SEDAR Interim Financial Statements

Stella-Jones Inc. Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 (in millions of Canadian dollars) As at As at Note September 30, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents 69 50 Accounts receivable 398 277 Inventories 1,563 1,759 Income taxes receivable 7 11 Other current assets 51 42 2,088 2,139 Non-current assets Property, plant and equipment 1,084 1,048 Right-of-use assets 296 311 Intangible assets 168 170 Goodwill 394 406 Derivative financial instruments 12 21 Other non-current assets 6 8 4,048 4,103 Liabilities and Shareholders’ Equity Current liabilities Accounts payable and accrued liabilities 172 180 Income taxes payable 3 — Deferred revenue — 17 Current portion of long-term debt 4 24 1 Current portion of lease liabilities 62 64 Current portion of provisions and other long-term liabilities 5 27 24 288 286 Non-current liabilities Long-term debt 4 1,198 1,379 Lease liabilities 247 259 Deferred income taxes 207 197 Provisions and other long-term liabilities 5 36 37 Employee future benefits 4 4 1,980 2,162 Shareholders’ equity Capital stock 7 188 188 Contributed surplus 4 — Retained earnings 1,680 1,498 Accumulated other comprehensive income 196 255 2,068 1,941 4,048 4,103 Subsequent events 12 Stella-Jones Inc. Condensed Interim Consolidated Statements of Financial Position (Unaudited) The accompanying notes are an integral part of these condensed interim consolidated financial statements. (in millions of Canadian dollars) Accumulated other comprehensive income Capital stock Contributed surplus Retained earnings Foreign currency translation adjustment Translation of long-term debts designated as net investment hedges Unrealized gains (losses) on cash flow hedges Total Total shareholders’ equity Balance – January 1, 2025 188 — 1,498 367 (127) 15 255 1,941 Comprehensive income (loss) Net income — — 287 — — — — 287 Other comprehensive income (loss) — — — (65) 13 (7) (59) (59) Comprehensive income (loss) — — 287 (65) 13 (7) (59) 228 Dividends on common shares — — (51) — — — — (51) Equity-settled share-based payments expense — 4 — — — — — 4 Employee share purchase plans 2 — — — — — — 2 Repurchase of common shares including related taxes (note 7) (2) — (54) — — — — (56) — 4 (105) — — — — (101) Balance – September 30, 2025 188 4 1,680 302 (114) 8 196 2,068 Stella-Jones Inc. Condensed Interim Consolidated Statements of Change in Shareholders’ Equity (Unaudited) For the nine-month periods ended September 30, 2025 and 2024 The accompanying notes are an integral part of these condensed interim consolidated financial statements. (in millions of Canadian dollars) Accumulated other comprehensive income Capital stock Retained earnings Foreign currency translation adjustment Translation of long-term debts designated as net investment hedges Unrealized gains (losses) on cash flow hedges Total Total shareholders’ equity Balance – January 1, 2024 189 1,329 224 (105) 15 134 1,652 Comprehensive income (loss) Net income — 267 — — — — 267 Other comprehensive income (loss) — — 31 (5) (4) 22 22 Comprehensive income (loss) — 267 31 (5) (4) 22 289 Dividends on common shares — (47) — — — — (47) Employee share purchase plans 1 — — — — — 1 Repurchase of common shares including related taxes (note 7) (2) (64) — — — — (66) (1) (111) — — — — (112) Balance – September 30, 2024 188 1,485 255 (110) 11 156 1,829 Stella-Jones Inc. Condensed Interim Consolidated Statements of Change in Shareholders --- ’ Equity...Continued (Unaudited) For the nine-month periods ended September 30, 2025 and 2024 The accompanying notes are an integral part of these condensed interim consolidated financial statements. (in millions of Canadian dollars, except earnings per common share) For the three-month periods ended September 30, For the nine-month periods ended September 30, Note 2025 2024 2025 2024 Sales 958 915 2,765 2,739 Expenses Cost of sales (including depreciation and amortization (3 months - $32 (2024 - $29) and 9 months - $95 (2024 - $85)) 770 727 2,203 2,153 Selling and administrative (including depreciation and amortization (3 months - $4 (2024 - $3) and 9 months - $11 (2024 - $11)) 51 53 156 156 Other losses, net 2 5 1 8 Gain on insurance settlement 11 — — (28) — 823 785 2,332 2,317 Operating income 135 130 433 422 Financial expenses 18 23 52 65 Income before income taxes 117 107 381 357 Income tax expense Current 32 24 85 84 Deferred (3) 3 9 6 29 27 94 90 Net income 88 80 287 267 Basic and diluted earnings per common share 7 1.59 1.42 5.17 4.72 Stella-Jones Inc. Condensed Interim Consolidated