JEWETT CAMERON TRADING CO LTD Q2 FY2026 earnings call

Key managerial messages include: Core metal fencing business is the largest and most successful category, with Lifetime Steel posts showing positive momentum. Executing initiatives to reduce complexity, lower costs, improve execution, like headcount reduction, tighter overhead control, and disciplined inventory management. Successfully monetizing excess inventory in Q2, including negotiating with consignment customer for excess cedar fencing and selling remaining excess cedar inventory to a lumber wholesaler, and liquidating slow - moving pet inventory. Evaluating strategic options such as monetizing remaining excess non - core inventory, and considering strategic partnerships, collaborations, and potential divestitures of select businesses and real estate assets. External environment faces challenges like tariffs, soft consumer sentiment, and higher fuel - related shipping and logistical costs.

Second quarter revenue increased 16% year - over - year to $10.5 million, and 5% for the first six months over last year. Driven by sell - through of excess cedar fencing inventory, liquidation of slow - moving pet inventory, and stronger sales at Greenwood. Within metal fencing, higher Lifetime Steel post sales were offset by lower Adjustagate and other metal fence products sales. Gross margin in Q2 was 15.7% vs negative 12.5% in Q1. For the first six months, revenue was $19.2 million vs $18.3 million, with gross margin 3%. Wages and employee benefits declined 19% year - over - year to $1.3 million in Q2, SG&A was higher due to professional fees and warehousing costs. Greenwood's Q2 sales were $1.5 million vs $1.1 million in Q2 2025, an increase of 31%.

Objective is to exit fiscal 2026 with a sustainable business model, focused on strongest product categories, supported by disciplined operations, and unlocking value from non - core assets where appropriate.

Tariff changes and uncertainty create cost pressures and disrupt purchasing patterns. Soft consumer sentiment weighs on discretionary spending. Higher fuel - related shipping and logistical costs with limited ability to pass through. Uncertainty in monetization of non - core assets and potential strategic transactions, with no assurance of definitive agreements.

Q: To the extent possible, can you quantify the volume and impact of lumber liquidation and excess pet inventory in Q2 versus Q1 and indicate how much of this inventory remains outstanding?

A: Approximately 2.5 million of second quarter sales came from liquidating certain pet inventory and selling excess cedar fencing, those sales won't repeat. Substantially sold most of the excess lumber inventory, with important outcome of converting stranded capital back into cash, reducing warehouse costs, etc.

Q: Do you have any updates on the sale of Jewett Cameron Seed property in Hillsboro and the Innovation Studio property in North Plains?

A: They remain listed for sale and additional information will be provided when a sale document is executed.

Q: Can you sort of expand upon tariff refunds and the, I think it was mentioned, the April 2026 Section 232 change?

A: Refund related to IEEPA - related tariffs is not expected to be material, timing and method uncertain. April 2026 Section 232 steel tariff change is calculated on full value of imported products, which in some cases could increase tariff expense, and still evaluating product - by - product impact.

Q: What is the latest on the cost reduction program?

A: Continue to reduce headcount and align cost structure to current revenue levels. Wages and employee benefits were down 19% year - over - year in Q2 and down 23% in the six - month period. Remain committed to reducing annual operating expense by $1 million to $3 million as part of exiting fiscal 2026 with a more sustainable model.