Jewett-Cameron Trading Company

Good afternoon and welcome to the Jewett Cameron Trading Company reports first quarter fiscal year 2026 financial results conference call. Please note this event is being recorded. I would now like to turn the conference over to your host for today's call. Please go ahead.

Great. Thank you for joining us today to discuss Jewett Cameron's operational and financial results for the fiscal 2026 first quarter for the period ended November 30th, 2025. With us on the call representing the company today, are Chad Summers, Jewett Cameron's Chief Executive Officer, and Mitch Van Domelen, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will look to address questions. Before we begin with the 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, 2025, 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, I'm going to turn the call over to Chad Summers, Chief Executive Officer for Jewett Cameron. Chad, please proceed.

Well, good afternoon and thank you for joining us today. Given that we conducted our year-end conference just 45 days ago, I'll keep my remarks a bit more brief. I certainly encourage everyone to listen to a replay of our December 1st call as we went into a deep dive on many aspects of the business and our strategic plans. I will dive into a few of the updates we have since that call, but first let me provide a couple of key financial highlights to start things off. First, our metal fence business showed year-over-year growth, albeit small, for the first quarter. This is despite the challenges of tariffs and continuing negative consumer sentiment throughout the year. Our Greenwood subsidiary experienced growth as well in the first quarter. This growth was offset by decreased sales of lumber and pet, two areas which we previously announced initiatives to sell off excess inventory due to challenging market conditions and changes in customer programs. Second, in addition to the tariff impacts, our reported gross margins were further negatively affected by a write-down on certain pet and lumber inventory, along with liquidation sales of already reserved inventory that, in essence, carried zero margin. Without these factors, our gross margins would have shown improvement. We are also making progress in pricing alignment with customers, which, when fully implemented, should better highlight the opportunity for margin improvement going forward. Third, Our wages and employee benefits dropped significantly to $1.2 million from $1.7 million as we continued to reduce our headcount. We did incur some one-time fees during the quarter associated with the engagement of consultants and increases in our lumber warehousing costs, which impacted overall OPEX. But we are making the necessary moves to align our go-forward cost structure with our efficiency strategy. So certainly a lot of challenges in the first quarter financial results, some of which are a continuation from earlier in the calendar year. But we believe that there are positive developments that will be more evident in the quarters to come. Mitch will go into more detail on the financials in a moment. Let's turn to an update on how the initiatives we outlined on that year-end call are progressing and how we are positioning the company as we navigate a challenging operating environment. While many of the broader headwinds impacting the business over the past nine months continue to persist, we believe the actions we have taken and continue to take are strengthening the foundation of the company and improving our long-term outlook. At the center of our strategy remains our strong metal fencing business, which continues to be our largest and most successful product category. As discussed previously, this category has demonstrated resilience across market cycles and remains an area where we believe we have a clear competitive advantage. Importantly, we saw encouraging signs of renewed momentum in this business, reinforcing our confidence in its long-term growth potential and providing optimism as global trade conditions gradually stabilize. Metal fencing will continue to be a primary focus of our operations, capital allocation, and innovation efforts while we work to optimize sales of our other product categories. Building on the initiatives outlined in the fourth quarter, we remain focused on expanding our retail footprint and enhancing our in-store presence. We continue to work closely with retail partners to deploy additional display units, improve product visibility, and strengthen merchandising execution. Programs such as Lifetime Steel Post and Adjust-a-Gate Displays exemplify how differentiated products combined with effective in-store presentation can drive engagement and adoption. While we have made meaningful progress, we continue to view our current footprint as being at an early stage relative to the broader opportunity ahead. We continue to align our cost with the prices we charge for our differentiated offerings. We have successfully renegotiated agreements with most of our customers. While this work has taken time and careful collaboration, it represents a meaningful step toward improving margin and building a more durable, and resilient operating model. Operational efficiency and organizational alignment also remain key priorities. Over the past several months, we have accelerated initiatives designed to streamline the business, reduce complexity, and improve execution. Disciplined cost control and effective inventory management remain central to how we are navigating current conditions. I mentioned a moment ago the significant decrease in our wages and employee benefits going to $1.2 million from $1.7 million as we reduce our headcount. It remains our commitment to reduce annual operating expenses by $1 million to $3 million and our intent to exit fiscal 2026 with a business model that is sustainable in the long term. Further, as we reduce our inventory, several of our business lines, mainly pet and lumber, We will reduce our warehouse expenses, which will have a beneficial impact on cost, as well as bolster our balance sheets. In addition, as announced previously, we are actively working to monetize non-core assets. This includes evaluating strategic partnerships and collaborations and exploring potential divestitures along select businesses and real estate assets. These efforts are primarily focused on our industrial lumber subsidiary, Selected pet assets are wood fencing business and sale of our seed processing and storage facility and innovation studio property. There is not a lot to report since early December given the holiday season, but we are highly engaged in advancing these initiatives in the new calendar year. We recently entered into a revised lending agreement that provides additional flexibility to support our operational realignment. This increased flexibility is important as we continue to streamline the organization, prioritize core initiatives, and thoughtfully deploy resources in support of our long-term strategy. The revised structure enhances our ability to execute planned changes while maintaining stability as we navigate an uncertain external environment. Mitch will provide more details on the specifics in just a moment. Uncertainty surrounding tariffs remain a significant factor influencing cost and purchasing behavior across the market, and weak consumer sentiment continues to weigh on discretionary spending. That said, we have made progress on a number of the strategic activities we presented in early December, and those efforts are beginning to take shape as we move forward into the new calendar year. As we look ahead, our objective is clear. to exit fiscal 2026 with a business model that is sustainable over the long term, focused on our strongest product categories, supported by disciplined operations, and positioned to deliver enhanced value to shareholders. While the external environments remain complex, we believe the progress we are making across our strategic initiatives reinforces the direction we are taking and the opportunities ahead. Let me now turn the call over to Mitch for additional comments.