Q2 2025 Stella-Jones Inc Earnings Call
Good morning, and thank you for standing by.
Welcome to Stella Jones second quarter of 2025 or earnings call at this time. All participants, and listen, only mode following the presentation, we will hold a question and answer session to queue up for questions by phone. Please press star 1 and a moderator will contact you. If anyone experiences difficulties during the conference call, please press star zero for operator assistance at any time.
I would like to remind everyone that this conference call is being recorded on Thursday, August 7th, 2025. I will now turn over to David galison. Vice president, investor relations of Stella Jones. Please go ahead.
Thank you, Anna. And good morning, everyone.
Earlier this morning, we issued our press release reporting our results for the second quarter of 2025.
along with our mdna, it can be found on the investor relations section of our website at www stella-jones.com
As well as Cedar Plus.
As a reminder all figures expressed on today's call are in Canadian dollars unless otherwise stated.
Please note that the comments made on today's call may contain forward-looking information and this information by its nature is subject to risk and uncertainties.
Actual results May differ materially from the views expressed today.
for more for further information on these risks and uncertainties, please consult the company's relevant, filings on Cedar Plus
These documents are also available in the investor relations section of St. John's website at www.stella.com,
Additionally, during this conference, call the company May refer to non-gaap measures, which have no standardized meaning under the Gap and are not likely to be comparable to similar, measures presented by other issuers.
for more information, please refer to the company's latest ndna available on Stella Jones website and on Cedar Plus
Lastly, we have prepared a corresponding presentation, which we encourage you to follow along with during this call.
I'll now hand the call over to Eric ishan, president and chief executive officer of Stella Jones for a strategic business update.
Followed by Sal salvina travalini senior vice president and Chief Financial Officer of Stella Jones who will provide a more detailed Financial overview for the quarter.
Eric over to you.
Thank you, David. Good morning, everyone and thank you for joining us today.
Our Q2 results, reflected the discipline execution of our strategy for Value creation.
Supported by the scale and reach of our extensive network.
The volumes were softer; we focused on sustaining a strong EBITDA margin and generating healthy cash flows.
while executing on on our strategy, to broaden our infrastructure offering
with the acquisition of lockwell which was completed in Q2, we now have a presence in the steel transmission structure market and a platform to further expand our reach and share of wallet as we leverage our robust, customer relationships.
The integration of Lockwell into our business.
And the operational investment to increase production capacity are well underway. And we are already seeing the benefits of this addition to our Network.
I will now turn to a performance overview of our main product categories before, moving to the outlook for the remainder of the year.
Starting with utility polls.
Since the end of Q2, we've seen a pickup in quoting activity, particularly in the southern yellow, pine region in the US. And we have started to benefit from new customer agreements secured last year.
economic environment, certain utilities have maintained a more cautious purchasing Pace with this trend being particularly pronounced in Canada,
All those sales volumes were lower when compared to the strong shipments, recorded in the same period last year volumes were above those seen since Q2 2024. And we expect continued Improvement in the second half of the year.
Based on the lower level of demand experienced since mid 2024. And the expectation,
Of a return to a mid single digit growth. Only towards the end of 2025, we have reduced our utility pole sales outlook for the back half of the year.
we now expect sales growth for utility poles for the remainder of the year to be in the low, single digit, range versus 2024,
Our extensive network and strong offering utility pole positions us well to benefit from the meaningful Investments required by our customers over the long term, to replace aging infrastructure and increase grid resiliency.
Timing of these investments will continue to be influenced by our customers capital expenditure programs and their Capital deployment strategies.
In July, there was a fire incident at our brierfield, Alabama, utility pole, treating facility.
We are pleased to report that Noel's employees were injured.
The fired impacted the site's oil treating facility but its CCA treating peeling drying and framing capabilities. Remain unaffected.
With an hours of the incident, the team developed plans to leverage our Network to reallocate the facilities orders.
As a result of this exceptional agility, we do not expect any significant impact on our capacity to fulfill customer orders.
The Swift turnaround.
