Mr. Eric Vachon reports

STELLA-JONES ANNOUNCES FIRST QUARTER RESULTS

Stella-Jones Inc. has released its financial results for its first quarter ended March 31, 2024.

"I am pleased with our performance in the first quarter, which marks a strong start to the year and builds upon the momentum we generated in 2023," said Eric Vachon, President and Chief Executive Officer of Stella-Jones. "Our Q1 performance reflects the ongoing robust fundamental market trends in our infrastructure product categories and an improvement over our solid fourth quarter results. Although we noted a softer pace of purchases by utilities in recent quarters, we are confident that incremental multi-year volume commitments secured from new and existing customers will be realized, highlighting the enduring growth potential of our business."

"The sustained strength of our results is a testament to our focus on growing our infrastructure business and leveraging our unique competitive advantages. We are drawing on the strength of our customer relationships and expansive network to capitalize on growth opportunities and deliver on our strategic objectives," concluded Mr. Vachon.

FIRST QUARTER RESULTS

Sales in the first quarter of 2024 were up 9 per cent to $775 million, compared to $710 million last year. Excluding the contribution from the acquisition of Baldwin Pole and Piling Company, Inc., Baldwin Pole Mississippi, LLC and Baldwin Pole & Piling, Iowa Corporation (collectively, "Baldwin"), sales were up $51 million, or 7 per cent. The increase was driven by a 10 per cent organic sales growth of the Company's infrastructure businesses, namely utility poles, railway ties and industrial products, partially offset by lower residential lumber and logs and lumber sales when compared to the same period last year. All infrastructure product categories benefited from higher year-over-year sales prices, while residential lumber sales were unfavourably impacted by the decrease in the market price of lumber when compared to the same period last year.

Pressure-treated wood products:

Utilit y poles (52 per cent of Q1-24 sales): Utility poles sales increased to $402 million in the first quarter of 2024, compared to sales of $362 million in the corresponding period last year. Excluding the contribution from the acquisition of the Baldwin assets, utility poles sales increased by $26 million, or 7 per cent, driven by higher pricing. While sales volumes were higher compared to the previous quarter, volumes were below levels realized in the first quarter of last year. Incremental multi-year commitments were secured from new and existing customers but the growth in volumes continued to be impacted and deferred by the slower pace of utility poles purchases by certain contract customers.

Railway ties (29 per cent of Q1-24 sales): Railway ties sales increased by $32 million, or 16 per cent, to $227 million in the first quarter of 2024, compared to sales of $195 million in the same period last year. The increase was largely attributable to higher volumes for non-Class 1 business due to the replenished level of ties inventory, as well as sales price increases to cover higher costs, when compared to the same period last year.

Residential lumber (11 per cent of Q1-24 sales): Sales in residential lumber decreased by three million dollars, or 3 per cent, to $87 million in the first quarter of 2024, compared to sales of $90 million in the corresponding period last year. This decrease was mainly driven by lower pricing attributable to the decrease in the market price of lumber.

Industrial produc ts (5 per cent of Q1-24 sales): Industrial product sales were $36 million in the first quarter of 2024, unchanged compared to the corresponding period last year.

Logs and lumber:

Logs and lumber ( 3 per cent of Q1-24 sales): Logs and lumber sales totaled $23 million, down 15 per cent compared to the same period last year. The decrease in sales compared to the first quarter last year was largely attributable to less lumber trading activity. Logs sales remained stable as higher log sales activity was offset by the lower market price of logs.

Gross profit was $172 million in the first quarter of 2024 compared to $136 million in the corresponding period last year, representing a margin of 22.2 per cent and 19.2 per cent, respectively. The increase in gross profit in absolute dollars and as a percentage of sales was largely due to the margin expansion of the Company's infrastructure product categories, particularly attributable to the favourable pricing realized for utility poles and railway ties.

Similarly, operating income totaled $124 million in the first quarter of 2024 versus operating income of $95 million in the corresponding period of 2023, while EBITDA increased to $156 million, or a margin of 20.1 per cent, compared to $120 million, or a margin of 16.9 per cent reported in the first quarter of 2023.

Net income for the first quarter of 2024 was $77 million, or $1.36 per share, compared to net income of $60 million, or $1.03 per share, in the corresponding period of 2023.

LIQUIDITY AND CAPITAL RESOURCES

During the quarter ended March 31, 2024, Stella-Jones used its liquidity to support the seasonal increase in working capital requirements, maintain its assets, expand production capacity, as well as repurchase $15 million of shares. During the quarter, the Company also declared a dividend totaling $16 million.

During the first quarter of 2024, the Company amended and restated the syndicated credit agreement in order to increase the amount available under the unsecured revolving credit facility to US$600 million and extend the term of the US$475 million tranche to February 27, 2028, and the US$125 million tranche to February 27, 2026.

As at March 31, 2024, the net debt-to-EBITDA(1) ratio was above the target range, at 2.7x, largely explained by the seasonal increase in working capital requirements in the first quarter of each year.

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

QUARTERLY DIVIDEND

On May 7, 2024, the Board of Directors declared a quarterly dividend of $0.28 per common share payable on June 21, 2024 to shareholders of record at the close of business on June 3, 2024. This dividend is designated to be an eligible dividend.

ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

Stella-Jones will hold its Annual and Special Meeting of Shareholders on May 8, 2024, at 10:00 a.m. Eastern Daylight Time ("EDT"). Interested parties may attend in-person at: 1250 Rene-Levesque Blvd. West, suite 3610 Montreal, Quebec or virtually by webcast at: https://web.lumiagm.com/499511552 entering the password: stella2024 (case-sensitive).

CONFERENCE CALL

Stella-Jones will hold a conference call to discuss these results on May 8, 2024, at 1:30 p.m. EDT. Interested parties can join the call by dialing 1-866-518-4114. 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://web.lumiagm.com/411019516 . This recording will be available on Wednesday, May 8, 2024, as of 4:30 p.m. until 11:59 p.m. on Wednesday, May 15, 2024.

ABOUT STELLA-JONES

Stella-Jones Inc. (TSX: SJ) is a leading North American manufacturer of pressure-treated wood products, focused on supporting infrastructure that is 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 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' infrastructure product categories also include industrial products, namely 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 Canadian customers through its national manufacturing and distribution network.

We seek Safe Harbor.