After the market closed on Tuesday, Wajax Corporation (WJX: CN) posted a first quarter earnings miss, which was led largely by poorer margins in the Equipment division. We observed that parts and service could not immune to headwinds. Wajax Corporation (“Wajax” or the “Corporation”) announced its 2015 first quarter results as follow.
First Quarter Highlights
- Consolidated first quarter revenue of $317.2 million decreased $14.2 million, or 4%, compared to last year. Compared to the previous year, Equipment and Power Systems segment revenue declined 9% and 3%, respectively, while Industrial Components segment sales increased 2%. Reduced activity in the mining, oil and gas and oil sands sectors negatively affected revenue from western Canada in all three segments. However, in the Industrial Components segment this was more than offset by stronger sales in Ontario and eastern Canada.
- Net earnings for the quarter of $5.7 million, or $0.34 per share, decreased $1.0 million compared to $6.7 million, or $0.40 per share recorded in 2014. Equipment segment earnings decreased to $6.8 million, while Power Systems segment earnings were essentially flat at $3.4 million. Industrial Components segment earnings increased $2.2 million, to $3.4 million. Earnings in this segment were positively impacted by higher volumes and reduced selling and administrative costs compared to last year, despite a $1.3 million increase in bad debt expenses.
- On a consolidated basis, selling and administrative costs were $3.8 million lower than the previous year as a result of workforce reductions and lower incentive accruals, severance costs and sales related expenses.
- Consolidated backlog at March 31, 2015 of $173.3 million decreased 2% compared to December 31, 2014 and increased 10% compared to March 31, 2014.
- Funded net debt of $252.0 million at March 31, 2015 increased $51.0 million in the quarter as a result of cash used in operating activities and the payment of dividends. Cash used in operating activities included $43.9 million in changes in non-cash operating working capital attributable to lower accounts payable and accrued liabilities and seasonal increases in inventory.
Wajax is a leading Canadian distributor engaged in the sale, rental and after-sale parts and service support of equipment, power systems and industrial components, through a network of 123 branches across Canada. The Corporation is a multi-line distributor and represents a number of leading worldwide manufacturers across its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.