## Wajax Faces Softer Market Conditions Despite Increased Backlog and Cost Reductions
Wajax Corporation, a prominent Canadian industrial products and services provider, has announced its financial results for the third quarter of 2024. The company reported a decline in revenue compared to the same period last year, attributing this to softer-than-anticipated market conditions. Despite the revenue dip, Wajax showcased positive indicators of future potential through increased backlog and strategic cost-cutting initiatives.
Key Highlights from the Third Quarter
*
Revenue Down:
Total revenue for the third quarter reached $481.0 million, a decrease of 5.6% from the same period in 2023. The decline was mainly attributed to reduced customer demand and heightened competition, impacting product support and industrial parts sales.*
Backlog Up:
Wajax’s backlog increased to $588.1 million as of September 30, 2024, reflecting a 7.9% rise from the second quarter. This increase is primarily driven by stronger construction, forestry, and mining orders, including seven large mining shovels scheduled for delivery over the next seven quarters.*
Cost Savings:
The company successfully implemented cost-saving measures during the quarter, resulting in a reduction of selling and administrative expenses by $10.8 million compared to the second quarter of 2024. Wajax is actively seeking further cost reduction opportunities.CFO Succession
The company also announced the impending retirement of Stuart Auld, Chief Financial Officer, effective March 4, 2025. Auld joined Wajax in 2014 and has held various leadership roles, including Senior Vice President of Information Systems and Senior Vice President of Human Resources and Information Systems before assuming the CFO position in 2019.
Wajax has appointed Tania Casadinho, Vice President, Corporate Controller, as Auld’s successor. Casadinho brings over 16 years of experience in finance and accounting, having joined Wajax in 2018. The company is confident in her ability to maintain financial discipline and contribute to achieving strategic goals.
Outlook and Strategic Priorities
While acknowledging the softer market conditions, Wajax remains optimistic about the mining and energy sectors, where they observe strong customer demand. The company is committed to executing its six strategic priorities for 2024, including:
1.
People First Culture:
Building a company that prioritizes its employees.2.
Business Growth:
Expanding existing operations with a focus on parts, service, and margin improvement.3.
Hitachi Partnership:
Leveraging the potential of the enhanced direct relationship with Hitachi.4.
Acquisitions:
Acquiring industrial parts and ERS businesses to enhance its portfolio.5.
Cost Optimization:
Improving cost structure and processes to maintain efficiency.6.
Technology Enhancement:
Continuing the rollout of the ERP system and implementing additional technology improvements.Wajax is committed to exploring options for repaying or refinancing its $57.0 million in senior unsecured debentures maturing in January 2025.
Dividend Announcement
The company declared a dividend of $0.35 per share for the fourth quarter of 2024, payable on January 7, 2025, to shareholders of record on December 16, 2024.
Conclusion
Wajax’s third-quarter results highlight the challenges presented by a fluctuating market environment. However, the company’s proactive approach to cost reduction, coupled with its strong backlog and commitment to strategic priorities, suggests a resilient and forward-looking stance. The company’s focus on building a strong foundation and exploring growth opportunities positions it favorably for navigating the changing market dynamics and achieving long-term success.
