Stella-Jones Inc.
TSX : SJ

Stella-Jones Inc.

May 06, 2009 07:00 ET

Stella-Jones Reports First Quarter Results

Annual and Special Meeting of Shareholders Later this Morning

MONTREAL, QUEBEC--(Marketwire - May 6, 2009) - Stella-Jones Inc. (TSX:SJ)

- Sales growth of 69.2% to $112.0 million

- Net earnings of $7.7 million compared with $5.3 million last year, up 44.4%

- Diluted EPS of $0.61, versus $0.42 in the first quarter of 2008

Stella-Jones Inc. today announced financial results for its first quarter ended March 31, 2009. The Company reported strong growth in sales and profitability driven by the contribution from the operating facilities of The Burke-Parsons-Bowlby Corporation ("BPB"), acquired on April 1, 2008.



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Financial highlights
(in thousands of dollars,
except per share data) Quarters ended March 31,
2009 2008
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Sales 111,954 66,182
Gross profit 22,519 13,856
Cash flow from operations 1 11,321 7,328
Net earnings for the period 7,687 5,323
Per share - basic ($) 0.61 0.43
Per share - diluted ($) 0.61 0.42
Weighted average shares outstanding
(basic, in '000s) 12,566 12,348
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(1) Before changes in non-cash working capital components.


Sales amounted to $112.0 million, an increase of $45.8 million, or 69.2% over last year's sales of $66.2 million. The contribution from the BPB operations amounted to approximately $37.3 million. Organically, sales increased by approximately 3.0%, reflecting strong demand in the Company's utility pole product category. Fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, increased the value of U.S. dollar denominated sales by approximately $6.7 million compared with the same period last year.

Driven by the BPB acquisition, railway tie sales reached $61.4 million, an increase of 90.0% over last year. Sales of utility poles grew 35.0% to $37.3 million, reflecting better market conditions, as last year's corresponding quarter was marked by more competitive pricing in the United States and adverse weather in Canada that delayed utility pole installation. Sales in the industrial lumber category reached $10.5 million, up from $2.1 million last year, on the strength of BPB's ancillary product sales, while sales of consumer lumber decreased 34.0% to $2.7 million as a result of a slower start to the renovation season in Canada.

"We are satisfied with our first quarter results, a period characterized by seasonal volatility in most of our geographical markets and product categories," said Brian McManus, President and Chief Executive Officer of Stella-Jones. "As the integration of BPB's operations continues to progress, we are increasingly well positioned to capture market opportunities that may arise to further reinforce our continental reach in core product categories."

Gross profit was $22.5 million or 20.1% of sales, up from $13.9 million or 20.9% of sales last year. The improvement in gross profit dollars essentially reflects the contribution of the BPB operations. However, gross profit as a percentage of sales declined primarily as a result of a different product mix, partially offset by plant specialization and economies of scale from increased volume.

Net earnings for the period increased to $7.7 million or $0.61 per share, fully diluted, in 2009, compared with $5.3 million or $0.42 per share, fully diluted, in 2008. Cash flow from operating activities before changes in non-cash working capital components rose 54.5% to $11.3 million.

As at March 31, 2009, the Company's long-term debt, including the current portion, amounted to $106.7 million, representing a ratio of total long-term debt to shareholders' equity of 0.63:1, down from 0.66:1 three months earlier. Meanwhile, working capital stood at $163.8 million, up from $156.9 million as at December 31, 2008, reflecting greater business activity and the seasonal inventory build-up.

"Our solid cash flow generation should lead to further debt reduction as we enter seasonal peak demand," said George Labelle, Senior Vice-President and Chief Financial Officer. "We remain focused on keeping our costs in line and improving efficiencies in our operations. Ongoing identification of additional efficiencies from the BPB integration process is progressively bringing BPB's operating margin in line with comparable operations in our plant network."

OUTLOOK

"The weakness of the global economy continues to call for a cautious outlook. However, the essential role played by our products in infrastructure projects that governments often initiate during times of economic slowdown could stimulate demand. As maintenance and new installation undertakings may involve many of our clients in the railway and electrical transmission and distribution industries, the strength and reliability of our continental plant network will be key elements in potentially securing additional business volume, as we pursue our strategic objective of continental expansion and consolidation," concluded Mr. McManus.

CONFERENCE CALL

Stella-Jones will hold a conference call to discuss these results on Wednesday, May 6, 2009, at 1:30 PM Eastern Time. Interested parties can join the call by dialling 1-416-644-3426 (Toronto or overseas) or 1-800-814-4890 (elsewhere in North America). Parties unable to call in at this time may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 21304594#. This tape recording will be available on Wednesday, May 6, 2009 as of 3:30 PM Eastern Time until 11:59 PM Eastern Time on Wednesday, May 13, 2009.

ABOUT STELLA-JONES

Stella-Jones Inc. (TSX:SJ) is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. 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, 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 interim consolidated financial statements and Management's Discussion & Analysis are available on Stella-Jones' website at www.stella-jones.com



HEAD OFFICE

3100 de la Côte-Vertu Blvd.
Suite 300
Saint-Laurent, Québec
H4R 2J8
Tel.: (514) 934-8666
Fax: (514) 934-5327

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Stock Symbol (TSX): SJ

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