JCTC

Good afternoon, and welcome to the Jewett-Cameron Trading Company second quarter fiscal 2026 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 Blum with Lytham 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 2026 second quarter financial results for the period ended February 28th, 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 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, Jewett-Cameron's CFO, is with me again today and will dive into the key drivers of our second quarter financial results. 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 Jewett-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. Jewett-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 at approximately 200 stores. Even 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 Steel Post displayers, which were initially produced domestically at high cost to meet our customers' 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 these 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" high and 84" 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 helped us to offer competitive pricing and, to some extent, lessen the impact of the current tariff situation. Jewett-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 much better positioned 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 the 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. 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?

Thank you, Chad, and good afternoon to everyone on the call today. My comments will focus on adding color to key areas and events that had material influence on the quarter. Let's begin with the revenue line.

I'd like to remind our longtime investors and more recent shareholders that our revenues tend to be very seasonal, with a majority of our impactful sales occurring in our third and fourth fiscal quarters, March through August. As such, Q1 and Q2 sales results are typically lower than the second half of the year. Revenue for Q2 2025 was $9.1 million, compared to $8.2 million in Q2 of 2024. As Chad mentioned, sales of metal fencing products increased compared to Q2 of last year, driven by ongoing load-in of new Lifetime Steel Posts in store displayers. Sales of compostable products were flat in the quarter as compared to the same quarter last year. As Chad mentioned, we are experiencing growth with the MyEcoWorld products online and as we transition our marketing efforts towards that brand.

Sales at our Greenwood operating segment for the current quarter were $1.1 million, compared to $0.8 million in Q2 2024, as we saw tariff uncertainty accelerate some purchases from our customers. The aforementioned growth by these product lines was offset in part by our wood fencing product sales, which decreased compared to the same period last year due to materials constraints. Additionally, demand for pet products continues to be weak as sales in the current quarter declined compared to Q2 2024. As Chad mentioned, as we look to the remainder of fiscal 2025, the growth initiatives we have implemented, particularly the Lifetime Steel Post replenishment orders, anticipated reorders from the increased and improved marketing of Adjust-A-Gate displayers, and onboarding new regional grocery retailers carrying our sustainable bags, is expected to offset softness in our Pet Solutions business.

It is not yet clear how the tariffs and pricing changes will impact our seasonal sales, but we will monitor our inventories closely to adjust to the market demand accordingly. Turning to gross margins. Gross margins for Q2 2025 were 20.1% compared to 25.1% in Q2 2024, and compared to 18.3% in Q1 2025. The decrease in gross profit margins from the year-ago period primarily relate to a shift in sales mix to lower margin products and the high cost of additional in-store display units produced domestically and deployed during the quarter, also increased our costs compared to the second quarter of fiscal 2024. We believe this to be an investment in our future growth strategy.

While the potential tariff situation plays itself out, our ongoing initiatives to improve gross margins, including new supply chain partners and enhanced pricing strategies, are designed to improve margins in future quarters. However, no assurance can be made that this will be the case due to the fluidity and uncertainty of the tariff situation. Turning to OpEx. Operating expenses during Q2 2025 were $2.6 million compared to $2.8 million in Q2 of 2024. The decrease is primarily due to a realignment and reduction in headcount to new business processes. Loss from operations for Q2 2025 was $0.8 million, compared to $0.7 million loss in Q2 of 2024.

Net loss for Q2 2025 was $0.6 million or $0.16 per basic and diluted share, compared to net income of $0.5 million or $0.15 per basic and diluted share in Q2 of 2024. Finally, a few comments on the balance sheet. As part of our initiatives to improve working capital, we've reduced our inventory balances by 23% to $14.9 million at February 28, 2025, from $17.6 million at February 29th, 2024. Cash balance at February 28, 2025, was $0.4 million compared to $1.1 million at February 2024. We currently have no long-term debt. I do want everyone to note that we do have access to a $6 million revolving line of credit that we use for seasonal working capital needs.

Based on the seasonality of our normal cash cycle, we typically see our working capital needs spike in the early spring as we transition our inventory to sales and collections. Subsequent to the end of this second quarter, we began drawing on our line. Finally, our total stockholder equity at February 28, 2025, was $23.7 million or $6.73 per share. As Chad touched on, our carrying balance of the Seed facility is less than $600,000, where we currently have it listed for sale for $9 million. The successful sale or lease of the real estate and facility would dramatically improve shareholder equity. We hit some of those topics from a pretty high level and covered a lot of them pretty quickly, but happy to answer any additional questions anyone may have. I will now pass the call back over to Chad.

