Descartes Acquires Localz

Descartes Acquires Localz

GlobeNewswireApr 20, 2023 7:00 AM EDT

Descartes Acquires Localz

Adds Advanced Customer Engagement Capabilities to Descartes’ Final-Mile Delivery Solutions

ATLANTA and MELBOURNE, Australia, April 20, 2023 (GLOBE NEWSWIRE) -- Descartes Systems Group (TSX:DSG) (Nasdaq:DSGX), the global leader in uniting logistics-intensive businesses in commerce, announced that it has acquired the assets of Localz, a technology platform to help engage with customers on the day they’re having goods or services delivered.

The Localz platform combines real-time vehicle location tracking and communications to deliver safe, transparent, customer-centric SaaS solutions that transform the customer delivery experience. End customers can schedule services and deliveries through an online portal, and then follow the progress of their order in real-time with advanced notifications built in. Localz also helps retailers provide a premium, highly efficient “click-and-collect” solution that improves the in-store collection process.

"Descartes continues to invest in final-mile solutions to help our customers offer cost-efficient delivery services that transform the end customer experience,” said Ken Wood, EVP of Product Management at Descartes. “By combining with Localz, we’ve expanded our capabilities so our customers can further differentiate themselves in a highly-competitive final-mile delivery market where delivery excellence is a must-have.”

“A great delivery experience is essential and expected by customers,” said Edward J Ryan, Descartes’ CEO. “End customers demand visibility and choice. Localz has a highly complementary solution to Descartes that dramatically improves the scheduling and day-of-service customer experience. We’re thrilled to welcome the Localz employees, customers and partners into the Descartes family and we look forward bringing this new technology to our wider customer base.”

Localz is headquartered in Melbourne, Australia. Descartes acquired the assets of Localz for approximately $US 6.2 million, satisfied from cash on hand.

About Descartes Systems Group
Descartes is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, security, and sustainability of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, track and help improve the safety, performance and compliance of delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world's largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com , and connect with us on LinkedIn and Twitter .

Global Investor Contact
Laurie McCauley
+1-519-746-6114 x202358
investor@descartes.com

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Source

https://money.tmx.com/en/quote/DSG/news/8277761767243202/Descartes_Acquires_Localz

What Really Matters

What Really Matters

An excerpt from one of Howard Mark's (Oaktree Capital Management) memos. Howard Marks is always required reading for the small do-it-yourself invester and for everyone else as well...

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What really matters is the performance of your holdings over the next five or ten years (or more) and how the value at the end of the period compares to the amount you invested and to your needs.  Some people say the long run is a series of short runs, and if you get those right, you’ll enjoy success in the long run.  They might think the route to success consists of trading often in order to capitalize on relative value assessments, predictions regarding swings in popularity, and forecasts of macro events.  I obviously do not.

Most individual investors and anyone who understands the limitations regarding outperformance would probably be best off holding index funds over the long run.  Investment professionals and others who feel they need or want to engage in active management might benefit from the following suggestions.

I think most people would be more successful if they focused less on the short run or macro trends and instead worked hard to gain superior insight concerning the outlook for fundamentals over multi-year periods in the future.  They should:

• study companies and securities, assessing things such as their earnings potential;

• buy the ones that can be purchased at attractive prices relative to their potential;

• hold onto them as long as the company’s earnings outlook and the attractiveness of the price remain intact; and

• make changes only when those things can’t be reconfirmed, or when something better comes along.

At the London conference mentioned on page one – while I was discussing (and discouraging) paying attention to the short run – I said that at Oaktree we consider it our job to (a) buy debt that will be serviced as promised (or will return the same amount or more if not) and (b) invest in companies that will become more valuable over time.  I’ll stick with that.

The above description of the investor’s job is quite simple . . . some might say simplistic.  And it is.  Setting out the goals and the process in broad terms is easy.  The hard part is executing better than most people: That’s the only route to market-beating performance.  Since average decision-making is reflected in security prices and produces average performance, superior results have to be based on superior insight.  But I can’t tell you how to do these things better than the average investor.

There’s a lot more to the process, and I’m going to outline some of what I think are key elements to remember.  You’ll recognize recurring themes here, from other memos and from earlier pages in this one, but I make no apology for dwelling on things that are important:

• Forget the short run – only the long run matters.  Think of securities as interests in companies, not trading cards.

• Decide whether you believe in market efficiency.  If so, is your market sufficiently inefficient to permit outperformance, and are you up to the task of exploiting it?

• Decide whether your approach will lean more toward aggressiveness or defensiveness.  Will you try to find more and bigger winners or focus on avoiding losers, or both?  Will you try to make more on the way up or lose less on the down, or both?  (Hint: “both” is much harder to achieve than one or the other.)  In general, people’s investment styles should fit their personalities.

