TSX Symbol: WJX
Expanded Relationship with Hitachi and
Growth in Industrial Parts and Engineered Repair Services Continue
to Drive Record Results
TORONTO, March 4,
2024 /CNW/ - Wajax Corporation ("Wajax"
or the "Corporation") today announced its 2023 fourth
quarter and annual results. All monetary amounts are in Canadian
dollars unless otherwise noted.
Selected Highlights for the Fourth Quarter and Full
Year
- Fourth quarter revenue of $542.6
million and record full year revenue of $2,154.7 million, up 0.2% and 9.8%, respectively,
over 2022;
- Fourth quarter adjusted EBITDA of $47.2
million and record full year adjusted EBITDA of $197.4 million, up 11.5% and 19.0%, respectively,
over 2022;
- Fourth quarter adjusted basic EPS of $0.83 and full year adjusted basic EPS of
$3.88, down 0.4% and up 19.1%,
respectively, over 2022; and
- Ended 2023 with backlog of $554.0
million, an increase of $85.2
million over 2022.(1)
"In 2023, Wajax celebrated its 165th anniversary and delivered a
third straight year of record revenue, up 9.8% over 2022. When
combined with our continuing focus on improved operating leverage,
this resulted in a 19.1% year-over-year increase in adjusted basic
earnings per share," said Iggy
Domagalski, President and Chief Executive Officer. "Our team
delivered significant value to shareholders including a 32%
increase in the quarterly dividend. We are pleased with these
results, and proud of our team's exceptional efforts throughout the
year."(1)
He continued, "Looking ahead into 2024, fundamentals remain
solid across many of our key markets, which continues to be
reflected in our strong backlog – and these fundamentals should be
supportive as we look to build on the near-record number of Hitachi
excavators we shipped in 2023, as well as the exceptionally strong
performance of our industrial parts and engineered repair services
businesses. Our strong financial results and solid balance sheet,
coupled with the recently completed $100.0
million increase in credit limit under our senior secured
credit facility, give us the flexibility to continue to invest in
future organic growth and acquisitions. The 6% dividend increase
announced today reflects the board's and management's collective
belief in our strategic vision."(1)
|
(Dollars in
millions, except per share data)
|
Three Months
Ended
December 31
|
Twelve Months
Ended
December 31
|
|
2023
|
2022
|
%
change
|
2023
|
2022
|
%
change
|
|
CONSOLIDATED
RESULTS
|
|
|
|
|
|
|
|
Revenue
|
$542.6
|
$541.3
|
0.2 %
|
$2,154.7
|
$1,962.8
|
9.8 %
|
|
Equipment
sales
|
$158.5
|
$202.2
|
(21.6) %
|
$607.1
|
$628.6
|
(3.4) %
|
|
Product
support
|
$132.8
|
$118.3
|
12.3 %
|
$543.3
|
$483.9
|
12.3 %
|
|
Industrial
parts
|
$136.0
|
$137.9
|
(1.4) %
|
$605.1
|
$535.8
|
12.9 %
|
|
Engineered repair
services (ERS)
|
$103.6
|
$72.6
|
42.8 %
|
$354.3
|
$275.5
|
28.6 %
|
|
Equipment
rental
|
$11.7
|
$10.2
|
14.4 %
|
$45.0
|
$39.1
|
14.9 %
|
|
|
|
|
|
|
|
|
Net
earnings
|
$11.1
|
$16.6
|
(33.2) %
|
$81.0
|
$72.4
|
11.9 %
|
|
Basic earnings per
share(2)
|
$0.52
|
$0.78
|
(33.6) %
|
$3.77
|
$3.38
|
11.4 %
|
|
|
|
|
|
|
|
|
Adjusted net
earnings(1)(3)
|
$17.8
|
$17.8
|
0.2 %
|
$83.5
|
$69.8
|
19.5 %
|
|
Adjusted basic
earnings per share(1)(2)(3)
|
$0.83
|
$0.83
|
(0.4) %
|
$3.88
|
$3.26
|
19.1 %
|
|
|
|
|
|
|
|
|
Adjusted
EBIT(1)
|
$31.7
|
$28.2
|
12.1 %
|
$138.9
|
$110.4
|
25.8 %
|
|
Adjusted
EBITDA(1)
|
$47.2
|
$42.3
|
11.5 %
|
$197.4
|
$165.9
|
19.0 %
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin(1)
|
5.8 %
|
5.2 %
|
11.8 %
|
6.4 %
|
5.6 %
|
14.6 %
|
|
Adjusted EBITDA
margin(1)
|
8.7 %
|
7.8 %
|
11.3 %
|
9.2 %
|
8.5 %
|
19.0 %
|
Outlook
Moving into 2024, Wajax continues to see solid
fundamentals in many of the markets it serves - particularly
mining, energy and construction - supported by relatively elevated
key commodity prices and sustained customer budgeting for capital
projects. Wajax began 2024 with strong backlog of $554.0 million, up 18.2% from the end of 2022,
which supports management's confidence in the near-term
future.(1) In addition to expected growth in its heavy
equipment business over the long-term, Wajax continues to
anticipate further demand in its less cyclical industrial parts and
engineered repair services ("ERS") businesses, which saw
top-line growth of 12.9% and 28.6%, respectively, in 2023.