Thanks, Mitch, for the overview. Let me just wrap things up with a few key comments and takeaways. First, our focus remains on driving shareholder value. Our strategy is focused in four key areas, growth drivers, product innovation, supply chain and operational efficiency, and asset monetization. The successful growth in our metal fence category and encouraging traction of our MyEcoWorld products is validation of good execution on our strategic focus. Our product innovation continues to progress and drive our desire to enrich outdoor spaces and improve the lives of professionals, do-it-yourselfers, and dog owners with our new Adjust-A-Gate Unlimited Gate Kit. We are not out of the woods yet, and there is much more work to be done as we navigate the rapidly changing geopolitical landscape impacting importers of quality products like ours.

We are partnering with our suppliers and our customers to navigate the changing landscape over the coming months. With that, let me turn the call over to the operator for any questions. Operator?

We will now begin the question and answer session. To submit a question, you may type it into the ask a question box on your webcast screen. Robert, I'll turn it over to you to address the questions.

Thank you so much. Again, I just want to remind everyone, if you are on the webcast player and would like to submit a question, as the operator just said, submit it to the ask a question feature there on the webcast player. Chad, just a question here. If you can talk about why haven't sort of yourself or members of the executive team purchased shares in the open market? If you could maybe just talk in some generalities about insider purchases.

Sure. Thank you for the question. I, of course, cannot speak for everyone, but this is certainly something that I will review and evaluate. Oftentimes, management teams are locked out from purchasing shares due to material information, so that's clearly a factor that has to be considered, but I'll certainly investigate that further.

Okay. Once again, to everyone on the line here, if you'd like to submit a question, type it into the webcast player. I'll pause for just a moment to see if there's any additional questions. All right, Chad, I'm not showing any additional questions here. With that, I'll turn it back over to you for closing remarks.

Okay. Thank you, Robert. One final point. As part of our ongoing effort to increase investor awareness of the company, we have recently commenced quarterly conference calls. We have updated our Nasdaq trading symbol from JCTCF to JCTC to better highlight our U.S.-based operations, and we have expanded our shareholder communications program. In furtherance of this expansion, we will be attending the Planet MicroCap Showcase in Las Vegas, coming up on April 23rd and 24th. If you are attending, we look forward to seeing you there. If you're not attending but would like to follow up and learn more about Jewett-Cameron, please contact Robert Blum to help coordinate an introduction. Again, I want to thank you all for your continued interest and support of Jewett-Cameron, and thanks again for your participation. Have a good afternoon.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, and welcome to the Jewett-Cameron Trading Company's Review of Financial Results for the Fiscal 2025 Full Year and Fourth Quarter ended August 31, 2025. Please note, this event is being recorded. I would now like to turn the conference over to your host. Please go ahead.

