Jewett-Cameron Announces 1st Quarter Financial Results

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Jan 14, 2020, 16:35 ET

NORTH PLAINS, Ore., Jan. 14, 2020 /PRNewswire/ -- Jewett-Cameron Trading Company Ltd. (NASDAQ: JCTCF) today reported financial results for the first quarter of fiscal 2020 ended November 30, 2019.

Sales for the first quarter of fiscal 2020 totaled $7.1 million compared to sales of $9.1 million for the first quarter of fiscal 2019. Net loss for the current quarter was ($6,621), or ($0.00) per share, compared to net income of $349,694, or $0.08 per share, in the year-ago quarter.

"Several of our major accounts postponed their expected purchases during the quarter," said CEO Charlie Hopewell. "The delay may be related to the timing of reduced tariffs on some of our products, as we received notice during the quarter that a number of our metal products imported from China have been reclassified and are no longer subject to the 25% tariff. During the quarter, we also continued to invest in our infrastructure while rationalizing our product offerings by deciding to discontinue our involvement in Industrial Tools through the closure of our MSI-Pro Division. Although all these changes come with initial costs, we believe they will help to better position the Company for the future."

As of November 30, 2019, the Company's cash position was approximately $8.97 million, and there was no borrowing against its $3.0 million line of credit. The Company has also continued to use its excess cash to repurchase and cancel common shares. Subsequent to the end of the fiscal period, the Company privately repurchased for cancelation a total of 490,120 common shares from two large shareholders. The shares were repurchased by the Company at a price of $7.89 per share, calculated as the Volume Weighted Average Price (VWAP) of all the shares traded on NASDAQ during the first quarter of fiscal 2020. The total cost of the share repurchases was $3,867,047. The Company has historically utilized its cash position by implementing share repurchase programs as an effective method of enhancing shareholder value, and the Board of Directors will consider implementing new share repurchase plans in the future.

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, Animal House and AKC licensed products in the expanding pet market; fencing products under the Adjust-A-Gates, Fit-Right, Perimeter Patrol, and LIFETIME POST™ systems brands; Early Start, Spring Gardner, and Weatherguard for greenhouses; and TrueShade for patio umbrellas, furniture covers and canopies. 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)

	November 30, 2019		August 31, 2019

ASSETS

Current assets
Cash and cash equivalents	$	8,969,249	$	9,652,310
Accounts receivable, net of allowance of $Nil (August 31, 2019 - $Nil)		2,164,026		2,835,952
Inventory, net of allowance of $165,000 (August 31, 2019 - $119,357)		7,280,126		6,377,805
Note receivable		997		1,197
Prepaid expenses		568,815		393,539
Prepaid income taxes		201,956		223,420

Total current assets		19,185,169		19,484,223

Property, plant and equipment, net		2,708,144		2,727,406

Intangible assets, net		2,912		3,048

Total assets	$	21,896,225	$	22,214,677


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable	$	238,133	$	410,027
Accrued liabilities		1,186,744		1,312,580

Total current liabilities		1,424,877		1,722,607

Deferred tax liability		47,103		61,204

Total liabilities		1,471,980		1,783,811

Stockholders' equity
Capital stock
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
3,971,282 common shares (August 31, 2019 – 3,971,282)		936,903		936,903
Additional paid-in capital		618,707		618,707
Retained earnings		18,868,635		18,875,256

Total stockholders' equity		20,424,245		20,430,866

Total liabilities and stockholders' equity	$	21,896,225	$	22,214,677

JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)

	Three Months Ended November 30, 2019		Three Months Ended November 30, 2018

SALES	$	7,055,178	$	9,066,100

COST OF SALES		5,006,835		6,757,014

GROSS PROFIT		2,048,343		2,309,086

OPERATING EXPENSES
Selling, general and administrative expenses		649,010		556,148
Depreciation and amortization		48,148		50,870
Wages and employee benefits		1,362,059		1,223,059

		2,059,217		1,830,077

Income from continuing operations		(10,874)		479,009

OTHER ITEMS
Interest and other income		11,615		17,151

Income before income taxes		741		496,160

Income tax expense		(7,362)		(146,466)

Net (loss) income	$	(6,621)	$	349,694

Basic earnings per common share	$	(0.00)	$	0.08

Diluted earnings per common share	$	(0.00)	$	0.08

Weighted average number of common shares outstanding:
Basic		3,971,282		4,256,361
Diluted		3,971,282		4,256,361

JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)

	Three Months Ended November 30,		Three Months Ended November 30,
	2019		2018

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(6,621)	$	349,694
Items not involving an outlay of cash:
Depreciation and amortization		48,148		50,870
Deferred income taxes		(14,101)		4,826

Changes in non-cash working capital items:
Decrease (increase) in accounts receivable		671,926		417,942
(Increase) in inventory		(902,321)		(1,121,813)
Decrease in note receivable		200		1,903
(Increase) in prepaid expenses		(175,276)		(157,361)
Increase (decrease) in accounts payable and accrued liabilities		(297,730)		536,032
Decrease in prepaid income taxes		21,464		114,310
Increase in income taxes payable		-		27,330

Net cash provided by (used by) operating activities		(654,311)		223,733

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(28,750)		-

Net cash used in investing activities		(28,750)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock		-		(893,376)

Net cash used in financing activities		-		(893,376)

Net decrease in cash		(683,061)		(669,643)

Cash, beginning of period		9,652,310		6,097,463

Cash, end of period	$	8,969,249	$	5,427,820