SJ Stella Jones Inc

Stella-Jones Inc. (TSX:SJ) today announced financial results for its second
quarter ended June 30, 2013. 


"Demand for Stella-Jones' core products remained healthy during the second
quarter, as we continue to leverage our enhanced presence in the treated wood
products market. Gross profit as a percentage of sales increased from the same
period a year ago as a result of our focus on our main markets and on improving
operating efficiencies, including on-going progress in the integration of our
latest acquisition, McFarland Cascade Holdings, Inc. ("McFarland")," said Brian
McManus, President and Chief Executive Officer. 




----------------------------------------------------------------------------
Financial highlights                                                        
(in thousands of                                                            
 Canadian dollars,         Quarters ended June 30, Six months ended June 30,
 except per share data)          2013         2012         2013         2012
----------------------------------------------------------------------------
Sales                         273,161      203,919      490,200      362,714
Operating income               40,959       32,580       70,630       56,670
Net income for the                                                          
 period                        26,426       20,835       45,183       35,841
  Per share - basic ($)          1.54         1.30         2.63         2.24
  Per share - diluted ($)        1.53         1.30         2.62         2.24
Cash flow from                                                              
 operations (1)                48,171       35,963       82,510       63,143
Weighted average shares                                                     
 outstanding (basic, in                                                     
 '000s)                        17,170       15,976       17,169       15,968
----------------------------------------------------------------------------
(1)  Before changes in non-cash working capital components and interest and 
     income tax paid.                                                       



SECOND QUARTER RESULTS 

Sales for the quarter ended June 30, 2013 totalled $273.2 million, up 34.0% over
last year's sales of $203.9 million. The operating facilities acquired from
McFarland on November 30, 2012 contributed sales of approximately $75.0 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 $1.8 million on the value of U.S. dollar denominated sales when
compared with the previous year's second quarter. Excluding these factors, sales
decreased approximately $7.5 million, as a result of more traditional seasonal
demand patterns in 2013 versus the prior year, lower sales of industrial
products, and reduced railcar availability in Western Canada due to flooding in
southern Alberta.


Railway tie sales amounted to $119.8 million, essentially stable compared with
sales of $120.1 million last year, reflecting healthy industry demand. Utility
pole sales amounted to $95.1 million, up from $51.7 million in the corresponding
period in 2012. This increase is mainly attributable to utility pole sales of
$46.0 million from the McFarland operations. Sales of residential lumber reached
$41.3 million, up from $14.0 million a year earlier as a result of additional
residential lumber sales of $26.7 million from the McFarland operations.
Finally, industrial product sales totalled $17.0 million, compared with $18.1
million a year earlier, due to a reduction in the tie recycling business and in
rail projects requiring industrial products compared to the second quarter of
last year, as well as a reduction in sales of certain non-core products. 


Gross profit as a percentage of sales increased to 21.2% in the second quarter
of 2013, from 20.8% last year, as a result of greater efficiencies across the
Company's plant network, including the McFarland facilities, as well as reduced
low margin non-core product sales. Operating income as a percentage of sales
decreased to 15.0% compared with 16.0% of sales last year. This reflects the
higher level of selling and administrative expenses following the McFarland
acquisition and a loss on the disposal of surplus assets from previous
acquisitions. In monetary terms, operating income was $41.0 million in the
second quarter of 2013, up 25.7% from $32.6 million in the prior year.  


Net income for the period increased 26.8% to $26.4 million or $1.53 per share,
fully diluted, compared with $20.8 million or $1.30 per share, fully diluted, in
the second quarter of 2012. Cash flow from operating activities before changes
in non-cash working capital components and interest and income tax paid rose
33.9% to $48.2 million.


SIX-MONTH RESULTS 

For the six-month period ended June 30, 2013, sales amounted to $490.2 million,
up 35.1% from the same period a year earlier. The McFarland operations
contributed sales of approximately $140.0 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 $2.3
million. Excluding these factors, sales decreased approximately $14.8 million,
reflecting more traditional seasonal demand in 2013 versus prior year.


