Stella-Jones (SJ) Q2 2026 earnings summary

Executive summary

• Q2 sales were $1,042 million versus $1,034 million, supported by utility products, the Brooks acquisition and healthy infrastructure demand.

• Operating income fell to $95 million from $155 million, including $32 million in network optimization charges; adjusted EBITDA was $167 million (16.0% margin) versus $189 million (18.3%).

• Utility products grew, while railway ties and residential lumber faced softer results; operating costs and steel-structure inefficiencies pressured margins.

Financial highlights

• H1 sales totaled $1,833 million versus $1,807 million; adjusted EBITDA was $303 million (16.5% margin) versus $330 million (18.3%).

• Q2 gross profit was $186 million (17.9% margin) versus $206 million (19.9%); net income was $61 million ($1.12 per share) versus $106 million ($1.91). Adjusted net income was $87 million ($1.59 per share).

• Q2 cash from operations was $192 million versus $224 million; H1 net debt fell by more than $100 million excluding FX.

• Railway tie optimization charges totaled $32 million, including $24 million in non-cash asset write-downs; excluded from adjusted EBITDA.

Outlook and guidance

• H2 2026 adjusted EBITDA margin is expected to improve, but full-year margin is projected below 17.5%; the 2026-2028 average objective remains 17.5%-18.5%.

• FY wood utility pole organic growth guidance remains mid-single-digit; residential lumber sales are expected at $600 million-$650 million, and railway tie sales flat to down 2%.

• TSO could reach 5%-10% of railway tie sales in H2 and up to 10% of volumes going forward.

• Pole network actions are expected to add $10 million-$12 million in annual profitability from 2027; railway tie optimization is expected to generate $10 million-$15 million in annual savings beginning in 2027.