Press release from Marketwire
Stella-Jones Reports Solid First Quarter Results: Annual Meeting of Shareholders Later this Morning
- Sales of $217.0 million, up 36.7% from $158.8 million a year ago - 25.0% increase in net income to $18.8 million, or $1.09 per share, fully diluted, versus $15.0 million, or $0.94 per share, fully diluted, in the prior year - Cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid increased $7.2 million, or 26.3%
Thursday, May 02, 2013
Stella-Jones Reports Solid First Quarter Results: Annual Meeting of Shareholders Later this Morning07:00 EDT Thursday, May 02, 2013
MONTREAL, QUEBEC--(Marketwired - May 2, 2013) - Stella-Jones Inc. (TSX:SJ) today announced financial results for its first quarter ended March 31, 2013. This represents the first full quarter that includes the operating results of McFarland Cascade Holdings, Inc. ("McFarland"), acquired on November 30, 2012.
"First-quarter results showed sustained demand for Stella-Jones' core railway tie and utility pole products, although seasonal patterns proved more normal in 2013, compared to last year. The operating facilities acquired from McFarland produced solid revenues. As anticipated, lower margins from these operations resulted in a reduction of operating income as a percentage of sales. We are progressing according to plan in regards to the integration of McFarland's activities into our network, as well as with the construction and ramp-up of our new wood treating facility in Cordele, Georgia. These initiatives will further enhance our presence in the market for treated wood products," said Brian McManus, President and Chief Executive Officer.
|Financial highlights||Quarters ended March 31,|
|(in thousands of Canadian dollars, except per share data)||2013||2012|
|Net income for the period||18,757||15,006|
|Per share - basic and diluted ($)||1.09||0.94|
|Cash flow from operating activities 1||34,339||27,180|
|Weighted average shares outstanding (basic, in '000s)||17,169||15,959|
|1 Before changes in non-cash working capital components and interest and income tax paid.|
FIRST QUARTER RESULTS
Sales reached $217.0 million, an increase of $58.2 million, or 36.7%, over last year's sales for the same period of $158.8 million. The operating facilities acquired from McFarland contributed sales of approximately $65.0 million, while the conversion effect from fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, versus the U.S. dollar, had a positive impact of $0.5 million on the value of U.S. dollar denominated sales when compared with the previous year's first quarter. Excluding these factors, sales decreased approximately $7.3 million, as a result of a slower start for rail related industrial products and more traditional seasonal demand patterns for utility poles and residential lumber in the first quarter of 2013, compared with the same period last year.
Railway tie sales amounted to $96.5 million, an increase of 0.5% over sales of $96.0 million a year earlier, reflecting steady market demand. Utility pole sales amounted to $90.8 million, up from $43.5 million in the corresponding period last year. The increase is mainly attributable to utility pole sales of $50.7 million from the McFarland operations. Industrial product sales reached $11.9 million, compared with $15.2 million last year, mainly as a result of a slower start in rail projects requiring industrial products, as compared to the first quarter of last year. Finally, sales in the residential lumber category totalled $17.9 million, up from $4.2 million a year earlier. The increase reflects additional residential lumber sales of $14.1 million from the McFarland operations.
Operating income amounted to $29.7 million, or 13.7% of sales, versus $24.1 million, or 15.2% of sales a year earlier. The increase in absolute dollars essentially reflects the addition of the McFarland operations, while the decrease as a percentage of sales mainly stems from lower margins at the McFarland facilities.
Net income for the first quarter of 2013 totalled $18.8 million, or $1.09 per share, fully diluted, versus $15.0 million, or $0.94 per share, fully diluted, in the first quarter of 2012, representing a year-over-year increase of 25.0%. Cash flow from operating activities before changes in non-cash working capital components and interest and income tax paid rose 26.3% to $34.3 million.
SOUND FINANCIAL POSITION
As at March 31, 2013, Stella-Jones' financial position remained healthy with total debt of $382.6 million. At that same date, the ratio of total debt to total capitalization was 0.44:1, stable in comparison with December 31, 2012.
Reflecting higher business activity near the end of the first quarter as per historical seasonal demand patterns, accounts receivable rose to $128.5 million as at March 31, 2013, up from $89.6 million three months earlier. Inventories stood at $425.6 million as at March 31, 2013, versus $413.4 million as at December 31, 2012, due to the normal seasonal inventory build-up ahead of peak demand in the second and third quarters.
QUARTERLY DIVIDEND OF $0.20 PER SHARE
On May 1, 2013, the Board of Directors declared a quarterly dividend of $0.20 per common share payable on June 28, 2013 to shareholders of record at the close of business on June 3, 2013.
"Stella-Jones' role as a supplier of basic infrastructure will continue to serve us well and we expect demand for our core products to remain healthy for the remainder of 2013. In the short-term, the integration of the McFarland operations into our network and the ramp-up of our new facility in Georgia are our main priorities. We will use our enhanced abilities from an expanded network to better serve our customers and capture new business opportunities. Over the long run, we remain committed to our disciplined approach to network expansion, as well as to unlocking synergies and achieving maximum efficiency from such initiatives. Precise execution of this strategy will create further value for our shareholders," concluded Mr. McManus.
Stella-Jones will hold a conference call to discuss these results on Thursday, May 2, 2013, at 1:30 PM Eastern Time. Interested parties can join the call by dialling 647-427-7450 (Toronto or overseas) or 1-888-231-8191 (elsewhere in North America). Parties unable to call in at this time may access a tape recording of the meeting by calling 1-855-859-2056 and entering the passcode 34056092. This tape recording will be available on Thursday, May 2, 2013 as of 5:30 PM Eastern Time until 11:59 PM Eastern Time on Thursday, May 9, 2013.
NON-IFRS FINANCIAL MEASURES
Operating income and cash flow from operations are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these measures to be useful information to assist knowledgeable investors in evaluating the cash generating capabilities of the Company.
Stella-Jones Inc. (TSX:SJ) is a leading producer and marketer of pressure treated wood products. The Company supplies North America's railroad operators with railway ties, timbers and recycling services; and the continent's electrical utilities and telecommunications companies with utility poles. Stella-Jones also provides industrial products and services for construction and marine applications, as well as residential lumber to retailers and wholesalers for outdoor applications. The Company's common shares are listed on the Toronto Stock Exchange.
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, fluctuations in quarterly results, evolution in customer demand for the Company's products and services, the impact of price pressures exerted by competitors, the ability of the Company to raise the capital required for acquisitions, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
Note to readers: Complete unaudited first-quarter financial statements are available on Stella-Jones' website at www.stella-jones.com
FOR FURTHER INFORMATION PLEASE CONTACT:
Eric Vachon, CPA, CA
Senior Vice-President and Chief Financial Officer
Martin Goulet, CFA