TSX Symbol: WJX
Stronger Equipment Sales Contribute to
Inventory Reduction as ERP System Implementation Reaches Major
Milestone
TORONTO, August 8,
2024 /CNW/ - Wajax Corporation ("Wajax" or the
"Corporation") today announced its 2024 second quarter
results. All monetary amounts are in Canadian dollars unless
otherwise noted.
Selected Highlights for the Second Quarter
- Second quarter revenue of $568.3
million and adjusted basic earnings per share of
$1.06, down from $586.2 million and $1.26, respectively, in the same quarter of the
prior year;
- Second quarter gross profit margin of 20.9%, up from 19.9% in
2023, due to higher margins on engineered repair services
("ERS") sales, and a higher proportion of, and higher
margins on, product support sales;
- Cash flows generated from operating activities of $35.8 million in the second quarter of 2024
compared with cash flows used in operating activities of
$6.0 million in the same quarter of
the prior year;
- Second quarter adjusted EBITDA margin of 9.6%, compared to 9.8%
in 2023; and
- The competitive new financing program introduced by Hitachi
Construction Machinery Americas Inc. ("HCMA") effective
March 1, 2024, as well as
management's focus on reducing inventory levels, resulted in
stronger equipment sales and lower inventory in the second quarter
of 2024 as compared to the first quarter of
2024.(1)
"Compared to the first quarter of 2024, equipment
sales improved by 84% and adjusted basic earnings per share
improved by 78%, resulting in improved cash flow and a reduction in
inventory and debt levels. Further inventory reductions are
expected through the remainder of 2024," said Iggy Domagalski, President and Chief Executive
Officer. "The decrease in equipment sales versus the prior year
period was primarily the result of the delivery of a large mining
shovel in the second quarter of 2023 which did not recur this year.
Lower revenue against a strong comparable quarter in 2023 was
partially offset by growth in higher margin product support
revenue, as well as a solid improvement in gross margin."
He continued, "As an organization, we remain
focused on driving further improvements to operating efficiency
and, during the quarter, we rolled out the Corporation's new ERP
system to a further 57 industrial parts and ERS branch locations,
some of which are colocations. We now have a total of 99 branch
locations operating on the new ERP system, representing
approximately 90% of 2023 annual revenue."
|
(dollars in millions,
except per share data)
|
Three Months
Ended
June 30
|
Six Months
Ended
June 30
|
|
2024
|
2023
|
%
change
|
2024
|
2023
|
%
change
|
|
CONSOLIDATED
RESULTS
|
|
|
|
|
|
|
|
Revenue
|
$568.3
|
$586.2
|
(3.1) %
|
$1,050.6
|
$1,102.3
|
(4.7) %
|
|
Equipment
sales
|
$180.4
|
$190.4
|
(5.2) %
|
$278.5
|
$322.6
|
(13.7) %
|
|
Product
support
|
$144.8
|
$140.6
|
3.0 %
|
$279.2
|
$275.4
|
1.4 %
|
|
Industrial
parts
|
$147.2
|
$154.9
|
(5.0) %
|
$302.0
|
$308.2
|
(2.0) %
|
|
Engineered repair
services (ERS)
|
$85.0
|
$89.0
|
(4.4) %
|
$169.3
|
$174.0
|
(2.7) %
|
|
Equipment
rental
|
$10.9
|
$11.4
|
(4.8) %
|
$21.7
|
$22.2
|
(2.2) %
|
|
|
|
|
|
|
|
|
Net
earnings
|
$20.6
|
$29.0
|
(28.9) %
|
$35.4
|
$46.5
|
(24.0) %
|
|
Basic earnings per
share(2)
|
$0.95
|
$1.35
|
(29.6) %
|
$1.63
|
$2.16
|
(24.7) %
|
|
|
|
|
|
|
|
|
Adjusted net
earnings(1)(3)
|
$22.9
|
$27.1
|
(15.4) %
|
$35.8
|
$44.9
|
(20.4) %
|
|
Adjusted basic
earnings per share(1)(2)(3)
|
$1.06
|
$1.26
|
(16.3) %
|
$1.65
|
$2.09
|
(21.1) %
|
|
|
|
|
|
|
|
|
Adjusted
EBIT(1)
|
$39.3
|
$42.7
|
(8.0) %
|
$64.9
|
$71.8
|
(9.6) %
|
|
Adjusted
EBITDA(1)
|
$54.7
|
$57.2
|
(4.3) %
|
$95.4
|
$100.2
|
(4.8) %
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin(1)
|
6.9 %
|
7.3 %
|
(5.1) %
|
6.2 %
|
6.5 %
|
(5.1) %
|
|
Adjusted EBITDA
margin(1)
|
9.6 %
|
9.8 %
|
(1.3) %
|
9.1 %
|
9.1 %
|
(0.1) %
|
Outlook
Wajax continues to see solid fundamentals in certain of the
markets it serves, particularly in mining and energy, but has
observed reduced activity in industrial and forestry. Management is
continuing to monitor end markets and customer purchasing patterns,
while being prudent with costs, and maintaining focus on the
execution of its 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 ERP system rollout
and additional technology improvements.
