Parthenon LLC Delivers Open Letter to the Jewett-Cameron (NASDAQ: JCTCF) Board of Directors
Parthenon LLC Delivers Open Letter to the Jewett-Cameron (NASDAQ: JCTCF) Board of Directors
Believes that the Board should immediately begin exploring Strategic Alternatives to maximize Shareholder value
认为董事会应立即开始探索战略替代方案,以最大限度地提高股东价值
The Performance of the stock has been abysmal
该股的表现一直很糟糕
Profitability has collapsed over the past 3 years
在过去的3年中,盈利能力已经崩溃
Insiders own less than 1% of the outstanding stock
内部人士拥有的已发行股票不到1%
No insider has purchased a single share of stock in 10 years – an unequivocal vote of "no confidence" in the business
十年来,没有内部人士购买过一股股票——这是对该业务的明确投票 “不信任”
LOUISVILLE, Ky, Sept. 3, 2024 /PRNewswire/ --
肯塔基州路易斯维尔,2024 年 9 月 3 日 /PRNewswire/ —
Jewett-Cameron Trading Company LTD.
Attn: The Board of Directors
32275 N.W. Hillcrest
P.O. Box 1010
North Plains, Oregon 97133
Jewett-Cameron 贸易有限公司
收件人:董事会
32275 N.W. Hillcrest
邮政信箱 1010
俄勒冈州北平原 97133
Members of the Board of Directors:
董事会成员:
Parthenon LLC is one of the largest shareholders of Jewett-Cameron Trading Company Ltd. (NASDAQ: JCTCF), with a beneficial ownership of approximately 6.2%. We have been continuous shareholders since 2011. We have generally been very patient and supportive owners. However, over the past two years, we have discussed our growing apprehension and disappointment with the current CEO and the Board Chairman in numerous conversations. Our warnings, which have unfortunately proven even more prescient than we imagined, have largely been ignored. We are writing this letter to express our serious concerns regarding both the business and stock performance and the extremely problematic prospects for the long-term viability of Jewett-Cameron as an independent public company. In addition, the near-total lack of ownership by the board and management creates a governance structure with an appalling economic and incentive mismatch between insiders and outside shareholders. Management has failed operationally and strategically, yet continues to implement more of the same failed strategies of the past. Management has not articulated any rational, sound plan to address the serious and growing challenges the company faces. We believe management is in denial about the severity of the hurdles the company must surmount to generate positive returns for shareholders. They seem unaware of the need to act with urgency before more (or all) shareholder value is destroyed.
帕台农有限责任公司是Jewett-Cameron贸易有限公司(纳斯达克股票代码:JCTCF)的最大股东之一,实益所有权约为6.2%。自2011年以来,我们一直是持续的股东。我们一直是非常耐心和支持的所有者。但是,在过去的两年中,我们在多次对话中与现任首席执行官和董事会主席讨论了我们日益增长的担忧和失望。不幸的是,事实证明,我们的警告比我们想象的更有先见之明,但在很大程度上被忽视了。我们写这封信是为了表达我们对业务和股票表现以及Jewett-Cameron作为独立上市公司的长期生存能力极其困难的前景的严重担忧。此外,董事会和管理层几乎完全缺乏所有权,这造成了内部股东和外部股东之间令人震惊的经济和激励不匹配的治理结构。管理层在运营和战略上都失败了,但仍在继续实施更多与过去相同的失败战略。管理层尚未制定任何合理、健全的计划来应对公司面临的严峻且日益严重的挑战。我们认为,管理层否认公司为为股东创造正回报必须克服的障碍的严重性。他们似乎没有意识到在更多(或全部)股东价值被摧毁之前必须采取紧急行动。
A brief summation of the stock and business performance will serve to illustrate the depth of the problem. Over the past five years ending August 23, Jewett-Cameron stock has returned a horrific negative 46.3%, while the Russell 2000 Index is up 62.4% for the same period. For the past 10 years, the total return in the stock has been negative 11.4%. The Russell 2000 is up 118.8% for the same period. The stock collapse has mirrored the business collapse. For the 10 Fiscal Years (FY) ending August 31, 2012 through 2021, Jewett-Cameron generated an average of approximately $4 million in EBITDA annually with a low of approximately $3 million in FY 2019. In FY 2022, EBITDA declined to $2.4 million. In FY 2023, EBITDA was slightly below $1 million. This fiscal year, through the first nine months ending May 31, EBITDA was approximately negative $1.2 million. We expect the company to be only marginally profitable (if at all) for the fiscal year ending August 2024. Based on management's comments in the third quarter 10-Q, along with our discussions with management and our own analysis, we fear that Fiscal Year 2025 results are likely to be worse than any of the past three years.
