TABLE OF CONTENTS | |
President's Report to the Shareholders | 2 |
Management's Discussion and Analysis | 3 |
Consolidated Financial Statements and Notes ... | 11 |
Directors and Officers | 23 |
Sales Offices and Distribution Centres | 24 |
HEAD OFFICE | Toll-Free Canada: 800-361-6503 |
225 Goodfellow Street | Tel: 450-635-6511 |
Delson, Quebec | Fax: 450-635-3729 |
J5B 1V5 | info@goodfellowinc.com |
Canada | www.goodfellowinc.com |
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PRESIDENT'S REPORT TO THE SHAREHOLDERS
In the first quarter of 2025, Goodfellow delivered $111.2 M in sales, up 5.5% from $105.3 M in the same quarter of 2024, thanks to its diversified product offering and strong distribution network across Canada. Increased overhead including wages, leases and depreciation tied to existing sites, and the integration of several asset acquisitions in the United States, led to impacts that will take time to fully mitigate, resulting in a net loss of $2.3 M, compared to a net loss of $0.1 M in Q1 2024.
A key factor in Goodfellow's performance was its strategic approach to inventory management, ensuring adequate stock levels to support both distribution operations and specific customer programs. Market share gains through opportunity buys played a crucial role in driving modest sales growth, reinforcing the Company's competitive position.
Goodfellow remains focused on long-term opportunities and will continue to monitor and manage the supply chain to address risks related to U.S. tariffs. The ongoing Canadian housing shortage continues to create demand for specialty wood products. Shifting consumer behaviors in Canada could drive increased renovation expenditures heading into the seasonal period.
With its strong market presence, dedicated team and adaptive strategies, the Company is well positioned to navigate these volatile economic conditions. Goodfellow's value-added capabilities and specialty services offering will remain key drivers of growth in 2025 and beyond.
Sincerely,
(Signed) "Patrick Goodfellow"
President and Chief Executive Officer
April 10, 2025
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The following Management's Discussion and Analysis ("MD&A") and Goodfellow Inc. (the "Company") interim consolidated financial statements were approved by the Audit Committee and the Board of Directors on April 10, 2025. Unless otherwise indicated, the MD&A is based on information available up to such date. The MD&A should be read in conjunction with the consolidated financial statements and the corresponding notes for the years ended November 30, 2024 and November 30, 2023. The MD&A provides a review of the significant developments and results of operations of the Company during the three months ended February 28, 2025 and February 29, 2024. The interim consolidated financial statements ended February 28, 2025 and February 29, 2024 are prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts in this MD&A are in Canadian dollars unless otherwise indicated. All tabular dollar amounts are in thousands of Canadian dollars, except amounts per share or unless otherwise indicated. Some amounts included in this MD&A have been rounded to make reading easier, which may affect some calculations. Additional information relating to Goodfellow Inc., including the Annual Information Form and the Annual Report, can be found on SEDAR+ at www.sedarplus.caand at www.goodfellowinc.com.
