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What changed in JEWETT CAMERON TRADING CO LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of JEWETT CAMERON TRADING CO LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+164 added−141 removedSource: 10-K (2023-11-28) vs 10-K (2022-11-29)

Top changes in JEWETT CAMERON TRADING CO LTD's 2023 10-K

164 paragraphs added · 141 removed · 74 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn February 2002, Greenwood was incorporated in anticipation of JC USA acquiring the business and certain assets of Greenwood Forest Products Inc. Greenwood is involved in the processing and distribution of specialty wood products. In June 2012, the Company acquired land and fixed assets located in Manning, Oregon for $250,000 cash.
Biggest changeIn October 2023, Mr. Nasser voluntarily resigned from the Board of Directors but is available as an advisor to the Board. In July 1987, the Company acquired JC USA in what was not an arms-length transaction. 2 In February 2002, Greenwood was incorporated in anticipation of JC USA acquiring the business and certain assets of Greenwood Forest Products Inc.
Some of the products that JCC distributes flow through the Company’s facility in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers, eCommerce partners, on-line direct consumers as well as other retailers. The home improvement business is seasonal, with higher levels of sales occurring between February and August.
Some of the products that JCC distributes flow through the Company’s facility in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers, eCommerce partners, on-line direct consumers as well as other retailers. 3 The home improvement business is seasonal, with higher levels of sales occurring between February and August.
General Development of Business I ncorporation and Subsidiaries Jewett-Cameron Trading Company Ltd. was incorporated under the Company Act of British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”), which was incorporated in September 1953 in Oregon, USA.
General Development of Business Incorporation and Subsidiaries Jewett-Cameron Trading Company Ltd. was incorporated under the Company Act of British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”), which was incorporated in September 1953 in Oregon, USA.
Total Company sales were approximately $62.9 million and $57.5 million during fiscal years ended August 31, 2022 and 2021, respectively. The Company's principal office is located at 32275 NW Hillcrest Street, North Plains, Oregon; and the Company’s website address is www.jewettcameron.com . The Company’s primary mailing address is P.O. Box 1010, North Plains, OR 97133.
Total Company sales were approximately $54.3 million and $62.9 million during fiscal years ended August 31, 2023 and 2022, respectively. The Company's principal office is located at 32275 NW Hillcrest Street, North Plains, Oregon; and the Company’s website address is www.jewettcameron.com . The Company’s primary mailing address is P.O. Box 1010, North Plains, OR 97133.
The Company’s operations are classified into three reportable operating segments, one discontinued segment (Industrial Tools) and the parent corporate and administrative segment, which were determined based on the nature of the products offered along with the markets being served.
The Company’s operations are classified into three reportable operating segments and the parent corporate and administrative segment, which were determined based on the nature of the products offered along with the markets being served.
JC USA has the following wholly owned subsidiaries. MSI-PRO Co. (“MSI”), incorporated in April 1996 and dissolved in September 2019, Jewett-Cameron Seed Company, (“JCSC”), incorporated in October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated in February 2002, and Jewett-Cameron Company (“JCC”) incorporated in September 2013. Jewett-Cameron Trading Company, Ltd. and its subsidiaries have no significant assets in Canada.
JC USA has the following wholly owned subsidiaries. Jewett-Cameron Seed Company, (“JCSC”), incorporated in October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated in February 2002, and Jewett-Cameron Company (“JCC”) incorporated in September 2013. Jewett-Cameron Trading Company, Ltd. and its subsidiaries have no significant assets in Canada.
As of August 31, 2022 and November 21, 2022, there were 3,495,342 common shares outstanding. The Company's common shares are listed on the NASDAQ Capital Market in the United States with the symbol “JCTCF”. The Company's fiscal year ends on August 31st.
As of August 31, 2023 and November 27, 2023, there were 3,498,899 common shares outstanding. The Company's common shares are listed on the NASDAQ Capital Market in the United States with the symbol “JCTCF”. The Company's fiscal year ends on August 31st.
Boone served as President and CEO from 1984 until 2017 when he voluntarily retired from his officer positions and oversaw the addition and successful integration of new management and directors. In September 2019 the Board of Directors decided to permanently close the Company’s MSI-Pro division.
Boone passed away. Mr. Boone served as President and CEO from 1984 until 2017 when he voluntarily retired from his officer positions and oversaw the addition and successful integration of new management and directors. In April 2023, the Board of Directors decided to close the Company’s JCSC seed division.
The primary market in which Greenwood competes has decreased in economic sensitivity as users are incorporating products into the municipal and mass transit transportations sectors. However, these markets may sustain some contractions due to COVID-19 related patterns of individuals utilizing transit and mass transit less due to concerns over exposure.
The primary market in which Greenwood competes has decreased in economic sensitivity as users are incorporating products into the municipal and mass transit transportations sectors. However, these markets sustained some contractions due to COVID-19 as work shifted from offices to homes, and many individuals utilized transit less due to concerns over exposure.
Examples of the Company’s brands include Lucky Dog®, for pet products; Adjust-A-Gate™, Fit-Right®, Perimeter Patrol®, and Lifetime Post™ for gates and fencing; Early Start, Spring Gardner™, Greenline®, and Weatherguard for greenhouses. JCC uses contract manufacturers to manufacture these products.
Examples of the Company’s brands include Lucky Dog®, for pet products; Adjust-A-Gate®, Fit-Right®, Perimeter Patrol®, and Lifetime Post™ for gates and fencing; Early Start, Spring Gardner™, Greenline®, and Weatherguard for greenhouses. JCC has also recently become the exclusive distributor of MyEcoWorld® sustainable bag products in the US and Canada. JCC uses contract manufacturers to manufacture its products.
Administrative Services – JC USA JC USA Inc. is the parent company for the Company’s wholly-owned subsidiaries as described above. JC USA provides professional and administrative services, including warehousing, accounting and credit services, to its subsidiary companies. 4 Tariffs The Company’s metal and other products are largely manufactured in China and are imported into the United States.
It provides professional and administrative services, including warehousing, accounting and credit services, to its subsidiary companies. 4 Tariffs The Company’s metal and other products are largely manufactured in China and are imported into the United States.
These individuals are Donald Boone, who passed away in May, 2019, and who was the previous Chairman and Director and the former President, Chief Executive Officer, Treasurer, and Principal Financial Officer, transitioning to strictly the Board Chair in 2017; and Michael Nasser, who remains active in the business and is both a Director and the Corporate Secretary.
These individuals are Donald Boone, who passed away in May, 2019, and who was the previous Chairman and Director and the former President, Chief Executive Officer, Treasurer, and Principal Financial Officer, transitioning to strictly the Board Chair in 2017; and Michael Nasser, who retired from day-to-day involvement in the business as of December 2022 but remained engaged as a Director.
The tariffs began at 10%, and subsequently were increased to 25% as of May 10, 2019. A number of the Company’s products manufactured in China have been subject to duties of 25% when imported into the United States. These new tariffs were temporarily reduced on many of the Company’s imported products in September 2019 under a deemed one-year exemption.
