Stella-Jones (SJ) Q2 2024 earnings summary

Executive summary

• Achieved strong organic sales growth and increased profitability in Q2 2024, driven by infrastructure product categories, with sales rising 8% year-over-year to $1,049 million and infrastructure products accounting for nearly 80% of H1 2024 sales.

• Net income increased 10% to $110 million, with EPS up 13% to $1.94 compared to Q2 2023.

• Well-positioned to meet or exceed targets set in the three-year financial plan, with utility pole capacity expansion nearing completion.

• Published the annual ESG report, including a company-wide climate transition risk and opportunities assessment aligned with TCFD and ISSB, highlighting sustainability progress.

Financial highlights

• Q2 2024 sales rose 8% year-over-year to over CAD 1 billion ($1,049 million), led by 17% growth in utility poles, railway ties, and industrial products.

• Operating income increased to $168 million (16.0% margin); EBITDA grew 14% to $200 million (19.1% margin).

• Gross profit reached $226 million (21.5% margin), up from $200 million (20.6%) in Q2 2023.

• Net income reached $110 million (EPS $1.94) vs. $100 million (EPS $1.72) last year.

• Six-month sales totaled $1,824 million, up from $1,682 million in 2023; net income for H1 was $187 million.

Outlook and guidance

• On track to meet or exceed 2023-2025 financial objectives, with utility pole sales expected to grow at a 15% CAGR for 2024 and 2025.

• Forecasting 2024 EBITDA margin closer to 18%, despite anticipated lower sales in railway ties and residential lumber in H2.

• Residential lumber sales expected at the lower end of the CAD 600–650 million range due to weak demand.

• No significant pricing pressure expected for utility poles in H2 2024; pricing risk for 2025 considered low.

• Management remains focused on infrastructure product growth and sustainable value creation.