SJ Stella Jones Inc

Stella-Jones Inc. (TSX:SJ) today announced financial results for its second
quarter ended June 30, 2012. 


"Stella-Jones achieved another strong financial performance in the second
quarter driven by robust demand for our core railway tie products," said Brian
McManus, President and Chief Executive Officer. "More importantly, our ongoing
efforts to enhance operating efficiency combined with tight controls on
operating costs resulted in further margin improvements and significant
increases in net income and cash flow."




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                                        Quarters ended      Six months ended
Financial highlights                          June 30,              June 30,
(in thousands of Canadian                                                   
 dollars, except per share data)       2012       2011       2012       2011
----------------------------------------------------------------------------
Sales                               203,919    180,331    362,714    310,816
Operating income                     32,580     27,582     56,670     42,000
Net income for the period            20,835     17,271     35,841     25,771
  Per share - basic ($)                1.30       1.08       2.24       1.62
  Per share - diluted ($)              1.30       1.08       2.24       1.61
Cash flow from operations (1)        35,963     29,236     63,143     46,424
Weighted average shares                                                     
 outstanding (basic, in '000s)       15,976     15,947     15,968     15,939
----------------------------------------------------------------------------
                                                                            
(1)  Before changes in non-cash working capital components and interest and 
     income tax paid.                                                       



SECOND QUARTER RESULTS

Sales for the quarter ended June 30, 2012 totalled $203.9 million, an increase
of $23.6 million, or 13.1%, over last year's sales of $180.3 million. The
Russellville, Arkansas operating facility acquired from Thompson Industries,
Inc. on December 7, 2011 ("Russellville Facility") contributed railway tie and
industrial product sales of approximately $10.1 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 $5.5 million when compared with the previous year.
Excluding these factors, sales increased approximately $8.0 million, or 4.4%.


Railway tie sales amounted to $120.1 million, an increase of $24.6 million, or
25.7%, over sales of $95.5 million last year, reflecting solid market demand as
well as a $10.0 million contribution from the Russellville Facility. Utility
pole sales amounted to $51.7 million, down slightly from $52.4 million in the
corresponding period in 2011. The variation reflects the year-over-year timing
difference in orders for transmission poles related to special projects, which
had resulted in stronger sales in the second quarter of 2011. Meanwhile, sales
of distribution poles increased, as demand for regular maintenance projects
remained solid. Industrial product sales reached $18.1 million, compared with
$20.6 million a year earlier, due to a reduction in the tie recycling business
partially offset by higher demand for marine applications in Canada. Sales of
residential lumber totalled $14.0 million, up 18.1% from $11.9 million a year
earlier as a result of more favourable weather in Canada compared with the same
period last year.


Operating income was $32.6 million or 16.0% of sales, compared with $27.6
million or 15.3% of sales last year. The increase in monetary terms mainly
reflects higher business activity and the addition of the Russellville Facility,
while the increase as a percentage of sales is mainly due to 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 20.6% to $20.8 million or $1.30 per share,
fully diluted, compared with $17.3 million or $1.08 per share, fully diluted, in
the second quarter of 2011. Cash flow from operating activities before changes
in non-cash working capital components and interest and income tax paid rose
23.0% to $36.0 million.


SIX-MONTH RESULTS

For the six-month period ended June 30, 2012, sales amounted to $362.7 million,
up 16.7% from the same period a year earlier. The Russellville Facility
contributed sales of $19.7 million, while the conversion effect from
fluctuations in the value of the Canadian dollar, versus the U.S. dollar,
increased the year-over-year value of U.S. dollar denominated sales by about
$7.0 million. Excluding these factors, sales increased approximately $25.2
million, or 8.1%.


Operating income was $56.7 million or 15.6% of sales, compared with $42.0
million or 13.5% of sales last year. Net income for the period reached $35.8
million or $2.24 per share, fully diluted, up 39.1% from $25.8 million or $1.61
per share, fully diluted, a year earlier. Cash flow from operating activities
before changes in non-cash working capital components and interest and income
tax paid rose 36.0% to $63.1 million.


FINANCIAL POSITION REMAINS HEALTHY

As at June 30, 2012, the Company's long-term debt, including the current
portion, amounted to $192.3 million, versus $180.0 million three months ago. The
ratio of total debt, including short-term bank indebtedness, to total
capitalization was 0.35:1 as at June 30, 2012, unchanged from three months
earlier. 


Working capital stood at $314.2 million as at June 30, 2012, up from $273.2 at
the beginning of the year. The main elements of this variation were an increase
of $27.3 million in accounts receivable, as a result of strong sales growth in
the first half of 2012, and a $22.1 million increase in inventories due to
higher planned inventory levels of air-dried wood, both to improve future
treating cycles and meet anticipated sales growth. 


QUARTERLY DIVIDEND OF $0.16 PER SHARE

On August 9, 2012, the Board of Directors declared a quarterly dividend of $0.16
per common share payable on September 28, 2012 to shareholders of record as the
close of business on September 4, 2012.


OUTLOOK

"We expect demand for our core products to remain solid for the remainder of
2012. In addition, we will continue to focus on operating efficiencies and on
leveraging the strength of our network. We will also maintain our focus on cash
generation and a prudent use of leverage, while we pursue our disciplined
acquisition strategy in our core markets," concluded Mr. McManus.


CONFERENCE CALL 

Stella-Jones will hold a conference call to discuss these results on Friday,
August 10, 2012, at 10:00 AM 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
98841448#. This tape recording will be available on Friday, August 10, 2012 as
of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, August 17, 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 second quarter financial statements are
available on Stella-Jones' website at www.stella-jones.com

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