Challenges associated with higher interest rates, wage and price
inflation, and a tight labour market, are expected to persist, and
management continues to monitor market dynamics and customer
sentiment for signs of possible weakness.
Management will be focused on six strategic priorities for 2024:
continuing to build a "people first" company; growing Wajax's
existing business with a focus on parts, service and margin
improvement; unlocking the potential of Wajax's enhanced direct
relationship with Hitachi; acquiring industrial parts and ERS
businesses; improving cost structure and processes; and continuing
Wajax's enterprise resource planning system rollout and additional
technology improvements. For more information regarding these
priorities, please see the Wajax's Management's Discussion and
Analysis for the year-ended December 31,
2023, and annual report for the year ended December 31, 2023.
Dividend Increase
Wajax also announced today that its
Board of Directors has approved a 6% increase in the Corporation's
quarterly dividend. The Corporation has declared a dividend of
$0.35 per share for the first quarter
of 2024, payable on April 2, 2024, to shareholders of record
on March 15, 2024.
Fourth Quarter Highlights
- Revenue in the fourth quarter of 2023 increased $1.3 million, to $542.6
million, from $541.3 million
in the fourth quarter of 2022. From a regional perspective:
- Revenue in western Canada of
$235.6 million decreased 15.5% from
the prior year due primarily to the timing of mining equipment
sales, as well as lower equipment sales in the construction and
forestry category, offset partially by strong ERS sales.
- Revenue in central Canada of
$105.4 million increased 21.3% from
the prior year mainly due to strong ERS sales, higher equipment
sales in the construction and forestry category, and higher product
support revenue across all categories.
- Revenue in eastern Canada of
$201.7 million increased 14.8% from
the prior year due primarily to higher equipment and product
support sales in the construction and forestry category, and strong
industrial parts and ERS sales.
- Gross profit margin of 21.2% in the fourth quarter of 2023
increased 310 basis points ("bps") compared to the same
period of 2022. The increase in margin was driven primarily by
higher margins across all revenue types, and a higher proportion of
ERS and product support sales as compared to equipment
sales.(1)
- Selling and administrative expenses as a percentage of revenue
increased to 17.1% in the fourth quarter of 2023 from 13.2% in the
fourth quarter of 2022. Selling and administrative expenses in the
fourth quarter of 2023 increased $21.2
million, or 29.6%, compared to the fourth quarter of 2022
due primarily to: higher personnel costs as the volume of ERS and
product support business increased over the prior year; an
unrealized loss on interest rate swaps of $5.5 million in the quarter, compared to a loss
of less than $0.1 million in the same
quarter of the prior year; and facility closure, restructuring, and
other related costs of $1.9 million
in the quarter without a comparable cost in the same quarter of the
prior year. Excluding the $5.5
million loss on interest rate swaps, and the $1.9 million facility closure, restructuring, and
other related costs, selling and administrative expenses as a
percentage of revenue was 15.7% in the fourth quarter of 2023. The
unrealized loss/gain on interest rate swaps and the facility
closure, restructuring, and other related costs have been excluded
in calculating the following metrics: adjusted net earnings,
adjusted EBIT, adjusted EBIT margin, adjusted EBITDA, adjusted
EBITDA margin, adjusted basic earnings per share, and adjusted
diluted earnings per share.(1)
- EBIT decreased $4.1 million, or
15.5%, to $22.6 million in the fourth
quarter of 2023 versus $26.7 million
in 2022. The year-over-year decrease in EBIT resulted from higher
selling and administrative expenses, offset partially by higher
margins, and a higher proportion of ERS and product support sales.
Adjusted EBIT increased $3.4 million,
or 12.1%, to $31.7 million in the
fourth quarter of 2023 from $28.2
million in the fourth quarter of 2022, and adjusted EBIT
margin increased to 5.8% in the fourth quarter of 2023 from 5.2% in
the same quarter of 2022.(1)
- The Corporation generated net earnings of $11.1 million, or $0.52 per share, in the fourth quarter of 2023
versus $16.6 million, or $0.78 per share, in 2022. The Corporation
generated adjusted net earnings of $17.8
million, or $0.83 per share,
in both the fourth quarter of 2023 and the fourth quarter of 2022.
