Stella-Jones Unveils 2026-2028 Financial Objectives and Outlines its Future Growth Plans
MWN-AI** Summary
Stella-Jones Inc. (TSX: SJ), a North American leader in manufacturing infrastructure products, recently announced its strategic financial objectives and growth plans for 2026-2028 during its Investor Day in Toronto. CEO Eric Vachon emphasized the company’s commitment to operational excellence, indicating that recent investments positioned the firm to respond to new opportunities and maintain a strong trajectory of growth.
Stella-Jones aims to reach annual sales of approximately $4 billion by 2028, up from an anticipated $3.5 billion for 2023-2025. To achieve this, the company targets an annual organic sales growth rate of 4-5% and is committed to maintaining an elevated EBITDA margin between 17.5% and 18.5%. A new earnings per share (EPS) growth target of over 10% per annum has also been established to align its financial performance with strategic priorities.
The capital allocation strategy will focus on four key areas: maintenance capital expenditures estimated at 2.5% of annual sales, investment in strategic growth opportunities, consistent dividend payouts of 20-30% of the previous year’s EPS, and an opportunistic share repurchase program aligned with growth and leverage targets. This strategy reflects a robust cash flow profile with projected EBITDA-to-free cash flow conversion rates of approximately 50%.
Vachon noted that the transition to an EPS-based target enhances comparability across different capital deployment strategies. Key growth assumptions include steady demand for wood utility poles and treated railway ties, bolstered by recent acquisitions expected to contribute an additional $225 million in sales by 2028. Stella-Jones' ambitious framework showcases its determination to become a premier supplier for utility and railroad companies, underpinning its operational and financial outlook for the coming years.
MWN-AI** Analysis
In light of Stella-Jones Inc.'s recently unveiled financial objectives for the 2026-2028 period, potential investors should consider several key insights when evaluating the company's growth trajectory and investment appeal.
Stella-Jones is targeting annual sales of approximately $4 billion by 2028, bolstered by an existing asset base and strategic acquisitions that are anticipated to contribute an additional $225 million in revenue. Over this period, a compound annual growth rate (CAGR) of 4-5% in organic sales is indicative of a steady, albeit cautious, expansion strategy. With a proven ability to deliver EBITDA margins between 17.5% and 18.5%, investors can expect operational efficiency to remain a cornerstone of the business model, affirming Stella-Jones' competitiveness within the infrastructure sector.
The decision to implement an opportunistic share repurchase strategy signals confidence in the company's financial health. This approach not only aligns with growth priorities but also enhances shareholder value, particularly in light of the new EPS growth target of over 10% CAGR, showcasing a commitment to returning value to investors. Investors should also note Stella-Jones' disciplined capital allocation strategy, which includes maintaining a consistent dividend representing 20% to 30% of the prior year's EPS, ensuring a balance between reinvestment and shareholder returns.
Potential risks to consider include dependency on market conditions affecting demand for treated wood products and the economic environment impacting raw material costs. However, with management’s assertive approach and a robust cash flow profile—targeting around $350 million in free cash flow—the company is well-positioned to navigate these challenges.
In summary, Stella-Jones appears poised for growth, with solid financial targets, a commitment to operational excellence, and strategic capital allocations. Investors looking for exposure to a stable infrastructure market may find Stella-Jones an attractive candidate, provided they remain cautious of external economic influences.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
- Broadens vision to be supplier of choice to utilities and railroads
- Targets annual sales of ~$4 billion by 2028, supported by current asset base
- Aims to maintain elevated EBITDA margin (1) of 17.5-18.5%
- Introduces EPS growth target of >10% to better align with Company’s strategic objectives
- Shifts to an opportunistic share repurchase strategy in line with growth priorities and leverage targets
MONTREAL, Nov. 20, 2025 (GLOBE NEWSWIRE) -- Stella-Jones Inc. (TSX : SJ) (“Stella-Jones” or the “Company”) a leading North American manufacturer of infrastructure products, will unveil today its financial objectives and capital allocation priorities for the 2026-2028 period, and present its future growth strategy at its 2025 Investor Day, to be held in Toronto, Ontario.
