Stella-Jones Announces Second Quarter Results

Sales of $1,034 million, down 1% from Q2 2024 Operating income of $155 million vs $168 million in Q2 2024 Strong EBITDA(1) of $189 million, or 18.3% margin(1) Completed acquisition of a steel transmission structure manufacturer Available liquidity of almost $700 million Updated revenue outlook for the year MONTREAL, Aug. 07, 2025 (GLOBE NEWSWIRE) -- Stella-Jones Inc. (TSX: SJ) (“Stella-Jones” or the “Company”) today announced financial results for its second quarter ended June 30, 2025. “Our second quarter results reflect the resilience of our business and the disciplined execution of our strategy for value creation as we continued to deliver a robust EBITDA margin and solid cashflows during a quarter of softer volumes,” said Eric Vachon, President and Chief Executive Officer of Stella-Jones. “We anticipate maintaining healthy profitability levels, despite a revised revenue outlook for the year, and are encouraged by the progressive improvement in utility poles volumes. The breadth of our network provides a distinct advantage, allowing us to pivot capacity when necessary, and will enable us to support our customers from a position of strength as they execute on their long-term maintenance and capital investment plans.” “We are also pleased to have completed the Locweld acquisition during the quarter, which establishes our presence in the steel transmission structure market, providing a platform to further expand our reach as we continue to execute on our strategy to broaden Stella-Jones’ infrastructure offering. With this acquisition, we are better positioned to capitalize on new investment opportunities,” he concluded. Financial Highlights (in millions of Canadian dollars, except ratios and per share data) Three-month periods ended June 30,   Six-month periods ended June 30,   2025   2024   2025   2024   Sales 1,034   1,049   1,807   1,824   Gross profit(1) 206   226   374   398   Gross profit margin(1) 19.9%   21.5%   20.7%   21.8%   Operating income 155   168   298   292   Operating income margin(1) 15.0%   16.0%   16.5%   16.0%   EBITDA(1) 189   200   368   356   EBITDA margin(1) 18.3%   19.1%   20.4%   19.5%   Net income 106   110   199   187   Earnings per share (“EPS”) - basic and diluted 1.91   1.94   3.58   3.30     As at June 30, 2025   December 31, 2024   Net debt-to-EBITDA(1) 2.4x   2.6x   (1) These indicated terms have no standardized meaning under GAAP and are not likely to be comparable to similar measures presented by other issuers. For more information, please refer to the section entitled “Non-GAAP and Other Financial Measures” of this press release for an explanation of the non-GAAP and other financial measures used and presented by the Company and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures. SECOND QUARTER RESULTS Sales for the second quarter of 2025 were $1,034 million, down $15 million, versus sales of $1,049 million for the corresponding period last year. Excluding the contribution from the acquisition of Locweld Inc. (“Locweld”) of $18 million and the currency conversion of nine million dollars, pressure-treated wood sales decreased by $43 million, or 4%, while logs and lumber sales remained relatively stable. Comparing against a strong prior-year period for both utility poles and railway ties, the decrease in pressure-treated wood sales was largely driven by a decline in volumes for railway ties and utility poles and lower utility poles pricing. Residential lumber sales were unchanged as softer demand was offset by the higher market price of lumber compared to the same period last year. Pressure-treated wood products: Utility poles (46% of Q2-25 sales): Utility poles sales increased to $476 million in the second quarter of 2025, compared to sales of $470 million in the corresponding period last year. Excluding the contribution from the acquisition of Locweld, whose sales benefited from the execution of backlog orders during the quarter, and the currency conversion effect, utility poles sales decreased by $17 million, or 4% versus the same period last year due to lower pricing and volumes. While sales volumes were lower compared to the strong shipments recorded in the second quarter last year, incremental volumes from new customers led to volume levels above those recorded since the second quarter of last year. Railway ties (23% of Q2-25 sales): Railway ties sales decreased by $25 million to $240 million in the second quarter of 2025, compared to sales of $265 million in the same period last year. Excluding the currency conversion effect, sales of railway ties decreased by $28 million, or 11%, mostly attributable to a Class 1 railroad’s shift to treating railway ties in-house and delays in non-Class 1 projects. Residential lumber (24% of Q2-25 sales): Sales in residential lumber remained relatively stable at $246 million in the second quarter of 2025, compared to sales of $243 million in the corresponding period last year. Higher pricing stemming from the increase in the market price of lumber when compared to the second quarter of 2024 was offset by softer demand, particularly during the earlier part of the quarter. Industrial products (4% of Q2-25 sales): Industrial product sales were stable at $46 million in the second quarter of 2025. Logs and lumber: Logs and lumber (3% of Q2-25 sales): Sales in the logs and lumber product category were $26 million in the second quarter of 2025, compared to $25 million in the