Adjusted net earnings for the quarter excludes facility closure,
restructuring, and other related costs of $1.4 million after tax, or $0.07 per share (2022 - nil), non-cash losses on
mark to market of derivative instruments of $5.0 million after tax, or $0.23 per share (2022 – losses of $1.1 million after tax, or $0.05 per share), and losses on the change in
fair value of contingent consideration of $0.2 million after tax, or $0.01 per share (2022 - nil).(1)
- Adjusted EBITDA margin increased to 8.7% in the fourth quarter
of 2023 from 7.8% in 2022.(1)
- Cash flows generated from operating activities amounted to
$48.5 million in the fourth quarter
of 2023, compared to $19.1 million in
the same quarter of the previous year. The increase of $29.4 million was mainly attributable to a
decrease in accounts receivable of $3.9
million in the fourth quarter of 2023 compared to an
increase of $33.0 million in the same
quarter of the previous year, and a decrease in inventory of
$28.1 million compared to an increase
of $15.5 million in the same quarter
of the prior year. This increase in cash generated was offset
partially by a decrease in accounts payable and accrued liabilities
of $20.3 million compared to an
increase of $38.1 million in the same
quarter of the prior year.
- The Corporation's backlog at December
31, 2023 of $554.0 million
decreased $45.3 million, or 7.6%,
compared to September 30, 2023 due
primarily to lower construction and forestry
orders.(1)
- Working capital of $560.2 million
at December 31, 2023 decreased
$31.2 million from September 30, 2023, due primarily to lower
inventory levels. Working capital efficiency was 23.9%, an increase
of 250 bps from September 30, 2023,
due to the higher trailing four-quarter average working
capital.(1)
- The Corporation's leverage ratio decreased to 1.98 times at
December 31, 2023, compared to 2.16
times at September 30, 2023. The
decrease in the leverage ratio was due to the lower debt level in
the current period, driven largely by cash generated from operating
activities during the quarter. The Corporation's senior secured
leverage ratio was 1.64 times at December
31, 2023, compared to 1.82 times at September 30, 2023.(1)
- Subsequent to quarter-end and effective January 2, 2024, the Corporation completed
adjustments to its senior management structure following the
retirement of Steve Deck, Chief
Operating Officer and Senior Vice President, Heavy Equipment.
Brian Deacon has been appointed to
the role of Senior Vice President, Category Management, and André
Dubé to the role of Senior Vice President, Sales and Operations.
Mr. Deacon first joined Wajax in 2011 after 14 years in the
equipment industry, and has held increasingly senior roles at the
Corporation, including Regional Branch Manager – Equipment, and
Vice President, Service Operations. Most recently, he was serving
as Regional Vice President, Western
Canada. Mr. Dubé first joined Wajax in 1999 as a strategic
sourcing specialist, and since then has served in increasingly
senior roles including Vice President, Key Accounts, Vice
President, End Market Mining, and Regional Vice President,
Ontario and Québec. Most recently,
he was serving as Senior Vice President, Industrial Part and
ERS.
- Subsequent to quarter-end, on January
11, 2024, the Corporation amended its senior secured credit
facility to increase the facility limit from $400.0 million to $500.0
million. Such facility is now composed of a $50.0 million non-revolving term facility and a
$450.0 million revolving term
facility. There was no change to the maturity date of the senior
secured facility.
Conference Call Details
Wajax will webcast its Fourth
Quarter Financial Results Conference Call. You are invited to
listen to the live webcast on Tuesday, March 5, 2024 at
2:00 p.m. EDT. To access the webcast,
please visit our website wajax.com, under "Investor
Relations", "Events and Presentations", "Q4 and
Full Year 2023 Financial Results" and click on the "Webcast"
link. An archive of the webcast will be available following the
live presentation.
