Stella-Jones Inc. ($SJ)

Good morning. My name is David Galison, Vice President of Investor Relations for Stella-Jones. I'm happy to welcome you to our 2026 Annual Meeting of Shareholders. Before we begin, please note that the comments made in today's presentation may contain forward-looking information. And this information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today. Additionally, during this presentation, the company may refer to non-GAAP measures, which have no standardized meaning under GAAP and are not likely comparable to similar measures presented by other issuers. For further information on these risks and uncertainties, please consult the relevant filings on SEDAR+. With this, I would like to invite Katherine Lehman, Chair of the Board of Directors of Stella-Jones, to begin the meeting.

Have a good day. David... Thank you, and good morning to everyone. On behalf of the members of our Board and our more than 3,200 employees across Canada and the United States, I would like to welcome you to our Annual Meeting of Shareholders, and thank you for being with us today, whether you're joining us virtually or in person. I'll begin by introducing the members of the Stella-Jones senior management team who are sharing the stage with me today. You will have the opportunity to hear from them during the meeting, and there will be a question-and-answer period following their prepared remarks. First, I'd like to introduce Eric Vachon, President and Chief Executive Officer of Stella-Jones. Mr. Vachon also serves as Executive Director of the Board. Joining Eric are Silvana Travaglini, Senior Vice President and Chief Financial Officer; and James Kenner, Senior Vice President, Chief Legal Officer and Corporate Secretary. I also wish to welcome the nonexecutive members of the Board of Directors who will be presented for election today. I would like to invite them to please stand when I call their name. Michelle Banik, Robert Coallier, Sean Donnelly, Anne E. Giardini, Karen Laflamme, Renee Laflamme, Douglas Muzyka and Simon Pelletier. I would also like to recognize, of course, Stella-Jones' leadership team and its outstanding employees, a number of whom who are also here today in the audience. Before proceeding with the formal portion of today's meeting, please allow me to share a few words about our performance and our Board's continued focus on governance over the past year. 2025 was a pivotal year for Stella-Jones, one defined by strong execution, thoughtful actions and meaningful growth progress. As the company concluded its 3-year strategic guidance period and stepped into an exciting next phase of growth, the Board continued to work in lockstep with management to build on Stella-Jones' robust foundations by providing ongoing guidance and oversight. Our collective commitment to excellence and our shared vision enabled Stella-Jones to execute its strategy with discipline, agility and ambition. In 2025, the company celebrated its 25th consecutive year of sales growth and its 21st consecutive year of dividend growth. These are a testament to the enduring strength of this business to the quality and dedication of the team that runs it and to the clarity and consistency of our strategic direction. Our disciplined approach to capital allocation, encompassing strategic investments, consistent returns to shareholders and a strong balance sheet has fortified our financial position and empowered us to pursue growth with well-founded confidence. Our expanded utility product offering exemplifies Stella-Jones' ability to execute in new areas, realize value and expand our addressable market. Additionally, our strategic focus on operational efficiency ensures that we remain at the forefront of our industry and continue to fulfill our customers' needs. Throughout the past year, the Board of Directors remain dedicated to enhancing its corporate governance framework. This commitment to continuous improvement has demonstrated -- was demonstrated through the successful implementation of several key initiatives. First, I want to acknowledge a meaningful milestone in our sustainability journey. In 2025, we released our inaugural climate report while advancing towards our 2030 target of reducing Scope 1 and 2 greenhouse gas emissions by 32%. The Board takes this responsibility for sustainability oversight seriously, and we are proud of the progress our teams have made in this area as well as in our community engagement efforts. Good governance ensures that our company is positioned to capture today's opportunity while meeting the broader responsibilities of tomorrow, standards our team continues to uphold. Governance does not happen in isolation. It is through -- it is strengthened through consistent, open and proactive dialogue with our shareholders. Over the past year, management and the Board continued to invest in building and deepening relationships with the investor community. These efforts included both structured outreach and ongoing dialogue with existing and prospective shareholders. They reflect our firm belief that maintaining strong, transparent and ongoing communication with our investor base is fundamental to our shared success. This brings me to our November 2025 Investor Day, where the company unveiled its infrastructure-focused growth initiative strategy and its financial objectives for 2026 through 2028. For the first time, earnings per share was added as a core performance metric in our guidance. This change underscores the Board's confidence in the company's strategic path and the management team's ability to execute. By formalizing this metric, we are ensuring that every strategic move is directly aligned with creating long-term shareholder value. On the compensation front, we focused on ensuring that the interest of our leadership team remain closely aligned with those of our shareholders. Share ownership guidelines introduced in 2025 reinforce a culture of accountability and long-term thinking at the senior management level. These guidelines, along with our broader compensation framework, reflect the Board's commitment to responsible