• Think about what your normal risk posture should be – your normal balance between aggressiveness and defensiveness – based on your or your clients’ financial position, needs, aspirations, and ability to live with fluctuations.  Consider whether you’ll vary your balance depending on what happens in the market.

• Adopt a healthy attitude toward return and risk.  Understand that “the more return potential, the better” can be a dangerous rule to follow given that increased return potential is usually accompanied by increased risk.  On the other hand, completely avoiding risk usually leads to avoiding return as well.

• Insist on an adequate margin of safety, or the ability to weather periods when things go less well than you expected.

• Stop trying to predict the macro; study the micro like mad in order to know your subject better than others.  Understand that you can expect to succeed only if you have a knowledge advantage, and be realistic about whether you have it or not.  Recognize that trying harder isn’t enough.  Accept my son Andrew’s view that merely possessing “readily available quantitative information regarding the present” won’t give you above average results, since everyone else has it.

• Recognize that psychology swings much more than fundamentals, and usually in the wrong direction or at the wrong time.  Understand the importance of resisting those swings.  Profit if you can by being counter-cyclical and contrarian.

• Study conditions in the investment environment – especially investor behavior – and consider where things stand in terms of the cycle.  Understand that where the market stands in its cycle will strongly influence whether the odds are in your favor or against you.

• Buy debt when you like the yield, not for trading purposes.  In other words, buy 9% bonds if you think the yield compensates you for the risk, and you’ll be happy with 9%.  Don’t buy 9% bonds expecting to make 11% thanks to price appreciation resulting from declining interest rates.

Of critical importance, equity investors should make their primary goals (a) participating in the secular growth of economies and companies and (b) benefiting from the wonder of compounding.  Think about the 10.5% yearly return of the S&P 500 Index (or its predecessors) since 1926 and the fact that this would have turned $1 into over $13,000 by now, even though the period witnessed 16 recessions, one Great Depression, several wars, one World War, a global pandemic, and many instances of geopolitical turmoil.  

Think of participating in the long-term performance of the average as the main event and the active efforts to improve on it as “embroidery around the edges.”  This might be the reverse of most active investors’ attitudes.  Improving results through over- and underweighting, short-term trading, market timing, and other active measures isn’t easy.  Believing you can do these things successfully requires the assumption that you’re smarter than a bunch of very smart people.  Think twice before proceeding, as the requirements for success are high (see below).

Don’t mess it up by over-trading.  Think of buying and selling as an expense item, not a profit center.  I love the idea of the automated factory of the future, with its one man and one dog; The dog’s job is to keep the man from touching the machinery, and the man’s job is to feed the dog.  Investors should find a way to keep their hands off their portfolios most of the time.

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Source

https://www.oaktreecapital.com/insights/memo/what-really-matters

Triton International to be Acquired by Brookfield Infrastructure in a $13.3 Billion Take-Private Transaction

Triton International to be Acquired by Brookfield Infrastructure in a $13.3 Billion Take-Private Transaction

GlobeNewswireApr 12, 2023 6:55 AM EDT

Triton International to be Acquired by Brookfield Infrastructure in a $13.3 Billion Take-Private Transaction

Triton common shareholders to receive consideration valued at $85 per share, including $68.50 in cash and $16.50 in class A shares of Brookfield Infrastructure Corporation

Represents a 35% premium to Triton’s closing share price on April 11, 2023 and a 34% premium to the 30-day volume-weighted average share price

BROOKFIELD, NEWS, April 12, 2023 (GLOBE NEWSWIRE) -- Triton International Limited (NYSE: TRTN)  (“Triton” or the "Company") and Brookfield Infrastructure Partners L.P. (“BIP”) (NYSE: BIP, TSX: BIP.UN), through its subsidiary Brookfield Infrastructure Corporation (“BIPC”) and its institutional partners (collectively, “Brookfield Infrastructure”), jointly announce a definitive agreement for Triton to be acquired in a cash and stock transaction valuing the Company’s common equity at approximately $4.7 billion and reflecting a total enterprise value of approximately $13.3 billion.

“We believe this transaction provides an excellent outcome for all of Triton’s stakeholders,” commented Brian M. Sondey, Chief Executive Officer of Triton. “The sale price provides significant value to our investors and represents a 35% premium to yesterday’s closing share price. For our long-term shareholders, this transaction crystalizes a total shareholder return of approximately 700% since the 2016 merger of Triton and TAL International. For our customers and employees, Brookfield Infrastructure’s significant resources and long-term investment horizon will support Triton’s franchise, underpin our commitment to providing unrivaled service, and support continued investment in our growing business.”

“Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation,” said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure. “This transaction provides Brookfield Infrastructure with a high going-in cash yield, strong downside protection, and a platform for growth in the transportation and logistics sector. The transaction consideration also provides the opportunity for Triton shareholders to benefit from owning a globally diversified portfolio of infrastructure assets within a platform that has a proven history of generating long-term value for its shareholders.”