About Wajax Corporation
Founded in 1858, Wajax (TSX:
WJX) is one of Canada's
longest-standing and most diversified industrial products and
services providers. The Corporation operates an integrated
distribution system providing sales, parts and services to a broad
range of customers in diverse sectors of the Canadian economy,
including: construction, forestry, mining, industrial and
commercial, oil sands, transportation, metal processing, government
and utilities, and oil and gas.
|
Notes:
|
|
|
(1)
|
"Backlog", "Working
capital", "Gross profit margin", "Selling and administrative
expenses as a percentage of revenue", "Working capital efficiency",
"Leverage ratio", "Senior secured leverage ratio", "Adjusted net
earnings", "Adjusted basic and diluted earnings per share",
"Adjusted EBIT", "Adjusted EBIT margin", "Adjusted EBITDA", and
"Adjusted EBITDA margin" do not have standardized meanings
prescribed by generally accepted accounting principles
("GAAP"). See the Non-GAAP and Other Financial Measures
section later in this press release.
|
|
(2)
|
Weighted average
shares, net of shares held in trust, outstanding for calculation of
basic and diluted earnings per share for the three months ended
December 31, 2023 was 21,570,005 (2022 – 21,453,250) and 22,319,062
(2022 – 22,228,401), respectively.
|
|
Weighted average
shares, net of shares held in trust, outstanding for calculation of
basic and diluted earnings per share for the year ended December
31, 2023 was 21,509,250 (2022 - 21,423,140) and 22,271,628 (2022 -
22,196,918),
respectively.
|
|
(3)
|
Net earnings excluding
the following:
|
|
a.
|
after-tax facility
closure, restructuring, and other related costs of $1.4 million
(2022 – nil), or basic and diluted loss per share of $0.07 and
$0.06, respectively (2022 – nil) for the fourth quarter of 2023 and
for the year ended December 31, 2023.
|
|
b.
|
after-tax non-cash
losses on mark to market of derivative instruments of $5.0 million
(2022 – losses of $1.1 million), or basic and diluted loss per
share of $0.23 (2022 – loss per share of $0.05) for the fourth
quarter of 2023.
|
|
c.
|
after-tax non-cash
losses on mark to market of derivative instruments of $0.9 million
(2022 – gains of $2.6 million), or basic and diluted loss per share
of $0.04 (2022 – earnings per share of $0.12) for the year ended
December 31, 2023.
|
|
d.
|
after-tax losses on the
change in fair value of contingent consideration of $0.2 million
(2022 – nil), or basic and diluted loss per share of $0.01 (2022 –
nil) for the fourth quarter of 2023 and for the year ended December
31, 2023.
|
|
e.
|
after-tax gain recorded
on the sale of properties of $0.1 million (2022 – nil), or basic
and diluted earnings per share of less than $0.01 (2022 – nil) for
the year ended December 31, 2023.
|
Non-GAAP and Other Financial Measures
The press
release contains certain non-GAAP and other financial measures that
do not have a standardized meaning prescribed by GAAP. Therefore,
these financial measures may not be comparable to similar measures
presented by other issuers. Investors are cautioned that these
measures should not be construed as an alternative to net earnings
or to cash flow from operating, investing, and financing activities
determined in accordance with GAAP as indicators of the
Corporation's performance. The Corporation's management believes
that:
|
(i)
|
these measures are
commonly reported and widely used by investors and
management;
|
|
(ii)
|
the non-GAAP measures
are commonly used as an indicator of a company's cash operating
performance, profitability and ability to raise and service
debt;
|
|
(iii)
|
"Adjusted net
earnings", "Adjusted basic earnings per share" and
"Adjusted diluted earnings per share" provide indications of
the results by the Corporation's principal business activities
prior to recognizing non-recurring costs (recoveries) and non-cash
losses (gains) on mark to market of derivative instruments. These
adjustments to net earnings and basic and diluted earnings per
share allow the Corporation's management to consistently compare
periods by removing infrequent charges incurred outside of the
Corporation's principal business activities and the impact of
unrealized losses (gains) resulting from fluctuations in interest
rates and the Corporation's share price;
|
|
(iv)
|
"Adjusted
EBITDA" provides an indication of the results by the
Corporation's principal business activities prior to recognizing
non-recurring costs (recoveries) and non-cash losses (gains) on
mark to market of derivative instruments. These adjustments to net
earnings allow the Corporation's management to consistently compare
periods by removing infrequent charges incurred outside of the
Corporation's principal business activities, the impact of
unrealized losses (gains) resulting from fluctuations in interest
rates and the Corporation's share price, the impact of fluctuations
in finance costs related to the Corporation's capital structure,
the impact of tax rates, and the impact of depreciation and
amortization of long-term assets; and
|
|
(v)
|
"Pro-forma adjusted
EBITDA" provides the same utility as Adjusted EBITDA described
above, however pursuant to the terms of the bank credit facility,
is adjusted for the EBITDA of business acquisitions made during the
period as if they were made at the beginning of the trailing
12-month period, and for the deduction of payments of lease
liabilities. Pro-forma adjusted EBITDA is used in calculating the
Leverage ratio and Senior secured leverage ratio.