and performance-oriented governance. These initiatives taken together are a reflection of what has always set Stella-Jones apart, a dedication to continuous improvement, a forward-looking mindset and a shared commitment to building long-term value for shareholders. The Board remains fully engaged, fully committed and deeply proud of what this company and its people have achieved. Turning back to the Board itself. In 2025, we are pleased to welcome 2 new members to our Board, Renee Laflamme and Sean Donnelly. Renee brings deep expertise in digital transformation and artificial intelligence, capabilities of growing importance as our business embraces technology and innovation to drive enhanced performance and efficiency. Sean contributes experience in steel manufacturing, utilities and environmental health and safety, areas which are vital as we scale our operations. Their combined perspectives have already enriched our governance and sharpened our strategic oversight. I'm pleased to have them both on this Board, and I look forward to their continued contributions in the years ahead. These appointments complement the Board's ongoing site visits and targeted training to ensure our Board remains agile and well equipped to navigate the complexities ahead. As we look at the nominees before you today, I'm proud of the strength and diversity of this Board. Excluding our President and CEO, our nominees represent an independent group, reflecting a wide range of complementary skills, backgrounds and meaningful gender diversity. This is a Board built to guide the company's growth with both confidence and clarity. On behalf of our Board, I would like to extend my heartfelt congratulations to the entire Stella-Jones team for their remarkable accomplishments in 2025. And of course, to you, our shareholders, thank you for your enduring trust. Thank you for your continued engagement and your ongoing support of Stella-Jones.[indiscernible] I will now move to the formal portion of today's agenda. Pursuant to the general bylaws of the corporation, I will be acting as Chair of today's meeting, and Mr. James Kenner will act as Secretary of the meeting. Mr. Steve Gilbert and Mr. Vlad Talvesa of Computershare Investor Services, Inc., the transfer agent and registrar of the company, will be acting as scrutineers. While management holds proxies representing over 91% of votes in favor of all matters, which would normally allow us to conduct the votes by a show of hands, the virtual participation requires us to conduct the votes by ballot. We will announce the preliminary results of voting on each resolution prior to the close of the meeting, with final results for each of these matters to be filed on SEDAR+ as soon as they are available. Please pay attention to the following voting instructions as they'll be used for every item requiring a vote at today's meeting. For those attending the meeting virtually who are registered shareholders or duly appointed proxy holders and who have not already voted by proxy, voting will be conducted via the online platform following the steps displayed on your screen. You can now vote on each resolution until the closing of the vote after the last resolution. You will be notified when the voting period is over. For those attending the meeting in person, who are registered shareholders or duly appointed proxy holders and who have not already voted by proxy, if you registered with Computershare upon your arrival, you will have been provided with a voting tablet. If you're not registered with the scrutineers and/or you have not received a tablet, please go to the scrutineers' table for assistance. If you've already voted by proxy prior to this meeting in any manner, there's no need to enter a vote. You should only enter a vote by poll or voting tablet today if you wish to change your vote, given that if you choose to vote again, only your vote cast during the meeting will be counted, and the vote that you previously submitted by proxy will be revoked. Once discussion on all items of business has concluded, I'll take a brief pause to allow you to record your vote on the online platform or on the voting tablet as applicable in case you have not already done so. And then I'll declare the voting closed on all resolutions. I'd like to remind you that registered shareholders and duly appointed proxy holders are the only persons entitled to vote or ask questions during the meeting. Shareholders and duly appointed proxy holders attending the meeting in person may address the meeting when there is a request to discuss a motion before the meeting. For those joining virtually, you'll be able to do so by selecting the messaging tab on the online platform. To avoid delays, please provide your suggestions to us as soon as you've logged in, and we'll address each of them at the appropriate time during the meeting. I'll pause for 5 seconds after asking if there are any questions on a particular motion to take into account any delays we may experience. Ms. Stephanie Corrente, Director of Corporate Communications for Stella-Jones, will monitor all questions submitted through the platform virtually, and Mr. James Kenner will read them out loud for the benefit of both the in-person and the virtual audience. Each question will then be answered by the appropriate individual. A general question-and-answer period with respect to questions submitted that do not relate to an item on the agenda will take place after we have addressed all matters to be submitted to a vote today. The Secretary has informed me that the notice of this meeting, the management information circular and the forms of proxy have been sent by Computershare Investor Services, Inc. to all the shareholders of record as of March 12, 2026. Copies of such documents are also available at the scrutineers' table as well as electronically on Stella-Jones' profile on SEDAR+ on Stella-Jones website and through notice and access at www.envisionreports.com/SJI 2026. I've been informed that we have a quorum at the meeting today, and I invite Mr. Steve Gilbert to please read his report regarding the attendance.

