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Outlook

Looking ahead to the first half of 2025, Wajax continues to see strong customer demand in the mining and energy sectors, with the former supported by strong backlog.⁽¹⁾ Headwinds are expected, with broader market conditions remaining soft and uncertainty surrounding potential tariffs and counter-tariffs on Canada-U.S. trade; additional headwinds are expected should such tariffs materialize. Amid this backdrop, management remains committed to executing the Corporation's six strategic priorities, which will continue to support and position the business for future success, and which have been refined for 2025. As additional focus areas, management will execute initiatives to reduce inventory, improve margins and lower costs.

Wajax's six strategic priorities for 2025 are: 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 and integrating industrial parts and ERS businesses; improving cost structure and processes; and continuing Wajax's ERP system roll-out and additional technology improvements. Please see Wajax's Management's Discussion and Analysis for the year-ended December 31, 2024, which has been filed under the Corporation's profile on SEDAR+ at www.sedarplus.ca, for further discussion regarding these priorities.

CFO Succession

As previously announced by the Corporation on November 4, 2024, Tania Casadinho has been appointed Chief Financial Officer effective March 4, 2025, following the planned retirement of Stuart Auld from that role. Mr. Auld has agreed to remain with the Corporation in the near term to support a series of operational efficiency initiatives.

"On behalf of the board and the management team, I would like to congratulate Tania on her appointment to the role of CFO," said Mr. Domagalski. "We look forward to further leveraging her expertise and disciplined approach to financial risk management." He continued, "I also want to thank Stuart for his many contributions to Wajax. His extensive operational knowledge positions him to remain a core contributor, and we appreciate the continued benefit of his expertise and leadership."

Dividend

The Corporation has declared a dividend of $0.35 per share for the first quarter of 2025, payable on April 2, 2025, to shareholders of record on March 14, 2025.

Fourth Quarter Highlights

• Revenue in the fourth quarter of 2024 increased $23.3 million, to $565.9 million, from $542.6 million in the fourth quarter of 2023. From a regional perspective:

  • Revenue in western Canada of $274.9 million increased 16.7% from the same period in the prior year due primarily to higher industrial parts sales and higher mining equipment sales, including the delivery of two large mining shovels in the fourth quarter of 2024 with no such deliveries in the fourth quarter of the prior year. These increases were offset partially by lower ERS sales.

  • Revenue in central Canada of $99.7 million decreased 5.4% from the same period in the prior year due primarily to lower equipment sales in the construction and forestry category, as well as lower ERS sales. The decrease was offset partially by higher equipment sales in the material handling category.

  • Revenue in eastern Canada of $191.4 million decreased 5.1% from the same period in the prior year due primarily to lower equipment sales in the construction and forestry category, as well as lower industrial parts sales. The decrease was partially offset by higher equipment sales in the material handling category.

• Gross profit margin of 17.1% in the fourth quarter of 2024 decreased 420 bps compared with gross profit margin of 21.2% in the same period of 2023.⁽¹⁾ This decrease in margin was driven primarily by lower margins realized on equipment, ERS and rental revenue due to increased market pressures, as well as a lower proportion of ERS, product support, and industrial parts sales relative to equipment sales.

• Selling and administrative expenses as a percentage of revenue decreased to 14.1% in the fourth quarter of 2024 from 16.1% in the same period of 2023.⁽¹⁾ Selling and administrative expenses in the fourth quarter of 2024 decreased $7.4 million, or 8.5% compared to the fourth quarter of 2023. This decrease was due primarily to lower spending in multiple areas, including personnel, bonuses, travel and entertainment, and supplies and marketing, driven largely by cost saving initiatives. Excluding the $2.3 million of contingent consideration revaluation expense (2023 – $0.3 million), and the $1.8 million of unrealized loss on total return swaps (2023 – $0.8 million unrealized gain), selling and administrative expenses decreased $12.0 million compared with the same period in the prior year, and selling and administrative expenses as a percentage of revenue decreased to 13.4% in the fourth quarter of 2024, from 16.1% in the same quarter of 2023.⁽¹⁾

• In the fourth quarter of 2024, the Corporation implemented workforce reductions in response to market conditions. A restructuring cost of $5.8 million was recognized in the fourth quarter relating primarily to severance costs.

• EBIT decreased $16.9 million, or 60.3%, to $11.1 million in the fourth quarter of 2024 from $28.1 million in the same period of 2023. The year-over-year decrease in EBIT resulted primarily from lower gross profit margin and a $5.8 million restructuring cost for workforce reductions, offset partially by reduced selling and administrative expenses.⁽¹⁾ Adjusted EBIT decreased $12.3 million, or 39.0%, to $19.3 million in the fourth quarter of 2024 from $31.7 million in the fourth quarter of 2023, and adjusted EBIT margin decreased to 3.4% in the fourth quarter of 2024 from 5.8% in the same quarter of 2023.⁽¹⁾

• Finance costs of $8.4 million in the fourth quarter of 2024 decreased $4.9 million compared with the same quarter last year due primarily to an unrealized gain on interest rate swaps of $0.2 million in the quarter compared to a loss of $5.5 million in the same period of the prior year. Excluding the unrealized gain/loss on interest rate swaps in both periods, finance costs increased $0.8 million compared with the same quarter last year due primarily to higher average borrowings under the Corporation's bank credit facility.

