Wajax Ltd -
First quarter results
Wajax Ltd
WJX
Shares issued 15632294
1998-04-28 close $20.5
Wednesday Apr 29 1998
Mr Laurence Sellyn reports
For the first quarter of 1998 sales revenue was $218-million, up 18 per cent from $184-million in the
first quarter of 1997. The higher sales revenue was largely due to the inclusion of the results for Pacific
North Equipment, which was acquired with effect from Mar. 31, 1997. Net earnings were $4.2-million,
up 11 per cent from $3.7-million in the first quarter of 1997. On a per share basis, earnings were
unchanged at 27 cents due to the higher number of shares outstanding as a result of the common share
issue in April, 1997. The proceeds from the issue are now being re-invested by the company in new
acquisitions, including the acquisitions of Bearing Power (Canada) Limited and Yellowstone
Hydraulics Inc., which were both implemented with effect from Mar. 31, 1998.
The increased earnings for the first quarter of 1998 reflect the continuing strong performance of the
Alberta mobile equipment region, as well as the impact of administrative cost reductions implemented
following the integration of the B.C. region with Alberta in mid-1997. In addition, the results for diesel
engines improved further over the first quarter of 1997. Although good progress is being made in
developing and implementing plans to reposition Pacific North, the results for this acquisition were
dilutive to the company's overall earnings in the first quarter of 1998, due to traditionally low seasonal
demand in construction in the first quarter and continuing weakness in the regional forestry market.
Sales and earnings for the first quarter of 1998 were also negatively impacted by the non-recurrence of
major mining transactions which enhanced the results for the Quebec/Labrador region in the first
quarter of 1997.
Historically, the first quarter is seasonally the lowest quarter in the company's annual earnings cycle.
At this stage, management expects that results for the balance of the year will show improvement over
1997, in spite of the slowdown in the Alberta oil industry and weak market conditions for forestry and
mining in British Columbia.
The level of bank indebtedness increased by $49-million in the first quarter of 1998, primarily due to
the cash requirements to finance the Bearing Power and Yellowstone acquisitions. The company is
continuing to investigate acquisition opportunities in all of its core businesses.
STATEMENT OF EARNINGS
Three months ended Mar. 31
(thousands of dollars)
1998 1997
Revenue $218,299 $184,099
-------- --------
Gross profit 51,458 42,063
-------- --------
Selling and admin
expenses 40,557 32,389
-------- --------
Earnings before
interest and
income taxes 10,901 9,674
Interest expense 3,687 2,826
-------- --------
Earnings before
income taxes 7,214 6,848
Income taxes 3,060 3,115
-------- --------
Net earnings $4,154 $3,733
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Earnings per share 27 cents 27 cents
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