Triton is the world’s largest owner and lessor of intermodal containers and is a critical provider of transportation logistics infrastructure supporting global supply chains. The Company has built an irreplaceable asset base, delivers high levels of utilization and maintains strong customer relationships. Triton is led by a proven management team and Brookfield Infrastructure looks forward to partnering with them to enhance the business under private ownership.

Brookfield Infrastructure intends to maintain Triton’s existing investment grade capital structure, uphold the highest operating and customer service standards for the benefit of Triton’s customers and stakeholders, and help grow the business, aided by Brookfield Infrastructure's substantial access to long-term private capital.

Transaction Consideration

The total consideration of $85.00 per Triton common share (“Triton Share”) will consist of $68.50 in cash and $16.50 in BIPC class A exchangeable shares (“BIPC Shares”) (NYSE: BIPC, TSX: BIPC).  At closing, BIP’s equity investment is expected to be approximately $1 billion, inclusive of the BIPC shares.

The stock portion of the consideration is subject to a collar, ensuring Triton shareholders receive the number of BIPC shares equal to $16.50 in value for every Triton Share if the ten-day VWAP of BIPC Shares (measured two days prior to closing) (the “BIPC Final Stock Price”) is between $42.36 and $49.23. Triton shareholders will receive 0.390 BIPC Shares for each Triton Share if the BIPC Final Stock Price is below $42.36, and 0.335 BIPC Shares for each Triton Share if the BIPC Final Stock Price is above $49.23. With the collar, between 18.4 and 21.3 million BIPC Shares will be issued to Triton shareholders.

Triton shareholders will be able to elect to receive the mixed cash/stock consideration described above, or all-cash or all-stock consideration, subject to proration to the extent cash or stock is oversubscribed. Regardless of the mix elected, the value per share will be equalized ahead of closing, such that the value of each election choice will be substantially the same.

Approvals and Timing

The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions, including approval by Triton’s shareholders and receipt of required regulatory approvals. The transaction has been unanimously approved and recommended by the Board of Directors of Triton. The transaction has also received all required approvals from Brookfield Infrastructure, is not subject to a financing condition, and is not subject to approval from BIPC shareholders.

Prior to closing, Triton intends to maintain its current quarterly dividend on the Triton common shares. Upon the closing of the transaction, Triton’s common shares will be delisted from the New York Stock Exchange. Triton’s Series A-E cumulative redeemable perpetual preference shares will remain outstanding.

Advisors

Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Triton and Sullivan & Cromwell LLP is serving as Triton’s legal advisor, with Appleby as Bermuda counsel.

Brookfield Infrastructure engaged BofA Securities and Mizuho Securities USA LLC as joint financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor.  Brookfield Infrastructure Corporation engaged Torys LLP to serve as legal counsel and was advised by MUFG.

About Triton International Limited

Triton International Limited is the world’s largest lessor of intermodal freight containers. With a container fleet of over 7 million twenty-foot equivalent units, Triton’s global operations include acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis.

About Brookfield Infrastructure

Brookfield Infrastructure is a leading global infrastructure company that owns and operates high-quality, long-life assets in the utilities, transport, midstream and data sectors across North and South America, Asia Pacific and Europe. Brookfield Infrastructure is focused on assets that generate stable cash flows and require minimal maintenance capital expenditures. Investors can access its portfolio either through Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN), a Bermuda-based limited partnership, or Brookfield Infrastructure Corporation (NYSE, TSX: BIPC), a Canadian corporation. Further information is available at https://bip.brookfield.com .

Brookfield Infrastructure is the flagship listed infrastructure company of Brookfield Corporation, a global alternative asset manager with approximately $800 billion of assets under management. For more information, go to https://brookfield.com .

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Source

https://money.tmx.com/en/quote/BIP.UN/news/4538842158817070/Triton_International_to_be_Acquired_by_Brookfield_Infrastructure_in_a_133_Billion_TakePrivate_Transaction

The Inefficient Canadian Market

The Inefficient Canadian Market

By OSAM Research Team
April 2016

Despite robust performance, the Canadian market gets little consideration as a dedicated piece of an overall asset allocation outside of the country. Canadian equities have a long history, dating back to 1861, and today it ranks as the world’s fourth largest stock market by market capitalization. Over the period from 1900 to 2014, adjusted for inflation, Canadian equities have returned 5.8 percent annualized, which compares favorably to the U.K’s return of 5.3 percent and slightly lags the U.S. return of 6.5 percent.^*

Over the most recent 20-year period, the Canadian stock market has been one of the best performers in terms of both absolute return and consistency (see Table 1 below). For example, Canada even outpaces the U.S.—widely considered to be the most dynamic equity market in the world—with a winning percentage of 62 percent (135 out of 217 rolling three-year periods). Canada ranks third with an average excess return of 2.1 percent over all rolling time frames, trailing only Australia and Sweden.

