Q1 2026 Stella-Jones Inc Earnings Call Transcript
Key Points
- Stella-Jones Inc (STLJF) reported a strong start to 2026 with a 10% growth in their utility products business, driven by high demand for wood utility poles.
- The acquisition of Locweld has provided an immediate platform for growth, with expected capacity expansion in Canada fully allocated until the end of 2027.
- Investments to double steel structure production capacity are on schedule, with full ramp-up expected in the second half of 2026.
- The company generated $47 million of cash from operations in Q1, a significant improvement over the previous year, highlighting disciplined working capital management.
- Stella-Jones Inc (STLJF) maintains a stable leverage ratio of 2.6 times, providing flexibility to support business needs and strategic investments.
- Residential lumber sales faced a 14% decline due to softer demand and lower pricing year-over-year.
- Railway tie sales decreased by 5% due to foreign exchange impacts, with Class 1 volumes under pressure from industry consolidation.
- The company expects to incur one-time restructuring charges related to optimizing the railway tie business, mostly non-cash and recorded by the end of Q2.
- Adjusted EBITDA margin declined from 18.2% to 17.2% year-over-year, impacted by a less favorable product mix and a $5 million mark-to-market adjustment on stock-based compensation.
- Intense competition in the spot market for utility poles is expected to continue, potentially impacting pricing as additional capacity comes online.
Good morning and thank you for standing by. Welcome to Stella-Jones' first quarter 2026 earnings call. At (Operator Instructions) I would like to remind everyone that this conference is being recorded on Wednesday, May 6, 2026.
I'll now turn it over to David Galison, Vice President Investor Relations of Stella-Jones.
Thank you, Vincent, and good morning, everyone. Earlier this morning. We issued a press release reporting of results for the first quarter of 2026, along with our MD&A that can be found in the Investor Relations section of our website at www.stella-jones.com, as well as on SEDAR+. As a reminder, all figures expressed on today's call are in Canadian dollars unless otherwise stated. Please note that the comments made on today's call may contain forward-looking information. And this information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views
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