TSX Symbol: WJX
Revenue Decreases 6.5% While
Increased Backlog and New Hitachi Construction Machinery Americas
Financing Program Supports Continued Momentum in Near
Term
TORONTO, May 1, 2024
/CNW/ - Wajax Corporation ("Wajax" or the
"Corporation") today announced its 2024 first quarter
results. All monetary amounts are in Canadian dollars unless
otherwise noted.
Selected Highlights for the First Quarter
- First quarter revenue of $482.3
million and adjusted basic earnings per share of
$0.59;
- First quarter gross profit margin of 22.0%, up from 20.4% in
2023, due to a higher proportion of, and higher margins on, product
support, industrial parts and engineered repair services
("ERS") sales;
- First quarter adjusted EBITDA margin of 8.4%, up from 8.3% in
2023;
- Backlog at March 31, 2024 of
$587.1 million increased $33.1 million, or 6.0%, compared to December 31, 2023 backlog of $554.0 million, due primarily to higher
construction and forestry orders; and
- Effective March 1, 2024, Hitachi
Construction Machinery Americas Inc. ("HCMA") introduced a
new financing program with competitive rates that will benefit
Wajax customers and is expected to result in stronger equipment
sales in the near term.(1)
"In the first quarter of 2024, Wajax delivered revenue of
$482.3 million, down $33.7 million, or 6.5%, from the first quarter of
2023. This year over year decrease was primarily due to a decline
in construction and forestry equipment sales in western and eastern
Canada," said Iggy Domagalski, President and Chief Executive
Officer. "Given our increased backlog of $587.1 million as at March
31, 2024, and the new HCMA financing program available
March 1, 2024, stronger equipment
sales are expected in the near term, and inventory is expected to
decline over the next two quarters."(1)
He continued, "The recently completed $100.0 million increase in credit limit under our
senior secured credit facility provides us with additional
flexibility as we continue to invest in future organic growth and
our robust pipeline of potential acquisitions. We continue to
monitor end markets and customer purchasing patterns, while being
prudent with costs and maintaining focus on the execution of our
strategic priorities."
|
(Dollars in
millions, except per share data)
|
Three Months
Ended
March 31
|
|
2024
|
2023
|
%
change
|
|
CONSOLIDATED
RESULTS
|
|
|
|
|
Revenue
|
$482.3
|
$516.1
|
(6.5) %
|
|
Equipment
sales
|
$98.1
|
$132.3
|
(25.8) %
|
|
Product
support
|
$134.3
|
$134.8
|
(0.4) %
|
|
Industrial
parts
|
$154.9
|
$153.3
|
1.0 %
|
|
Engineered repair
services (ERS)
|
$84.2
|
$85.0
|
(0.9) %
|
|
Equipment
rental
|
$10.8
|
$10.7
|
0.5 %
|
|
|
|
|
|
Net
earnings
|
$14.7
|
$17.5
|
(15.8) %
|
|
Basic earnings per
share(2)
|
$0.68
|
$0.81
|
(16.5) %
|
|
|
|
|
|
Adjusted net
earnings(1)(3)
|
$12.8
|
$17.8
|
(27.8) %
|
|
Adjusted basic
earnings per share(1)(2)(3)
|
$0.59
|
$0.83
|
(28.5) %
|
|
|
|
|
|
Adjusted
EBIT(1)
|
$25.6
|
$29.0
|
(11.8) %
|
|
Adjusted
EBITDA(1)
|
$40.7
|
$43.0
|
(5.3) %
|
|
|
|
|
|
Adjusted EBIT
margin(1)
|
5.3 %
|
5.6 %
|
(5.7) %
|
|
Adjusted EBITDA
margin(1)
|
8.4 %
|
8.3 %
|
1.3 %
|
Outlook
Wajax continues to see solid fundamentals in many of the markets
it serves – particularly in mining and energy, supported by
relatively elevated commodity prices and sustained customer
budgeting for capital projects.
Effective March 1, 2024, HCMA
introduced a new financing program with competitive rates that will
benefit Wajax's customers and is expected to result in stronger
equipment sales in the near term. The majority of recent increases
in short-term equipment rental arrangements are also expected to
convert to equipment sales within six to twelve months, and as at
March 31, 2024, Wajax had
$54.2 million of equipment inventory
related to such arrangements.
