NORTH PLAINS, Ore., Oct. 30 /CNW/ -- Jewett-Cameron Trading Company Ltd. (Nasdaq: JCTCF; TSX: JCT) today reported financial results for the fourth quarter and 12 months ended August 31, 2007.
Sales for the fourth quarter of 2007 totaled $17.7 million compared to sales of $18.4 million for the fourth quarter of 2006. The company reported net income of $929 thousand or $.39 per diluted share compared to net income of $610 thousand or $.26 per diluted share in the same period a year ago.
For the 12 months and fiscal year ended August 31, 2007 Jewett-Cameron reported sales of $70.5 million compared to $76.1 million for the same period a year ago. Net income for the 12 months of fiscal 2007 was $2,295 thousand or $.96 per diluted share compared to net income of $2,339 thousand or $1.02 per diluted share in the prior fiscal year.
Fourth Quarter
Earnings in the fourth quarter of 2007 include a number of items that relate to prior periods. One particularly large item that increased reported income in the quarter is an accrual of a rebate from a supplier that relates to business done over the entire fiscal year. Other items that increased income include the reversal of prior over-accruals for a number of different expenses, which was partially offset by an inventory write-down that was taken in the fourth quarter. The net effect of these unusual items was an increase in earnings of $.10 per diluted share. Diluted earnings per share for the quarter without these items were $.29 compared with $.26, which was reported for the fourth quarter a year ago.
In spite of lower sales in the fourth quarter compared to the same period a year ago profitability improved. This is based primarily on a change in sales mix that reflects the rapid growth in sales of specialty metal products, which have a much higher gross margin than most of the company's other sales.
Year
Reported results for all of 2007 include several items that relate to the prior year. These items are the reversal of an inventory reserve that was booked in 2006 and subsequently reversed in the first quarter of 2007, the booking of rebates from a supplier in the second and third quarters of 2007 that relate to business done in 2006, and the reversal of another sizable accrued expense in the fourth quarter of 2007 that was booked in 2006 and subsequently determined to not be needed. The effect of these items was an increase in earnings of $.11 per diluted share in 2007, and earnings without these items were $.85 per diluted share.
Reported results for 2006 include a one-time gain from the sale of the company's distribution center in Utah, which alone contributed $.17 to diluted earnings per share. Also, 2006 results include a rebate from a supplier that relates to business done in 2005. Therefore, if these items are excluded from earnings for 2006, and the items that got reflected in 2007 that really relate to 2006 are shifted back to 2006, then earnings for 2006 were $.96 per diluted share.
The decline in adjusted earnings from $.96 per diluted earnings per share in 2006 to $.85 in 2007 primarily reflects the significantly lower earnings in our industrial wood segment, which was only partially offset by improved results in our lawn, garden and pet segment.
Outlook
In the first two quarters of the new fiscal year earnings per share should be lower than in the final two quarters of the year just ended. This would be a reflection of a seasonal slowdown in our lawn, garden and pet segment. However, based particularly on positive sales trends for our specialty metal products we expect 2008 to be a very good year. It could possibly be a record year in terms of earnings.
CEO Comment
"We view the fourth quarter as a satisfying conclusion to a good year and are optimistic about the outlook for the coming year," said Don Boone, CEO of Jewett-Cameron. "Also, a significant transformation is taking place at Jewett-Cameron as specialty metal products like dog kennels, our proprietary gate support system, and perimeter fencing continue to grow in total sales and become a bigger part of our sales mix. Investors may still tend to view us as a lumber or wood products wholesaler, but this characterization is becoming less accurate. Specialty metal products have grown from about 14% of total company sales in 2006 to about 21% in 2007, and in 2008 these products could be around 30% of total sales. This is a very important and positive trend, since metal products have a much higher gross margin than other products that the company sells."
Mr. Boone also noted, "It is gratifying that our balance sheet is very strong relative to the size of the company. In fact our financial condition is as strong as it has ever been."
Stock Split
At Jewett-Cameron's annual meeting, which was held on March 9, 2007, shareholders approved a three for two stock split, which was distributed on or about March 23, 2007 to holders of record on March 19, 2007. The stock started trading on a post-split basis on March 15, 2007, and per share financial results have been restated to reflect this stock split.
About Jewett-Cameron Trading Company Ltd.
Jewett-Cameron Trading Company is a holding company that operates through subsidiary companies as follows. Jewett-Cameron Lumber Corporation's business consists of warehouse distribution and direct sales of wood products and specialty metal products to home centers and other retailers. Greenwood Products is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries. MSI-PRO is an importer and distributor of pneumatic air tools, industrial clamps, and the Avenger Products line of sawblades and other products. Jewett-Cameron Seed Company is a processor and distributor of agricultural seeds. The area of most significant growth within Jewett-Cameron is the manufacture and distribution of specialty metal products like dog kennels, gate support systems, and perimeter fencing.
