MONTREAL – Railway tie and utility pole maker Stella-Jones Inc. reported a near doubling of its net income to $15 million in the first quarter as sales jumped 22 per cent.
The Montreal-based company earned $15 million or 94 cents per share for the period ended March 31. That was well above the analyst forecast of 73 cents per share and $8.5 million or 53 cents per share earned last year.
Sales grew to $158.8 million, from $130.5 million last year.
The acquisition of Thompson Industries last December contributed $9.6 million sales during the quarter, while currency fluctuations added $1.5 million.
Excluding these factors, sales increased 13.2 per cent or $17.2 million.
CEO Brian McManus said robust demand for its core railway tie and utility pole products led to the significant increases in sales and operating profits.
“This improved performance reflects the wider reach of our continental network and continued efficiency gains,” he stated, adding that it benefited from favourable weather in most regions of North America.
Railway tie sales increased 25 per cent to $96 million. Utility pole sales were $43.5 million, up nearly 22 per cent from the prior year.
Industrial product sales remained stable at $15.2 million. Sales of residential lumber grew 31 per cent to $4.2 million.
Stella-Jones (TSX:SJ) approved a 15 cents per share dividend payable June 29.
McManus expects demand for its core products will remain solid.
“Internally, we will benefit from new network synergies and efficiencies as we finalize the integration of the Thompson operating facility. This will allow us to pursue additional opportunities with existing and new clients,” he added.
Its strong financial position will allow it to pursue expansion opportunities. It recently announced the proposed acquisition of certain assets of Brisco Wood Preservers Ltd.
Ben Vendittelli of Laurentian Bank Securities called the results “electrifying.”
“We believe that Stella-Jones should continue exhibiting solid growth. Continued market share gains, stemming from the Thompson and Tangent Rail acquisitions should also benefit the company in 2012,” he wrote in a report.
Stella-Jones is a leading producer and marketer of pressure treated wood products. It supplies North America’s railroad operators with railway ties, timbers and recycling services, and the continent’s electrical utilities and telecommunications companies with utility poles.
It also provides industrial products and services for construction and marine applications, as well as residential lumber to retailers and wholesalers for outdoor applications.
Stella-Jones shares closed at $48.50, up $1.75 or 3.74 per cent, in Thursday trading on the Toronto Stock Exchange.