Stella-Jones Inc. announced financial results for its Q3 ended September 30, 2024. Sales were $915 million, compared to sales of $949 million for the corresponding period last year. Excluding the positive effect of currency conversion, sales were down $44 million, or 5%.
The decrease was driven by lower volumes across all product categories, partially offset by higher pricing to cover increased costs. Volumes for infrastructure product categories, namely utility poles, railway ties and industrial products, were impacted by the slower pace of purchases and a deferral in the execution of projects by utilities, and a reduction in the maintenance program of certain railroads, while residential lumber volumes were lower due to softer consumer demand.
Gross profit was $188 million in the Q3 2024 compared to $215 million in the corresponding period last year, representing a margin of 20.5% and 22.7%, respectively. The decrease in gross profit was largely driven by lower sales volumes across all product categories.
Similarly, operating income totaled $130 million in the Q3 2024 versus operating income of $166 million in the corresponding period of 2023. EBITDA totaled $162 million, representing a margin of 17.7%, compared to $193 million, or a margin of 20.3% reported in the corresponding period last year.
Net income for the Q3 2024 was $80 million, or $1.42 per share, compared to net income of $110 million, or $1.91 per share, in the corresponding period of 2023.
“Stella-Jones' strategy is, as always, rooted in the long-term growth of our resilient infrastructure business. In the Q3, despite strong long-term demand tailwinds, we witnessed a slower pace of purchases by our utility customers. Though total sales were lower than anticipated, we delivered a solid quarter EBITDA margin of 17.7% and strong operating cashflows,” said Eric Vachon, President and Chief Executive Officer of Stella-Jones. “Year-todate, sales were higher and our profit margins remained above target levels. Based on utilities' current purchasing behaviour and the Company's solid margin performance, we are updating our three-year financial objectives to sales of approximately $3.6 billion by 2025 and an EBITDA margin of more than 17%.”
“Utilities continue to forecast meaningful increases in infrastructure investments, evidenced by the longer-term sales contracts secured from new and existing customers. These commitments support our confidence in the solid and sustained growth in demand for utility poles. With our compelling infrastructure offering, robust available capacity and strong balance sheet, we are enthusiastic about the opportunities for continued growth and enhanced profitability,” concluded Mr. Vachon.
Nine-month results
For the first nine months of 2024, sales amounted to $2,739 million, versus $2,631 million for the corresponding period last year.
Gross profit increased to $586 million, or 21.4% of sales in the first nine months of 2024, from $551 million or 20.9% of sales, in the corresponding period last year. Similarly, operating income amounted to $422 million, versus $410 million a year ago, while EBITDA was $518 million, compared to $488 million in the prior year and EBITDA margin expanded from 18.5% in 2023 to 18.9% in 2024.
Net income in the first nine months of 2024 was $267 million, or $4.72 per share, versus net income of $270 million, or $4.63 per share, in the corresponding period last year.
Stella-Jones Inc. is a leading North American manufacturer of pressure-treated wood products.
