Jewett-Cameron reports Q2 net income of US$237,398, down from US$790,631 a year earlier, on sales 31.7% lower at US$9.7M; CEO says results for Q2 and six-month period ended Feb. 28 impacted by suppliers' manufacturing constraints around Chinese New Year

NORTH PLAINS, Oregon , April 9, 2014 (press release) – Jewett-Cameron Trading Company Ltd. (NASDAQ: JCTCF) today reported financial results for the second quarter and six month periods of fiscal 2014 ended February 28, 2014.

Sales for the second quarter of fiscal 2014 totaled $9.7 million compared to sales of $14.2 million for the second quarter of fiscal 2013. Income from operations was $408,818 compared to income of $979,059 for the quarter ended February 28, 2013. Second quarter 2013 income included the one-time gain of $353,852 related to the sale of property. Net income after other items and income taxes for the current quarter was $237,398, or $0.08 per share, compared to net income of $790,631, or $0.25 per share, in the year-ago quarter.

For the six months ended February 28, 2014, Jewett-Cameron reported sales of $17.7 million compared to sales of $23.5 million for the six months ended February 28, 2013. Net income was $569,977, or $0.18 per share, compared to net income of $1,271,377, or $0.41 per share, in the first six months of fiscal 2013. The year ago period was positively affected by the one-time gain on the sale of property.

"The second quarter and six month results were negatively affected by a delay in our orders from our suppliers caused by manufacturing constraints around Chinese New Year," said CEO Don Boone. "Due to these constraints, shipments to our customers were delayed and also pushed back the rollout of several new products. We do not expect these constraints to continue in the remainder of fiscal 2014."

As of February 28, 2014, the Company's cash position was $5.8 million, and there was no borrowing against its $5.0 million line of credit. In the second quarter of fiscal 2014, the Company repurchased and cancelled 58,180 common shares at a cost of $569,019, which represents an average price of $9.78 per share. Subsequent to the end of the second quarter, the Company re-purchased and is in the process of cancelling a total of 255,313 additional shares of its common stock at a total cost of $2,486,571 at an average price of $9.74 per share. These purchases were pursuant to the Company's share re-purchase plan first announced on January 13, 2014 which has now been completed and terminated. Today the Company's Board of Directors authorized the implementation of a new share repurchase plan under Rule 10b-18. Under the new plan, the Company may purchase for cancellation up to 300,000 common shares, which represents approximately 10.6% of the 2,821,443 common shares currently outstanding. The Company has historically utilized its cash position by implementing share repurchase programs as an effective method of enhancing shareholder value.

About Jewett-Cameron Trading Company Ltd.

Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation ("JCLC"), incorporated September 1953.  Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary. Effective September 1, 2013, Jewett-Cameron reorganized certain of its subsidiaries. JCLC's name was changed to JC USA Inc. ("JC USA"), and a new subsidiary, Jewett-Cameron Company ("JCC"), was incorporated. JC USA has the following wholly owned subsidiaries: MSI-PRO Co. ("MSI"), incorporated April 1996, Jewett-Cameron Seed Company, ("JCSC"), incorporated October 2000, Greenwood Products, Inc. ("Greenwood"), incorporated February 2002, and Jewett-Cameron Company ("JCC"), incorporated September 2013.  Jewett-Cameron Trading Company, Ltd. and its subsidiaries (the "Company") have no significant assets in Canada.

The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC's business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States. Greenwood is a processor and distributor of industrial wood products used in a variety of markets and applications, including the marine and transportation markets. MSI is an importer and distributor of pneumatic air tools and industrial clamps in the United States. JCSC is a processor and distributor of agricultural seeds in the United States. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.

Forward-looking Statements

The information in this release contains certain forward-looking statements that anticipate future trends and events. These statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks, including but not limited to, the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry, and other factors detailed in the Company's SEC filings. Accordingly, actual results may differ, possibly materially, from predictions contained herein.

 

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

 
 

February 28,

2014

 

August 31,

2013

       

ASSETS

     
       

Current assets

     

  Cash

$   5,816,854

 

$    8,308,445

  Accounts receivable, net of allowance of $Nil (August 31, 2013 - $Nil)

4,256,286

 

3,344,777

  Inventory, net of allowance of $134,259 (August 31, 2013 - $134,259) (note 3)

7,528,726

 

8,520,991

  Note receivable

-

 

15,000

  Prepaid expenses

2,088,834

 

587,609

  Prepaid income taxes

492,032

 

270,423

       

  Total current assets

20,182,732

 

21,047,245

       

Property, plant and equipment, net (note 4)

2,213,436

 

2,241,950

 

Intangible assets, net (note 5)

 

332,310

 

 

368,662

       

Total assets

$  22,728,478

 

$  23,657,857

       

LIABILITIES AND STOCKHOLDERS' EQUITY

     
       

Current liabilities

     
       

  Accounts payable

$ 1,190,980

 

$  1,715,458

  Litigation reserve (note 13(a))

130,854

 

144,103

  Accrued liabilities

765,638

 

1,149,882

       

  Total current liabilities

2,087,472

 

3,009,443

       

Deferred tax liability (note 6)

42,027

 

50,393

       

Total liabilities

2,129,499

 

3,059,836

       

Contingent liabilities and commitments (note 13)

     
       

Stockholders' equity

     

  Capital stock (note 8)