Statements of Income (Unaudited) The accompanying notes are an integral part of these condensed interim consolidated financial statements. (in millions of Canadian dollars) For the three-month periods ended September 30, For the nine-month periods ended September 30, 2025 2024 2025 2024 Net income 88 80 287 267 Other comprehensive income (loss) Items that may subsequently be reclassified to net income Gains (losses) on translation of financial statements of foreign operation 40 (22) (65) 31 (Losses) gains on translation of long-term debt designated as hedges of net investment in foreign operations (4) 3 13 (5) Change in fair value of derivatives designated as cash flow hedges (2) (9) (9) (5) Income tax on change in fair value of derivatives designated as cash flow hedges — 2 2 1 Items that will not subsequently be reclassified to net income Remeasurements of post-retirement benefit obligations — (1) — — 34 (27) (59) 22 Comprehensive income 122 53 228 289 Stella-Jones Inc. Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited) The accompanying notes are an integral part of these condensed interim consolidated financial statements. (in millions of Canadian dollars) For the three-month periods ended September 30, For the nine-month periods ended September 30, Note 2025 2024 2025 2024 Cash flows from (used in) Operating activities Net income 88 80 287 267 Adjustments for Depreciation of property, plant and equipment 14 11 41 34 Depreciation of right-of-use assets 17 17 51 49 Amortization of intangible assets 5 4 14 13 Financial expenses 18 23 52 65 Income tax expense 29 27 94 90 Gain on insurance settlement 11 — — (28) — Other — 5 (10) 5 171 167 501 523 Changes in non-cash working capital components Accounts receivable 14 70 (111) (68) Inventories 71 27 172 (14) Other current assets (1) — (5) (6) Accounts payable and accrued liabilities (4) (34) (15) (13) 80 63 41 (101) Interest paid (23) (25) (57) (67) Income taxes paid (30) (19) (79) (54) 198 186 406 301 Financing activities Net change in revolving credit facilities (64) (83) 14 (117) Proceeds from long-term debt — — — 168 Repayment of long-term debt (48) (1) (143) (103) Repayment of lease liabilities (16) (16) (49) (46) Dividends on common shares (17) (15) (51) (47) Repurchase of common shares 7 (20) (30) (55) (65) Other 1 1 1 1 (164) (144) (283) (209) Investing activities Busin --- ess combinations 3 (10) (4) (58) (4) Purchase of property, plant and equipment (19) (35) (73) (91) Property insurance proceeds 11 — — 26 10 Additions of intangible assets (2) (3) (6) (7) Other 1 — 7 — (30) (42) (104) (92) Net change in cash and cash equivalents during the period 4 — 19 — Cash and cash equivalents – Beginning of period 65 — 50 — Cash and cash equivalents – End of period 69 — 69 — Stella-Jones Inc. Condensed Interim Consolidated Statements of Cash Flows (Unaudited) The accompanying notes are an integral part of these condensed interim consolidated financial statements. 1 Description of the Business Stella-Jones Inc. (with its subsidiaries, either individually or collectively, referred to as the “Company”) is a leading North American manufacturer of products focused on supporting infrastructure that are essential to the delivery of electrical distribution and transmission, and the operation and maintenance of railway transportation systems. The Company supplies the continent’s major electrical utilities companies with treated wood and steel utility poles and steel lattice towers, as well as North America’s Class 1, short line and commercial railroad operators with treated wood railway ties and timbers. The Company also supports infrastructure with industrial products, namely timbers for railway bridges, crossings and construction, marine and foundation pilings, and coal tar-based products. Additionally, the Company manufactures and distributes premium treated residential lumber and accessories to Canadian and American retailers for outdoor applications, with a significant portion of the business devoted to servicing Canadian customers through its national manufacturing and distribution network. The Company has facilities across Canada and the United States and sells its products primarily in these two countries. The Company’s headquarters are located at 3100 de la Côte-Vertu Blvd., in Saint-Laurent, Quebec, Canada. The Company is incorporated under the Canada Business Corporations Act, and its common shares are listed on the Toronto Stock Exchange (“TSX”) under the stock symbol SJ. 2 Material Accounting Policies Basis of presentation The Company’s condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. These condensed interim consolidated financial statements were approved by the Board of Directors on November 4, 2025. The same accounting policies, methods of computation and presentation have been followed in the preparation of these condensed interim consolidated financial statements as were applied in the annual consolidated financial statements for the year ended December 31, 2024. These condensed interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2024, which have been prepared in accordance with IFRS Accounting Standards. Principles of consolidation The condensed interim consolidated financial statements include the accounts of Stella-Jones Inc. and its controlled subsidiaries. Intercompany transactions and balances between these companies have been eliminated. All consolidated subsidiaries are wholly owned. The significant subsidiaries --- within the legal structure of the Company are as follows: Subsidiary Parent Country of incorporation Stella-Jones U.S. Holding Corporation Stella-Jones Inc. United States Stella-Jones Corporation Stella-Jones U.S. Holding Corporation United States Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 1 Accounting pronouncements not yet adopted The following amendments and new standard were issued by the International Accounting Standards Board (“IASB”) and were not yet adopted in preparing the condensed interim consolidated financial statements. Amendments to IFRS 9 and IFRS 7 In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments, which amended IFRS 9 and IFRS 7, to clarify when a financial asset or a financial liability is recognized and derecognized and to introduce an accounting policy choice to derecognize financial liabilities settled using an electronic payment system before the settlement date. The amendments also clarify the classification of financial assets with environmental, social and governance (“ESG”)-linked features, non-recourse loans and contractually linked instruments, and introduce disclosure requirements for financial instruments with contingent features and equity instruments classified at fair value through other comprehensive income. The amendments are effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. The Company is currently assessing the impact of these amendments on its annual and condensed interim consolidated financial statements. Presentation and Disclosure in Financial Statements – IFRS 18 In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements, which replaces IAS 1, Presentation of Financial Statements. IFRS 18 introduces three sets of new requirements to improve companies' reporting of financial performance and give investors a better basis for analyzing and comparing companies: – improved comparability in the statement of income by introducing three defined categories for income and expenses (operating, investing and financing) and requiring companies to provide new defined subtotals, including operating profit; – enhanced transparency of management-defined performance measures by requiring companies to disclose explanations of those company-specific measures that are related to the statement of income; and – enhanced guidance on how companies group information in the financial statements, including guidance on whether information is included in the primary financial statements or is further disaggregated in the notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. The Company is currently assessing the impact of the new standard on its annual and condensed interim consolidated financial statements. 3 Business Combination On May 7, 2025, the Company completed the acquisition of Locweld Inc. (“Locweld”), a designer and manufacturer of steel lattice transmission towers and steel poles. The total consideration consisted of a purchase price of $58 million on a debt-free basis, plus a working capital adjustment and a performance-based contingent consideration. The cash outlay at closing was $48 million, excluding acquisition-related costs of two million dollars, recognized in the condensed interim consolidated statement --- of income under selling and administrative expenses. With this acquisition, the Company has established a presence in the steel transmission structure market. As at the reporting date, the Company had not completed the purchase price allocation to the fair value of the identifiable net assets acquired and goodwill. The fair value determination of the assets acquired and liabilities assumed was based on Management’s best estimates and information