FORWARD-LOOKING STATEMENTS
This MD&A contains forward-looking statements relating, inter alia, to objectives, strategies, priorities, goals, plans, financial position, operating results, trends and activities of Goodfellow Inc. and its markets and industries. Forward-looking statements can be identified by words such as: "believe," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements regarding liquidity and risk management in the current economic conditions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, these statements are forward-looking to the extent that they are based on the Company's assessments, expectations and assumptions relative to, inter alia, to the state of the global economy and the economies of the regions in which the Company operates; the level of demand for the Company's products including from its recurring client base, including bookings from customers; prices and margins for its products; competitors; reliability of supply chains; inflation; interest rates; foreign currency fluctuations; overhead expenses; working capital requirements and access to capital or funding to finance same; the collection of accounts receivable; the availability and sufficiency insurance coverage; the sufficiency and reliability of the Company's workforce; the successful management of environmental and health and safety risk; the sufficiency, reliability and effectiveness of information systems; the sufficiency, reliability and effectiveness of internal and disclosure controls; and the absence of adverse change in the Company's regulatory environment and legal proceedings. Although the Company believes that the assessments, expectations and assumptions underlying the forward-looking statements contained in the MD&A are reasonable, there can be no assurance that such assessments, expectations and assumptions will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward- looking statements are based will occur or prove to be accurate. Actual results could differ significantly from management's expectations if recognized or unrecognized risks and uncertainties affect results or if assessments or assumptions are inaccurate. These risks and uncertainties include, among other things: the effects of general economic and business conditions including the cyclical nature of our business; industry competition; inflation, credit, currency and interest rate risks; environmental risk; level of demand and financial performance of the manufacturing industry; competition from vendors; changes in customer demand; extent to which the Company is successful in gaining new long-term relationships with customers or retaining existing ones and the level of service failures that could lead customers to use competitors' services; increased customer bankruptcies; dependence on key personnel; laws and regulation; information systems, cost structure and working capital requirements; changes in trade policies, including duties, barriers, restrictions, tariffs and any retaliatory measures; occurrence of hostilities, political instability or catastrophic events and other factors described in the Company's Annual Management's Discussion and Analysis for the years ended November 30, 2024 and November 30, 2023 and its other public filings available at www.sedarplus.ca. For these reasons, the Company cannot guarantee the results of these forward-looking statements. The foregoing risks and uncertainties are described in greater detail in this MD&A. The MD&A gives an insight into past performance as well as the future strategies and key performance indicators as viewed by the management team at Goodfellow Inc. The Company disclaims any obligation to update or revise these forward-looking statements, except as required by applicable law.
NON-IFRS FINANCIAL MEASURES (unaudited)
The Company reports its financial results in accordance with IFRS. However, in this document, the following non-IFRS measures, non-IFRS ratios and supplementary financial measures are used: EBITDA, Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid, Gross profit, Gross margin, Shareholders' Equity per share and dividends paid per share. These measures do not have a standardized meaning under IFRS and could be calculated differently by other companies and accordingly, may not be comparable. Definitions for these non-IFRS measures and a reconciliation to financial information in accordance with IFRS are presented below and in Note 15 "Segmented Information and Sales" to the unaudited interim consolidated financial statements for the three months ended February 28, 2025 and February 29, 2024. The Company believes that many of its readers analyze the financial performance of the Company's activities based on these non-IFRS financial measures, as such measures may allow for easier comparisons between periods. The Company also believes that these measures are useful indicators of the performance of its operations and its ability to meet its financial obligations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them. For measures displayed per share, the Company divided the measures by the total number of outstanding shares at February 28 and 29 of the period presented in the case of Shareholders Equity per share and by the weighted average number of outstanding shares for the relevant period ended February 28 and 29 presented for other measures per share.
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"EBITDA" represents earnings before income taxes, net financial costs, depreciation of property, plant and equipment and of right-of- use-assets and amortization of intangible assets. Management believes this metric is useful as it allows comparability of operating results from one period to another by excluding the effects of items that primarily reflect the impact of long-term investment and financing decisions, rather than the results of day-to-day operations.
The table below contains a reconciliation of EBITDA to the most directly comparable IFRS measure, net earnings.
Reconciliation of EBITDA | For the three months ended | For the years ended | ||
February 28 | February 29 | November 30 | November 30 | |
2025 | 2024 | 2024 | 2023 | |
(unaudited) | (unaudited) | |||
$ | $ | $ | $ | |
Net (loss) earnings | (2,260) | (108) | 13,369 | 14,688 |
Income taxes | (878) | (43) | 4,695 | 5,402 |
Net financial costs | 786 | 55 | 2,379 | 2,429 |
Depreciation of property, plant and equipment | 1,262 | 835 | 4,188 | 3,311 |
Depreciation of right-of-use assets | 1,495 | 1,034 | 4,787 | 4,697 |
Amortization of intangible assets | 145 | 147 | 591 | 602 |
EBITDA | 550 | 1,920 | 30,009 | 31,129 |
"Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid" represents net cash flows from operating activities before changes in non-cash working capital, income tax paid and interest paid. Management believes this measure is useful as it provides an indication of the Company's financial flexibility, i.e. cash available to the Company to service debt, meet other payment obligations, make investments and execute the Company's strategy.
