- Sales increased 14% to a first quarter record of
$503 million - Gross profit grew by 19% from last year
- EBITDA remained stable at
$63 million , negatively impacted by a$7 million mark-to-market loss on diesel derivative financial instruments - Updated 2020 outlook to reflect the uncertain impact of the COVID-19 pandemic
“We had a solid start to the year with sales up a robust 14%. Sales growth for our pressure-treated wood products was supported by stronger demand for utility poles and residential lumber, and improved pricing for utility poles and railway ties. While higher sales led to a 19% increase in gross profit, EBITDA was unfavourably impacted by the mark-to-market variation in diesel derivative commodity contracts. As a result, EBITDA remained stable compared to the same period last year,” stated Éric Vachon, President and CEO of Stella-Jones.
“While Stella-Jones’ operations and products are considered critical to the integrity of the supply chains for North American utilities, railroads and the construction industry, we anticipate headwinds from the COVID-19 pandemic and have therefore updated our 2020 outlook. We remain focused on managing our business prudently while applying rigorous hygiene practices and physical distancing policies throughout the organization. We are confident that our resilient business model and seasoned management team, combined with a solid balance sheet and ample financial flexibility position us well to weather the current crisis and continue to drive growth,” concluded
Financial Highlights (in millions of Canadian dollars, except per share data and margin) | Q1-20 | Q1-19 |
Sales | 503 | 441 |
Gross Profit(1) | 83 | 70 |
EBITDA(1) | 63 | 64 |
EBITDA margin (%)(1) | 12.5% | 14.5% |
Operating income(1) | 45 | 46 |
Net income for the period | 28 | 29 |
Per share – basic and diluted ($) | 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. |
FIRST QUARTER RESULTS
Sales for the first quarter reached a record
Pressure-treated wood products:
- Utility poles (40% of Q1-20 sales): Utility pole sales rose to
$202 million , up 18% 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% of Q1-20 sales): Railway tie sales were
$172 million , an increase of 6% 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% of Q1-20 sales): Sales in the residential lumber category totalled
$71 million , up 25% from sales of$57 million last year. This increase is primarily attributable to increased demand, both inCanada and theU.S.
- Industrial products (6% of Q1-20 sales): Industrial product sales increased to
$29 million , up 16% 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 (6% 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 inNorth 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% to
Net income was
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations, before the effect of working capital changes and interest and taxes paid, of
QUARTERLY DIVIDEND
On
UPDATED 2020 OUTLOOK
Management believes that the resiliency of the Company’s utility pole, railway tie and residential lumber product categories as well as its solid balance sheet and liquidity, places it in a favourable position to navigate through the current challenging environment.
Given, however, the uncertain impact of the COVID-19 pandemic and the weaker economic conditions in
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these results on
NON-IFRS FINANCIAL MEASURES
EBITDA (operating income before depreciation of property, plant and equipment, depreciation of right-of-use assets and amortization of intangible assets), gross profit, operating income and EBITDA margin are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these non-IFRS measures to be useful information to assist knowledgeable investors understand the Company’s operating results, financial condition and cash flows as they provide an additional measure about its performance. Please refer to the non-IFRS financial measures described in the Management’s Discussion and Analysis.
ABOUT STELLA-JONES
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 factors may include, without excluding other considerations, general economic and business conditions (including the impact of the global outbreak of the novel coronavirus), evolution in customer demand for the Company's products and services, product selling prices, availability and cost of raw materials, changes in foreign currency rates, and the ability of the Company to raise capital. 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.
Source: | ||
Contacts: | ||
Senior Vice-President and Chief Financial | ||
Stella-Jones | ||
Tel.: (514) 940-8660 | Tel.: (514) 731-0000 | |
stravaglini@stella-jones.com | pierre@maisonbrison.com | |
jennifer@maisonbrison.com |
Source:
2020 GlobeNewswire, Inc., source