|
|
Non-GAAP financial
measures are identified and defined below:
|
|
Funded net
debt
|
Funded net debt
includes bank indebtedness, debentures and total long-term debt,
net of cash. Funded net debt is relevant in calculating the
Corporation's funded net debt to total capital, which is a non-GAAP
ratio commonly used as an indicator of a company's ability to raise
and service debt.
|
|
|
|
Debt
|
Debt is funded net debt
plus letters of credit. Debt is relevant in calculating the
Corporation's leverage ratio, which is a non-GAAP ratio commonly
used as an indicator of a company's ability to raise and service
debt.
|
|
|
|
Total
capital
|
Total capital is
shareholders' equity plus funded net debt.
|
|
|
|
EBITDA
|
Net earnings (loss)
before finance costs, income tax expense, depreciation and
amortization.
|
|
|
|
Adjusted net
earnings (loss)
|
Net earnings (loss)
before any facility closure, restructuring, and other related
costs, gains/losses recorded on sale of properties, non-cash
gains/losses on mark to market of derivative instruments, and
change in fair value of contingent consideration.
|
|
|
|
Adjusted basic
earnings (loss) per share and adjusted diluted earnings (loss)
per share
|
Basic and diluted
earnings (loss) per share before any facility closure,
restructuring, and other related costs, gains/losses recorded on
sale of properties, non-cash gains/losses on mark to market of
derivative instruments, and change in fair value of contingent
consideration.
|
|
|
|
Adjusted
EBIT
|
EBIT before any
facility closure, restructuring, and other related costs,
gains/losses recorded on sale of properties, non-cash gains/losses
on mark to market of derivative instruments, and change in fair
value of contingent consideration.
|
|
|
|
Adjusted
EBITDA
|
EBITDA before any
facility closure, restructuring, and other related costs,
gains/losses recorded on sale of properties, non-cash gains/losses
on mark to market of derivative instruments, and change in fair
value of contingent consideration.
|
|
|
|
Pro-forma adjusted
EBITDA
|
Defined as adjusted
EBITDA adjusted for the EBITDA of business acquisitions made during
the period as if they were made at the beginning of the trailing
12-month period pursuant to the terms of the bank credit facility
and the deduction of payments of lease liabilities. Pro-forma
adjusted EBITDA is used in calculating the Leverage ratio and
Senior secured leverage ratio.
|
|
|
|
Working
capital
|
Defined as current
assets less current liabilities, as presented in the consolidated
statements of financial position.
|
|
|
|
Other working
capital amounts
|
Defined as working
capital less trade and other receivables and inventory plus
accounts payable and accrued liabilities, as presented in the
consolidated statements of financial position.
|
|
|
|
Non-GAAP ratios are
identified and defined below:
|
|
Adjusted EBIT
margin
|
Defined as adjusted
EBIT (defined above) divided by revenue, as presented in the
consolidated statements of earnings.
|
|
|
|
EBITDA
margin
|
Defined as EBITDA
(defined above) divided by revenue, as presented in the
consolidated statements of earnings.
|
|
|
|
Adjusted EBITDA
margin
|
Defined as adjusted
EBITDA (defined above) divided by revenue, as presented in the
consolidated statements of earnings.
|
|
|
|
Leverage
ratio
|
The leverage ratio is
defined as debt (defined above) at the end of a particular quarter
divided by trailing 12-month pro-forma adjusted EBITDA (defined
above). The Corporation's objective is to maintain this ratio
between 1.5 times and 2.0 times.
|
|
|
|
Senior secured
leverage ratio
|
The senior secured
leverage ratio is defined as debt (defined above) excluding
debentures at the end of a particular quarter divided by trailing
12-month pro-forma adjusted EBITDA (defined above).
|
|
|
|
Funded net debt to
total capital
|
Defined as funded net
debt (defined above) divided by total capital (defined
above).
|
|
|
|
Working capital
efficiency
|
Defined as trailing
four-quarter average working capital (defined above) as a
percentage of the trailing 12-month revenue.
|
|
|
|
Supplementary financial
measures are identified and defined below:
|
|
EBIT
margin
|
Defined as EBIT divided
by revenue, as presented in the consolidated statements of
earnings.
|
|
|
|
Backlog
|
Backlog is a management
measure which includes the total sales value of customer purchase
commitments for future delivery or commissioning of equipment,
parts and related services, including ERS projects. There is no
directly comparable GAAP financial measure for Backlog.
|
|
|
|
Gross profit
margin
|
Defined as gross profit
divided by revenue, as presented in the consolidated statements of
earnings.