Good morning, Madam Chair. We, the undersigned scrutineers from Computershare Investor Services Inc., hereby report that there are at least 6 shareholders and/or proxy holders present at this meeting, representing in person or by proxy, 46,157,068 shares being 84.5% of the total 54,583,771 outstanding shares of Stella-Jones Inc., and we will hand a report signed by myself, Steve Gilbert and Vlad Talvesa, scrutineers. Thank you.

Thank you very much. Since we have a quorum, I hereby confirm that this meeting has been duly constituted and that we may proceed with the holding of the present meeting. The scrutineers' report will be given to the Secretary of the meeting and attached to the minutes of this meeting. Please also note that you can obtain the minutes of the last annual meeting upon request to the Secretary of the corporation. We will now open the polls for the resolutions pertaining to the appointment of auditors, the election of directors and the advisory vote on the corporation's approach to executive compensation. I refer you to the consolidated financial statements of the corporation and the independent auditor's report for the year ended December 31, 2025. These were included in the corporation's annual report mailed to each shareholder who requested it, and they're also available on Stella-Jones' SEDAR+ profile, its website and through the dedicated notice and access site. We understand that you've reviewed these documents, and we will therefore not ask the Secretary of the meeting to read them. Are there any questions from our in-person shareholders on the financial statements and independent auditor's report? Mr. Secretary, have any questions been submitted online regarding the financial statements and independent auditor's report?

Madam Chair, no questions were asked electronically.

Thank you. There being no further questions, I hereby declare that the corporation's annual consolidated financial statements for the financial year ended December 31, 2025, as well as the independent auditor's report thereto annexed have been received by the shareholders of the corporation. Next item of business is the election of the directors. The number of directors to be elected at this meeting have been fixed at 10. Additional information regarding each nominee has been set forth in the management information circular for this meeting and we will be nominating and approving individual directors. May I have a motion to nominate the Board of Directors of Stella-Jones?

[Foreign Language] Sean Donnelly, Anne Giardini, Karen Laflamme, Renee Laflamme, Katherine A. Lehman, Douglas W. Muzyka ,[Foreign Language]

Madam Chair my name is David Galison, and I second the motion.

Thank you. Mr. Secretary, are there any questions? Are there any further nominations?

Madam Chair, no questions were submitted and no Board members were proposed for nomination electronically.

Thank you. I declare that the nomination period is closed, and we will now vote. If you are a registered shareholder or duly appointed proxy holder attending virtually, you may vote using the platform. If you're a registered shareholder or duly appointed proxy holder attending in person, please use your tablet to vote. We will announce the preliminary voting results of the selection later in the meeting. The next item of business is the appointment of auditors for the following financial year. On recommendation of the Audit Committee, the Board of Directors recommends that PricewaterhouseCoopers LLP be appointed as the auditors of the corporation. I will now entertain a motion regarding the appointment of the auditors.[Foreign Language] Mr. Secretary, are there any questions on this matter?

Madam Chair, no questions were submitted electronically.

