Expanded Relationship with Hitachi,
Continued Growth in Industrial Parts and Engineered Repair
Services, Drive 8.3% Year-Over-Year Revenue Increase and 24.4%
Increase in Adjusted Net Earnings(1)
TORONTO, Nov. 6, 2023
/CNW/ - Wajax Corporation ("Wajax" or the
"Corporation") today announced its 2023 third quarter
results. All monetary amounts are in Canadian dollars unless
otherwise noted.
Selected Highlights for the Third Quarter
- Third quarter revenue of $509.7
million, up 8.3% over 2022;
- Third quarter adjusted EBITDA of $50.0
million, up 28.0% over 2022;
- Third quarter adjusted net earnings of $20.7 million, up 24.4% over 2022; and
- Ended the quarter with record backlog of $599.2 million, up $48.0
million from June 30,
2023.(1)
"We continued to execute clearly against our core strategic
priorities during the third quarter, and this drove strong
financial performance," said Iggy
Domagalski, President and Chief Executive Officer. "Top line
growth was supported by sustained customer demand across all
regions, including continued positive momentum in central
Canada. Solid year-over-year
growth in product support sales was complemented by even greater
strength in industrial parts revenue. Improved operating leverage
saw year-to-date adjusted basic earnings per share grow 25.8%
versus 2022, to $3.06. Our record
backlog of $599.2 million, up
$48.0 million sequentially from the
second quarter due largely to mining orders, as well as solid
fundamentals across many of Wajax's key markets, supports
confidence in our prospects as we advance into the fourth quarter
and beyond."(1)
"We also continued to execute our industrial parts and
engineered repair services growth strategy during the quarter,
adding sought-after technical capabilities and expanding the
services we offer to customers across the country. We acquired
Calgary-based Polyphase Engineered
Controls, and Sault Ste.
Marie-based Beta Fluid Power and Beta Industrial, increasing
our custom electrical, hydraulic and pneumatic capabilities in key
regions. Becoming an increasingly valuable partner, with a fully
integrated service offering is critical to gaining market share,
driving improved margins and offering a top-notch customer service
experience. The acquisitions of Polyphase, Beta Fluid Power and
Beta Industrial, as well as our strategic investments in inventory
during the year, resulted in our leverage ratio increasing to 2.16
times during the quarter, slightly above our target range of 1.5 to
2.0 times. Our strong financial results and balance sheet give us
the flexibility to further invest in our expanded Hitachi
relationship, additional organic initiatives and acquisition
opportunities to help drive future growth."(1)
(Dollars in millions, except per share
data)
|
Three Months Ended
September 30
|
Nine Months Ended
September 30
|
|
2023
|
2022
|
% change
|
2023
|
2022
|
% change
|
CONSOLIDATED RESULTS
|
|
|
|
|
|
|
Revenue
|
$509.7
|
$470.8
|
8.3 %
|
$1,612.0
|
$1,421.5
|
13.4 %
|
Equipment sales
|
$126.0
|
$136.9
|
(8.0 %)
|
$448.6
|
$426.3
|
5.2 %
|
Product support
|
$135.1
|
$118.8
|
13.7 %
|
$410.4
|
$365.6
|
12.3 %
|
Industrial parts
|
$160.9
|
$134.7
|
19.4 %
|
$469.1
|
$397.9
|
17.9 %
|
Engineered repair services
(ERS)
|
$76.7
|
$70.1
|
9.4 %
|
$250.6
|
$202.9
|
23.5 %
|
Equipment rental
|
$11.1
|
$10.3
|
7.7 %
|
$33.2
|
$28.9
|
15.1 %
|
|
|
|
|
|
|
|
Net earnings
|
$23.4
|
$18.0
|
30.1 %
|
$69.9
|
$55.8
|
25.3 %
|
Basic earnings per
share(2)
|
$1.09
|
$0.84
|
29.6 %
|
$3.25
|
$2.60
|
24.9 %
|
|
|
|
|
|
|
|
Adjusted net
earnings(1)(3)
|
$20.7
|
$16.7
|
24.4 %
|
$65.7
|
$52.0
|
26.2 %
|
Adjusted basic earnings per
share(1)(2)(3)
|
$0.96
|
$0.78
|
23.8 %
|
$3.06
|
$2.43
|
25.8 %
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
$50.0
|
$39.1
|
28.0 %
|
$150.2
|
$123.6
|
21.6 %
|
Outlook
After the first nine months of
2023, 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. The Corporation's record
backlog also continues to support management's confidence as Wajax
advances into the last quarter of the year.(1) In
addition to expected growth in its heavy equipment business, Wajax
continues to anticipate further strong demand in its less cyclical
industrial parts and engineered repair services ("ERS")
businesses. For the balance of 2023, Wajax continues to expect
challenges associated with supply chain volatility, although
additional improvements are anticipated. Higher interest rates,
wage and price inflation, and a tight labour market are also
expected to remain challenges, and management continues to monitor
market dynamics and customer sentiment for signs of possible
weakness.