Thank you very much, operator, and thank all of you for joining us today to discuss Jewett-Cameron's operational and financial results for the fiscal 2025 full year and fourth quarter for the period ended August 31, 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 address questions that have been submitted to the company. 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, planned, 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. A webcast replay of 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. I appreciate the opportunity to speak with everyone here today. As I stated in the press release, we began fiscal 2025 with a positive outlook and a focus on continuing to increase sales, improve margins, lower costs, introduce innovative products and monetize surplus assets. Throughout the first 2 quarters of the fiscal year, many of management's key objectives were achieved. Specifically, our metal fence business was on a clear growth trajectory, resulting in first half 2025 revenue growth compared to the first half of 2024. This momentum was driven by the continued success of our Lifetime Steel Post and Adjust-A-Gate products, the expansion of our innovative in-store display placements and the launch of new offerings. Further, our new supply source partners were increasing production to support our sales, lessening our dependence on China and the higher tariff impacts. With new Lifetime Steel Post displayers in place in the right stores in the right aisles, we were set for seasonally strong second half of the year when professionals and do-it-yourselfers are most active leveraging our products to enrich outdoor spaces. Unfortunately, the rapidly escalating and unpredictable across-the-board tariffs first announced in February of 2025 on sourced goods created unprecedented market turmoil, which resulted in deferring retailer purchases, straining logistics and driving higher costs, all of which significantly impacted our second half results. It was not just our ability to understand and calculate the complex and rapidly changing executive orders, but also getting our customers to accept price increases in a timely manner. For the past number of months, we have taken aggressive steps to mitigate the impacts of the tariffs in the short term. Some of these, we were able to move quickly and decisively on, including realignment of our workforce through the reassignment of some employees to new roles and an overall headcount reduction in 2025 of 27% year-over-year. Further, the actions taken over the past couple of years to institute multi-country sourcing initiatives have allowed us to somewhat mitigate a portion of these new tariff costs by shifting production away from China as the highest tariff country. We believe that retailers are becoming acclimated to the new tariff environment and the realities of new associated costs. Our customers are increasingly accepting the new prices, which will help alleviate a portion of this cost pressure going forward. We will continue to work with our suppliers and customers to find solutions to these tariff challenges while reducing our cost as much as possible. Furthermore, we are working with our customers to better align our costs with the price we charge for our products. This structural alignment is critical to ensuring our long-term profitability and minimizing the risk to the business against future volatility. While the tariffs had a short-term impact on our business during the second half of fiscal 2025, it further forced us to accelerate our internal strategic review. For years, Jewett-Cameron Trading Company had been a collection of businesses, products and brands that included pneumatic tools, seed cleaning, engineered plywood flooring as well as dog kennels, gates and fence sports. As the world evolved, we began to shift our long-term strategic focus to the business we felt could scale and deliver meaningful profits. We shut down the pneumatic tool business, closed down our seed cleaning facility and rebranded Jewett-Cameron to capitalize on our strengths of differentiation, innovation and channel presence with a focus on improving the lives of pros and do-it-yourselfers in the backyard. Our metal fence products remain our best margin-producing category and not only maintained their growth trajectory post pandemic, but matched last year's sales even with the tariff volatility this year. Jewett-Cameron fence will continue to be the primary focus of our operations and resources as we expand our in-store presence and introduce innovative products. With thousands of display units already deployed and our Lifetime Steel Post program on track to be in over 500 stores, a small fraction of its potential, we see significant opportunities to grow through broader retail placement, new channels and continued product enhancement. As global conditions stabilize, we believe a significant opportunity remains to accelerate growth and rebuild margins by deepening key partnerships, improving purchasing discipline and bringing our core fencing products to more customers than ever before. Mitch will touch more on this section -- in his section, but it's important to note that despite the challenges from tariffs for the year, metal fence products were essentially flat compared to the previous year. Let me expand on each of these actions just a bit more. First off, on the overhead and administrative expense reductions, we are executing on a plan to initially reduce operating expenses by approximately $1 million to $3 million. It is our intent to match our operating expense level with our gross profit levels to achieve profitability in the long term. Jewett-Cameron was originally founded as a lumber brokerage business and has maintained strong lumber sales for many years. In 2023, we had the opportunity to help one of our larger customers who had recently lost their primary source of Western Red Cedar fence tickets, and they asked us to assist by participating in their lumber consignment program. This program helped stabilize the year-over-year lumber sales fluctuations we were commonly experiencing as a secondary supplier to multiple big box retailers. However, the increased demand to keep sufficient quantities of inventory on hand, the inflexibility to accept price increases and longer cash conversion cycle greatly reduced the profitability of our lumber program. Under the consignment arrangement, we were required to purchase and warehouse increased volumes of inventory to support the quick replenishment of stock at our customers' distribution centers, which placed a significant liquidity burden on the company as it had to outlay cash, but would not