Wajax Corporation

Thank you for attending Wayzax Corporation's 2026 First Quarter Financial Results Webcast. On today's webcast will be Mr. George McLean, President and Chief Executive Officer, Ms. Tanya Casadinho, 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 Casadeen-Hall.

Thank you, Operator. Good afternoon, and thank you for participating in our first quarter results call. This afternoon, we will be following a webcast, which includes a summary presentation of Wage Access Q1 2026 financial results. The presentation can be found on our website under Investor Relations, Events, and Presentations. Again, I would like to draw your attention to our cautionary statement regarding forward-looking information on slide 2 and the non-GAAP and other financial measures on slide 3. Please turn to slide 4, and at this point, I'll turn the call over to George.

To start out, we'll provide highlights on our first quarter before turning it back to Tanya for commentary on backlog, inventory, and the balance sheet. This slide provides an overview of WageX. The corporation has more than 167 years. of Canadian operating history and operates across 105 branches with a team of approximately 2,900 employees. During the quarter, our heavy equipment categories and revenue sources made up approximately 55% of our total revenue, while industrial parts and ERS generated approximately 45%. Moving to slide five. This slide provides an overview of our purpose and values. WageX'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 shareholders, customers, suppliers, our people, and the communities we serve. 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 were refined for 2026. During 2025, management focused on cost control, inventory optimization, and margin improvement to reduce leverage, enhance profitability, and increase cash flow from operations. These actions represented initial steps in an ongoing program of operational improvements. In 2026, management continues to emphasize disciplined operational execution across these focus areas, supported by balance sheet strength and prudent capital allocation, which will enable the corporation to deliver sustainable long-term value. Turning to slide 7, first quarter of 2026, WageX delivered improved margins, strong operating cash flow, and a further reduction in leverage despite lower year-over-year revenue. Revenue of $502.1 million decreased $52.9 million, or 9.5% in the quarter. The decrease resulted primarily from lower equipment volumes, including the delivery of one large mining shovel in the current quarter compared to two in the first quarter of the prior year. as well as continued customer uncertainty and increased caution across certain sectors. The gross profit margin of 20.6% increased 150 basis points compared to the same period of 2025, reflecting margin initiatives and sales mix. Increase was driven primarily by higher margins realized in industrial parts and ERS sales and a lower proportion of equipment sales from a sales mix perspective. These increases were partially offset by lower margins realized on product support revenue. We remain focused on these margin improvement initiatives to strengthen our margin profile, mitigate ongoing market pressures, and drive continued earnings performance. Selling and administrative expenses as a percentage of revenue increased to 14.8% in the first quarter of 2026 from 14.3% in the same period of 2025, driven by the year-over-year decline in revenue. Using the adjustments noted on the slide, adjusted selling and admins expenses decreased $1.5 million in the first quarter of 2026 compared with the same period in the prior year, primarily due to ongoing discipline in cost control and operational efficiency. Adjusted EBITDA margin of 8.1% in the first quarter of 2026 improved from 7.8% compared to the same period of 2025 and increased from 7.9% in the fourth quarter of 2025. Adjusted EBITDA of $40.5 million decreased $2.7 million, or 6.3%, from the first quarter of 2025, noting the adjustments recorded on this chart. Adjusted net earnings of $0.67 per share decreased 2.4%, or $0.02 per share, from the first quarter of 2025, noting the adjustments recorded on this chart. At the end of Q1, the TRIF rate was 2.02, an increase of 55% from the first quarter of 2025. Safety continues to be WageX'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 workplace safety. Turning to slide eight. Revenue decreases of 9.5% in the first quarter resulted from lower revenue in all regions. Western Canada sales of $227 million decreased 14% in the quarter to primarily to lower construction and forestry equipment volumes and lower mining volumes, reflecting the delivery of one large mining shovel in the first quarter of 2026 compared to two in the first quarter of the prior year. Central Canada sales of $90 million decreased 9.5% in the quarter due primarily to lower revenue in the material handling and industrial parts categories. Eastern Canada sales of $184 million decreased 3.3% in the quarter due primarily to lower equipment volumes in the construction and forestry segments and material handling categories and lower industrial parts sales. These decreases were partially offset by higher ERS revenue and higher equipment volumes in the power systems category.