WAJAX STRENGTHENS ORGANIZATIONAL STRUCTURE AND
ANNOUNCES RECORD SALES REVENUES
ME, TSE Symbol: Wjx.
VANCOUVER, Aug. 1 /CNW/ - Wajax today announced that revenues for the
second quarter of 1997 were a record $240 million, up 36% from $176 million in
the second quarter of 1996. Net earnings were $4.9 million, the same as last
year, while earnings per share were $0.32 in the second quarter of 1997,
compared to $0.35 last year, due to the higher number of shares outstanding.
The results for the second quarter of 1997 include an after-tax reorganization
charge of $1.1 million ($0.07 per share). Before taking account of the
reorganization charge, net earnings were $6.0 million or $0.39 per share, up
$0.04 per share from the second quarter of 1996.
The earnings for the quarter reflect stronger results for the diesel
engines and industrial components businesses, as well as the
Alberta/Saskatchewan mobile equipment region. The higher earnings in these
areas were largely offset by the impact of weak forestry markets in B.C./Yukon
and in Eastern Canada, which adversely affect the results for the mobile
equipment divisions in these regions. The Company believes that its increased
diversification into three core businesses over the past three years, and its
expanded geographical presence, have better positioned it to mitigate the
impact of cyclical downturns in specific market segments or geographical
regions.
The reorganization charge primarily reflects actual and anticipated
unusual recruitment, relocation and severance costs associated with
implementing organizational changes to build management depth and ensure
management succession at the Corporate and divisional levels. As a result of
these changes, the Company will be better positioned to successfully manage
its increased scale of activity and continue with its strategic expansion
plans. In addition, the Company is consolidating its Alberta/Saskatchewan and
B.C./Yukon mobile equipment regions into a single Western division. The
Company expects that the consolidation of the two regions, which have common
product-lines, will result in operational efficiencies and cost savings.
For the first six months of 1997, net earnings amounted to $8.6 million
($0.59 per share) on record revenues of $424 million, compared with net
earnings in the first half of 1996 of $8.3 million ($0.60 per share) on
revenues of $330 million. Before taking account of the reorganization
charge, net earnings were $9.7 million or $0.66 per share, up $0.06 per share
from the first half of 1996.
With respect to the outlook for the balance of 1997, the Company expects
that its diesel engines and industrial components businesses will continue to
perform strongly, and that it will continue to benefit from strong regional
market conditions for its Alberta/Saskatchewan mobile equipment region.
Results for the other mobile equipment divisions will depend largely upon the
extent and pace of recovery in the forestry market, as well as the overall
improvement in the B.C./Yukon operations under the new divisional structure.
The Company generated $15.6 million of cash flow from operations ($1.06
per share) in the first half of 1997, before changes in non-cash working
capital. In addition, it successfully completed a $25 million common equity
issue in April of 1997, to finance its ongoing strategic growth plans. The
Company is currently reviewing acquisition opportunities, in the U.S. as well
as Canada.
Wajax is a diversified growth company which is leading a consolidation
process in its industry. The Company's three core distribution businesses are
engaged in the sale and after-sales parts and service support of mobile
equipment, diesel engines and industrial components, through a network of 95
branches across Canada and the Western United States. Its customer base spans
natural resources, construction, transportation, manufacturing, industrial
processing and utilities.
