Stella-Jones' sales in the Q2 2023 increased by 7% to $972 million, compared to sales of $907 million last year. Excluding the contribution from the 2022 acquisition of the utility pole manufacturing business of Texas Electric Cooperatives, Inc. (“TEC”) and the positive effect of currency conversion, sales were up $17 million or 2%. The increase was driven by a 10% organic sales growth of the Company’s infrastructure-related businesses, namely utility poles, railway ties and industrial products, offset in large part by lower residential lumber and logs and lumber sales when compared to the same period last year. Led by the strong organic sales growth, particularly for the Company’s largest product category, utility poles, EBITDA increased to $175 million in the Q2 2023 compared to $154 million in the second quarter last year and EBITDA margin expanded from 17.0% in 2022 to 18.0% in 2023
Gross profit was $200 million in the Q2 2023, compared to $173 million in the corresponding period last year, representing a margin of 20.6% and 19.1% respectively. The increase in gross profit in absolute dollars was largely due to the margin expansion of the Company’s infrastructure-related businesses, particularly stemming from the price increases realized for utility poles. This improvement was offset in part by a decrease in the gross profit of residential lumber due to lower pricing. As a percentage of sales, the gross profit margin also benefited from a better product mix, led by the strong growth of utility poles sales. Similarly, operating income totaled $149 million in the Q2 2023 versus operating income of $133 million in the corresponding period of 2022.
Net income for the Q2 2023 was $100 million, or $1.72 per share, compared to net income of $94 million, or $1.51 per share, in the corresponding period of 2022.
“Stella-Jones is executing on its three-year growth plan with the achievement of another strong performance in the Q2, reflecting the upward momentum generated by accelerating demand for our infrastructure-related products," said Eric Vachon, President and CEO of Stella-Jones. “Our Q2 results continued to benefit from higher pricing dynamics for utility poles, railway ties and industrial products, while residential lumber delivered sales in line with expectations."
Six-month results
For the first six months of 2023, sales amounted to $1,682 million, versus $1,558 million for the corresponding period last year, driven by the 13% organic sales growth of the Company’s infrastructure-related businesses.
Gross profit increased to $336 million, or 20.0% of sales, from $273 million or 17.5% of sales, in the corresponding period last year. Operating income amounted to $244 million, versus $200 million a year ago, while EBITDA was $295 million, compared to $242 million in the prior year and EBITDA margin expanded from 15.5% in 2022 to 17.5% in 2023.
Net income in the first six months of 2023 was $160 million, or $2.73 per share, versus net income of $140 million, or $2.23 per share, in the corresponding period last year. Earnings per share was positively impacted by the increase in net income and the Company’s repurchase of shares through its normal course issuer bids.
Stella-Jones Inc. is North America’s leading producer of pressure-treated wood products.
