-- Sales of $970.1 million, up 35.2% from $717.5 million last year
-- 26.6% growth in operating income to $138.7 million, versus $109.6
million in 2012
-- Net income up 26.6% to $92.5 million, compared to $73.1 million last
year
-- Diluted EPS of $1.34 versus $1.13 a year ago
Stella-Jones Inc. (TSX:SJ) ("Stella-Jones" or the "Company") today announced
financial results for its fourth quarter and fiscal year ended December 31,
2013.
"2013 marked the thirteenth consecutive year of growth for Stella-Jones, as the
Company further benefited from its proven expansion strategy. The ongoing growth
of our continental network has resulted in improved efficiency of our operations
and increased confidence of our customers. By virtue of recent acquisitions and
key strategic decisions, Stella-Jones has not only become larger, it has become
a stronger and more efficient organization, as well as a lasting source of value
creation for its shareholders," said Brian McManus, President and Chief
Executive Officer.
----------------------------------------------------------------------------
Quarters ended Years ended
Financial highlights Dec. 31, Dec. 31,
(in thousands of Canadian dollars,
except per share data) 2013 2012 2013 2012
----------------------------------------------------------------------------
Sales 211,862 159,345 970,149 717,494
Operating income 29,519 21,127 138,699 109,596
Net income for the period 19,690 16,546 92,536 73,070
Per share - basic ($) 0.29 0.25 1.35 1.14
Per share - diluted ($) 0.29 0.25 1.34 1.13
Cash flows from operating activities
before changes in non-cash working
capital components and interest and
income taxes paid 34,607 22,363 160,631 120,797
Cash flows provided by operating
activities 23,883 21,086 104,218 28,516
Weighted average shares outstanding
(basic, in '000s) 68,693 65,548 68,681 64,312
----------------------------------------------------------------------------
2013 RESULTS
Sales reached $970.1 million, up 35.2% over last year's sales of $717.5 million.
The operating facilities acquired from McFarland Cascade Holdings, Inc.
("McFarland") on November 30, 2012 contributed additional sales of $275.4
million over an eleven-month period in 2013, net of production transferred from
other Stella-Jones facilities, while the assets acquired from The Pacific Wood
Preserving Companiesa ("PWP") on November 15, 2013 generated sales of
approximately $4.1 million in the fourth quarter. The conversion effect from
fluctuations in the value of the Canadian dollar, Stella-Jones' reporting
currency, versus the U.S. dollar, increased the value of U.S. dollar denominated
sales by about $12.9 million when compared with the previous year. Excluding
these factors, sales decreased approximately $39.8 million due to a timing
effect on railway tie sales resulting from the transition of a Class 1 railroad
customer from a treating services only ("TSO") program to a black tie ("Black
Tie") program and to the year-over-year timing difference for certain utility
pole orders.
Railway tie sales amounted to $394.0 million, compared with $404.5 million last
year. This slight decrease reflects the transition of a Class 1 railroad
customer from a TSO program to a Black Tie program, which had a timing effect of
$30.9 million on 2013 sales. Excluding this factor, railway tie sales rose
approximately 5.0%. This transition is mostly complete and should have a minimal
impact on results in the first quarter of 2014. Thereafter, annualized sales to
that customer should be greater than the aforementioned amount due to more value
added under a Black Tie program. Sales of utility poles totalled $405.8 million,
up from $218.5 million in 2012. This increase is essentially attributable to
additional utility pole sales of $197.9 million from the McFarland operations.
Sales of residential lumber reached $112.3 million, up from $35.5 million a year
earlier as a result of additional residential lumber sales of $73.8 million from
the McFarland operations. Finally, industrial product sales were $58.1 million,
compared with $59.0 million a year earlier.
Operating income rose 26.6% to $138.7 million, or 14.3% of sales, versus $109.6
million, or 15.3% of sales, last year. While the increase in monetary terms
mainly reflects the addition of the McFarland operations, the reduction as a
percentage of sales stems from a less favourable product mix and McFarland's
lower margins at the beginning of the year. Reflecting a successful integration,
McFarland's margins progressively improved during the year.
Net income for the year increased 26.6% to $92.5 million or $1.34 per share,
fully diluted, compared with $73.1 million or $1.13 per share, fully diluted, in
2012. Cash flows from operating activities before changes in non-cash working
capital components and interest and income taxes paid rose 33.0% to $160.6
million. Cash flow provided by operating activities was $104.2 million compared
to $28.5 million in 2012.
FOURTH QUARTER RESULTS
Sales amounted to $211.9 million, up 33.0% from $159.3 million for the same
period a year earlier. The McFarland operations contributed additional sales of
$49.3 million, net of production transferred from other Stella-Jones facilities,
over a two-month period, while assets acquired from PWP generated sales of $4.1
million. The year-over-year conversion effect from fluctuations in the value of
the Canadian dollar, versus the U.S. dollar, increased the value of U.S. dollar
denominated sales by $5.8 million. Excluding these factors, sales decreased
approximately $6.7 million, as the year-over-year timing difference for certain
utility pole orders and the timing effect on sales from the program transition
of a Class 1 railroad customer more than offset solid industry demand for
railway ties.