|
|
|
|
Selling and
administrative expenses as a percentage of revenue
|
Defined as selling and
administrative expenses divided by revenue, as presented in the
consolidated statements of earnings.
|
Reconciliation of the Corporation's net earnings to adjusted net
earnings, adjusted basic earnings per share and adjusted diluted
earnings per share is as follows:
|
Three months
ended
|
Year
ended
|
|
December
31
|
December
31
|
|
2023
|
2022
|
2023
|
2022
|
|
Net earnings
|
$
11.1
|
$ 16.6
|
$
81.0
|
$
72.4
|
|
Facility closure,
restructuring, and other related costs, after tax
|
1.4
|
—
|
1.4
|
—
|
|
Gain recorded on the
sale of properties, after tax
|
—
|
—
|
(0.1)
|
—
|
|
Non-cash losses (gains)
on mark to market of derivative instruments, after tax
|
5.0
|
1.1
|
0.9
|
(2.6)
|
|
Change in fair value of
contingent consideration, after tax
|
0.2
|
—
|
0.2
|
—
|
|
Adjusted net
earnings
|
$
17.8
|
$ 17.8
|
$
83.5
|
$
69.8
|
|
Adjusted basic
earnings per share(1)
|
$
0.83
|
$ 0.83
|
$
3.88
|
$
3.26
|
|
Adjusted diluted
earnings per share(1)
|
$
0.80
|
$ 0.80
|
$
3.75
|
$
3.15
|
|
(1)
|
At December 31, 2023,
the number of weighted average basic and diluted shares outstanding
were 21,570,005 and 22,319,062, respectively for the three months
ended, and 21,509,250 and 22,271,628, respectively for the year
ended.
|
|
At December 31, 2022,
the number of weighted average basic and diluted shares outstanding
were 21,453,250 and 22,228,401, respectively for the three months
ended, and 21,423,140 and 22,196,918, respectively for the year
ended.
|
Reconciliation of the Corporation's EBIT to EBITDA, Adjusted
EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as
follows:
|
Three months
ended
|
Year
ended
|
|
December 31
2023
|
December 31
2022
|
December 31
2023
|
December 31
2022
|
|
EBIT
|
$
22.6
|
$
26.7
|
$
135.5
|
$
113.9
|
|
Depreciation and
amortization
|
15.5
|
14.1
|
58.6
|
55.5
|
|
EBITDA
|
$
38.1
|
$
40.8
|
$
194.1
|
$
169.3
|
|
|
|
|
|
|
EBIT
|
$
22.6
|
$
26.7
|
$
135.5
|
$
113.9
|
|
Facility closure,
restructuring, and other related costs(1)
|
1.9
|
—
|
1.9
|
—
|
|
Gain recorded on the
sale of properties
|
—
|
—
|
(0.1)
|
—
|
|
Non-cash losses (gains)
on mark to market of derivative
instruments(2)
|
6.8
|
1.5
|
1.3
|
(3.5)
|
|
Change in fair value of
contingent consideration(3)
|
0.3
|
—
|
0.3
|
—
|
|
Adjusted
EBIT
|
$
31.7
|
$
28.2
|
$
138.9
|
$
110.4
|
|
Depreciation and
amortization
|
15.5
|
14.1
|
58.6
|
55.5
|
|
Adjusted
EBITDA
|
$
47.2
|
$
42.3
|
$
197.4
|
$
165.9
|
|
Payment of lease
liabilities(4)
|
|
|
(35.5)
|
(32.0)
|
|
Polyphase acquisition
pro-forma EBITDA(5)
|
|
|
3.2
|
—
|
|
Beta acquisition
pro-forma EBITDA(5)
|
|
|
1.4
|
—
|
|
Pro-forma adjusted
EBITDA
|
|
|
$
166.7
|
$
133.9
|
|
(1)
|
For 2023, facility
closure, restructuring, and other related costs consists of costs
accrued for a branch closure during the fourth quarter, including
workforce reduction and remaining facility costs.
|
|
(2)
|
Non-cash losses (gains)
on mark to market of derivative instruments that are not
effectively designated as hedging instruments under
IFRS.
|
|
(3)
|
The change in fair
value of contingent consideration relates to changes in the
estimated fair value of future performance-based earnout payments
relating to business acquisitions.
|
|
(4)
|
Effective with the
reporting period beginning on January 1, 2019 and the adoption of
IFRS 16, the Corporation amended the definition of Funded net debt
to exclude lease liabilities not considered part of debt. As a
result, the corresponding lease costs must also be deducted from
EBITDA for the purpose of calculating the leverage
ratio.
|
|
(5)
|
Pro-forma EBITDA for
the Polyphase Engineered Controls (1977) Ltd. ("Polyphase"),
and the Beta Fluid Power Ltd. and Beta Industrial Ltd.