The Corporation's core strategic priorities remain unchanged and
Wajax is focused on continuing to invest in its people and their
overall health and well-being, leveraging its enhanced relationship
with Hitachi, delivering exceptional customer value, organically
growing its business, transacting on its robust acquisition
pipeline, prudently managing its balance sheet, deploying its ERP
system, and entrenching sustainability into the business.
Dividend
The Corporation has declared a dividend of
$0.33 per share for the fourth
quarter of 2023, payable on January 3,
2024, to shareholders of record on December 15, 2023.
Third Quarter Highlights
- Revenue in the third quarter of 2023 increased $39.0 million, or 8.3%, to $509.7 million, from $470.8 million in the third quarter of
2022. Regionally:
-
- Revenue in western Canada of
$232.9 million increased 3.8% from
the prior year due to strong industrial parts sales, material
handling sales, and product support revenue in the mining category.
These increases were offset partially by lower equipment sales in
the construction and forestry, and mining categories.
-
- Revenue in central Canada of
$92.0 million increased 29.7% from
the prior year due primarily to higher equipment sales in the
material handling, and construction and forestry categories, as
well as higher product support revenue in all categories, and
strong industrial parts and ERS sales.
-
- Revenue in eastern Canada of
$184.8 million increased 5.3% from
the prior year due primarily to higher industrial parts and ERS
sales, offset partially by lower equipment sales in the power
systems category.
- Gross profit margin of 22.2% in the third quarter of 2023
increased 180 basis points ("bps") compared with gross
profit margin of 20.3% in the same period of 2022.(1)
The increase was driven primarily by higher product support,
equipment and ERS margins, as well as a higher proportion of
industrial parts sales. These increases were offset partially by
lower industrial parts margins.
- Selling and administrative expenses as a percentage of revenue
decreased to 14.5% in the third quarter of 2023 from 14.7% in the
third quarter of 2022, driven by the 8.3% increase in
revenue.(1) Selling and administrative expenses in the
third quarter of 2023 increased $5.0
million compared with the third quarter of 2022 due
primarily to higher personnel costs as the volume of business
increased over the prior year.
- EBIT increased $12.3 million, or
46.3%, to $39.0 million in the third
quarter of 2023 versus $26.7 million
in the same period of 2022. The year-over-year increase in EBIT
resulted primarily from higher sales volumes and higher product
support margins, offset partially by higher selling and
administrative expenses.
- The Corporation generated net earnings of $23.4 million, or $1.09 per share, in the third quarter of 2023
versus $18.0 million, or $0.84 per share, in the same period of 2022. The
Corporation generated adjusted net earnings of $20.7 million, or $0.96 per share, in the third quarter of 2023
versus $16.7 million, or $0.78 per share, in the same period of 2022.