“Our disciplined execution and accretive investments have positioned Stella-Jones to deliver industry-leading results year after year,” said Eric Vachon, President and Chief Executive Officer of Stella-Jones. “Building on a strong foundation of consistent growth and operational excellence, we’ve strengthened our ability to act on new opportunities, invest with discipline, and create enduring value for our stakeholders. These priorities reflect our confidence in the path ahead and commitment to driving profitable, long-term growth.”
“Our recent acquisitions in new and adjacent product offerings have set the stage for the next phase of our growth. Supported by a strong balance sheet, seasoned leadership, and a disciplined focus on value creation, Stella-Jones is well-positioned to be the partner of choice to utility and railroad companies across North America,” he concluded.
2026-2028 Financial Objectives
Stella-Jones is introducing a three-year financial objective framework that will be rolled forward each year, starting with the publication of the Q4 2026 financial reports, in order to maintain a three-year horizon.
In this outlook period, the Company has introduced an EPS-based target, replacing the dollar-based return metric. EPS will provide a more comparable view of performance across different capital deployment strategies and is better aligned with the Company’s growth strategy.
The three-year financial objectives for the 2026-2028 period are as follows:
| (in millions of dollars, except percentages and ratios) | 2026-2028 Financial Objectives | 2023-2025 Results (2) |
| Annual Sales | ~$4,000 by 2028 | ~$3,500 |
| Annual Organic Sales Growth | 4-5% CAGR (3) | 4.5% CAGR (3) |
| EBITDA Margin (1) | 17.5-18.5% | 17.9% (4) |
| Earnings Per Share (“EPS”) | > 10% CAGR (3) | N/A |
| Return to Shareholders: cumulative | N/A | $454 |
Capital Allocation Strategy
Over the outlook period, the EBITDA-to-free cash flow conversion (1) is expected to remain consistent with the Company’s recent performance, representing a conversion rate of approximately 50%. Stella-Jones’ strong cash flow profile underpins its capital allocation strategy, which is centered on four key priorities:
- Maintenance Capital Expenditures : investment of ~2.5% of sales annually, which translates to $85 to $95 million of capital expenditures per year;
- Strategic Growth Opportunities: investment in strategic capital expenditures and pursuit of value-accretive acquisitions;
- Dividends: maintain a consistent dividend payout, targeting dividends equivalent to 20% to 30% of the prior year’s reported earnings per share; and
- Share Repurchases: opportunistic repurchases aligned with strategic priorities and leverage targets, providing flexibility to act on growth opportunities.
The Company remains committed to maintaining an investment-grade credit rating and a net debt-to-EBITDA ratio (1) within the range of 2.0x-2.5x, with flexibility to deviate temporarily for working capital requirements and strategic investments.
Key Assumptions
The 2026-2028 targets are based on the following assumptions:
- Wood utility poles achieving mid-single digit organic sales growth
- Railway ties achieving low-single digit organic sales growth
- Residential lumber achieving $600-$650 million of annual sales
- Recent acquisitions resulting in additional sales of ~ $225 million by 2028
- Excludes impact of any M&A activity completed after the publication of this press release
- US/CAD exchange rate remaining in line with current rates
Investor Day
Stella-Jones will elaborate on its 2026–2028 financial targets and outline its plans for future growth as a leading supplier to essential infrastructure providers across North America at the Company’s Investor Day, held in person in Toronto, Ontario for institutional investors and research analysts, and virtually for all other interested parties. The event will begin at 9 a.m. Eastern Standard Time. After the presentation, the leadership team will be available to answer questions. The live webcast can be accessed at the following link: https://meetings.lumiconnect.com/400-049-290-204 . 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 at the same link as the webcast, and on the Investor Relations section of the Company’s website following the event.