The tariffs began at 10%, and subsequently were increased to 25% as of May 10, 2019. A number of the Company’s products manufactured in China remain subject to duties of 25% when imported into the United States.
The product line was re-branded as “MSI-PRO” and MSI was incorporated in 1996 to carry-on the business of Material Supply. In October 2000, JCSC was incorporated in anticipation of JC USA acquiring the business and certain assets of a firm called Agrobiotech Inc. JCSC operates as a seed storage, processing and sales business.
JCSC operates as a seed storage, processing and sales business and was incorporated by the Company in October 2000 in anticipation of JC USA acquiring the business and certain assets of a firm called Agrobiotech Inc.
Management believes the ownership of these patents results in an important competitive advantage for these and certain other products. During fiscal 2022, the Company applied for one patent (fiscal 2021 – Nil) and received no patents (2021 – Nil).
Management believes the ownership of these patents and trademarks is an important competitive advantage for these and certain other products. During fiscal 2023, in addition to the additional trademark rights for Adjust-A-Gate®, the Company applied for 2 patents (fiscal 2022 – one) and received 0 patents (2022 – Nil).
Narrative Description of Business The Company’s operations are classified into four segments: Industrial wood products; Pet, Fencing and Other; Seed processing and sales; and corporate and administration. Sales, income before taxes, assets, depreciation and amortization, capital expenditures, and interest expense by segment are shown in the financial statements under Note 12 “Segment Information”.
Sales, income before taxes, assets, depreciation and amortization, capital expenditures, and interest expense by segment are shown in the financial statements under Note 12 “Segment Information”.
The property was sold in an arms-length transaction in the second quarter of fiscal 2019 for $325,000 cash. In May 2019 Chairman and Co-Founder of the Company Donald M. Boone passed away. Mr.
Greenwood is involved in the processing and distribution of specialty wood products. In June 2012, the Company acquired land and fixed assets located in Manning, Oregon for $250,000 cash. The property was sold in an arms-length transaction in the second quarter of fiscal 2019 for $325,000 cash. In May 2019 Chairman and Co-Founder of the Company Donald M.
Also, the Company’s single largest customer was responsible for 28% and 33% of total Company sales for the years ended August 31, 2022 and August 31, 2021 respectively. Employees As of August 31, 2022 the Company had 75 full-time employees (August 31, 2021 – 74 full-time employees).
Customer Concentration The top ten customers were responsible for 88% and 84% of total Company sales for the years ended August 31, 2023 and August 31, 2022, respectively. Also, the Company’s single largest customer was responsible for 35% and 28% of total Company sales for the years ended August 31, 2023 and August 31, 2022 respectively.
By segment these employees were located as follows: Greenwood 1, JCC 44, JCSC 11, and JC USA 19. None of these employees are represented by unions at the Company. Jewett-Cameron Trading Company Ltd. has no direct employees, and the CEO of the Company is employed by JC USA.
Jewett-Cameron Trading Company Ltd. has no direct employees, and the CEO of the Company is employed by JC USA.
However, the metal products that JCC manufactures and distributes may be somewhat differentiated from similar products available from other suppliers.
However, the metal products that JCC manufactures and distributes may be somewhat differentiated from similar products available from other suppliers. The company has been successful garnering key patents and trademarks on multiple products that assist their ability to continue to differentiate based on design and functionality.
The company has been successful garnering key patents and trademarks on multiple products that assist their ability to continue to differentiate based on design and functionality. 3 JCC owns the patents and manufacturing rights connected with the Adjust-A-Gate™ and Fit-Right™ products, which are the gate support systems for wood, vinyl, chain link, and composite fences.
JCC owns the patents and manufacturing rights connected with the Adjust-A-Gate® and Fit-Right™ products, which are the gate support systems for wood, vinyl, chain link, and composite fences. The Company completed its purchase of the full trademark rights for Adjust-A-Gate® and filed its registration with the US Patent and Trademark Office in February 2023.
A patent granted in 2018 was an update of the Adjust-a-Gate™, which will extend the protection on the Adjust-a-Gate™ products for an additional 15 years. Backlog orders are a factor in this business as customers may place firm priced orders for products for shipments to take place three to four months in the future.
Backlog orders are a factor in this business as customers may place firm priced orders for products for shipments to take place three to four months in the future. Industrial Wood Products - Greenwood Greenwood is a wholesale distributor of a variety of specialty wood products. Operations are co-located in the building utilized by JCC.
Industrial Wood Products - Greenwood Greenwood is a wholesale distributor of a variety of specialty wood products. Operations are co-located in the building utilized by JCC. Historically, a major product category has been treated plywood that was sold into the marine industry. It migrated from that segment and focused more into the transportation industry.
Historically, a major product category was treated plywood that was sold into the marine industry. It migrated from that segment and focused more into the transportation industry. Greenwood’s total sales for fiscal 2023 and 2022 were 5% and 4% respectively of total Company sales.
However, profitability around after the month of August may be higher based on a seasonal surge in cleaning sales, which are more profitable than product sales. JCSC often has a backlog of sales orders based on placement of future contracts so that buyers can capture key commodity supplies for specific crops due to seasonal patterns.
However, profitability around and after the month of August may be higher based on a seasonal surge in cleaning sales, which are more profitable than product sales. The Company ended regular operations at JCSC effective August 31, 2023. The Company has now sold all of its remaining seed inventory and is working to sell the remaining JCSC equipment.
JCSC processes and distributes agricultural seed. Most of this segment’s sales come from selling seed to distributors with a lesser amount of sales derived from cleaning seed. 1 The Company also formerly operated in the industrial tools and clamps segment through MSI-PRO (“MSI”). MSI imported and distributed products including pneumatic air tools, industrial clamps, and saw blades.
JCSC processed and distributed agricultural seed. Most of this segment’s sales were derived from selling seed to distributors with a lesser amount of sales derived from cleaning seed. During the fiscal year ended August 31, 2023, the Company decided to close its JCSC seed subsidiary effective August 31, 2023.
Removed
These products were primarily sold to wholesalers that in turn sold to contractors and end users. During fiscal 2020, the Company decided to exit this segment. The remaining inventory was liquidated, and MSI was wound-up and closed. JC USA provides professional and administrative services, including accounting and credit services, to each of its wholly-owned subsidiary companies.
Added
JCSC has sold all of its seed inventory and is presently working to sell the segment’s remaining equipment in preparation for being wound-up.
Removed
In July 1987, the Company acquired JC USA in what was not an arms-length transaction. 2 In early 1986, prior to JC USA being acquired by the Company, JC USA acquired Material Supply International (“Material Supply”). Material Supply was engaged in the importation and distribution of pneumatic air tools and industrial clamps.
Added
JCSC is continuing to store some seed for its customers while they arrange alternate storage, but the facility is expected to be fully closed by December 31, 2023. 1 JC USA provides professional and administrative services, including accounting and credit services, to each of its wholly-owned subsidiary companies.
Removed
Efforts to drive further sales and margin growth were unsuccessful due to a lack of market differentiation and changing customer patterns. The remaining inventory was liquidated and the personnel were moved into different positions with the Company. As of August 31, 2020, MSI was wound-up and the division closed.
