Jewett-Cameron Trading Company

Good afternoon, and welcome to the Jewett Cameron Trading Company second quarter fiscal year 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To submit a question, you may type it into the ask a question box on the webcast screen. Please note, this event is being recorded. I would now like to turn the conference over to Robert Bloom with Litham Partners. Please go ahead.

All right. Thank you very much, Gary, and thank everyone for joining us today to discuss Jewett Cameron's fiscal year 2025 second quarter financial results for the period ended February 28, 2025. With us on the call representing the company today are Chad Summers, Jewett Cameron's Chief Executive Officer, and Mitch Van Damelen, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. As the operator indicated, if you are listening through the webcast portal and would like to ask a question, you can submit your question through the Ask a Question feature in the webcast player. Before we begin with prepared remarks, please note that statements made by the management team of Jewett Cameron during the course of this conference call may contain forward-looking statements within the meaning of U.S. securities laws. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan, will, should, expected, anticipates, or similar words. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those identified in the forward-looking statements as a result of various factors and other risks identified in the company's 10-K for the fiscal year ended August 31, 2024. and other filings made with the Securities and Exchange Commission. An audio recording and webcast replay for today's conference call will also be available online on the company's investor relations page. With that said, let me turn the call over to Chad Summers, Chief Executive Officer for Jewett Cameron. Chad, please proceed.

