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- Sales growth of 42.7% to $384.8 million
- Net earnings of $28.5 million compared with $25.7 million last year
- Diluted EPS of $2.25, versus $2.03 in 2007
- Q4 sales grew by 72.9% and net earnings by 42.5%
Stella-Jones Inc. (TSX:SJ) today announced financial results for its fourth quarter and fiscal year ended December 31, 2008. The Company reported strong growth in sales driven by the contribution from the operating facilities of The Burke-Parsons-Bowlby Corporation ("BPB"), acquired on April 1, 2008. All product categories posted gains with core railway tie and utility pole categories accounting for the majority of the increase.
-------------------------------------------------------------------------- Financial highlights Quarters ended Years ended (in thousands of dollars, December 31, December 31, except per share data) 2008 2007 2008 2007 -------------------------------------------------------------------------- Sales 83,731 48,439 384,822 269,714 Gross profit 18,665 12,721 78,398 66,788 Net earnings for the period 6,327 4,440 28,547 25,700 Per share - basic ($) 0.50 0.36 2.29 2.09 Per share - diluted ($) 0.50 0.35 2.25 2.03 Weighted-average shares outstanding (basic, in '000s) 12,562 12,340 12,483 12,324 --------------------------------------------------------------------------
2008 RESULTS
Sales amounted to $384.8 million, an increase of $115.1 million, or 42.7% over last year's sales of $269.7 million. The contribution from the BPB operations amounted to approximately $91.0 million, while organically, sales increased by about 8.0%. Year-over-year fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, reduced the value of U.S. dollar denominated sales by about $6.0 million compared with last year.
Driven by the BPB acquisition, railway tie sales reached $181.1 million, an increase of 92.3% over last year. Sales of utility poles grew 6.4% to $137.8 million with improved demand for distribution poles and stability in the transmission pole market. Sales in the industrial lumber category more than doubled to $33.2 million, reflecting the addition of BPB's ancillary product sales, while sales of consumer lumber increased 10.7% to $32.8 million.
Gross profit was $78.4 million or 20.4% of sales, up from $66.8 million or 24.8% 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 mainly because of BPB's lower margins. A different product mix and higher wood, energy and transportation costs also negatively affected gross profit as a percentage of sales, partially offset by plant specialization and economies of scale from increased overall volume in the Company's core markets. Net earnings stood at $28.5 million or $2.25 per share, fully diluted, in 2008, compared with $25.7 million or $2.03 per share, fully diluted, in 2007.
"2008 represented the eighth consecutive year of record sales and net earnings for Stella-Jones," said Brian McManus, President and Chief Executive Officer of Stella-Jones. "Demand held firm for all of our products, even while uncertainty characterized the North American economy. We are very pleased with the integration of the BPB acquisition, which speaks highly about the quality of our employees and managers. With the addition of BPB, Stella-Jones became the second largest producer of treated wood railway ties in North America, broadened its product offering and customer base, as well as accentuated its industry leadership, particularly along the eastern seaboard."
FOURTH QUARTER RESULTS
Sales reached $83.7 million, an increase of 72.9% over sales of $48.4 million in the fourth quarter of 2007. The BPB operations generated revenues of approximately $28.0 million, while demand held firm in the Company's core markets. Sales growth was supplemented by a weaker year-over-year Canadian currency that increased the value of U.S. dollar denominated sales by approximately $2.4 million, while last year's fourth quarter results were also lowered by the continuation of the labour conflict in southern British Columbia, which only ended in late October, 2007.
Sales of railway ties amounted to $34.6 million, up from $11.5 million a year earlier, reflecting the BPB acquisition and last year's temporary shortage of railcars at year-end. Utility pole sales reached $35.5 million, representing an increase of 18.1% over sales of $30.0 million in the fourth quarter of 2007, a period affected by the final three weeks of the strike in British Columbia. Industrial lumber sales amounted to $10.4 million, compared with $4.0 million a year earlier, essentially reflecting the BPB acquisition, while consumer lumber sales grew 11.2% to $3.3 million.
Gross profit totalled $18.7 million or 22.3% of sales in the fourth quarter of 2008, up from $12.7 million or 26.3% of sales, a year earlier. Net earnings for the period were $6.3 million or $0.50 per share, fully diluted, compared with $4.4 million or $0.35 per share, fully diluted, last year.
"Although still reflecting the effect of BPB's lower margins, fourth quarter gross profit benefited from lower energy prices and a weaker Canadian dollar versus the U.S. currency," said George Labelle, Senior Vice-President and Chief Financial Officer. "We also initiated the process with our customers of requesting annual selling price adjustments, as permitted by the terms and conditions in many of our fixed price multi-year railway tie contracts, to reflect wood cost increases incurred during the year."
BALANCE SHEET AND LIQUIDITY REMAIN SOLID
As at December 31, 2008, the Company's long-term debt, including the current portion, amounted to $105.8 million, representing a ratio of total long-term debt to shareholders' equity of 0.66:1. Bank indebtedness at the end of 2008 totalled $81.6 million, up from $39.0 million at the end of 2007. This increase mirrors higher working capital requirements resulting from higher sales. Total availability under the Company's Canadian and U.S. operating lines of credit was $10.9 million and US$7.1 million, respectively, as at December 31, 2008.
As the Company's major customers, mainly Class 1 railroad operators and large-scale utility service providers, have good credit standing and a limited history of default, substantially all accounts receivable are fully collectible.
SEMI-ANNUAL DIVIDEND OF $0.18 PER SHARE
The Board of Directors declared a semi-annual dividend of $0.18 per share on the outstanding common shares of Stella-Jones, payable on May 15, 2009 to shareholders of record at the close of business on April 3, 2009.
OUTLOOK
"While the global economic situation calls for a more cautious outlook, the key role played by our products in basic transportation and utility infrastructure, combined with their essential presence in infrastructure projects that governments often initiate during times of economic slowdown, should enable Stella-Jones to maintain market share and grow its business. The full-year contribution and the successful integration of the BPB operations will also be major performance drivers in 2009. We will remain focused on keeping our costs in line and improving efficiencies in our operations," concluded Mr. McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these results on Thursday, March 12, 2009, at 10:00 AM Eastern Time. Interested parties can join the call by dialling 1-416-644-3415 (Toronto or overseas) or 1-800-732-9303 (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 21297995#. This tape recording will be available on Thursday, March 12, 2009 as of 12:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday, March 26, 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 consolidated financial statements of Stella-Jones Inc. for the fourth quarter and year ended December 31, 2008 are available on Stella-Jones' website at www.stella-jones.com
HEAD OFFICE 3100 de la Cote-Vertu Blvd. Suite 300 Saint-Laurent, Quebec H4R 2J8 Tel.: (514) 934-8666 Fax: (514) 934-5327 EXCHANGE LISTINGS The Toronto Stock Exchange Stock Symbol (TSX): SJ TRANSFER AGENT AND REGISTRAR Computershare Investor Services Inc.
SOURCE: Stella-Jones Inc.
Stella-Jones Inc. George T. Labelle, CA Senior Vice-President and Chief Financial Officer 514-934-8665 glabelle@stella-jones.com www.stella-jones.com MaisonBrison Martin Goulet, CFA 514-731-0000 martin@maisonbrison.com
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