Revenue for Canadian distributor Wajax was $344.1 million in the first quarter of 2020, compared to $374.6 million in the first quarter of 2019, an 8.1-percent decline. Revenue in western Canada was $137.5 million, a 13.6-percent tumble compared to last year, primarily because of lower construction and forestry equipment sales and lower product support revenue in the construction and engines and transmissions categories.
Revenue in central Canada was $73 million, a 1.9-percent year-over-year drop, primarily because of lower product support and industrial parts sales, partially offset by higher Engineered Repair Services attributable to the acquisition of NorthPoint Technical Services effective Jan. 13.
Revenue in eastern Canada was $133.5 million, a 5.2-percent year-over-year decline, because of lower equipment sales in material handling, power generation and forestry, partially offset by sales gains in industrial parts and ERS.
The decline in the quarter was primarily attributable to the emergence of COVID-19 public health crisis. Consolidated revenue for January and February were comparable to the year-ago quarter.
Gross profit margin of 20 percent in the first quarter of 200 increased 0.5 percent compared to the same period of 2019, with higher equipment and product support margins, and parts and service sales.
"Current business conditions had a negative effect on Wajax's results during the first quarter of 2020, due primarily to volume declines in March,” said president and CEO Mark Foote. “While the ongoing COVID-19 pandemic remains the primary challenge, the significant decline in oil prices has also negatively affected the corporation's volumes in western Canada. Actions taken to reduce costs began late in the month of March and as such, did not have a material impact on offsetting the negative earnings impact of the volume decline in the first quarter.
"Based on internal estimates, approximately 90 percent of the corporation's customers fall within the definition of 'essential' workplaces or businesses, as defined by provinces where commercial activity has been limited to help stop the spread of COVID-19, and the majority of categories in which the corporation provides products and services remain operational in all regions of the country. Volume from 'essential' workplace and business customers has declined, however, due to temporary constraints on operations and/or production curtailments. Category revenue declines are expected in the second quarter of 2020 when compared to last year, particularly in new equipment sales. Cost reductions are anticipated to partially offset the effect of the expected declines in category revenue.”
Wajax, based in Mississauga, Ontario, Canada, is No. 76 on the new soon-to-be-released RER 100.