corresponding period last year. Gross profit was $206 million in the second quarter of 2025 compared to $226 million in the corresponding period last year, representing a margin of 19.9% and 21.5%, respectively. The decrease in gross profit was largely driven by lower sales volumes across most product categories, lower utility poles pricing and higher fibre costs, particularly for residential lumber. As a percentage of sales, the gross profit was also impacted by an unfavourable sales mix. Lower sales volumes, compared to the same period last year, largely explained the $13 million decline in operating income to $155 million in the second quarter of 2025. Similarly, EBITDA decreased by $11 million to $189 million compared to $200 million in the same period last year. Despite lower sales, the Company continued to deliver a strong EBITDA margin of 18.3%. When compared to the 19.1% margin generated in the second quarter of last year, the decrease was largely attributable to an unfavourable sales mix. Net income for the second quarter of 2025 was $106 million, or $1.91 per share, versus net income of $110 million, or $1.94 per share, in the corresponding period of 2024. SIX-MONTH RESULTS For the first six months of 2025, sales amounted to $1,807 million, versus $1,824 million for the corresponding period last year. Excluding the contribution from the Locweld acquisition of $18 million and the currency conversion of $47 million, pressure-treated wood sales decreased by $79 million, or 4%. Lower volumes for utility poles and railway ties explained most of the lower sales. The decrease in logs and lumber sales compared to the corresponding period last year was largely attributable to less lumber trading activity. Gross profit amounted to $374 million, or 20.7%, compared to $398 million, or 21.8% of sales, in the corresponding period last year. Operating income amounted to $298 million, versus $292 million a year ago, while EBITDA was $368 million, representing a margin of 20.4%, compared to $356 million, or a margin of 19.5% in the corresponding period last year. The insurance settlement gain recorded in the first six month of 2025 increased EBITDA by $28 million and EBITDA margin by 2%. Net income in the first six months of 2025 was $199 million, or $3.58 per share, versus net income of $187 million, or $3.30 per share, in the same period last year. LIQUIDITY AND CAPITAL RESOURCES During the quarter ended June 30, 2025, Stella-Jones used the cash generated from operations of $224 million to broaden its infrastructure product offering with the acquisition of Locweld, return $54 million to shareholders, through dividends and share repurchases, and repay $118 million of debt. As at June 30, 2025, the Company had available liquidity of $693 million and its net debt-to-EBITDA stood at 2.4x. ACQUISITION OF LOCWELD INC. On May 7, 2025, the Company completed the acquisition of 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. Locweld services customers in both Canada and the United States from its facility in Candiac, Quebec. 2023-2025 FINANCIAL OBJECTIVES The Company has updated its sales objective and now expects sales to be approximately $3.5 billion in 2025, including the acquisition of Locweld, compared to the previous sales objective of approximately $3.6 billion. Largely influenced by ongoing macroeconomic challenges, the revision was primarily driven by lower-than-expected organic sales growth in utility poles in the first half of the year and a projected low single-digit growth for the remainder of the year, with a return to mid-single digit growth anticipated towards the end of 2025. The revised sales guidance also reflects lower-than expected railway ties sales growth in 2025, as the reduction in sales which resulted from a Class 1 railroad customer’s shift to treating railway ties in-house is not expected to be recovered by year-end. The Company now expects a modest year-over-year decline in railway ties sales, in the low single-digit range. The Company is maintaining its EBITDA margin, cumulative capital return and leverage targets over 2023-2025 outlook period. Since 2023, the Company has delivered a significant improvement in EBITDA margin. It generated an EBITDA margin of 18% in 2023 and 2024 and expects to generate an above 17% margin in 2025. As at June 30, 2025, the Company had returned to shareholders $417 million out of the $500 million target, through dividends and share repurchases, and its net debt-to-EBITDA ratio stood at 2.4x. The financial objectives do not include the impact of future acquisitions and assume that foreign currency exchange rates remain generally consistent with current levels. QUARTERLY DIVIDEND On August 6, 2025, the Board of Directors declared a quarterly dividend of $0.31 per common share payable on September 25, 2025 to shareholders of record at the close of business on September 2, 2025. This dividend is designated to be an eligible dividend. CONFERENCE CALL Stella-Jones will hold a conference call to discuss these results on August 7, 2025, at 10:00 a.m. Eastern Daylight Time (“EDT”). Interested parties can join the call by dialing 1-800 206-4400. A live audio webcast of the conference call will be available on the Company’s website, on the Investor relations section’s home page or here: https://meetings.lumiconnect.com/400-675-688-704. This recording will be available on Thursday, August 7, 2025, as of 1:00 p.m. EDT until 11:59 p.m. EDT on Thursday, August 