Adjusted net earnings in the third quarter of 2023 excludes
non-cash gains on mark to market of derivative instruments of
$2.5 million after-tax, or
$0.12 per share (2022 – gains of
$1.3 million, or $0.06 per share), and a gain recorded on the sale
of properties of $0.1 million after
tax, or less than $0.01 per share
(2022 - nil).(1)
- Adjusted EBITDA margin increased to 9.8% in the third quarter
of 2023 from 8.3% in the third quarter of 2022.(1)
- The Corporation's backlog at September
30, 2023 of $599.2 million
increased $48.0 million, or 8.7%,
compared with June 30, 2023 backlog
of $551.2 million due primarily to
higher mining orders, offset partially by lower ERS and industrial
parts orders. The Corporation's backlog at September 30, 2023 of $599.2 million increased $40.5 million, or 7.2%, compared to September 30, 2022 due to higher mining, ERS and
material handling orders, offset partially by lower construction
and forestry, industrial parts, and power systems
orders.(1)
- Working capital of $591.4 million
at September 30, 2023 increased
$110.8 million from June 30, 2023 due primarily to higher inventory
and lower accounts payable and accrued liabilities. Working
capital efficiency was 21.4%, an increase of 250 bps from
June 30, 2023, due to the higher
trailing four quarter average working capital.(1)
- Cash flows used in operating activities amounted to
$62.0 million in the third quarter of
2023, compared with cash flows used in operating activities of
$3.4 million in the same quarter of
the previous year. The decrease in cash flows generated from
operating activities of $58.6 million
was mainly attributable to a decrease in accounts payable and
accrued liabilities of $69.4 million
during the quarter driven largely by timing of inventory payments,
compared to an increase of $41.7
million in the same quarter of the prior year. This decrease
in cash generated was offset partially by a decrease in trade and
other receivables of $2.7 million
during the quarter compared to an increase of $36.2 million in the prior year, and by an
increase in net earnings excluding items not affecting cash flow of
$11.2 million.
- The Corporation's leverage ratio increased to 2.16 times at
September 30, 2023, compared with
1.76 times at June 30, 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, timing on repayment of accounts payable and accrued
liabilities, and cash paid for business acquisitions in the
quarter. The Corporation's senior secured leverage ratio was
1.82 times at September 30, 2023,
compared with 1.38 times at June 30,
2023.(1)
- On July 4, 2023, the Corporation
acquired all of the issued and outstanding shares of Polyphase
Engineered Controls (1977) Ltd. ("Polyphase"). The shares of
Polyphase were acquired for an estimated aggregate purchase price
of approximately $26.9 million,
subject to normal post-closing adjustments and the results of a
three-year performance-based earnout. Polyphase's trailing
twelve-month revenue at the time of acquisition was approximately
$25.8 million.
- On September 1, 2023, the
Corporation acquired all of the issued and outstanding shares of
Beta Fluid Power Ltd. and Beta Industrial Ltd. (together,
"Beta") for an estimated aggregate purchase price of
approximately $8.5 million, subject
to normal post-closing adjustments and the results of a three-year
performance-based earnout. Beta's trailing twelve-month revenue at
the time of acquisition was approximately $16.7 million.
- On November 6, 2023, Wajax
announced the retirement of Steve
Deck, Chief Operating Officer, and Senior Vice President,
Heavy Equipment, to be effective January 1,
2024. Since joining the Corporation in 2014 to lead its
industrial components business, Mr. Deck has held a number of
senior executive roles and played a significant role in executing
the "One Wajax" strategy, building the vision for Wajax's
industrial parts and ERS business, and developing Wajax's
relationship with Hitachi. Succession planning remains underway,
and additional information will be provided in due course. Mr. Deck
will remain active in his role until his retirement date, and will
support the orderly transition of his responsibilities.
Conference Call Details
Wajax will webcast its Third
Quarter Financial Results Conference Call. You are invited to
listen to the live webcast on Tuesday,
November 7, 2023 at 2:00 p.m.
