Stella-Jones (SJ) Q1 2026 earnings summary

Executive summary

• Q1 2026 sales increased to $791 million, driven by strong utility product demand and recent acquisitions, but operating income declined to $97 million from $143 million due to less favorable product mix and higher costs.

• Net income was $60 million ($1.10 per share), down from $93 million ($1.67 per share) last year; adjusted net income was $61 million ($1.12 per share).

• Utility products led growth with double-digit volume increases for wood utility poles and contributions from steel structures and crossarms.

• Railway ties remained stable, with ongoing optimization and cost-saving initiatives, though Class 1 volumes were under pressure.

• Residential lumber faced softer demand and lower prices but is managed with discipline and remains a long-term contributor.

Financial highlights

• Adjusted EBITDA was $136 million (17.2% margin), down from $141 million (18.2%) last year.

• Gross profit was $155 million (19.6% margin), down from $168 million (21.7% margin) year-over-year.

• Q1 operating cash flow improved to $47 million from a $60 million outflow last year.

• Available liquidity at quarter-end was $646 million.

• Adjusted EPS was $1.12, slightly down from $1.15 year-over-year.

Outlook and guidance

• Utility products expected to maintain mid-single digit growth for the year, with Q1's 12% volume growth not expected to persist into Q3/Q4.

• Railway tie sales expected to remain flat year-over-year for 2026, with low single-digit growth over three years.

• Residential lumber guidance remains at CAD 600 million–CAD 650 million for the year, with a late spring start but positive volume trends.

• Cost savings from railway tie optimization (CAD 10–15 million annualized) to begin in 2027.

• Financial objectives for 2026-2028 target adjusted EBITDA margin of 17.5-18.5% and 10% CAGR for adjusted EPS.