Following the fire incident highlights, the Strategic value of our extensive network and the capabilities of our experienced management team.
I'm very proud and appreciative of all employees involved for their mobilization and dedicated efforts.
For Railway ties sales in the second quarter continued to be impacted by a Class 1 customer. Now, treating more of their Railway ties internally
This shift follows this customer's acquisition of the only Class 1 railroad that operated its own treating facility.
We expect this volume loss to provide a headwind for the remainder of the year.
While we anticipate recovering some of the volume shortfall with more commercial sales in the second half of the Year. Certain projects starts are taking longer than expected as a result. We are now forecasting. A low single digit year-over-year decline in Railway Thai sales.
Railway Thai customers. Continue to look to Stella Jones to deliver solutions to address the evolving needs and optimize their business model.
This allowed us to achieve a mid single-digit sales growth over the last 3 years.
Over the long term. We continue to leverage, our customer relationships to deliver low, single-digit sales growth for this business.
While residents while residential Lumbers performance, this quarter remain relatively stable. We are encouraged by the improved volume performance. We noted in June,
We anticipate demand for the remainder of the year to transf favorably and we remain optimistic about achieving sales within the 600 to 650 million dollar, target range for this product category.
As we enter the second half of 2025, we have adjusted our Revenue outlook for the year, but remain confident in the long term sales growth, trajectory of our infrastructure product categories.
For 2025. We now, expect to generate approximately 3.5 billion dollars of sales, including the contribution from lockwell versus our previous Outlook of approximately 3.6 billion. We are maintaining the same level of profitability with the ibido margins over. 17%
Our commitment to return more than 500 million dollars to shareholders. Cumulatively over our Outlook Horizon, while maintaining a leveraged within targeted levels remains unchanged
With that, I will. Now ask sauna to provide a more detailed overview of our second quarter Financial results.
Thank you, Eric and good morning everyone.
Failed for the second quarter, we're down 4% organically compared to a strong prior year quarter largely explained by lower Railway Thai volumes.
While utility pole sales were also down. The decrease was modest and we observed a positive sequential volume trend.
Total sales were down about 1% or $15 million compared to Q2 last year.
Despite lower sales, we continue to deliver a solid EBITDA margin of 18.3%.
For utility polls. We generated 476 million in sales in the second quarter.
compared to a strong shipment quarter last year sales were down 4%, organically,
While the pace of purchases of some utilities remained. Slow incremental volumes from new customers and improved quoting activity in the southern yellow. Pine region, provided a partial offset.
Volumes in the quarter were down 2% with a corresponding decline, in pricing largely attributable to an unfavorable sales mix.
Offsetting in large part the lower utility pole sales was the contribution of Lockwell, whose results are reported in the utility poles product category.
Block 12 sales were better than anticipated as they had backlog orders that existed prior to the acquisition that were completed during the quarter.
Sales of Railway ties were down 11% organically this quarter to 240 million as volumes continued to be impacted by a Class. 1 customer, treating more of their Railway ties at their company-owned facility.
While we expected to offset some of the sales shortfall with commercial sales delays in the timing of major projects and funding Grant reviews. Impacted these recoveries
In the second quarter, all of the sales decline for Railway ties was attributable to lower volumes.
Residential sales were 246 million in the second quarter of 2025 compared to 243 million in Q2 last year.
Sales benefited from the higher market price of lumber, but volumes continued to be solved, particularly in the earlier. Part of the quarter. At the weather improved. We saw an upward Trend in the man towards the end of the quarter.
Turning now to profitability.
Eed by 11 million to 189 million in Q2 of 2025.
The decrease was largely attributable to lower sales volume and the less favorable sales mix in our utility polls business. Compared to the same period last year.
Despite lower volumes. The company delivered, an epidemic margin of 18.3% for the quarter and 18.8% year to date, excluding the insurance settlement, gain recorded in the first quarter.
A strong epidemic performance, underscores the resilience of our business and ability to deliver results in a dynamic environment.
During the quarter, cash generated from operating activities was $224 million, compared to $177 million in Q2 last year.