Sales of railway ties reached $78.3 million in 2013, versus $73.7 million in
2012. This increase reflects solid market demand, including higher
year-over-year advanced deliveries, and the PWP acquisition, partially offset by
a timing effect of $13.4 million from the transition of a Class 1 railroad
customer to a Black Tie program. Utility pole sales rose $36.9 million to $107.1
million due to a $41.3 million additional net contribution from the McFarland
operations over a two-month period and the PWP acquisition. Excluding these
factors, sales declined due to the year-over-year timing difference for certain
orders. Residential lumber sales reached $13.8 million, up from $5.1 million
last year, mainly due to additional sales of $8.1 million from the McFarland
operations. Finally, industrial product sales were $12.7 million, versus $10.4
million a year ago, as a result of higher sales of industrial timber for railway
bridges.
Operating income was $29.5 million, or 13.9% of sales, versus $21.1 million, or
13.3% of sales, last year. 2013 results include acquisition costs of $1.2
million related to the PWP transaction, while last year's results included
acquisition costs of $2.4 million related to the McFarland transaction.
Excluding these elements, operating income for the fourth quarter of 2013 was
$30.7 million, or 14.5% of sales, compared with $23.5 million, or 14.8% of
sales, a year earlier. The variation as a percentage of sales reflects a less
favourable year-over-year product mix, partially offset by greater efficiencies
throughout the Company's plant network.
Net income for the period rose 19.0% to $19.7 million, or $0.29 per share, fully
diluted, compared with $16.5 million, or $0.25 per share, fully diluted, last
year. Cash flows from operating activities before changes in non-cash working
capital components and interest and income taxes paid reached $34.6 million, up
54.8% from $22.4 million a year earlier.
SOLID FINANCIAL POSITION
As at December 31, 2013, the Company's long-term debt, including the current
portion, stood at $372.9 million compared with $349.6 million at the end of the
previous year. The increase essentially reflects the additional long-term debt
required to finance the acquisition of PWP and the effect of local currency
translation on U.S. dollar denominated long-term debt. Despite this acquisition
completed shortly before year end, Stella-Jones total debt to total
capitalization improved to 0.39:1 as at December 31, 2013, versus 0.44:1 a year
earlier.
QUARTERLY DIVIDEND OF $0.07 PER SHARE
On March 13, 2014, the Board of Directors declared a quarterly dividend of $0.07
per common share payable on April 30, 2014 to shareholders of record at the
close of business on April 2, 2014.
OUTLOOK
"As the North American economy continues to strengthen, demand for our core
products should remain healthy in 2014. While a stronger economy could result in
a tighter market for untreated railway ties and utility poles, as demand for
other wood-based products also increases, we believe our inventory position and
the strength of our procurement network should allow Stella-Jones to meet demand
at the most optimal cost. The integration of the PWP assets will be a key focus
in the year ahead. The operating efficiencies we expect to achieve should
further strengthen our market penetration and status as a leading provider of
treated wood products in our core categories," concluded Mr. McManus.
CONFERENCE CALL
Stella-Jones will hold a conference call to discuss these results on March 14,
2014, at 10:00 AM Eastern Time. Interested parties can join the call by dialing
647-427-7450 (Toronto or overseas) or 1-888-231-8191 (elsewhere in North
America). Parties unable to call in at this time may access a tape recording of
the meeting by calling 1-855-859-2056 and entering the passcode 69145418. This
tape recording will be available on Friday, March 14, 2014 as of 1:00 PM Eastern
Time until 11:59 PM Eastern Time on Friday, March 21, 2014.
NON-IFRS FINANCIAL MEASURES
Operating income and cash flow from operating activities before changes in
non-cash working capital components and interest and income tax paid are
financial measures not prescribed by IFRS and are not likely to be comparable to
similar measures presented by other issuers. Management considers these non-IFRS
measures to be useful information to assist knowledgeable investors regarding
the Company's financial condition and results of operations as they provide
additional measures of its performance.
ABOUT STELLA-JONES
Stella-Jones Inc. (TSX:SJ) is a leading producer and marketer of pressure
treated wood products. The Company supplies North America's railroad operators
with railway ties and timbers, and the continent's electrical utilities and
telecommunication companies with utility poles. Stella-Jones also provides
residential lumber to retailers and wholesalers for outdoor applications, as
well as industrial products for construction and marine applications. 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, the ability of the Company to raise the capital required for
acquisitions, and general market trends or economic changes. As a result,
readers are advised that actual results may differ from expected results.
Note to readers: Condensed interim unaudited consolidated financial statements
for the fourth quarter and year ended December 31, 2013 are available on
Stella-Jones' website at www.stella-jones.com
FOR FURTHER INFORMATION PLEASE CONTACT:
Source:
Stella-Jones Inc.
Eric Vachon, CPA, CA
Senior Vice-President and Chief Financial Officer
(514) 940-3903
evachon@stella-jones.com
Martin Goulet, CFA
MaisonBrison Communications
(514) 731-0000
martin@maisonbrison.com
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