At O’Shaughnessy Asset Management (OSAM), we believe Canadian equities present investors with an overlooked opportunity for consistent long-term return. In this paper, we will examine the structure of the Canadian market and highlight why we consider it to be less efficient than the U.S. with the implication that inefficiency results in the potential to outperform. As well, based on our research spanning nearly three decades, we will highlight why the Canadian equity space provides equivalent or greater alpha potential—including greater safety and less cost—relative to other less efficient markets.

Market Inefficiency

The benchmark indices for the U.S. and Canada, the S&P 500, and the S&P/TSX cover the cap spectrum within their respective markets. However, the Canadian market is heavily skewed towards small and mid cap stocks. As of year end 2015, 33 percent of companies on the S&P/TSX are classified as mid cap while 54 percent are in the small cap space—compared to only 24 percent and one percent in the small and mid cap buckets within the U.S. market (see Figure 1).

This is important because small and mid cap stocks exhibit greater dispersion between the highest and lowest performers. To illustrate this point, we perform a simple test assuming we know in advance the return of each stock over the next 12 months and rank the return by quintile within each market cap bucket (see Figure 2). The universe of small cap stocks within Canada has the greatest return spread between the top and bottom quintile (135 percent). As we move up the capitalization range, the spread declines to 98 percent for mid cap and 84 percent for large cap stocks. The wider dispersion in returns for small and mid cap companies suggests there are greater inefficiencies as you move down the capitalization spectrum. Aligning portfolio characteristics with consistent winners while avoiding traits of consistent underperformers provides investors with the potential to outperform over the long run.

Stability & Cost Matter

While an inefficiently-priced market provides alpha opportunity for investors, it is not a cure all for achieving excess returns. Common concerns about investing outside of the U.S. are related to stability and cost. When comparing Canada against the U.S. and emerging markets, we observe a favorable climate for investing in equities according to rankings by three non-governmental organizations (see Table 2). Based on corruption, ease of doing business, and political stability, Canada ranks in the best 15 out of more than 150 countries. Of equal importance is the low ticket charge from custodians associated with trading a Canadian stock at $9 relative to the emerging space at $48. This cost differential makes smaller account sizes more viable in Canada, since fees can significantly erode return. Finally, Canada offers investors more favorable tax treatment than emerging markets. Depending on the country, emerging market countries levy as much as a two percent local or stamp duty tax on all transactions.

Factor Alpha Efficacy

A common way for quantitative researchers to evaluate the efficacy of a factor is to compare the return spread between the highest- and lowest-ranking decile. To understand where Canada falls on the efficiency spectrum we compare it to the U.S.—widely considered the most difficult market to outperform—and to a less efficient region such as emerging markets.

Over the period spanning from 1993 to 2015, the spread between the cheapest and most expensive decile by OSAM Value in Canada is 22 percent—beating the 19 percent spread for the U.S. The efficacy of Value in Canada also exceeds emerging markets by approximately 2.4 percent. For OSAM Momentum, we see even more impressive results in Canada. The spread between the highest- and lowest-scoring Momentum decile in Canada is approximately 22.3 percent—exceeding the spread offered in both the U.S. and emerging markets by more than 12 percent. The wide dispersion suggests there are significant benefits derived from aligning portfolio characteristics with the proven themes of valuation and momentum. In particular, within Canada these themes have exhibited outsized efficacy relative to the U.S. and even emerging markets.

CONCLUSION

Small and mid cap stocks account for approximately 87 percent of the investable opportunity set within Canada. As well, we have established greater dispersion of returns between the top and bottom performers as you move down the capitalization spectrum, indicating greater inefficiencies for active managers to exploit. We believe the business climate in Canada is among the best in the world—it achieves a high ranking based on corruption, ease of doing business, and stability, while also keeping costs low for cheap investor access. Finally, the themes of value and momentum investing show particular efficacy in Canada, exhibiting spreads in excess of the U.S. and emerging markets.

OSAM has managed Canadian equity strategies since 1997, utilizing the themes of value and momentum as the primary stock selection criteria. O’Shaughnessy All-Canadian equity has beaten the S&P/TSX in 100 percent of all rolling three-year periods since inception and has generated 5.5 percent annualized excess return^** during that period.

Footnotes:

^* Elroy Dimson, Paul Marsh, Mike Staunton; “Credit Suisse Global Investment Returns Yearbook 2015” (Feb. 2015) http://bit.ly/16TVzOJ

^** Gross of fees, CAD (as of 2/29/16). Inception date: February 1, 2007.