This Improvement was largely attributable to a more significant decrease in inventory levels compared to the same period in 202024.
In addition to the typical seasonal, decrease in inventory expected in Q2, we reduced inventories as part of our efforts to optimize the higher levels at the start of the year.
We continue to expect to end the year with a lower inventory, level compared to the beginning of the year.
We remain committed to a balanced approach to Capital allocation.
Over the last 12 months, we generated cash from operations of approximately, 500 million dollars allowing us to invest over a hundred million dollars in our business acquire lock while and return 155 million to shareholders. The remaining Capital was used to bolster our liquidity
As at the end of June, we returned 470 million of capital to shareholders out of the 500 million. That was committed for the 2023 to 2025 period and yesterday our board of directors approved, a quarterly dividend of 31 cents per share.
We ended the quarter with almost 700 million in available liquidity. And a net debt to EA ratio of 2.4 times down from the 2.6 times at the end of the previous quarter.
With a continued focus on profitability and working Capital Management. The leverage ratio was reduced within the desired target range.
To value a creative, Acquisitions core to our growth strategy.
In summary with the breadth of our Network, the strength of our business, and our teams combined with our healthy financial position and strong cash. Generating ability fellow Jones is well positioned for continued growth and success in 2025 and Beyond.
I will now turn the call back to Eric for his closing remarks.
Thank you, sauna.
while our Lord sales guidance, reflects some near-term, softness largely associated with ongoing macroeconomic conditions, the mid to long-term market dynamics remain intact,
As such, we maintain our confidence in the growth Prospect of each of our infrastructure businesses.
We are encouraged by the progressive Improvement in utility pool volumes. And we are positioned to further capitalize on the growing North American infrastructure, demand.
For Railway ties. We're focused on exploring opportunities, that will mitigate some of the near-term, headwinds and Leverage The evolving Railway tile landscape.
Our customers view Stella Jones as a partner that is capable of delivering impactful business enhancing Solutions, anywhere fully committed to fulfilling that role
Enhancing our growth through Acquisitions remains a Cornerstone of our value creation strategy as we focus on, expanding our offering and strengthening our Market position.
We are dedicated to pursuing Acquisitions that are accretive and complimentary to our current infrastructure portfolio. Further strengthening our overall business resilience,
We expect to continue to maintain ibida. Margins above our 17% Target.
Reflecting the strength of our business.
Compared to our original guidance from 2023, where we projected a 9% ibid doer. For the 2023 to 2025 period. The epid Kerr is now expected to be closer to 11% despite softer sales over the past year.
We look forward to providing further Insight on our growth strategy at our next investor day, which is planned to be hosted in November.
Thank you for your continued support and Trust in Stella Jones's vision of connecting communities through stronger infrastructure.
This concludes today's prepared prepared remarks, I will now open the line to questions.
Thank you, ladies and gentlemen, we will now begin the question and answer session as a reminder. Should you have a question please press star. Followed by the 1 on your telephone keypad, you will hear a prompt that your hand has been raised. And should you wish to cancel your request? Please press star for beta 2.
If you're using a speaker-phone, please leave the handset. Before pressing any Keys 1 moment, please for your first question.
Thank you. And your first question comes from the line of family from CIBC Capital markets. Please go ahead. Hi. Good morning.
Eric uh if we start with the the pole side of the business, the 4% organic decline in in Q2 how much of that was was pricing uh versus weaker volumes.
Roughly half and half, you know, 2 2% on pricing and 2% on volume.
Okay, great. And then when, in terms of the outlook for, uh, the remainder of the Year pointing to low single digits, uh, organic growth in in polls, uh, what's the similarly, you know, what's the, the pricing and volume assumptions, underlying that and could you speak to what you're seeing in the spot market for, uh, for poll prices?
Right. So
I would say, you know,
Pretty much all volume for the back half of the year is progressively growing. Now, uh, you know, moving forward, as I said, very encouraged to see, you know, the, the, the, the,
Steady trend of of increasing volumes year over year. Um, so to answer your question, all all volume. I think we have much of the the pricing headwinds. Now what now behind us
Okay. And then in the spot market and on the past, you've pointed to some pockets of weakness is that still the case or have things stabilized.