(1) These indicated terms have no standardized meaning under GAAP and are not likely to be comparable to similar measures presented by other issuers. For more information, please refer to the section entitled “Non-GAAP and Other Financial Measures” of this press release.
(2) Trailing twelve months ended September 30, 2025.
(3) Compound Annual Growth Rate.
(4) Excludes pre-tax gain on insurance settlement recorded in 2025 of $28 million. For more information, please refer to the section entitled “Non-GAAP and Other Financial Measures” of this press release.
About Stella-Jones
Stella-Jones Inc. (TSX: SJ) is a leading North American manufacturer of products focused on supporting infrastructure that are essential to the delivery of electrical distribution and transmission, and the operation and maintenance of railway transportation systems. It supplies the continent’s major electrical utilities companies with treated wood poles and crossarms, steel poles and lattice towers, as well as North America’s Class 1, short line and commercial railroad operators with treated wood railway ties and timbers. It also supports infrastructure with industrial products, namely timbers for railway bridges, crossings and construction, marine and foundation pilings, 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 Canadian customers through its national manufacturing and distribution network.
Caution Regarding Forward-Looking Information
This press release contains statements that are forward-looking in nature. The words “may”, “could”, “should”, “would”, “assumptions”, “plan”, “strategy”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “objective”, the use of the future and conditional tenses, and words and expressions of similar nature are intended to identify forward-looking statements. Forward-looking statements include, without limitation, the Company’s three-year financial targets (including sales, annual sales growth, EBITDA margins, earnings per share and return to shareholders), the Company’s capital allocation strategy (including the EBITDA-to-free cash flow conversion, the maintenance capital expenditures, the strategic growth opportunities, the dividend payout and the share repurchases), the Company’s investment-grade credit rating and the net debt-to-EBITDA ratio, which are provided for the purpose of assisting the reader in understanding the Company’s financial position, operating results and cash flows and management’s current expectations and plans (and may not be appropriate for other purposes). Such statements are based upon a number of assumptions and involve known and unknown risks and uncertainties that may cause the actual results of the Company to be materially different from those expressed or implied by such forward-looking statements. Such items include, among others: general political, economic and business conditions, evolution in customer demand for the Company's products and services, product selling prices, availability and cost of raw materials, operational disruption, climate change, failure to recruit and retain qualified workforce, information security breaches or other cyber-security threats, changes in foreign currency rates, the ability of the Company to raise capital, regulatory and environmental compliance and factors and assumptions referenced herein and in the Company’s continuous disclosure filings. As a result, readers should not place undue reliance on forward-looking information. Unless required to do so under applicable securities legislation, the Company’s management does not assume any obligation to update or revise forward-looking statements to reflect new information, future events or other changes after the date hereof.
Non-GAAP and Other Financial Measures
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and net debt-to-EBITDA ratio are non-GAAP financial measures and non-GAAP ratios. Such measures are not prescribed by International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards) and may therefore not be comparable to similar measures presented by other issuers. Management considers these non-GAAP measures to be useful information to assist knowledgeable investors to understand the Company’s operating results, financial position and cash flows as they provide a supplemental measure of its performance. The Company believes EBITDA and EBITDA margin provide investors with useful information because they are common industry measures used by investors and analysts to measure a company’s ability to service debt and to meet other payment obligations, or as a common valuation measurement. These measures are also key metrics of the Company's operational and financial performance and are used to evaluate senior management’s performance. The Company believes net debt-to-EBITDA ratio is an indicator of the financial leverage of the Company.
Please refer to the section “Non-GAAP and other financial measures” of the Company’s latest Management’s Discussion and Analysis, available at www.sedarplus.ca and on the Company’s website at www.stella-jones.com , for an explanation of the non-GAAP financial measures, non-GAAP ratios and other financial measures used and presented by the Company in this press release and a reconciliation of non-GAAP financial measures and non-GAAP ratios to the most directly comparable GAAP measures.