known at the time of preparing these condensed interim consolidated financial statements. This fair value determination is expected to be completed within 12 months of the acquisition date and consequently, significant changes could occur mainly with respect to property, plant and Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 2 equipment, intangible assets and deferred tax liabilities. If new information obtained about facts and circumstances that existed at the date of acquisition identifies adjustments to the below amounts, or any additional provisions that existed at the date of acquisition, the accounting for this acquisition will be revised. The following is a preliminary summary of the assets acquired, the liabilities assumed and the consideration transferred at fair value as at the acquisition date. (Amounts in millions of Canadian dollars) Assets Acquired Accounts receivable 35 Inventories 16 Other current assets 7 Property, plant and equipment 41 Intangible assets 9 108 Liabilities Assumed Accounts payable and accrued liabilities (23) Income taxes payable (3) Long-term debt and notes payable (22) Provisions and other long-term liabilities (7) Deferred tax liabilities (8) Total identifiable net assets acquired 45 Cash outlay at closing 48 Payment of long-term debt and notes payable (22) Contingent consideration 5 Deferred consideration 14 Consideration transferred to shareholders 45 The Company agreed to pay an additional consideration to some of the selling shareholders of up to seven million dollars, contingent upon achieving specific financial milestones in a future period. The fair value of the contingent consideration of five million dollars was estimated by calculating the present value of the future expected cash flows. The estimates were based on a discount rate of 10%. At the acquisition date, the trade receivables comprise gross amounts of $35 million, which were expected to be collectible. The Company’s valuation of intangible assets has mainly identified customer relationships having a useful life of 10 years. Significant assumptions used in the determination of intangible assets, as defined by Management, include year- over-year sales growth, discount rate and operating income before depreciation and amortization margin. In the period from May 7, 2025 to September 30, 2025, the sales and net income of Locweld amounted to $40 million and six million dollars, respectively. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 3 4 Long-term Debt As at As at (Amounts in millions of Canadian dollars) Maturity date September 30, 2025 December 31, 2024 Unsecured: Revolving credit facilities (a) 2029-2030 302 295 Term loan facilities US$125, variable rate based on SOFR plus 1.725% 2028 174 180 US$100, fixed rates ranging from 3.27% to 4.47%, with quarterly amortization payments starting in 2026 2029-2030 139 144 US$25, fixed rate of 4.52% 2029 35 --- 36 US$47.8 (as at December 31, 2024 – US$150), variable rate based on SOFR plus applicable margin 2030-2031 67 216 Senior notes $400, fixed rate of 4.312% 2031 400 400 US$75, fixed rate of 3.81% 2027 105 108 Other 2 3 1,224 1,382 Deferred financing costs (2) (2) 1,222 1,380 Less: Current portion of long-term debt 24 1 1,198 1,379 a) On February 4, 2025, the Company amended the U.S. Farm Credit Agreement in order to, among other things, extend the term of the revolving credit facility of US$150 million from March 3, 2028 to February 4, 2030 and increase the required level of net funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio to 3.75 :1.00. In order to maintain in place the credit facilities and private placement senior notes with certain U.S. investors, the Company needs to comply with customary covenants, reporting requirements and financial ratios. As at September 30, 2025, the Company was in compliance with these covenants, requirements and ratios. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 4 5 Provisions and Other Long-term Liabilities As at As at (Amounts in millions of Canadian dollars) September 30, 2025 December 31, 2024 Site remediation 22 28 Share-based payment liabilities 20 24 Deferred and contingent consideration 16 8 Others 5 1 63 61 Less: Current portion of provisions and long-term liabilities 27 24 36 37 6 Share-based Payments In May 2024, the shareholders of the Company approved the Treasury Share Unit Plan (“TSU Plan”), which allows equity awards to be granted to the President and Chief Executive Officer, Senior Vice-Presidents and Vice-Presidents (collectively “Executive Officers”) in the form of restricted