Compared to last year, it's slight slightly down because still compared to, to to last year, you know, luckily for us, the larger percentage of our sales are through the long-term contracts, uh, you know, which is around 75%. So that, that has been mitigating that impact. But yes, we're seeing the spot Market being softer.
The um, the capacity expansion that you have uh uh planned over there.
Yeah, certainly we, um, obviously it's been 3 months. Now I would say the integration has gone extremely well, uh, that's about to say, know, pretty much behind us. Um, we've, uh, We've committed to the capital investment to expand the capacity so that I was, you know, uh, announced at 15 million. You can expect, you know, by the end of this year, we will have spent a first charge of let's say 9 to 10 million dollars of that capex. And, you know, delivery of equipment is expected between. Well, some equipment is actually going to be delivered in September and then the balance will be early next year. So that is progressing. Well. Um, happy to, to inform the listeners that, um, we secured a a 5 year commitment from a large North American utility to produce uh, uh structures which you know will.
Will take up or or utilize a large part of that or a good part of that capacity. So that's very encouraging. As we're making this investment, I'm confident now for the next 5 years, you know, we've uh we've got a solid uh, a solid uh, a solid book of order. And we're actually quoting a lot of long-term projects right now that span between the 2 to 5 year Horizon and there's actually some some discussions about quoting the the period from 2030 to 2035. So it it's an interesting uh environment to transmit.
Mission, uh, uh, world, as, you know, project projects get gets, get planned over, you know, a much longer Horizon the 7 to 10 year, uh, time frame. So, but things are looking very well. Thank you for the question.
Okay, great. I appreciate the color. That's that's all I had. I'll turn it over. Thanks.
Thanks, Amir.
Thank you. And your next question comes from the line of James mcgar from RBC Capital markets, please go ahead.
Hey, uh, good morning and thanks for having me on. Um, you know, just just on the changing guidance. Like can you just elaborate a little bit on? You know, some of the primary challenges that you're seeing at the the customer level, uh, you know I guess kind of what changed uh with those conversations between q1 and Q2. And I guess you know, just what underpins your confidence in achieving that uh you know that Google the utility pool the guidance in the uh the second half of the year.
Well, thank you, James. You know,
What what encourages me and what we're seeing is that there's a constant Trend in improving volumes. Uh, and you know, in recent discussions with shareholders, you know, I mentioned, what's important for me is to see that Trend in, you know, for me to will continue into into 2026, so obviously a bit bit more soft.
just I pointed out, um, we're seeing
Some softness in the Canadian market. So, Canadian to tell these have definitely taken uh, a more prudent approach to to to um, to to, to projects. Um,
You know, but that being said, you know, I, you know, we're we're still confident about that. Seeing that volume growth in the back half of the year, it's just a slower base. As I mentioned in in my notes,
I appreciate the call, thanks. And then, uh, you know, you alluded to contaminate in your prepared remarks, um, you know, I guess, you know, can you just remind us how you're viewing, uh, your balance sheet capacity right now? And, uh, you know, any color that you can provide on, uh, you know, your recent acquisition of a lock Weld and um you know, any potential opportunities uh that might have opened up in the uh, the US for you. And after that, I'll turn the line over. Thank you.
Thank you, James. I I still have to point it out. We have a lot of availability on a credit facility right now around 700 million dollars, uh, our leverage sitting at at 2.4 for this time of the year, both very well as you know, typically we we actually leverage down in the second half of the year. So I think from a financial perspective, we have a lot of dry powder to go out and and, and, you know, execute on on on acquisitions.
And to that extent, we are looking at a few projects. Uh you know, that are related to the wood treating industry and also related to, you know, as I had qualified it in the past adjacent businesses now uh to to the point of the lock well, uh, question, you know, we definitely, uh, executed on that transaction with the intention to use it as a, uh, you know.
