Stella-Jones reports 76.5% increase in net income in first quarter, 2012
Stella-Jones‘s sales increased 21.7% up to 158.8 million in the company’s first quarter of 2012. The net income for the quarter was $15.0 million, compared with $8.5 million last year.
“Robust demand for Stella-Jones’ core railway tie and utility pole products led to significant increases in sales and operating profitability in the first quarter of 2012,” said Brian McManus, President and Chief Executive Officer. “This improved performance reflects the wider reach of our continental network and continued efficiency gains. More favourable weather in most regions of North America, compared with the same period last year, also allowed for a greater number of projects requiring our products to be carried out early in the year.”
The operating facility acquired from Thompson Industries, Inc. on December 7, 2011 contributed sales of approximately $9.6 million, while 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 $1.5 million when compared with the previous year. Excluding the acquisition and currency effects, sales increased approximately $17.2 million, or 13.2%.
Railway tie sales for the first quarter of 2012 amounted to $96.0 million, an increase of 25.4% over last year, reflecting tie sales of approximately $9.1 million from the operating facility acquired from Thompson as well as solid market demand. Utility pole sales amounted to $43.5 million in the first quarter of 2012, up 21.9% over the corresponding period in 2011. The increase is attributable to robust demand for transmission poles related to orders for special projects and to an increase in distribution pole sales stemming from regular maintenance projects. Industrial product sales remained stable at $15.2 million, as the contribution from the facility acquired from Thompson was offset by lower demand for marine applications in Canada. Sales of residential lumber increased 31.2% to $4.2 million, primarily as a result of more favourable weather compared with last year.
Operating income was $24.1 million, or 15.2% of sales, compared with $14.4 million, or 11.1% of sales, last year. The increase in absolute dollars essentially reflects higher business activity and the addition of the Thompson operations, while the increase as a percentage of sales mainly stems from a better absorption of fixed costs resulting from higher business activity and from greater efficiency throughout the company’s plant network.
“We continue to expect demand for our core products to remain solid. Internally, we will benefit from new network synergies and efficiencies as we finalize the integration of the Thompson operating facility. This will allow us to pursue additional opportunities with existing and new clients. In addition, a healthy cash flow and strong financial position allow us to study all opportunities for network expansion, such as the recently announced proposed acquisition of certain assets of Brisco Wood Preservers Ltd. As such, Stella-Jones will continue to pursue, and refine, its core competencies to create further value for its shareholders,” concluded Mr. McManus.
Read full release from Stella-Jones
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