Stella-Jones Announces Third Quarter Results

Executive Summary

• Stella-Jones Inc. reported financial results for the third quarter ended September 30, 2025, showing a 5% increase in sales to $958 million and a 4% increase in operating income to $135 million compared to Q3 2024.
• The company announced the completion of its acquisition of Brooks Manufacturing Co. for approximately US$140 million, aimed at broadening its utility sector portfolio.
• The Board declared a quarterly dividend of $0.31 per share and announced a Normal Course Issuer Bid (NCIB) for 2025-2026 to repurchase up to 1,500,000 common shares.

Key Details

• Q3 2025 Financial Highlights (Three-month periods ended Sept 30, 2025):
  • Sales: $958 million (up 5% from $915 million in Q3 2024).
  • Gross Profit: $188 million (margin 19.6% vs 20.5% in Q3 2024).
  • Operating Income: $135 million (up 4% from $130 million).
  • EBITDA: $171 million (margin 17.8% vs 17.7% in Q3 2024).
  • Net Income: $88 million ($1.59 EPS) vs $80 million ($1.42 EPS) in Q3 2024.
• Nine-Month 2025 Results:
  • Sales: $2,765 million vs $2,739 million in the same period last year.
  • Net Income: $287 million ($5.17 EPS) vs $267 million ($4.72 EPS).
  • Includes a pre-tax insurance settlement gain of $28 million in the first nine months of 2025.
• Operational Performance (Q3 2025):
  • Pressure-Treated Wood: Sales increased by $29 million (3% organic growth) excluding acquisitions and currency effects.
    • Utility Poles: Sales of $480 million (up from $448 million); driven by mid-single-digit volume growth from new contractual commitments, partially offset by lower spot market pricing.
    • Railway Ties: Sales of $211 million (up $6 million); driven by a $4 million price improvement, offset by lower Class 1 volumes due to in-house treatment shifts.
    • Residential Lumber: Sales of $201 million (up from $191 million); driven by higher pricing despite stable demand.
    • Industrial Products: Sales of $50 million (up $9 million); driven by higher project-driven demand.
  • Logs and Lumber: Sales decreased to $16 million from $30 million, primarily due to lower log activity.
• Liquidity and Capital Resources:
  • Available liquidity: ~$780 million.
  • Net debt-to-EBITDA ratio: 2.2x (improved from 2.6x at Dec 31, 2024).
  • Q3 Cash Flow: $198 million generated from operations; used for $19M capex, $37M returned to shareholders (dividends/repurchases), and $112M debt reduction.
  • Share Repurchases: 742,634 shares repurchased for $55 million in the first nine months of 2025. Total repurchases since NCIB start (Nov 14, 2024): 883,133 shares for $65 million.
• Acquisition of Brooks Manufacturing Co.:
  • Completed on November 5, 2025.
  • Acquired assets of Brooks Manufacturing Co., a manufacturer of treated wood distribution crossarms and transmission framing components in the US.
  • Consideration: Approximately US$140 million plus customary working capital adjustments.
  • Antitrust waiting period satisfied.
• Corporate Actions:
  • NCIB: TSX accepted notice for a bid to purchase up to 1,500,000 common shares (approx. 2.7% of outstanding) from Nov 14, 2025, to Nov 13, 2026.
  • Dividend: Declared $0.31 per common share, payable Dec 19, 2025, to shareholders of record on Dec 1, 2025.

Notable Quotes

• Eric Vachon, President and CEO: “Stella-Jones achieved another solid performance in the third quarter, supported by volume improvements, robust margins, improved cash flow and a strong balance sheet... We remain confident in the long-term growth trajectory of our core businesses and in our continued ability to deliver strong profitability.”
• Eric Vachon, President and CEO: “Alongside our resilient performance, we advanced our growth strategy with the acquisition of Brooks. This investment aligns with our strategic priorities—broadening our portfolio of solutions, strengthening our position in the utility sector, and creating a more robust platform to capture rising demand and accelerate future growth.”