As at March 31, 2024, the
Corporation's inventory of $747.4
million increased by $116.4
million sequentially from December
31, 2023. This was primarily due to lower equipment sales in
the first quarter of 2024, as well as management's determination to
accept early delivery of certain equipment inventory in exchange
for more favourable payment terms. Given the Corporation's
increased backlog and the new HCMA financing program, inventory is
expected to decline over the next two quarters.
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. The
increase provides the Corporation with additional flexibility as
management continues to invest in future organic growth and the
Corporation's robust pipeline of potential acquisitions. The
Corporation's $57.0 million in senior
unsecured debentures mature on January 15,
2025, and management is evaluating options to repay or
refinance such debentures.
Management continues to monitor end markets and customer
purchasing patterns, while being prudent with costs, and continuing
to 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 enterprise resource planning ("ERP") system rollout
and additional technology improvements. For more information
regarding these priorities, please see Wajax's Management's
Discussion and Analysis for the quarter ended March 31, 2024, and annual report for the year
ended December 31, 2023.
Dividend
The Corporation has declared a dividend of $0.35 per share for the second quarter of 2024,
payable on July 3, 2024, to shareholders of record on
June 14, 2024.
First Quarter Highlights
- Revenue in the first quarter of 2024 decreased $33.7 million, or 6.5%, to $482.3 million, from $516.1 million in the first quarter of 2023.
Regionally:
- Revenue in western Canada of
$219.7 million decreased 7.7% from
the same period in the prior year due primarily to lower equipment
sales in the construction and forestry category. This increase was
offset partially by higher industrial parts sales.
- Revenue in central Canada of
$90.5 million increased 3.7% from the
same period in the prior year due primarily to higher ERS
sales.
- Revenue in eastern Canada of
$172.2 million decreased 9.8% from
the same period in the prior year due primarily to lower equipment
sales in the construction and forestry, and material handling
categories.
- Gross profit margin of 22.0% in the first quarter of 2024
increased 150 basis points ("bps") compared with gross
profit margin of 20.4% in the same period of 2023. The increase was
driven primarily by a higher proportion of, and higher margins on,
product support, industrial parts and ERS sales.(1)
- Selling and administrative expenses as a percentage of revenue
increased to 16.4% in the first quarter of 2024 from 14.7% in the
same period of 2023. Selling and administrative expenses in the
first quarter of 2024 increased $3.3
million compared with the first quarter of 2023. This
increase was due primarily to higher personnel
costs.(1)
- EBIT decreased $2.8 million, or
9.5%, to $26.7 million in the first
quarter of 2024 versus $29.5 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 11.8%, to $25.6 million in the
first quarter of 2024 from $29.0
million in the first quarter of 2023, and adjusted EBIT
margin decreased to 5.3% in the first quarter of 2024 from 5.6% in
the same quarter of 2023.(1)
- The Corporation generated net earnings of $14.7 million, or $0.68 per share, in the first quarter of 2024
versus $17.5 million, or $0.81 per share, in the same period of 2023. The
Corporation generated adjusted net earnings of $12.8 million, or $0.59 per share, in the first quarter of 2024
versus $17.8 million, or $0.83 per share, in the same period of 2023.
Adjusted net earnings in the first quarter of 2024 excludes
non-cash gains on mark to market of derivative instruments of
$1.9 million after tax, or
$0.09 per share (2023 – losses of
$0.3 million, or $0.01 per share).(1)
- Adjusted EBITDA margin increased to 8.4% in the first quarter
of 2024 from 8.3% in the first quarter of 2023.(1)
- Cash flows used in operating activities amounted to
$7.3 million in the first quarter of
2024, compared with cash flows used in operating activities of
$69.6 million in the same quarter of
the previous year. The increase in cash generated of $62.2 million was mainly attributable to a
decrease in contract assets of $16.3
million during the quarter compared to an increase of
$7.0 million in the prior year, a
decrease in trade and other receivables of $18.5 million during the quarter compared to a
decrease of $5.0 million in the prior
year, and income taxes paid of $10.0
million during the quarter compared to $27.0 million in the prior year.