stock units (“TRSUs”) and performance stock units (“TPSUs”), starting in March 2025. The total number of shares reserved for issuance under the TSU Plan and the Stock Option Plan, on a combined basis, is 1,500,000. The TSU Plan supplements the existing cash-settled Stock Unit Plan (“SUP”). Awards granted under the SUP will remain outstanding and governed by the terms of such plan, but no new awards will be granted to Executive Officers under the SUP. All awards made under the TSU Plan are considered equity-settled arrangements. The Company’s share-based payment plans consist of two categories: equity-settled TRSUs and TPSUs and cash- settled restricted stock units (“RSUs”), performance stock units (“PSUs”) and deferred share unit (“DSUs”). Equity-settled TRSUs and TPSUs plan Under the TSU Plan, TRSUs and TPSUs granted to Executive Officers are settled in shares, either issued from treasury or purchased on the open market, in cash or in a combination thereof, at the discretion of the Company. TPSUs granted vest based on the attainment of performance criteria and market conditions set out pursuant to the TSU Plan. TRSUs vest ratably over a period of three years and TPSUs vest three years after the grant date, subject to the participant’s continued employment at time of vesting. Changes in outstanding TRSUs during the nine-month periods ended September 30, are as follows: 2025 2024 TRSUs outstanding - Beginning of period — — Granted 126,650 — Forfeited (19,710) — TRSUs outstanding - End of period 106,940 — Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 5 Changes in outstanding TPSUs during the nine-month periods ended Septembe --- r 30, are as follows: 2025 2024 TPSUs outstanding - Beginning of period — — Granted 68,455 — Forfeited (10,654) — TPSUs outstanding - End of period 57,801 — Cash-settled RSUs and PSUs plan Under the SUP, RSUs and PSUs are granted to eligible participants of the Company. RSUs and PSUs entitle the holders to receive a cash payment equal to the average closing price on the TSX of the Company’s common shares for the five trading days preceding the vesting date. PSUs granted vest based on the attainment of performance criteria and market conditions set out pursuant to the SUP. RSUs vest ratably over a period of up to three years and PSUs are paid three years after the grant date, subject to the participant’s continued employment at time of vesting. Changes in outstanding RSUs during the nine-month periods ended September 30, are as follows: 2025 2024 RSUs outstanding - Beginning of period 156,156 129,438 Granted 13,648 118,688 Vested (78,051) (66,492) Forfeited (10,985) (1,368) RSUs outstanding - End of period 80,768 180,266 Changes in outstanding PSUs for the nine-month periods ended September 30, are as follows: 2025 2024 PSUs outstanding - Beginning of period 128,744 97,072 Granted 7,391 59,348 Performance multiplier 36,130 26,543 Vested (72,260) (53,086) Forfeited (13,231) (1,133) PSUs outstanding - End of period 86,774 128,744 DSUs DSUs entitle non-executive directors of the Company to receive a minimum participation amount in the form of DSUs and they may elect to participate in the DSU plan for all or a portion of their Board fees. Such deferred remuneration is converted to DSUs based on the average closing price of the Company’s common shares on the TSX of the five trading days immediately preceding the date such awards are granted to the non-executive director. DSUs are settled for cash only after a non-executive director ceases to act as a director. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 6 Additionally, the Company maintains a supplementary executive retirement plan that permits certain Executive Officers to receive DSUs. Changes in outstanding DSUs for the nine-month periods ended September 30, are as follows: 2025 2024 DSUs outstanding - Beginning of period 71,457 59,365 Granted 11,341 12,092 DSUs outstanding - End of period 82,798 71,457 7 Capital Stock and Earnings Per Share The following table provides the number of common shares outstanding for the nine-month periods ended September 30: 2025 2024 Number of common shares outstanding - Beginning of period 55,824,953 56,866,712 Common shares repurchased (742,634) (761,153) Stock option exercised 5,000 15,000 Employee share purchase plans 28,027 15,687 Number of common shares outstanding - End of period 55,115,346 56,136,246 Capital stock The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series. All issued shares are fully paid. The common shares provide for the right to receive notice of, attend and