Free Cash Flow (FCF) and EBITDA-to-FCF Conversion?
Free cash flow is defined as cash flows from operating activities less lease payment in financing activities, maintenance capital expenditures, net of property insurance proceeds, and additions of intangible assets. EBITDA-to-FCF conversion is defined as free cash flow for the period divided by the EBITDA for the period. The Company uses these measures as an indicator of the efficiency and liquidity of the Company’s business by measuring its cash available to settle outstanding debt and obligations, invest in growth opportunities and potentially return capital to shareholders by paying dividends or buying back common shares. A reconciliation of the most directly comparable financial measure has been provided below:
| Reconciliation of Cash Flows from Operating Activities to Free Cash Flow (in millions of dollars) | Trailing twelve months ended September 30, 2025 | |
| Cash flows from operating activities? | 513 | |
| Less:? | ||
| Lease payment in financing activities? | 65 | |
| Maintenance capital expenditures? | 114 | |
| Property insurance proceeds? | (26 | ) |
| Additions of intangible assets? | 10 | |
| Free Cash Flow? | 350 | |
Maintenance and Growth Capital Expenditures?
?The sum of maintenance capital expenditures and growth capital expenditures represents total purchases of property, plant and equipment. The Company uses maintenance capital expenditures and growth capital expenditures to calculate the investment needed to sustain the current level of economic activity and to calculate the investment needed to increase the current level of economic activity respectively.
EBITDA and EBITDA margin for the trailing twelve months as at September 30, 2025
EBITDA and EBITDA margin for the trailing twelve months as at September 30, 2025 exclude the gain on insurance settlement. These are non-GAAP financial measures and non-GAAP ratios. Such measures are not prescribed by the IFRS Accounting Standards and may therefore not be comparable to similar measures presented by other issuers. Management uses these non-GAAP measures in order to facilitate operating and financial performance comparisons from period to period. A reconciliation of the most directly comparable financial measure has been provided below:
| Reconciliation of Operating Income to EBITDA Excluding the Gain on Insurance Settlement (in millions of dollars) | Trailing twelve months ended September 30, 2025 | |
| Operating income | 514 | |
| Depreciation and amortization | 140 | |
| EBITDA | 654 | |
| Gain on insurance settlement | 28 | |
| EBITDA excluding the gain on insurance settlement | 626 | |
Contact
| Investor Relations David Galison Vice President, Investor Relations Tel.: (647) 618-2709 dgalison@stella-jones.com | Media Stephanie Corrente Director, Corporate Communications Tel.: (514) 934-8666 communications@stella-jones.com |
| Stella-Jones – Head Office 3100 de la Côte-Vertu Blvd., # 300 Saint-Laurent, Québec?H4R 2J8 Tel.: (514) 934-8666 |
FAQ**
How does Stella-Jones Inc. SJ:CC plan to leverage its current asset base to achieve its target of ~$4 billion in annual sales by 2028, and what specific strategies will be employed to secure its position as the supplier of choice for utilities and railroads?
With an EBITDA margin target of 17.5-18.5%, what operational efficiencies does Stella-Jones Inc. SJ:CC anticipate implementing during the 2026-20period to maintain or improve this margin, considering industry challenges?
As part of its capital allocation strategy, how does Stella-Jones Inc. SJ:CC plan to balance maintenance capital expenditures and strategic growth opportunities while ensuring a consistent dividend payout of 20%-30% of the prior year's EPS?
Can Stella-Jones Inc. SJ:CC elaborate on the expected impact of recent acquisitions and the anticipated organic sales growth rates in the wood utility poles and railway ties segments on its overall financial performance through 2028?
**MWN-AI FAQ is based on asking OpenAI questions about Stella-Jones Inc. (TSXC: SJ:CC).
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