Canada's Stella-Jones Q3 revenue misses estimates on asset impairment

Stella-Jones

Wed 11:14

Overview
Canada infrastructure wood products maker's Q3 revenue rose yr/yr but missed analyst expectations
Operating income fell, impacted by asset impairment and restructuring costs tied to network optimization
Company launched cost-saving program and announced share buyback of up to 1.5 mln shares

Outlook
Company targets up to C$100 mln in cost savings over next three years
Company expects 2026 adjusted EBITDA margin below 17.5%-18.5% target range
Stella-Jones aims to return to 17.5%-18.5% adjusted EBITDA margin over next three years

Result Drivers
WOOD UTILITY POLES & ACQUISITION - Co said higher volumes of wood utility poles and sales from Brooks acquisition drove revenue growth
PRODUCT MIX & COSTS - Co said less favourable product mix, higher fuel and lumber costs weighed on margins
RESTRUCTURING COSTS - Asset impairment and restructuring costs related to network optimization reduced operating income

Company press release: ID:nGNXt6wqd

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Sales
Miss
C$979 mln
C$1.007 bln (8 Analysts)
Q3 Adjusted EPS
 
C$1.39
 
Q3 EPS
 
C$0.93
 
Q3 Net Income
 
C$51 mln
 
Q3 Gross Margin
 
17.20%
 
Q3 Gross Profit
 
C$168 mln
 
Q3 Operating Income
 
C$82 mln
 

Analyst Coverage
The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 5 "strong buy" or "buy", 3 "hold" and 1 "sell" or "strong sell"
The average consensus recommendation for the forest & wood products peer group is "buy."
Wall Street's median 12-month price target for Stella-Jones Inc. is C$83.00, about 24% above its November 3 closing price of C$66.96
The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 13 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)