Wajax (WJX) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 5.6% year-over-year to CAD 481 million, mainly due to lower mining and industrial parts sales and softer market conditions.

• Gross profit margin fell to 19.2%, down 300 basis points, reflecting a higher proportion of equipment sales and increased market pressures.

• Adjusted EBITDA dropped 25.3% to CAD 37.4 million, and adjusted EPS fell 54.2% to CAD 0.44.

• Cost-saving initiatives reduced selling and administrative expenses by 6.6% or $5.0 million year-over-year.

• Backlog increased 7.9% sequentially to $588.1 million, driven by higher construction, forestry, and mining orders.

Financial highlights

• Equipment sales rose 4.5% to CAD 132 million, driven by construction and forestry, offset by lower mining sales.

• Product support sales declined 8.9% to CAD 123 million; industrial parts sales fell 15.3% to CAD 136 million; ERS revenue grew 1.9%.

• Adjusted EBITDA margin fell to 7.8% from 9.8% year-over-year.

• Cash flows used in operating activities improved to $34.5 million from $62.0 million year-over-year.

• Dividend of $0.35 per share declared for Q4 2024.

Outlook and guidance

• Management expects continued strong demand in mining and energy, but reduced activity in industrial and forestry.

• Further cost-reduction measures are being pursued in response to softer market conditions.

• Focus remains on six strategic priorities, including margin improvement, cost structure, and ERP rollout.

• Management is evaluating options to repay or refinance $57.0 million in debentures maturing January 2025.

• Inventory levels are expected to decline in Q4 as large pre-sold equipment is delivered.