- The Corporation's backlog at March 31,
2024 of $587.1 million
increased $33.1 million, or 6.0%,
compared to December 31, 2023 backlog
of $554.0 million due primarily to
higher construction and forestry orders. The Corporation's backlog
at March 31, 2024 increased
$56.4 million, or 10.6%, compared to
March 31, 2023 backlog of
$530.8 million due to higher mining
and material handling orders, offset partially by lower
construction and forestry, and industrial parts
orders.(1)
- Working capital of $542.9 million
at March 31, 2024 decreased
$17.4 million from December 31, 2023 due primarily to higher
accounts payable and accrued liabilities, lower trade and other
receivables, lower contract assets, and the Corporation's unsecured
subordinated debentures being classified within current liabilities
in the current quarter versus non-current liabilities in the prior
quarter. These decreases were offset partially by higher inventory.
Working capital efficiency was 25.6%, an increase of 180 bps from
December 31, 2023, due to the higher
trailing four quarter average working capital and the lower
trailing 12-month revenue. Excluding the debentures, working
capital of $599.3 million at
March 31, 2024 increased $39.1 million from December 31, 2023, and working capital efficiency
was 26.3%, an increase of 240 bps from December 31, 2023.(1)
- The Corporation's leverage ratio increased to 2.20 times at
March 31, 2024, compared to 1.98
times at December 31, 2023. The
increase in leverage ratio was due to the higher debt level in the
current period, driven largely by the Corporation's investment in
inventory, and lower trailing 12-month pro-forma adjusted EBITDA.
The Corporation's senior secured leverage ratio was 1.85 times at
March 31, 2024, compared to 1.64
times at December 31,
2023.(1)
- Effective January 2, 2024, Wajax
completed adjustments to its senior management structure following
the retirement of Steve Deck, Chief
Operating Officer and Senior Vice President, Heavy Equipment.
Brian Deacon was 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 most recently, was serving as Senior Vice
President, Industrial Part and ERS.
- On January 11, 2024, Wajax
amended its senior secured credit facility to increase the facility
limit from $400.0 million to
$500.0 million. The 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 credit facility.
- On March 4, 2024, the Corporation
announced a 6% increase in its quarterly dividend. A dividend of
$0.35 per share was declared for the
first quarter of 2024, paid on April 2,
2024, to shareholders of record on March 15, 2024.
Conference Call Details
Wajax will webcast its First Quarter Financial Results
Conference Call. You are invited to listen to the live webcast
on Thursday, May 2, 2024 at 2:00 p.m.
EDT. To access the webcast, please visit our website
wajax.com, under "Investor
Relations", "Events and Presentations", "Q1 2024
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
March 31, 2024 were 21,682,241 (2023 - 21,489,126) and 22,265,084
(2023 - 22,154,023), respectively.
|
|
(3)
|
Net earnings excluding
the following:
|
|
a.
|
after-tax non-cash
gains on mark to market of derivative instruments of $1.9 million
(2023 – losses of $0.3 million), or basic and diluted earnings per
share of $0.09 and $0.08, respectively (2023 – $0.01 loss per
share) for the three months ended March 31, 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
|
|
March
31
|
|
2024
|
2023
|
|
Net earnings
|
$
14.7
|
$ 17.5
|
|
Non-cash (gains) losses
on mark to market of derivative
instruments, after tax
|
(1.9)
|
0.3
|
|
Adjusted net
earnings
|
$
12.8
|
$ 17.8
|
|
Adjusted basic
earnings per share(1)
|
$
0.59
|
$ 0.83
|
|
Adjusted diluted
earnings per share(1)
|
$
0.58
|
$ 0.80
|
|
(1)
|
For the three months
ended March 31, 2024, the number of weighted average basic and
diluted shares outstanding were 21,682,241 and 22,265,084,
respectively (2023 - 21,489,126 and 22,154,023,
respectively).