Added
JCSC has been receiving lower quantities of seed for processing, and the demand for its marketing and sales services have declined as costs have been rising. JCSC’s facilities and equipment are near the end of the expected useful life and would require significant capital investment to remain operating.
Removed
In February 2014, due to the falling marine market, the Company sold its remaining and excess inventory related to the marine industry. Greenwood’s total sales for fiscal 2022 and 2021 were 4% and 5% respectively of total Company sales.
Added
Regular operations at JCSC ended effective August 31, 2023, but seed storage operations are expected to continue through approximately December 31, 2023 in order to provide customers time to obtain alterative storage. The entire seed inventory was sold in early October, and the remaining equipment is in the process of being sold.
Removed
The 25% tariff rate was restored on the Company’s products in September 2020 when the exemption expired. Customer Concentration The top ten customers were responsible for 84% and 81% of total Company sales for the years ended August 31, 2022 and August 31, 2021, respectively.
Added
The Company has prioritized career development and retention, and some of the JCSC personnel are being moved to different positions within the Company. Narrative Description of Business The Company’s operations are classified into four segments: Industrial wood products; Pet, Fencing and Other; Seed processing and sales; and corporate and administration.
Added
Seed storage operations are expected to continue through approximately December 31, 2023 in order to provide customers time to obtain alternative storage. Administrative Services – JC USA JC USA is the parent company for the Company’s wholly-owned subsidiaries as described above. JC USA operates out of the Company’s offices in North Plains, Oregon.
Added
Employees As of August 31, 2023 the Company had 68 full-time employees (August 31, 2022 – 75 full-time employees). By segment these employees were located as follows: Greenwood 1, JCC 40, JCSC 8, and JC USA 19.
Added
Subsequent to the end of the fiscal year, the Company ceased regular operations at JCSC. 4 of the JCSC employees are being transferred to JCC, and the remainder were terminated and offered transition assistance. None of these employees are represented by unions at the Company.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are currently in compliance with the requirements of our existing line of credit. If we lost this credit it could become impossible to pay some of our creditors on a timely basis. Our information technology systems are susceptible to certain risks, including cyber security breaches, which could adversely impact our operations and financial condition.
Biggest changeWe are currently in compliance with the requirements of our existing line of credit. If we lost access to this line of credit it could negatively affect our ability to pay some of our creditors on a timely basis.
We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our year ended August 31, 2022. Based on this process we did not identify any material weaknesses.
We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our year ended August 31, 2023. Based on this process we did not identify any material weaknesses.
These actions could have a negative effect on our business, results of operations, or financial condition. 6 We could lose our credit agreement and could result in our not being able to pay our creditors. We have a line of credit with U.S. Bank in the amount of $10 million, of which $2.4 million is available.
These actions could have a negative effect on our business, results of operations, or financial condition. 6 We could lose our credit agreement and could result in our not being able to pay our creditors. We have a line of credit with U.S. Bank in the amount of $10 million, of which the entire amount is available.
If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability. If our top customers were lost, we could experience lower sales volumes. For the fiscal year ended August 31, 2022 our top ten customers represented 84% of our total sales, and our single largest customer was responsible for 28% of our total sales.
If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability. If our top customers were lost, we could experience lower sales volumes. For the fiscal year ended August 31, 2023 our top ten customers represented 88% of our total sales, and our single largest customer was responsible for 35% of our total sales.
In the business of the company, any of the following risks could affect our business, its financial condition, its potential profits or losses, and could result in you losing your entire investment if our business became insolvent. The risks and uncertainties described below are not the only ones we face.
There is a great deal of risk involved in the business of the company, and any of the following risks could affect our business, its financial condition, its potential profits or, and could result in you losing your entire investment if our business became insolvent. The risks and uncertainties described below are not the only ones we face.
Item 1A. Risk Factors. Investors should carefully consider the following risk factors and all other information contained in this Annual Report. There is a great deal of risk involved.
ITEM 1A. RISK FACTORS Investors should carefully consider the following risk factors and all other information contained in this Annual Report.
Our operations involve information technology systems that process, transmit and store information about our suppliers, customers, employees, and financial information. These systems face threats including telecommunication failures, natural disasters, and cyber security threats, including computer viruses, unauthorized access to our systems, and other security issues.
These systems face threats including telecommunication failures, natural disasters, and cyber security threats, including computer viruses, unauthorized access to our systems, and other security issues.
With this limited trading volume, investors could find it difficult to purchase or sell our common stock.
The average daily trading volume of our common stock was approximately 5,000 shares on NASDAQ for the fiscal year ended August 31, 2023. With this limited trading volume, investors could find it difficult to purchase or sell our common stock.
Removed
The common shares also formerly traded on the Toronto Stock Exchange in Canada until the Company voluntarily delisted from the Toronto Stock Exchange on October 11, 2012. The average daily trading volume of our common stock was approximately 3,350 shares on NASDAQ for the fiscal year ended August 31, 2022.
Added
Our information technology systems are susceptible to certain risks, including cyber security breaches, which could adversely impact our operations and financial condition. Our operations involve information technology systems that process, transmit and store information about our suppliers, customers, employees, and financial information.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDuring fiscal 2010, the Company purchased a 2,000 square foot building that previously housed a seed testing lab located at 31895 NW Hillcrest Street, North Plains, OR 97133. The Company formerly leased the property for $729 per month until the expiration of the lease on January 4, 2010.
Biggest changeWith the closure of the seed business, the ultimate disposition of JCSC’s property has not been determined and will be evaluated by the Board. During fiscal 2010, the Company purchased a 2,000 square foot building adjacent to the Company’s main facilities that previously housed a seed testing lab located at 31895 NW Hillcrest Street, North Plains, OR 97133.
At that time, the Company exercised its option to buy the land and building for a total cost of $150,946. In fiscal 2020, the Company began a renovation of this building into its new innovation center which will focus on new product development for the Company’s subsidiaries. The renovation was completed during fiscal 2021. 7
In fiscal 2020, the Company began a renovation of this building into its new innovation center which will focus on new product development for the Company’s subsidiaries. The renovation was completed during fiscal 2021. 7
Added
The Company formerly leased the property for $729 per month until the expiration of the lease on January 4, 2010. At that time, the Company exercised its option to buy the land and building for a total cost of $150,946.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDuring the fiscal year ended August 31, 2022, the case was settled within the Company’s insurance policy limits with no admission of guilt by the Company, and there were no additional costs incurred. The Company has initiated arbitration against a former distributor asserting a breach of the distribution agreement and seeking damages.
Biggest changeDuring the fiscal year ended August 31, 2022, the case was settled within the Company’s insurance policy limits with no admission of guilt by the Company, and there were no additional costs incurred. In fiscal 2021, the Company initiated arbitration against a former distributor asserting a breach of the distribution agreement and seeking damages.
In June 2022, a settlement was finalized which requires the Company to pay the previously accrued $300,000 as a cash fine over a four-month period with no admission of guilt by the Company. The Company was one of three named defendants in a Civil Action in Pennsylvania.
In June 2022, a settlement was finalized which required the Company to pay the previously accrued $300,000 as a cash fine over a four-month period with no admission of guilt by the Company. The Company was one of three named defendants in a Civil Action in Pennsylvania.
