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Stella-Jones reports record $503 million in sales for 2020 Q1
May 7, 2020 By Stella-Jones
Stella-Jones Inc. today announced financial results for its first quarter ended March 31, 2020. Results include a sales increase of 14 per cent and a gross profit of 19 per cent.
FIRST QUARTER RESULTS:
Sales for the first quarter reached a record $503 million, up $62 million, or 14 per cent, versus sales of $441 million last year. Pressure-treated wood sales rose by $59 million while sales for logs and lumber increased by $3 million. The increase in pressure-treated wood sales, excluding the positive impact of the currency conversion of $3 million, was $56 million, or 13 per cent, and was driven by higher demand and improved sales prices for utility poles, increased volumes for residential lumber and industrial products and higher sales prices for railway ties.
“We had a solid start to the year with sales up a robust 14 per cent. Sales growth for our pressure-treated wood products was supported by stronger demand for utility poles and residential lumber, and improved pricing for utility poles and railway ties. While higher sales led to a 19 per cent increase in gross profit, EBITDA was unfavourably impacted by the mark-to-market variation in diesel derivative commodity contracts. As a result, EBITDA remained stable compared to the same period last year,” stated Éric Vachon, president and CEO of Stella-Jones.
“While Stella-Jones’ operations and products are considered critical to the integrity of the supply chains for North American utilities, railroads and the construction industry, we anticipate headwinds from the COVID-19 pandemic and have therefore updated our 2020 outlook. We remain focused on managing our business prudently while applying rigorous hygiene practices and physical distancing policies throughout the organization. We are confident that our resilient business model and seasoned management team, combined with a solid balance sheet and ample financial flexibility position us well to weather the current crisis and continue to drive growth,” concluded Vachon.
| Financial Highlights (in millions of Canadian dollars, except per share data and margin) |
Q1-20 | Q1-19 |
| Sales | 503 | 441 |
| Gross Profit(1) | 83 | 70 |
| EBITDA(1) | 63 | 64 |
| EBITDA margin (%)(1) | 12.5% | 14.5% |
| Operating income(1) | 45 | 46 |
| Net income for the period | 28 | 29 |
| Per share – basic and diluted ($) | 0.41 | 0.43 |
| Weighted average shares outstanding (basic, in ‘000s) | 67,469 | 69,136 |
| (1) This is a non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures presented by other issuers. | ||
Pressure-treated wood products:
- Utility poles (40 per cent of Q1-20 sales): Utility pole sales rose to $202 million, up 18 per cent from sales of $171 million in the corresponding period last year. Excluding the currency conversion effect, utility pole sales increased by $29 million, primarily driven by continued growth in replacement demand and improved pricing.
- Railway ties (34 per cent of Q1-20 sales): Railway tie sales were $172 million, an increase of six per cent compared to sales of $162 million in the same period last year. Excluding the currency conversion, railway tie sales increased $9 million, mainly due to higher sales prices. Volume remained stable as higher shipments to Class 1 customers were offset by lower volume to non-Class 1 customers, largely related to the timing of projects.
- Residential lumber (14 per cent of Q1-20 sales): Sales in the residential lumber category totalled $71 million, up 25 per cent from sales of $57 million last year. This increase is primarily attributable to increased demand, both in Canada and the U.S.
- Industrial products (six per cent of Q1-20 sales): Industrial product sales increased to $29 million, up 16 per cent compared to sales of $25 million in the first quarter last year, primarily as a result of stronger railway bridge sales.
Logs and lumber:
- Logs and lumber (six per cent of Q1-20 sales): Sales in the logs and lumber product category were $29 million, compared with $26 million last year. Sales increased mainly due to higher lumber market prices in North America for most of the first quarter compared to the same period last year, while volumes remained relatively unchanged.
Led by strong sales growth, gross profit increased 19 per cent to $83 million, compared to gross profit of $70 million in the first quarter last year. Despite the improvement in gross profit, operating income and EBITDA remained relatively unchanged compared to the same period last year at $45 million and $63 million, respectively, given a $7 million mark-to-market loss recorded in the quarter for diesel derivative commodity contracts. Adjusting for the mark-to-market impact of diesel derivative contracts, EBITDA for the three-month periods ending March 31, 2020 and 2019 were $70 million and $60 million, representing EBITDA margins of 13.9 per cent and 13.6 per cent, respectively.
Net income was $28 million, or $0.41 per diluted share, versus net income of $29 million, or $0.43 per share, last year.
Read the full report here.
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