14, 2025. ABOUT STELLA-JONES Stella-Jones Inc. (TSX: SJ) 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. It 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. It 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. CAUTION REGARDING FORWARD-LOOKING INFORMATION 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 items include, among others: general political, economic and business conditions, evolution in customer demand for the Company's products and services, product selling prices, availability and cost of raw materials, operational disruption, climate change, failure to recruit and retain qualified workforce, information security breaches or other cyber-security threats, changes in foreign currency rates, the ability of the Company to raise capital, regulatory and environmental compliance and factors and assumptions referenced herein and in the Company’s continuous disclosure filings. As a result, readers are advised that actual results may differ from expected results. Unless required to do so under applicable securities legislation, the Company does not assume any obligation to update or revise forward-looking statements to reflect new information, future events or other changes after the date hereof. Note to readers: Condensed interim unaudited consolidated financial statements for the second quarter ended June 30, 2025 as well as management’s discussion and analysis are available on Stella-Jones’ website at www.stella-jones.com. Head Office 3100 de la Côte-Vertu Blvd., Suite 300 Saint-Laurent, Québec H4R 2J8 Tel.: (514) 934-8666 Exchange Listings The Toronto Stock Exchange Stock Symbol: SJ Transfer Agent and Registrar Computershare Investor Services Inc. Investor Relations David Galison Vice President, Investor Relations           Tel.: (647) 618-2709 [email protected] (in millions of Canadian dollars, except earnings per common share)   For the three-month periods ended June 30,     For the six-month periods ended June 30,     2025   2024     2025   2024                   Sales 1,034   1,049     1,807   1,824                   Expenses                               Cost of sales (including depreciation and amortization (3 months - $31 (2024 - $28) and 6 months - $63 (2024 - $56)) 828   823     1,433   1,426   Selling and administrative (including depreciation and amortization (3 months - $3 (2024 - $4) and 6 months - $7 (2024 - $8)) 55   56     105   103   Other (gains) losses, net (4 ) 2     (1 ) 3   Gain on insurance settlement —   —     (28 ) —     879   881     1,509   1,532   Operating income 155   168     298   292                   Financial expenses 14   20     34   42                                   Income before income taxes 141   148     264   250                   Income tax expense               Current 25   36     53   60   Deferred 10   2     12   3                     35   38     65   63                   Net income 106   110     199   187                   Basic and diluted earnings per common share 1.91   1.94     3.58   3.30   (in millions of Canadian dollars)   As at   As at     June 30, 2025   December 31, 2024   Assets         Current assets         Cash and cash equivalents 65   50   Accounts receivable 408   277   Inventories 1,613   1,759   Income taxes receivable 14   11   Other current assets 54   42     2,154   2,139   Non-current assets         Property, plant and equipment 1,069   1,048   Right-of-use assets 281   311   Intangible assets 167   170   Goodwill 386   406   Derivative financial instruments 14   21   Other non-current assets 7   8     4,078   4,103   Liabilities and Shareholders’ Equity         Current liabilities         Accounts payable and accrued liabilities 187   180   Income taxes payable 8   —   Deferred revenue —   17   Current portion of long-term debt 15   1   Current portion of lease liabilities 62   64   Current portion of provisions and other long-term liabilities 39   24     311   286   Non-current liabilities         Long-term debt 1,307   1,379   Lease liabilities 232   259   Deferred income taxes 207   197   Provisions and other long-term liabilities 36   37   Employee future benefits 4   4     2,097   2,162   Shareholders’ equity         Capital stock 188   188   Contributed surplus 2   —   Retained earnings 1,629   1,498   Accumulated other comprehensive income 162   255               1,981   1,941     4,078   4,103   (in millions of Canadian dollars)   For the three-month periods ended June 30,     For the six-month periods ended June 30,     2025   2024     2025   2024   Cash flows from (used in)           Operating activities           Net income 106   110     199   187   Adjustments for           Depreciation of property, plant and equipment 13   12     27   23   Depreciation of right-of-use assets 17   16     34   32   Amortization of intangible assets 4   4     9   9   Financial expenses 14   20     34   42   Income tax expense 35   38     65   63   Gain on insurance settlement —   —     (28 ) —   Other 4   (3 )   (10 ) —     193   197     330   356               Changes in non-cash working capital components           Accounts receivable (48 ) (44 )   (125 ) (138 ) Inventories 142   76     101   (41 ) Other current assets (7 ) (13 )   (4 ) (6 ) Accounts payable and accrued liabilities —   10     (11 ) 21     87   29     (39 ) (164 ) Interest paid (9 ) (20 )   (34 ) (42 ) Income taxes paid (47 ) (29 )   (49 ) (35 )   224   177     208   115   Financing activities           Net change in revolving credit