Removed
Arbitration is tentatively scheduled to occur in December 2022. While the company is robustly pursuing its rights and defending itself against claims, the arbitration and lawsuit are in their initial stages and therefore it is speculative to predict as to its outcome. Item 4. Mine Safety Disclosures. --- No Disclosure Necessary --- 8 PART II
Added
The liability arbitration hearing was held in December 2022. In February 2023, the arbitrator issued its decision and ruled in favor of the Company on the majority of all of its claims. A damages hearing was held in August 2023. In September 2023, the Company settled its arbitration for a cash payment of $2,450,000 which was received in October 2023.
Added
ITEM 4. MINE SAFETY DISCLOSURES --- No Disclosure Necessary --- 8 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTable No. 1 NASDAQ Capital Market Common Shares Trading Activity (US Dollars) Period Ended Volume High Low Closing Monthly 9/30/22 101,800 $ 6.54 $ 5.03 $ 5.30 Quarterly 8/31/22 162,600 $ 7.09 $ 6.19 $ 6.36 5/31/22 271,500 $ 8.25 $ 5.50 $ 6.72 2/28/22 153,800 $ 9.84 $ 7.15 $ 7.98 11/30/21 254,100 $ 13.74 $ 9.02 $ 9.15 8/31/21 389,800 $ 12.00 $ 9.62 $ 10.60 5/31/21 149,300 $ 10.95 $ 9.71 $ 9.93 2/28/21 380,100 $ 10.80 $ 8.26 $ 10.56 11/30/20 386,200 $ 11.66 $ 7.23 $ 8.90 Annually 8/31/22 842,000 $ 13.74 $ 5.50 $ 6.36 8/31/21 1,305,400 $ 12.00 $ 7.23 $ 10.60 8/31/20 455,600 $ 8.78 $ 5.00 $ 7.55 8/31/19 1,318,200 $ 10.00 $ 6.23 $ 8.04 8/31/18 1,252,600 $ 8.96 $ 6.50 $ 8.68 Holders Computershare Investor Services Inc. which is located in Vancouver, British Columbia, Canada is the registrar and transfer agent for the common shares.
Biggest changeTable No. 1 NASDAQ Capital Market Common Shares Trading Activity (US Dollars) Period Ended Volume High Low Closing Monthly 9/30/23 64,900 $ 4.84 $ 4.50 $ 4.65 Quarterly 8/31/23 471,700 $ 5.62 $ 3.70 $ 4.52 5/31/23 206,500 $ 5.90 $ 4.67 $ 4.65 2/28/23 296,200 $ 5.98 $ 4.95 $ 5.50 11/30/22 274,800 $ 6.54 $ 4.85 $ 5.08 8/31/22 162,600 $ 7.09 $ 6.19 $ 6.36 5/31/22 271,500 $ 8.25 $ 5.50 $ 6.72 2/28/22 153,800 $ 9.84 $ 7.15 $ 7.98 11/30/21 254,100 $ 13.74 $ 9.02 $ 9.15 Annually 8/31/23 1,249,200 $ 6.54 $ 3.70 $ 4.52 8/31/22 842,000 $ 13.74 $ 5.50 $ 6.36 8/31/21 1,305,400 $ 12.00 $ 7.23 $ 10.60 8/31/20 455,600 $ 8.78 $ 5.00 $ 7.55 8/31/19 1,318,200 $ 10.00 $ 6.23 $ 8.04 Holders Computershare Investor Services Inc. which is located in Vancouver, British Columbia, Canada is the registrar and transfer agent for the common shares.
Any dividends paid by the Company to U.S. shareholders would be subject to Canadian withholding tax. Recent Sales of Securities: Use of Proceeds from Securities The Company has sold no securities in the last 3 fiscal years.
Any dividends paid by the Company to U.S. shareholders would be subject to Canadian withholding tax. 9 Recent Sales of Securities: Use of Proceeds from Securities The Company has sold no securities in the last 3 fiscal years.
Purchases of equity securities by the issuer and affiliated purchasers The Company has not repurchased any common shares during the years ended August 31, 2022 or August 31, 2021. Item 6. [Reserved].
Purchases of equity securities by the issuer and affiliated purchasers The Company has not repurchased any common shares during the years ended August 31, 2023 or August 31, 2022. ITEM 6. [RESERVED]
On October 11, 2022 there were 23 registered shareholders and 3,495,342 shares of the Company’s common shares outstanding. 9 Dividends The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future.
On October 13, 2023 there were 26 registered shareholders and 3,498,899 shares of the Company’s common shares outstanding. Dividends The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future.
The stock split was effective as of May 29, 2018. Table No. 1 lists the volume of trading along with the high, low, and closing sales prices on the NASDAQ Capital Market for the Company's common shares. Prices are adjusted to reflect the common stock split effective May 29, 2018.
The common stock began trading on the NASDAQ Small Cap Market in April 1996. Table No. 1 lists the volume of trading along with the high, low, and closing sales prices on the NASDAQ Capital Market for the Company's common shares.
Removed
The common stock began trading on the NASDAQ Small Cap Market in April 1996. The Company declared a two for one stock split of its common stock with a record date of the close of business on May 22, 2018. Shareholders received one additional common share for each common share held as of the record date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the Year Ended August 31, 2022 First Second Third Fourth Full Quarter Quarter Quarter Quarter Year* Sales $ 12,918 $ 14,061 $ 20,922 $ 15,001 $ 62,902 Gross profit 2,465 3,424 5,353 2,551 13,793 Net income (loss) (391 ) 270 1,494 (209 ) 1,164 Basic earnings (loss) per share $ (0.11 ) $ 0.08 $ 0.43 $ (0.06 ) $ 0.33 Diluted earnings (loss) per share $ (0.11 ) $ 0.08 $ 0.43 $ (0.06 ) $ 0.33 For the Year Ended August 31, 2021 First Second Third Fourth Full Quarter Quarter Quarter Quarter Year Sales $ 10,316 $ 10,460 $ 21,620 $ 15,106 $ 57,502 Gross profit 2,963 2,612 5,582 2,990 14,147 Net income (loss) 489 (63 ) 2,414 615 3,455 Basic earnings per share $ 0.14 $ (0.02 ) $ 0.69 $ 0.18 $ 0.99 Diluted earnings per share $ 0.14 $ (0.02 ) $ 0.69 $ 0.18 $ 0.99 * Fiscal 2022 quarterly per share earnings were calculated using weighted average number of common shares outstanding as of August 31, 2022 of 3,493,807 (2021 – 3,486,537).