General Legal Disclosures & Hypothetical and/or Backtested Results Disclaimer

The material contained herein is intended as a general market commentary. Opinions expressed herein are solely those of O’Shaughnessy Asset Management, LLC and may differ from those of your broker or investment firm.

It should not be assumed that your account holdings correspond directly to any comparative indices. Individual accounts may experience greater dispersion than the composite level dispersion (which is an asset weighted standard deviation of the accounts in the composite for the full measurement period). This is due a variety of factors, including but not limited to, the fresh start investment approach that OSAM employs and the fact that each account has its own customized re-balance frequency. Over time, dispersion should stabilize and track more closely to the composite level dispersion. Gross of fee performance computations are reflected prior to OSAM’s investment advisory fee (as described in OSAM’s written disclosure statement), the application of which will have the effect of decreasing the composite performance results (for example: an advisory fee of 1% compounded over a 10-year period would reduce a 10% return to an 8.9% annual return). Portfolios are managed to a target weight of 3% cash. Account information has been compiled by OSAM derived from information provided by the portfolio account systems maintained by the account custodian(s), and has not been independently verified. In calculating historical asset class performance, OSAM has relied upon information provided by the account custodian or other sources which OSAM believes to be reliable. OSAM maintains information supporting the performance results in accordance with regulatory requirements. Please remember that different types of investments involve varying degrees of risk, that past performance is no guarantee of future results, and there can be no assurance that any specific investment or investment strategy (including the investments purchased and/or investment strategies devised and/or implemented by OSAM) will be either suitable or profitable for a prospective client’s portfolio. OSAM is a registered investment adviser with the SEC and a copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

Hypothetical performance results shown on the preceding pages are backtested and do not represent the performance of any account managed by OSAM, but were achieved by means of the retroactive application of each of the previously referenced models, certain aspects of which may have been designed with the benefit of hindsight.

The hypothetical backtested performance does not represent the results of actual trading using client assets nor decision-making during the period and does not and is not intended to indicate the past performance or future performance of any account or investment strategy managed by OSAM. If actual accounts had been managed throughout the period, ongoing research might have resulted in changes to the strategy which might have altered returns. The performance of any account or investment strategy managed by OSAM will differ from the hypothetical backtested performance results for each factor shown herein for a number of reasons, including without limitation the following:

• Although OSAM may consider from time to time one or more of the factors noted herein in managing any account, it may not consider all or any of such factors. OSAM may (and will) from time to time consider factors in addition to those noted herein in managing any account.
• OSAM may rebalance an account more frequently or less frequently than annually and at times other than presented herein.
• OSAM may from time to time manage an account by using non-quantitative, subjective investment management methodologies in conjunction with the application of factors.
• The hypothetical backtested performance results assume full investment, whereas an account managed by OSAM may have a positive cash position upon rebalance. Had the hypothetical backtested performance results included a positive cash position, the results would have been different and generally would have been lower.
• The hypothetical backtested performance results for each factor do not reflect any transaction costs of buying and selling securities, investment management fees (including without limitation management fees and performance fees), custody and other costs, or taxes – all of which would be incurred by an investor in any account managed by OSAM. If such costs and fees were reflected, the hypothetical backtested performance results would be lower.
• The hypothetical performance does not reflect the reinvestment of dividends and distributions therefrom, interest, capital gains and withholding taxes.
• Accounts managed by OSAM are subject to additions and redemptions of assets under management, which may positively or negatively affect performance depending generally upon the timing of such events in relation to the market’s direction.
• Simulated returns may be dependent on the market and economic conditions that existed during the period. Future market or economic conditions can adversely affect the returns.

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Source

https://www.osam.com/Commentary/the-inefficient-canadian-market

Tourmaline aims to double portion of gas shipped as LNG by 2026

Robert Tuttle, Bloomberg News

Extended interview with Tourmaline Oil CEO

Tourmaline Oil Corp., which began shipping liquefied natural gas off the U.S. Gulf Coast this year, could more than double the portion of its gas output that’s exported in liquefied form within three years. 

The volumes sent as LNG could rise to 10 per cent to 15 per cent in the next two or three years from 6 per cent currently, Michael Rose, chief executive officer, said in an interview. Earlier this year, the company started sending natural gas from British Columbia to Cheniere Energy Inc.’s LNG export terminal on the Gulf Coast, where the gas is sent to markets in Asia and Europe. 

Tourmaline may find opportunities either on the Gulf or via Canada’s West Coast, where a Shell Plc-led consortium is scheduled to start up LNG Canada by mid-decade, to be Canada’s first major LNG export terminal with shorter access to Asia than U.S. terminals on the Gulf. Another project off BC, called Woodfibre LNG, is also progressing with construction and Pembina Pipeline Corp.’s Cedar LNG recently received both BC and federal approvals. 

