Improved Margins and Continued Cost Discipline Drive Positive Cash Flow and Improved Leverage
TSX Symbol: WJX
Wajax Corporation (“Wajax” or the “Corporation”) today announced its 2025 third quarter results. All monetary amounts are in Canadian dollars unless otherwise noted.
Selected Highlights for the Third Quarter
— Revenue of $483.1 million and adjusted basic earnings per share of $0.75, up from $481.0 million and $0.44, respectively, versus the third quarter of 2024;(1)
— Gross profit margin of 20.8% increased 160 basis points (“bps”) from 19.2% in the third quarter of 2024, 170 bps from 19.1% in the second quarter of 2025 and 370 bps from 17.1% in the fourth quarter of 2024;(1)
— Selling and administrative expenses in the third quarter of 2025 remained relatively flat versus the third quarter of 2024 and decreased $2.6 million compared with the second quarter of 2025;(1)
— Inventory of $605.7 million increased slightly from $602.5 million at June 30, 2025, and was down $144.4 million from its peak level in March 2024;
— Cash flow generated from operations of $18.5 million compared to cash used of $36.6 million in the third quarter of 2024; and
— Leverage ratio improved to 2.28 times, from 2.35 times at June 30, 2025, and 2.61 times at December 31, 2024.(1)
“Wajax delivered steady performance in the third quarter of 2025, reflecting management's efforts to drive margin improvement, maintain disciplined cost control and sustain focus on inventory optimization,” said Iggy Domagalski, President and Chief Executive Officer. “Inventory has decreased $144.4 million from its peak in March 2024, resulting in an improved leverage ratio of 2.28 times. Management continues to execute initiatives aimed at right-sizing inventory, streamlining costs and enhancing margins.”(1)
Mr. Domagalski continued, “Our gross profit margin of 20.8% improved 170 basis points versus the second quarter of 2025 and 370 basis points from 17.1% in the fourth quarter of 2024, reflecting the progress of our margin improvement initiatives. Overall profitability metrics continue to improve, with adjusted EBIT margin and adjusted EBITDA margin increasing sequentially from the first and second quarters of 2025. Looking ahead, business and economic conditions, particularly those tied to Canada-U.S. trade relations, remain uncertain. While tariffs have had only a minimal direct impact on our business, they have affected some of our customers more significantly. We continue to closely monitor evolving tariff policies and are proactively taking steps to ensure any direct effects on our business remain limited.”(1)
Outlook
Looking ahead to the balance of 2025, Wajax continues to see strong customer demand in the mining and energy sectors, with the former supported by a robust equipment backlog. The broader end-market environment remains challenging, with macroeconomic softness and ongoing uncertainty related to Canada-U.S. tariff dynamics.
On October 15, 2025, Wajax announced that its Board of Directors and Mr. Domagalski have jointly agreed to initiate a CEO succession process. As part of this planned transition, Mr. Domagalski will continue to serve as President and CEO and as a director of Wajax until the conclusion of the process, ensuring continuity and a seamless handover of responsibilities to his successor. Completion of the process is expected in the first quarter of 2026. During this period, management will remain sharply focused on Wajax's six strategic priorities and key operational areas: inventory optimization, cost management and margin improvement.
Management believes that continued execution of these priorities and key areas of focus, supported by prudent capital allocation and a strong balance sheet, will drive sustainable value creation over the long term. Wajax remains well-positioned to benefit from its diverse market exposure, disciplined growth strategy and focus on operational excellence.
Dividend
The Corporation has declared a dividend of $0.35 per share for the fourth quarter of 2025, payable on January6, 2026, to shareholders of record on December15, 2025.
Third Quarter Highlights
— Revenue in the third quarter of 2025 increased $2.1 million, or 0.4%, to $483.1 million, from $481.0 million in the third quarter of 2024.Regionally:
— Revenue in western Canada of $210.3 million increased 0.3% from the same period in the prior year due primarily to higher mining equipment sales, including the delivery of a large mining shovel in the third quarter of 2025 with no such delivery in the third quarter of the prior year. This increase was partially offset by lower ERS revenue and reduced equipment sales in the construction and forestry, and material handling categories.
— Revenue in central Canada of $91.4 million increased 3.3% from the same period in the prior year due primarily to stronger industrial parts and ERS revenue, and higher equipment sales in the construction and forestry, and power systems categories. These increases were partially offset by lower material handling equipment sales.
