May 03, 2014. /Lesprom Network/. Stella-Jones Inc. announced financial results for its 1Q ended March 31, 2014. Sales reached $257.5 million, up 15.7% from $222.6 million in the same period last year. The operating assets acquired from The Pacific Wood Preserving Companiesâ ("PWP") on November 15, 2013 contributed sales of $13.2 million, while the conversion effect from fluctuations in the value of the Canadian dollar, Stella-Jones' reporting currency, versus the U.S. dollar, increased the value of U.S. dollar denominated sales by about $16.2 million when compared with the previous year. Excluding these factors, sales increased approximately $5.5 million, or 2.5%, as the company said in the press release received by Lesprom Network.

Operating income rose 17.1% to $34.7 million, or 13.5% of sales, versus $29.7 million, or 13.3% of sales, last year. While the increase in monetary terms partially reflects the contribution of the PWP assets, the increase as a percentage of sales stems from greater efficiencies throughout the Company's plant network, partially offset by higher year-over-year costs for untreated railway ties and utility poles. Of note, margins from non-pole-quality log sales are nominal as they are sold close to cost of sales.

Net income for the 1Q 2014 increased 20.1% to $22.5 million or $0.33 per share, fully diluted, compared with $18.8 million or $0.27 per share, fully diluted, in the 1Q 2013.

"We are pleased with Stella-Jones' solid operating results in the 1Q 2014. Demand for our core products remained healthy despite unfavourable weather conditions across North America. Moreover, operating income as a percentage of sales rose further, as greater efficiencies achieved throughout our network more than offset higher costs stemming from a tighter procurement market for untreated railway ties and utility poles," said Brian McManus, President and CEO.

"As we look ahead to the remainder of 2014, we expect demand for our core products to remain healthy, driven by a stronger economy and sound fundamentals in our main sectors of activity. However, the procurement market for untreated railway ties and utility poles remains tight and our margins may be slightly impacted in the short term. Still, we believe that our current inventory position and the strength of our procurement network should allow Stella-Jones to meet demand at an optimal cost. We remain focused on integrating the PWP assets and pursuing the proposed acquisition of two wood treating facilities from Boatright Railroad Products, Inc. expected to close, if the transaction is finalized, in the latter part of the 2Q," concluded Mr. McManus.

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.