Stella-Jones Inc. Acquires Locweld to Enhance Electrical Infrastructure Capabilities
- Stella-Jones Inc. acquired Locweld for CAD 58 million to expand its electrical infrastructure capabilities.
- The acquisition enhances Stella-Jones' position in the CAD 5 billion steel transmission structure market.
- Stella-Jones reported stable sales of CAD 773 million despite a decline in pressure-treated wood sales.
Stella-Jones Inc. Expands Infrastructure Footprint with Locweld Acquisition
Stella-Jones Inc. announces a pivotal acquisition in its strategic expansion into the electrical infrastructure sector, acquiring Locweld Inc. for CAD 58 million. This acquisition, which includes potential performance-based payments of up to CAD 7 million, is set to enhance Stella-Jones' manufacturing capabilities in steel transmission structures. Locweld, a well-established player with over 75 years in the industry, reported sales of CAD 55 million for the year ending September 30, 2024, and operates from a 220,000 square foot facility in Candiac, Quebec. The integration of Locweld aligns with Stella-Jones’ broader strategy to broaden its infrastructure offerings and meet the growing demand for electrical transmission solutions.
The acquisition positions Stella-Jones to tap into the lucrative CAD 5 billion steel transmission structure market, strengthening its existing utility poles business. Eric Vachon, President and CEO of Stella-Jones, emphasizes that this strategic move not only diversifies their product offerings but also enhances the company’s competitive edge in a sector that is increasingly focused on modernizing electrical grids. As infrastructure investments are projected to rise, Stella-Jones aims to leverage Locweld’s expertise and operational efficiencies to drive innovation in electrical transmission projects.
To finance the acquisition, Stella-Jones plans to utilize its existing revolving credit facilities, with an additional investment of CAD 15 million earmarked for boosting Locweld's production capabilities. The management team at Locweld will remain in place to ensure a smooth transition, although CEO Michael Cyr will step down following the acquisition. This acquisition is viewed as a strategic step forward for Stella-Jones, reinforcing the company’s commitment to supporting essential infrastructure development across North America while adapting to changing market dynamics.
In addition to the acquisition news, Stella-Jones also reports its first-quarter financial results for 2025, showcasing resilient sales figures of CAD 773 million, nearly unchanged from the previous year. However, the company faces challenges with a 5% decline in pressure-treated wood sales, attributed to lower volumes across product categories. Despite these challenges, Stella-Jones maintains a strong financial position, with available liquidity of CAD 691 million and a net debt-to-EBITDA ratio of 2.6x, further underscoring its capacity to invest in growth opportunities like the Locweld acquisition.
As the company prepares for its upcoming Annual Meeting of Shareholders, scheduled for May 2025, it aims to foster transparency and engagement among stakeholders. Key agenda items include the election of non-executive directors and discussions on executive compensation, reflecting Stella-Jones' commitment to good governance and shareholder involvement in strategic decisions.