The tables below contain a reconciliation of Net Cash Flows from Operating Activities excluding impact of changes in non-cash working capital, income tax paid and interest paid to the most directly comparable IFRS measure, Net Cash Flows from Operating Activities.
Reconciliation of Net Cash Flows from Operating Activities excluding impact of changes | For the three months ended | ||
in non-cash working capital, income tax paid and interest paid - First quarter | February 28 | February 29 | |
(unaudited) | 2025 | 2024 | |
$ | $ | ||
Net Cash Flows from Operating Activities | (34,762) | (32,701) | |
Changes in non-cash working capital items | 34,562 | 32,510 | |
Interest paid | 545 | 189 | |
Income taxes paid | 1 | 1,925 | |
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working | 346 | 1,923 | |
capital, income tax paid and interest paid | |||
Net Cash Flows from Operating Activities per share | (4,12) | (3.84) | |
Net Cash Flows from Operating Activities excluding impact of changes in non-cash working | 0.04 | 0.23 | |
capital, income tax paid and interest paid per share | |||
Weighted Average Number of Share Outstanding (thousands) | 8,434 | 8,515 |
With respect to "Gross profit" and "Gross margin", these measures are used under the sections "Cost of Goods Sold" in the discussion below for the results for the three months ended February 28, 2025 and February 29, 2024. Please refer to such sections for a description of how theses measures are calculated and a reconciliation to the most directly comparable IFRS measure.
In addition, the following tables set out the information supporting the per share calculation Shareholders' Equity:
Reconciliation of Shareholders' Equity per share | As at | ||
(unaudited) | February 28 | November 30 | February 29 |
2025 | 2024 | 2024 | |
$ | $ | $ | |
Shareholders' Equity | 201,407 | 206,208 | 190,520 |
Shareholders' Equity per share | 23.91 | 24.38 | 22.37 |
Number of Share Outstanding (thousands) | 8,424 | 8,458 | 8,513 |
BUSINESS OVERVIEW
Goodfellow Inc. is a diversified manufacturer of value-added lumber products and a leading wholesale distributor of building materials and floor coverings. The Company operates in Canada, the United States and the United Kingdom, serving both commercial and residential sectors. In Canada, Goodfellow maintains a strong presence with nine (9) processing plants and thirteen (13) distribution centres strategically located from coast to coast. In the United States, the Company operates four (4) processing plants and two (2)
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distribution centres, while in the United Kingdom there is one (1) distribution centre. Goodfellow serves a diverse customer base that includes lumberyard retailers, manufacturers, industrial and infrastructure project partners, and floor covering specialists.
COMPARISON FOR THE THREE MONTHS ENDED FEBRUARY 28, 2025 AND FEBRUARY 29, 2024 (unaudited)
HIGHLIGHTS | Q1-2025 | Q1-2024 | Variance |
$ | $ | % | |
Sales | 111,180 | 105,334 | +6 |
Loss before income taxes | (3,138) | (151) | -1,978 |
Net loss | (2,260) | (108) | -1,993 |
Net loss per share - Basic and Diluted | (0.27) | (0.01) | -2,600 |
Net cash flow from Operating Activities excluding impact of changes in non-cash | |||
working capital, income tax paid and interest paid (1) | 346 | 1,923 | -82 |
Net cash flow from Operating Activities | (34,762) | (32,701) | -6 |
EBITDA (1) | 550 | 1,920 | -71 |
- Non-IFRSfinancial measure - refer to section "Non-IFRS Financial Measures" for more information and a reconciliation to the most directly comparable IFRS measure.
Sales in Canada during the first quarter of 2025 increased 3% compared to last year due to an increase in sales of flooring products and lumber. Quebec sales increased 5% due to an increase in sales of flooring products and lumber. Sales in Ontario decreased 3% mainly due to a decrease in sales of all product categories except for flooring products. Sales in Western Canada increased 6% due to an increase in sales of flooring products and lumber. Atlantic region sales increased 7% due to an increase in sales of all product categories except for flooring products.
