Message to Shareholders “Together We Get More Done” is the essence of our company. Wajax’s strategy is based on a strong foundation, clear growth plans and investments in our business; all working together to give our customers and our employees a consistently excellent experience. Our strategy is transforming Wajax from its legacy as a group of decentralized productcentric distribution businesses to a unified industrial services provider which leverages market-leading product and service breadth and a superb team to set a new standard for what customers can expect.
2019
Record year for workplace safety
0.93
The Wajax team performed exceptionally well in 2019, delivering adjusted net earnings of $41.9 million, an increase of 5% on record revenue of $1.55 billion, also up 5%. 2019 was another record year for workplace safety with a TRIF rate of 0.93 resulting from an 8% reduction in recordable injuries.(1)
TRIF(1)
Efforts to regionally balance revenue paid dividends in 2019. Revenue of $618 million in eastern Canada grew 23%, offsetting weakness in western Canada where revenue of $624 million declined 5% under progressively more difficult conditions. Central Canada revenue of $311 million declined 4% due to the loss of a road-building distribution agreement. Net of that, revenue in central Canada was up 2%.
Recordable Incidents
While we are satisfied with the results given the challenging market conditions, we had higher expectations as we entered the year. Weakness related to the western Canada market and a 14% reduction in demand for construction equipment nationally were the principal drivers in lower than planned earnings and elevated inventory.(2)
85
52 35
2015
2016
2017
26
24
2018
2019
Revenue ($ millions)
2
1,273.3
1,221.9
2015
2016
1,318.7
2017
Wajax 2019 Annual Report
1,481.6
1,553.0
2018
2019
We are very pleased with the significant progress made in 2019 on our infrastructure initiatives. These programs are designed to improve Wajax’s customer service capabilities, operational consistency and cost efficiency. We completed an extensive pilot of our new ERP system and made excellent progress with the testing of our Customer Support Centres. Organizationally, we completed the centralization of our Finance function and realigned the management of our regional sales and operations teams. In addition to the benefits of a simpler organization, the realignment is estimated to save $5 million pre-tax annually starting in 2020. Engineered Repair Services (ERS) was an important contributor to our growth in 2019. Revenue of $156 million (up $68 million or 77%) resulted from the combination of our legacy ERS business and the first full year of operation of Groupe Delom, which we acquired in October 2018. ERS is an important competitive differentiator, especially to our large customers. It encompasses a wide range of services to meet the engineering, repair, fabrication, maintenance and reliability needs of our industrial and resource customers in their fixed-plant operations. Adding to our scale in this business, we announced the acquisition of NorthPoint Technical Services in January 2020. NorthPoint brings a complimentary branch network, a skilled electro-mechanical repair workforce and additional revenue of approximately $49 million.(3) 2019 also included steps to ensure that the company has the financial flexibility that it requires to grow. Among the actions taken in the year, our $400 million bank credit facility was extended through October 2024 and we completed a public offering of senior unsecured debentures, maturing January 2025, with net proceeds of $54 million which were applied to our credit facilities. In addition, Wajax began a real estate monetization program for selected owned properties. Combined with working capital management balanced to current market conditions, these activities are expected to reduce leverage to our target range in support of the base business and to provide flexible access to capital for our acquisition program.
(1) Total Recordable Injury Frequency (2) B ased on the demand for construction class excavators in Wajax addressable markets. (3) T railing Twelve Month (TTM) revenue of NorthPoint Technical Services to December 31, 2019.
