Stella-jones Inc. · TSX:SJ
Stella-jones — Shareholder Meeting (May 2021)
41 slides from Stella-jones's shareholder meeting presentation, May 3, 2021
Slide 1: Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS May 3, 2021
Slide 2: Agenda
AGENDA 1 Opening of the Meeting Chair, Secretary and Scrutineers Notice of Meeting Scrutineer’s Report Minutes of Previous Meeting Annual Report & Independent Auditor’s Report Election of the Directors Appointment of Auditors Advisory Vote on the Corporation’s Approach to Executive Compensation Term
Slide 3: Management
MANAGEMENT Eric Vachon, CPA, CA Silvana Travaglini, CPA, CA Marla Eichenbaum President and Senior Vice-President and Vice-President, General Chief Executive Officer Chief Financial Officer Counsel and Secretary 3
Slide 4: Caution Regarding Forward-Looking Information
Caution Regarding Forward-Looking Information This presentation contains statements that are forward-looking in nature. Such statements 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 suc
Slide 5: Katherine A. Lehman, Chair of the Board
Katherine A. Lehman Chair of the Board 5
Slide 6: Agenda
AGENDA Opening of the Meeting 2 Chair, Secretary and Scrutineers 3 Notice of Meeting 4 Scrutineer’s Report 5 Minutes of Previous Meeting 6 Annual Report & Independent Auditor’s Report 7 Election of the Directors Appointment of Auditors Advisory Vote on the Corporation’s Approach to Executive Compens
Slide 7: Election of Directors
ELECTION OF DIRECTORS Robert Coallier Anne E. Giardini Rhodri J. Harries Karen Laflamme Katherine A. Lehman Corporate Director Corporate Director Executive Vice-President, Corporate Director Chair of the Board, Chief Financial and Stella-Jones Inc. Adminstration Officer, Managing Partner, Gildan Act
Slide 8: Agenda
AGENDA Opening of the Meeting Chair, Secretary and Scrutineers Notice of Meeting Scrutineer’s Report Minutes of Previous Meeting Annual Report & Independent Auditor’s Report Election of the Directors 8 Appointment of Auditors 9 Advisory Vote on the Corporation’s Approach to Executive Compensation 10
Slide 9: Éric Vachon, President and Chief Executive Officer
Éric Vachon President and Chief Executive Officer 9
Slide 10: 2020 – Growth in Sales and Profitability
2020 – GROWTH IN SALES AND PROFITABILITY Sales EBITDA(1) Net income $2.6B $385M $210M $2.2B $313M $163M 17% 15% $3.12 14% $2.37 2019 2020 2019 2020 2019 2020 20th consecutive year of Driven by volume and pricing Driven by strong sales sales growth gains across the three core growth product categorie
Slide 11: Proven Resiliency
PROVEN RESILIENCY Strength of Our Agility of Our Unparalleled Experienced Team North American Network Customer Service 11
Slide 12: Utility Poles
UTILITY POLES 2020 Sales Sales Variation $888M $797M +11% $888M 35% 2019 2020 Organic Growth $83M 10% Note: 2019 figure was adjusted to reclass some freight revenue from COGS to sales. 12
Slide 13: Railway Ties
RAILWAY TIES 2020 Sales Sales Variation $733M +6% $689M $733M 29% 2019 2020 Organic Growth $37M 5% Note: 2019 figure was adjusted to reclass some freight revenue from COGS to sales. 13
Slide 14: Residential Lumber
RESIDENTIAL LUMBER 2020 Sales Sales Variation $665M 41% $471M $665M 26% 2019 2020 Organic Growth $191M 41% 14
Slide 15: Industrial Products
