Montreal, Quebec - Stella-Jones Inc. today announced financial results for its first quarter ended March 31, 2012. The Company generated record first quarter sales and net income.
"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."
|Financial highlights (in thousands of Canadian dollars, except per share data)||Quarters ended March 31,|
|Net income for the period||15,006||8,500|
|Per share - basic and diluted ($)||0.94||0.53|
|Cash flow from operations (1)||27,180||17,188|
Weighted average shares outstanding (basic, in 000s)
(1) Before changes in non-cash working capital components and interest and income tax paid.
FIRST QUARTER RESULTS
Sales reached $158.8 million, an increase of $28.3 million, or 21.7% over last year's first-quarter sales of $130.5 million. The operating facility acquired from Thompson Industries, Inc. ("Thompson") 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.
Net income for the period increased 76.5% to $15.0 million, or $0.94 per share, fully diluted, compared with $8.5 million, or $0.53 per share, fully diluted, in the first quarter of 2011. Cash flow from operating activities, before changes in non-cash working capital components and interest and income tax paid, rose 58.1% to $27.2 million.
FINANCIAL POSITION REMAINS HEALTHY
As at March 31, 2012, the Company's long-term debt, including the current portion, amounted to $180.0 million, essentially stable when compared with $180.1 million as at December 31, 2011. The ratio of total debt, including short-term bank indebtedness, to total capitalization was 0.35:1 as at March 31, 2012, unchanged from three months earlier.
Working capital stood at $283.2 million as at March 31, 2012, up from $273.2 three months earlier. The main components of this variation were an increase in accounts receivable, as a result of strong sales growth in the first quarter, and an increase in inventories, due to the normal seasonal inventory build-up ahead of peak demand in the second and third quarters.
QUARTERLY DIVIDEND OF $0.15 PER SHARE
On May 2, 2012, the Board of Directors approved a quarterly dividend of $0.15 per common share payable on June 29, 2012 to shareholders of record at the close of business on June 1, 2012.
"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.
Stella-Jones will hold a conference call to discuss these results on Thursday, May 3, 2012, at 1:30 PM Eastern Time. Interested parties can join the call by dialling 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 71367028#. This tape recording will be available on Thursday, May 3, 2012 as of 5:00 PM Eastern Time until 11:59 PM Eastern Time on Thursday, May 10, 2012.
NON-IFRS FINANCIAL MEASURES
Operating income and cash flow from operations are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these measures to be useful information to assist knowledgeable investors in evaluating the cash generating capabilities of the Company.
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