Stella-Jones Inc. (TSX:SJ) today announced financial results for
its third quarter ended September 30, 2011. These results reflect
the adoption, on January 1, 2011, of International Financial
Reporting Standards ("IFRS"). Results for the prior year have been
restated.
----------------------------------------------------------------------------
Quarters Nine
ended months ended
Sept. 30, Sept. 30,
Financial highlights
(in thousands of Canadian
dollars, except per share
data) 2011 2010 2011 2010
----------------------------------------------------------------------------
Sales 181,812 161,298 492,628 427,975
Operating income 25,569 19,744 67,569 41,496
Net income for the period 16,569 12,440 42,340 23,791
Per share - basic ($) 1.04 0.78 2.66 1.60
Per share - diluted ($) 1.03 0.78 2.65 1.60
Cash flow from operations 1 27,796 23,495 74,867 54,910
Weighted average shares
outstanding (basic, in
'000s) 15,950 15,901 15,943 14,840
----------------------------------------------------------------------------
(1) Before changes in non-cash working capital components and
interest and income tax paid.
THIRD-QUARTER RESULTS
Sales reached $181.8 million, an increase of $20.5 million, or
12.7% over last year's third-quarter sales of $161.3 million. The
conversion effect from fluctuations 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 $10.2
million when compared with the previous year. Excluding this
conversion effect, sales increased approximately 19.0%, as demand
remained robust for the Company's core railway tie and utility pole
product categories.
Railway tie sales amounted to $92.3 million, up 9.7% from last
year, reflecting solid market demand. Adjusting for a negative
foreign exchange effect of $7.1 million due to a lower average
conversion rate on U.S. dollar denominated tie sales,
year-over-year comparable railway tie sales increased $15.3
million, or 18.2%. Utility pole sales reached $56.2 million, up
31.6% from a year ago. This increase mainly reflects robust demand
for transmission poles resulting from orders for special projects,
while a lower year-over-year conversion rate reduced the value of
U.S. dollar denominated pole sales by $1.7 million. Industrial
product sales decreased 9.4% to $22.6 million due to the sale of
certain assets of the Terre Haute, Indiana facility in the fourth
quarter of 2010 and a $1.4 million negative impact from a lower
conversion rate on U.S. dollar denominated sales. However, demand
remained solid for the balance of the Company's principal products
and services in this category. Finally, sales of residential lumber
increased 12.0% to $10.7 million, as a result of more favourable
weather compared with last year.
Operating income was $25.6 million or 14.1% of sales, compared
with $19.7 million or 12.4% of sales last year. The increase as a
percentage of sales mainly stems from a product mix more heavily
weighted towards utility poles and greater efficiencies throughout
our plant network. Net income for the period reached $16.6 million
or $1.03 per share, fully diluted, up 33.2% from $12.4 million or
$0.78 per share, fully diluted, in 2010. Cash flow from operating
activities before changes in non-cash working capital components
and interest and income tax paid rose 18.3% to $27.8 million.
"Stella-Jones continues to benefit from robust investment in the
North American rail and electrical utility infrastructure, which
led to another strong financial performance in the third quarter,"
said Brian McManus, President and Chief Executive Officer. "A
greater geographical reach and a more extensive breadth of products
and services have further enhanced Stella-Jones' market position
and driven sales growth. More importantly, additional efficiencies
from increased throughput provided additional thrust to operating
profitability."
NINE-MONTH RESULTS
For the nine-month period ended September 30, 2011, sales
reached $492.6 million, up 15.1% from $428.0 million a year
earlier. Excluding the additional sales contribution of $37.7
million from the Tangent Rail Corporation operations in the first
quarter of 2011, and net of a $20.9 million conversion effect from
fluctuations in the value of the Canadian dollar versus the U.S.
currency, sales increased approximately 11.0%.
Operating income amounted to $67.6 million, or 13.7% of sales,
versus $41.5 million, or 9.7% of sales a year earlier. Last year's
nine-month results included non-recurring expenses and asset
impairment charges of approximately $7.5 million. Net income for
the period totalled $42.3 million, or $2.65 per share, fully
diluted, in 2011 versus $23.8 million, or $1.60 per share, fully
diluted, in 2010. Finally, cash flow from operating activities
before changes in non-cash working capital components and interest
and income tax paid grew 36.3% to $74.9 million.
SOLID FINANCIAL POSITION
As at September 30, 2011, the Company's financial position
remained solid with total debt, including short-term bank
indebtedness, of $172.9 million, down from $175.8 million as at
June 30, 2011. The ratio of total debt to shareholders' equity was
0.53:1 as at September 30, 2011, down from 0.59:1 three months
earlier.
During the quarter, Stella-Jones entered into an agreement to
amend its existing revolving credit agreement. The amended facility
consists of a $170.0 million committed revolving facility made
available for a five-year term. As a result of this agreement, all
bank indebtedness is now considered long-term debt with the
exception of the Company's proportion of the operating line of its
joint venture.
"Operating activities produced a solid cash flow that allowed
Stella-Jones to further reduce debt and finance its growth. As a
result, the proposed acquisition of Thompson Industries, Inc.
("Thompson") would, if finalized, be entirely financed through
readily available sources of funds," added George Labelle, Senior
Vice-President and Chief Financial Officer.
OUTLOOK
"Despite recent volatility in the macro-economic environment, we
expect demand for our core products to remain solid in the fourth
quarter of 2011. In the short-term, our priority is to complete our
due diligence and, if satisfactory, proceed with the closing of our
proposed acquisition of Thompson. If successful, this network
expansion would further enhance Stella-Jones' product and service
offering to the North American railroad industry. As fundamentals
remain solid in our core product categories, we will proactively
assess prospective business opportunities to maintain our market
momentum," concluded Mr. McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these
results on Friday, November 11, 2011, at 10:00 AM Eastern Time.
Interested parties can join the call by dialling 416-644-3426
(Toronto or overseas) or 1-800-731-5319 (elsewhere in North
America). Parties unable to call in at this time may access a tape
recording of the meeting by calling 1-877-289-8525 and entering the
passcode 4478464#. This tape recording will be available on Friday,
November 11, 2011 as of 1:00 PM Eastern Time until 11:59 PM Eastern
Time on Friday, November 18, 2011.
NON-IFRS FINANCIAL MEASURES
Operating income and cash flow from operations are financial
measures not prescribed by IFRS and are not likely to be comparable
to similar measures presented by other issuers. Management
considers these measures 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 products and services for construction and
marine applications, as well as residential 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.
Contacts: Source: Stella-Jones Inc. Contacts: George T. Labelle,
CA Senior Vice-President and Chief Financial Officer (514)
934-8665glabelle@stella-jones.com Martin Goulet, CFA MaisonBrison
(514) 731-0000martin@maisonbrison.com INVESTOR RELATIONS George
Labelle Senior Vice-President and Chief Financial Officer (514)
934-8665 (514) 934-5327 (FAX)glabelle@stella-jones.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