- Sales increased 10.5% to $440.7 million
- EBITDA up 45% to $63.8 million, explained by increased margins as well as by the adoption of IFRS 16 and a non-cash mark-to-market gain of $4.4 million on derivative commodity contracts
- Net income and diluted EPS increased to $29.5 million and $0.43 per share
- Acquired Shelburne Wood Protection Ltd., located in Ontario, following the end of the quarter
On January 1, 2019, the Company retrospectively adopted IFRS 16, Leases, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. For the three-month period ended March 31, 2019, instead of lease expenses, $7.8 million in right-of-use asset depreciation and $1.0 million in financing expenses were recorded in the consolidated statement of income. Please refer to the impact of new accounting pronouncements and interpretation section of the quarterly Management’s Discussion and Analysis for further details.
MONTREAL, May 02, 2019 -- Stella-Jones Inc. (TSX: SJ) (“Stella-Jones” or the “Company”) today announced financial results for its first quarter ended March 31, 2019.
“First quarter results demonstrated strong sales and profitability growth, which were primarily driven by the sales price and market demand increases in the utility pole and railway tie product categories, as well as acquisitions completed last year combined with the currency conversion effect. These factors were partially offset by lower lumber costs which impacted sales in the residential lumber and logs and lumber product categories. We continued to follow our strategy of continental expansion, having completed a tuck-in acquisition in Ontario in April which further expands our network of residential lumber treating facilities in Canada. Stella-Jones continues to build on its healthy financial position. Looking forward, we expect to generate higher year-over-year sales and margin improvement over last year. As always, we will continue to remain focused on optimizing our operations across the organization while diligently seeking market opportunities in all product categories,” said Brian McManus, President and Chief Executive Officer.
FIRST QUARTER RESULTS
Sales for the first quarter of 2019 reached $440.7 million, up 10.5% versus sales of $398.8 million for the corresponding period last year. Acquisitions completed in 2018 contributed sales of approximately $11.6 million, while the currency conversion effect had a positive impact of $18.6 million. Excluding these factors, sales increased approximately $11.7 million, or 2.9%.
Utility pole sales reached $170.5 million in the first quarter of 2019, up 11.5% from sales of $153.0 million for the corresponding period last year. Acquisitions completed in 2018 contributed sales of $0.5 million, while the currency conversion effect increased sales by about $7.6 million. Excluding the contribution from acquisitions and the currency conversion effect, utility pole sales increased approximately $9.4 million, or 6.2%, primarily driven by increased sales prices coupled with a healthy demand in the South East United States.
Railway tie sales for the first quarter of 2019 amounted to $161.4 million, representing an increase of 10.2%, from sales of $146.4 million in the corresponding period last year. The currency conversion effect increased sales by about $8.4 million. Excluding the currency conversion effect, railway tie sales increased approximately $6.6 million, or 4.5%, primarily as a result of price increases.
Sales in the residential lumber category totalled $57.6 million in the first quarter of 2019, up 14.6% from sales of $50.3 million in the corresponding period last year. Acquisitions completed in 2018 contributed sales of approximately $7.3 million, while the currency conversion effect increased sales by about $1.4 million. Excluding these factors, residential lumber sales decreased approximately $1.4 million. This variance is primarily explained by lower demand due to unfavourable weather conditions in the Eastern Canada and Eastern United States regions as well as reduced selling prices due to lower lumber costs.
Industrial product sales reached $25.5 million in the first quarter of 2019, compared with $20.8 million last year. Acquisitions completed in 2018 contributed sales of approximately $3.8 million, while the currency conversion effect increased sales by about $0.9 million. Excluding the contribution from acquisitions and the currency conversion effect, sales were stable.
Sales in the logs and lumber product category totalled $25.7 million in the first quarter of 2019, compared with $28.3 million in the corresponding period last year. Excluding the contribution from acquisitions completed in 2018 and the currency conversion effect, sales for this product category decreased by $2.9 million. This variance is a result of reduced selling prices due to lower lumber costs, coupled with decreased lumber transaction volumes. These factors were partially offset by stronger log sales generated as part of the increased harvesting activities to procure raw material to support robust pole sales.
Operating income was $45.7 million, or 10.4% of sales, compared with $35.5 million, or 8.9% of sales, in the first quarter of the previous year. The increase versus last year is explained by greater sales volumes, improving margins and a non-cash mark-to-market gain on derivative commodity contracts.
Net income for the first quarter of 2019 reached $29.5 million, or $0.43 per diluted share, versus net income of $23.1 million, or $0.33 per diluted share, in the corresponding period last year.
Source: Stella-Jones
