in the area. This is the current asking price, and there is no guarantee the property will sell for this amount. The land is strategically situated on a corner lot at a major interchange immediately adjacent to US Highway 26, which is one of the region’s busiest roadways. The land is currently zoned with a rural industrial classification, but the Company is exploring the potential to expand the list of permitted uses for the property, including a possible re-zoning by the governing authority. A reclassification would provide interested parties with greater flexibility of development options. There is also a high level of interest from the cities immediately adjacent to the property in the potential expansion of their urban growth boundaries, and this property would potentially be included within the expanded area. Should such an expansion be approved and/or a rezoning occur, it would likely increase the land’s value and potentially maximize any return we receive for the sale of this surplus asset.
Previous wording
JC USA is the holding company for the wholly-owned operating subsidiaries. For the quarter ended May 31, 2024, JC USA had income before income taxes of $128,995 compared to operating income of $141,450 for the quarter ended May 31, 2023. The results of JC USA are eliminated on consolidation.
Current wording
JC USA is the holding company for the wholly-owned operating subsidiaries. For the quarter ended November 30, 2024, JC USA had operating income of $108,720 compared to operating income of $212,290 for the quarter ended November 30, 2023. The results of JC USA are eliminated on consolidation.
Previous wording
Income tax recovery for the three months ended May 31, 2024 was $99,254 compared to expense of $363,163 for the three-month period ended May 31, 2023. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect, and the increase in taxes is consistent with the higher income for the current quarter.
Current wording
Loss before income taxes was for the quarter ended November 30, 2024 was ($835,347). Income before income taxes for the quarter ended November 30, 2023 was $1,743,576, which was boosted by the receipt of the arbitration case settlement payment. Income tax recovery in the current quarter was $176,630 compared to income tax expense of ($452,035) in the prior year’s quarter. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.
Previous wording
Net income for the quarter ended May 31, 2024 was $154,862, or $0.04 per basic and diluted share, compared to net income of $734,951, or $0.21 per basic and diluted share, for the quarter ended May 31, 2023.
Current wording
The net loss for the quarter ended November 30, 2024 was ($658,717), or ($0.19) per share, compared to net income of $1,291,541, or $0.37 per share, for the quarter ended November 30, 2023.
Previous wording
We continue to remain focused on restructuring our working capital to provide greater liquidity and flexibility through cash generation. As of May 31, 2024, the Company had working capital of $20,050,299 compared to working capital of $18,987,180 as of August 31, 2023, an increase of $1,063,119.
Current wording
As of November 30, 2024, the Company had working capital of $19,726,137 compared to working capital of $20,548,093 as of August 31, 2024, a decrease of $821,956.
Previous wording
As of May 31, 2024, accounts receivable and inventory represented 89% of current assets and 74% of total assets. As of May 31, 2023, accounts receivable and inventory represented 89% of current assets and 76% of total assets. For the three months ended May 31, 2024, the accounts receivable collection period, or DSO, was 43 compared to 37 for the three months ended May 31, 2023. For the nine-month period ended May 31, 2024, the DSO was 60 compared to 52 for the nine months ended May 31, 2023. Inventory turnover for the three months ended May 31, 2024 was 110 days compared to 138 days for the three months ended May 31, 2023. For the nine months ended May 31, 2023, inventory turnover was 162 days compared to 184 days for the nine months ended May 31, 2023.
Current wording
As of November 30, 2024, accounts receivable and inventory represented 79% of current assets and 66% of total assets compared to 73% of current assets and 61% of total assets as of August 31, 2024.
Previous wording
Our balance sheet remains strong, with a current ratio (current assets divided by current liabilities) of 7.11 as of May 31, 2024. We have no borrowing against our bank line of credit as we were able to fully fund our 3 rd quarter operations and inventory purchases from our cash flow. Our prior bank line of credit expired on June 30, 2024 and a new asset-based line has been established with Northrim Funding Services (“Northrim”). Under the terms of the agreement Northrim will provide short-term operating capital by purchasing the Company’s accounts receivable invoices (“AR invoices”) at a discount below the face value of such invoices. The maximum of AR invoices Northrim will purchase at one time is limited to an amount equal to 80% of the net eligible accounts and an amount equal to 25% of all eligible inventory, but not to exceed funding on inventory of $4,000,000. Furthermore, the purchase of AR invoices is not to exceed $6,000,000. Although the interest rate on the line is higher than we were previously paying, it does provide uswith additional financial flexibility.
Current wording
External sources of liquidity include an asset-based line of credit agreement with Northrim Funding Services (“Northrim”) which we established in fiscal 2024. Under the terms of the agreement, Northrim will provide short-term operating capital by either purchasing the Company’s accounts receivable invoices (“AR invoices”) or as a loan against our inventory position. The maximum amount of AR invoices Northrim will purchase at one time is limited to an amount equal to 80% of the net eligible accounts but is not to exceed $6,000,000. Borrowing against our inventory is computed as an amount equal to 25% of all eligible inventory but is not to exceed $4,000,000. The maximum total draw the Company may borrow under the line is $6,000,000. Interest is computed at the prime rate plus 4.75% with floor of 11%, and is secured by certain or our assets. The line expires on June 30, 2025. There has been no borrowing to date under this line of credit, although we may need to draw against the line during our second fiscal quarter to help fund our usual inventory build prior to our busiest selling season beginning in Spring.