     

     Authorized

     

      21,567,564 common shares, without par value

     

      10,000,000 preferred shares, without par value

     

    Issued

     

      3,076,756 common shares (August 31, 2013 - 3,134,936)

1,451,791

 

1,479,246

  Additional paid-in capital

600,804

 

600,804

  Retained earnings

18,546,384

 

18,517,971

       

  Total stockholders' equity

20,598,979

 

20,598,021

       

  Total liabilities and stockholders' equity

$  22,728,478

 

$  23,657,857

 


JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

 
 

Three Month Period

Ended February 28,

 

Six Month Period

Ended February 28,

 

2014

 

2013

 

2014

 

2013

               

SALES

$  9,732,649

 

$  14,227,824

 

$  17,738,930

 

$ 23,524,229

               

COST OF SALES

7,974,979

 

11,788,155

 

14,131,481

 

19,093,554

               

GROSS PROFIT

1,757,670

 

2,439,669

 

3,607,449

 

4,430,675

               

OPERATING EXPENSES

             

  Selling, general and administrative expenses

446,900

 

468,162

 

838,786

 

803,982

  Depreciation and amortization

69,531

 

64,202

 

139,550

 

121,696

  Wages and employee benefits

832,421

 

928,246

 

1,676,371

 

1,753,553

 

1,348,852

 

1,460,610

 

2,654,707

 

2,679,231

               

Income from operations

408,818

 

979,059

 

952,742

 

1,751,444

               

OTHER ITEMS

             

   Gain on sale of property, plant and equipment

-

 

353,852

 

4,109

 

353,852

   Interest and other income

6,612

 

6,605

 

13,273

 

23,315

   Interest expense

-

 

(400)

 

-

 

(400)

 

6,612

 

360,057

 

17,382

 

376,767

               

Income before income taxes

415,430

 

1,339,116

 

970,124

 

2,128,211

               

Income tax expense

(178,032)

 

(548,485)

 

(400,147)

 

(856,834)

               

Net income

$    237,398

 

$       790,631

 

$     569,977

 

$  1,271,377

               

Basic earnings per common share

$          0.08

 

$             0.25

 

$           0.18

 

$            0.41

               

Diluted earnings per common share

$          0.08

 

$             0.25

 

$           0.18

 

$            0.41

               

Weighted average number of common shares outstanding:

             

  Basic

3,129,764

 

3,135,860

 

3,132,365

 

3,135,902

  Diluted

3,129,764

 

3,135,860

 

3,132,365

 

3,135,902

 

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

 
 

Three Month Period

Ended February 28,

 

Six Month Period

Ended February 28,

 

2014

 

2013

 

2014

 

2013

               

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net income

$  237,398

 

$  790,631

 

$ 569,977

 

$ 1,271,377

Items not involving an outlay of cash:

             

  Depreciation and amortization

69,531

 

64,202

 

139,550

 

121,696

  Gain on sale of property, plant and equipment

-

 

(353,852)

 

(4,109)

 

(353,852)

  Deferred income taxes

(3,802)

 

137,100

 

(8,366)

 

151,423

  Interest income on litigation

(6,588)

 

(6,588)

 

(13,249)

 

(13,249)

               

Changes in non-cash working capital items:

             

  Increase in accounts receivable

(2,018,552)

 

(4,628,402)

 

(911,509)

 

(4,202,382)

  Decrease in inventory

846,025

 

68,731

 

992,265

 

1,393,096

  Decrease in note receivable

-

 

-

 

15,000

 

20,000

  (Increase) decrease in prepaid expenses

(1,205,662)

 

537,657

 

(1,501,225)

 

(1,041,955)

  Increase in prepaid income taxes

(448,288)

 

(253,952)

 

(221,609)

 

(253,952)

  Increase (decrease) in accounts payable and accrued liabilities

 

837,196

 

 

675,104

 

 

(908,722)

 

 

(296,125)

  Decrease in accrued income taxes

-

 

(330,957)

 

-

 

(37,203)

               

Net cash used in operating activities

(1,692,742)

 

(3,300,326)

 

(1,851,997)

 

(3,241,126)

               

CASH FLOWS FROM INVESTING ACTIVITIES

             

  Purchase of property, plant and equipment

(17,457)

 

(18,657)

 

(75,375)

 

(130,790)

  Proceeds from sale of property, plant and equipment

 

-

 

 

410,000

 

 

4,800

 

 

410,000

               

Net cash provided by (used in) investing activities

(17,457)

 

391,343

 

(70,575)

 

279,210

               

CASH FLOWS FROM FINANCING ACTIVITIES

             

  Redemption of common stock

(569,019)

 

(4,884)

 

(569,019)

 

(4,884)

               

Net cash used in financing activities

(569,019)

 

(4,884)

 

(569,019)

 

(4,884)

               

Net decrease in cash

(2,279,218)

 

(2,913,867)

 

(2,491,591)

 

(2,966,800)

               

Cash, beginning of period

8,096,072

 

7,256,455

 

8,308,445

 

7,309,388

               

Cash, end of period

$ 5,816,854

 

$  4,342,588

 

$  5,816,854

 

$  4,342,588

Contact: Don Boone, President & CEO, (503) 647-0110

SOURCE Jewett-Cameron Trading Company Ltd.

 



RELATED LINKS
http://www.jewettcameron.com

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