Thank you, Robert, and good afternoon. Today I'll update you on our performance through second quarter. as well as our progress on the key initiatives we've shared over the last six months to improve shareholder value. As Robert mentioned, Mitch Van Domelen, Jua Cameron's CFO, is with me again today, and we'll dive into the key drivers of our second quarter financial results. And at the conclusion of our prepared remarks, we'll be happy to answer any questions you might have. Jewett Cameron remains committed to improving the lives of professionals, do-it-yourselfers, and dog owners with innovative products that enrich outdoor spaces. Our quality products solve practical problems and fulfill unmet needs at competitive prices. For those of you who may be new to Jewett Cameron, it's worth mentioning that we were founded over 70 years ago and were owner-operated and managed for nearly 40 years. Over that time, the company was lean and opportunistic, acquiring an eclectic combination of businesses, but had an aging technology and operational processes unable to scale. My team and I have brought focus to GWIC Cameron in the last couple of years and created a strategic plan to drive profitability moving forward. We are aggressively enhancing our systems, improving processes, and expanding our supply sourcing to serve our customers. I'll now provide some updates on some of our key initiatives. Hewitt Cameron's innovation within our metal fence category is driving growth. We have had displayers of our Adjust-A-Gate products sold in aisle in thousands of stores over the years, and I'm excited to report that we exceeded our target through February of getting our new lifetime steel post displayers into over 330 Home Depot and Lowe's stores. This is 65% more from just three months ago when we were approximately 200 stores. These are the right stores in the right aisles and next to the wood fence material. Having our steel fence accessories commercialized with the wood and easily accessible for professionals and do-it-yourselfers, building a fence is essential. Point-of-sales data has been strong during the fall and winter months, providing encouraging indicators of future success during the fence building season of the spring and summer months ahead. More regions continue to request adding our displayers so demand is strong and we are coordinating with them to ensure continued successful rollout and support. This rollout of our lifetime still post-displayers, which were initially produced domestically at high cost to meet our customer's demand schedule, and the increased sales as a percent of our overall fence category sales, has had an impact on our reduced margin in the first half of this year. We greatly reduced the displayer cost by producing new displayers overseas in the second quarter, which will diminish the margin impact in the future. In other fence category news, it's worth restating that we launched our new unique low profile Adjust-A-Gate Unlimited earlier this year. This gate is unlike any other four-corner steel frame gate kit on the market. It is one of the only full, complete gate kits with hinges, latch, and strike plate included, along with a truss cable to prevent sag, and most importantly, once installed, it is practically invisible, so the focus is on the wood gate, not the steel frame. This fully adjustable gate design empowers professionals and DIYers with greater control to create gates tailored to their unique needs. Keep an eye out for this innovative gate solution as we continue to get into more stores and online. The kit supports both horizontal and vertical gate designs and accommodates sizes up to 72 inches high and 84 inches wide. Additionally, its patent-pending design with anti-sag technology ensures gates stay straight and secure over time, solving one of gate owners' most common challenges. With its durable steel corner brackets, all necessary hardware, and a comprehensive installation guide, the Adjust-A-Gate Unlimited is designed for users of all skill levels. Its straightforward installation process can be completed in very little time. Beyond its technological advancements, the Adjust-A-Gate Unlimited is sold as an all-in-one complete integrated system at a competitive price point compared to other gate kits that require purchasing additional parts such as latches, hinges, and other components to complete a gate project. As you can hear, we are operating at a high level with our metal fence category. We are seeing growth in customer demand, growth in new stores carrying our in-aisle displayers, and we are continuing to bring exciting new products to market. Transitioning for a moment, Tariffs are clearly a topic of discussion today, and while the environment surrounding tariffs is rapidly evolving, the potential positive impact from the supply chain strategy we initiated approximately two years ago may prove to be significant. As background, we began supply chain initiatives two years ago to multi-source our production. Our dependence on a single supplier has been eliminated, and our expansion to sourcing countries outside of China has have helped us to offer competitive pricing and to some extent lessen the impact of the current tariff situation. Hewitt Cameron's management team had the vision and fortitude to tackle multi-sourcing hundreds of products into various countries starting in 2023. Further, the success of this effort cannot be overstated as it has given us options that many other importers may not have at their disposal at a time of rapidly changing tariff policies. As we sit here today, The global steel tariff of 25% implemented in March impacts all imported steel products from around the world and will raise prices for everyone. The tariff landscape remains fluid, and we will continue to monitor it closely to strategize how best to serve our customers, but given the sourcing initiatives we implemented over the last two years, I believe we are in a much better position today than we would have been otherwise. A huge credit goes to the entire Jewett Cameron team for their efforts. I'll now touch on the performance of other areas of our business. Our wood fence products revenue fell slightly from last year over the same time period due to material constraints. We continue to maintain our lumber program with a major big box retailer as a primary supplier of select fence board products in multiple markets. Within our pet containment products, downstream retail channel inventory congestion continues to negatively impact our sales. However, Online sales for several of our pet products have started to pick up recently. We continue to make progress as our pet inventory is down over 17% from a year ago and nearly 60% from our peak in February of 2023. Our pet product pricing that had been burdened by high shipping costs from a few years ago may now be highly attractive to many retailers in the near term, looking to keep their shelves stocked and avoid the new high tariff on importing similar products, particularly out of China. Within our sustainable products category, We transitioned from our Lucky Dog compostable poop bags over to an expanded line of sustainable bag products, including bin liners and post-consumer recycled plastic dog waste bags under the brand MyEcoWorld in calendar year 2023. Initial sales under the new brand began in the fall of 2023. While a relatively small revenue contributor overall, the growth over a 15-month period has been strong. Sales are being driven by online performance, new grocery channel adoption, and the recent success of our post-consumer recycled plastic dog waste bags in Mexico. Finally, sales at Greenwood increased 31% for the current quarter to $1.1 million compared to $0.9 million in Q2 of 2024. Seed facility, it's worth reminding everyone, as part of the conglomeration of the various businesses the company had over the years, We previously owned and operated a seed cleaning facility based on 11.6 acres, not far from our headquarters in Oregon. It is in a great location with a high quality warehousing space readily available. From an operation standpoint, we shut down the cleaning operation in August of 2023 and wrapped up seed storage near the end of fiscal 2024. The property is currently on the market, and it is our belief that the value we will receive for this will be well north of what it is currently on the books for, and thus it will be additive to our overall shareholder value. We originally listed it for sale at $9 million, although no assurance can be given that that will be the price we receive for it, and it sits on our books for less than $600,000. We may also elect to lease all or part of the space to generate income in the near term, but it's important to note our goal is to fully monetize the asset and put the capital to best use once sold for the benefit of the company and our shareholders. With that said, let me turn it over to Mitch for a detailed review of the financials. I will then provide some brief closing comments and turn it over for any questions. Mitch?