Previous wording
Based on the Company’s current working capital position, combined with the expected timing of accounts receivable and the expectation that a new credit agreement will be established prior to the expiration of the current bank line of credit, the Company is expected to have sufficient liquidity available to meet the Company’s working capital requirements for the remainder of fiscal 2024.
Current wording
Based on the Company’s current working capital position, combined with the expected timing of accounts receivable and the capital available under our Line of Credit, the Company is expected to have sufficient liquidity available to meet the Company’s working capital requirements for the remainder of fiscal 2025.
Previous wording
Our social responsibilities include cultural standards of operations and values which we establish in conjunction with our employees. We regularly provide employees with a corporate engagement survey to benchmark their engagement, satisfaction, and ideas for change. We support educational programs that build the future workforce through active participation in regional and statewide organizations, including the CTE/STEM Employer Coalition and assisting teachers to connect traditional school subjects to practical job site applications. The Company also actively participates in the local community, supported by a Corporate Charitable Giving Charter.
Current wording
Our social responsibilities include cultural standards of operations and values which we establish in conjunction with our employees. We regularly provide employees with a corporate engagement survey to benchmark their engagement, satisfaction, and ideas for change. We support educational programs that build the future workforce through active participation in regional and statewide organizations, including the CTE/STEM Employer Coalition and assisting teachers to connect traditional school subjects to practical job site applications. We also actively participate in the local community, supported by a Corporate Charitable Giving Charter.
Previous wording
As a public company, our processes are outlined and governed by multiple regulations, including Sarbanes-Oxley. Our financial controls are mapped, executed, self-audited as well as regularly audited by outside experts as part of our annual process. We have established risk mitigations that allows for condensed reviews of risks and impacts with our systems in place. An IT Governance Committee aligns execution and security both for ourselves and also for parties with whom we communicate and do business.
Current wording
As a public company, our processes are outlined and governed by multiple regulations, including the Sarbanes-Oxley Act of 2002. Our financial controls are mapped, executed, self-audited as well as regularly audited by outside experts as part of our annual process. We have established risk mitigations that allows for condensed reviews of risks and impacts with our systems in place. An IT Governance Committee aligns execution and security both for ourselves and also for parties with whom we communicate and do business.
Previous wording
For the nine months ended May 31, 2024 our top ten customers represented 95% of our total sales, and our single largest customer was responsible for 39% of our total sales. We would experience a significant decrease in sales and profitability and would have to cut back our operations, if these customers were lost and could not be replaced. Our top ten customers are located in North America and are primarily in the retail home improvement and pet industries.
Current wording
For the fiscal quarter ended November 30, 2024 our top ten customers represented 98% of our total sales, and our single largest customer was responsible for 40% of our total sales. We would experience a significant decrease in sales and profitability and would have to cut back our operations, if these customers were lost and could not be replaced. Our top ten customers are located in North America and are primarily in the retail home improvement and pet industries.
Previous wording
We purchase our products from other vendors and a delay in shipment from these vendors to us could cause significant delays in our delivery to our customers. This could result in a decrease in sales orders to us and we would experience a loss in profitability.
Current wording
We purchase our products from other vendors and a delay in shipment from these vendors to us could cause significant delays in our delivery to our customers. Such disruptions may include adjustments to ocean shipping schedules, labor strikes or other job-related actions by workers within the supply chain, geopolitical unrest, longshoreman or rail strikes, geopolitical unrest, or government actions. This could result in a decrease in sales orders to us and we would experience a loss in profitability.
Previous wording
Since the bulk of our products are supplied from other countries, political actions by either our trading country or our own domestic policy could impact both the availability and cost of our products. Currently, we see this in regard to tariffs being levied on foreign sourced products entering into the United States, including from China. The continuing tariffs by the United States on certain Chinese goods include some of our products that we purchase from suppliers in China. The company has multiple options to assist in mitigating the cost impacts of these government actions. However, we cannot control the duration or depth of such actions which may increase our product costs which would in turn reduce our margins and potentially decrease the competitiveness of our products. These actions could have a negative effect on our business, results of operations, or financial condition.
Current wording
Since the bulk of our products are supplied from other countries, political actions by either our trading country or our own domestic policy could impact both availability and cost of our products. Currently, we see this in regard to tariffs being levied on foreign sourced products entering into the United States, including from China. The continuing tariffs by the United States on certain Chinese goods include some of our products that we purchase from suppliers in China. The possibility of new tariffs being levied on manufactured goods imported into the United States from other countries in addition to China also currently exists. We cannot control the duration or depth of such actions which may increase our product costs which would in turn reduce our margins and potentially decrease the competitiveness of our products. These actions could have a negative effect on our business, results of operations, or financial condition.
