Inventory Optimization and Cost Discipline Drive Free Cash Flow, Restore Target Leverage and Strengthen Balance Sheet
TSX Symbol: WJX
TORONTO, March 2, 2026 /CNW/ – Wajax Corporation (“Wajax” or the “Corporation“) today announced its 2025 fourth quarter and annual results. All monetary amounts are in Canadian dollars unless otherwise noted.
Selected Highlights for the Fourth Quarter and Full Year
- Fourth quarter revenue of $560.0 million remained relatively flat over the prior year, and full year revenue of $2,145.3 million was up 2.3% over 2024;
- Adjusted basic earnings per share of $0.71 for the fourth quarter and $2.90 for the full year, up from $0.35 and $2.44, respectively, over 2024;(1)
- Fourth quarter gross profit margin of 18.0% up 100 basis points (“bps“) year-over-year, driven by margin improvement activities. Full year gross profit margin of 19.2% down 50 bps over 2024, reflecting more competitive market dynamics in the first half of 2025 versus the first half of 2024;(1)
- Selling and administrative expenses decreased by $6.4 million for the fourth quarter, and by $14.7 million for the full year, compared to 2024, reflecting management’s continued focus on cost discipline;
- Inventory of $547.6 million decreased from $605.7 million at September 30, 2025, and was down $126.4 million from December 31, 2024, reflecting improved year-over-year inventory turns and optimization;
- Cash generated from operating activities was $81.5 million for the fourth quarter and $194.0 million for the full year, reflecting prudent management of working capital; and
- Leverage ratio improved to 1.62 times from 2.28 times at September 30, 2025, and 2.61 times at December 31, 2024, returning to management’s target leverage range of 1.5 to 2.0 times.(1)
“Throughout the year, our leadership team remained firmly focused on disciplined cost control, inventory optimization and margin improvement to strengthen profitability, enhance cash flow and reduce leverage,” said Iggy Domagalski, President and Chief Executive Officer. “Inventory has decreased by $202.7 million from its peak in March 2024, significantly improving cash flow from operating activities and supporting a meaningful reduction in leverage, returning us to our target leverage range of 1.5 to 2.0 times. These results reflect disciplined execution and a stronger, more resilient balance sheet as we enter 2026.”(1)
Mr. Domagalski continued, “We delivered solid earnings growth in 2025, with adjusted basic earnings per share of $0.71 in the fourth quarter and $2.90 for the full year, up 104.1% and 19.2%, respectively, over the same periods in the prior year. Gross margin improved 100 basis points in the quarter to 18.0%, reflecting improved execution, while full-year gross margin of 19.2% was modestly lower compared to prior year due to more competitive market conditions, particularly in the first half of the year compared to the first half of 2024. Despite the year-over-year margin decline, we saw meaningful improvement in product support margins versus 2024, and improved industrial parts and ERS margins in the latter half of 2025 versus the latter half of 2024. We remain focused on margin improvement initiatives to strengthen our margin profile, mitigate ongoing market pressures and drive continued earnings performance.”(1)
|
(dollars in millions, except per share data) |
Three Months Ended |
Twelve Months Ended |
||||
|
2025 |
2024 |
change |
2025 |
2024 |
change |
|
|
CONSOLIDATED RESULTS |
||||||
|
Revenue |
$ 560.0 |
$ 565.9 |
(1.0) % |
$ 2,145.3 |
$ 2,097.6 |
2.3 % |
|
Equipment sales |
$ 205.8 |
$ 208.4 |
(1.2) % |
$ 684.7 |
$ 618.6 |
10.7 % |
|
Product support |
$ 124.3 |
$ 132.8 |
(6.4) % |
$ 527.1 |
$ 535.0 |
(1.5) % |
|
Industrial parts |
$ 130.6 |
$ 133.6 |
(2.3) % |
$ 552.7 |
$ 572.0 |
(3.4) % |
|
Engineered repair services (“ERS”) |
$ 87.8 |
$ 79.1 |
11.1 % |
$ 334.3 |
$ 326.5 |
2.4 % |
|
Equipment rental |
$ 11.5 |
$ 12.1 |
(4.7) % |
$ 46.5 |
$ 45.5 |
2.1 % |
|
Net earnings |
$ 12.1 |
$ 1.0 |
1,073.7 % |
$ 57.5 |
$ 42.8 |
34.3 % |
|
Basic earnings per share(2) |
$ 0.56 |
$ 0.05 |
1,073.7 % |
$ 2.64 |
$ 1.97 |
34.0 % |
|
Adjusted net earnings(1)(3) |
$ 15.4 |
$ 7.5 |
104.1 % |
$ 63.2 |
$ 52.9 |
19.5 % |
|
Adjusted basic earnings per share(1)(2)(3) |
$ 0.71 |
$ 0.35 |
104.1 % |
$ 2.90 |
$ 2.44 |
19.2 % |
|
Adjusted EBIT(1) |
$ 28.1 |
$ 19.3 |
45.6 % |
$ 114.1 |
$ 105.8 |
7.8 % |
|
Adjusted EBITDA(1) |
$ 44.0 |
$ 35.1 |
25.2 % |
$ 176.7 |
$ 168.0 |
5.2 % |
|
Adjusted EBIT margin(1) |
5.0 % |
3.4 % |
160 bps |
5.3 % |
5.0 % |
30 bps |
|
Adjusted EBITDA margin(1) |
7.9 % |
6.2 % |
170 bps |
8.2 % |
8.0 % |
20 bps |
|
Cash generated from operating activities |
$ 81.5 |
$ 81.4 |
$ 0.1 |
$ 194.0 |
$ 75.1 |
$ 118.8 |
Outlook
In 2026, management will continue to focus on disciplined cost control, inventory optimization and margin improvement, supported by prudent capital allocation and effective execution, to enhance efficiency, strengthen cash flow and support sustainable performance.
