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
認爲董事會應立即開始探討戰略替代方案,以最大化股東價值
The Performance of the stock has been abysmal
股票表現糟糕透頂
Profitability has collapsed over the past 3 years
盈利能力在過去的3年中崩潰
Insiders own less than 1% of the outstanding stock
內部持有的流通股不到1%
No insider has purchased a single share of stock in 10 years – an unequivocal vote of "no confidence" in the business
10年來,沒有一名內部人員購買過一股股票,這是對業務的明確不信任投票
LOUISVILLE, Ky, Sept. 3, 2024 /PRNewswire/ --
LOUISVILLE,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
朱伊特卡梅倫貿易有限公司。
注意:董事會
N.W. Hillcrest 32275號
郵政信箱1010
俄勒岡州北平斯
Members of the Board of Directors:
董事會成員:
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.
Parthenon LLC是Jewett-Cameron Trading Company Ltd. (納斯達克: JCTCF)的最大股東之一,持有約6.2%的股權。自2011年以來,我們一直是持續的股東。我們一直是非常耐心和支持性的股東。然而,在過去兩年中,我們在衆多會談中討論了我們日益增長的擔憂和對現任CEO和董事長的失望。我們的警告遺憾地證明比我們想象的更準確,但很大程度上被忽視了。我們寫這封信來表達我們對Jewett-Cameron的業務和股票表現以及其作爲一家獨立公開公司的極其問題的長期可行性的嚴重擔憂。此外,董事會和管理層幾乎沒有股權,導致內部人員和外部股東之間存在嚴重的治理結構差異和激勵離譜。管理層在運營和戰略上失敗了,卻繼續實施過去失敗的戰略。管理層沒有提出任何理性有效的計劃來應對公司面臨的嚴峻和不斷增長的挑戰。我們認爲管理層對公司克服障礙產生積極回報存在否認態度。他們似乎沒有意識到在更多(或所有)股東價值消失之前,採取緊急行動的必要性。
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.
對股票和業務表現的簡要總結將有助於說明問題的嚴重程度。 在截至2023年8月23日的過去五年中,Jewett-Cameron股票收益率慘跌46.3%,而同期Russell 2000指數上漲62.4%在過去的10年中,股票總回報率爲負11.4%。而同期Russell 2000指數上漲118.8%。股價崩潰與業務崩潰相映成趣。在截至2021年8月31日的10個財年中,Jewett-Cameron平均每年實現約400萬美元的EBITDA,其中在2019財年最低,約爲300萬美元。2022財年,EBITDA下降至240萬美元。2023財年,EBITDA略低於100萬美元。今年截至5月31日的前九個月,EBITDA約爲負120萬美元。我們預計公司在截至2024年8月的財年中僅能實現微薄利潤(如果有的話)。根據管理層在第三季度的10-Q報告中的評論,以及我們與管理層的討論和自己的分析,我們擔心2025財年的業績可能會比過去三年中的任何一年更糟糕。
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.
朱伊特卡梅倫必須克服的難題,我們認爲是衆多、困難且持續增長的。其中包括供應鏈集中化帶來的重大地緣政治風險以及不斷上升的採購成本,與最重要的客戶之間的定價能力有限,以及在幾個重要產品線上面臨不斷增加的競爭。過去十年中,公司引入了幾個成功的新產品線延伸,但都未對盈利能力產生有意義的積極影響。所有這些挑戰的重壓對於資源有限的小型獨立公司來說將是困難,甚至是不可能克服的。
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.
對於朱伊特卡梅倫作爲獨立公司的長期可持續性,我們的擔憂已經得到信貸市場的 echo, 董事會也清楚。公司在今年春季被現任放貸人放棄後,被迫尋找新的信貸額度提供方。管理層設法獲得了新的額度,但將支付按照基準利率加4.75%計算的利息。這現在相當於一個非常痛苦且顯著的 13.25%。這種極高成本的債務將嚴重拖累已經嚴重減少的稅前利潤。
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.
內部持有人僅擁有32,518股股份,佔比0.93%。根據公開信息,這相當於141,453美元(截至8月23日收盤價),是一筆令人羞愧的微小資本承諾。更令人擔憂的是,幾乎所有內部持有人擁有的股份都是通過授予和期權獲得的。在過去的10年中,基於公開信息, 我們認爲,沒有董事會成員或高級執行人員購買過任何股票。 這是對內部管理和監督的公司前景明確而令人震驚的「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,我們對董事會在 2024 年 2 月設立分層董事會的企圖感到非常失望和憤怒。幸運的是,股東們拒絕了這一傲慢自私的舉措(在我們所知的情況下,沒有公開發起反對提案的運動)。
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.
我們認爲朱伊特卡梅倫的品牌寵物圍欄、區域圍欄和木製面板產品,以及公司擁有的房地產,在擁有資本、專業知識和基礎設施的買家手中,可能具有遠高於市場估值的價值。在正確的「家」中,我們相信費用的協同效應可能相當大。董事會應該在一個合格的外部顧問的協助下,探索公司和股東的最佳前進道路,將這些產品納入擁有更大資源的大型公司。我們非常擔心這可能是朱伊特卡梅倫唯一可行的長期前進道路。我們認爲董事會應立即開始履行其受託責任,考慮到所有股東的最佳利益。
Sincerely,
此致敬禮,
Thomas A. Corea
Chief Executive Officer
Parthenon LLC
Thomas A. Corea
首席執行官
Parthenon LLC
SOURCE Parthenon, LLC
SOURCE Parthenon, LLC