Thank you. We will now vote. If you're a registered shareholder or duly appointed proxy holder attending virtually, you may vote using the platform. If you're a registered shareholder or duly appointed proxy holder attending in person, please use your tablet to vote. We'll now consider the next item on our agenda. I will now entertain a motion regarding the advisory vote on the corporation's approach to executive compensation. [Voting]

Madam Chair, my name is Mathieu , and I move that the resolution in favor of the corporation's approach to executive compensation as set out in the corporation's management proxy circular be accepted.

Madam Chair, my name is Eichenbaum, and I second the motion.

Thank you. Mr. Secretary, are there any questions on this motion?

Madam Chair, no questions were submitted.

Thank you very much. We will now vote. If you're a registered shareholder or duly appointed proxy holder attending virtually, you may vote using the platform. If you're a registered shareholder or duly appointed proxy holder attending in person, please use your tablet to vote. Since we've covered all of the topics on today's meeting agenda, we will now take a short break in order to allow registered shareholders and proxy holders to vote if they have not already done so. I remind you that if you've already voted by proxy, it's not necessary to vote again. As the voting platform is now closed and all electronic ballots have been submitted and tabulated, I will now call upon our scrutineer, Steve Gilbert, to please present the preliminary results of the vote.

[Foreign Language]

Thank you. I therefore declare that those nominated to be duly elected as directors of the corporation until the next annual election of directors or until their successors are elected or appointed. Detailed voting results will be published by press release subsequent to this meeting.

Madam Chair, we report that 99% of all common shares represented at this meeting were voted in favor of the appointment of PricewaterhouseCoopers LLP as the auditors of the corporation and in favor of the determination of their remuneration by the Board of Directors.

Thank you. Since the resolution has been duly passed, I hereby declare that PricewaterhouseCoopers LLP be appointed the auditors of the corporation to hold office until the close of its next Annual General Meeting of Shareholders and that their remuneration to that effect be determined by the Board of Directors.

[Foreign Language]

Thank you. Since the resolution has been passed by a majority of the votes cast by the holders of common shares entitled to vote on this resolution, I hereby declare that the motion in favor of the corporation's approach to executive compensation be carried. The final voting results for each of these matters will be filed on SEDAR+ as soon as they are available. We've now completed the business of the meeting, and I declare the formal portion of the Annual Meeting of Shareholders terminated. At this time, Mr. Eric Vachon will present an overview of the corporation's activities in 2025, and Ms. Silvana Travaglini will follow with a financial overview.