100%
Geographical Distribution of Sales for the First Quarter ended February 28, 2025 | |
Quebec | 33% (2024 : 33%) |
Ontario | 25% (2024 : 27%) |
Atlantic | 19% (2024 : 19%) |
US and Exports | 15% (2024 : 13%) |
Western Canada | 8% (2024 : 8%) |
Sales in the United States during first quarter of 2025 increased by 3% compared to the same period last year, due an increase in sales of building materials and lumber products. Additionally, the export sales saw a significant increase of 70% in the first quarter of 2025 compared to the previous year, with all product categories experiencing growth, except for flooring products.
Product Distribution of Sales for the First Quarter ended February 28, 2025 | |
Lumber | 59% (2024: 57%) |
Specialty & Commodity Panel | 18% (2024: 20%) |
Flooring | 14% (2024: 13%) |
Building Material | 9% (2024: 10%) |
In terms of the distribution of sales by product, lumber and flooring products saw an increase in sales. Flooring sales during first quarter of fiscal 2025 increased 11%, specialty and commodity panel sales decreased 3%, building material sales decreased 8%, and lumber sales increased 9% compared to last year.
Reconciliation of Gross profit | For the three months ended | |
(unaudited) | February 28 | February 29 |
2025 | 2024 | |
$ | $ | |
Sales | 111,180 | 105,334 |
Cost of goods sold | 85,713 | 82,546 |
Gross profit | 25,467 | 22,788 |
Gross margins | 22.9% | 21.6% |
Gross profit and Gross margins are non-IFRS financial measures. See section "Non-IFRS Financial Measures" for more information. Gross profit is calculated as sales less cost of goods sold. Gross margin is calculated Gross profit over sales. The table below contains a reconciliation of Gross profit to sales.
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Cost of Goods Sold
Cost of goods sold during the first quarter of 2025 was $85.7 million compared to $82.5 million for the corresponding period a year ago, an increase of 4% compared to last year. Gross profits were $25.5 million compared to $22.8 million last year. Gross profits increased 12% compared to last year. Gross margins were 22.9% for the three months ended February 28, 2025 (21.6% last year).
Selling, Administrative and General Expenses
Selling, Administrative and General Expenses during the first quarter of 2025 were $27.8 million compared to $22.9 million last year representing an increase of 22% compared to last year.
Net Financial Costs
Net financial costs during the three months ended February 28, 2025 were $0.8 million ($0.1 million last year). The average Canadian prime rate was 5.45% (7.20% last year). The average U.S. prime rate was 7.55% (8.50% last year).
SUMMARY OF THE LAST EIGHT MOST RECENTLY COMPLETED QUARTERS
(unaudited)
May-2024 | Aug-2024 | Nov-2024 | Feb-2025 | ||
$ | $ | $ | $ | ||
Sales | 140,334 | 139,668 | 124,205 | 111,180 | |
Net earnings (loss) | 5,309 | 5,750 | 2,418 | (2,260) | |
Net earnings (loss) per share | 0.62 | 0.68 | 0.29 | (0.27) | |
May-2023 | Aug-2023 | Nov-2023 | Feb-2024 | ||
$ | $ | $ | $ | ||
Sales | 142,326 | 139,155 | 125,415 | 105,334 | |
Net earnings (loss) | 6,575 | 6,191 | 2,133 | (108) | |
Net earnings (loss) per share | 0.77 | 0.72 | 0.25 | (0.01) |
As indicated above, our results over the past eight quarters follow a seasonal pattern with sales activities traditionally higher in the second and third quarters.
STATEMENT OF FINANCIAL POSITION
Total assets
Total assets at February 28, 2025 were $332.9 million compared to $291.9 million as at November 30, 2024. Cash at February 28, 2025 was $4.2 million compared to $5.3 million as at November 30, 2024. Trade and other receivables at February 28, 2025 were $70.0 million ($56.6 million as at November 30, 2024). Income taxes receivable was $7.5 million compared to $6.6 million as at November 30, 2024. Inventories at February 28, 2025 were $158.9 million compared to $131.3 million as at November 30, 2024. Prepaid expenses at February 28, 2025 were $4.1 million ($4.0 million as at November 30, 2024). Defined benefit plan asset was $21.7 million at February 28, 2025 compared to $21.9 million as at November 30, 2024. Other assets were $1.3 million at February 28, 2025 (same as at November 30, 2024).