Looking ahead, Wajax continues to see strong customer demand in the mining and energy sectors, with mining demand reflected in a backlog of two large mining shovels for delivery over the next five quarters. Market conditions in other sectors remain mixed across regions with continued macroeconomic softness and uncertainty related to Canada–U.S. tariff and trade dynamics.
Wajax enters 2026 with a strengthened balance sheet, a solid backlog and improved operating performance. Inventory levels are within a normal operating range, margin and cost control remain a focus, and leverage is within the Corporation’s target range. While demand visibility varies across end markets, the Corporation’s diversified exposure and approach to capital allocation and execution supports its ability to manage current conditions.
Management believes that continued execution of its priorities, underpinned by prudent capital allocation and balance sheet strength, will support sustainable long-term value creation.
Dividend
The Corporation has declared a dividend of $0.35 per share for the first quarter of 2026, payable on April 2, 2026, to shareholders of record on March 16, 2026.
Fourth Quarter Highlights
- Revenue in the fourth quarter of 2025 decreased $5.9 million, or 1.0%, to $560.0 million, from $565.9 million in the fourth quarter of 2024. Regionally:
- Revenue in western Canada of $261.4 million decreased 4.9% from the same period in the prior year due primarily to lower construction and forestry sales, partially offset by higher equipment sales in the mining category and higher ERS sales.
- Revenue in central Canada of $95.3 million decreased 4.4% from the same period in the prior year due primarily to lower equipment sales in the material handling category and lower industrial parts sales. These decreases were partially offset by higher equipment sales in the construction and forestry category and higher ERS sales.
- Revenue in eastern Canada of $203.3 million increased 6.2% from the same period in the prior year due primarily to higher ERS sales and higher equipment sales in the power systems, and construction and forestry categories. These increases were partially offset by lower equipment sales in the material handling category.
- Gross profit margin of 18.0% in the fourth quarter of 2025 increased 100 bps compared with gross profit margin of 17.1% in the same period of 2024.(1) This increase in margin was driven primarily by higher margins realized on industrial parts, product support and equipment revenue, reflecting management’s focus on margin improvement initiatives in these areas of the business. The increase in margin was also driven by a higher proportion of ERS sales from a sales mix perspective.
- Selling and administrative expenses in the fourth quarter of 2025 decreased $6.4 million compared with the fourth quarter of 2024. Excluding the $1.2 million contingent consideration revaluation recovery (2024 – $2.3 million expense), the $1.3 million unrealized gain on total return swaps (2024 – $1.8 million unrealized loss), and the $1.3 million loss on settlement of defined benefit pension obligations under the Wajax Limited Supplemental Executive Retirement Plan (the “SERP“) (2024 – nil), selling and administrative expenses decreased $1.2 million compared with the same period in the prior year. Cost reductions from management’s continued focus on cost discipline were partially offset by higher incentive accruals driven by improved financial results compared to the prior year. Selling and administrative expenses as a percentage of revenue decreased to 13.1% in the fourth quarter of 2025 from 14.1% in the same period of 2024.(1) Excluding the contingent consideration revaluation recovery/expense and the unrealized gain/loss on total return swaps in both periods, and the loss on settlement of obligations under the SERP in 2025, selling and administrative expenses as a percentage of revenue decreased to 13.3% in the fourth quarter of 2025, from 13.4% in the same quarter of 2024.(1)
- During the quarter, the Corporation recognized $4.3 million of restructuring and other related costs, relating primarily to executive separation benefits.
- EBIT of $23.3 million in the fourth quarter of 2025 increased $12.2 million, or 109.5%, from $11.1 million in the same period of 2024. The year-over-year increase in EBIT resulted primarily from higher gross profit margin. Adjusted EBIT increased $8.8 million, or 45.6%, to $28.1 million in the fourth quarter of 2025 from $19.3 million in the fourth quarter of 2024, and adjusted EBIT margin increased to 5.0% in the fourth quarter of 2025 from 3.4% in the same quarter of 2024.(1)
- Finance costs of $6.9 million in the fourth quarter of 2025 decreased $1.5 million compared with the same quarter last year. Excluding the unrealized loss on interest rate derivatives of less than $0.1 million in the quarter and the unrealized gain of $0.2 million in the same period of the prior year, finance costs decreased $1.8 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.
- The Corporation generated net earnings of $12.1 million, or $0.56 per share, in the fourth quarter of 2025 versus $1.0 million, or $0.05 per share, in the same period of 2024. The Corporation generated adjusted net earnings of $15.4 million, or $0.71 per share, in the fourth quarter of 2025 versus $7.5 million, or $0.35 per share, in the same period of 2024.(1) Adjusted net earnings for the fourth quarter of 2025 excludes facility closure, restructuring and other related costs of $3.2 million after tax, or $0.15 per share (2024 – $4.3 million after tax, or $0.20 per share), gains on the change in fair value of contingent consideration of $1.2 million after tax, or $0.06 per share (2024 – losses of $2.3 million after tax, or $0.10 per share), non-cash losses on mark to market of derivative instruments of $0.5 million after tax, or $0.02 per share (2024 – gains of less than $0.1 million after tax, or less than $0.01 per share), gains recorded on sale of properties of $0.3 million after tax, or $0.01 per share (2024 – nil), and loss on settlement of obligations under …