Operating income was $70.6 million or 14.4% of sales, compared with $56.7
million or 15.6% of sales last year. Net income for the period reached $45.2
million or $2.62 per share, fully diluted, up 26.1% from $35.8 million or $2.24
per share, fully diluted, a year earlier. Cash flow from operating activities
before changes in non-cash working capital components and interest and income
tax paid rose 30.7% to $82.5 million.


HEALTHY FINANCIAL POSITION AND INVESTMENT IN INCREMENTAL CAPACITY 

As at June 30, 2013, the Company's long-term debt, including the current
portion, amounted to $373.7 million, down from $382.6 million three months ago.
At that same date, the ratio of total debt to total capitalization was 0.41:1,
down from 0.44:1 three months earlier. 


During the second quarter of 2013, Stella-Jones invested $5.9 million in
purchases of property, plant and equipment, primarily for the addition of
various equipment upgrades and incremental capacity. This amount includes $1.8
million to continue the construction of a new treating facility in Cordele,
Georgia, where wood treatment operations are expected to begin in August 2013,
and an initial amount of $1.4 million for a new treating cylinder at the New
Westminster, British Columbia facility.


QUARTERLY DIVIDEND OF $0.20 PER SHARE 

On August 8, 2013, the Board of Directors declared a quarterly dividend of $0.20
per common share payable on September 30, 2013 to shareholders of record at the
close of business on September 2, 2013.


OUTLOOK 

"Demand for our core products should remain healthy for the remainder of 2013,
as higher freight volume supports further investment in the North American rail
network and demand for utility poles is expected to hold over the short-term.
More importantly, we believe that utility pole demand should pick-up over the
mid-term, as an increasing number of installed poles are approaching the end of
their normal service life and will need to be replaced. Increased forecasted
demand by some of our larger utility pole customers supports this belief.
Stella-Jones is investing in additional capacity to meet this anticipated
demand," concluded Mr. McManus.


CONFERENCE CALL 

Stella-Jones will hold a conference call to discuss these results on Friday,
August 9, 2013, at 10:00 AM Eastern Time. Interested parties can join the call
by dialling 647-427-7450 (Toronto or overseas) or 1-888-231-8191 (elsewhere in
North America). Parties unable to call in at this time may access a tape
recording of the meeting by calling 1-855-859-2056 and entering the passcode
17280571. This tape recording will be available on Friday, August 9, 2013 as of
1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, August 16, 2013. 


NON-IFRS FINANCIAL MEASURES 

Operating income and cash flow from operations are financial measures not
prescribed by IFRS and are not likely to be comparable to similar measures
presented by other issuers. Management considers these measures to be useful
information to assist knowledgeable investors in evaluating the cash generating
capabilities of the Company.


ABOUT STELLA-JONES 

Stella-Jones Inc. (TSX:SJ) is a leading producer and marketer of pressure
treated wood products. The Company 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.
Stella-Jones also provides industrial products and services for construction and
marine applications, as well as residential lumber to retailers and wholesalers
for outdoor applications. The Company's common shares are listed on the Toronto
Stock Exchange. 


Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of future
events. Such factors may include, without excluding other considerations,
fluctuations in quarterly results, evolution in customer demand for the
Company's products and services, the impact of price pressures exerted by
competitors, the ability of the Company to raise the capital required for
acquisitions, and general market trends or economic changes. As a result,
readers are advised that actual results may differ from expected results.


Note to readers: Condensed interim unaudited consolidated financial statements
for the second quarter are available on Stella-Jones' website at
www.stella-jones.com




FOR FURTHER INFORMATION PLEASE CONTACT: 
Source:
Stella-Jones Inc.


Eric Vachon, CPA, CA
Senior Vice-President and Chief Financial Officer
(514) 940-3903
evachon@stella-jones.com


Martin Goulet, CFA
MaisonBrison Communications
(514) 731-0000
martin@maisonbrison.com

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