vote at all meetings of shareholders and receive dividends, subject to the prior rights of the preferred shares and any other shares ranking senior to the common shares. To date, the Company has not issued any preferred shares. During the nine-month period ended September 30, 2025, 5,000 ordinary shares were issued as a result of the exercise of options arising from the share options granted in 2015 (September 30, 2024 - 15,000 --- ). Options were exercised at the option value price of $49.01 per share. Normal Course Issuer Bid (“NCIB”) On November 5, 2024, the TSX accepted the Company’s Notice of Intention to Make a NCIB to purchase for cancellation up to 2,500,000 common shares during the 12-month period commencing November 14, 2024 and ending November 13, 2025, representing approximately 4.5% of the common shares outstanding. During the nine-month period ended September 30, 2025, the Company repurchased for cancellation 742,634 common shares under its NCIB (September 30, 2024 – 761,153 under the NCIB then in effect) for a total consideration of $55 million (September 30, 2024 – $65 million), representing an average price of $74.05 per common share (September 30, 2024 – $85.39). For the nine-month period ended September 30, 2025, the Company’s capital stock was reduced by Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 7 two million dollars (as at September 30, 2024 – two million dollars) and the retained earnings decreased by $54 million (as at September 30, 2024 – $64 million), including one million dollars of related taxes (as at September 30, 2024 – one million dollars). Employee share purchase plans The employee share purchase plans were amended in January 2025. The aggregate number of common shares reserved for issuance under the Company’s employee share purchase plans remains at 1,300,000. Under the new plans, employees of the Company are eligible to buy common shares from the Company, up to a maximum of 5% of their base annual salary, and the Company contributes an amount equal to 25% of the employee contributions. Earnings per share The following table provides the reconciliation, as at September 30, between basic earnings per common share and diluted earnings per common share: (Amounts in millions of Canadian dollars, except per share amounts) For the three-month periods ended September 30, For the nine-month periods ended September 30, 2025 2024 2025 2024 Net income applicable to common shares $88 $80 $287 $267 Weighted average number of common shares outstanding* 55,192 56,293 55,471 56,554 Effect of dilutive stock options and non-vested TRSUs and TPSUs* 64 3 45 5 Weighted average number of diluted common shares outstanding* 55,256 56,296 55,516 56,559 Basic and diluted earnings per common share $1.59 $1.42 $5.17 $4.72 * Number is presented in thousands. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 8 8 Fair Value Measurement and Financial Instruments The following table summarizes the Company’s interest rate swap agreements: As at As at September 30, December 31, (Amounts in millions of Canadian dollars) 2025 2024 Notional amount Related debt instrument Fixed rate % Effective date Maturity date Notional equivalent CA$ Notional equivalent CA$ US$50 Revolving credit facilities 0.796* Dec. 2021 Dec. 2026 70 72 US$125 Term loan facility 1.0769** July 2021 June 2028 174 180 * Plus applicable margin based on pricing grid included in the revolving credit agreements. ** Plus set margin of 1.725%. The Company designates its interest rate swap agreements as cash flow hedges of the underlying debt. The cash flow hedge documentation allows the Company to substitute the underlying debt as long as the hedge effectiveness is demonstrated. As at September 30, 2025, all cash flow hedges were effective. As at September 30, 20 --- 25, the fair value of interest swap agreements was $12 million, recognized as non-current assets in the condensed interim consolidated statement of financial position (December 31, 2024 - $21 million in the consolidated statement of financial position). The fair value of these financial instruments has been estimated using the discounted future cash flow method and has been classified as Level 2 in the fair value hierarchy as per IFRS 7, Financial Instruments: Disclosures, as it is based mainly on observable market data, namely government bond yields and interest rates. A description of each level of the hierarchy is as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for these assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Financial instruments which are not measured at fair value on the statement of financial position are represented by accounts receivable, accounts payable and accrued liabilities and long-term debt. The fair values of accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature. The long- term debt has a carrying value of $1,222 million (December 31, 2024 – $1,380 million) and a fair value of $1,225 million (December 31, 2024 – $1,368 million). 