Canada’s Wajax Improves Fourth Quarter Profits
Canadian distributor Wajax Corp. posted CDN $313.7 million in fourth quarter revenue, compared to $324.4 million (about U.S. $234.9 million) in the fourth quarter of 2015, a 3.3-percent year-over-year decline. For the full year, Wajax’s revenue was $1,221.9 million compared to $1,273.3 in 2015, a 4-percent slide.
The Equipment segment declined 5 percent on lower Western Canada construction, material handling and forestry volumes. The Power Systems and Industrial Components segments each posted revenue declines of 2 percent on lower power generation and mining sector volumes respectively.
Rental revenue declined in the fourth quarter to $11.3 million compared to $12.6 million in the fourth quarter of 2015, a 10.3-percent dip. For the full year, equipment rental revenue dropped from about $50.3 million in 2015 to $43.8 million, a 12.8 percent slide.
For the fourth quarter, Wajax recorded net earnings of $8.9 million compared to a net loss in Q415 of $33.3 million.
“Despite the continuing challenging market conditions, Wajax delivered improved results in the fourth quarter,” said Mark Foote, president and CEO of Wajax. “On an adjusted net earnings basis and excluding the impact of insurance recoveries and the environmental provision, fourth quarter results increased over the previous year as higher gross margins and lower selling and administrative costs more than made up for the reduction in revenue. We are pleased with the improvement in our Power Systems segment, where our cost reduction and margin improvement initiatives significantly benefited fourth quarter results.”
Foote said the company saved $8.6 million in 2016 because of reorganization efforts and the company expects about $17 million in annualized cost savings in 2017.
“Looking forward to 2017, although there have been some announced increases in planned investments by Canadian oil and gas companies, we expect that most major resource and industrial markets will remain under continuing spending and resultant competitive pressure,” said Foote in regard to 2017 expectations. “Our focus in 2017 will be to generate revenue sufficient to offset the four large shovel deliveries made in 2016 which are not expected to be repeated, effectively manage our margins and ensure we deliver the operational improvements and full annualized savings expected from our reorganization. Assuming the achievement of these objectives, we anticipate net earnings in 2017 will increase compared to 2016 adjusted net earnings.”
Wajax, based in Mississauga, Ontario, Canada, is a leading Canadian distributor engaged in sale, rental and aftermarket parts and service support of equipment, power systems and industrial components through 109 Canadian branch locations. A major rental player, Wajax is No. 54 on the RER 100.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.