Stella-Jones Inc. (TSX:SJ)
-- Sales of $158.8 million, up 21.7% from $130.5 million last year
-- Operating income of $24.1 million, versus $14.4 million in Q1 2011
-- Net income up 76.5% to $15.0 million, compared with $8.5 million last
year
-- Diluted EPS of $0.94, versus $0.53 a year ago
Stella-Jones Inc. today announced financial results for its
first quarter ended March 31, 2012. The Company generated record
first quarter sales and net income.
"Robust demand for Stella-Jones' core railway tie and utility
pole products led to significant increases in sales and operating
profitability in the first quarter of 2012," said Brian McManus,
President and Chief Executive Officer. "This improved performance
reflects the wider reach of our continental network and continued
efficiency gains. More favourable weather in most regions of North
America, compared with the same period last year, also allowed for
a greater number of projects requiring our products to be carried
out early in the year."
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Financial highlights Quarters ended March 31,
(in thousands of Canadian dollars, except per
share data) 2012 2011
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Sales 158,795 130,485
Operating income 24,090 14,418
Net income for the period 15,006 8,500
Per share - basic and diluted ($) 0.94 0.53
Cash flow from operations (1) 27,180 17,188
Weighted average shares outstanding (basic, in
'000s) 15,959 15,932
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(1) Before changes in non-cash working capital components and interest and
income tax paid.
FIRST QUARTER RESULTS
Sales reached $158.8 million, an increase of $28.3 million, or
21.7% over last year's first-quarter sales of $130.5 million. The
operating facility acquired from Thompson Industries, Inc.
("Thompson") on December 7, 2011 contributed sales of approximately
$9.6 million, while the conversion effect from fluctuations in the
value of the Canadian dollar, Stella-Jones' reporting currency,
versus the U.S. dollar, increased the value of U.S. dollar
denominated sales by about $1.5 million when compared with the
previous year. Excluding the acquisition and currency effects,
sales increased approximately $17.2 million, or 13.2%.
Railway tie sales for the first quarter of 2012 amounted to
$96.0 million, an increase of 25.4% over last year, reflecting tie
sales of approximately $9.1 million from the operating facility
acquired from Thompson as well as solid market demand. Utility pole
sales amounted to $43.5 million in the first quarter of 2012, up
21.9% over the corresponding period in 2011. The increase is
attributable to robust demand for transmission poles related to
orders for special projects and to an increase in distribution pole
sales stemming from regular maintenance projects. Industrial
product sales remained stable at $15.2 million, as the contribution
from the facility acquired from Thompson was offset by lower demand
for marine applications in Canada. Sales of residential lumber
increased 31.2% to $4.2 million, primarily as a result of more
favourable weather compared with last year.
Operating income was $24.1 million, or 15.2% of sales, compared
with $14.4 million, or 11.1% of sales, last year. The increase in
absolute dollars essentially reflects higher business activity and
the addition of the Thompson operations, while the increase as a
percentage of sales mainly stems from a better absorption of fixed
costs resulting from higher business activity and from greater
efficiency throughout the Company's plant network.
Net income for the period increased 76.5% to $15.0 million, or
$0.94 per share, fully diluted, compared with $8.5 million, or
$0.53 per share, fully diluted, in the first quarter of 2011. Cash
flow from operating activities, before changes in non-cash working
capital components and interest and income tax paid, rose 58.1% to
$27.2 million.
FINANCIAL POSITION REMAINS HEALTHY
As at March 31, 2012, the Company's long-term debt, including
the current portion, amounted to $180.0 million, essentially stable
when compared with $180.1 million as at December 31, 2011. The
ratio of total debt, including short-term bank indebtedness, to
total capitalization was 0.35:1 as at March 31, 2012, unchanged
from three months earlier.
Working capital stood at $283.2 million as at March 31, 2012, up
from $273.2 three months earlier. The main components of this
variation were an increase in accounts receivable, as a result of
strong sales growth in the first quarter, and an increase in
inventories, due to the normal seasonal inventory build-up ahead of
peak demand in the second and third quarters.
QUARTERLY DIVIDEND OF $0.15 PER SHARE
On May 2, 2012, the Board of Directors approved a quarterly
dividend of $0.15 per common share payable on June 29, 2012 to
shareholders of record at the close of business on June 1,
2012.
OUTLOOK
"We continue to expect demand for our core products to remain
solid. Internally, we will benefit from new network synergies and
efficiencies as we finalize the integration of the Thompson
operating facility. This will allow us to pursue additional
opportunities with existing and new clients. In addition, a healthy
cash flow and strong financial position allow us to study all
opportunities for network expansion, such as the recently announced
proposed acquisition of certain assets of Brisco Wood Preservers
Ltd. As such, Stella-Jones will continue to pursue, and refine, its
core competencies to create further value for its shareholders,"
concluded Mr. McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these
results on Thursday, May 3, 2012, at 1:30 PM Eastern Time.
Interested parties can join the call by dialling 647-427-7450
(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 1-855-859-2056 and entering the
passcode 71367028#. This tape recording will be available on
Thursday, May 3, 2012 as of 5:00 PM Eastern Time until 11:59 PM
Eastern Time on Thursday, May 10, 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.
Note to readers: Complete unaudited first-quarter financial
statements are available on Stella-Jones' website at
www.stella-jones.com
Contacts: Stella-Jones Inc. George T. Labelle, CA Senior
Vice-President and Chief Financial Officer (514)
934-8665glabelle@stella-jones.com Martin Goulet, CFA MaisonBrison
Communications (514) 731-0000martin@maisonbrison.com
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