Stella-Jones Inc. (TSX: SJ)
-- Sales of $99.4 million compared with $112.0 million last year
-- Net earnings of $5.8 million compared with $7.7 million last year
-- Diluted EPS of $0.46 versus $0.61 in 2009
-- Further debt reduction prior to the completion of the Tangent
acquisition
Stella-Jones Inc. (TSX: SJ) today announced financial results
for its first quarter ended March 31, 2010.
-------------------------------------------------------------
Financial highlights Quarters ended March 31,
(in thousands of dollars, except per
share data)(unaudited) 2010 2009
-------------------------------------------------------------
Sales 99,360 111,954
Gross profit 18,163 22,519
Cash flow from operations(1) 8,528 11,321
Net earnings for the period 5,814 7,687
Per share - basic ($) 0.46 0.61
Per share - diluted ($) 0.46 0.61
Weighted average shares outstanding
(basic, in '000s) 12,688 12,566
-------------------------------------------------------------
(1) Before changes in non-cash working capital components.
FIRST-QUARTER RESULTS
Sales were $99.4 million, a decrease of $12.6 million, or 11.2%
from last year's sales of $112.0 million. Changes in the value of
the Canadian dollar, Stella-Jones' reporting currency, versus the
U.S. dollar, decreased the value of U.S. dollar denominated sales
by about $8.9 million when compared with the same period a year
earlier. Adjusting for year-over-year currency fluctuations, sales
decreased approximately 3.0% versus last year's first quarter,
reflecting reduced railcar availability resulting from severe
winter weather in the eastern United States at the beginning of the
quarter, and, to a lesser extent, weaker demand and softer pricing
for the Company's core products.
Railway tie sales amounted to $48.2 million, down 21.5% from
last year (or approximately 11.0% net of year-over-year currency
translation effect), as a result of reduced railcar availability
and slightly weaker industry demand in North America in comparison
with the year earlier period. Utility pole sales totalled $36.5
million, a decrease of 2.2% from a year ago (or an increase of
approximately 2.0% net of year-over-year currency translation
effect). Industrial lumber sales declined marginally to $10.1
million, as solid demand for marine applications in Canada were
offset by lower sales in the United States. Finally, sales of
consumer lumber rose 65.6% to $4.5 million, largely due to
favourable weather conditions at the end of the quarter in most of
the Company's markets.
"We are pleased with these results in light of difficulties in
securing railcars to ship products, as well as adverse
year-over-year currency movements," said Brian McManus, President
and Chief Executive Officer of Stella-Jones. "More importantly, we
started to see greater sales momentum in our core railway tie
product category towards the end of the period."
Gross profit was $18.2 million or 18.3% of sales, compared with
$22.5 million or 20.1% of sales last year. The reduction in gross
profit, as a percentage of sales, essentially stems from softer
pricing in most product categories as well as a different product
mix in the railway tie category.
"The decrease in gross profit dollars also results from a
significant reduction in the year-over-year average rate applied to
convert gross profit from U.S. dollar denominated sales.
Furthermore, first quarter results include approximately $1.8
million in general and administrative expenses directly related to
the Tangent Rail Corporation ("Tangent") acquisition," added George
Labelle, Senior Vice-President and Chief Financial Officer.
Net earnings for the period stood at $5.8 million or $0.46 per
share, fully diluted, compared with $7.7 million or $0.61 per
share, fully diluted, last year. Cash flow from operating
activities before changes in non-cash working capital components
reached $8.5 million, versus $11.3 million in the same period a
year ago.
Stella-Jones' balance sheet as at March 31, 2010 reflects the
financing components for the Tangent acquisition, which was
successfully completed subsequent to the end of the period on April
1, 2010. Such components include long-term borrowings of US$65.0
million (Cdn$66.0 million) and net proceeds of $76.9 million from
the issuance of subscription receipts. Conversely, current assets
included restricted cash of $142.9 million, which was disbursed on
April 1, 2010. Excluding these components, the Company's long-term
debt, including the current portion, amounted to $83.0 million,
representing a ratio of total long-term debt to shareholders'
equity of 0.46:1, down from 0.48:1 three months earlier. In
addition, a solid cash flow generation and better working capital
resulted in a $6.3 million decrease in short-term bank
indebtedness, which stood at $49.9 million as at March 31,
2010.
OUTLOOK
"The acquisition of Tangent has considerably enhanced
Stella-Jones' position as a continent-wide producer. A successful
integration will be a major performance driver in 2010 and beyond,
as we gradually achieve all potential synergies. While our
expectation for the year ahead is for demand levels to remain
similar to those of last year, our aim will be to reap all the
benefits that our newly enlarged network can provide. Our ongoing
focus on network optimization and cost control should increase both
our efficiencies and our margins as the economic recovery gains
further momentum," concluded Mr. McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these
results on Tuesday, May 4, 2010, at 1:00 PM Eastern Time.
Interested parties can join the call by dialling 647-427-7452
(Toronto or overseas) or 1-888-231-8191 (elsewhere in North
America). Parties unable to call in at this time may access a tape
recording of the meeting by calling 1-800-642-1687 and entering the
passcode 67872162. This tape recording will be available on
Tuesday, May 4, 2010 as of 3:00 PM Eastern Time until 11:59 PM
Eastern Time on Tuesday, May 11, 2010.
NON-GAAP MEASURE
Cash flow from operations is a financial measure not prescribed
by Canadian generally accepted accounting principles ("GAAP") and
is not likely to be comparable to similar measures presented by
other issuers. Management considers it to be useful information to
assist knowledgeable investors in evaluating the cash generating
capabilities of the Company.
ABOUT STELLA-JONES
Stella-Jones Inc. (TSX: SJ) is a leading producer and marketer
of pressure treated wood products. The Company supplies North
America's railroad operators with railway ties, timbers and
recycling services; and the continent's electrical utilities and
telecommunications companies with utility poles. Stella-Jones also
provides industrial lumber and services for construction and marine
applications, as well as consumer lumber to retailers and
wholesalers for outdoor applications. The Company's common shares
are listed on the Toronto Stock Exchange.
Except for historical information provided herein, this press
release may contain information and statements of a forward-looking
nature concerning the future performance of the Company. These
statements are based on suppositions and uncertainties as well as
on management's best possible evaluation of future events. Such
factors may include, without excluding other considerations,
fluctuations in quarterly results, evolution in customer demand for
the Company's products and services, the impact of price pressures
exerted by competitors, the ability of the Company to raise the
capital required for acquisitions, and general market trends or
economic changes. As a result, readers are advised that actual
results may differ from expected results.
Note to readers: Complete unaudited first-quarter financial
statements are available on Stella-Jones' website at
www.stella-jones.com
Contacts: Source: Stella-Jones Inc. Stella-Jones Inc. George T.
Labelle, CA Senior Vice-President and Chief Financial Officer
514-934-8665 glabelle@stella-jones.com MaisonBrison Martin Goulet,
CFA 514-731-0000 martin@maisonbrison.com
Stella Jones (TSX:SJ)
Historical Stock Chart
From Jun 2024 to Jul 2024
Stella Jones (TSX:SJ)
Historical Stock Chart
From Jul 2023 to Jul 2024
