NORTH PLAINS, Ore., Jan. 8 /CNW/ -- Jewett-Cameron Trading Company Ltd. (Nasdaq: JCTCF; TSX: JCT) today reported financial results for the three months ended November 30, 2007.
Sales for the first quarter of fiscal 2008 totaled $14.3 million compared to sales of $15.5 million for the first quarter of 2007. In spite of lower sales the company reported an increase in profitability. Net income for the three months ended November 30, 2007 was $374 thousand or $.16 per diluted share compared to net income of $288 thousand or $.12 per diluted share in the same period a year ago. Furthermore, if an inventory reserve reversal, which increased income in the year ago period, is excluded, then net income in that period was $.08 per diluted share. Reflecting this adjustment, earnings per share for the first quarter of this year is double what it was a year ago.
The sales decline from the same period a year ago primarily reflects a relatively large decrease in sales in our industrial wood products segment that was only partially offset by a significant increase in sales in our lawn, garden and pet segment. In spite of lower sales the industrial wood products segment generated improved operating income based on gross margin improvement and operating expense reduction. A sales increase in the lawn, garden and pet segment primarily reflects a significant increase in the sales of specialty metal products along with a moderate increase in wood products sales. In the year ago period operating income in the lawn, garden and pet segment was favorably impacted by the inventory reserve reversal referred to above, and if this item is excluded, operating income in this segment was up significantly compared to a year ago. This is primarily based on the fact that the gross margin on the sale of our specialty metal products is much higher than on wood products sales.
Outlook
Our first quarter results are in line with the outlook that we indicated in our year end earnings press release on October 30, 2007. In that release we disclosed that earnings per share in the first two quarters of what is now the current fiscal year should be lower than in the final two quarters of the prior year, and that this would be a reflection of a seasonal slowdown in our lawn, garden and pet segment.
Consistent with the outlook expressed in our year end press release, we believe that the current fiscal year could be a record year in terms of earnings. Results in the second quarter, which will end on February 29, 2008, will continue to reflect seasonal slowness in our lawn, garden and pet segment. However, based primarily on positive order and sales trends for our specialty metal products we expect the third and fourth quarters of this current fiscal year to be very strong.
CEO Comment
"We are pleased with our results in the quarter just ended," said Don Boone, CEO of Jewett-Cameron. "We are also encouraged with the continued rapid growth in demand for our specialty metal products particularly for our gate support systems, which sell under the trade name Adjust-A-Gate. Finally, our strong financial condition, which currently includes a significant surplus of cash, is worth noting."
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 (Unaudited)
Three Month Periods Ended
November 30,
2007 2006
SALES $14,263,158 $15,540,969
COST OF SALES 11,739,134 13,090,616
GROSS PROFIT 2,524,024 2,450,353
OPERATING EXPENSES
Selling, general and
administrative expenses 709,946 741,810
Depreciation and amortization 79,006 67,850
Wages and employee benefits 1,075,199 1,106,282
1,864,151 1,915,942
Income from operations 659,873 534,411
OTHER ITEMS
Interest and other income - 56
Interest expense (42,208) (53,140)
(42,208) (53,084)
Income before income taxes 617,665 481,327
Income taxes 243,750 193,444
Net income $ 373,915 $ 287,883
Basic earnings per common share $.16 $ .12
Diluted earnings per common share $.16 $ .12
Weighted average number of common shares outstanding: Basic 2,388,258 2,377,289 Diluted 2,391,265 2,379,483
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED BALANCE SHEETS
November 30, August 31,
2007 2007
(Unaudited)
ASSETS
Current assets Cash and cash equivalents $3,124,820 $257,131 Accounts receivable, net of allowances of $25,377 (August 31, 2007 - $15,396) 4,856,816 6,445,284 Inventory 9,210,526 10,878,543 Prepaid expenses 153,339 202,155
Total current assets 17,345,501 17,783,113
Property, plant and equipment, net 2,005,089 2,033,671
Intangible assets, net 795,545 815,132
Deferred income taxes 119,700 119,700
Total assets $20,265,835 $20,751,616
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Bank indebtedness $ - $ 1,059 Account payable 1,458,808 2,106,051 Accrued liabilities 928,951 1,424,610 Accrued income taxes 417,507 173,757 Current portion of long term liabilities 364,955 363,896
Total current liabilities 3,170,221 4,069,373
Long term liabilities Promissory note 2,001,405 2,018,046 Note payable 300,000 300,000
Total long term liabilities 2,301,405 2,318,046
Total liabilities 5,471,626 6,387,419
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 2,390,977 common shares (August 31, 2007 -- 2,384,792) 2,256,111 2,200,014 Additional paid-in capital 600,804 600,804 Retained earnings 11,937,294 11,563,379
Total stockholders' equity 14,794,209 14,364,197
Total liabilities and stockholders' equity $20,265,835 $20,751,616
JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Month
Periods Ended
November 30
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES Net income $373,915 $ 287,883 Items not involving an outlay of cash: Depreciation and amortization 79,006 67,850 Deferred income taxes - (400) Stock based compensation expense - 26,389 Changes in non-cash working capital items: Decrease in accounts receivable 1,588,468 979,698 (Increase) decrease in inventory 1,668,017 (145,626) (Increase) decrease in prepaid expenses 48,816 (33,081) Decrease in accounts payable and accrued liabilities (1,142,902) (1,218,834) Increase in accrued income taxes 243,750 89,146
Net cash provided by operating activities 2,859,070 53,025
CASH FLOWS FROM FINANCING ACTIVITIES Repayment of bank indebtedness (1,059) - Promissory note (15,582) (14,595) Proceeds from issuance of stock 56,097 -
Net cash provided by (used in) financing activities 39,456 (14,595)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES Purchase of property, plant and equipment (30,837) (26,553)
Net cash used in investing activities (30,837) (26,553)
Net increase in cash and cash equivalents 2,867,689 11,877
Cash and cash equivalents, beginning of period 257,131 146,810
Cash and cash equivalents, end of period $3,124,820 $158,687
JEWETT-CAMERON TRADING COMPANY LTD. SEGMENT INFORMATION
Following is a summary of segment information for the three months ended November 30:
2007 2006
Sales to unaffiliated customers:
Industrial wood products $ 8,207,327 $10,823,767
Lawn, garden, pet and other 3,756,294 2,435,326
Seed processing and sales 2,117,708 2,019,997
Industrial tools 181,829 261,879
$ 14,263,158 $15,540,969
Income (loss) from operations:
Industrial wood products $420,076 $ 244,601
Lawn, garden, pet and other 145,250 245,472
Seed processing and sales 103,068 89,795
Industrial tools 12,969 686
Unallocated overhead (21,490) (46,143)
$659,873 $ 534,411
Contact: Don Boone, President & CEO, Ltd., (503) 647-0110
