Mr. Eric Vachon reports

STELLA-JONES UPDATES ITS FINANCIAL OBJECTIVES BUILDING ON SUSTAINED GROWTH

Stella-Jones Inc. has updated its three-year objectives, reflecting the years 2023 to 2025. The company will be featuring its new financial targets at its investor day, being held this morning in Toronto, Ont.

• Deliver sales of over $3.6-billion by 2025;
• Expand EBITDA (earnings before interest, taxes, depreciation and amortization) margin to 16 per cent through 2025;
• Return over $500-million of capital to shareholders in the 2023 to 2025 period;
• Maintain net debt-to-EBITDA ratio between 2.0 times to 2.5 times.

"Following a record year in 2022, coupled with our outstanding start to 2023, we are excited to share updated financial objectives that reflect Stella-Jones's performance and growth potential," said Eric Vachon, president and chief executive officer of Stella-Jones. "In light of our favourable position to meet or exceed our original financial targets, we are raising our 2025 sales target to almost 20 per cent above 2022 sales and the 2023 to 2025 EBITDA margin goal to 16 per cent, primarily driven by the accelerating demand for our higher margin utility poles business.

"Over its 30-year history, Stella-Jones has cultivated industry-shaping success through customer partnerships, premium product offerings and an unwavering focus on our network. This has culminated in a unique leadership position for our business -- one that allows us to leverage the significant capital generated by our strong performance to fuel investments and seize opportunities for growth, while creating continued value for our shareholders. Our inaugural investor day today sets the stage for us to share our new targets and build on what we believe is a defining time for us and for the essential infrastructure businesses we serve."

Updated financial objectives

The company's record financial performance over the last year has provided Stella-Jones with the ability to update its three-year financial targets, which now extend to 2025. Excluding future acquisitions, the company's financial objectives are as displayed in the attached table.

                    (in millions of dollars, except percentages and ratios) 

                            Initial 2022-2024 objectives        Updated 2023-2025 objectives 

Sales                                      $2,700-$3,000                             >$3,600              
EBITDA margin               greater than or equal to 15%                                 16%                
Return to shareholders                         $500-$600                               >$500               
Net debt-to-EBITDA                             2.0x-2.5x                           2.0x-2.5x             


  

Growing sales and EBITDA margin

After achieving the high end of its sales target in the first year of the company's 2022 to 2024 financial objectives, Stella-Jones expects sales to increase organically at a compound annual growth rate of approximately 6 per cent to over $3.6-billion by 2025. This growth is expected to be driven by a 9-per-cent compound annual sales increase of the company's infrastructure-related businesses. Led by an improvement in its product mix, Stella-Jones has also increased its target EBITDA margin to 16 per cent for the 2023 to 2025 period, up from its previous target of approximately 15 per cent.

Leveraging strong cash generating profile

Stella-Jones has an established record of generating consistent and strong cash flows which provides flexibility to deliver significant value to shareholders. The company is pursuing growth investments to enhance its utility poles capacity for the growing demand, while reaffirming its commitment to return capital to shareholders in excess of $500-million through dividends and share repurchases, in the 2023 to 2025 period. The company continues to maintain its net leverage target range of 2.0 times to 2.5 times. Given its strong cash flow generating profile, the company may temporarily exceed its target leverage ratio to finance strategic growth opportunities related to its infrastructure-related businesses.

Investor day

Stella-Jones will elaborate on its 2023 to 2025 financial objectives at the company's investor day for institutional investors and research analysts, which is taking place today in Toronto, Ont.

The event will begin at 8 a.m. Eastern Daylight Time (EDT). After the presentation, the leadership team will be available to answer questions. The live webcast can be accessed on-line. An investor presentation will also be made available on the investor relations, events and presentations page of the company's website.

A replay will be available on the investor relations section of the company's website following the event.

About Stella-Jones Inc.

Stella-Jones is North America's leading producer of pressure-treated wood products. It supplies the continent's major electrical utilities and telecommunication companies with wood utility poles and North America's Class 1, short line and commercial railway operators with railway ties and timbers. Stella-Jones also provides industrial products, which include wood for railway bridges and crossings, marine and foundation pilings, construction timbers, and coal tar-based products. Additionally, the company manufactures and distributes premium treated residential lumber and accessories to Canadian and American retailers for outdoor applications, with a significant portion of the business devoted to servicing the Canadian market through its national manufacturing and distribution network. The company's common shares are listed on the Toronto Stock Exchange.

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