INDUSTRIAL PRODUCTS 2020 Sales Sales Variation $120M $119M (1%) $119M 4% 2019 2020 Organic Growth ($2M) (2%) 15
Slide 16: Logs and Lumber
LOGS AND LUMBER 2020 Sales Sales Variation $146M $112M 30% $146M 6% 2019 2020 Organic Growth $34M 30% 16
Slide 17: Higher Market Lumber Prices Benefitting Results
HIGHER MARKET LUMBER PRICES BENEFITTING RESULTS US$ 929 1000 2019 2020 900 800 700 600 500 400 300 200 100 260 0 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Source: Factset (LB
Slide 18: The Strength of Our Continental Network
THE STRENGTH OF OUR CONTINENTAL NETWORK 18
Slide 19: Silvana Travaglini, Chief Financial Officer
Silvana Travaglini, CPA, CA Senior Vice-President and Chief Financial Officer 19
Slide 20: Track Record of Performance
TRACK RECORD OF PERFORMANCE Sales(1) EBITDA(2)(3) $2 551M $ 385M $ 640M $ 97M 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cash Flow(2)(4) & Net income Net Debt-to-EBITDA(2)(5) $ 402M $ 210M 3.0x 2.8x 2.6x $ 100M 2.4x 2.5x 2.3x $ 56M 1.9x 2.1x 1
Slide 21: 2020 – 20th Consecutive Year of Sales Growth
2020 – 20th CONSECUTIVE YEAR OF SALES GROWTH $2.6B SALES VARIANCE +17% $2.2B 2019 Sales (M) $2,189 Currency variations 19 Organic growth Pressure-treated wood 309 Logs and lumber 34 2020 Sales (M) $2,551 2019 2020 Utility Poles Railway Ties Residential Lumber Industrial Products Logs & Lumber Note:
Slide 22: 2020 – Higher Gross Profit and Margin
2020 – HIGHER GROSS PROFIT(1) AND MARGIN $446M $358M Driven by sales price increases for residential lumber in the 18% 2nd half of the year, stronger 16% residential lumber demand and favourable sales mix for utility poles and railway ties 2019 2020 (1)This is a non-IFRS financial measure. Please re
Slide 23: 2020 – Record EBITDA
2020 – RECORD EBITDA(1) EBITDA(1) Operating Income $385M $309M $313M Driven by pricing $242M 15% and volume gains across the 12% 14% Company’s three 11% core product categories 2019 2020 2019 2020 (1) This is a non-IFRS financial measure. Please refer to the Company’s MD&A. 23
Slide 24: 2020 – Higher Net Income & EPS
2020 – HIGHER NET INCOME & EPS Net income EPS $210M $3.12 32% 29% $2.37 $163M Driven by strong sales growth 2019 2020 2019 2020 24
Slide 25: 2020 - Strong Cash Flow Generation
2020 - STRONG CASH FLOW GENERATION Cash Flow before certain items(1)(2) Cash Flow from Operating Activities $402M $178M $305M Record cash from $90M operations despite inventory build-up for 2021 sales growth 2019 2020 2019 2020 (1) This is a non-IFRS financial measure. Please refer to the Company’s
Slide 26: Allocating Capital for Growth & Returns
ALLOCATING CAPITAL FOR GROWTH & RETURNS $192M $198M $177M $155M $143M $122M $97M $105M $87M $45M 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Acquisitions Capex Dividends Share buyback (NCIB) Growth Investments: $944M Cash returned to shareholders: $379M Acquisitions: $545M Dividends: $244M
Slide 27: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES 1 2 3 Capital Expenditures Dividend Acquisitions Share Repurchase Organic growth, Durable dividend payout Pursue accretive Return excess free cash innovation, productivity TARGET: 20-30% of transactions to flow to shareholders and asset maintenance prior year’s EPS enha
Slide 28: Increasing Dividends Consistently
INCREASING DIVIDENDS CONSISTENTLY 2020 marked the 16th consecutive year of dividend increase $0.60 $0.56 18.5% $0.48 CAGR $0.44 $0.40 $0.32 $0.28 $0.20 $0.16 $0.13 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 28