EDT. To access the webcast, please visit our website
wajax.com, under "Investor
Relations", "Events and Presentations", "Q3 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.
The Corporation's goal is to be Canada's leading industrial products and
services provider, distinguished through its three core
capabilities: sales force excellence, the breadth and efficiency of
repair and maintenance operations, and the ability to work closely
with existing and new vendor partners to constantly expand its
product offering to customers. The Corporation believes that
achieving excellence in these three areas will position it to
create value for its customers, employees, vendors and
shareholders.
Notes:
(1)
|
"Adjusted net
earnings", "Adjusted basic earnings per share", "Adjusted EBITDA",
"Adjusted EBITDA margin", "Backlog", "Leverage ratio", "Senior
secured leverage ratio", "Working capital", "Working capital
efficiency", "Gross profit margin", and "Selling and administrative
expenses as a percentage of revenue" 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
September 30, 2023 was 21,489,982 (2022 – 21,399,694) and
22,243,361 (2022 – 22,217,478), respectively.
|
|
Weighted average
shares, net of shares held in trust, outstanding for calculation of
basic and diluted earnings per share for the nine months ended
September 30, 2023 was 21,488,776 (2022 - 21,412,993) and
22,198,036 (2022 - 22,186,152), respectively.
|
(3)
|
Net earnings excluding
the following:
|
|
a.
|
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 three months ended September 30, 2023.
|
|
b.
|
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 nine months ended September 30, 2023.
|
|
c.
|
after-tax non-cash
gains on mark to market of derivative instruments of $2.5 million
(2022 – gains of $1.3 million), or basic and diluted earnings per
share of $0.12 and $0.11, respectively (2022 – $0.06 earnings per
share) for the three months ended September 30, 2023.
|
|
d.
|
after-tax non-cash
gains on mark to market of derivative instruments of $4.1 million
(2022 – gains of $3.7 million), or basic and diluted earnings per
share of $0.19 (2022 – earnings per share of $0.17) for the nine
months ended September 30, 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 gains/losses recorded on the sale of properties,
restructuring and other related costs, non-cash gains/losses on
mark to market of derivative instruments, and acquisition-related
transaction costs.
|
|
|
Adjusted basic earnings (loss) per share and adjusted
diluted earnings (loss) per share
|
Basic and diluted
earnings (loss) per share before any gains/losses recorded on the
sale of properties, restructuring and other related costs, non-cash
gains/losses on mark to market of derivative instruments, and
acquisition-related transaction costs.
|
|
|
Adjusted EBIT
|
EBIT before any
gains/losses recorded on the sale of properties, restructuring and
other related costs, non-cash gains/losses on mark to market of
derivative instruments, and acquisition-related transaction
costs.
|
|
|
Adjusted EBITDA
|
EBITDA before any
gains/losses recorded on the sale of properties, restructuring and
other related costs, non-cash gains/losses on mark to market of
derivative instruments, and acquisition-related transaction
costs.
|
|
|
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:
|
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
|
Nine months ended
|
|
September 30
|
September 30
|
|
2023
|
2022
|
2023
|
2022
|
Net earnings
|
$
23.4
|
$
18.0
|
$
69.9
|
$
55.8
|
Gain recorded on the
sale of properties, after-tax
|
(0.1)
|
—
|
(0.1)
|
—
|
Non-cash gains on mark
to market of derivative instruments, after-tax
|
(2.5)
|
(1.3)
|
(4.1)
|
(3.7)
|
Adjusted net earnings
|
$
20.7
|
$
16.7
|
$
65.7
|
$
52.0
|
Adjusted basic earnings per
share(1)
|
$
0.96
|
$
0.78
|
$
3.06
|
$
2.43
|
Adjusted diluted earnings per
share(1)
|
$
0.93
|
$
0.75
|
$
2.96
|
$
2.34
|
(1)
|
For the three months
ended September 30, 2023, the number of weighted average basic and
diluted shares outstanding were 21,489,982 and 22,243,361,
respectively (2022 - 21,399,694 and 22,217,478,
respectively).