An entrance to to this Market. Which, you know, we've qualified to be like 5 5 billion dollars. Canadian in annual sales, which would be lattice and tubular polls. Uh, but that being said, Our intention is definitely to keep pursuing m&a in, in that space in North America.
Thank you.
Go ahead.
Uh, hi. Um, good morning. How are you?
Good, good. Thank you yourself, Max.
Good, good, thank you. Um, the first question actually, I just wanted to follow up on on lock world and your thought process, um, as you learn more about sort of the, the lattice market and, and the capacity to expand, uh, organically in, in the US, uh, what are your thoughts there? And can you provide, uh, maybe a little bit of of for an update there in terms of what's happening in that market specifically, thanks.
Yes, yes, certainly. So, you know
More details. So, uh, you know, the last 2 months, uh, our, our sales team and the log. Well, team have been, you know, meeting with customers, uh, introducing the new, you know, Joint Forces of of the 2 businesses and definitely introducing lockwell to new potential.
Customers. Um, it has been widely. Welcome by all our customers. Uh, and, you know, the the, the same question you have or customers have for us now, is that. So what are your intentions? Are you guys going to acquire something in the US, or is Stella Jones going to expand? And so there's a lot of interest for us to do so. So we're definitely putting some time behind analyzing that that possibility. So I, I think right now there's a very positive um feedback from our customers which is usually the hardest part of a project is to properly scoped out the commercial aspect and and
The the the the ability to to penetrate the market. So I think that is indicating very positively for us right now. The balance of executing on that comes back down to, you know.
Capex. Which you know, obviously we have a lot of financial means know, how would you now have with with the lockwell team? Uh, and to say that this team at lockwell is definitely um um very high on the idea of of expanding uh, you know, the uh, the division and you know, becoming the largest lattice manufacturer in North America. So yeah, I would say we're definitely exploring those Avenues.
Okay. Uh, and do do you have a sense of potential, you know, timing to uh, kind of, you know, making a decision is that 2025 2026 time frame? Uh, or is it is it too premature to uh talk specifics?
uh,
the board. Do we need to structure to to structure a, um, a project? But
I, I guess I want to say, we don't want to drag our feet. I, I think there's an opportunity and, you know, uh, being first to Market is key in my mind. So, um, it's too early to talk about the timing but it definitely, uh, you know, something that's, you know, on my priority list.
Okay, okay, great to hear and then just 1 quick question around tie and I mean now that's why seeing um you know, speculation around uh additional consolidation in um uh in the rail space do you have a sense in terms of uh if there could be some still over effect in terms of insourcing or do these companies don't have their own you know treatment capacity just any color. That would be great.
That's a good question Max. It's it's a question that has come up recent several times in in recent months. So you know to clarify there was only 1 class 1 that had a treating facility and uh you know, they they emerge, you know, the the emergence of another class 1. So there's only 1 call 1 class 1. That owns the treating facility now, they're using it internally. So, all the other customers do not have these, uh, the the, the, the, the capability. And I would say if, if I were, you know, personally, comment. I don't think any of them are interested in owning those assets. Uh, you know, we have customers talking to us about doing treating Services where they would actually be, they could own the ties with you. You leverage our, our our Network, some of us are talking to, to us about expansion projects, so they're definitely wanting Stella Jones to service them, uh, better in certain geographical regions. So, we, we know, we, we do have, you know, some of these discussions with our customers, which indicate to me that this is not a trend in the industry of uh, of seeing, you know,
You know, the railroads start investing in these assets which are, you know, not their core business.
Yeah, makes sense. Okay, that's great. Thank you so much.
Thank you, Mixon.
Thank you. Once again, that is starting 1 to ask a question in your next question. Cancel, the line of minimum Capital markets, please go ahead.
Could you maybe provide an update on the rail type customer projects that could help compensate for the uh volume shortfall. We see with the uh this class 1
As I said in, in the prepared remarks, we're, um, definitely looking to compensate some of the headwinds with the, uh, with, with some commercial, some Commercial Business.