Slide 29: Maintaining a Solid Financial Position
MAINTAINING A SOLID FINANCIAL POSITION $745M $ 900 $ 800 $ 700 $ 600 3.0x 2.8x in millions $ 2.5x 2.6x $ 500 2.4x Net Debt- 2.3x $ 400 2.1x to-EBITDA (1) Target: 1.9x 1.9x 1.9x 2.0x – 2.5x $ 300 $ 200 $ 100 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net debt(1) Net Debt-to-EBITDA (1) (1) T
Slide 30: Q1-2021 Financial Results
Q1-2021 FINANCIAL RESULTS 30
Slide 31: Q1-21 – Sales Up 23%
Q1-21 – SALES UP 23% $623M +23% SALES VARIANCE $508M Q1-20 Sales (M) $508 Currency variations (23) Organic growth Pressure treated wood 102 Logs and lumber 36 Q1-21 Sales (M) $623 Q1-20 Q1-21 Utility Poles Railway Ties Residential Lumber Industrial Products Logs & Lumber Note: Comparative figures ha
Slide 32: Q1-21 – Increasing EBITDA and Operating Income
Q1-21 – INCREASING EBITDA(1) AND OPERATING INCOME EBITDA(1) Operating income $82M $99M Driven by high market price of $63M $45M 13% 16% lumber, strong demand for residential lumber 9% 12% and operational efficiency gains Q1-20 Q1-20 Q1-21 Q1-21 Q1-20 Q1-20 Q1-21 Q1-21 (1) This is a non-IFRS financia
Slide 33: Q1-21 – Increasing Net Income & EPS
Q1-21 – INCREASING NET INCOME & EPS Net income EPS $56M $0.85 +100% +107% $28M $0.41 Q1-20 Q1-20 Q1-21 Q1-21 Q1-20 T1-20 Q1-21 T1-21 33
Slide 34: Q1-21 – Lower CFO Due to Increased Inventory
Q1-21 – LOWER CFO DUE TO INCREASED INVENTORY Cash Flow before certain items(1)(2) Cash Flow Used in Operating Activities $141M $100M $93M $69M Increase in working capital in anticipation of sales growth Q1-20 Q1-21 Q1-20 Q1-21 Q1-20 Q1-21 Q1-20 Q1-21 (1) This is a non-IFRS financial measure. Please
Slide 35: Maintaining a Solid Financial Position
MAINTAINING A SOLID FINANCIAL POSITION $798M $900 $800 $700 $600 3.0x 2.8x 2.6x Net Debt- $500 2.4x 2.5x 2.3x 2.2x to-EBITDA (1) Target: $400 2.1x 2.0x – 2.5x 1.9x 1.9x $300 $200 $100 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-21 (1) (1) Net debt Net Debt-to-EBITDA (1) This is a non-IFRS fin
Slide 36: Increasing Dividends Consistently
INCREASING DIVIDENDS CONSISTENTLY 2021 will mark the 17th consecutive year of dividend increase $0.72* $ 0.60 18.2% CAGR $ 0.56 $ 0.48 $ 0.44 $ 0.40 $0.16 $ 0.32 $ 0.28 $ 0.20 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E * Projected based on the latest quarterly dividend 36
Slide 37: Éric Vachon, President and Chief Executive Officer
Éric Vachon President and Chief Executive Officer 37
Slide 38: 2021 Outlook & Priorities
2021 OUTLOOK & PRIORITIES 2021 UPDATED GUIDANCE 2021 PRIORITIES • EBITDA(1) guidance in the range of $450 to $480 million • Pursue acquisitions • Organic sales growth ranging between 15% to low 20% • Continue to focus on innovation, improve our operating efficiencies and expand our capacity • Utilit
Slide 39: Agenda
AGENDA Opening of the Meeting Chair, Secretary and Scrutineers Notice of Meeting Scrutineer’s Report Minutes of Previous Meeting Annual Report & Independent Auditor’s Report Election of the Directors Appointment of Auditors Advisory Vote on the Corporation’s Approach to Executive Compensation Termin
Slide 40: Stella-Jones
Stella-Jone S WWW.STELLA-JONES.COM
Slide 41: Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS May 3, 2021