receive payment until store supplies were replenished. Our lumber consignment customer recently provided notice of their intention to transition away from our consignment arrangement in calendar 2026. Although the consignment arrangement provided us with meaningful revenue, it was low margin, demanding of internal resources and not as profitable as we would like. We are currently in discussions with this customer as well as other third parties regarding the purchase of our remaining lumber inventory, which is -- which, as mentioned, adds warehousing and other costs to maintain. On the pet product front, as we have communicated for the past few years, demand for certain of our pet products remains slow as the pet market continues its overall weakness. As a result, we continue to have excess pet inventory at our warehouse. This excess inventory has placed a strain with working capital tied up in inventory. In recent months, we have successfully implemented programs that are beginning to accelerate sales of our pet products. Additionally, we are working with third-party liquidators to sell the remaining high-quality but slow-moving inventory, which will provide us with cash and clear our warehousing costs for these products. We are working to sell most, if not all, over the next few months. Because we expect to sell this inventory at lower prices, we have increased our allowance for obsolete inventory by $650,000 in fiscal 2025 over our allowance in fiscal 2024. Going forward, we are reviewing potential changes to our pet business as we expect the overall pet industry to remain challenging in the foreseeable future. At Greenwood, sales in fiscal 2025 rose by 2% over our sales in fiscal 2024. Although demand for transit-focused products continues to rebound from the pandemic lows as more workers return to the office, a transit seat shortage during fiscal 2025 restricted new bus construction and orders for our transit products. Demand for these transit products improved as the stat shortage was largely resolved by the fourth quarter of fiscal 2025. We have recently realigned some personnel to provide support to Greenwood by working to open new sales channels and add new customers. We believe this segment has significant growth potential in both our primary transit sector and in new industrial markets. While our Greenwood subsidiary is generally a lower risk profitable business, it is somewhat outside of our core differentiated operations and may present more value to us as part of a strategic collaboration. Thus, we are in the process of reviewing transactions that would enhance overall value for our industrial wood products subsidiary and our company. If our preliminary discussions materialize into something more definitive, we will provide appropriate additional disclosures at that time. Transitioning to MyEcoWorld. While we have seen good growth since we rebranded, we have not matched our $2.5 million in sales when we first launched our compostable dog waste bags a few short years ago. One part of our growth strategy for this line was to enter the grocery store segment. During fiscal 2025, we secured our first placement with the launch of pet waste bags into 59 tops friendly markets across the Northeast beginning in late February. However, the imposition of the new tariffs first announced in February 2025 made our products less price competitive and growth in the grocery segment much more challenging. Instead, we will be focusing on expanding upon our successful introductions into big box stores where we have existing strong supplier relationships and into foreign markets that are unburdened by the U.S. tariffs, making these products more competitive. A big value opportunity is clearly our seed cleaning property. It sits on our books for just $566,000 unencumbered, and it is our belief that the value of this facility is much higher. That said, the current sluggish economic conditions within both the nearby cities and in Greater Portland has reduced the previously perceived need among the nearby cities to quickly expand the urban growth boundary, which prioritize our property throughout the consideration process. Therefore, any inclusion of this property in expanded urban growth boundary or reclassification of the property from its limited rural industrial classification now appears less likely in the short term, given the prevailing economic and political environment in the surrounding area. Accordingly, we have relisted the property based on comps, its corner location along a major highway and its unique zoning classification at a price of $7.223 million. In addition to our seed cleaning property, we also own a property in North Plains, Oregon, we refer to as our innovation studio that contains a photo studio and meeting space, which we are listing at a price of $795,000. This property is also unencumbered. After a promising start to our fiscal year 2025, the second half experienced unprecedented challenges that required us to shift our focus. As I hope you can hear, management and the Board are highly focused on evaluating strategic alternatives that prioritize the company's and shareholders' overall value. Obviously, there can be no assurance that any strategic discussion with third parties will result in definitive agreements or the completion of any transaction, but we recognize that the status quo is not an option. We will provide further updates on these preliminary discussions if and when a definitive agreement is reached, of which there can be no assurance. As we look forward, we believe there is value to be created in our business. Our goal, first and foremost, is to create an operating structure that gets us to operating profitability as quickly as possible. While the market is still tough, we believe the best pathway forward is by focusing on our core strengths by improving the lives of professionals and do-it-yourselfers with innovative products that enrich outdoor spaces and leveraging our extensive distribution footprint with the industry's leading home improvement retail locations. Through a focused approach that allow for a better correlation between our cost and the prices we sell our products for, reduction in our exposure to carrying excess levels of inventory by adding direct import sales, which reduces our working capital needs and a lean operating structure, we can exit fiscal 2026 in a dramatically improved financial position. And then as we monetize certain noncore assets, we can deliver added value to shareholders. With that, let me now turn the call over to Mitch to review the financials in a bit more detail. We will then look to address your questions. Mitch?