Management continues to evaluate options to repay or refinance
the Corporation's $57.0 million in
senior unsecured debentures maturing January
15, 2025.
Dividend
The Corporation has declared a dividend of $0.35 per share for the third quarter of 2024,
payable on October 2, 2024, to shareholders of record on
September 16, 2024.
Second Quarter Highlights
- Revenue in the second quarter of 2024 decreased $17.9 million, or 3.1%, to $568.3 million, from $586.2 million in the second quarter of 2023.
Regionally:
- Revenue in western Canada of
$240.4 million decreased 10.8% from
the same period in the prior year due primarily to lower
construction and forestry equipment sales, and lower mining
equipment sales driven largely by the delivery of a large mining
shovel in the second quarter of the prior year with no such
delivery in the current year.
- Revenue in central Canada of
$96.6 million decreased 6.4% from the
same period in the prior year due primarily to lower equipment
sales in the construction and forestry category and lower
industrial parts sales.
- Revenue in eastern Canada of
$231.3 million increased 8.3% from
the same period in the prior year due primarily to higher equipment
sales in the construction and forestry category, and higher overall
sales in the power systems category, partially offset by lower
industrial parts sales.
- Gross profit margin of 20.9% in the second quarter of 2024
increased 100 basis points ("bps") compared with gross
profit margin of 19.9% in the same period of 2023. The increase was
driven primarily by higher margins on ERS sales, and a higher
proportion of, and higher margins on, product support
sales.(1)
- Selling and administrative expenses as a percentage of revenue
increased to 14.4% in the second quarter of 2024 from 12.8% in the
same period of 2023. Selling and administrative expenses in the
second quarter of 2024 increased $6.8
million compared with the second quarter of 2023. This
increase was due primarily to higher personnel
costs.(1)
- EBIT decreased $4.7 million, or
11.3%, to $37.2 million in the second
quarter of 2024 versus $41.9 million
in the same period of 2023. The year-over-year decrease in EBIT
resulted primarily from lower sales volumes and higher personnel
expenses, offset partially by an improved gross profit margin.
Adjusted EBIT decreased $3.4 million,
or 8.0%, to $39.3 million in the
second quarter of 2024 from $42.7
million in the second quarter of 2023, and adjusted EBIT
margin decreased to 6.9% in the second quarter of 2024 from 7.3% in
the same quarter of 2023.(1)
- The Corporation generated net earnings of $20.6 million, or $0.95 per share, in the second quarter of 2024
versus $29.0 million, or $1.35 per share, in the same period of 2023. The
Corporation generated adjusted net earnings of $22.9 million, or $1.06 per share, in the second quarter of 2024
versus $27.1 million, or $1.26 per share, in the same period of 2023.
Adjusted net earnings in the second quarter of 2024 excludes
non-cash losses on mark to market of derivative instruments of
$2.3 million after tax, or
$0.11 per share (2023 – gains of
$1.9 million after tax, or
$0.09 per share).(1)
- Adjusted EBITDA margin decreased to 9.6% in the second quarter
of 2024 from 9.8% in the second quarter of 2023.(1)
- Cash flows generated from operating activities amounted to
$35.8 million in the second quarter
of 2024, compared with cash flows used in operating activities of
$6.0 million in the same quarter of
the previous year. The increase in cash generated of $41.8 million was mainly attributable to a
decrease in inventory of $22.5
million during the quarter compared to an increase of
$40.7 million in the same quarter of
the prior year, and a decrease in trade and other receivables of
$9.0 million during the quarter
compared to an increase of $7.9
million in the same quarter of the prior year. These
increases in cash generated are offset partially by a decrease in
accounts payable and accrued liabilities of $14.1 million during the quarter compared to an
increase of $13.0 million in the same
period of 2023.
- The Corporation's backlog at June 30,
2024 of $544.9 million
decreased $42.2 million, or 7.2%,
compared to March 31, 2024 backlog of
$587.1 million due primarily to lower
construction and forestry, material handling and ERS orders. The
Corporation's backlog at June 30,
2024 decreased $6.4 million,
or 1.2%, compared to June 30, 2023
backlog of $551.2 million due to
lower construction and forestry, material handling, ERS, and
industrial parts orders, offset partially by higher mining
orders.(1)
- Working capital of $533.3 million
at June 30, 2024 decreased
$9.6 million from March 31, 2024 due primarily to lower inventory,
offset partially by lower accounts payable and accrued liabilities.