(collectively referred above as "Beta") acquisitions made
during the period as if they were made at the beginning of the
trailing 12-month period pursuant to the terms of the bank credit
facility, for the purpose of calculating the leverage
ratio.
|
Calculation of the Corporation's funded net debt, debt, leverage
ratio and senior secured leverage ratio is as follows:
|
December 31
2023
|
December 31
2022
|
|
Bank
indebtedness
|
$
1.4
|
$
5.2
|
|
Debentures
|
56.3
|
55.8
|
|
Long-term
debt
|
267.8
|
83.6
|
|
Funded net
debt
|
$
325.5
|
$
144.6
|
|
Letters of
credit
|
4.8
|
6.2
|
|
Debt
|
$
330.3
|
$
150.8
|
|
Pro-forma adjusted
EBITDA(1)
|
$
166.7
|
$
133.9
|
|
Leverage
ratio(2)
|
1.98
|
1.13
|
|
Senior secured
leverage ratio(3)
|
1.64
|
0.71
|
|
(1)
|
For the year ended
December 31, 2023 and December 31, 2022.
|
|
(2)
|
Calculation uses debt
divided by the trailing four-quarter Pro-forma adjusted EBITDA.
This leverage ratio is calculated for purposes of monitoring the
Corporation's objective target leverage ratio of between 1.5 times
and 2.0 times, and is different from the leverage ratio calculated
under the Corporation's bank credit facility agreement.
|
|
(3)
|
Calculation uses debt
excluding debentures divided by the trailing four-quarter Pro-forma
adjusted EBITDA. While the calculation contains some differences
from the leverage ratio calculated under the Corporation's bank
credit facility agreement, the resulting leverage ratio under the
bank credit facility agreement is not significantly different. See
the Liquidity and Capital Resources section.
|
|
|
Calculation of total capital and funded net debt to total
capital is as follows:
|
December 31
2023
|
December 31
2022
|
|
Shareholders'
equity
|
$
496.2
|
$
449.8
|
|
Funded net
debt
|
325.5
|
144.6
|
|
Total
capital
|
$
821.7
|
$
594.4
|
|
Funded net debt to
total capital
|
39.6 %
|
24.3 %
|
Calculation of the Corporation's working capital and other
working capital amounts is as follows:
|
December 31
2023
|
December 31
2022
|
|
Total current
assets
|
$
1,043.6
|
$
860.1
|
|
Total current
liabilities
|
483.4
|
514.1
|
|
Working
capital
|
$
560.2
|
$
346.0
|
|
Trade and other
receivables
|
(309.1)
|
(307.1)
|
|
Inventory
|
(630.9)
|
(462.2)
|
|
Accounts payable and
accrued liabilities
|
407.1
|
423.8
|
|
Other working
capital amounts
|
$
27.3
|
$
0.7
|
Cautionary Statement Regarding Forward-Looking
Information
This news release contains certain
forward-looking statements and forward-looking information, as
defined in applicable securities laws (collectively,
"forward-looking statements"). These forward-looking
statements relate to future events or the Corporation's future
performance. All statements other than statements of historical
fact are forward-looking statements. Often, but not always, forward
looking statements can be identified by the use of words such as
"plans", "anticipates", "intends", "predicts", "expects", "is
expected", "scheduled", "believes", "estimates", "projects" or
"forecasts", or variations of, or the negatives of, such words and
phrases or state that certain actions, events or results "may",
"could", "would", "should", "might" or "will" be taken, occur or be
achieved. Forward-looking statements involve known and unknown
risks, uncertainties and other factors beyond the Corporation's
ability to predict or control which may cause actual results,
performance and achievements to differ materially from those
anticipated or implied in such forward-looking statements. To the
extent any forward-looking information in this news release
constitutes future-oriented financial information or financial
outlook within the meaning of applicable securities law, such
information is being provided to demonstrate the potential of the
Corporation and readers are cautioned that this information may not
be appropriate for any other purpose. There can be no assurance
that any forward-looking statement will materialize. Accordingly,
readers should not place undue reliance on forward-looking
statements. The forward-looking statements in this news release are
made as of the date of this news release, reflect management's
current beliefs and are based on information currently available to
management. Although management believes that the expectations
represented in such forward-looking statements are reasonable,
there is no assurance that such expectations will prove to be
correct. Specifically, this news release includes forward looking
statements regarding, among other things: our belief that, moving
into 2024, fundamentals remain solid across many of the key markets
we serve, and in particular, mining, energy and construction, and
continue to be reflected in our strong backlog, and that these
fundamentals should be supportive as we look to build on the
near-record number of Hitachi excavators we shipped in 2023, as
well as the exceptionally strong performance of our industrial
parts and engineered repair services businesses; our belief that
our strong 2023 financial results and solid balance sheet, coupled
with the recently completed $100.0
million increase in credit limit under our senior secured
credit facility, give us the flexibility to continue investing in
future organic growth and acquisitions; the board's and