Biggest changeFor the Year Ended August 31, 2023 First Second Third Fourth Full Quarter Quarter Quarter Quarter Year Sales $ 12,578 $ 8,143 $ 18,946 $ 14,622 $ 54,289 Gross profit 2,860 1,921 4,413 3,053 12,247 Net income (loss) (74 ) (972 ) 735 290 (21 ) Basic earnings per share $ (0.02 ) $ (0.28 ) $ 0.21 $ 0.08 $ (0.01 ) Diluted earnings per share $ (0.02 ) $ (0.28 ) $ 0.21 $ 0.08 $ (0.01 ) For the Year Ended August 31, 2022 First Second Third Fourth Full Quarter Quarter Quarter Quarter Year* Sales $ 12,918 $ 14,061 $ 20,922 $ 15,001 $ 62,902 Gross profit 2,465 3,424 5,353 2,551 13,793 Net income (loss) (391 ) 270 1,494 (209 ) 1,164 Basic earnings (loss) per share $ (0.11 ) $ 0.08 $ 0.43 $ (0.06 ) $ 0.33 Diluted earnings (loss) per share $ (0.11 ) $ 0.08 $ 0.43 $ (0.06 ) $ 0.33 * Fiscal 2023 quarterly per share earnings were calculated using weighted average number of common shares outstanding as of August 31, 2023 of 3,498,899 (2022 – 3,493,807).
An IT Governance Committee aligns execution and security both for ourselves and also for parties with whom we communicate and do business. 15 Uyghur Forced Labor Prevention Act The Uyghur Forced Labor Prevention Act (“UFLPA”) is a US Federal Law signed by President Biden in December 2021 which became effective on June 21, 2022. As enforced by U.S.
An IT Governance Committee aligns execution and security both for ourselves and also for parties with whom we communicate and do business. Uyghur Forced Labor Prevention Act The Uyghur Forced Labor Prevention Act (“UFLPA”) is a US Federal Law signed by President Biden in December 2021 which became effective on June 21, 2022. As enforced by U.S.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Company’s operations are classified into three reportable operating segments and the parent corporate and administrative segment, which were determined based on the nature of the products offered along with the markets being served.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation The Company’s operations are classified into three reportable operating segments and the parent corporate and administrative segment, which were determined based on the nature of the products offered along with the markets being served.
Senior Management has discussed with the Audit Committee the development, selection and disclosure of accounting estimates used in the preparation of the consolidated financial statements. Recent Accounting Pronouncements Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements.
Management has discussed with the Audit Committee the development, selection and disclosure of accounting estimates used in the preparation of the consolidated financial statements. Recent Accounting Pronouncements Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements.
The segments are as follows: · Industrial wood products · Pet, Fencing and Other · Seed processing and sales · Corporate and administration Quarterly Results The following table summarizes quarterly financial results in fiscal 2022 and fiscal 2021. (Figures are thousands of dollars except per share amounts).
The segments are as follows: · Industrial wood products · Pet, Fencing and Other · Seed processing and sales · Corporate and administration Quarterly Results The following table summarizes quarterly financial results in fiscal 2023 and fiscal 2022. (Figures are thousands of dollars except per share amounts).
The results of JC USA are inter-company transactions and are eliminated on consolidation.5 LIQUIDITY AND CAPITAL RESOURCES Fiscal Year Ended August 31, 2022 As of August 31, 2022, the Company had working capital of $19,207,874 compared to working capital of $19,073,194 as of August 31, 2021.
The results of JC USA are inter-company transactions and are eliminated on consolidation. LIQUIDITY AND CAPITAL RESOURCES Fiscal Year Ended August 31, 2023 As of August 31, 2023, the Company had working capital of $19,134,810 compared to working capital of $19,207,874 as of August 31, 2022.
The sum of the quarterly earnings per share may not equal the full year earnings per share due to the use of the full year’s weighted average share figure and rounding. 10 RESULTS OF OPERATIONS Fiscal 2022 was a difficult and unpredictable year.
The sum of the quarterly earnings per share may not equal the full year earnings per share due to the use of the full year’s weighted average share figure and rounding. RESULTS OF OPERATIONS Fiscal 2023 was a difficult year in our markets.
Interest is now calculated based on the one-month SOFR plus 157 basis points, which as of August 31, 2022 was 3.86% (2.29% + 1.57%). The line of credit has certain financial covenants. The Company is in compliance with these covenants.
Interest is now calculated based on the one-month SOFR plus 157 basis points, which as of August 31, 2023 was 6.88% (5.31% + 1.57%). The line of credit has certain financial covenants. The Company is in compliance with these covenants.
Inflation Inflation did not have a material impact during fiscal 2020. Beginning in fiscal 2021, a number of product costs increased substantially, including raw materials, energy, and transportation/logistical related costs. These higher costs have negatively affected the Company’s gross margins.
Inflation Historically, inflation has not been a significant issue for the Company. However, beginning in fiscal 2021, a number of product costs increased substantially, including raw materials, energy, and transportation/logistical related costs. These higher costs have negatively affected the Company’s gross margins.
Current Working Capital Requirements Based on the Company’s current working capital position and the utilization of its current line of credit, the Company expects to have sufficient liquidity available to meet its working capital requirements for fiscal 2023. 14 OTHER MATTERS Contractual Obligations and Commercial Commitments The Company currently has no material contractual obligations or commercial commitments other than to suppliers of products or services.
Based on the Company’s current working capital position, the anticipated reduction in cash needs due to the closure of JCSC, and the unused borrowing capacity under its current line of credit, the Company expects to have sufficient liquidity available to meet its working capital requirements for fiscal 2024. 15 OTHER MATTERS Contractual Obligations and Commercial Commitments The Company currently has no material contractual obligations or commercial commitments other than to suppliers of products or services.
Corporate – JC USA JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had operating income of $819,139 in fiscal 2022 compared to operating income of $580,435 in fiscal 2021.
JCSC had an operating loss of ($251,261) in fiscal 2023 compared to an operating loss of ($517,453) in fiscal 2022. 14 Corporate – JC USA JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had operating income of $962,459 in fiscal 2023 compared to income of $819,139 in fiscal 2022.
Critical Accounting Policies Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The Company has ensured that each of its suppliers is in full compliance with the law and none of its products fall under the prohibited goods clause. 16 Critical Accounting Policies Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Environmental, Social and Corporate Governance (ESG) Jewett-Cameron endeavors to be a good steward and provide sustainable products with a positive impact. We strive to operate and grow in a way that honors our environment and relationships for the long term. This also aligns with one of our three value pillars: stewardship.
We strive to operate and grow in a way that honors our environment and relationships for the long term. This also aligns with one of our three value pillars: stewardship. Environmental For our products, the goal is that 90% of materials can be recycled.
We regularly provide employees with a corporate engagement survey to benchmark their engagement, satisfaction, and ideas for change. We support educational programs that build the future workforce through active participation in regional and statewide organizations, including the CTE/STEM Employer Coalition and assisting teachers to connect traditional school subjects to practical job site applications.
We support educational programs that build the future workforce through active participation in regional and statewide organizations, including the CTE/STEM Employer Coalition and assisting teachers to connect traditional school subjects to practical job site applications. The Company also actively participates in the local community, supported by a Corporate Charitable Giving Charter.
The decrease in cash is related to the increases in inventory. Prepaid expenses, which is mostly deposits paid for future inventory, declined as the Company’s large current inventory position has reduced the need for additional inventory purchases in the near term. Accounts payable rose to $1,566,047 from $1,349,677 which is related to the timing of payments due to suppliers.
