Wajax Corporation

Thank you for attending WageX Corporation's 2024 Fourth Quarter and Year-End Financial Results Webcast. On today's webcast will be Mr. Iggy Domogalski, President and Chief Executive Officer, Mr. Stuart Auld, Outgoing Chief Financial Officer, and Ms. Tanya Casadino, Incoming Chief Financial Officer. Please be advised that this webcast is being recorded. Please note that this webcast contains forward-looking statements. Actual future results may differ from expected results. I will now turn the call over to Tanya Casadino.

Thank you, operator, and good afternoon. Thank you for participating in our fourth quarter results call. This afternoon, we will be following a webcast, which includes a summary presentation of Wage Access Q4 2024 financial results. The presentation can be found on our website under Investor Relations, Events, and Presentations. To begin, I would like to draw your attention to our cautionary statement regarding forward-looking information on slide two. and the non-GAAP and other financial measures on slide three. Please turn to slide four, and at this point, I'll turn it over to Iggy.

Thank you, Tanya. To start, I will provide highlights on our fourth quarter before turning it over to Stuart and Tanya for commentary on backlog, inventory, and the balance sheet. This slide provides an overview of WageX. The corporation has 167 years of Canadian operating history and operates across 114 branches with a team of more than 3,000 employees. During the quarter, our heavy equipment categories and revenue sources made up approximately 62% of our total revenue, while industrial products and ERS generated approximately 38%. Turning to slide five. This slide provides an overview of our purpose and values. Wajax's purpose statement is empowering people to build a better tomorrow, which we strive to achieve by living our values and delivering an exceptional experience for our people, customers, suppliers, and the communities we serve. By living our purpose and values, we'll continue to build a people-first company that is strong, resilient, and profitable. Our purpose and values guide our decision-making and allow us to execute on our strategic priorities. Turning to slide six, this slide provides an overview of our strategic priorities, which have been refined for 2025. Management is completely focused on executing against these priorities. Between our purpose and values and these six priorities, we have the foundation to continue growing our company for many years to come. Turning to slide seven. In the fourth quarter, Wajak saw higher revenues and lower selling and administrative expenses, which were offset by lower gross profit margins and restructuring and other related costs. Revenue of $565.9 million increased $23.3 million in the quarter. The increase resulted primarily from higher mining equipment sales in Western Canada from the delivery of two large mining shovels in the fourth quarter of 2024, with no such deliveries in the fourth quarter of the prior year. These increases were offset partially by lower ERS sales in Western and Central Canada. First profit margin of 17.1% decreased 420 basis points compared to the same period of 2023, driven primarily by lower margins realized on equipment, ERS, and rental revenue due to increased market pressures, as well as a lower proportion of ERS product support and industrial parts sales relative to equipment sales. Selling at administrative expenses as a percentage of revenue decreased to 14.1% in the fourth quarter of 2024 from 16.1% in the fourth quarter of 2023. Selling and administrative expenses in the fourth quarter of 2024 decreased $7.4 million, or 8.5%, compared to the fourth quarter of 2023, due primarily to lower spending in multiple areas, including personnel, bonuses, travel and entertainment, and supplies and marketing, driven largely by cost savings initiatives. In the fourth quarter of 2024, the corporation implemented workforce reductions in response to market conditions. A restructuring cost of $5.8 million was recognized in the fourth quarter, relating primarily to severance costs. Adjusted EBITDA of $35.1 million decreased 12.1 million or 25.6% from the fourth quarter of 2023, noting the adjustments recorded on this chart. The decrease resulted primarily from lower gross profit margins offset partially by reduced selling and administrative expenses. Adjusted net earnings of $0.35 per share decreased 58.2% or $0.48 per share from the fourth quarter of 2023, noting the adjustments recorded on this chart. At the end of Q4, the TRIF rate was 0.94, a decrease of 7% from the fourth quarter of 2023. The fourth quarter TRIF rate was up 3% from the third quarter of 2024. Safety continues to be Wage Act's number one priority, and management is committed to continuously improving our safety programs to improve on this result. We thank everyone on our team for their ongoing dedication to workforce safety. Turning to slide eight. Revenue increase of 4.3% in the fourth quarter resulted from higher revenue in Western Canada offset partially by lower revenues in Central Asia. Western Canada sales of $275 million increased 16.7% in the quarter, due primarily to higher industrial part sales and higher mining equipment sales, including the delivery of two large mining shovels in the fourth quarter of 2024, with no such deliveries in the fourth quarter of the prior year. These increases were offset partially by lower ERS sales. Central Canada sales of $100 million decreased 5.4% in the quarter due primarily to lower equipment sales in the construction and forestry category as well as lower ERS sales. The decrease was offset partially by higher equipment sales in the material handling category. Eastern Canada sales of $191 million decreased 5.1% in the quarter due primarily to lower equipment sales in the construction and forestry category as well as lower industrial parts sales. The decrease was partially offset by higher equipment sales in the material handling category. Please turn to slide 9. An update on equipment and product support sales and year-over-year variances are shown on this page. Equipment sales of $208 million increased $50 million, or 32% compared to last year, due primarily to higher mining sales in Western Canada, including the delivery of two large mining shovels in the fourth quarter of 2024, with no such deliveries in the fourth quarter of the prior year, as well as higher material handling sales in all regions. These increases were offset partially by lower construction and forestry sales in all regions. Product support sales of $133 million were essentially flat compared to last year. Please turn to slide 10. An update on industrial parts and ERS sales and year-over-year variances are shown on this page. Industrial parts sales of approximately $134 million decreased $2 million or 2%. ERS sales of approximately $79 million decreased $25 million or 24% due to lower sales in all regions, particularly in Western Canada. Turning to slide 11. The slide summarizes sales at the category level for our company's overall groupings of heavy equipment and industrial parts and services. In the fourth quarter, the heavy equipment categories increased 50 million, or 17%, driven primarily by higher mining sales in Western Canada, including the delivery of two large mining shovels in the fourth quarter, with no such deliveries in the fourth quarter of the prior year, as well as higher material handling sales in all regions. These increases were offset partially by lower construction and forestry sales in all regions. The industrial parts and service category decreased 27 million, or 11%, driven by lower ERS sales in all regions, particularly in Western Canada, and lower industrial parts sales due to weaker market conditions. As previously announced, on November 4, 2024, Tanya Cassadino has been appointed Chief Financial Officer effective today, following the planned retirement of Stuart Auld from the CFO role. She has agreed to remain with Wajax in the near term to support a series of operational efficiency initiatives. On behalf of the board and management, I would like to thank Stuart for his many contributions to WageX over the last 10 years. His extensive operational knowledge positions him to remain a core contributor, and we appreciate the continued benefit of his expertise and leadership. I'd also like to congratulate Tanya on her appointment to the role of CFO. We look forward to further leveraging her expertise and disciplined approach to financial risk management. I will now turn the call over to Stuart and Tanya for commentary on backlog, inventory, and a balance sheet.