Wajax Corporation ((TSE:WJX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Wajax Corporation painted a mixed picture, highlighting both achievements and challenges. While the company demonstrated significant improvements in cash flow and inventory management, these were counterbalanced by declines in revenue, EBITDA, and backlog. The company’s efforts to enhance operating efficiency and manage costs were evident, but market pressures, particularly in the construction and forestry equipment sectors, impacted overall financial performance.
Strong Cash Flow and Reduced Leverage
Wajax Corporation reported a robust cash flow from operating activities, reaching $67.4 million in Q2 2025, a notable increase from $35.8 million in the same quarter of the previous year. This improvement was accompanied by a reduction in the leverage ratio to 2.35x from 2.53x in Q1 2025, attributed to lower debt levels.
Inventory Optimization
The company made significant strides in inventory management, with inventory levels decreasing by $56 million compared to Q1 2025 and $147.5 million from peak levels at March 31, 2024. This reflects a strategic focus on optimizing inventory to align with market demands.
Improved Gross Profit Margin Sequentially
Wajax’s gross profit margin remained stable at 19.1% in Q2 2025 compared to Q1 2025, marking a 200 basis point increase from Q4 2024. This improvement was driven by enhanced service operations margins.
Revenue Decline
The company faced a revenue decline, with Q2 2025 revenue at $547.1 million, down by $21.2 million or 3.7% from the same quarter in 2024. This decrease was primarily due to reduced equipment sales in the construction and forestry categories.
Decreased EBITDA and Net Earnings
Adjusted EBITDA saw a decline of $10 million or 18.3% from Q2 2024, and adjusted net earnings per share fell by 27.4% from the same period, reflecting challenges in maintaining profitability amidst lower sales volumes.
Backlog Reduction
The backlog at the end of Q2 2025 was $524.3 million, a reduction of $37 million from Q1 2025 and $20.6 million year-over-year, largely due to decreased orders in construction and forestry.
Safety Incident Rate Increase
Despite a 22% improvement from Q1 2025, the TRIF rate increased by 26% from Q2 2024, indicating ongoing challenges in enhancing safety measures within the company.
Forward-Looking Guidance
Looking ahead, Wajax Corporation expects to continue focusing on inventory optimization and cost-saving measures. The company declared a third-quarter dividend of $0.35 per share, payable in October 2025, reflecting confidence in its cash flow management. However, challenges remain in the form of market pressures affecting sales volumes and profitability.
In summary, the earnings call for Wajax Corporation highlighted a balanced view of achievements and areas for improvement. While the company has made commendable progress in cash flow and inventory management, it continues to face challenges in revenue growth and safety measures. Investors will be keen to see how Wajax navigates these challenges in the coming quarters.