Property, plant, equipment, intangible and right-of-use assets
Property, plant and equipment at February 28, 2025 was $43.6 million compared to $43.9 million as at November 30, 2024, and intangible assets at February 28, 2025 were $0.8 million compared to $0.9 million as at November 30, 2024. Capital expenditures on property, plant and equipment and intangibles during the first three months of fiscal 2025 amounted to $0.9 million compared to $1.3 million for the same period last year. Property, plant and equipment capitalized during the first three months of fiscal 2025 mainly included buildings and yard improvements, equipment, computers and rolling stock. Right-of-use assets at February 28 2025 was $20.9 million ($19.9 million as at November 30, 2024). Depreciation / amortization of property, plant, equipment, intangible, and right- of-use assets during the first three months of fiscal 2025 amounted to $2.9 million compared to $2.0 million last year.
Total liabilities
Total liabilities at February 28, 2025 were $131.5 million compared to $85.6 million as at November 30, 2024. Bank indebtedness was $42.4 million compared to $5.9 million as at November 30, 2024 Trade and other payables at February 28, 2025 were $55.5 million compared to $49.0 million as at November 30, 2024. Current provision at February 28, 2025 was $0.8 million ($0.9 million as at November 30, 2024). Dividend payable at February 28, 2025 were $2.1 million compared to nil as at November 30, 2024. Lease liabilities at February 28, 2025 were $22.4 million compared to $21.5 million as at November 30, 2024. Deferred income taxes at February 28, 2025 were $8.3 million (same as at November 30, 2024).
Shareholders' Equity
Total Shareholders' Equity at February 28, 2025 was $201.4 million compared to $206.2 million as at November 30, 2024. The Company generated a return on Shareholders' Equity of (4.5)% during the three months ended February 28, 2025 compared to (0.2)% last year (Return on shareholders' equity is the net earnings (loss) divided by shareholders' equity, expressed as a
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percentage). The share price closed at $12.11 per share on February 28, 2025 ($13.99 on November 30, 2024). The Shareholders' Equity per share at February 28, 2025 was $23.91 per share compared to $24.38 per share as at November 30, 2024. Share capital was $9.3 million at February 28, 2025 (same as at November 30, 2024).
On November 20, 2024 (2023: November 20, 2023), following approval of the Toronto Stock Exchange (the "TSX"), the Company renewed its existing normal course issuer bid (NCIB). This program allows the Company to repurchase up to an aggregate 493,102 common shares (2023: 426,157 common shares). All Shares repurchased under the share repurchase program will be cancelled upon repurchase. The share repurchase period will end no later than November 19, 2025 (2023: November 19, 2024). During fiscal year 2024, under the NCIB, the Company purchased 63,700 shares at a weighted-average price of $14.01 for a total aggregate purchase price of $892 thousand (2023: purchased 36,500 shares at a weighted-average price of $12.50 for a total aggregate purchase price of $456 thousand).
During the three months ended February 28, 2025, the Company bought back 34,100 shares at a weighted-average price of $12.78 for a total aggregate purchase price of $436 thousand compared to 8,500 shares at a weighted-average price of $13.96 for a total aggregate purchase price of $119 thousand during the three months ended February 29, 2024.
Additional information regarding the NCIB is contained in Note 10b of the Interim Consolidated Financial Statements for the period ended February 28, 2025.
The following dividends were declared and paid by the Company for the three-month period ended February 28, 2025, and for the year ended November 30, 2024:
February 28, 2025
Declared
Record | Per | Amount | Payment |
date | share | date | |
$ | $ | ||
Mar 5, 2025 | 0.25 | 2,105 | Mar 19, 2025 |
0.25 | 2,105 |
November 30, | 2024 |
Declared |
Record | Per | Amount | Payment |
date | share | date | |
$ | $ | ||
Mar 5, 2024 | 0.50 | 4,256 | Mar 19, 2024 |
Oct 23, 2024 | 0.25 | 2,119 | Nov 6, 2024 |
0.75 | 6,375 |
The Company is continually assessing its declaration of dividends in the context of overall profitability, cash flows, capital requirements, general economic conditions, and other business needs.
