Stella-Jones Announces First Quarter Results

• Stella-Jones reported First Quarter 2026 sales of $791 million, an increase from $773 million in Q1 2025.
• Net income declined to $60 million ($1.10 per share) compared to $93 million ($1.67 per share) in the prior year period.
• Gross profit margin compressed to 19.6% from 21.7% in Q1 2025, driven by a less favorable product mix and absence of a prior-year insurance recovery.
• Adjusted EBITDA decreased to $136 million (17.2% margin) versus $141 million (18.2% margin) in the previous year.
• The company finalized site selection for its new U.S. steel lattice manufacturing facility in Fayetteville, Tennessee.
• Liquidity stands at $646 million with net debt-to-adjusted EBITDA at 2.6x.
• Share repurchases totaled $15 million during the quarter and a quarterly dividend of $0.34 per share was declared.

• The sales growth of approximately 2% is positive but does not offset the significant decline in profitability metrics.
• Net income dropped by roughly 35%, primarily due to the absence of a one-time insurance settlement gain recognized in Q1 2025, though operational margin compression remains a concern.
• Gross and EBITDA margins declined by approximately 200 basis points year-over-year, indicating pricing pressure or cost inflation that management has not yet fully mitigated.
• Net debt-to-EBITDA of 2.6x slightly exceeds the stated target range of 2.0x to 2.5x outlined in the November 2025 financial objectives, suggesting leverage is creeping up faster than earnings growth.
• The steel lattice facility site selection confirms progress on the FY25 announced US$50 million investment, with commissioning expected by end-2027.
• Liquidity remains robust at $646 million, mitigating immediate solvency concerns despite the leverage deviation.

• Stella-Jones Inc. operates in the building materials sector with segments including Utility Products, Railway Ties, Residential Lumber, and Industrial Products.
• Flagship Project: A new greenfield steel lattice manufacturing facility in Fayetteville, Tennessee, approved for US$50 million investment in FY25.
• The facility is intended to expand utility product offerings and serves as a key component of the 2026-2028 growth strategy targeting $4 billion in annual sales by 2028.
• Recent acquisitions include Locweld and Brooks Manufacturing Co., contributing approximately US$140 million in purchase price for treated wood distribution assets.