As Robert mentioned, Mitch Van Domelen, Jewett-Cameron's CFO, is with me again today and will dive into the key drivers of our first quarter financial results. And at the conclusion of our prepared remarks, we'll be happy to answer any questions you might have. Over the past few years, we have been guided here at Jewett-Cameron by our mission to improve the lives of professionals and do-it-yourselfers with innovative products that enrich outdoor spaces. We offer quality products that solve problems and fulf ...

Core Viewpoint - The company is facing significant challenges due to the impact of tariffs on imported products, which has led to deferred purchases by retailers and consumers, negatively affecting third-quarter results. However, proactive measures have been implemented to mitigate these impacts and improve operational efficiency. Group 1: Tariff Impact - The uncertainty surrounding tariffs has negatively impacted third-quarter results, with many retailers and consumers deferring purchases of imported metal products until clarity on prices is available [1] - Tariffs on Chinese goods were initially set at 25% in 2019, with additional increases announced in early 2025, leading to a doubling of the tariff rate to 50% [12][14] - The rapid and unpredictable changes in tariff rates have caused customers to pause their purchasing decisions, leading to a significant decline in sales [15][16] Group 2: Financial Performance - Revenue for Q3 2025 was $12.6 million, down from $15.9 million in Q3 2024, reflecting a 21% decline overall, although the metal fence business only saw a 4% decrease [7][34] - Gross profit margins for Q3 2025 were 15%, down from 18.6% in Q3 2024, primarily due to higher tariff and shipping costs [36] - The net loss for Q3 2025 was $600,000, compared to a net income of $200,000 in Q3 2024, attributed to deferred purchases and lower gross margins [39] Group 3: Strategic Initiatives - The company has implemented a multi-sourcing strategy to reduce dependence on high-tariff countries, expanding sourcing to Vietnam, Malaysia, and Bangladesh [19][20] - Price adjustments are being made to align with increased costs due to tariffs, although the rapid changes in rates have complicated this process [21] - Operational efficiency initiatives have included a 20% reduction in personnel to better align with new business processes [22] Group 4: Product Performance - The metal fence business showed resilience with an 85% increase in product sales of lifetime steel posts compared to Q3 2024 [24] - The pet business experienced a 44% decline compared to last year's Q3, continuing to be affected by supply chain issues [9] - Sales of the MyEcoWorld product line increased by 265% over the comparative period in fiscal 2024, indicating strong demand for sustainable products [26] Group 5: Future Outlook - The company expects that resolution of ongoing tariff negotiations will lead to more normalized customer purchasing patterns in the future [6][17] - Demand for metal goods has begun to pick up as customers adjust to new pricing, although it is not expected to return to normalized levels immediately [32] - The company remains committed to enhancing operational efficiencies and leveraging technology to navigate the evolving tariff environment [20][32]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $12.6 million, down from $15.9 million in Q3 2024, but up from $9.1 million in Q2 2025, indicating a seasonal recovery [24] - Gross profit margins decreased to 15% from 18.6% in Q3 2024, primarily due to higher tariff and shipping costs [25] - Net loss for Q3 2025 was $600,000, or negative $0.18 per share, compared to net income of $200,000, or $0.04 per share in Q3 2024 [27] Business Line Data and Key Metrics Changes - Metal fence business only saw a 4% decline year-over-year, attributed to the expansion of the lifetime steel post business, which increased by 85% in product sales [6][24] - Pet business experienced a significant decline of 44% compared to Q3 2024, although it showed slight improvement from the previous quarter [7] - Wood fencing product sales decreased due to material constraints, impacting the ability to fulfill cedar fence orders [9] Market Data and Key Metrics Changes - The uncertainty surrounding tariffs has led to deferred purchases of imported metal products, affecting overall sales [5][11] - Sales of MyECO World products increased by 265% over the comparative period in fiscal 2024, indicating strong demand for sustainable products [18] - Sales in the Greenwood operating segment decreased by 24% to $700,000 compared to $900,000 in Q3 2024, due to supply issues [19] Company Strategy and Development Direction - The company is focusing on four key areas: growth drivers, product innovation, supply chain and operational efficiency, and asset monetization [30] - A multi-sourcing strategy has been implemented to reduce dependence on suppliers from high-tariff countries, enhancing supply chain resilience [13] - The company is actively managing production capacity constraints and logistical issues to support existing display replenishment demand [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism that resolution to