Thank you, Chad. Good afternoon to everyone on the call today. My comments will focus on adding some color to key areas and events that had material influence on the fiscal year and the fourth quarter. Now let's start on the revenue line. For the year, total revenue was $41.3 million, down $5.8 million compared to the $47.1 million from last year. For the fourth quarter, revenue was $10.4 million versus $13.2 million for the fourth quarter of last year. Despite the impact from the tariffs, our metal fence business was essentially flat from last year. This highlights our rationale to lean into our differentiated metal fence operations as the normalization in the market occurs, and we come to the other side of this with better contractual structures with our retail customers. Looking at the remainder of our operations, our lumber sales were down due to supply challenges and profitability to support this program remain undesirably low due to the customer resistance to accept new prices in a timely fashion. As Chad mentioned, our primary lumber customer gave notice of their intention to transition away from our consignment arrangement in calendar 2026. We currently have about $5 million in excess lumber inventory, which we acquired to meet the needs of the customer under our consignment arrangement. We are currently in discussions with this customer as well as other third parties regarding the purchase of this excess lumber inventory. Our pet business was $4.3 million compared to $7.6 million last year, reflecting the overall weakness in the pet industry in general. Our Greenwood industrial wood business saw 2% growth for the year, coming in at $3.8 million compared to $3.7 million, while the sustainable or MyEcoWorld business had revenue of $800,000 versus $1.5 million in last fiscal year. Turning to gross margins. Overall, gross profit margins for the year were 15.1% compared to 18.8% in fiscal 2024. For the fourth quarter, gross margins were 8.2% compared to 14.5% in Q4 of last year. The decline in gross margins were due to a combination of higher tariff costs, higher shipping costs, expenditures on the continued rollout of in-store display units and a shift by customers towards lower-margin products during the quarter. Our 2025 margins were also negatively affected by an increase in our obsolete inventory reserve of $650,000 to $1.2 million from the $550,000 in fiscal 2024. We've made strenuous efforts to adjust our selling prices to correctly reflect the new tariff rates, but the rapid and unpredictable announcements of new rates has made that process extremely difficult, which is largely dependent on our customers consenting to these higher prices in a timely manner. Chad had mentioned this process in his remarks, but progress has been made, and we expect prices to normalize as the global economic situation stabilizes. Turning to operating expenses. As a result of our cost reduction initiatives implemented through fiscal year '25, operating expenses decreased from $10.7 million last year to $10 million this year. For the fourth quarter, operating expenses were $2.3 million compared to $2.2 million in Q4 of 2024. As Chad mentioned, we have initiated a plan to further reduce operational expenses by an additional $1 million to $3 million annually moving forward. Net loss for the year was $4.1 million compared to $722,000 net income last year. Looking specifically at the fourth quarter, net loss was $2.2 million compared to $191,000 net loss for the fourth quarter of fiscal year 2024. For the year, the impact of tariffs was the primary driver that impacted the decrease in both sales and gross margins. Please remember that the last fiscal year also included a $2.45 million gain from a settled arbitration case against one of our former distributors. Finally, a few comments on the balance sheet. Our inventory balance at August 31, 2025, was $15.9 million. And yes, that does include the obsolete inventory reserve of $1.2 million. We are currently in discussions with the lumber customer as well as other third parties regarding the purchase of the remaining lumber inventory. We are also working with third-party liquidators to sell our high-quality but slow-moving pet inventory, which will provide us with cash and clear our warehousing and maintenance costs for these products. As I communicated last quarter, based on the seasonality of our normal cash cycle, we typically see our working capital needs spike in the early spring as we transition our inventory to sales and collection. For this reason, coupled with the slower movement of certain inventories, we once again draw on our credit line at the end of fiscal year. We had drawn $2.1 million against the credit line. However, as of November 28, 2025, our borrowing under the credit line was about $4.3 million. Under the current terms of the credit line, our lender, Northrim, provides a short-term operating capital by purchasing the company's accounts receivable invoices and as a loan against our inventory position. The maximum we may borrow against the line is $6 million. We are currently discussing with Northrim to adjust the credit line to increase the maximum borrowing computation, which would provide us with additional financial flexibility and to raise the maximum amount available to us. As Chad discussed, we will continue to focus on our operational strengths while reducing costs where possible in our efforts to increase our sales and margins and return to profitability. In addition, we are currently evaluating several different strategies to strengthen our liquidity position, many of which we discussed during this call and are otherwise detailed in our public reports. With that, let me turn it back over to Chad.