“We’re looking at opportunities going west, we’re looking at other opportunities going south, but they’ve got to be deals that commercially make sense to us,” Rose said. 

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Source

https://www.bnnbloomberg.ca/tourmaline-aims-to-double-portion-of-gas-shipped-as-lng-by-2026-1.1909287

Stella-Jones Reports 2022 Year-End Results Anchored in Strong Business Fundamentals

Stella-Jones Reports 2022 Year-End Results Anchored in Strong Business Fundamentals

GlobeNewswireMar 8, 2023 7:00 AM EST

Stella-Jones Reports 2022 Year-End Results Anchored in Strong Business Fundamentals

• Sales of $3,065 million, up 11%, driven by infrastructure-related product category sales
  
• EBITDA ⁽¹⁾ up 12% to $448 million, from $400 million in 2021
• Net income reached $241 million , or $3.93 per share
• Acquired wood utility pole manufacturing business of Texas Electric Cooperatives, Inc.
• Q uarterly cash dividend increased 15 % to $0.23 per share
  

MONTREAL, March 08, 2023 (GLOBE NEWSWIRE) -- Stella-Jones Inc. (TSX: SJ) (“Stella-Jones” or the “Company”) today announced financial results for its fourth quarter and year ended December 31, 2022.

“Stella-Jones concluded 2022 on a very strong note, and I am proud of the robust performance we delivered as a Company,” said Eric Vachon, President and CEO of Stella-Jones. “Our fourth quarter sales continued their upward trajectory, reflecting more than a 25% organic increase in utility poles sales, sustained growth in railway ties sales and better than anticipated residential lumber sales. Our exceptional results in 2022 can be credited to several contributors, from the efforts of our dedicated team to our expansive North American network. In a year of challenging market and macroeconomic conditions, our proven ability to procure the fibre required to meet customer demand and pass through cost increases were true keystones of our success, and a testament to the resilient character of our business model.”

“Our strong performance was further bolstered by the contributions of our most recent accretive acquisitions. The timely addition of Cahaba has allowed us to seize growth opportunities, while Texas Electric Cooperatives' pole treating facility represents a strategic addition to our network, and I am very pleased with its contribution thus far,” added Mr. Vachon. “2022 marks a 22 ^nd consecutive year of increased sales for Stella-Jones and the completion of the first year of our three-year plan, marked by exceptional utility poles sales growth, which we expect will continue in 2023. From where we stand, we are well on our way to meet or exceed our objectives, and remain favourably positioned for the future, with continued growth in sales, profitability and in turn, shareholder value,” he concluded.

Financial Highlights (in millions of Canadian dollars, except per share data and margins)	Q4-22	Q4-21	2022	2021
Sales	665	545	3,065	2,750
Gross profit (1)	112	65	524	456
Gross profit margin (1)	16.8%	11.9%	17.1%	16.6%
EBITDA (1)	87	52	448	400
EBITDA margin (1)	13.1%	9.5%	14.6%	14.5%
Operating income	61	32	359	326
Operating income margin (1)	9.2%	5.9%	11.7%	11.9%
Net income for the period	36	22	241	227
Earnings per share - basic and diluted	0.61	0.34	3.93	3.49
Weighted average shares outstanding (basic, in ‘000s)	59,449	64,292	61,421	65,002

_{⁽¹⁾ Refer to the section "Non-GAAP and other financial measures" in this press release.}

FOURTH QUARTER RESULTS

Sales for the fourth quarter of 2022 increased by 22% to $665 million, compared to sales of $545 million for the same period in 2021. Excluding the $34 million favourable impact of currency conversion and the contribution from the acquisitions of Cahaba Pressure Treated Forest Products, Inc. and Cahaba Timber, Inc. (together "Cahaba") and Texas Electric Cooperatives, Inc. (“TEC”) of $19 million, pressure-treated wood sales rose $60 million, or 12%. The growth was driven by the sales of the Company’s infrastructure-related businesses, namely utility poles, railway ties and industrial products, which grew by 17% compared to the same period last year. Higher pricing across all product categories, particularly utility poles and railway ties, and increased demand for utility poles were partially offset by lower railway ties and residential lumber volumes.

Pressure-treated wood products:

• Utility poles ( 49% of Q4-22 sales) : Utility poles sales amounted to $326 million, up from $227 million for the same period last year. Excluding the currency conversion effect and the contribution from the acquisitions, sales increased 27%, mainly driven by higher pricing and, to a lesser extent, increased volumes.
  
  
• Railway ties (24% of Q4-22 sales) : Sales of railway ties amounted to $161 million, versus $147 million in the corresponding period last year. Excluding the currency conversion effect, sales of railway ties increased by 2%, attributable to improved pricing for both Class 1 and non-Class 1 business, largely offset by lower volumes, particularly from Class 1 customers.
  