对股票和业务表现的简要总结将有助于说明问题的深度。 在截至8月23日的过去五年中,Jewett-Cameron的股票回报了可怕的负46.3%,而罗素2000指数同期上涨了62.4%。在过去的10年中,该股的总回报率为负11.4%。罗素2000指数同期上涨了118.8%。股票暴跌反映了业务的崩溃。在截至2012年8月31日至2021年的10个财政年度(FY)中,Jewett-Cameron平均每年产生约400万美元的息税折旧摊销前利润,而2019财年的最低水平约为300万美元。在2022财年,息税折旧摊销前利润下降至240万美元。2023财年,息税折旧摊销前利润略低于100万美元。本财年,截至5月31日的前九个月,息税折旧摊销前利润约为负120万美元。我们预计,在截至2024年8月的财年中,该公司将仅实现微薄利润(如果有的话)。根据管理层在10-Q第三季度的评论,以及我们与管理层的讨论和我们自己的分析,我们担心2025财年的业绩可能比过去三年的任何一年都要差。
The challenges Jewett-Cameron must overcome to return to consistent profitability are, we believe, numerous, daunting, and growing. These include supply chain concentration that carries significant geopolitical risks along with rising procurement costs, limited pricing power with its most important customers, and growing competition in several important product lines. The company has introduced few successful new product line extensions over the past decade, and none that have had a meaningful positive impact on profitability. The weight of all these challenges will be difficult, if not impossible, to overcome as a small independent company with limited resources.
我们认为,为了恢复稳定的盈利能力,Jewett-Cameron必须克服许多挑战,令人望而生畏,而且还在不断增长。其中包括具有重大地缘政治风险的供应链集中化、采购成本上升、与最重要客户的定价能力有限以及多个重要产品线的竞争日益激烈。在过去的十年中,该公司几乎没有成功推出新的产品线扩展,也没有对盈利能力产生有意义的积极影响。作为一家资源有限的小型独立公司,所有这些挑战的重担即使不是不可能也很难克服。
Our fears for the long-term viability of Jewett-Cameron as an independent company have been, as the board knows, echoed by the credit market. The company was forced to search for a new lender for its credit line this past spring after being dropped by their then-current lender. Management was able to secure a new line, but will pay interest computed at the prime rate plus 4.75%. That is now equal to a very painful, and telling, 13.25%. This extremely high-cost debt will weigh heavily on already severely diminished pre-tax profits.
正如董事会所知,我们对Jewett-Cameron作为一家独立公司的长期生存能力的担忧得到了信贷市场的回应。去年春天,该公司在被当时的贷款机构取消信贷额度后,被迫为其信贷额度寻找新的贷款机构。管理层得以获得新额度,但将支付按最优惠利率加4.75%计算的利息。现在,这相当于非常痛苦且有说服力的13.25%。这笔成本极高的债务将严重压制已经严重减少的税前利润。
Insiders own only 32,518 shares, or 0.93%. That amounts to $141,453 (at market close on August 23), a shamefully miniscule capital commitment. Even more disturbing, nearly all the shares owned by insiders were obtained through grants and options. Over the past 10 years, based on publicly available information, we think that no board member or senior executive has purchased even a single share of stock. This is a clear, and appalling, vote of "no confidence" in the prospects of the company that insiders manage and oversee.
内部人士仅拥有32,518股股票,占0.93%。这相当于141,453美元(8月23日收盘时),这是一笔微不足道的资本承诺。更令人不安的是,内部人士拥有的几乎所有股份都是通过赠款和期权获得的。在过去的十年中, 根据公开的信息, 我们认为,没有董事会成员或高级管理人员购买过哪怕一股股票。 这是对内部人士管理和监督的公司前景的明确而骇人听闻的 “不信任” 投票。
In addition, we were incredibly disappointed and angered to see the board attempt to entrench themselves by instituting a staggered board in February 2024. Fortunately, this arrogant and self-serving move was voted down by shareholders (in a true "grassroots" vote, as we are aware of no public campaign waged against the proposal).
此外,看到董事会试图通过在2024年2月成立错开的董事会来巩固自己的地位,我们感到非常失望和愤怒。幸运的是,这一傲慢而自私自利的举动被股东否决了(我们知道没有针对该提案的公开运动,这是一次真正的 “基层” 投票)。
We feel that Jewett-Cameron's branded pet containment, area fencing, and wood panel products, along with the company-owned real estate, could have a value well above the public market valuation to a buyer with the capital, expertise, and infrastructure to maximize the returns. The expense synergies in the right "home" are, we believe, potentially quite large. The board should explore, with the assistance of a qualified outside advisor, if the best path forward for the company and shareholders would be for those products to be part of a larger company with much greater resources. We are very concerned this may be the only viable long-term path forward for Jewett-Cameron. We believe the board should immediately begin to fulfill its fiduciary duty to consider the best interests of all shareholders.
我们认为,对于拥有资金、专业知识和基础设施以实现回报最大化的买家来说,Jewett-Cameron的品牌宠物收容设施、区域围栏和木板产品以及公司拥有的房地产,其价值可能远高于公开市场估值。我们认为,正确的 “家园” 的支出协同效应可能相当大。董事会应在合格的外部顾问的协助下,探讨公司和股东的最佳前进道路是否是让这些产品成为拥有更多资源的大公司的一部分。我们非常担心这可能是Jewett-Cameron唯一可行的长期前进道路。我们认为,董事会应立即开始履行其信托责任,考虑所有股东的最大利益。
Sincerely,
真诚地,
Thomas A. Corea
Chief Executive Officer
Parthenon LLC
托马斯·A·科里亚
首席执行官
帕台农神庙有限责任公司
SOURCE Parthenon, LLC
来源 Parthenon, LLC