Stella-Jones (SJ) Q1 2025 earnings summary

Executive summary

• Maintained solid profit margins and a robust financial position despite macroeconomic headwinds, unfavorable weather, and a shift in the railway tie business impacting volumes.

• Q1 2025 sales were $773 million, nearly flat year-over-year, with resilient EBITDA margin despite softer volumes.

• Operating income rose to $143 million, aided by a $38 million insurance settlement from a 2023 fire.

• Net income increased to $93 million ($1.67 per share), with the insurance settlement contributing approximately $30 million after tax.

• Expanded into the steel transmission market with the acquisition of Locweld, aligning with long-term infrastructure growth strategy.

Financial highlights

• Q1 sales declined 5% organically year-over-year, mainly due to lower railway tie volumes, totaling $773 million.

• Utility pole sales rose to $419 million from $402 million, driven by favorable pricing and currency impacts despite a 4% volume decline.

• Railway tie sales dropped 14% organically to $208 million, mainly due to lower volumes and internalization by a major customer.

• Residential lumber sales were stable at $88 million, with higher prices offsetting lower volumes from weather delays.

• EBITDA reached $179 million (23.2% margin), up from $156 million (20.1%), with a $38 million insurance settlement boosting results; excluding this, EBITDA margin was 18%.

Outlook and guidance

• Guidance and financial objectives for 2025 remain unchanged, with expectations of stronger utility pole volumes in the second half and flattish railway tie performance for the year.

• Utility pole organic growth expected to be mid-single digits for the full year, driven by volume recovery in H2.

• Railway tie organic growth revised to flat for the year, with anticipated volume recovery from new projects.

• Locweld acquisition expected to contribute positively, with capacity expansion planned and strong demand outlook.