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Stella-Jones reports record second quarter results

An increased demand for railway ties, some 25 percent more than last year, pushed Stella-Jones' second quarter net income up more than 20 percent from 2011.

August 10, 2012  By  John Tenpenny

“Stella-Jones achieved another strong financial performance in the second quarter driven by robust demand for our core railway tie products,” said Brian McManus, President and Chief Executive Officer. “More importantly, our ongoing efforts to enhance operating efficiency combined with tight controls on operating costs resulted in further margin improvements and significant increases in net income and cash flow.”

The company also announced a quarterly dividend of $0.16 per share, representing an increase of 6.7 percent over its previous quarterly dividend.

Sales for the quarter ended June 30, 2012 totalled $203.9 million, an increase of $23.6 million, or 13.1 percent over last year’s sales of $180.3 million. The Russellville, Arkansas operating facility acquired from Thompson Industries, Inc. on December 7, 2011 contributed railway tie and industrial product sales of approximately $10.1 million, while the conversion effect from fluctuations in the value of the Canadian dollar, Stella-Jones’ reporting currency, versus the U.S. dollar, increased the value of U.S. dollar denominated sales by about $5.5 million when compared with the previous year. Excluding these factors, sales increased approximately $8.0 million, or 4.4 percent.

Railway tie sales amounted to $120.1 million, an increase of $24.6 million, or 25.7 percent, over sales of $95.5 million last year, reflecting solid market demand as well as a $10.0 million contribution from the Russellville Facility. Utility pole sales amounted to $51.7 million, down slightly from $52.4 million in the corresponding period in 2011. The variation reflects the year-over-year timing difference in orders for transmission poles related to special projects, which had resulted in stronger sales in the second quarter of 2011. Meanwhile, sales of distribution poles increased, as demand for regular maintenance projects remained solid. Industrial product sales reached $18.1 million, compared with $20.6 million a year earlier, due to a reduction in the tie recycling business partially offset by higher demand for marine applications in Canada. Sales of residential lumber totalled $14.0 million, up 18.1 percent from $11.9 million a year earlier as a result of more favourable weather in Canada compared with the same period last year.


Operating income was $32.6 million or 16 percent of sales, compared with $27.6 million or 15.3 percent of sales last year. The increase in monetary terms mainly reflects higher business activity and the addition of the Russellville Facility, while the increase as a percentage of sales is mainly due to a better absorption of fixed costs resulting from higher business activity and from greater efficiency throughout the company’s plant network.

Net income for the period increased 20.6 percent to $20.8 million or $1.30 per share, fully diluted, compared with $17.3 million or $1.08 per share, fully diluted, in the second quarter of 2011. Cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid rose 23 percent to $36.0 million.

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