Working capital efficiency was 26.5%, an increase of 80 bps from
March 31, 2024, due to the higher
trailing four quarter average working capital and the lower
trailing 12-month revenue. Excluding debentures, working capital of
$589.9 million at June 30, 2024 decreased $9.4 million from March
31, 2024, and working capital efficiency was 27.8%, an
increase of 150 bps from March 31,
2024.(1)
- The Corporation's leverage ratio decreased to 2.17 times at
June 30, 2024, compared to 2.20 times
at March 31, 2024. The decrease in
leverage ratio was due to the lower debt level in the current
period. The Corporation's senior secured leverage ratio was 1.80
times at June 30, 2024, compared to
1.85 times at March 31,
2024.(1)
Conference Call Details
Wajax will webcast its Second Quarter Financial Results
Conference Call. You are invited to listen to the live webcast
on Friday, August 9, 2024 at 2:00 p.m.
EDT. To access the webcast, please visit our website
wajax.com, under "Investor
Relations", "Events and Presentations", "Q2 2024
Financial Results" and click on the "Listen to 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 second quarter of 2024
were 21,696,986 (2023 – 21,487,212) and 22,235,115 (2023 –
22,180,341), respectively.
|
|
Weighted average
shares, net of shares held in trust, outstanding for calculation of
basic and diluted earnings per share for the six months ended June
30, 2024 were 21,689,613 (2023 - 21,488,163) and 22,231,197 (2023 -
22,170,148), respectively.
|
|
(3)
|
Net earnings excluding
the following:
|
|
a.
|
after-tax non-cash
losses on mark to market of derivative instruments of $2.3 million
(2023 – gains of $1.9 million), or basic and diluted loss per share
of $0.11 and $0.10, respectively (2023 – $0.09 earnings per share)
for the second quarter of 2024.
|
|
b.
|
after-tax non-cash
losses on mark to market of derivative instruments of $0.4 million
(2023 – gains of $1.6 million), or basic and diluted loss per share
of $0.02 (2023 – earnings per share of $0.07) for the six months
ended June 30, 2024.
|
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 condensed
consolidated interim 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
condensed consolidated interim 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
condensed consolidated interim statements of earnings.
|
|
|
|
EBITDA
margin
|
Defined as EBITDA
(defined above) divided by revenue, as presented in the condensed
consolidated interim statements of earnings.
|
|
|
|
Adjusted EBITDA
margin
|
Defined as adjusted
EBITDA (defined above) divided by revenue, as presented in the
condensed consolidated interim 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 condensed consolidated interim
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 condensed consolidated
interim 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
condensed consolidated interim 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
|
Six months
ended
|
|
June
30
|
June
30
|
|
2024
|
2023
|
2024
|
2023
|
|
Net earnings
|
$
20.6
|
$
29.0
|
$
35.4
|
$
46.5
|
|
Non-cash losses (gains)
on mark to market of derivative instruments, after tax
|
2.3
|
(1.9)
|
0.4
|
(1.6)
|
|
Adjusted net
earnings
|
$
22.9
|
$
27.1
|
$
35.8
|
$
44.9
|
|
Adjusted basic
earnings per share(1)
|
$
1.06
|
$
1.26
|
$
1.65
|
$
2.09
|
|
Adjusted diluted
earnings per share(1)
|
$
1.03
|
$
1.22
|
$
1.61
|
$
2.03
|
|
(1)
|
For the three months
ended June 30, 2024, the number of weighted average basic and
diluted shares outstanding were 21,696,986 and 22,235,115,
respectively (2023 - 21,487,212 and 22,180,341,
respectively).
|
|
For the six months
ended June 30, 2024, the number of weighted average basic and
diluted shares outstanding were 21,689,613 and 22,231,197,
respectively (2023 - 21,488,163 and 22,170,148,
respectively).
