The third-quarter revenue of Canadian distributor Wajax Corp. declined from CDN $356.4 in last year’s third quarter to $338.5 million (about U.S. $325 million) this year, a 5-percent drop. For the first nine months of the year, revenue was CDN $1.037 billion (about U.S. $995 million), compared to $1.1 billion last year, a 5.8-percent decline. Lower mining equipment sales in the equipment segment and the negative effect of reduced activity in the western Canada oil-and-gas sector on Power Systems’ segment revenue were the primary factors contributing to consolidated revenue declines.
Partially offsetting these factors was a 4-percent in the Industrial Components segment revenue as a result of the ACE Hydraulic and Kaman Canada acquisitions completed in the fourth quarter of 2012.
Net earnings for the quarter were CDN $11.5 million, compared to $16.2 million a year ago. Equipment and Power Systems segment earnings decreased $1.5 million and $2.3 million respectively on lower volumes and increased selling and administrative expenses. Industrial Components segment earnings declined by $1.2 million as higher acquisition-related revenues were insufficient to offset reduced margins and an increase in selling and administrative costs.
“Third-quarter revenue and earnings were largely as expected,” said president and CEO Mark Foote. “When compared to last year, revenue was negatively affected by continued weakness in the oil and gas and mining markets. Mining-related revenue declines, including the loss of the LeTourneau product line, were partially mitigated by increases in mining-associated aftermarket sales driven by improvements in equipment support revenue and continuing gains from our rotating products growth initiative.
“We continue to expect the weakness in the oil-and-gas market to remain for the balance of 2013, with demand for new equipment and aftermarket services for drilling, and well stimulation continuing to be soft. In mining, quoting activity remains at a reasonable level for the Equipment segment, as well as Power Systems’ electrical power-generation business. However, lower commodity prices continue to result in mining customers reducing their capital and development spending, limiting their ability to commit to new equipment orders. In spite of this, we were able to increase our consolidated backlog on increases in non-mining related orders and electric power generation orders in the Equipment and Power Systems segments respectively. As well, the commercial trial of the four Hitachi EH5000 320-ton mining trucks began in the oil sands in the fourth quarter.”
Foote added that the company is maintaining a cautious outlook regarding end markets for the rest of 2013 and continues to expect that full-year earnings will be less than 2012.
Wajax Corp., based in Mississauga, Ontario, also has a sizable rental program and is No. 50 on the RER 100.