LIQUIDITY AND CAPITAL RESOURCES
Financing
The Company has a credit agreement with two chartered Canadian banks. In May 2024, the Company renewed its credit agreement for a maximum revolving operating facility of $90 million maturing in May 2026 by way of bank loans and/or CORRA loans. In addition, an accordion of $10 million is available once per fiscal year for a maximum of 150 days. Funds advanced under these credit facilities bear interest at the prime rate plus a premium and are secured by first ranking security on the universality of the movable and immovable property of the Company. As at February 28, 2025 the Company was compliant with its financial covenants. As at February 28, 2025, under the credit agreement, the Company was using of $28.0 million its facility (nil last year). As at February 28, 2025, the Company has $1.4 million of issued letters of credit which reduces the availability of its facility ($1.2 million last year).
The Company's business follows a seasonal pattern with sales activities traditionally higher in the second and third quarter. As a result, cash flow requirements are generally higher during these periods. The current facility is considered by management to be adequate to support its current forecasted cash flow requirements. Source of funding and access to capital is disclosed in detail under
LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS.
Cash Flow
Net cash flow from operating activities for the three months ended February 28, 2025 was $(34.8) million compared to $(32.7) million last year. Financing activities during the first three months of fiscal 2025 was $26.1 million compared to $(1.3) million last year. Investing activities during the three months ended February 28, 2025 was $(0.9) million compared to $(1.3) million last year.
LIQUIDITY AND RISK MANAGEMENT IN THE CURRENT ECONOMIC CONDITIONS
The Company's objectives are as follows:
- Maintain financial flexibility in order to preserve its ability to meet financial obligations;
- Maintain a low net debt-to-capital ratio to preserve its capacity to pursue its organic growth strategy;
- Maintain financial ratios within covenants requirements; and
- Provide an adequate return to its shareholders.
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The Company defines its capital as net debt less shareholders' equity as follows
As at | As at | |
February 28 | November 30 | |
2025 | 2024 | |
$ | $ | |
Cash | 4,237 | 5,314 |
Bank Indebtedness | (42,385) | (5,913) |
Net Debt | (38,148) | (599) |
Share Capital | 9,271 | 9,309 |
Retained Earnings | 192,136 | 196,899 |
Shareholders' Equity | 201,407 | 206,208 |
Total Capital | 163,259 | 205,609 |
The Company manages its capital and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital, the Company may adjust the amount of dividends paid to shareholders, issue new shares or repurchase shares under a normal course issuer bid, acquire or sell assets to improve its financial performance and flexibility or return capital to shareholders. The Company's primary uses of capital are to finance increases in non- cash working capital and capital expenditures for capacity expansion. The Company currently funds these requirements out of its internally generated cash flows and credit facilities. The Company's financial objectives and strategy remain substantially unchanged.
The Company is subject to certain covenants on its credit facilities. The covenants include a debt-to-capitalization ratio and an interest coverage ratio. The Company monitors the ratios on a monthly basis. The Company currently complies with all externally imposed capital requirements. Other than the covenants required for the credit facilities, the Company is not subject to any externally imposed capital requirements.
Cost Structure, Working Capital Requirements
At February 28, 2025, the Company's debt-to-capitalization ratio stood at 16.3% (0.6% as at November 30, 2024). Debt-to- capitalization ratio represents debt over total shareholders' equity. Debt is defined as bank indebtedness less cash and cash equivalents (i.e. debt excludes lease liabilities). Capitalization is debt plus shareholders' equity.