|
Reconciliation of the Corporation's EBIT to EBITDA, Adjusted
EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as
follows:
|
Three months
ended
|
Twelve months
ended
|
|
March 31
2024
|
March 31
2023
|
March 31
2024
|
December 31
2023
|
|
EBIT
|
$
26.7
|
$
29.5
|
$
134.0
|
$
136.7
|
|
Depreciation and
amortization
|
15.1
|
14.0
|
59.7
|
58.6
|
|
EBITDA
|
$
41.8
|
$
43.5
|
$
193.7
|
$
195.3
|
|
|
|
|
|
|
EBIT
|
$
26.7
|
$
29.5
|
$
134.0
|
$
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 (gains) losses
on mark to market
of derivative instruments, excluding interest
rate swaps(2)
|
(1.1)
|
(0.5)
|
(0.6)
|
—
|
|
Change in fair value of
contingent
consideration(3)
|
—
|
—
|
0.3
|
0.3
|
|
Adjusted
EBIT
|
$
25.6
|
$
29.0
|
$
135.4
|
$
138.9
|
|
Depreciation and
amortization
|
15.1
|
14.0
|
59.7
|
58.6
|
|
Adjusted
EBITDA
|
$
40.7
|
$
43.0
|
$
195.1
|
$
197.4
|
|
Payment of lease
liabilities(4)
|
|
|
(36.0)
|
(35.5)
|
|
Polyphase acquisition
pro-forma EBITDA(5)
|
|
|
1.6
|
3.2
|
|
Beta acquisition
pro-forma EBITDA(5)
|
|
|
0.9
|
1.4
|
|
Pro-forma adjusted
EBITDA
|
|
|
$
161.7
|
$
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:
|
March 31
2024
|
December 31
2023
|
|
(Cash) bank
indebtedness
|
$
(2.0)
|
$
1.4
|
|
Debentures
|
56.5
|
56.3
|
|
Long-term
debt
|
297.3
|
267.8
|
|
Funded net
debt
|
$
351.8
|
$
325.5
|
|
Letters of
credit
|
4.1
|
4.8
|
|
Debt
|
$
355.9
|
$
330.3
|
|
Pro-forma adjusted
EBITDA(1)
|
$
161.7
|
$
166.7
|
|
Leverage
ratio(2)
|
2.20
|
1.98
|
|
Senior secured
leverage ratio(3)
|
1.85
|
1.64
|
|
(1)
|
For the twelve months
ended 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 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:
|
March 31
2024
|
December 31
2023
|
|
Shareholders'
equity
|
$
503.6
|
$
496.2
|
|
Funded net
debt
|
351.8
|
325.5
|
|
Total
capital
|
$
855.4
|
$
821.7
|
|
Funded net debt to
total capital
|
41.1 %
|
39.6 %
|
Calculation of the Corporation's working capital and other
working capital amounts is as follows:
|
March 31
2024
|
December 31
2023
|
|
Total current
assets
|
$
1,137.4
|
$
1,043.6
|
|
Total current
liabilities
|
594.6
|
483.4
|
|
Working
capital
|
$
542.9
|
$
560.2
|
|
Trade and other
receivables
|
(290.5)
|
(309.1)
|
|
Inventory
|
(747.4)
|
(630.9)
|
|
Debentures -
current
|
56.5
|
—
|
|
Accounts payable and
accrued liabilities
|
464.7
|
407.1
|
|
Other working
capital amounts
|
$
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 belief that HCMA's new financing
program introduced March 1, 2024 will
benefit Wajax customers and result in stronger equipment sales in
the near term; our expectation that stronger equipment sales will
result in the near term given our increased 2024 first quarter
backlog and the new HCMA financing program, and that our inventory
will decline over the next two quarters; our expectation that the
recently completed $100.0 million
increase in credit limit under our senior secured credit facility
will provide us with additional flexibility as we continue to
invest in future organic growth and our robust pipeline of
potential acquisitions; our intention to continue to monitor end
markets and customer purchasing patterns, while being prudent with
costs and maintaining focus on the execution of our strategic
priorities; our belief that fundamentals remain solid in many of
the markets we serve – particularly in mining and energy; our
expectation that the majority of recent increases in short-term
equipment rental arrangements will also convert to equipment sales
within six to twelve months; 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 ERP system rollout and additional technology improvements.
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
