JCTCF – Jewett Q3 review

First thing to pop out in this 9 months review is the US growth in revenues.  The US market sales increased by 16% in the current fiscal year.  Mostly due to the highly profitable division of Lawn, Garden, Pet and others.  They increased current customers sales in this division in a nice way.  We’ve also seen small revenues coming from South Ameria and Africa.  Will it grow or is it a one time sale?  We’ll see in the future.

Secondly, Jewett decreased customer concentration from 2 customers accounting for more than 10% of sales deriving 50% of revenues to 1 (26% of sales).  Risk on receivables have been spread on more customers.  I like lower risks. Top 10 customers still represents 56% of sales.

Third, operating expenses and administration costs decreased considerably (10% and 28%).  This helped alot the bottom line because division margins were low in the current quarter.  Lets see the “breakout”.

Revenues are finally in the up trend (10%).  Demand from the boat manufacturing industry remains weak. The Company is developing new industry relationships in other industries which has helped overall demand for Greenwood’s industrial wood products.  This helps greenwood bottom line reducing losses to 100k in recent quarter instead of 200k for the previous year equivalent quarter.

The decline in operating income is attributable to higher raw material and transportation costs.  While still being profitable, this division bottom line decline by 25% from previous year with constant sales.

Higher sales (17%), lower profit (36%).  Looks like a copy/paste of JCLC.

Small division, small profit. Nothing changed.

Forth, the buyback craziness (see here) is still on the run!  They cancelled for 3M$ in the fiscal year or 1M$ in the last fiscal quarter alone!  Moreover, a new share repurchase plan for a total of 15% of company shares have been approved by the board!

Price estimate review
TTM without extraordinary charges (legal) would result at 1.53$/share on the current share count.  With an EPS calculator of 10, this would result in a price of 15.3$ representing a gain of 54% on current market price (9.9$).

Disclosure : Author has a position in JCTCF.

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