FINANCIAL COMMITMENTS AND CONTINGENCIES | |||||||||||||
OBLIGATIONS | |||||||||||||
Payments due by period- undiscounted | Total | Less than 1 | 2-3 | 4-5 | After 5 | ||||||||
year | Years | Years | years | ||||||||||
$ | $ | $ | $ | $ | |||||||||
Lease liability obligations | 27,684 | 6,913 | 11,711 | 7,120 | 1,940 | ||||||||
Purchase obligation | 694 | 694 | - | - | - | ||||||||
Total obligations | 28,378 | 7,607 | 11,711 | 7,120 | 1,940 | ||||||||
Contingent liabilities
During the normal course of business, certain product liability and other claims have been brought against the Company and, where applicable, its suppliers. While there is inherent difficulty in predicting the outcome of such matters, management has vigorously contested the validity of these claims, where applicable, and based on current knowledge, believes that they are without merit and does not expect that the outcome of any of these matters, in consideration of insurance coverage maintained, or the nature of the claims, individually or in the aggregate, would have a material adverse effect on the consolidated financial position, results of operations or future earnings of the Company.
RISKS AND UNCERTAINTIES
The risks and uncertainties affecting the Company remain substantially unchanged from those described in the Company's Annual MD&A for the year ended November 30, 2024, which are hereby incorporated by reference. These include the risks and uncertainties described under the headings "Risks and Uncertainties" and "Financial Instruments and Other Instruments" of such Annual MD&A. Only those factors with notable variability components are described below:
Dependence on Major Customers
The Company does not have long-term contracts with any of its customers. Distribution agreements are usually awarded annually and can be revoked. Only one major customer exceeds 10% of total Company sales during the three months ended February 28, 2025 (same last year).
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The following represents the total sales consisting primarily of various wood products of the major customer:
For the three months ended
February 28, 2025 | February 29, 2024 | |||
$ | % | $ | % | |
Sales to the major customer that exceeded 10% of total Company's sales | 19,273 | 17.3 | 18,219 | 17.3 |
The loss of any major customer could have a material effect on the Company's results, operations and financial position. The carrying amounts of financial assets represent the maximum credit exposure.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company is exposed to risks arising from financial instruments, including Financing and Liquidity Risk, interest rate risk, currency risk, and credit risk. Please refer to Note 12 of the interim consolidated financial statements for the three months ended February 28, 2025, for additional details.
RELATED PARTY TRANSACTIONS
The related party transactions remain substantially unchanged from those included in the Company's Annual MD&A contained in its 2024 Annual report.
CRITICAL ACCOUNTING ESTIMATES
The critical accounting estimates remain substantially unchanged from those included in the Company's Annual MD&A contained in its 2024 Annual report.
SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies applied in the Company's interim financial statements are the same as those described in Note 3 contained in its 2024 Annual consolidated financial statements.
DISCLOSURE OF OUTSTANDING SHARE DATA
As at February 28, 2025, there were 8,423,654 common shares issued, 8,457,754 as at November 30, 2024, and 8,512,954 common shares as at February 29, 2024. The Company has authorized an unlimited number of common shares to be issued, without par value. As at April 10, 2025, there were 8,405,954common shares outstanding.
SUBSEQUENT EVENT
The continued changes to, deferral of, and announcement of the imposition of new tariffs by the U.S. administration, and retaliatory actions by the Canadian government, continue to create economic uncertainty, and could negatively impact the Canadian economy, potentially increasing costs, disrupting supply chains, weaken the Canadian dollar, and other potential negative impacts. The Company continues to assess, including the constant changes to the trade tariffs, the direct and indirect impacts to its business of such tariffs, retaliatory tariffs or other trade protectionist measures implemented as this situation continues to develop, and such impacts could be material.
OUTLOOK
With complex and evolving economic conditions shaping the lumber and building materials industry, companies will have to navigate a difficult landscape of trade policies, shifting demand, and financial volatility. As global and regional markets adjust to factors such as interest rate fluctuations, housing market trends, and geopolitical developments, new opportunities will emerge for those who can anticipate and adapt to change. At the same time, businesses must remain vigilant about customer credit risks, as economic pressures may strain cash flows and payment reliability across the supply chain. Price fluctuations, driven by material costs, tariffs, and supply- demand imbalances, will require proactive strategies to manage margins and maintain competitiveness. In this dynamic environment, flexibility, strategic foresight, and financial discipline will be essential to seizing opportunities while mitigating risks.
CERTIFICATION
Disclosure Controls
Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide reasonable assurance that all material information relating to the Company and its subsidiaries is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.
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