Stella-Jones (TSE:SJ) executives described 2025 as a “pivotal year” on the company’s fourth-quarter and full-year earnings call, pointing to solid profitability, a broadened infrastructure offering, and strong cash generation that supported acquisitions and shareholder returns. Management said results landed within the company’s latest guidance despite softer demand across all three product categories during the year.
2025 results and fourth-quarter performance
Senior Vice President and CFO Silvana Travaglini said full-year sales rose by CAD 23 million to CAD 3.5 billion, driven largely by higher wood utility pole volumes, contributions from recent acquisitions, and favorable currency conversion, partly offset by weaker railway tie volumes. In the fourth quarter, organic sales declined 4% year over year, but total sales were “relatively stable” versus the prior-year quarter due to the acquisition contributions and currency impact.
For the full year, Stella-Jones reported an EBITDA margin of 18.1% excluding an insurance gain, which management said was consistent with the prior two years.
Utility products: contract volumes supported growth
CEO Eric Vachon said utility pole demand, which had softened starting in the third quarter of 2024, improved as certain customers accelerated purchasing in the third quarter of 2025, with momentum carrying into the fourth quarter. He credited volume growth to the company’s contract business and a multi-year strategy focused on customers seeking long-term supply security.
Management said contract business represents more than 75% of utility pole sales and helped mitigate pressure in the spot market, which Vachon described as more competitive. He noted that in 2025 the spot market was “maybe 7%–10% lower,” but emphasized contract pricing is not directly comparable given the additional services and logistics Stella-Jones provides under contract arrangements.
In the fourth quarter, utility products sales were CAD 447 million, up 16% from CAD 385 million a year earlier. Travaglini said acquisitions (Locweld and Brooks) accounted for 7% of the increase, and volume gains drove 9% organic growth, while pricing was “relatively stable” as softer spot pricing was largely offset by higher contract pricing.
Looking to 2026, Vachon reiterated mid-single-digit growth expectations for wood utility poles specifically, while adding that steel structures and crossarms were expected to have “a very good year” in 2026. He also said the company was seeing a broader set of utility customers becoming more active entering 2026.
Railway ties: volume headwinds and a more competitive market
Management characterized 2025 as a transition year for railway ties, citing a Class I railroad’s shift to in-house treatment, project deferrals, and heightened competition. Travaglini said fourth-quarter railway tie sales fell 16% (down CAD 31 million) to CAD 162 million, largely due to lower volumes. She added that shipment timing and competitive pressures affected volumes more than expected, contributing to full-year organic sales declining 10% versus the company’s previously disclosed mid-single-digit decrease.
In Q&A, Vachon said the decline was “all volume,” with a slight pricing gain, and he stressed the company’s discipline on returns. He acknowledged that Stella-Jones did not win some business because pricing “was not attractive” and said the company does not plan to sacrifice return on investment in the railway tie division. He also told analysts the company expects a “flat year” for railway ties in 2026, aligning with what he said the Railway Tie Association and Class I customers are communicating.
Vachon noted 2026 includes a cycle of Class I contract renewals, calling renewals a strategic opportunity to better align offerings with customer requirements. Later, he specified that four Class I agreements are up for renewal in 2026 and one in 2027, and suggested that any resulting pricing adjustments would most likely affect 2027.
On the commercial side, management said uncertainty around government funding had been resolved and that customer activity was improving. Vachon said federal-funded CRISI grants in the U.S. were “still in effect” for at least a couple more years, and he expects that to support commercial project activity.
Residential lumber: stable sales despite pricing pressure
Vachon said the residential lumber business was resilient in 2025 despite significant industry pricing pressure and muted demand. He said volumes were affected by market slowdown, but the business delivered the same sales performance as 2024 due to higher pricing, helping recover higher inventory costs from early 2025 purchases.
Travaglini said residential sales declined in the fourth quarter versus a particularly strong prior-year quarter that benefited from seasonably warm weather, and that the year-over-year decrease was primarily volume-driven with relatively stable pricing. For the full year, she said residential lumber sales were CAD 650 million, compared to CAD 614 million in 2024.
Looking ahead, Vachon said Stella-Jones expects to keep the residential business within a CAD 600 million to CAD 650 million revenue range, while acknowledging potential pricing compression. He also said the company’s main customer expects low-single-digit growth in the treated lumber categories Stella-Jones supplies, supported by investments in the department and merchandising changes.
Acquisitions, capacity expansion, and capital allocation
Vachon said Stella-Jones completed two strategic acquisitions in the utility space in 2025—Locweld and Brooks—expanding its addressable market and cross-selling opportunities. He highlighted that the Brooks acquisition marked the company’s entry into pole fixtures and accessories and said the CAD 140 million transaction was completed without increasing debt leverage. Management said integration was progressing in line with expectations.
On operations, Vachon said investments to double steel structure production capacity at the company’s Kandiyohi facility are underway, with completion expected by mid-2026 and a full production ramp in the second half of the year. He also announced plans to invest approximately $50 million to build a new greenfield steel lattice tower facility in the Southeast U.S., adding about 20,000 tons of capacity. Commissioning is expected by late 2027, with full three-shift capacity by the end of 2028.
In Q&A, Vachon said the Quebec steel facility’s capacity is sold out for 2026 and 2027, and that Stella-Jones is discussing projects with customers into 2030. He said the U.S. facility is intended to provide scalability and could allow the company to shift some production for U.S. customers into the U.S., potentially freeing capacity to support Canadian needs.
Management also noted a post-year-end sustainability-related investment: a one-third equity interest in Lizzie Bay Logging for approximately CAD 5 million, a partnership with local British Columbia First Nations intended to secure long-term supply of utility pole fiber, including western red cedar and Douglas fir for large transmission poles.
On cash generation and shareholder returns, Travaglini reported CAD 557 million in cash generated from operations in 2025 and free cash flow of “over CAD 400 million,” citing working capital discipline and inventory optimization. She said the company deployed cash to fund two acquisitions totaling CAD 260 million, invested in operations, and returned CAD 158 million to shareholders in 2025—bringing total returns over three years to CAD 506 million, exceeding the CAD 500 million commitment. She also said Stella-Jones reduced its share count by more than 4 million shares since 2023, contributing to 13% EPS growth over that period.
Stella-Jones increased its dividend payout by 11% in 2025 to CAD 1.24 per share and announced a 10% increase in the quarterly dividend to CAD 0.34 per share, marking its 22nd consecutive annual increase. Travaglini said the company initiated a new normal course issuer bid in the fourth quarter to repurchase up to 1.5 million shares and will continue to evaluate buybacks alongside M&A timing.
On capital spending, management reiterated regular capex of CAD 85 million to CAD 95 million. The company expects to spend the remaining portion of a previously disclosed CAD 15 million Locweld investment in 2026 (about CAD 7 million to CAD 8 million, to be completed by mid-year). For the new U.S. lattice tower project, management expects spending to be split roughly 50/50 between 2026 and 2027.
About Stella-Jones (TSE:SJ)
Stella-Jones Inc produces and sells lumber and wood products. The company operates in two segments: Pressure-treated wood, which includes utility poles, railway ties, residential lumber, and industrial products; and Logs & Lumber segment comprises of the sales of logs harvested in the course of the company’s procurement process that is determined to be unsuitable for use as utility poles, it also includes the sale of excess lumber to local home-building markets. The vast majority of its revenue comes from the Pressure-treated wood segment.
