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Highlights
- Q4 revenue reaches $565.9M, full-year revenue at $2.1B, down 2.6% YoY
- 2024 fourth quarter cash flow from operations hits $75.9M
- Backlog growth to $564.4M despite challenging market conditions
Wajax Corporation (TSX:WJX) today announced its financial results for the fourth quarter and full year of 2024. Despite the challenges presented by a declining customer demand and economic uncertainty, the company managed to navigate through tough conditions with solid cash flow and a modest backlog increase. All monetary amounts are in Canadian dollars unless otherwise noted.
Financial Performance in 2024
For the fourth quarter of 2024, Wajax reported revenue of $565.9 million, marking a 4.3% increase compared to the same period in 2023. However, for the full year, the company saw a slight revenue decline of 2.6%, bringing total annual revenue to $2,097.6 million. This downturn was attributed to a decrease in customer demand across key segments, coupled with ongoing business and economic uncertainties that persisted through the year.
Wajax's gross profit margin for Q4 stood at 17.1%, representing a decline of 420 basis points (bps) from the previous year. The full-year gross profit margin also decreased by 120 bps, ending at 19.7%. This decline was primarily driven by competitive pressures, especially in the second half of the year, and a shift in the sales mix. As a result, the company experienced some challenges in maintaining profitability levels.
Operational Efficiency and Strategic Measures
Despite the pressures, Wajax demonstrated resilience through effective cost-saving strategies. The company reduced selling and administrative expenses by $7.4 million in Q4 2024 compared to Q4 2023, reflecting a conscious effort to streamline operations and mitigate market challenges. Additionally, the company implemented successful inventory reduction initiatives, which led to a decrease in inventory levels by $76.3 million from the peak levels seen earlier in the year (March 2024).
Cash flow from operating activities in the fourth quarter was $75.9 million, a strong performance that indicated the company’s ability to prudently manage working capital. As a result, Wajax managed to sequentially reduce its leverage ratio to 2.61 times, down from 2.78 times at the end of the third quarter in 2024.
Backlog and Future Outlook
Wajax ended the year with a backlog of $564.4 million, which is an increase of $10.5 million from the previous year. This included seven large mining shovels, underscoring the company's strong position in large equipment markets. While the company faced declining revenue and margin pressures in 2024, this growth in backlog offers a positive outlook for future sales and operational activity.
Looking ahead, Wajax President and CEO Iggy Domagalski stated, "In response to market conditions, we have refined our strategic priorities for 2025 and will continue to implement initiatives to right-size inventory, reduce costs, and drive margin improvement. We are confident that these efforts will enable us to return to growth as market conditions improve."