Thank you, Kate. Good morning, everyone, and welcome. [Foreign Language] In 2025, we delivered approximately $3.5 billion in sales, maintained an EBITDA margin close to 18% and generated more than $550 million in operating cash flow. Over the 2023 to 2025 period, we also returned $506 million to shareholders, exceeding the commitment we made at the start of that period. All these achievements reflect the talent, the discipline and dedication of our more than 3,200 employees across Canada and the United States. In 2025, we sharpened Stella-Jones' strategic vision to be the partner of choice for North America's utilities and railroad industries. That vision is grounded in a clear objective to deepen our role in essential infrastructure markets, broaden our capabilities and allocate capital in a disciplined way to support long-term value creation. Our acquisition of Rockwell and Brooks were important milestones in that strategy. Lockwell gave us an immediate platform in steel transmission structures, while Brooks strengthened our position in treated wood crossarms and transmission framing components. Together, these businesses expand our reach in transmission and distribution and moves us further along our path to becoming a more comprehensive infrastructure partner. At Rockwell, the expansion project is progressing well and is expected to double capacity in the coming months. And following year-end, we approved the development of a new steel lattice tower manufacturing facility in Fayetteville, Tennessee. These investments reflects our confidence in the long-term growth potential in transmission infrastructure for North America. Let me now turn to the performance of our core businesses. Utility products remain the primary growth driver for Stella-Jones in 2025 and continues to lead our momentum into 2026. After a period of softer demand for wood utility poles, customer purchasing activity accelerated in the second half of 2025, and that momentum carried into the first quarter of this year. We are benefiting from our contract-based business model, strong customer relationships and end markets supported by aging infrastructure, grid hardening, electrification and resilience investments. We believe Utility Products remains exceptionally well positioned for long-term growth. Railway ties operated in a more challenging environment, marked by an evolving industry landscape and a more competitive pressure scenario. But these headwinds have not changed the underlying strength of our railway tie business, including our operational footprint, long-standing customer relationships and strong reputation for quality and service. As part of our continuous improvement strategy, we are taking practical steps to make our railway tie business more efficient and better positioned for the future. By consolidating production into our most efficient facilities, we are aligning capacity more closely with demand and improving long-term returns -- the long-term return profile of the business. At the same time, we remain focused on growth. We see opportunities to strengthen our position with Class 1 customers, expand higher-value offerings and increase our participation in the commercial market. We will also continue to evaluate both organic and M&A opportunities that can enhance returns, strengthen our network and reinforce our role as a trusted partner to the North American rail industry. Overall, our priority is to build a stronger, more efficient and more resilient railway tie business for the long term. Residential lumber also demonstrated resilience through a softer market backdrop. Its value-added model, national distribution network and strong service level allowed it to remain a meaningful contributor to profitability. We continue to manage this business with discipline and remain confident in its contribution to Stella-Jones. We also made meaningful progress in strengthening the capabilities that support our business. In 2025, we successfully completed our enterprise-wide ERP deployment, an important milestone that improves visibility, efficiency and decision-making across our business. We also began laying the foundations for broader use of AI tools to support continuous improvement. At the same time, we reduced safety incidents for the third consecutive year and continue to strengthen partnerships that supports long-term fiber access for our utility pole business, including our early 2026 investment in Lizzy Bay Logging. [Foreign Language] At our Investor Day last November, we introduced rolling 3-year financial objectives that reflect both the quality of the platform we have built and the opportunities we see ahead. Based on our current base assets, we expect sales to grow at a compound annual rate of approximately 4% to 5% through 2028, reaching approximately $4 billion. We are targeting EBITDA margins in the range of 17.5% to 18.5% and an EPS annual growth of more than 10%. These objectives support -- are supported by the momentum in utility products, the actions underway in the railway tie business and the growth platform we are building in transmission infrastructure. We enter this next phase with confidence in our team, our strategy and our ability to continue creating long-term value. I would like to thank our employees for their dedication and hard work and our shareholders for their continued trust and support. With that, I am pleased to invite Silvana Travaglini, our Senior Vice President and Chief Financial Officer, to provide a more detailed financial overview.

Thank you, Eric, and good morning, everyone. [Foreign Language] Despite those headwinds, we delivered EBITDA of $623 million and an EBITDA margin of close to 18%, excluding the insurance settlement. This is consistent with the strong margin profile we have maintained over the last 2 years. We also generated $557 million in cash from operations and more than $400 million in free cash flow, reflecting the resilience of our business model and our disciplined management of working capital. That strong cash generation allowed us to take a balanced approach to capital allocation. In 2025, we deployed approximately $260 million to complete the acquisitions of Lockwell and Brooks while continuing to invest in the safety, reliability and long-term efficiency of our operations. At the same time, we completed our 3-year commitment to return over $500 million to shareholders. Since 2023, we have reduced our share count by more than 4 million shares and delivered a 13% EPS annual growth rate, outpacing the growth of both sales and EBITDA. We also continued our long track record of dividend growth with the Board recently approving a 10% increase in the quarterly dividend to $0.34 per share, marking our 22nd consecutive annual increase. We carried this positive momentum into the first quarter of 2026, with sales increasing by $18 million to $791 million. Utility products continued to lead growth, benefiting from higher volumes and the contribution from our recent acquisitions. In railway ties, organic sales remained relatively stable, while residential lumber sales reflected softer demand and lower pricing. Overall, our first quarter performance demonstrated the resilience of our business. As Eric mentioned, in railway ties, we have initiated targeted optimization actions to better align our footprint with the current market conditions. These initiatives are expected to generate approximately $10 million to $15 million in annualized cost savings starting in 2027. To implement these actions, we do expect to incur onetime restructuring charges, the majority of which are expected to be noncash. These actions will lower our cost base, improve our network efficiency and support a more disciplined return-focused operating model. Starting in the first quarter, we have introduced adjusted EBITDA and adjusted EPS as part of our financial disclosures. This will give investors a clearer view of our underlying performance and improve comparability with the prior year period, which was impacted by an insurance settlement. For the first quarter, adjusted EBITDA was $136 million, representing a margin of 17.2% compared with $141 million and a margin of 18.2% in Q1 of last year. The year-over-year decline was primarily due to a less favorable mix in utility products and a $5 million mark-to-market adjustment on our stock-based compensation expense resulting from the appreciation of the company's share price. Despite these factors, our margin profile was within our expected range for the first quarter. Cash from operations in the first quarter was $47 million, a significant improvement over the $16 million used in the same period last year. We ended the quarter with $646 million in available liquidity and a net debt to adjusted EBITDA ratio of 2.6x, which remains consistent with our capital allocation strategy, which provides flexibility to fund seasonal working capital needs and strategic investments. Overall, our financial position remains strong. We are combining resilient earnings, robust cash generation and disciplined capital allocation with the flexibility to support our strategic priorities and pursue attractive growth opportunities from a position of strength. With that, I will turn it back to Eric.