  
• Residential lumber ( 15% of Q4-22 sales) : Residential lumber sales totaled $100 million, down from $107 million in the fourth quarter of 2021. Excluding the currency conversion effect, sales decreased 8%, attributable to lower sales volumes as pricing was relatively unchanged compared to the fourth quarter of 2021.
  
  
• Industrial products ( 5% of Q4-22 sales) : Industrial product sales amounted to $32 million, up compared to the $25 million of sales generated a year ago, primarily due to higher project-related bridge and crossing sales.
  

Logs and lumber:

• Logs and lumber ( 7% of Q4-22 sales) : Logs and lumber sales totaled $46 million, up 13% compared to the same period last year, mainly attributable to higher log sales.
  

Gross profit ⁽¹⁾ was $112 million in the fourth quarter of 2022, versus $65 million, in the fourth quarter of 2021, representing a margin ⁽¹⁾ of 16.8% and 11.9% respectively. The increase was primarily attributable to pricing gains outpacing cost increases in the fourth quarter of 2022 for certain infrastructure-related product categories, as well as the improvement in the gross profit of residential lumber compared to the marginal gross profit generated in the fourth quarter of last year. The gross profit of residential lumber in the fourth quarter of 2021 was impacted by the drop in demand in the second half of the year and the resulting higher cost of inventory on hand. Acquisitions and the effect of the positive currency conversion further contributed to the higher gross profit in the fourth quarter of 2022, compared to the same period last year.

Operating income totaled $61 million in the fourth quarter of 2022 versus operating income of $32 million in the corresponding period of 2021 while EBITDA ⁽¹⁾ increased to $87 million, compared to $52 million reported in the fourth quarter of 2021.

Net income for the fourth quarter of 2022 was $36 million, or $0.61 per share, compared to net income of $22 million, or $0.34 per share, in the corresponding period of 2021.

_{⁽¹⁾ Refer to the section "Non-GAAP and other financial measures" in this press release.}

2022 RESULTS

Sales in 2022 were up 11% to $3,065 million, compared to $2,750 million in 2021. Excluding the impact of the Cahaba and TEC acquisitions of $66 million and the currency conversion of $73 million, pressure-treated wood sales rose $206 million or 8%. Infrastructure-related sales grew by 14%, while residential lumber sales were lower compared to the record high sales in 2021. Pricing gains across all infrastructure-related product categories and increased maintenance and project-related demand for utility poles were partially offset by lower sales volumes for railway ties and residential lumber. The decrease in logs and lumber sales was largely driven by lower lumber sales activity compared to the prior year.

Pressure-treated wood products:

• Utility poles ( 40% of 2022 sales) : Utility poles sales increased to $1,227 million in 2022, compared to sales of $925 million in 2021. Excluding the contribution from the acquisitions of Cahaba and TEC in 2022, and the currency conversion effect, utility poles sales increased by $197 million, or 21%, driven by upward sales price adjustments in response to higher costs and increased maintenance and project-related demand, particularly for Southern Yellow Pine poles in the U.S. south east.
  
  
• Railway ties ( 24% of 2022 sales) : Railway ties sales were $750 million in 2022, compared to sales of $700 million in 2021. Excluding the currency conversion effect, railway ties sales increased $27 million, or 4%, due to favourable sales price adjustments, largely to cover higher fibre and preservative costs, offset in part by reduced maintenance demand of certain Class 1 customers.
  
  
• Residential lumber ( 24% of 2022 sales) : Sales in the residential lumber category decreased to $744 million in 2022, compared to sales of $773 million in 2021. Excluding the currency conversion effect, residential lumber sales decreased $36 million, or 5%, driven by the slower start to the 2022 season and lower pricing compared to the market-driven record prices in the first half of 2021. While sales in 2022 were lower compared to 2021, they were up over 55% compared to sales of $471 million generated in the pre-pandemic period of 2019.
  
  
• Industrial products (5% of 2022 sales) : Industrial product sales increased to $143 million in 2022 compared to sales of $121 million in 2021. Excluding the currency conversion effect, industrial product sales rose by $18 million, or 15%, largely stemming from increased sales for pilings, timbers and bridges.
  

Logs and lumber:

• Logs and lumber ( 7% of 2022 sales) : Sales in the logs and lumber product category were $201 million in 2022, down from $231 million in 2021. The decrease in sales was largely due to lower lumber trading activity compared to last year.

Gross profit ⁽¹⁾ was $524 million in 2022 compared to $456 million in 2021, representing a margin ⁽¹⁾ of 17.1% and 16.6%, respectively. The increase in gross profit, in absolute dollars and as a percentage of sales, was largely attributable to favourable price adjustments realized for infrastructure-related product categories, which outpaced higher costs. The increase in absolute dollars was partially offset by lower demand for railway ties, residential lumber and logs and lumber. The full year contribution of the Cahaba acquisition and the positive impact of the currency conversion also benefited gross profit for the year ended December 31, 2022.