The decrease in cash is related to the repayment of funds borrowed against the bank line of credit. Prepaid expenses, which is mostly deposits paid for future inventory, declined as the Company’s large current inventory position has reduced the need for additional inventory purchases in the near term.
The Company also actively participates in the local community, supported by a Corporate Charitable Giving Charter. Governance As a public company, our processes are outlined and governed by multiple regulations, including Sarbanes-Oxley. Our financial controls are mapped, executed, self-audited as well as regularly audited by outside experts as part of our annual process.
Governance As a public company, our processes are outlined and governed by multiple regulations, including Sarbanes-Oxley. Our financial controls are mapped, executed, self-audited as well as regularly audited by outside experts as part of our annual process. We have established risk mitigations that allows for condensed reviews of risks and impacts with our systems in place.
Environmental For our products, the goal is that 90% of materials can be recycled. Our suppliers are audited to strict commercial and fair practice standards, including our own supplier qualifications regarding facilities, capacity, labor practices, and environmental awareness.
Our suppliers are audited to strict commercial and fair practice standards, including our own supplier qualifications regarding facilities, capacity, labor practices, and environmental awareness. Packaging is designed to maximize recyclability and re-use and minimize non-recycled materials, and all waste materials in our own facilities are segregated to maximize recycling.
Greenwood’s sales have been heavily impacted by the COVID-19 pandemic, as many of their products are sold to municipalities and larger transit operators which continue to see reduced demand for transit services. These customers have also been severely impacted by shortages of components necessary to complete transit products due to logistics and supply chain issues.
Greenwood’s sales were heavily impacted by the COVID-19 pandemic, as many of their products are sold to municipalities and larger transit operators which experienced lower rider demand and supply shortages of important components and skilled personnel.
Short-term and Long-term Debt External sources of liquidity include a line of credit from U.S. Bank of $10 million, of which $3 million was available as of August 31, 2022. Subsequent to the end of the fiscal year, the Company has drawn an additional $600,000. As of October 28, 2022, $2,400,000 remains available.
Inventory turnover for the year ended August 31, 2023 was 169 days compared to 130 days for the year ended August 31, 2022. Short-term and Long-term Debt External sources of liquidity include a line of credit from U.S. Bank of $10 million, of which approximately $8.74 million was available as of August 31, 2023.
Accrued liabilities increased by $57,951 to $1,856,039 from $1,798,088. Bank indebtedness, which is from the Company’s line of credit and has primarily been used to acquire inventory, was $7,000,000 as of August 31, 2022 compared to $3,000,000 as of August 31, 2021. Deferred tax liability fell to $Nil from $116,945.
Accounts payable rose to $2,181,194 from $1,566,047 which is related to the timing of payments due to suppliers. Accrued liabilities increased by $257,154 to $2,113,193 from $1,856,039. Bank indebtedness, which is from the Company’s line of credit and has primarily been used to acquire inventory, was $1,259,259 as of August 31, 2023 compared to $7,000,000 as of August 31, 2022.
Packaging is designed to maximize recyclability and re-use and minimize non-recycled materials, and all waste materials in our own facilities are segregated to maximize recycling. Our facilities have replaced high energy consumption infrastructure with energy efficient HVAC and lighting during our recent remodel. Active products and designs utilize either recycled or non-petroleum-based plastics to enhance recycling and composting.
Our facilities have replaced high energy consumption infrastructure with energy efficient HVAC and lighting during our recent remodel. Active products and designs utilize either recycled or non-petroleum-based plastics to enhance recycling and composting. This includes the recently introduced compostable dog waste bag, a plant-based product, that is less reliant on fossil fuels used in traditional plastic bags.
The largest change affecting working capital is an increase in inventory of $6,240,948 to $20,632,313 from $14,391,365. Other changes in components of working capital include a decrease in cash of $699,850, an increase in accounts receivable of $105,143, a decrease in prepaid expenses of $1,193,245, and a decrease in prepaid income taxes of $43,995.
The largest change affecting working capital is a decrease in inventory of $2,293,265 to $18,339,048 from $20,632,313. Other changes in components of working capital include a decrease in cash of $400,767, a decrease in accounts receivable of $1,556,722, a decrease in prepaid expenses of $481,787, and a decrease in prepaid income taxes of $208,963.
Customs unless the importer is able to prove that these goods have not been made with forced labor. The Company has ensured that each of its suppliers is in full compliance with the law and none of its products fall under the prohibited goods clause.
Customs unless the importer is able to prove that these goods have not been made with forced labor.
There was no material impact on the Company’s financial statements on adoption. Other than Topic 842, the Company did not adopt any new accounting policies that would have a material impact on the consolidated financial statements, nor did it make changes to accounting policies.
Actual results may differ from these estimates under different assumptions or conditions. The Company has not adopted any new accounting policies that would have a material impact on the consolidated financial statements, nor did it make changes to accounting policies.
As of August 31, 2022, accounts receivable and inventory represented 94% of current assets and 81% of total assets. As of August 31, 2021, accounts receivable and inventory represented 85% of current assets and 74% of total assets. Our customers continue to pay on-time, with almost all of our outstanding receivables classified as current.
Our customers continue to pay on-time, with almost all of our outstanding receivables classified as current. For the fiscal year ended August 31, 2023, the accounts receivable collection period or DSO was 38 days compared to 42 days for the year ended August 31, 2022.
This includes the recently introduced compostable dog waste bag, a plant-based product, that is less reliant on fossil fuels used in traditional plastic bags. We also dedicate a percentage of sales to support environmental cleanup efforts. Social Our social responsibilities include cultural standards of operations and values which we establish in conjunction with our employees.
We also dedicate a percentage of sales to support environmental cleanup efforts. Social Our social responsibilities include cultural standards of operations and values which we establish in conjunction with our employees. We regularly provide employees with a corporate engagement survey to benchmark their engagement, satisfaction, and ideas for change.
Greenwood recorded operating income of $21,865 compared to an operating loss of ($144,313) in fiscal 2021. 13 Seed Processing and Sales - JCSC Sales at JCSC were $2,359,794 in fiscal 2022 compared to sales of $3,172,138 in fiscal 2021, which represents a decrease of $812,344, or 26%.
For fiscal 2023, Greenwood had an operating loss of ($46,307) compared to operating income of $21,865 for fiscal 2022. Seed Processing and Sales - JCSC During fiscal 2023, the Board of Directors made the difficult decision to permanently close JCSC effective August 31, 2023. Sales for JCSC in fiscal 2023 were $2,464,153 compared to sales of $2,359,794 in fiscal 2022.
Depreciation and amortization increased to $319,617 from $244,279. Income from operations decreased to $1,969,553 from $3,739,692 in fiscal 2021 due to the lower gross margins and the higher costs. Including other items, income before income taxes was $1,581,000 in fiscal 2022 compared to $4,424,208 in fiscal 2021.
Income from operations decreased to $430,684 from $1,969,553 due to the lower level of sales and the higher costs. Other items in fiscal 2023 totaled a loss of ($388,213) compared to a loss of ($388,553) in fiscal 2022.