|
Reconciliation of the Corporation's EBIT to EBITDA, Adjusted
EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as
follows:
|
Three months
ended
|
Six months
ended
|
Twelve months
ended
|
|
June 30
2024
|
June 30
2023
|
June 30
2024
|
June 30
2023
|
June 30
2024
|
December 31
2023
|
|
EBIT
|
$
37.2
|
$ 41.9
|
$
63.9
|
$ 71.4
|
$ 129.2
|
$
136.7
|
|
Depreciation and
amortization
|
15.4
|
14.5
|
30.5
|
28.4
|
60.7
|
58.6
|
|
EBITDA
|
$
52.6
|
$ 56.4
|
$
94.5
|
$ 99.9
|
$ 189.9
|
$
195.3
|
|
|
|
|
|
|
|
|
EBIT
|
$
37.2
|
$ 41.9
|
$
63.9
|
$ 71.4
|
$ 129.2
|
$
136.7
|
|
Facility closure,
restructuring, and other related costs(1)
|
—
|
—
|
—
|
—
|
1.9
|
1.9
|
|
Gain recorded on the
sale of properties
|
—
|
—
|
—
|
—
|
(0.1)
|
(0.1)
|
|
Non-cash losses on mark
to market of derivative instruments, excluding interest rate
swaps(2)
|
2.1
|
0.8
|
1.0
|
0.3
|
0.7
|
—
|
|
Change in fair value of
contingent consideration(3)
|
—
|
—
|
—
|
—
|
0.3
|
0.3
|
|
Adjusted
EBIT
|
$
39.3
|
$ 42.7
|
$
64.9
|
$ 71.8
|
$ 132.0
|
$
138.9
|
|
Depreciation and
amortization
|
15.4
|
14.5
|
30.5
|
28.4
|
60.7
|
58.6
|
|
Adjusted
EBITDA
|
$
54.7
|
$ 57.2
|
$
95.4
|
$ 100.2
|
$ 192.7
|
$
197.4
|
|
Payment of lease
liabilities(4)
|
|
|
|
|
(37.0)
|
(35.5)
|
|
Polyphase acquisition
pro-forma EBITDA(5)
|
|
|
|
|
—
|
3.2
|
|
Beta acquisition
pro-forma EBITDA(5)
|
|
|
|
|
0.4
|
1.4
|
|
Pro-forma adjusted
EBITDA
|
|
|
|
|
$ 156.0
|
$
166.7
|
|
(1)
|
Facility closure,
restructuring, and other related costs consists of costs accrued
for a branch closure during the fourth quarter of 2023, 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, excluding
interest rate swaps as their fair value fluctuations impact finance
costs.
|
|
(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
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, 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:
|
June 30
2024
|
March 31
2024
|
December 31
2023
|
|
(Cash) bank
indebtedness
|
$
(2.8)
|
$
(2.0)
|
$
1.4
|
|
Debentures
|
56.7
|
56.5
|
56.3
|
|
Long-term
debt
|
280.5
|
297.3
|
267.8
|
|
Funded net
debt
|
$
334.4
|
$
351.8
|
$
325.5
|
|
Letters of
credit
|
3.7
|
4.1
|
4.8
|
|
Debt
|
$
338.1
|
$
355.9
|
$
330.3
|
|
Pro-forma adjusted
EBITDA(1)
|
$
156.0
|
$
161.7
|
$
166.7
|
|
Leverage
ratio(2)
|
2.17
|
2.20
|
1.98
|
|
Senior secured
leverage ratio(3)
|
1.80
|
1.85
|
1.64
|
|
(1)
|
For the twelve months
ended June 30, 2024, March 31, 2024, and December 31,
2023.
|
|
(2)
|
Calculation uses debt
divided by the trailing four-quarter Pro-forma adjusted EBITDA.
This leverage ratio is calculated for purposes of monitoring
against the Corporation's 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:
|
June 30
2024
|
March 31
2024
|
December 31
2023
|
|
Shareholders'
equity
|
$
517.4
|
$
503.6
|
$
496.2
|
|
Funded net
debt
|
334.4
|
351.8
|
325.5
|
|
Total
capital
|
$
851.7
|
$
855.4
|
$
821.7
|
|
Funded net debt to
total capital
|
39.3 %
|
41.1 %
|
39.6 %
|
Calculation of the Corporation's working capital and other
working capital amounts is as follows:
|
June 30
2024
|
March 31
2024
|
December 31
2023
|
|
Total current
assets
|
$
1,122.1
|
$
1,137.4
|
$
1,043.6
|
|
Total current
liabilities
|
588.8
|
594.6
|
483.4
|
|
Working
capital
|
$
533.3
|
$
542.9
|
$
560.2
|
|
Trade and other
receivables
|
(281.6)
|
(290.5)
|
(309.1)
|
|
Inventory
|
(724.8)
|
(747.4)
|
(630.9)
|
|
Debentures –
current
|
56.7
|
56.5
|
—
|
|
Accounts payable and
accrued liabilities
|
453.0
|
464.7
|
407.1
|
|
Other working
capital amounts
|
$
36.5
|
$
26.1
|
$
27.3
|
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 expectation that we will see
further inventory reductions through the remainder of 2024; our
belief that solid fundamentals remain in certain of the markets we
serve, particularly in mining and energy; our continued monitoring
of end markets and customer purchasing patterns, while being
prudent with costs; maintaining our focus on the execution of our
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 ERP system rollout and additional
technology improvements; and 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 new 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 MD&A 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 2023 Annual Report, is
available under the Corporation's profile on SEDAR+ at
www.sedarplus.ca.
SOURCE Wajax Corporation