Operating Performance - Operating results for the three-month period ended November 30, 2024, are not indicative of the results for the fiscal year ending August 31, 2025, as the company's performance is seasonal [77]. - For the three months ended November 30, 2024, sales decreased by 5% to $9,267,001 compared to $9,805,841 in the same period of 2023 [116]. - Gross margin for the quarter was 18.3%, down from 19.9% in the prior year, primarily due to higher shipping and logistics costs [121]. - Operating loss for the quarter was ($858,145), compared to a loss of ($789,224) for the same quarter in 2023 [123]. - Net loss for the quarter was ($658,717), or ($0.19) per share, compared to net income of $1,291,541, or $0.37 per share, in the prior year [126]. Sales and Product Performance - The Pet, Fencing, and Other segment is less sensitive to economic downturns, with sales peaking between February and August due to seasonal demand [79]. - Metal fence product sales increased by 19% in the first quarter compared to the same period in fiscal 2024, driven by the expansion of in-store display units [105]. - Sales of metal fencing products increased by 19% due to new in-store displayers, while pet product sales declined by 31% [117]. - The company is focused on increasing sales through strategic personnel realignment and new product innovations [110]. - For the fiscal quarter ended November 30, 2024, the top ten customers represented 98% of total sales, with the largest customer accounting for 40% [146]. Inventory and Financial Position - Current ratio as of November 30, 2024, was 8.79, with a cash position of $3.04 million [111]. - Inventory increased slightly to $13,491,547, up from $13,157,243, reflecting ongoing challenges in the pet products segment [128]. - Accounts receivable collection period (DSO) increased to 41 days from 31 days year-over-year [130]. Strategic Initiatives - The company engaged Continental Sales & Marketing, Inc. to manage in-store displays and increase online presence, enhancing distribution opportunities [106]. - The company is exploring new suppliers in Bangladesh, Vietnam, Malaysia, and Taiwan to mitigate risks associated with tariffs on Chinese imports [109]. - The company is exploring potential re-zoning of its JCSC property, currently listed for sale at $9,000,000 [89]. Product Development - The Adjust-A-Gate® Unlimited, a new product launched in December 2024, features patented anti-sag technology and accommodates gate sizes up to 72 inches high and 84 inches wide [107]. - MyEcoWorld® sustainable and Post-Consumer Recycled (PCR) bags are gaining traction, with compostable bin liners and pet waste bags scheduled for in-store placement in multiple grocery chains during calendar 2025 [108]. Risks and Challenges - The company is exposed to interest rate risk, with interest computed at the prime rate plus 4.75%, with a floor of 11% [163]. - The company relies on third-party manufacturers for substantially all products, which poses risks related to supply chain disruptions [147]. - Inflation has increased direct costs for raw materials, manufacturing, shipping, and logistics, impacting profitability [151]. - The company faces significant competition, which could reduce demand for its products and affect revenue [148]. - Seasonal demand for outdoor products is highly affected by weather conditions, impacting sales during spring and summer [152]. Compliance and Internal Controls - The company has ensured compliance with the Uyghur Forced Labor Prevention Act, preventing the import of products made with forced labor [142]. - The company has completed a management assessment of internal controls and did not identify any material weaknesses [157]. Other Information - The company completed the closure of its JCSC seed subsidiary effective August 31, 2023, and is currently working to sell the remaining equipment and property [88][89]. - The company has a line of credit with Northrim providing up to $6,000,000 for operating capital, which is set to expire on June 30, 2025 [155]. - The average daily trading volume of the company's common stock was approximately 4,700 shares for the fiscal year ended August 31, 2024, and 7,500 shares for the fiscal quarter ended November 30, 2024 [161]. - The company owns 7 US Patents and has 1 patent application pending related to its fencing products, which provides a competitive advantage [81].
Jewett-Cameron Trading pany .(JCTCF) - 2025 Q1 - Quarterly Report