WAJAX ANNOUNCES 2025 SECOND QUARTER RESULTS

Executive Summary

• Wajax Corporation reported its second quarter 2025 financial results, showing a decline in revenue and adjusted earnings per share compared to the prior year due to increased market pressures, though cash flow from operations improved significantly.
• The company highlighted successful inventory optimization, reducing inventory by $56.0 million sequentially and $147.5 million from peak levels, which contributed to an improved leverage ratio of 2.35 times.
• Management announced a workforce reduction resulting in $3.8 million in restructuring costs and appointed Michael Hachey as Chief Operating Officer effective June 2, 2025.

Key Details

• Revenue: $547.1 million for Q2 2025, a 3.7% decrease from $568.3 million in Q2 2024.
  • Six-month revenue was $1,102.1 million, up 4.9% from $1,050.6 million in the prior year.
  • Equipment sales: $176.7 million (down 2.1% YoY).
  • Product support: $133.4 million (down 7.9% YoY).
  • Industrial parts: $141.1 million (down 4.1% YoY).
  • Engineered repair services (ERS): $84.1 million (down 1.1% YoY).
  • Equipment rental: $11.8 million (up 8.4% YoY).
• Profitability:
  • Net earnings: $15.5 million ($0.71 per share), down from $20.6 million ($0.95 per share) in Q2 2024.
  • Adjusted net earnings: $16.7 million ($0.77 per share), down from $22.9 million ($1.06 per share) in Q2 2024.
  • Gross profit margin: 19.1%, down from 20.9% in Q2 2024, but flat vs Q1 2025 and up 200 bps from Q4 2024.
  • Adjusted EBIT: $29.4 million (down 25.2% YoY).
  • Adjusted EBITDA: $44.7 million (down 18.3% YoY).
• Cash Flow & Balance Sheet:
  • Cash flow from operations: $67.4 million, up from $35.8 million in Q2 2024.
  • Inventory: $602.5 million, decreased by $56.0 million from Q1 2025 and $147.5 million from March 31, 2024 peaks.
  • Leverage ratio: Improved to 2.35 times from 2.53 times at March 31, 2025.
  • Working capital: $530.7 million, a decrease of $45.8 million from March 31, 2025.
  • Backlog: $524.3 million at June 30, 2025, down 6.6% from March 31, 2025, driven by the delivery of a large mining shovel.
• Operational Updates:
  • Restructuring costs of $3.8 million were recognized in Q2 2025 related to a workforce reduction implemented in response to economic conditions.
  • Finance costs decreased to $6.3 million from $9.8 million in Q2 2024, aided by lower interest rates and the repayment of senior unsecured debentures on January 15, 2025.
  • Michael Hachey was appointed Chief Operating Officer effective June 2, 2025.
• Dividends:
  • Declared a dividend of $0.35 per share for Q3 2025, payable on October 2, 2025, to shareholders of record on September 15, 2025.

Notable Quotes

• "Inventory optimization and strong cost discipline generated robust second quarter cash flows from operations of $67.4 million, alongside another sequential quarterly improvement in our leverage ratio," said Iggy Domagalski, President and Chief Executive Officer.
• "While we experienced some year-over-year margin compression due to increased market pressures, our gross profit margin of 19.1% remained flat versus the first quarter of 2025 and improved 200 basis points from 17.1% in the fourth quarter of 2024. Overall profitability continues to improve..."
• "Looking ahead, business and economic uncertainty, particularly in relation to Canada-U.S. trade relations, remains a significant headwind. While tariffs have had a minimal direct impact on our business, they have affected some of our customers more significantly."