— Revenue in eastern Canada of $181.5 million decreased 0.7% from the same period in the prior year due primarily to lower equipment sales in the construction and forestry category, and reduced industrial parts sales. These decreases were partially offset by higher material handling equipment sales and ERS revenue.
— Gross profit margin of 20.8% in the third quarter of 2025 increased 160bps compared with gross profit margin of 19.2% in the same period of 2024.(1) The increase in margin was driven primarily by higher margins realized on product support, industrial parts and ERS sales, reflecting management's focus on margin improvement initiatives in these areas of the business. These increases were partially offset by reduced equipment margins due to competitive market dynamics. Gross profit margin increased by 170 bps from 19.1% in the second quarter of 2025 and increased by 370 bps from 17.1% in the fourth quarter of 2024.(1)
— Selling and administrative expenses as a percentage of revenue remained flat at 14.7% in both the third quarter of 2025 and the same period of 2024.(1) Selling and administrative expenses in the third quarter of 2025 decreased $0.1 million compared with the third quarter of 2024 and decreased $2.6 million compared with the second quarter of 2025, driven by ongoing discipline in cost control and operational efficiency.
— EBIT of $29.5 million in the third quarter of 2025 increased $8.1 million, or 37.8%, from $21.4 million in the same period of 2024. The year-over-year increase in EBIT resulted primarily from higher gross profit margin. Adjusted EBIT increased $7.0 million, or 32.3%, to $28.6 million in the third quarter of 2025 from $21.6 million in the third quarter of 2024, and adjusted EBIT margin increased to 5.9% in the third quarter of 2025 from 4.5% in the same quarter of 2024.(1) Adjusted EBIT margin of 5.9% in the third quarter of 2025 improved from 5.4% in the second quarter of 2025 and 3.4% in the fourth quarter of 2024.(1)
— Finance costs of $6.8 million in the third quarter of 2025 decreased $6.2 million compared with the same quarter last year. Excluding the unrealized loss on interest rate swaps of $0.3 million in the quarter and the unrealized loss of $4.2 million in the same period of the prior year, finance costs decreased $2.3 million compared with the same quarter of 2024 due primarily to lower interest rates and lower average borrowings when considering both Wajax's bank credit facility and any outstanding debentures combined. Wajax repaid its senior unsecured debentures on January 15, 2025. See the Bank and Other Credit Facilities and Debentures section for further details on the repayment of the debentures.
— The Corporation generated net earnings of $16.7 million, or $0.77 per share, in the third quarter of 2025 versus $6.4 million, or $0.29 per share, in the same period of 2024. The Corporation generated adjusted net earnings of $16.2 million, or $0.75 per share, in the third quarter of 2025 versus $9.6 million, or $0.44 per share, in the same period of 2024.(1) Adjusted net earnings in the third quarter of 2025 excludes non-cash gains on mark to market of derivative instruments of $0.5 million after tax, or $0.02 per share (2024 – losses of $3.2 million after tax, or $0.15 per share).(1)
— Adjusted EBITDA margin increased to 9.3% in the third quarter of 2025 from 7.8% in the third quarter of 2024 due primarily to higher gross profit margin.(1) Adjusted EBITDA margin of 9.3% in the third quarter of 2025 improved from 8.2% in the second quarter of 2025 and 6.2% in the fourth quarter of 2024.(1)
— Cash flows generated from operating activities amounted to $18.5 million in the third quarter of 2025, compared with cash used of $36.6 million in the same quarter of the prior year. The increase in cash generated of $55.1 million was mainly attributable to a decrease in accounts payable and accrued liabilities of $1.9 million during the quarter, compared to a decrease of $76.0 million in the same quarter of the prior year, and rental equipment additions of $0.3 million during the quarter, compared to $9.0 million in the same quarter of the prior year. These increases in cash generated were offset partially by an increase in trade and other receivables of $7.5 million in the quarter compared to a decrease of $16.0 million in the same quarter of the prior year.
— The Corporation's backlog of $506.5 million at September 30, 2025 decreased $17.8 million, or 3.4%, compared to June 30, 2025 backlog of $524.3 million due primarily to lower material handling and industrial parts orders, and lower mining backlog, driven largely by the sale of a large mining shovel in the quarter which was included in backlog at June 30, 2025.(1) These decreases were partially offset by higher construction and forestry, and ERS orders. Backlog decreased $81.6 million, or 13.9%, compared to September 30, 2024 backlog of $588.1 million due primarily to lower material handling orders, and lower mining backlog, driven largely by the sale of six large mining shovels since September 30, 2024. These decreases were partially offset by higher ERS orders.(1) Backlog at September 30, 2025 included four large mining shovels.