Operating income totaled $359 million in 2022 versus operating income of $326 million in 2021 while EBITDA ⁽¹⁾ increased 12% to $448 million in 2022, compared to $400 million in 2021. Despite the higher EBITDA, the EBITDA margin ⁽¹⁾ in 2022 remained relatively unchanged at 14.6% versus 14.5% in 2021 as it was impacted by other losses recognized in the year. Excluding other losses of eight million dollars, primarily related to the retirement of idled equipment, the Company's EBITDA margin was closer to its target of 15% in 2022.

_{⁽¹⁾ Refer to the section "Non-GAAP and other financial measures" in this press release.}

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2022, Stella-Jones generated cash from operations of $255 million. It used its operating cashflows and available credit to invest in capital expenditures, acquire two businesses, Dinsmore Trucking group and TEC, and return $230 million of capital to shareholders through share buybacks and the payment of dividends. In 2022, the dividend paid amounted to $0.80 per share, representing an 11% increase compared to 2021. As at December 31, 2022, the net debt-to-EBITDA ratio ⁽¹⁾ was 2.5x and the Company had available liquidity of $259 million (US$191 million).

Subsequent to year-end, the Company amended and restated the U.S. Farm Credit Agreement to increase the amount available under the credit facilities to US$550 million and to extend the term of U.S. Farm Revolving Credit Facility to March 3, 2028.

NORMAL COURSE ISSUER BID

On November 8, 2022, the TSX accepted Stella-Jones’ Notice of Intention to Make a Normal Course Issuer Bid ("NCIB") to purchase for cancellation up to 5,000,000 common shares during the 12-month period commencing November 14, 2022 and ending November 13, 2023, representing approximately 9.6% of the public float of its common shares.

In the three-month period ended December 31, 2022, the Company repurchased 828,257 common shares for cancellation in consideration of $36 million, under its NCIB then in effect. In 2022, the Company repurchased 4,696,312 common shares for cancellation in consideration of $181 million, under its NCIBs then in effect.

QUARTERLY DIVIDEND INCREASED 15% TO $0.23 PER SHARE

On March 7, 2023, the Board of Directors declared a quarterly dividend of $0.23 per common share payable on April 21, 2023 to shareholders of record at the close of business on April 3, 2023. This dividend is designated to be an eligible dividend.

_{⁽¹⁾ Refer to the section "Non-GAAP and other financial measures" in this press release.}

2022-2024 FINANCIAL OBJECTIVES: PROGRESS IN 2022

In 2022, the Company made important strides in the achievement of the Company’s 2022-2024 financial objectives, as summarized in the table below. Its strong 2022 performance places the Company on a solid footing for 2023 and positions it favourably to meet or exceed the financial objectives set for 2022 to 2024. The Company will provide more insights on the above at its upcoming Investor Day on May 25, 2023 in Toronto, Ontario.

(in millions of dollars, except percentages)	2022-2024 Financial Objectives published March 9, 2022 (2)	2022	Result
Sales	$2,700-$3,000	$3,065	Target met
Infrastructure-Related Businesses	75-80% of sales	69%	In Progress
Residential Lumber	20-25% of sales	24%	Target met
EBITDA margin (1)	> 15%	14.6%	In Progress
Utility Poles Growth Capex	$90-$100	$33	In Progress
Return to Shareholders	$500-$600	$230	In Progress
Net Debt-to-EBITDA (1)	2.0x-2.5x	2.5x	Target met

_{⁽¹⁾ Refer to the section "Non-GAAP and other financial measures" in this press release.
⁽²⁾ Refer to the 2021 Annual MD&A for further details and assumptions used in preparing the 2022-2024 financial objectives.}

CONFERENCE CALL

Stella-Jones will hold a conference call to discuss these results on March 8, 2023, at 10:00 a.m. Eastern Time. Interested parties can join the call by dialing 1-416-764-8646 (Toronto or overseas) or 1-888-396-8049 (elsewhere in North America). A live audio webcast of the conference call will be available on the company’s website, on the Investor relations section’s home page or here: https://www.gowebcasting.com/12423 . The replay of the webcast will remain available at the same link until 11:59 p.m., March 15, 2023. Parties unable to call in at this time may access a recording by calling 1-877-674-7070 and entering the passcode 447456. This recording will be available on Wednesday, March 8, 2023 as of 1:00 p.m. until 11:59 p.m. on Wednesday, March 15, 2023.

ABOUT STELLA-JONES

Stella-Jones Inc. (TSX: SJ) 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 railroad 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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Source

https://money.tmx.com/en/quote/SJ/news/8191020076255918/StellaJones_Reports_2022_YearEnd_Results_Anchored_in_Strong_Business_Fundamentals