|
|
For the nine months
ended September 30, 2023, the number of weighted average basic and
diluted shares outstanding were 21,488,776 and 22,198,036,
respectively (2022 - 21,412,993 and 22,186,152,
respectively).
|
Reconciliation of the Corporation's EBIT to EBITDA, Adjusted
EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as
follows:
|
Three months ended
|
Nine months ended
|
Twelve months ended
|
|
September 30
2023
|
September
30
2022
|
September 30
2023
|
September
30
2022
|
September 30
2023
|
June 30
2023
|
December
31
2022
|
EBIT
|
$
39.0
|
$
26.7
|
$
112.9
|
$ 87.1
|
$
139.6
|
$
127.3
|
$
113.9
|
Depreciation and
amortization
|
14.6
|
14.2
|
43.0
|
41.4
|
57.1
|
56.7
|
55.5
|
EBITDA
|
$
53.6
|
$
40.8
|
$
155.9
|
$ 128.5
|
$
196.7
|
$
184.0
|
$
169.3
|
|
|
|
|
|
|
|
|
EBIT
|
$
39.0
|
$
26.7
|
$
112.9
|
$ 87.1
|
$
139.6
|
$
127.3
|
$
113.9
|
Gain recorded on the
sale of properties
|
(0.1)
|
—
|
(0.1)
|
—
|
(0.1)
|
—
|
—
|
Non-cash gains on mark
to market of derivative instruments(1)
|
(3.4)
|
(1.7)
|
(5.6)
|
(5.0)
|
(4.1)
|
(2.3)
|
(3.5)
|
Adjusted EBIT
|
$
35.4
|
$
25.0
|
$
107.2
|
$ 82.2
|
$
135.4
|
$
125.0
|
$
110.4
|
Depreciation and
amortization
|
14.6
|
14.2
|
43.0
|
41.4
|
57.1
|
56.7
|
55.5
|
Adjusted EBITDA
|
$
50.0
|
$
39.1
|
$
150.2
|
$ 123.6
|
$
192.6
|
$
181.6
|
$
165.9
|
Payment of lease
liabilities(2)
|
|
|
|
|
(32.0)
|
(33.7)
|
(32.0)
|
Polyphase acquisition
pro-forma EBITDA(3)
|
|
|
|
|
4.9
|
—
|
—
|
Beta acquisition
pro-forma EBITDA(3)
|
|
|
|
|
2.0
|
—
|
—
|
Pro-forma adjusted EBITDA
|
|
|
|
|
$
167.4
|
$
147.9
|
$
133.9
|
(1)
|
Non-cash losses (gains)
on mark to market of non-hedged derivative instruments.
|
(2)
|
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.
|
(3)
|
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:
|
September 30
2023
|
June 30
2023
|
December
31
2022
|
Bank
indebtedness
|
$
(3.9)
|
$
4.4
|
$
5.2
|
Debentures
|
56.2
|
56.0
|
55.8
|
Long-term
debt
|
304.7
|
195.9
|
83.6
|
Funded net debt
|
$
356.9
|
$
256.4
|
$
144.6
|
Letters of
credit
|
4.4
|
4.4
|
6.2
|
Debt
|
$
361.3
|
$
260.8
|
$
150.8
|
Pro-forma adjusted
EBITDA(1)
|
$
167.4
|
$
147.9
|
$
133.9
|
Leverage ratio(2)
|
2.16
|
1.76
|
1.13
|
Senior secured leverage
ratio(3)
|
1.82
|
1.38
|
0.71
|
(1)
|
For the twelve months
ended September 30, 2023, June 30, 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.