— Working capital of $550.2 million at September 30, 2025 increased $19.5 million, from $530.7 million at June 30, 2025 due primarily to higher trade and other receivables and higher deposits on inventory.(1) Working capital efficiency was 25.4%, a slight improvement in efficiency of 30 bps from 25.7% at June 30, 2025 due to lower trailing four quarter average working capital and higher trailing 12-month revenue.(1) Excluding the Corporation's senior unsecured debentures, which were repaid on January 15, 2025, working capital efficiency was 26.1%, an improvement of 90 bps from 27.1% at June 30, 2025.(1) See the Bank and Other Credit Facilities and Debentures section for further details on the repayment of the debentures.
— The Corporation's leverage ratio improved to 2.28 times at September 30, 2025, from 2.35 times at June 30, 2025.(1) The improvement in leverage ratio was due to the higher trailing 12-month pro-forma adjusted EBITDA.(1)
— Subsequent to quarter end, on October 15, 2025,Wajax announced that its Board of Directors and Mr. Domagalski have jointly agreed to initiate a CEO succession process.
— Subsequent to quarter end, effective October 24, 2025, the Corporation extended the maturity of its $500.0 million senior secured bank credit facility from October 1, 2027 to October 24, 2029. There was no change to the credit limit of the facility, but the additional interest-bearing debt limit of $25.0 million was increased to $50.0 million. Effective October 24, 2025, the margins range between 1.5% and 3.3% for Canadian dollar termCORRA loans and U.S. dollar SOFR borrowings, and between 0.5% and 2.3% for prime rate borrowings.
Conference Call Details
Wajax will webcast its Third Quarter Financial Results Conference Call. You are invited to listen to the live webcast on Tuesday, November4, 2025 at 2:00 p.m. EDT. To access the webcast, please visit our website wajax.com, under “Investor Relations”,”Events and Presentations”, “Q3 2025 Financial Results” and click on the “Listen to the Webcast” link. An archive of the webcast will be available following the live presentation.
About Wajax Corporation
Founded in 1858, Wajax (TSX: WJX) is one of Canada's longest-standing and most diversified industrial products and services providers. The Corporation operates an integrated distribution system providing sales, parts and services to a broad range of customers in diverse sectors of the Canadian economy, including: construction, forestry, mining, industrial and commercial, oil sands, transportation, metal processing, government and utilities, and oil and gas.
Non-GAAP and Other Financial Measures
The press release contains certain non-GAAP and other financial measures that do not have a standardized meaning prescribed by GAAP. Therefore, these financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that these measures should not be construed as an alternative to net earnings or to cash flow from operating, investing and financing activities determined in accordance with GAAP as indicators of the Corporation's performance. The Corporation's management believes that:
Non-GAAP financial measures are identified and defined below:
Non-GAAP ratios are identified and defined below:
Supplementary financial measures are identified and defined below:
Reconciliation of the Corporation's net earnings to adjusted net earnings, adjusted basic earnings per share and adjusted diluted earnings per share is as follows:
Reconciliation of the Corporation's EBIT to EBITDA, Adjusted EBIT, Adjusted EBITDA and Pro-forma adjusted EBITDA is as follows:
Calculation of the Corporation's funded net debt, debt, leverage ratio and senior secured leverage ratio is as follows:
Calculation of total capital and funded net debt to total capital is as follows:
Calculation of the Corporation's working capital and other working capital amounts is as follows:
Cautionary Statement Regarding Forward-Looking Information
This news release contains certain forward-looking statements and forward-looking information, as defined in applicable securities laws (collectively, “forward-looking statements”). These forward-looking statements relate to future events or the Corporation's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward looking statements can be identified by the use of words such as “plans”, “anticipates”, “intends”, “predicts”, “expects”, “is expected”, “scheduled”, “believes”, “estimates”, “projects” or “forecasts”, or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors beyond the Corporation's ability to predict or control which may cause actual results, performance and achievements to differ materially from those anticipated or implied in such forward-looking statements. To the extent any forward-looking information in this news release constitutes future-oriented financial information or financial outlook within the meaning of applicable securities law, such information is being provided to demonstrate the potential of the Corporation and readers are cautioned that this information may not be appropriate for any other purpose. There can be no assurance that any forward-looking statement will materialize. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this news release, reflect management's current beliefs and are based on information currently available to management. Although management believes that the expectations represented in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct. Specifically, this news release includes forward-looking statements regarding, among other things: our continued execution of initiatives aimed at right-sizing inventory, streamlining costs and enhancing margins; business and economic conditions, including uncertainty tied to Canada-U.S. trade relations; our continued close monitoring of evolving tariff policies and proactive taking of steps to ensure any direct effects on our business remain limited; our outlook for the balance of 2025, including (i) our continued expectation of strong customer demand in the mining and energy sectors, and our belief that our expectation for the former is supported by robust equipment backlog, and (ii) our view that the broader end market environment remains challenging, with macroeconomic softness and ongoing uncertainty related to Canada-U.S. tariff dynamics; our planned CEO succession and transition process, including our plans for a smooth and seamless handover of responsibilities, our expectation that our search process will be completed in the first quarter of 2026, and our intention to remain sharply focused on our six strategic priorities and key operational areas: inventory optimization, cost management and margin improvement – together with our belief that continued execution of these priorities and key areas of focus, supported by prudent capital allocation and a strong balance sheet, will drive sustainable value creation over the long term; our belief that we remain well-positioned to benefit from our diverse market exposure, disciplined growth strategy and focus on operational excellence; the four large mining shovels scheduled for delivery over the next six quarters; and our objective of managing our working capital and normal-course capital investment programs within a leverage range of 1.5 – 2.0 times.
These statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions regarding: the absence of significant negative changes to general business and economic conditions; our ability to manage our business through ongoing uncertainty related to Canada-U.S. trade dynamics, including the imposition of new or changing trade tariffs; limited negative fluctuations in the supply and demand for, and the level and volatility of prices for, oil, natural gas and other commodities; the stability of financial market conditions, including interest rates; the ability of Hitachi Construction Machinery Americas Inc. (“Hitachi”) and Wajax to develop and execute successful sales, marketing and other plans related to the enhanced direct distribution relationship which took effect on March 1, 2022; our continued ability to execute our strategic priorities, including our ability to execute on our organic growth priorities, complete and effectively integrate industrial parts and ERS acquisitions, and successfully implement new information technology platforms, systems and software, such as our ERP system; the availability of highly qualified and experienced candidates for the role of CEO; the future financial performance of the Corporation; limited fluctuations in our costs; the level of market competition; our continued ability to attract and retain skilled staff; our continued ability to procure quality products and inventory; and our ongoing maintenance of strong relationships with suppliers, employees and customers. The foregoing list of assumptions is not exhaustive. Factors that may cause actual results to vary materially include, but are not limited to: a continued or prolonged deterioration in general business and economic conditions; continued or prolonged uncertainty related to Canada-U.S. tariff dynamics; new tariffs and/or counter-tariffs imposed on cross-border trade, particularly between Canada and the U.S.; negative fluctuations in the supply and demand for, and the level of prices for, oil, natural gas and other commodities; a continued or prolonged decrease in the price of oil or natural gas; the inability of Hitachi and Wajax to develop and execute successful sales, marketing and other plans related to the enhanced direct distribution relationship which took effect on March 1, 2022; the limited availability of highly qualified and experienced candidates for the role of CEO, or challenges in attracting such executive talent on commercially reasonable terms; a decrease in levels of customer confidence and spending; supply chain disruptions and shortages; fluctuations in financial market conditions, including interest rates; the level of demand for, and prices of, the products and services we offer; decreased market acceptance of the products we offer; the termination of distribution or original equipment manufacturer agreements; unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, our inability to reduce costs in response to slow-downs in market activity, unavailability of quality products or inventory, supply disruptions, job action and unanticipated events related to health, safety and environmental matters); our inability to attract and retain skilled staff and our inability to maintain strong relationships with our suppliers, employees and customers. The foregoing list of factors is not exhaustive.
Further information concerning the risks and uncertainties associated with these forward-looking statements and the Corporation's business may be found in our MD&A for the year-ended December 31, 2024 (the “2024 MD&A”), which has been filed under the Corporation's profile on SEDAR+ at www.sedarplus.ca, under the heading “Risk Management and Uncertainties”. The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. The Corporation does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
Readers are cautioned that the risks described in the 2024 MD&A are not the only risks that could impact the Corporation. Risks and uncertainties not currently known to the Corporation, or currently deemed to be immaterial, may have a material effect on the Corporation's business, financial condition or results of operations.
Additional information, including Wajax's 2024 Annual Report, is available under the Corporation's profile on SEDAR+ at www.sedarplus.ca.
SOURCE Wajax Corporation
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