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 erroneous and are subject to certain risks, uncertainties, 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 STATEMENTS OF OPERATIONS
Three Month Periods Ended Twelve Month Periods Ended
August 31, August 31,
2007 2006 2007 2006
SALES $17,740,605 $18,365,241 $70,515,596 $76,096,037
COST OF SALES 14,110,584 15,532,434 58,770,323 64,767,599
GROSS PROFIT 3,630,021 2,832,807 11,745,273 11,328,438
OPERATING EXPENSES
Selling, general
and administrative
expenses 646,514 454,419 2,925,274 2,727,164
Depreciation and
amortization 81,334 71,654 315,302 286,434
Wages and employee
benefits 1,322,665 1,375,036 4,479,674 5,112,290
2,050,513 1,901,109 7,720,250 8,125,888
Income from operations 1,579,508 931,698 4,025,023 3,202,550
OTHER ITEMS
Gain on sale of
property, plant and
equipment - - 6,787 599,825
Interest and other income - 14,314 - 74,749
Interest expense (43,860) (44,111) (234,589) (211,604)
(43,860) (29,797) (227,802) 462,970
Income before income taxes 1,535,648 901,901 3,797,221 3,665,520
Income taxes 606,921 291,800 1,502,366 1,326,800
Net income $928,727 $610,101 $ 2,294,855 $2,338,720
Basic earnings per common share $.39 $.26 $.96 $ 1.02
Diluted earnings per common share $.39 $.26 $.96 $ 1.02
Weighted average number of common shares outstanding: Basic 2,381,613 2,336,202 2,378,381 2,297,172 Diluted 2,384,964 2,336,202 2,379,085 2,297,172
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED BALANCE SHEETS
August 31, August 31,
2007 2006
ASSETS
Current assets Cash and cash equivalents $257,131 $146,810 Accounts receivable, net of allowances of $15,396 (August 31, 2006-$0) 6,445,284 6,822,197 Inventory 10,878,543 8,750,861 Prepaid expenses 202,155 139,936 Note receivable - 4,000
Total current assets 17,783,113 15,863,804
Property, plant and equipment, net 2,033,671 2,217,756
Intangible assets, net 815,132 101
Deferred income taxes 119,700 142,900
Total assets $20,751,616 $18,224,561
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Bank indebtedness $1,059 $- Account payable 2,106,051 2,514,801 Accrued liabilities 1,424,610 1,537,290 Accrued income taxes 173,757 40,871 Current portion of long term liabilities 363,896 59,432
Total current liabilities 4,069,373 4,152,394
Long term liabilities Promissory note 2,018,046 2,081,963 Note payable 300,000 -
Total long term liabilities 2,318,046 2,081,963
Total liabilities 6,387,419 6,234,357
Contingent liabilities and commitments
Stockholders' equity Capital stock Authorized 20,000,000 common shares, without par value 10,000,000 preferred shares, without par value Issued 2,384,792 common shares (August 31, 2006 - 2,377,292) 2,200,014 2,138,468 Additional paid-in capital 600,804 583,211 Retained earnings 11,563,379 9,268,525
Total stockholders' equity 14,364,197 11,990,204
Total liabilities and stockholders' equity $20,751,616 $18,224,561
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Month
Periods Ended
August 31
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES Net income $2,294,855 $ 2,338,720 Items not involving an outlay of cash: Depreciation and amortization 315,302 286,434 Gain on sale of property, plant and equipment (6,787) (599,825) Deferred income taxes 23,200 34,200 Loss on write-off of note receivable 4,000 - Stock based compensation expense 26,389 - Changes in non-cash working capital items: (Increase) decrease in accounts receivable 376,913 (420,432) (Increase) decrease in inventory (2,127,682) (976,448) (Increase) decrease in prepaid expenses (62,219) (85,245) Increase (decrease) in accounts payable and accrued liabilities (521,429) 652,992 Increase (decrease) in accrued income taxes 132,886 (310,126)
Net cash provided by operating activities 455,428 920,270
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (repayment) of bank indebtedness 1,059 (2,077,063) Issuance of capital stock for cash 52,750 137,364 Note payable 600,000 - Promissory note (59,453) (55,684)
Net cash provided by (used in) financing activities 594,356 (1,995,383)
CASH FLOWS FROM INVESTING ACTIVITIES Repayment of note receivable - 34,238 Purchase of property, plant and equipment (73,550) (82,259) Purchase of intangible assets and other (872,700) - Proceeds on sale of property, plant and equipment 6,787 660,000
Net cash provided by (used in) investing activities (939,463) 611,979
Net increase in cash and cash equivalents 110,321 (463,134)
Cash and cash equivalents, beginning of period 146,810 609,944
Cash and cash equivalents, end of period $257,131 $146,810
JEWETT-CAMERON TRADING COMPANY LTD. SEGMENT INFORMATION
Following is a summary of segment information for the twelve months ended August 31:
2007 2006
Sales to unaffiliated customers:
Industrial wood products $ 41,172,163 $49,127,586
Lawn, garden, pet and other 21,352,384 20,409,383
Seed processing and sales 6,984,412 5,626,985
Industrial tools 1,006,637 932,083
$ 70,515,596 $76,096,037
Income (loss) from operations:
Industrial wood products $1,136,948 $ 1,704,006
Lawn, garden, pet and other 2,741,985 1,484,296
Seed processing and sales 183,991 118,565
Industrial tools 78,896 33,216
Unallocated overhead (116,797) (137,533)
$4,025,023 $ 3,202,550
Contact: Don Boone, President & CEO, (503) 647-0110