9 Seasonality The Company’s operations follow a seasonal pattern, with utility poles, railway ties and industrial products shipments strongest in the second and third quarters to provide industrial end-users with product for their summer maintenance projects. Residential lumber sales follow the same seasonal pattern. Inventory levels of utility poles, railway ties and residential lumber are typically highest in the first quarter in advance of the summer shipping season. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 9 10 Segment Information The Company operates within two business segments which are the production and sale of pressure-treated wood and the procurement and sales of logs and lumber. The reportable segments are managed independently as the operational processes and capital requirements are different. The pressure-treated wood segment includes utility poles, railway ties, residential lumber and industrial products. The logs and lumber segment comprises the sales of logs harvested in the course of the Company’s procurement process that are determined to be unsuitable for use as utility poles. Also included in this segment is the sale of excess lumber to local home-building markets. Assets and net income related to the logs and lumber segment are nominal. Operating plants are located in six Canadian provinces and 18 American states. The Company also operates a large procurement and distribution network across North America. Sales attributed to countries based on location of customer for the nine-month periods ended September 30, are as follows: (Amounts in millions of Canadian dollars) 2025 2024 U.S. 2,066 1,945 Canada 699 794 2,765 2,739 Sales by product for the nine-month periods ended September 30, are as follows: (Amounts in millions of Canadian dollars) 2025 2024 Utility poles 1,375 1,320 Railway ties 659 697 Residential lumber --- 535 521 Industrial products 135 123 Pressure-treated wood 2,704 2,661 Logs and lumber 61 78 2,765 2,739 Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 10 Property, plant and equipment, right-of-use assets, intangible assets and goodwill attributed to the countries based on location are as follows: As at As at (Amounts in millions of Canadian dollars) September 30, 2025 December 31, 2024 Property, plant and equipment U.S. 758 765 Canada 326 283 1,084 1,048 Right-of-use assets U.S. 222 236 Canada 74 75 296 311 Intangible assets U.S. 105 115 Canada 63 55 168 170 Goodwill U.S. 373 385 Canada 21 21 394 406 11 Insurance Settlement During the first quarter of 2025, the Company settled a claim with its insurer related to a fire event in 2023 at its Silver Springs, Nevada manufacturing facility for total proceeds, net of the deductible, of $53 million (US$37.5 million). As result of the settlement, the Company recorded in the first quarter of 2025 an insurance recovery for business interruption insurance losses of $10 million (US$7 million) as a reduction to “Cost of sales” and a gain on the property damage claim of $28 million (US$19.5 million) as “Gain on insurance settlement”. The remainder of the insurance settlement, $15 million (US$11 million), was used to reimburse the Company for the book value of damaged property, plant and equipment as well as clean-up and site remediation costs. The Company received an advance from the insurance company for this claim of $10 million (US$7.5 million) in 2024. The remaining $43 million (US$30 million) was received in the second quarter of 2025. 12 Subsequent Events a) On November 4, 2025, the Board of Directors declared a quarterly dividend of $0.31 per common share payable on December 19, 2025 to shareholders of record at the close of business on December 1, 2025. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 11 b) On November 4, 2025, the TSX accepted the Company’s Notice of Intention to Make a NCIB to purchase for cancellation up to 1,500,000 common shares during the 12-month period from November 14, 2025 to November 13, 2026, representing approximately 2.7% of the common shares outstanding. Stella-Jones Inc. Notes to Condensed Interim Consolidated Financial Statements (Unaudited) September 30, 2025 and 2024 12