The operating facilities acquired from McFarland on November 30, 2012 contributed sales of approximately $86.2 million, while the conversion effect from fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, versus the U.S. dollar, had a positive impact of $4.7 million on the value of U.S. dollar denominated sales when compared with the previous year's 3Q.
Operating income rose 21.2% to $38.6 million, or 14.4% of sales, versus $31.8 million, or 16.3% of sales, last year. While the increase in monetary terms mainly reflects the addition of the McFarland operations, the reduction as a percentage of sales stems from a less favourable product mix and higher shipping cost due to the unexpected strong demand for residential lumber in southern Alberta, as greater shipments were made from Stella-Jones' eastern Canada facilities to adequately meet customer requirements.
Net income for the period increased 33.7% to $27.7 million or $0.40 per share, fully diluted, compared with $20.7 million or $0.32 per share, fully diluted, in the 3Q 2012. Cash flow from operating activities before changes in non-cash working capital components and interest and income taxes paid rose 23.3% to $43.5 million.
"Stella-Jones' focus on improving operating efficiency across its network produced solid operating results in the third quarter. A strong performance by the McFarland Cascade Holdings, Inc. operations led to greater penetration of the utility pole market in the United States. Meanwhile, the transition of a Class 1 railroad customer from a "treating services only" program to a "black-tie" program, whereby the customer purchases an integrated product and service offering from Stella-Jones, created a lag in shipments resulting in lower year-over-year railway tie sales. Finally, we are pleased with the on-schedule start of wood treatment operations at our new facility in Cordele, Georgia, which contributed sales of approximately $2.3 million," said Brian McManus, President and CEO.
For the nine-month period ended September 30, 2013, sales reached $758.3 million, up 35.9% from the same period a year earlier. The McFarland operations contributed sales of approximately $226.1 million while the year-over-year conversion effect from fluctuations in the value of the Canadian dollar, versus the U.S. dollar, increased the value of U.S. dollar denominated sales by $7.1 million.
Operating income was $109.2 million or 14.4% of sales, compared with $88.5 million or 15.9% of sales last year. Net income for the nine-month period reached $72.8 million or $1.05 per share, fully diluted, up 28.9% from $56.5 million or $0.88 per share, fully diluted, a year earlier. Cash flow from operating activities before changes in non-cash working capital components and interest and income taxes paid rose 28.0% to $126 million.
Stella-Jones Inc. is a leading producer and marketer of pressure treated wood products. Stella-Jones also provides residential lumber to retailers and wholesalers for outdoor applications, as well as industrial products for construction and marine applications.