facilities (59 ) (75 )   78   (34 ) Proceeds from long-term debt —   —     —   168   Repayment of long-term debt (59 ) —     (95 ) (102 ) Repayment of lease liabilities (16 ) (15 )   (33 ) (30 ) Dividends on common shares (34 ) (32 )   (34 ) (32 ) Repurchase of common shares (20 ) (20 )   (35 ) (35 )   (188 ) (142 )   (119 ) (65 ) Investing activities           Business combinations (48 ) —     (48 ) —   Purchase of property, plant and equipment (34 ) (33 )   (54 ) (56 ) Property insurance proceeds 26   —     26   10   Additions of intangible assets (2 ) (2 )   (4 ) (4 ) Other 6   —     6   —     (52 ) (35 )   (74 ) (50 ) Net change in cash and cash equivalents during the period (16 ) —     15   —   Cash and cash equivalents – Beginning of period 81   —     50   —   Cash and cash equivalents – End of period 65   —     65   —   NON-GAAP AND OTHER FINANCIAL MEASURES This section includes information required by National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure in respect of “specified financial measures” (as defined therein). The below-described non-GAAP financial measures, non-GAAP ratios and other financial measures have no standardized meaning under GAAP and are not likely to be comparable to similar measures presented by other issuers. The Company’s method of calculating these measures may differ from the methods used by others, and, accordingly, the definition of these measures may not be comparable to similar measures presented by other issuers. In addition, non-GAAP financial measures, non-GAAP ratios and other financial measures should not be viewed as a substitute for the related financial information prepared in accordance with GAAP. Non-GAAP financial measures include: Organic sales growth: Sales of a given period compared to sales of the comparative period, excluding the effect of acquisitions and foreign currency changes Gross profit: Sales less cost of sales EBITDA: Operating income before depreciation of property, plant and equipment, depreciation of right-of-use assets and amortization of intangible assets (also referred to as earnings before interest, taxes, depreciation and amortization) Net debt: Sum of long-term debt and lease liabilities (including the current portion) less cash and cash equivalents Non-GAAP ratios include: Organic sales growth percentage: Organic sales growth divided by sales for the corresponding period Gross profit margin: Gross profit divided by sales for the corresponding period EBITDA margin: EBITDA divided by sales for the corresponding period Net debt-to-EBITDA: Net debt divided by trailing 12-month (“TTM”) EBITDA Other financial measures include: Operating income margin: Operating income divided by sales for the corresponding period Management considers these non-GAAP and specified financial measures to be useful information to assist knowledgeable investors to understand the Company’s financial position, operating results and cash flows as they provide a supplemental measure of its performance. Management uses non-GAAP and other financial measures in order to facilitate operating and financial performance comparisons from period to period, to prepare annual budgets, to assess the Company’s ability to meet future debt service, capital expenditure and working capital requirements, and to evaluate senior management’s performance. More specifically: Organic sales growth and organic sales growth percentage: The Company uses these measures to analyze the level of activity excluding the effect of acquisitions and the impact of foreign exchange fluctuations, in order to facilitate period-to-period comparisons. Management believes these measures are used by investors and analysts to evaluate the Company's performance. Gross profit and gross profit margin: The Company uses these financial measures to evaluate its ongoing operational performance. EBITDA and EBITDA margin: The Company believes these measures provide investors with useful information because they are common industry measures used by investors and analysts to measure a company’s ability to service debt and to meet other payment obligations, or as a common valuation measurement. These measures are also key metrics of the Company's operational and financial performance and are used to evaluate senior management’s performance. Net debt and net debt-to-EBITDA: The Company believes these measures are indicators of the financial leverage of the Company. The following tables present the reconciliations of non-GAAP financial measures to their most comparable GAAP measures. Reconciliation of Operating Income to EBITDA (in millions of dollars) Three-month periods ended June 30,   Six-month periods ended June 30,     2025   2024   2025   2024   Operating income 155   168   298   292   Depreciation and amortization 34   32   70   64   EBITDA 189   200   368   356   Reconciliation of Long-Term Debt to Net Debt (in millions of dollars) As at June 30, 2025   As at December 31, 2024   Long-term debt, including current portion 1,322   1,380   Add:         Lease liabilities, including current portion 294   323   Less:         Cash and cash equivalents 65   50   Net Debt 1,551   1,653   EBITDA (TTM) 645   633   Net Debt-to-EBITDA 2.4x   2.6x         Source: Stella-Jones Inc. Stella-Jones Inc.       Contacts: David Galison Stephanie Corrente   Vice President, Investor Relations Stella-Jones Director, Corporate Communications Stella-Jones   Tel.: (647) 618-2709     [email protected] [email protected]