Stella-Jones Announces Second Quarter Results

Stella-Jones Inc. (“Stella-Jones” or the “Company”) announced financial results for its second quarter ended June 30, 2025.

• 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

“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.

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 prioryear 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.

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.