Stella-Jones Reports the Eleventh Consecutive Year of Growth in Net Income
March 16 2012 - 7:00AM
Marketwired Canada
Stella-Jones Inc. (TSX:SJ)
-- Q4 sales of $147.5 million, up 10.9% from $133.1 million last year
-- 25.5% increase in Q4 net income to $13.4 million, or $0.83 per share,
fully diluted, up from $10.7 million, or $0.67, fully diluted, in Q4
2010
-- 61.8% increase in 2011 net income to $55.7 million, or $3.48 per share,
fully diluted, up from $34.4 million, or $2.26 per share, fully diluted
in 2010
-- Adoption of a new dividend policy and declaration of a quarterly
dividend of $0.15 per share
Stella-Jones Inc. (TSX:SJ) today announced financial results for its fourth
quarter and fiscal year ended December 31, 2011. These results reflect the
adoption, on January 1, 2011, of International Financial Reporting Standards
("IFRS"). Results for the prior year have been restated.
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Financial highlights
(in thousands of Canadian
dollars, except per share
data) Quarters ended Dec. 31, Years ended Dec. 31,
2011 2010 2011 2010
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Sales 147,520 133,071 640,148 561,046
Operating income 20,399 19,194 87,968 60,690
Net income for the period 13,369 10,650 55,709 34,441
Per share - basic ($) 0.84 0.67 3.49 2.27
Per share - diluted ($) 0.83 0.67 3.48 2.26
Cash flow from operations 1 24,760 23,153 99,627 78,063
Weighted average shares
outstanding (basic, in '000s) 15,953 15,912 15,946 15,163
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1 Before changes in non-cash working capital components and interest and
income tax paid.
"2011 marked Stella-Jones' eleventh year of uninterrupted growth in net income.
These results reflect the successful execution of our operating strategy based
on continental expansion and industry consolidation. Demand for our core railway
tie and utility pole products remained solid throughout the year, as evidenced
by double-digit sales growth excluding acquisitions and currency variations.
More importantly, our continued focus on optimizing network efficiency and
overall operations led to solid improvements in profitability," said Brian
McManus, President and Chief Executive Officer.
FOURTH QUARTER RESULTS
Sales totalled $147.5 million, up 10.9% from last year's fourth-quarter sales of
$133.1 million. This increase is attributable to solid industry demand for the
Company's core products, including strong advanced deliveries of railway ties,
as well as a $1.7 million contribution from the Thompson Industries, Inc.
("Thompson") operations, acquired on December 7, 2011. The conversion effect
from fluctuations in the value of the Canadian dollar, Stella-Jones' reporting
currency, versus the U.S. dollar, had a marginal negative impact of $0.4 million
on the value of U.S. dollar denominated sales when compared with last year.
Excluding these factors, sales increased approximately 10.0%.
Fourth quarter sales of railway ties amounted to $74.4 million in 2011, up from
$62.4 million in the fourth quarter of 2010. This 19.2% increase, reflects
strong industry demand, including advanced deliveries, and a $1.5 million
contribution from the Thompson operations. Utility pole sales rose 3.8% to $50.6
million, compared with $48.7 million a year earlier, as a result of higher sales
of transmission poles related to special projects. Industrial product sales
stood at $20.6 million, up from $19.8 million a year ago, in part due to the
contribution of the Thompson operations. Residential lumber sales were $2.0
million, versus $2.2 million last year.
Operating income amounted to $20.4 million, or 13.8% of sales, compared with
$19.2 million, or 14.4% of sales, last year. Of note, results for the fourth
quarter of 2011 included an asset impairment charge of $2.2 million related to
the non-cash reversal of a customer relationship intangible asset, whereas
results for the fourth quarter of 2010 included several items representing net
revenues of $1.8 million, principally due to the sale of certain assets of the
Terre Haute, Indiana facility. Excluding these elements, operating income for
the fourth quarter of 2011 was $22.6 million, compared with $17.4 million a year
earlier.
Net income for the period reached $13.4 million, or $0.83 per share, fully
diluted, up 25.5% from $10.7 million, or $0.67 per share, fully diluted, last
year. Cash flow from operating activities before changes in non-cash working
capital components and interest and income tax paid was $24.8 million, compared
with $23.2 million a year ago.
YEAR-END RESULTS
For the year ended December 31, 2011, sales reached $640.1 million, up 14.1%
from $561.0 million a year earlier. Excluding additional contributions of $37.7
million from the Tangent Rail Corporation operations in the first quarter of
2011 and of $1.7 million from the Thompson operations in the last three weeks of
the fourth quarter of 2011, and net of a $21.3 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 $88.0 million, or 13.7% of sales, versus $60.7
million, or 10.8% of sales a year earlier. Net income for 2011 totalled $55.7
million, or $3.48 per share, fully diluted, versus $34.4 million, or $2.26 per
share, fully diluted, in 2010, representing a year-over-year increase of 61.8%.
Cash flow from operating activities before changes in non-cash working capital
components and interest and income tax paid rose 27.6% to $99.6 million.
SOLID FINANCIAL POSITION
As at December 31, 2011, the Company's financial position remained solid with
total debt, including short-term bank indebtedness, of $182.7 million, compared
with $157.8 million at the end of the previous year. The increase is essentially
attributable to the acquisition of Thompson three weeks prior to year-end. As at
December 31, 2011, the ratio of total debt to total capitalization was 0.35:1,
down from 0.36:1 twelve months earlier.
"A strong cash flow generation enabled Stella-Jones to conclude the year with a
healthy financial position. This provides the Company with the flexibility to
further expand its product and service offering, as well as its continental
reach," added George Labelle, Senior Vice-President and Chief Financial Officer.
NEW DIVIDEND POLICY AND QUARTERLY DIVIDEND OF $0.15 PER SHARE
On March 15, 2012, the Board of Directors modified the Company's dividend policy
to consider the declaration of a dividend on a quarterly rather than on a
semi-annual basis. In light of the Company's results, the Board declared a
quarterly dividend of $0.15 per common share payable on April 30, 2012 to
shareholders of record at the close of business on April 2, 2012.
OUTLOOK
"We expect demand for our core products to remain solid in 2012, as North
American railroad operators continue to invest in their network, while demand is
expected to hold in utility poles. Our short-term priority is to integrate the
Thompson operations and benefit from greater market penetration, synergies and
additional operating efficiencies from a larger network. Already well
established as one of the largest North American providers of industrial treated
wood products, Stella-Jones will continue to assess prospective business
opportunities that create additional value for its shareholders," concluded Mr.
McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these results on Friday,
March 16, 2012, 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
4511444#. This tape recording will be available on Friday, March 16, 2012 as of
1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, March 23, 2012.
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.
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