|
Calculation of total capital and funded net debt to total
capital is as follows:
|
September 30
2023
|
June 30
2023
|
December
31
2022
|
Shareholders'
equity
|
$
494.2
|
$
475.9
|
$
449.8
|
Funded net
debt
|
356.9
|
256.4
|
144.6
|
Total capital
|
$
851.1
|
$
732.3
|
$
594.4
|
Funded net debt to total
capital
|
41.9 %
|
35.0 %
|
24.3 %
|
Calculation of the Corporation's working capital and other
working capital amounts is as follows:
|
September 30
2023
|
June 30
2023
|
December
31
2022
|
Total current
assets
|
$
1,092.3
|
$
1,042.9
|
$
860.1
|
Total current
liabilities
|
500.9
|
562.2
|
514.1
|
Working capital
|
$
591.4
|
$
480.6
|
$
346.0
|
Trade and other
receivables
|
(313.9)
|
(308.4)
|
(307.1)
|
Inventory
|
(659.0)
|
(625.1)
|
(462.2)
|
Accounts payable and
accrued liabilities
|
428.2
|
487.3
|
423.8
|
Other working capital amounts
|
$
46.7
|
$
34.4
|
$
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 our record backlog,
as well as solid fundamentals across many of our key markets,
supports confidence in our prospects as we advance into the fourth
quarter and beyond; our belief that our strong financial results
and balance sheet give us the flexibility to continue to invest in
our expanded Hitachi relationship, additional organic initiatives
and acquisition opportunities to help drive future growth; our
outlook after nine months of 2023, including our continued view
that solid fundamentals persist in many of the markets Wajax serves
– particularly mining, energy and construction, and that our strong
backlog also continues to support our confidence as Wajax advances
into the last quarter of the year; our continued expectation of
growth in our heavy equipment business, and our anticipation of
further strong demand in our less cyclical industrial parts and ERS
businesses; our continued expectation that, for the balance of
2023, we will experience challenges associated with supply chain
volatility, although additional improvements are anticipated; our
expectation that higher interest rates, inflation, and a tight
labour market will also remain challenges, and our continued
monitoring of market dynamics and customer sentiment for signs of
possible weakness; our core strategic priorities, including our
continued focus on investing in Wajax's people and their overall
health and well-being, leveraging our enhanced relationship with
Hitachi, delivering exceptional customer value, organically growing
our business, transacting on our robust acquisition pipeline,
prudently managing our balance sheet, deploying our ERP system, and
entrenching sustainability into our business; our objective of
managing our working capital and normal-course capital investment
programs within a leverage range of 1.5 – 2.0 times; and our goal
of being Canada's leading
industrial products and services provider, distinguished by our
sales force excellence, the breadth and efficiency of our repair
and maintenance operations, and our ability to work closely with
existing and new vendor partners to constantly expand our product
offering to customers, together with our belief that achieving
excellence in these three areas will position us to create value
for our customers, employees, vendors and shareholders. 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 One Wajax
strategy, including our ability to execute on our organic growth
priorities, complete and effectively integrate acquisitions, such
as Polyphase and Beta, and successfully implement new information
technology platforms, systems and software, such as our ERP system;
the receding effects of the COVID-19 pandemic and actions taken by
governments, public authorities, suppliers and customers in
response to the COVID-19 virus and its variants; 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, including as a result of new
COVID-19 variants or armed conflicts between nations; 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; a decrease
in levels of customer confidence and spending; supply chain
disruptions and shortages related to or arising from the impacts of
COVID-19 or armed conflicts between nations; fluctuations in
financial market conditions, including interest rates; the impacts
of new COVID-19 variants, including the duration and severity of
travel, business and other restrictions imposed by governments and
public authorities in response to such variants; actions taken by
our suppliers and customers in relation to new COVID-19 variants,
including slowing, reducing or halting operations; 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; 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 (including those
caused by or related to new COVID-19 variants), 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, 2022 (the
"2022 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 2022
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