There there was a bit of delay in the first half of the year with uh with with Federal funding in the US have certain programs got reviewed. And there were some delays in in those funds, you know, being made available to our customer base but now we, you know, we've been quoting and got awarded contracts here in the second half of the year, which will, which supports my view that we'll be able to compensate some of the loss volumes into into the, um, uh, uh, uh, that. Well, sorry. The loss of ours that I've had in the first part of the year. Um, you know, once we get into next year, obviously the, you know, the uh, this headwind of this class 1 will be behind us. So so it's it's like a once and done. Uh, and then I do believe, as I said, we're going to continue growing our business at that low single digit.
Uh Pace. But, you know, I also see some opportunities with certain of our customers looking towards us for some Capital Investments, so we can enhance our our business with them. So, you know, more to come and, you know, in obviously, this takes take a bit of time, but it's in 26 and 27 but, you know, we'll put this behind us and I think, you know, the future looks good for the rail side division.
Okay. And could you talk a little bit about the upcoming contract renewals, uh, to come with the, uh, class 1? Uh, how many, uh, might we see in, uh, 2025 and should we expect this to be more, uh, a positive or negative Catalyst? Uh, Eric
Um, so, uh, well, without naming them 1 is behind us and another 1 to go uh, this year uh which is renewed at the end of October. Um, obviously, as we're going through these these, these contracts, you know, we're looking to adjust pricing, uh, favorably for us in the sense that we need to catch up on some cost increases that we've seen, you know, over the last few years, uh, you know, with these contracts are for the long term and we still in certain cases, feel the pain of cost increases through Co which has not receded. I had and have maintained so you know, as we execute on these contracts and and look for adjusted pricing, or I would say favorable triggers or to to incent us on on, on on, good pricing. And by that, I mean, if you know, if someone wants to give me more volume, I can definitely be more flexible on pricing. Um, you know, I think it, it, it looks favorable for us, you know, well, for the balance of the Year obviously, but I think we got renewals now.
To 26 and 27 also. So it'll gradually sort of makes it make its way in our results over the next 24 months. Let's say
Okay. And moving on utility Falls. When we look at the US electric companies they've asked 29 billion in rate increase for this year, which more than doubled their request for the, uh, first half of 2024 America, uh, American Electric Power also completed some Devastator Equity, uh, issuance. So it looks like that. The fundamental is quite strong, although we see still elevated interest rates. So is it still going to put some pressure on spending or, uh, would you say that utilities now realize the importance to to spend, despite the elevated interest rate environment? Any thoughts about the uh, fundamental for utility pool?
Does, you know, have been allocated to several customers? We see some customers, adjusting their capital structure to be able to, to go to move forward with their Investments. And, you know, I I associate it. I associate that, um, those facts to, you know, what we expressed in seeing, you know, our our volumes picking up here in the second half of the year and, you know, I, I like to think they will keep doing so in in the 26th.
There's there there. There's no doubt about the investment being required in integrated as a as a whole. And I think, no matter what the interest rate environment does at this point, I think our customers have adjusted to uh, uh, to to, to this reality. I mean, if the interests do drop in the US in the next several months, it it, it would only be favorable I would say. But at this point, I think our customers have found ways to move forward.
Or any thoughts about what we we should expect from residential number. And and this I can have
Yeah. Well, you know, I I really rate it. Our views of that, the range of 6 to 650 million and I think we will be largely fine to hit the range in the middle of the range. Let's say, for this year, you're completely right. That we have some ahead with early spring with a lot of rainy weekends and you know,
you know, I guess unfavorable
On on favorable, um, unfavorable weather. Um, but, you know, do the month of June has actually was actually very good and, you know, we're we're seeing positive trend on the volume side right now. Uh, you know, we definitely again have a great partner for on, uh, on the retail side is very aggressive. Some of the pricing and is dedicated to uh, to uh, to to to get market share in Canada. So that that is a real positive positive thing for us. So, you know, you're right, if our, I mean, if housing starts, uh, pick up again, that would also be a very fair World, contribute positively to, to the business. But even that at this point, I I still think, you know, we're we're that business is doing fine.