ongoing tariff negotiations will lead to normalized customer purchasing patterns [6][12] - The company anticipates that challenges experienced in Q3 will likely extend into Q4, with continued uncertainty affecting demand [21][22] - Demand for metal goods has started to pick up as customers adjust to new pricing, although it is not expected to return to normalized levels immediately [22] Other Important Information - The company is marketing a 6-acre seed processing facility in Oregon, which has a book value of just over $550,000 [20] - The cash balance at May 31, 2025, was $1.2 million, and stockholders' equity decreased to $23.1 million due to the net loss during the quarter [29] Q&A Session Summary Question: Can you elaborate on your tariff mitigation strategies? - The company began multi-sourcing production to countries other than China in early 2023, which helped reduce dependence on a single supplier and mitigate higher tariffs [32][33] Question: What are your revised operating expense expectations? - The company aims to be more efficient across operations and continues to evaluate technology to enhance efficiency [34] Question: Any updates on the property for sale? - The company is actively marketing the property and will provide updates when a definitive arrangement is secured [35] Question: What percentage of total sales are the lifetime steel fence posts? - Currently, lifetime steel fence posts account for 8% of gross sales [38] Question: Is there overlap between customers purchasing different product lines? - There is likely some overlap in target audiences, but definitive evidence of the same consumers is not available [39] Question: Have you considered cutting support for underperforming products? - The company continuously evaluates product performance and its contribution to shareholder value [41]

Summary of Jewett-Cameron Trading Company (JCTC) Conference Call Company Overview - Jewett-Cameron Trading Company (JCTC) is a small-cap company with significant growth potential, focusing on durable markets and functional products [3][4] - The company has a 70-year history and is listed on NASDAQ, primarily offering fencing, pet containment, and sustainable home products [4] Core Business and Product Offerings - JCTC is undergoing a strategic transformation, evolving from a lean operation to a growth-oriented platform with product leadership in outdoor living and home improvement [5] - Key product categories include: - **Fencing Products**: Includes fence boards, pickets, steel access accessories, and composite EuroFence products [8] - **Pet Containment**: Focuses on durable solutions like welded wire and chain link dog kennels [8] - **Sustainable Products**: Compostable and post-consumer recycled products, including bags for waste [8] - **Greenwood**: A subsidiary specializing in industrial wood products, particularly proprietary plywood for transit buses [8] Market Position and Growth Strategy - JCTC has established strong retail relationships with major retailers like Home Depot, Lowe's, and Costco, enhancing shelf presence and growth momentum [6] - The company is actively transitioning to growth mode by optimizing pricing, expanding distribution, and reducing overhead [8] - The introduction of innovative products, such as the lifetime steel post and adjustable gates, has driven significant sales growth [10][12] Financial Position - JCTC is trading at a steep discount to book value, has no long-term debt, and possesses a valuable 11.6-acre property that could enhance equity upon sale [7] - The company has reduced inventory levels to align with growth plans, improving cash flow and operational efficiency [16][17] Supply Chain and Tariff Mitigation - JCTC has diversified its supply chain to include sourcing from countries like Vietnam, Bangladesh, Malaysia, and Indonesia, reducing dependency on China [21][22] - The company has implemented a comprehensive multisourcing strategy to mitigate tariff impacts, particularly the 25% global steel tariff [21][22] - Ongoing landed cost comparisons and dual tooling strategies are in place to maintain competitive pricing and ensure supply continuity [25][26] Customer Response and Pricing Strategy - Customers have responded positively to recent price adjustments, which have been modest due to proactive sourcing strategies [27][28] - JCTC aims to maintain competitive pricing while ensuring product quality and reliability, reinforcing its position as a trusted supplier [28] Property Sale and Future Outlook - The company is selling an 11-acre property in Oregon, which has faced a slower sales timeline due to market uncertainties and zoning constraints [30][31] - The property is valued at $9 million, with significant potential upside upon sale [32] - JCTC envisions a dominant presence in the fencing market and plans to expand its product range and distribution channels over the next five to ten years [33][34] Final Takeaways - JCTC is executing a focused strategy with strong momentum in key product categories and strategic sourcing initiatives [36] - The management team is committed to creating value for shareholders, making it an opportune time for investors to consider the company [36]