Thank you, Silvana. Overall, we are encouraged by our performance and by the progress we are making across our strategic priorities. Utility products continue to build momentum. And in railway ties, we are taking focused actions as part of our continuous improvement strategy to optimize our network, strengthen the business and improve long-term returns. With a strong balance sheet, a clear growth strategy and disciplined execution across the organization, we believe Stella-Jones is well positioned to continue creating long-term value for our shareholders. And thank you again for your trust and your support. I will now hand the meeting back over to Kate.

Thank you very much, Silvana and Eric. I'll now invite shareholders or duly appointed proxy holders in the audience wishing to ask a question to please step up to the microphone, state your name and whether you're a shareholder or proxy holder. I'll also invite those asking questions virtually through the portal to select the question or messaging tab that now appears on your screen. Type your question in the text box provided and click the send button. Confirmation will appear on your screen that your message has been received. For those asking questions through the portal, Mr. James Kenner will be reading them out loud as well as the name of the individual who has asked the question if it's aided. Questions that have already been asked or answered will not be addressed. We will now begin receiving questions.

My name is William. I'm a shareholder. So I have 2 questions. The first question is and maybe they're naive, but I don't know the answers. There's a huge discussion in Canada about building rapid rails. Does Stella-Jones have any expertise or area that they can contribute to that?

Thank you for the question. Eric, I'll...

Thank you, Mr. Wish for the question. So typically, I assume you're referring to high-speed rail. Yes. And typically, high-speed rail are built on concrete infrastructures because of the fastening systems and the speed of the train themselves, wood railway ties are not suited for those applications. So unfortunately, anything would be high-speed rail would not be in the expertise unless we eventually expand into some concrete manufacturing or do an acquisition in the future, but there's nothing in the cards in the short term with regards to that.

Okay. And the second question concerns the United States. In infrastructure building, is there a limitation because Stella-Jones, as I understand it, is a Canadian company. Are you allowed to bid on infrastructure projects in the United States? It's a hard question politically. But as of this morning, maybe you could answer what the rules are.

Well, I can certainly sorry. please go ahead. I can certainly provide you with some insight. If you have read our MD&A, you should know or will know that 75% of our sales are in the United States, and we have a very large footprint in the U.S. So in the U.S., we actually operate under Stella-Jones Corporation. So we are in the U.S., a U.S. corporation, and we source raw materials in the U.S., do the transformation into the sales and have a distribution network. So very much so we do participate to all federal bids and all types of infrastructure bids that are available or suited for our products.

And I guess the question is with rapid rail or high-speed rail, would Stella-Jones, would it be a big, big push to develop expertise in that area? Or it's not something you're really looking at now?

So it's not something that we're looking to develop internally. We have done our research. There's one major North American supplier in concrete products that we know of. We actually, we do know them and have had soft discussions in the past, if you want, but they're owned actually by a very large European manufacturer. So we either need to develop it internally as you're alluding to and go compete head-to-head with them, but that's currently not part of our R&D activities, if you want. Speaker 1.

Are there any further questions, Mr. Secretary?

Madam Chair, there are no further questions.

As there are no more questions, this concludes our Annual Meeting of Shareholders, and we'd be pleased to meet with our in-person guests at this time, and we hope to see you all again at next year's meeting. Thank you for joining us today, and thank you for your support of Stella-Jones.