Okay, thank you very much for the time.
Thanks.
Thank you. And once again, should you have a question please? Press star 4 by the 1 on your telephone keypad.
Once once again, that is star and 1 to ask a question.
And your next question comes from the line of Jonathan Goldman from Scotia Bank. Please go ahead.
Good morning team and thanks for taking my questions. Um, Eric just a question on the outlook for um, polls for the rest of the year. Do you assume any rate cuts and there are what sort of macroeconomic variables are you considering in that guidance?
Oh no, we're not.
We're not, you know, we're not the baking in any any any any rate Cuts? That'd be very difficult for us to speculate on. Uh, so, you know, we use the information we have today, the current effects, or some projections of effects and, and current interest rates. And, uh, you know, anything else that happens. If there are rate Cuts, you know, if it's positive. First, it takes a while to, to scope into our, you know, the trickle back down to us. I think it it it it's a leading indicator of of positive uh, positive for us. But um you know, and we also follow what our customers say. So at this point, you know, if the rate cut, it might impact next year's plan at this point.
And then probably not as much this year, but as I said it's it's a good leading indicator for us.
All right, so if the macroeconomic conditions stay the same, what gives you confidence? That volumes will accelerate through the back half of the year. And if it's the order book, what sort of visibility do you have on that and can customers delay orders, and push them out potentially further?
Yeah, that's a good question. You know, at this point
We, we went through this exercise, uh, last year in the third quarter, so we definitely scrubbed, uh, uh, scrub. The order book and had good discussions with, with our customers, um, with regards to, you know, what's expected this year? You will notice, you know, the guidance slightly adjusted right? Uh, in in, in, in the expected growth but it's still a positive growth for the year. To be honest. There's also an easier copy over here because we had the client last year in, you know, in Q3 at Q4. So, you know, I, I'm, I'm, I'm quite comfortable with, you know, with what's going on right now. As far as the order book is conversations that our team is having with customers. I myself had a you know, a couple of discussions with some key customers as well. Um, you know, I I think what we've put out is definitely achievable
Okay, that makes sense and then maybe moving to the the margin guidance, still the same sort of guide above 17%, I mean that gives a lot to the imagination. You're above 18 for the second quarter in a row. Now, why wouldn't we assume that you can do 18%? I mean, spot volumes have been, you know, weaker for a bit now and you're still able to maintain that 18% mark.
So, you know, I
if you know, I need is a reference if you look last year but it's true in in in many years, the second half of the Year typically has less volume. So the residential Lumber business sort of
You know.
So, so down the maintenance season also sort of for, for polls and ties sort of slows down as well. So typically the H2 is a bit of a, a lower volume. And the ibido margin is slightly lower than than the first half of the year. So if you Scope that
Always, you know, swing for defenses where I was looking for a home runs. I'm I don't let anyone off the hook easily. I was looking for a for a good performance. Um but there's always that impact here of H2 that would would bring us you know, a slightly lower than the the year to date number. We have now
Okay, that makes sense. And if we look at the Historical Cadence from the first half, the second half in terms of margins is the last couple of years. 3 years maybe a good reference point or is it better to look farther back?
to kind of remove some of the pricing Dynamics, we've seen in the past couple of years,
Yep. I I'll let s because we actually spent some time talking about that in the last few days. So so I I would say Jonathan that in most years, it's pretty representative starting last year, I would say probably 1 of the an
We saw was in 2023. It was a year after probably, you remember when there was a lot of, uh, a lot of demand and, uh, a little bit of craziness in the market. But other than, uh, other than that year, I think, if you go back, historically, I think you'll always see, probably, you know, that that
that gap between the first and the half and second half.
Okay, makes sense. Thanks for taking my questions.
Thanks Jonathan.
Thank you. No further questions at the Q.
Thank you, Ena, and thank you everyone for joining us today. We look forward to updating you. When we release our third quarter results, until then enjoy the rest of the summer and stay safe.
This concludes today's call, thank you for participating. You may all disconnect.