Stella-Jones Announces First Quarter Results

2023-2025 financial objectives remain unchanged

Stella-Jones Inc. (“Stella-Jones” or the “Company”) announced financial results for its first quarter ended March 31, 2025.

• Sales of $773 million, relatively unchanged from Q1 2024
• Operating income of $143 million, including insurance settlement of $38 million
• Strong EBITDA(1) of $179 million, or 23.2% margin(1), including 5% from insurance
  settlement
• Robust available liquidity of $691 million at quarter-end
• Acquisition post-quarter of a steel transmission structure manufacturer, aligned with
  strategy to support North American infrastructure

“We delivered a strong EBITDA margin in the first quarter, reflecting the resilience and strength of our business through softer volumes,” said Eric Vachon, President and Chief Executive Officer of Stella-Jones. “Though macroeconomic headwinds continue to impact volume growth, at this stage we remain confident in our ability to achieve our financial objectives. We are executing on sound financial and operational foundations, and we remain assured in the long-term growth outlook for our infrastructure businesses.”

“The Company entered into a definitive agreement to acquire Locweld Inc., a leading manufacturer of lattice towers and steel poles for electrical transmission. This transaction marks a step forward in Stella Jones’ long-term vision, allowing us to enhance our infrastructure offering and establish a presence in the growing steel transmission structure industry. It is a significant marker in our growth strategy, which we expect will unlock investment opportunities and position us to create more value for our customers and shareholders,” he concluded.

First Quarter Results

Sales in the first quarter of 2025 remained relatively unchanged at $773 million, compared to $775 million in the corresponding period last year. Excluding the currency conversion effect of $38 million, pressure-treated wood sales decreased $36 million, or 5%, driven by lower volumes across most product categories, partially offset by favourable pricing for utility poles and residential lumber. The decrease in logs and lumber sales compared to the first quarter last year was largely attributable to less lumber trading activity.

Pressure-treated wood products

• Utility poles (54% of Q1-25 sales): Utility poles sales increased to $419 million in the first quarter of 2025, compared to sales of $402 million in the corresponding period last year. Excluding the currency conversion effect, utility poles sales decreased by five million dollars, or 1% when compared to the same period last year, as favourable pricing, largely due to product mix, was offset by a decrease in volumes. Sales volumes in the first quarter of 2025 benefited from incremental multi-year commitments secured in 2024 from new customers, but ongoing macroeconomic challenges, as well as unfavourable weather conditions led to lower volumes.
• Railway ties (27% of Q1-25 sales): Railway ties sales decreased by $19 million to $208 million in the first quarter of 2025, compared to sales of $227 million in the same period last year. Excluding the currency conversion effect, sales of railway ties decreased by $31 million, or 14%, largely attributable to lower sales volumes. The decrease was explained by the transition of a Class 1 railroad toward treating more railway ties internally and timing of non-Class 1 projects.
• Residential lumber (11% of Q1-25 sales): Sales in residential lumber remained relatively stable at $88 million in the first quarter of 2025, compared to sales of $87 million in the corresponding period last year. Higher pricing attributable to the increase in the market price of lumber when compared to Q1 2024 was offset by lower volumes, mainly due to unfavourable weather conditions which led to a later start of outdoor renovation activities.
• Industrial products (5% of Q1-25 sales): Industrial product sales increased to $39 million in the first quarter of 2025, compared to $36 million in the corresponding period last year, largely due to more bridge projects.

Logs and lumber

• Logs and lumber (3% of Q1-25 sales): Sales in the logs and lumber product category were $19 million in the first quarter of 2025, compared to $23 million in the corresponding period last year. The decrease in sales compared to the first quarter last year was largely due to less lumber trading activity, influenced by macroeconomic challenges.

Gross profit was $168 million in the first quarter of 2025 compared to $172 million in the corresponding period last year, representing a margin of 21.7% and 22.2%, respectively. The decrease in gross profit was largely driven by lower sales volumes across most product categories.

Despite lower sales volumes, operating income increased to $143 million in the first quarter of 2025, compared to $124 million in the corresponding period last year, due to the insurance settlement for a 2023 fire incident at one of the Company’s facilities that was recorded in Q1 2025. Similarly, EBITDA increased to $179 million in the first quarter of 2025, representing a margin of 23.2%, compared to $156 million, or a margin of 20.1%, in the corresponding period last year. The insurance settlement recorded in the first quarter of 2025 increased EBITDA by $38 million and EBITDA margin by 5%.

Net income for the first quarter of 2025 was $93 million, or $1.67 per share, versus net income of $77 million, or $1.36 per share, in the corresponding period of 2024.

Liquidity and Capital Resources

During the quarter ended March 31, 2025, Stella-Jones used its liquidity to support the seasonal increase in working capital requirements, maintain its assets, as well as repurchase $15 million of shares. During the quarter, the Company also declared a dividend totaling $17 million.

As at March 31, 2025, the Company maintained a healthy financial position. It had available liquidity of $691 million and its net debt-to-EBITDA stood at 2.6x.

Leadership Announcement

On April 14, 2025, Wesley Bourland was appointed as Senior Vice-President and Chief Operating Officer. Having served in several senior operations leadership roles, Mr. Bourland will leverage his expertise in manufacturing, strategic planning and process optimization to drive operational excellence.

Quarterly Dividend

On May 6, 2025, the Board of Directors declared a quarterly dividend of $0.31 per common share payable on June 20, 2025 to shareholders of record at the close of business on June 2, 2025.

Acquisition of Locweld Inc.

The Company entered into a definitive agreement to acquire Locweld Inc. (“Locweld”), a leading designer and manufacturer of lattice towers and steel transmission poles, for a purchase price of $58 million on a cash-free debt-free basis and subject to customary working capital adjustments. An additional performance-based consideration of up to seven million dollars may be paid contingent upon achieving specific financial and operational milestones. Stella-Jones will finance the acquisition through its existing revolving credit facilities. Closing of the acquisition is expected to occur May 7.

Based in Candiac, Quebec, Locweld has established a strong reputation for its commitment to quality and service, with over 75 years of operations. Led by a seasoned management team, Locweld employs approximately 220 people and services customers in both Canada and the United States from its 220,000 square foot facility. Sales for Locweld’s year ended September 30, 2024 reached approximately $55 million.

For full results click here.

About Stella-Jones

Stella-Jones Inc. (TSX: SJ) is a leading North American manufacturer of pressure-treated wood products, focused on supporting infrastructure that is 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 and telecommunication companies with wood utility poles and North America’s Class 1, short line and commercial railroad operators with railway ties and timbers. It also supports infrastructure with industrial products, namely wood for railway bridges and crossings, marine and foundation pilings, construction timbers 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.

Contact:

Stephanie Corrente – Director, Corporate Communications – communications@stella-jones.com

Silvana Travaglini, CPA – Senior VP and CFO – stravaglini@stella-jones.com – (514) 934-8660

Source: Stella-Jones Inc.