Stella-Jones decreased operating income by 10.5% in 2Q2017

Stella-Jones Inc reported 10.5% decrease of operating income amid 5.5% sales growth in 2Q2017 y-o-y. According to the announcement, the company’s sales accounted for CAD 594.2 million, generating operating income of CAD 74.5 million in the period.

Brian McManus, President and CEO, commented:

“Stella-Jones generated solid operating results in the second quarter. This performance was driven by higher railway tie volume stemming from earlier than expected deliveries for certain orders, partially offsetting the impact of lower year-over-year pricing in this product category. In addition, healthy demand in the utility pole category reflects sales synergies stemming from Stella-Jones’ expansion in the southeastern United States over the past two years.

As previously anticipated, we expect higher year-over-year sales in the second half of 2017 when compared to the previous year. While higher railway tie volume will be offset by lower pricing, a return to normal maintenance demand patterns and improving demand for special projects should result in higher year-over-year sales in the utility pole category. However, overall operating margins will remain affected by soft railway tie pricing and a less favourable geographical sales mix for utility poles. Stella-Jones remains committed to maximizing operating efficiencies and minimizing costs throughout the organization, while continuing to study any expansion opportunity that offers strategic value in our main product categories to the benefit of our shareholders.”

In 1Q2017 Stella-Jones decreased operating income by 25.3%.

Check other wood business-related companies 2Q2017 schedules for financial and operating results.

Earlier Stella-Jones acquired substantially all the operating assets employed in the businesses of Bois KMS (GMI) Ltée and Northern Pressure Treated Wood (N.P.T.W.) Ltd.

About Stella-Jones Inc:

The company is a leading producer and marketer of pressure treated wood products. It supplies North America’s railroad operators with railway ties and timbers, and the continent’s electrical utilities and telecommunication companies with utility poles. Stella-Jones also provides residential lumber to retailers and wholesalers for outdoor applications, as well as industrial products for construction and marine applications. The Company’s common shares are listed on the Toronto Stock Exchange.

Source: Woodbizforum