Wajax Boosts Revenue 4.3 Percent in Fourth Quarter; Rental Rises 3.2 Percent
Canadian distributor Wajax posted fourth quarter 2024 total revenue of CDN $565.9 million compared to $542.6 million in the fourth quarter of 2023, a 4.3-percent revenue increase. Equipment rental revenue in Q424 was $12.1 million compared to $11.7 million a year ago, a 3.2-percent revenue boost. Equipment sales were $208.4 million compared to $158.5 million in the previous year’s fourth quarter, a 31.5 percent jump. Product support was flat at $132.8 million in both years. Industrial parts revenue was $133.6 million compared to $136 million the previous year, a 1.7-percent decline, while engineered repair services dropped from $103.6 million in the fourth quarter of 2023 to $79.1 million in Q424, a 23.7-percent drop.
During the fourth quarter, revenue in western Canada increased 16.7 percent from the same period in 2023, primarily because of higher industrial parts sales and higher mining equipment sales. Revenue in central Canada decreased 5.4 percent year over year with lower equipment sales in construction and forestry, partially offset by higher equipment sales in material handling. Revenue in eastern Canada decreased 5.1 percent with lower equipment sales in construction and forestry and industrial parts, partially offset by higher equipment sales in material handling.
For the full year of 2024, total revenue was $2,097.6 million compared to $2,154.7 million in 2023, a 2.6-percent year-over-year drop. Equipment sales revenue reached $618 million compared to $607.1 million in 2023, a 1.9-percent increase. Equipment rental increased a slight 1.3 percent, from $45.0 million in 2023 to $45.5 million. Product support revenue was $535.0 million, compared to $543.3 million in 2023, a 1.5-percent decline. Industrial parts revenue totaled $572 million, down from $605.1 million in 2023, a 5.5-percent decline. Engineered repair services revenue declined from $354.3 million in 2023 to $326.5 million in 2024, a 7.9-percent decrease.
An uncertain market
"Following two years of robust market conditions, 2024 proved challenging as customer demand declined across several key segments and was further impacted by business and economic uncertainty as the year went on," said Iggy Domagalski, president and CEO. "As a result, 2024 revenue declined 2.6 percent from the record revenue achieved in 2023, while increased competitive pressures, mostly in the second half of the year, led to a gross profit margin decline of 120 basis points over 2023. Our adjusted basic earnings per share for 2024 declined to $2.44 from $3.88 in 2023.
"In response to market conditions, cost saving initiatives implemented during the second half of 2024 helped to reduce selling and administrative expenses in the fourth quarter by $7.4 million compared to the same quarter of 2023. Ongoing inventory reduction initiatives have decreased inventory by $76.3 million from peak levels on March 31, 2024. These and other efforts led to strong fourth quarter cash flows from operating activities of $75.9 million. Looking ahead, in addition to executing our six strategic priorities, which have been refined for 2025, management will continue to execute initiatives to right-size inventory, reduce costs, and drive margin improvement."
Looking ahead to the first half of 2025, Wajax continues to see strong customer demand in the mining and energy sectors, with the former supported by strong backlog. Headwinds are expected, with broader market conditions remaining soft and uncertainty surrounding potential tariffs and counter-tariffs on Canada-U.S. trade; additional headwinds are expected should such tariffs materialize. Amid this backdrop, management remains committed to executing the corporation's six strategic priorities, which will continue to support and position the business for future success, and which have been refined for 2025. As additional focus areas, management will execute initiatives to reduce inventory, improve margins and lower costs.
Wajax's six strategic priorities for 2025 are: continuing to build a people-first company; growing Wajax's existing business with a focus on parts, service and margin improvement; unlocking the potential of Wajax's enhanced direct relationship with Hitachi; acquiring and integrating industrial parts and ERS businesses; improving cost structure and processes; and continuing Wajax's ERP system roll-out and additional technology improvements.
Based in Mississauga, Ontario, Wajax is No. 66 on the RER 100.
