Canadian Distributor Wajax Slides 8.1 Percent in the First Quarter
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.
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.