• The Corporation generated net earnings of $1.0 million, or $0.05 per share, in the fourth quarter of 2024 versus $11.1 million, or $0.52 per share, in the same period of 2023. The Corporation generated adjusted net earnings of $7.5 million, or $0.35 per share, in the fourth quarter of 2024 versus $17.8 million, or $0.83 per share, in the fourth quarter of 2023.⁽¹⁾ Adjusted net earnings for the quarter excludes facility closure, restructuring, and other related costs of $4.3 million after tax, or $0.20 per share (2023 - $1.4 million after tax, or $0.07 per share), losses on the change in fair value of contingent consideration of $2.3 million after tax, or $0.10 per share (2023 - $0.2 million after tax, or $0.01 per share), and non-cash gains on mark to market of derivative instruments of less than $0.1 million after tax, or less than $0.01 per share (2023 – losses of $5.0 million after tax, or $0.23 per share).⁽¹⁾

• Adjusted EBITDA margin decreased to 6.2% in the fourth quarter of 2024 from 8.7% in the fourth quarter of 2023.⁽¹⁾

• Cash flows generated from operating activities amounted to $75.9 million in the fourth quarter of 2024, compared with cash generated of $48.5 million in the same quarter of the previous year. The increase in cash generated of $27.4 million was mainly attributable to an increase in accounts payable and accrued liabilities of $37.6 million compared to a decrease of $20.3 million in the same quarter of the prior year, and a decrease in inventory of $48.4 million compared to a decrease of $29.7 million in the same quarter of the prior year. This increase in cash generated was offset partially by an increase in accounts receivable of $36.0 million in the fourth quarter of 2024 compared to a decrease of $3.9 million in the same quarter of the previous year, and a decrease in net earnings excluding items not affecting cash flow of $17.2 million.

• The Corporation's backlog at December 31, 2024 of $564.4 million decreased $23.7 million, or 4.0%, compared to September 30, 2024 backlog of $588.1 million due primarily to lower material handling and mining orders. Backlog at December 31, 2024 included seven large mining shovels.⁽¹⁾

• Working capital of $532.4 million at December 31, 2024 decreased $39.6 million, from $572.0 million at September 30, 2024 due primarily to lower inventory and higher accounts payable and accrued liabilities, offset partially by higher trade and other receivables.⁽¹⁾ Working capital efficiency was 26.0%, a decrease of 60 bps from 26.6% at September 30, 2024 due to the lower trailing four quarter average working capital and higher trailing 12-month revenue.⁽¹⁾ Excluding the Corporation's senior unsecured debentures, working capital of $589.4 million at December 31, 2024 decreased $39.4 million from $628.8 million at September 30, 2024, and working capital efficiency was 28.7% as at both December 31, 2024 and September 30, 2024.⁽¹⁾

• The Corporation's leverage ratio decreased to 2.61 times at December 31, 2024, compared to 2.78 times at September 30, 2024.⁽¹⁾ The decrease in the leverage ratio was due to a lower debt level driven largely by cash generated from operating activities during the quarter. The Corporation's senior secured leverage ratio was 2.17 times at December 31, 2024, compared to 2.38 times at September 30, 2024.⁽¹⁾

• Subsequent to year end, on January 15, 2025, Wajax announced the repayment in full of the $57.0 million in principal amount owed under its 6.00% senior unsecured debentures due January 15, 2025, along with accrued interest up to but excluding the maturity date. The Corporation's existing bank credit facility was used to complete the repayment.

Conference Call Details

Wajax will webcast its Fourth Quarter Financial Results Conference Call. You are invited to listen to the live webcast on Tuesday, March 4, 2025 at 2:00 p.m. EDT. To access the webcast, please visit our website wajax.com, under "Investor Relations", "Events and Presentations", "Q4 and Year-End 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.

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:

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:

Reconciliation of the Corporation's EBIT to EBITDA, Adjusted EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as follows:

Calculation of the Corporation's funded net debt, debt, leverage ratio and senior secured leverage ratio is as follows:

Calculation of total capital and funded net debt to total capital is as follows:

Calculation of the Corporation's working capital and other working capital amounts is as follows:

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: management's commitment to executing our six strategic priorities and our belief that such priorities will continue to support and position our business for future success; our additional focus on the execution of initiatives to reduce inventory, improve margins and lower costs; our outlook for the first half of 2025, including our expectation of strong customer demand in the mining and energy sectors, headwinds related to softer market conditions in the broader market and uncertainty surrounding potential tariffs and counter-tariffs on Canada-U.S. trade, and additional headwinds should such tariffs materialize; our six strategic priorities for 2025: 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 and integrating industrial parts and ERS businesses, improving cost structure and processes, and continuing Wajax's ERP system roll-out 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; our ability to manage our business through the imposition of new or changing trade tariffs; 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 enhanced 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; new tariffs and counter-tariffs imposed on cross-border trade, particularly between Canada and the U.S.; 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 enhanced 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, 2024 (the "2024 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 2024 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 2024 Annual Report, is available under the Corporation's profile on SEDAR+ at www.sedarplus.ca.

SOURCE Wajax Corporation

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