Stella-Jones reports 24% year-over-year sales increase in Q3
Photo: Stella-Jones
Stella-Jones’ Q3 2022 sales increased by 24% to $842 million, compared to sales of $679 million for the same period in 2021.
Gross profit was $139 million in the Q3 2022, versus $82 million, in the Q3 2021, representing a margin of 16.5% and 12.1% respectively. The increase in gross profit both in absolute dollars and as a percentage of sales stemmed from higher margins across all the Company’s pressure-treated wood product categories, particularly residential lumber. In the Q3 2021, the gross profit of residential lumber was unfavourably impacted by elevated fibre costs, together with the market-driven decrease in pricing and drop in demand. In addition, an inventory write-down provision was recorded in the Q3 2021.
“Stella-Jones delivered strong results this quarter, reflecting the robust growth of our infrastructure-related product sales and the normalization of residential lumber sales,” said Éric Vachon, President and CEO of Stella-Jones. “Our performance demonstrates Stella-Jones’ ability to capitalize on growing utility poles demand, amplified by increased infrastructure spend and broadband network expansion programs. It also highlights the stability of our railway ties business and unique value proposition we deliver to our residential lumber customers. It is this resilience, in the face of inflationary pressures and supply chain constraints, that reaffirms the power of our business model and extensive network."
For the first nine months of 2022, sales amounted to $2,400 million, versus $2,205 million for the corresponding period last year, driven by the 13% organic sales growth of the Company’s infrastructure-related businesses. Excluding the positive impact of the currency conversion of $39 million and the contribution from the Cahaba acquisitions of $47 million, pressure-treated wood sales rose by $146 million, or 7%, while logs and lumber sales dropped by $38 million. The year-over-year growth in pressure-treated wood sales stemmed from favourable price adjustments and increased maintenance and project-related demand for utility poles, as well as higher pricing for railway ties. These factors were partly offset by a decrease in residential lumber volumes and pricing, as well as lower railway ties volumes, particularly for Class 1 business. The decrease in logs and lumber sales compared to the same period last year is largely attributable to less lumber trading activity.
Gross profit increased to $412 million, or 17.2% of sales, from $391 million, or 17.7% of sales, in the corresponding period last year. Operating income amounted to $298 million, versus $294 million a year ago, while EBITDA was $361 million, compared to $348 million in the prior year.
Net income in the first nine months of 2022 and 2021 was $205 million, or $3.30 per share for 2022 and $3.14 per share in the corresponding period last year. Earnings per share for the nine-months ended September 30, 2022 was positively impacted by the Company’s ongoing repurchase of shares through its normal course issuer bids.
Stella-Jones Inc. is North America’s leading producer of pressure-treated wood products.