Sales in Millions of Dollars Percent of Total Sales Fiscal Year Pet Fencing Other Pet Fencing Other 2022 $ 19,706,515 $ 38,562,319 $ 555,758 34 % 65 % 1 % 2021 $ 16,446,932 $ 33,805,909 $ 1,479,288 32 % 65 % 3 % Industrial Wood Products - Greenwood Sales at Greenwood in fiscal 2022 were $2,626,209, which was a nominal increase of $28,933 from sales of $2,597,276 in fiscal 2021.
Sales in Millions of Dollars Percent of Total Sales Fiscal Year Pet Fencing Other Pet Fencing Other 2023 $ 11,217,733 $ 36,078,696 $ 1,922,795 23 % 73 % 4 % 2022 $ 16,856,059 $ 37,935,911 $ 3,123,858 29 % 66 % 5 % Industrial Wood Products - Greenwood Sales at Greenwood in fiscal 2023 were $2,605,926, which was almost unchanged from sales of $2,626,209 in fiscal 2022.
Removed
Although the challenges associated with the worldwide COVID pandemic began to fade, the recovery brought its own unique difficulties, both for the Company and our customers. Sales for the year were $62,901,831, which was an increase of $5,400,288, or 9%, from sales of $57,501,543 in fiscal 2021.
Added
Our operations confronted a number of challenges, including poor weather, negative economic trends and inflationary pressures, and changing consumer spending habits. The primary selling season for our outdoor products in the spring and summer months was greatly shortened by the historically wet and unseasonably cold winter weather which extended across much of the United States well into April.
Removed
Our cost of sales, however, increased by $5,753,875, or 13%, which compressed our gross margins to 21.9% for the current year from 24.6% in fiscal 2021. These higher costs were due to large increases in raw material, energy, transportation, and freight costs during the year.
Added
This delayed, and ultimately significantly reduced, our orders from many of our customers, particularly retail hardware and Big Box stores. They maintained their winter inventory longer than usual which reduced their selling period for warm weather products.
Removed
We were especially affected by the soaring ocean freight costs caused by near-record high energy prices, port delays and shortages of vessels and shipping containers in the Pacific region.
Added
As a result, they ordered less product from our outdoor lines this year than in ordinary weather years. 10 The post-COVID shift of consumer spending habits, which has been compounded by persistently high levels of inflation, had a negative effect on our sales for the year.
Removed
For example, our container shipping costs from China in the 4 th quarter of fiscal 2022 were over 60% higher than we paid in the 4 th quarter of fiscal 2021, and over 900% higher than we paid in fiscal 2020 and 2019.
Added
These forces were particularly prominent within our home improvement and pet product lines, as consumers reduced their spending on these types of discretionary products from the elevated levels experienced during the pandemic. Our fiscal 2023 sales of $54.2 million is 21% higher than our sales of $44.9 in the last pre-pandemic year of 2020.
Removed
We also saw unprecedented increases in our shipping and delivery costs within the United States, and the time to both receive and deliver our goods also increased substantially.
Added
Although inflation has raised our selling price of our products since 2020, this 21% increase in the dollar amount of sales is still greater than the cumulative inflation rate in the US during the same period. Fencing sales were largely steady year-over-year, with several product lines exceeding expectations.
Removed
Because of the increasing costs of shipping and uncertainty of the timing of receipt of orders from China, coupled with rising inflation, we decided at the end of the 2 nd quarter to build our on-site inventory, particularly in our highest volume items.
Added
This performance was especially encouraging considering the poor Spring weather across the country which reduced consumer demand for fence lumber and hardware. Our efforts to increase the visibility of our hardware products and maintain their in-stock availability with several retailers has also contributed to this year’s sales.
Removed
This build began prior to the start of our traditionally busiest Spring and Summer sales season in our 3 rd and 4 th quarters of our fiscal year. It allowed us to mitigate the risks of shipping and supply chain disruptions and ship ahead of several announced price increases from both suppliers and shippers.
Added
We remain at the desired warehouse inventory levels for our key fence products and are experiencing no shipping delays to our customers. During fiscal 2023, we signed a new sales agreement with one of major lumber customers which changed how we inventory, sell and record our sales for this customer.
Removed
This higher level of inventory lowered some of our product costs while ensuring high product availability of our most popular products and on-time fulfillment during the 3 rd quarter. However, the supply issues on certain products which we experienced throughout the year worsened in the 4 th quarter and reduced our anticipated level of sales.
Added
Our expectation that this new arrangement would provide us with more consistent and predictable fencing sales, while improving the availability of the product in their stores, has been confirmed. Although this agreement requires us to maintain higher levels of fencing inventory than we had in the past, we are pleased with how the arrangement has progressed.
Removed
We sold out of some products entirely and lost sales while waiting for additional units to arrive from China. Due to both supplier and shipping delays, some of our seasonal products arrived late and we missed the primary sales window. Those sales could not be recouped.
Added
In the future, it may be possible to extend this agreement to more of this customer’s distribution centers that we continue to serve under our prior sales agreements. The pet industry overall has recently experienced a spending downturn from the surge of sales recorded in the prior two years. During the pandemic many Americans worked from home.
Removed
Several new products, which we originally planned for release in fiscal 2021 but were pushed back into 2022 due to the effects of the pandemic in China, had a slower than expected roll-out as many of our customers were also experiencing inventory issues and curtailed their orders.
Added
They acquired new pets and purchased additional supplies for all their pets. This increased spending subsided as many people returned to work outside the home. The higher levels of inflation prevailing over the last 18 months has also dampened consumer spending in the sector. Demand for our pet products have similarly been affected.
Removed
Our customers’ inventory issues also unexpectedly affected sales of some of our existing products, as certain retailers did not order at their usual volumes. We have now met with these customers to discuss and correct the issues to help ensure improved order volumes going forward.
Added
We relaunched one of our kennel products during 2023, and we also resolved a sales interruption with a significant on-line retailer, both of which have had positive results on sales. Our pet product inventory levels remain higher than usual.
Removed
During the fourth quarter we evaluated the costs of our international sales and decided that we will pause our effort to expand our sales in Europe. Our strategy of selling our products through distributors was ultimately not profitable, and we are evaluating new European sales strategies for the future.
Added
Many retailers have a higher than normal level of pet supply inventory on hand due to increasing their purchases during the pandemic prior to the sudden downturn in consumer demand. As a result, we expect overall demand from retailers to remain depressed into 2024 until they are able to work through their own high inventory levels.
Removed
However, in the near term, we determined that the deteriorating European financial environment, which has been negatively affected by the strong US dollar, the war in Ukraine, and likely upcoming energy shortages, is not an opportune time to resume our sales efforts. Therefore, we will be liquidating the inventory we currently have located in Europe during fiscal 2023.
Added
We remain committed to maintaining our list prices on our primary pet products. There is no urgency to move this inventory as it will not degrade or spoil over time. For our slower moving pet products, we continue to explore opportunities to accelerate sales in those items.
Removed
In the 4 th quarter, we recorded a $800,000 inventory allowance against our earnings, with a good portion of this allowance for the carrying value of our European inventory. We feel that there remains significant long-term potential to expand our sales internationally and remain committed to international expansion.