Thanks, Mitch, for the overview. Clearly, fiscal 2025 didn't go as we or anyone else expected. The results of the first half of the year versus the second half show a tale of 2 stories: one pre-tariffs where we were in a growth trajectory and one post tariffs, which highlighted a significant slowdown in sales and impact on our gross margins. Our goal, first and foremost, is to create an operating structure that gets us to operating profitability as quickly as possible. We are executing on a plan to further reduce operating expenses by approximately $1 million to $3 million annually and through a lean operating structure, we can exit fiscal 2026 in a dramatically improved financial position. I look forward to communicating with you in the months to come as we continue to execute on these reformulated strategic initiatives. I thank you all for your continued interest and support of Jewett-Cameron, and we'll now be happy to take any questions. Robert, can you let me know if there are any questions?

Yes, Chad, there's a couple of questions here. First off, can you provide maybe some more details about the customer slow adoption of your price adjustments? Anything you can expand upon there?

Yes, absolutely. Our customer relationships are such that any of our price increases must be consented to by the customer. The customer may not agree to any increase or negotiate lower price increases and any change may only be accepted after 30 to 90 days or longer, if at all. Ultimately, many of our customers did not immediately accept higher prices for our products, which we adjusted in response to the increased costs associated with the tariffs and global trade disruption. The frequent changes to tariff rates since February also caused some of the price changes we instituted in response to become obsolete before we could even pass them on to our customers. This forced us to spend time to recalculate the new prices and begin the process of presenting them to and negotiating with our customers again, which further affected our ability to recapture our higher costs through increasing our sales prices.

All right. The next question here is, maybe you can discuss why your lumber customer decided to move forward without you.

Yes. Good question. At Jewett-Cameron, we have a long history of being a reliable secondary supplier of cedar fence boards, able to step in and fill gaps if and when primary suppliers face delays or challenges. We were honored to be able to step in and help our customer in a time of crisis when they were in need of a primary supplier for multiple distribution centers. However, as I mentioned earlier, the consignment model slowed our cash flow, reduced our margins and demanded additional internal resource to support the program, in addition to greatly increasing our lumber inventory requirements and tying up our capital. I presume their decision to switch suppliers aligns with their long-term strategic direction for the category. while the program did provide meaningful revenue for our business, we believe this transition will reduce our inventory burdens and allow us greater focus on our metal fence products moving forward.

All right. Maybe you could expand on your decision to focus on the metal fence business as sort of the go-forward strategy here.

Yes. Well, the Jewett-Cameron fence products best represent our innovative abilities to deliver functional solutions to both pros and do-it-yourselfers. For example, our patented Adjust-A-Gate family of products is virtually unrivaled as it prevents gates from sagging and provides an adjustable gate frame kit to perfectly fit the opening. Our latest innovation, the Adjust-A-Gate Unlimited, is the only complete four-corner gate on the market and its low-profile design offers a no-sag technology that is low profile, so the metal is barely noticeable on a wood gate. Developing these differentiated products that deliver value to end users is something Jewett-Cameron has excelled at throughout our history. Jewett-Cameron fence continued to grow post pandemic, as I mentioned earlier, and held steady in the midst of the tariffs this past year. We believe there's room to grow. Our existing customers are requesting us to expand our fence products into thousands of stores. Our sales team is actively pursuing expanding channels and prospecting to make our products available wherever pros and do-it-yourselfers want to buy these products. I would add too, that our fence category offers diversity of products that are well positioned for growth, such as our perimeter patrol, temporary fencing and our high-quality, low-maintenance composite Euro fence products in both existing and new sales channels.

All right. Thank you for that, Chad. Maybe we could talk a little bit about the time line for any asset sales.

Yes, asset sales. As I mentioned earlier in my prepared remarks, we are engaged in a variety of preliminary discussions, and we'll provide additional disclosures if and when definitive arrangements are entered into.

All right. There's a couple of additional questions here. Maybe we could expand a little bit on the increase in the credit line usage from $2 million to $4 million. Is there anything that could be expanded upon there?

Well, I can take that. What I'd say is to fully capitalize on reformulated business strategy, we're actively pursuing strategic financing to accelerate our business plan to fund the core growth initiatives and to ensure robust operational capacity in the face of continuing global economic volatility. So securing the capital is key to maintaining our ability to consistently purchase and deliver products, thereby supporting our customers in the normal course of our business and their business.

All right. Very good. Next question here is specifically as it relates to collateral for the Northrim line of credit. Is there anything you can expand upon there on what specifically is the collateral?

Currently, our agreement with Northrim provides for the sale of accounts receivable and an advance against current inventory. And that's how we currently have that structured and that would remain in place.

All right. Very good. Maybe you could discuss what range of cash do you estimate freeing up in the next 6 months from pet product liquidation and excess lumber inventory to the extent that you're able to provide any details on any of that?

Yes. Mitch, I can speak to that. We won't be able to disclose that beyond what we've already kind of highlighted in the 10-K. I can't guarantee the value we're going to receive for that. But again, as previously mentioned, we are motivated and we'll be able to share that at a later date.

All right. Very good. I think we're sort of at top of the hour here on questions. If there's any additional questions, we'll look to get these addressed directly. I guess with that, I will turn it over to management for any closing remarks.

Well, again, thank you again for your interest in Jewett-Cameron, and I look forward to communicating with you in the months to come as we continue to execute on these reformulated strategic initiatives.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.