MONTREAL, QUEBEC--(Marketwired - April 28, 2016) - Stella-Jones Inc. (TSX:SJ) ("Stella-Jones" or the "Company") today announced financial results for its first quarter ended March 31, 2016.

"Stella-Jones generated solid operating results in the first quarter. This performance reflects healthy demand from regular replacement and maintenance programs in our core railway tie and utility pole markets, our expanded reach in the residential lumber category, as well as our focus on optimizing network efficiency," said Brian McManus, President and Chief Executive Officer.

Financial highlights
(in millions of Canadian dollars, except per share data)
Quarters ended March 31,
2016 2015
Sales 421.0 340.7
Operating income 54.6 47.6
Net income for the period 35.0 30.1
Per share - basic ($) 0.51 0.44
Per share - diluted ($) 0.51 0.43
Weighted average shares outstanding (basic, in '000s) 69,138 68,953


Sales reached $421.0 million, up 23.6% from $340.7 million a year ago. The acquisition of Ram Forest Group Inc. and Ramfor Lumber Inc. (collectively "Ram") on October 1, 2015, contributed sales of approximately $9.3 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 $35.9 million when compared with last year. Excluding these factors, organic growth represented approximately $35.1 million, or 10.3% due to solid demand for the Company's core products and the addition of the purchase and resale of lumber component to support residential lumber requirements.

Railway tie sales amounted to $200.3 million, up 20.1% from $166.8 million last year. Excluding the currency conversion effect, railway tie sales rose approximately 8.1%, primarily as a result of healthy industry demand and the timing of certain deliveries that had been pushed from the fourth quarter of 2015 into the first quarter of 2016.

Sales of utility poles reached $131.8 million, compared with $119.2 million last year. Excluding the currency conversion effect and the contribution from acquisitions in the southeastern United States completed in the second half of 2015, sales were relatively stable. During the quarter, a steady rise in sales of distribution poles stemming from regular maintenance programs was offset by lower sales of transmission poles due to decreased demand in special projects resulting from weakness in the oil and gas as well as mining industries.

Sales of residential lumber totalled $41.9 million, up from $28.4 million last year, reflecting sales of $9.3 million from the Ram acquisition, as well as the impact of the transition from treating services only for wholesalers to a value-added full service direct offering for retailers. Industrial product sales increased to $26.7 million, compared with $19.9 million a year ago, mainly as a result of increased demand for marine timbers in Eastern Canada. Finally, logs and lumber sales were $20.2 million, versus $6.4 million last year, due to procurement efforts to support residential lumber requirements and the timing of timber harvesting.

Operating income reached $54.6 million, or 13.0% of sales, versus $47.6 million, or 14.0% of sales, last year. The increase in absolute dollars essentially stems from higher business activity, the Ram acquisition and the effect of currency translation. As a percentage of sales, the decrease is mainly attributable to higher logs and lumber sales, which are performed at a value close to cost of sales, and additional selling expenses related to an expanded presence in the residential lumber category, partially offset by greater efficiencies throughout the Company's plant network.

Net income for the first quarter of 2016 increased 16.3% to $35.0 million, or $0.51 per diluted share, compared with $30.1 million, or $0.43 per diluted share, in the first quarter of 2015.


As at March 31, 2016, the Company's long-term debt, including the current portion, stood at $628.1 million compared with $669.9 million three months earlier. The decrease mainly reflects the effect of local currency translation on U.S. dollar denominated long-term debt, partially offset by higher working capital requirements, as per normal seasonal demand patterns. As at March 31, 2016, Stella-Jones' total debt to total capitalization ratio was 0.41:1, compared with 0.42:1 as at December 31, 2015.

Working capital requirements include the normal seasonal inventory build-up ahead of peak demand in the second and third quarters. The year-over-year inventory build-up is also higher as a result of the addition of Ram's business and the direct sales to retailers of residential lumber.


On April 27, 2016, the Board of Directors declared a quarterly dividend of $0.10 per common share, payable on June 28, 2016 to shareholders of record at the close of business on June 6, 2016.


"As we enter peak season for most of our products, we expect demand to remain healthy for the remainder of 2016. Supporting this confidence, Stella-Jones is moving forward with the construction of a new wood treating facility in Cameron, Wisconsin, which will primarily be used to service the utility pole market. We expect the facility to be ready for production in the first quarter of 2017. In the meantime, we continue to integrate recent acquisitions into our network by leveraging best practices and anticipate completing, in the second quarter of 2016, the acquisitions of Lufkin Creosoting Co., Inc. and 440 Investments, LLC. Our strategy remains committed on enhancing network efficiencies and methodically expanding through acquisitions. This focus has contributed in building lasting value for our shareholders," concluded Mr. McManus.


Stella-Jones will hold a conference call to discuss these results on April 28, 2016, at 1:30 PM Eastern Time. Interested parties can join the call by dialing 647-788-4922 (Toronto or overseas) or 1-877-223-4471 (elsewhere in North America). Parties unable to call in at this time may access a tape recording of the meeting by calling 1-800-585-8367 and entering the passcode 86832448. This tape recording will be available on Thursday, April 28, 2016 as of 4:30 PM Eastern Time until 11:59 PM Eastern Time on Thursday, May 5, 2016.


Operating income and cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these non-IFRS measures to be useful information to assist knowledgeable investors regarding the Company's financial condition and results of operations as they provide additional measures of its performance.


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 and timbers, and the continent's electrical utilities and telecommunication companies with utility poles. Stella-Jones also manufactures and distributes residential lumber and accessories to retailers for outdoor applications, as well as industrial products for construction and marine 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: Condensed interim unaudited consolidated financial statements for the first quarter ended March 31, 2016 are available on Stella-Jones' website at

Contact Information:

Stella-Jones Inc.

Eric Vachon, CPA, CA
Senior Vice-President and Chief Financial Officer
(514) 940-3903

Martin Goulet, CFA
MaisonBrison Communications
(514) 731-0000