managements' collective belief in our strategic vision; our belief
that our strong fourth quarter backlog supports management's
confidence in the near-term future; our expectation of growth in
our heavy equipment business over the long-term, and continued
anticipation of further demand in our less cyclical industrial
parts and ERS businesses; our expectation that challenges
associated with higher interest rates, wage and price inflation,
and a tight labour market will persist in 2024, and our continued
monitoring of market dynamics and customer sentiment for signs of
possible weakness; our focus on six strategic priorities for 2024:
continuing to build a "people first" company, growing Wajax's
existing business with a focus on parts, service and margin
improvement, unlocking the potential of Wajax's enhanced direct
relationship with Hitachi, acquiring industrial parts and ERS
businesses, improving cost structure and processes, and continuing
Wajax's enterprise resource planning ("ERP") system rollout
and additional technology improvements; our objective of managing
our working capital and normal-course capital investment programs
within a leverage range of 1.5 – 2.0 times. These statements are
based on a number of assumptions which may prove to be incorrect,
including, but not limited to, assumptions regarding: the absence
of significant negative changes to general business and economic
conditions; limited negative fluctuations in the supply and demand
for, and the level and volatility of prices for, oil, natural gas
and other commodities; the stability of financial market
conditions, including interest rates; the ability of Hitachi and
Wajax to develop and execute successful sales, marketing and other
plans related to the expanded direct distribution relationship
which took effect on March 1, 2022;
our continued ability to execute our strategic priorities,
including our ability to execute on our organic growth priorities,
complete and effectively integrate industrial parts and ERS
acquisitions, and successfully implement new information technology
platforms, systems and software, such as our ERP system; the future
financial performance of the Corporation; limited fluctuations in
our costs; the level of market competition; our continued ability
to attract and retain skilled staff; our continued ability to
procure quality products and inventory; and our ongoing maintenance
of strong relationships with suppliers, employees and customers.
The foregoing list of assumptions is not exhaustive. Factors that
may cause actual results to vary materially include, but are not
limited to: a continued or prolonged deterioration in general
business and economic conditions; negative fluctuations in the
supply and demand for, and the level of prices for, oil, natural
gas and other commodities; a continued or prolonged decrease in the
price of oil or natural gas; the inability of Hitachi and Wajax to
develop and execute successful sales, marketing and other plans
related to the expanded direct distribution relationship which took
effect on March 1, 2022; a decrease
in levels of customer confidence and spending; supply chain
disruptions and shortages; fluctuations in financial market
conditions, including interest rates; the level of demand for, and
prices of, the products and services we offer; decreased market
acceptance of the products we offer; the termination of
distribution or original equipment manufacturer agreements;
unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications
or expectations, cost escalation, our inability to reduce costs in
response to slow-downs in market activity, unavailability of
quality products or inventory, supply disruptions, job action and
unanticipated events related to health, safety and environmental
matters); our inability to attract and retain skilled staff and our
inability to maintain strong relationships with our suppliers,
employees and customers. The foregoing list of factors is not
exhaustive. Further information concerning the risks and
uncertainties associated with these forward-looking statements and
the Corporation's business may be found in our Management's
Discussion and Analysis for the year-ended December 31, 2023 (the "2023 MD&A"),
which has been filed under the Corporation's profile on SEDAR+ at
www.sedarplus.ca, under the heading "Risk Management and
Uncertainties". The forward-looking statements contained in this
news release are expressly qualified in their entirety by this
cautionary statement. The Corporation does not undertake any
obligation to publicly update such forward-looking statements to
reflect new information, subsequent events or otherwise unless so
required by applicable securities laws.
Readers are cautioned that the risks described in the 2023
MD&A are not the only risks that could impact the Corporation.
Risks and uncertainties not currently known to the Corporation, or
currently deemed to be immaterial, may have a material effect on
the Corporation's business, financial condition or results of
operations.
Additional information, including Wajax's Annual Report, is
available under the Corporation's profile on SEDAR+ at
www.sedarplus.ca.
SOURCE Wajax Corporation