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
Audrey Dixon
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
RELATED LINKS
http://www.jewettcameron.com
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