<<
Wajax Limited
-----------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
-----------------------------------
(unaudited)
Three months ended Six months ended
(in thousands of dollars, June 30 June 30
except per share data) 1997 1996 1997 1996
----------------------------------- --------- --------- ----------
Revenue $ 239,649 $ 175,889 $ 423,748 $ 329,593
----------------------------------- --------- --------- ----------
----------------------------------- --------- --------- ----------
Gross Profit 52,424 38,623 94,505 73,748
Selling and administrative
expenses 38,140 27,109 70,547 53,786
Reorganization costs 1,947 - 1,947 -
----------------------------------- --------- --------- ----------
Earnings before interest
and income taxes 12,337 11,514 22,011 19,962
Interest expense 3,529 2,472 6,355 4,614
----------------------------------- --------- --------- ----------
Earnings before
income taxes 8,808 9,042 15,656 15,348
Income taxes 3,909 4,128 7,024 7,060
----------------------------------- --------- --------- ----------
Net earnings $ 4,899 $ 4,914 $ 8,632 $ 8,288
----------------------------------- --------- --------- ----------
Earnings per
common share $ 0.32 $ 0.35 $ 0.59 $ 0.60
----------------------------------- --------- --------- ----------
----------------------------------- --------- --------- ----------
Weighted average number of
common shares outstanding 14,698,915 13,884,699
---------- -----------
Wajax Limited
-------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(unaudited)
June 30 December 31 June 30
(in thousands of dollars) 1997 1996 1996
-------------------------------------------- ---------- ---------
Current assets
Cash $ - $ 1,715 $ -
Accounts receivable 126,256 113,704 102,240
Inventories 235,377 179,211 163,876
Other 9,934 9,241 8,811
--------------------------------------------- ---------- ---------
371,567 303,871 274,927
---------- ---------- ---------
Non-current assets
Rental equipment 21,479 19,292 15,840
Capital assets 34,727 31,588 30,078
Goodwill and other assets 60,117 50,241 39,056
--------------------------------------------- ---------- ---------
116,323 101,121 84,974
---------- ---------- ---------
$ 487,890 $ 404,992 $359,901
---------- ---------- ---------
---------- ---------- ---------
Current liabilities
Bank indebtedness $ 918 $ - $ 4,608
Accounts payable and
accrued liabilities 137,530 111,238 87,649
Current portion of
long-term debt 3,035 4,189 1,683
-------------------------------------------- ---------- ---------
141,483 115,427 93,940
--------- ---------- ---------
Long-term debt 167,384 144,472 129,558
-------------------------------------------- ---------- ---------
Equity
Capital stock 101,296 75,454 75,454
Retained earnings 77,727 69,639 60,949
-------------------------------------------- ---------- ---------
179,023 145,093 136,403
--------- ---------- ---------
$ 487,890 $ 404,992 $ 359,901
--------- ---------- ---------
--------- ---------- ---------
Note:
1. On April 17, 1997, the Company issued 1,500,000 common shares at a
price of $17.00 per share. The proceeds of the common share issue,
which amounted to $25 million net of issue costs, will be used to
finance the Company's ongoing strategic growth plan.
2. Certain of the comparative figures have been reclassified to conform
to the current presentation.
Wajax Limited
---------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN CASH POSITION
---------------------------------------------------
(unaudited)
Six months ended
June 30
-------- --------
(in thousands of dollars, except per share data) 1997 1996
------------------------------------------------------------- --------
Operating activities
Earnings $ 8,632 $ 8,288
Items not affecting cash flow
Amortization
- Rental equipment 3,027 2,073
- Capital assets 2,572 2,193
- Goodwill and deferred expenses 1,392 984
Deferred Income taxes - (79)
------------------------------------------------------------- --------
Cash flow before changes in non-cash
working capital 15,623 13,459
------------------------------------------------------------- --------
Changes in non-cash working capital
Accounts receivable (3,978) (7,101)
Inventories (13,751) 1,693
Accounts payable and accrued liabilities 16,950 (16,706)
Income taxes payable (5,599) (8,126)
Other 797 35
------------------------------------------------------------- --------
(5,581) (30,205)
------------------------------------------------------------- --------
Cash provided by (used in) operating activities 10,042 (16,746)
------------------------------------------------------------- --------
Investing activities
Net rental equipment additions (5,215) (3,803)
Net capital asset additions (3,242) (2,649)
Acquisition of businesses
Working capital (37,231) (16,577)
Rental equipment - (225)
Capital assets (2,450) (2,064)
Goodwill (10,933) (22,609)
------------------------------------------------------------- --------
(59,071) (47,927)
------------------------------------------------------------- --------
Cash flow before financing activities (49,029) (64,673)
------------------------------------------------------------- --------
Financing activities
Increase in long-term bank loan 24,584 40,000
Issue of debentures - 20,000
Repayment of debentures (1,089) (354)
Notes payable on acquisition (1,936) 2,000
Issue of capital stock 25,296 3,824
Other (303) (373)
------------------------------------------------------------- --------
46,552 65,097
------------------------------------------------------------- --------
Effect of currency translation on bank indebtedness (156) -
------------------------------------------------------------- --------
(Increase) decrease in current bank indebtedness (2,633) 424
Cash (current bank indebtedness)
- beginning of period 1,715 (5,032)
------------------------------------------------------------- --------
Current bank indebtedness - end of period $ (918) $ (4,608)
------------------------------------------------------------- --------
Cash flow per common share from operations
before changes in non-cash working capital $ 1.06 $ 0.97
------------------------------------------------------------- --------
>>
-30-
For further information: John A. Powell, President & Chief Executive Officer; Lawrence G. Sellyn, Senior
Vice-President, Finance and Corporate Development and Chief Financial Officer; Scott T. McCaw, Treasurer
(604) 513-2224 |
