SJ Stella Jones Inc

Stella-Jones Inc. (TSX:SJ) ("Stella-Jones" or the "Company") today announced
financial results for its third quarter ended September 30, 2013. In this press
release, all references to common shares issued and outstanding, as well as per
share data, reflect a 4-for-1 share split that took the form of a share dividend
whereby shareholders received three additional common shares for each common
share held. The payment date for the share dividend was October 25, 2013.


"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. ("McFarland") 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 Chief Executive Officer. 




----------------------------------------------------------------------------
Financial highlights                Quarters ended Sept.   Nine months ended
                                                     30,           Sept. 30,
(in thousands of Canadian dollars,                                          
 except per share data)                   2013      2012      2013      2012
----------------------------------------------------------------------------
Sales                                  268,087   195,435   758,287   558,149
Operating income                        38,550    31,799   109,180    88,469
Net income for the period               27,663    20,683    72,846    56,524
  Per share - basic ($)                   0.40      0.32      1.06      0.88
  Per share - diluted ($)                 0.40      0.32      1.05      0.88
Cash flow from operations (1)           43,514    35,291   126,024    98,434
Weighted average shares outstanding                                         
 (basic, in '000s)                      68,687    63,957    68,681    63,899
----------------------------------------------------------------------------
                                                                            
(1)  Before changes in non-cash working capital components and interest and 
     income taxes paid.                                                     



THIRD QUARTER RESULTS

Sales for the quarter ended September 30, 2013 totalled $268.1 million, up 37.2%
over last year's sales of $195.4 million. 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 third quarter. 


Railway tie sales reached $99.4 million, compared with $114.7 million last year,
mainly reflecting the aforementioned transition of a Class 1 railroad customer
to a "black-tie" program. Sales of utility poles amounted to $112.8 million, up
from $53.1 million in the corresponding period in 2012. This increase is mainly
attributable to utility pole sales of $59.9 million from the McFarland
operations. Sales of residential lumber reached $39.3 million, up from $12.3
million a year earlier as a result of additional residential lumber sales of
$25.0 million from the McFarland operations and unexpected strong demand in
southern Alberta subsequent to flooding earlier in the year. Finally, industrial
product sales totalled $16.5 million, compared with $15.4 million a year
earlier, mainly reflecting a $1.3 million contribution from the McFarland
operations.


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 third quarter of 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.


NINE-MONTH RESULTS

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 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 $126.0 million.


LONG-TERM DEBT REDUCTION OF $55.3 MILLION 

As at September 30, 2013, the Company's long-term debt, including the current
portion, stood at $318.4 million, down $55.3 million from $373.7 million three
months ago. The decrease essentially reflects lower working capital requirements
in the third quarter of 2013. As a result, the ratio of total debt to total
capitalization was 0.37:1 as at September 30, 2013, down from 0.41:1 three
months earlier. 


During the third quarter of 2013, Stella-Jones invested $6.9 million in
purchases of property, plant and equipment, primarily for the addition of
various equipment upgrades and incremental capacity in anticipation of strong
demand. This amount includes $2.0 million to complete the construction of the
Cordele, Georgia facility and an amount of $0.9 million for a new treating
cylinder at the New Westminster, British Columbia facility.


QUARTERLY DIVIDEND OF $0.05 PER SHARE

On November 7, 2013, the Board of Directors declared a quarterly dividend of
$0.05 per common share payable on December 20, 2013 to shareholders of record at
the close of business on December 2, 2013.


OUTLOOK 

"Demand for Stella-Jones' products and services should remain healthy for the
upcoming quarters, as fundamentals in our core markets remain favourable. While
the transition to a "black tie" program will create a short-term lag effect on
sales to one of our customers until the first quarter of 2014, we are pleased
with this opportunity to demonstrate our ability to provide this customer with a
comprehensive product and service offering. Over the long-term, our strategy
focused on continental expansion remains intact, as evidenced by the proposed
acquisition of three wood treating facilities in Oregon, Nevada and Arizona.
Should this transaction be completed, Stella-Jones would benefit from greater
market penetration, synergies and additional operating efficiencies from a
larger network," concluded Mr. McManus.


CONFERENCE CALL

Stella-Jones will hold a conference call to discuss these results on November 8,
2013, at 10:00 AM Eastern Time. Interested parties can join the call by dialing
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 74539942. This
tape recording will be available on Friday, November 8, 2013 as of 1:00 PM
Eastern Time until 11:59 PM Eastern Time on Friday, November 15, 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 and timbers, and the continent's electrical utilities and
telecommunication companies with utility poles. Stella-Jones also provides
residential lumber to retailers and wholesalers for outdoor applications, as
well as industrial products for construction and marine 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 third quarter are available on Stella-Jones' website at
www.stella-jones.com


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


Contacts:
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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