Stella-Jones (SJ) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales declined due to lower utility pole volumes, but long-term demand drivers remain strong and margins were solid.

• Q3 sales were $915 million (CAD 950 million), down year-over-year, with operating income at $130 million and EBITDA margin at 17.7%.

• Year-to-date sales reached $2.7 billion, with EBITDA of $518 million and margin of 18.9%.

• 2025 sales target updated to approximately $3.6 billion, with a sustainable EBITDA margin floor set at 17%.

• Net income for Q3 was $80 million ($1.42 per share), down from $110 million ($1.91 per share) in Q3 2023.

Financial highlights

• Q3 gross profit was $188 million (20.5% margin), down from $215 million (22.7%) year-over-year.

• Q3 EBITDA was $162 million (17.7% margin), compared to $193 million (20.3%) in Q3 2023.

• Net debt-to-EBITDA ratio at 2.5x as of September 30, 2024.

• Operating cash flows for Q3 were $186 million, year-to-date $301 million.

• $342 million available under credit facilities at quarter-end; nearly $750 million available capital post-bond offering.

Outlook and guidance

• Three-year sales target revised to $3.6 billion by 2025, aligning utility pole growth with industry rates of 6%-7%.

• EBITDA margin target raised to above 17% for 2025 and beyond, up from previous 16%.

• Residential lumber sales forecasted in the $600–650 million range.

• CapEx for 2025 expected to be $75–80 million; working capital investment projected at $60–70 million.

• Guidance assumes stable FX rates and excludes future acquisitions.