Previous wording
We have a new line of credit with Northrim where short-term operating capital will be provided by purchasing the Company’s accounts receivable invoices (“AR invoices”). The maximum of AR invoices Northrim will purchase at one time is limited to an amount equal to 80% of the net eligible accounts and an amount equal to 25% of all eligible inventory, but not to exceed funding on inventory of $4,000,000. Furthermore, the purchase of AR invoices is not to exceed $6,000,000. The maximum draw amount is currently available and the line will expire on June 30, 2025. If we lost access to credit it could negatively affect our ability to acquire inventory to fulfil our customers’ orders and pay our obligations on a timely basis.
Current wording
We have a line of credit with Northrim where short-term operating capital will be provided by purchasing our accounts receivable invoices for up to $6,000,000, or as a loan against our inventory for up to $4,000,000, with the maximum amount we can draw under the line of $6,000,000. The maximum draw amount is currently available, and the line will expire on June 30, 2025. If we lost access to credit, or the borrowing costs exceed the likely benefits of our use of such capital, it could negatively affect our ability to acquire inventory to fulfil our customers’ orders and pay our obligations on a timely basis.
Previous wording
We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our year ended August 31, 2023. Based on this process we did not identify any material weaknesses. Although we believe our internal controls are operating effectively, we cannot guarantee that in the future we will not identify any material weaknesses in connection with this ongoing process.
Current wording
We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our audit of our financial statements for the year ended August 31, 2024. Based on this process we did not identify any material weaknesses or significant deficiencies. Although we believe our internal controls are operating effectively, we cannot guarantee that in the future we will not identify any material weaknesses or significant deficiencies in connection with this ongoing process.
Previous wording
Our business could be negatively affected by an outbreak of an infectious disease due to the consequences of the actions taken by companies and governments to contain and control the virus. These consequences include:
Current wording
Our business could be negatively affected by an outbreak of an infectious disease due to the consequences of the actions taken by companies and governments to contain and control such an outbreak. These consequences include:
Previous wording
The financial impact of such an outbreak is outside our control and is not reasonable to estimate but may be significant. The costs associated with any outbreak may have an adverse impact on our operations and financial condition and not be fully recoverable or adequately covered by insurance.
Current wording
The financial impact of such an outbreak are outside our control and are not reasonable to estimate but may be significant. The costs associated with any outbreak may have an adverse impact on our operations and financial condition and not be fully recoverable or adequately covered by insurance.
Previous wording
Risks Related to Our Common Stock
Current wording
Risks Related to Our Common Shares
Previous wording
We may decide to acquire assets or enter into business combinations, which could be paid for, either wholly or partially with our common stock and if we decide to do this our current shareholders would experience dilution in their percentage of ownership.
Current wording
We may decide to acquire assets or enter into business combinations, which could be paid for, either wholly or partially with our common shares and if we decide to do this our current shareholders would experience dilution in their percentage of ownership.
Previous wording
Our Articles of Incorporation give our Board of Directors the right to enter into any contract without the approval of our shareholders. Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval. If we acquire an asset or enter into a business combination, this could include exchanging a large amount of our common stock, which could dilute the ownership interest of present stockholders.
Current wording
Our Articles of Incorporation give our Board of Directors the right to enter into any contract without the approval of our shareholders. Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval. If we acquire an asset or enter into a business combination, this could include exchanging a large amount of our common shares, which could dilute the ownership interest of present shareholders.
Previous wording
If we raise additional funds by selling more of our stock, the new stock may have rights, preferences or privileges senior to those of the rights of our existing stock. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. The result of this would be a lessening of each present stockholder’s relative percentage interest in our company.
Current wording
If we raise additional funds by selling more of our stock, the new shares may have rights, preferences or privileges senior to those of the rights of our existing shares. If common shares are issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. The result of this would be a lessening of each present stockholder’s relative percentage interest in our company.
Previous wording
The Company’s common shares currently trade within the NASDAQ Capital Market in the United States. The average daily trading volume of our common stock was approximately 5,000 shares on NASDAQ for the fiscal year ended August 31, 2023, and 4,550 for the nine months ended May 31, 2024. With this limited trading volume, investors could find it difficult to purchase or sell our common stock.
Current wording
The Company’s common shares currently trade within the NASDAQ Capital Market in the United States. The average daily trading volume of our common stock was approximately 4,700 shares on NASDAQ for the fiscal year ended August 31, 2024 and 7,500 shares for the fiscal quarter ended November 30, 2024. With this limited trading volume, investors could find it difficult to purchase or sell our common stock or experience significant volatility in the price of our common stock.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the three months ended November 30, 2024, the accounts receivable collection period, or DSO, was 41 days compared to 31 days for the three months ended November 30, 2023. Inventory turnover to the three months ended November 30, 2024 was 160 days compared to 206 days for the three months ended November 30, 2023.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Income tax expense in the current nine-month period was $179,491 compared to income tax recovery in the prior nine-month period was $9,004. The Company estimates income tax expense for the period based on combined federal and state rates that are currently in effect.