Added
We launched our new MyEcoWorld® sustainable bag products during the 4 th quarter of fiscal 2023. Under our distribution agreement with SECOS Group of Australia, Jewett-Cameron is the exclusive distributor of their MyEcoWorld® sustainable bag products in the US and Canada.
Removed
We intend to formulate a new international growth plan, including in Europe, and will consider new sales initiatives once financial conditions improve. Our fiscal 2022 financial results were also negatively affected by the settlement of a case brought by an association of California District Attorneys.
Added
We expect it will take time for sales of these new and innovative premium products to gain traction with retailers and consumers. Since these products are consumables, once they are established, recurring sales will build over time. We are optimistic of the potential of this new product line to grow into a meaningful segment of our business.
Removed
This case related to their ongoing investigation into the environmental labeling and marketing of dog waste bags. The District Attorneys claim that labeling certain dog waste bags, including the Company’s, as biodegradable or compostable were misleading due to the lack of industrial composting facilities that accept dog waste. A number of major retailers also settled their portion of the case.
Added
Consumers are increasingly seeking more environmentally friendly alternatives to conventional hydrocarbon derived plastic products. Our success with our compostable poop bag since its launch several years ago indicates these products are less seasonal and can provide positive contributions to our historically lower revenue quarters.
Removed
In June 2022, we agreed to settle for a $300,000 payment with no admission of guilt by the Company. In response to the case, we have redesigned our packaging and marketing materials for the poop bags which included feedback from the District Attorneys to help ensure legal compliance for our future sales of the products within California.
Added
Greenwood’s primary customers are in the transit sector, which is an industry among the most affected by the COVID-19 pandemic.
Removed
We have moved forward with the lessons learned from the issue. Sales with the new packaging have resumed throughout the US and are selling well through both retailers and online which demonstrates the consumer’s desire for these types of new products. 11 Building our inventory required greater cash outlays which we primarily funded through our bank line of credit.
Added
Transit is beginning to recover from the severe decline in ridership and other serious issues, including shortages of vehicle components and trained drivers and mechanics, that reduced the number of vehicles on the road and the need for Greenwood’s engineered wood products.
Removed
Our plan is to repay the line of credit as the inventory is sold and accounts receivable are collected. We reduced our borrowing from a high during the year of $9.5 million to $7.0 million as of August 31 st .
Added
With transit’s recovery, Greenwood’s sales have increased from the pandemic periods but were flat in 2023 compared to 2022. We continue to see a number of marketing opportunities for Greenwood’s products in both its current markets and in new sectors, such as construction.
Removed
Because we are currently well stocked with inventory, we anticipate that we will order and receive smaller amounts of inventory than we historically order during the first quarter and into the second quarter of fiscal 2023. This is expected to allow us to more effectively manage our working capital in fiscal 2023.
Added
We have been actively searching to hire new traders to pursue these new business opportunities, and a new trader was successfully hired in September 2023. 11 During fiscal 2023, management concluded a comprehensive strategic review of the seed segment. As a result of this review, the Board of Directors made the difficult decision to close JCSC effective August 31, 2023.
Removed
We have continued to strategically invest in our personnel, facilities, and equipment. Effective January 1, 2022, Charlie Hopewell moved from the day-to-day operational role as CEO to his overall strategy positions as a Director and Board Chair.
Added
The review of JCSC, which last reported a full-year profit in fiscal 2020, was initiated due to the segment’s declining revenue, higher costs, and the lack of success in generating new customers over the last several years.
Removed
Chad Summers assumed the role of Chief Executive Officer in addition to his prior position as President, and Mitch Van Domelen, CPA, was promoted to Chief Financial Officer. Chad Summers was also named a Director in November 2022.
Added
When the seed operation was first opened in 1965, and then acquired by the Company in 2000, the local area around the JCSC operations was rural and dominated by large farming operations, including grass seed farms which made up JCSC’s customers.
Removed
We also added new employees and promoted from within to fill important skilled specialty roles to improve our efficiency and expand customer engagement and service, including a new Chief Revenue Officer and newly created positions of a Vice-President of Supply and a Vice-President of Fulfillment formerly consolidated under the COO role.
Added
Over the last decade, many agricultural customers in the area around JCSC are converting their acreage from growing cyclical and commoditized grass seed to more specialized higher value crops, such as berries and filberts. Consequently, JCSC has been receiving lower quantities and quality of seed for processing and experiencing less demand for its marketing and sales in recent years.
Removed
In both 2021 and 2022, we were named a “Top Workplace” by the Oregonian Newspaper, based on employee survey responses which has helped us to retain and attract talent and build a positive corporate culture.
Added
In addition, JCSC’s building and equipment are nearing the end of their expected operating life. Over the last several years, the higher costs of maintenance required to maintain operations have had a substantial negative effect on JCSC’s margins and has been an important factor in JCSC’s operating losses.
Removed
We expanded our facilities though the renovation of an existing warehouse building which we will use for both custom order fulfilment and to support our growing fence business. New investments have been made in technology improvements, including Electronic Data Interchange (EDI) and customer order automation through a Business to Business portal.
Added
Taking into consideration the current economic and market trends, and the high cost of new equipment, the Board determined an orderly wind-down of operations and closure of JCSC was the most prudent action. The wind-down of regular operations including seed cleaning was effective August 31, 2023. The process was greatly aided by the retention of the entire JCSC operating staff.
Removed
Our corporate website was upgraded with enhanced accessibility, functionality and modernized investor relations and contact sections. We also redesigned our product section with easier navigation and a more unified brand presentation within a new eCommerce interface. Although ocean shipping costs have recently fallen from the record highs seen in fiscal 2022, other logistic issues remain.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed0 unchanged
Biggest changeThe Company does not expect any change in the interest rates to have a material adverse effect on the Company’s results from operations. 16 Foreign Currency Risk The Company operates primarily in the United States. However, a relatively small amount of business is conducted in currencies other than U.S. dollars.
Biggest changeForeign Currency Risk The Company operates primarily in the United States. However, a relatively small amount of business is conducted in currencies other than U.S. dollars. Also, to the extent that the Company uses contract manufacturers in China, currency exchange rates can influence the Company’s purchasing costs.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Risk The Company did not have any derivative financial instruments as of August 31, 2022, and the Company does not use derivative instruments for trading purposes. Changes in U.S. interest rates affect the interest earned on the Company’s cash as well as interest paid on debt.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk The Company did not have any derivative financial instruments as of August 31, 2023, and the Company does not use derivative instruments for trading purposes. Changes in U.S. interest rates affect the interest earned on the Company’s cash as well as interest paid on debt.
The Company has a line of credit with an interest rate based on published rates that may fluctuate over time based on economic changes in the environment. The Company is subject to interest rate risk and could be subject to increased interest payments if market interest rates fluctuate.
The Company has a line of credit with an interest rate based on published rates that may fluctuate over time based on economic changes in the environment. The Company is subject to interest rate risk and could be subject to increased interest payments against any amounts borrowed against the line of credit if market interest rates fluctuate.
Removed
Also, to the extent that the Company uses contract manufacturers in China, currency exchange rates can influence the Company’s purchasing costs.

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