Scienjoy Holding Corporation Q4 FY2025 earnings call

• 2025 was a pivotal year with two strategic acquisitions in the utility space, broadening the total addressable market.
• Fourth quarter results bolstered by volume growth in wood utility poles and contributions of newly integrated steel structures and cross-arm businesses.
• Ongoing operational investments to double steel structure production capacity at the contact facility, on track for completion by mid-2026 with full ramp-up in the second half of the year.
• Plan to invest ~$50 million US to build a new greenfield facility in the US southeast for steel lattice towers, with commissioning expected by late 2027 and full capacity by end 2028.
• Entered pole fixtures and accessory market with acquisition of Brooks, integration underway.
• Acquired one-third equity interest in Lizzie Bay Logging for sustainable utility pole fiber supply.

Utility products: Fourth quarter sales reached $447 million, a 16% increase from the same period last year. Full-year sales growth was in the low single-digit range. Railway ties: Q4 sales were $31 million, down 16% year-over-year, with full-year organic sales declining 10%. Residential lumber: Q4 sales were $80 million, down 14% year-over-year; full-year sales were $650 million, comparable to the previous year.

• Utility products expected to have mid-single-digit growth in 2026.
• Railway ties expected to be flat in 2026.
• Residential lumber to remain within 600 to $650 million revenue range.
• Continued focus on scaling steel structure business and pursuing growth opportunities.

• Soft demand in product categories in 2025.
• Competitive landscape affecting railway ties sales.
• Impact of industry consolidation and macroeconomic headwinds on Class 1 railroads.
• Volatility in lumber prices affecting residential lumber business.

Q: When we look at the volume reduction in Q4 for railway tie, would it be fair to say it was mostly driven by some special purchase made by some Class 1 customer that did not repeat in Q4?

A: To a slight extent, yes. There was a year-end pre-ordering effect and more competitive landscape with Class 1 tightening maintenance programs.

Q: Could you deliver negative organic growth for railway ties in 2026?

A: Our view is flat, agreeing with the Relative Association's outlook.

Q: What could be some reasonable expectation in 2026 for utility pole?

A: Mid-single-digit growth expected, with good momentum carrying into the year and positive dynamics from commercial markets.

Q: Any thoughts whether upcoming capacity in Kendiak would be enough to meet Hydro - Québec etc. requirements?

A: Capacity in Quebec facility sold out for 2026 and 2027, new US facility will be positive to support demand.

Q: Could get more color on working capital movements?

A: Growth in wood treating business would require about 40% investment in working capital, with different considerations for steel and Brooks business.

Q: Any early potential discussions with clients on cross - selling opportunities?

A: Restructured sales team, team in Candiac benefited from new US customers, Brooks sales team making introductions in Canada.

Q: Update on CAPEX number for 2026 and 2027?

A: Regular CapEx between 85 - 95 million, Lockwell remaining spend in first part of 2026, US $50 million facility split roughly evenly over 2026 and 2027.

Q: Outlook for pricing longer term in railway tie business?

A: Remain disciplined, leverage quality and service, key metric for organization.

Q: In terms of utility poles, how much would be utility poles without the two acquisitions and growth of each acquisition?

A: Guidance for mid - single digit is for wood utility products only, Lockwell averaged ~$100 million in growth, Brooks in early days but expected to contribute to mid - single digit growth.

Q: Difference in residential lumber pricing this year?

A: Relatively marginal, with offset from expected growth in product categories serviced by main customer.

Q: Company's CapEx profile over 2026 and 2027?

A: Regular CapEx, Lockwell investment completion in first part of 2026, US $50 million facility split roughly evenly, Lockwell remaining spend in first part of 2026.

Q: Breakdown between pricing and shipments for railway ties decline?

A: All volume, slight gain on pricing but margin dollars remained same with lower sales.

Q: Confidence in railway ties growth coming back?

A: Four contracts being negotiated in 2026, commercial business strong, waiting on industry consolidation and NAFTA impact.

Q: Update on capital allocation priorities and M&A pipeline?

A: CapEx first priority, continue buybacks based on M&A pipeline, dividend stable, active in M&A with potential acquisitions in new addressable market.