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(Dollars in millions, Three Months Year
except per share data) Ended December 31 Ended December 31
----------------- -----------------
2000 1999 2000 1999
--------------------------------------------------------------- Revenue $296.9 $270.2 $1,147.5 $1,038.4 Earnings excluding unusual items $4.4 $1.9 $11.8 $4.0 Earnings per share excluding unusual items $0.28 $0.12 $0.75 $0.25 Unusual items $(21.4) - $(21.4) - Unusual items per share $(1.37) - $(1.37) - Net (loss) earnings $(17.0) $1.9 $(9.7) $4.0 Earnings (loss) per share $(1.09) $0.12 $(0.62) $0.25 --------------------------------------------------------------- Wajax Limited today announced fourth quarter 2000 earnings excluding unusual items of $4.4 million or $0.28 per share, a 130% increase compared to $1.9 million or $0.12 per share for the fourth quarter of 1999. This performance represents the sixth consecutive quarter of improved earnings when compared to the corresponding quarter of the previous year. Twelve month earnings excluding unusual items of $11.8 million or $0.75 per share represent a 200% increase over earnings of $4.0 million or $0.25 per share in 1999. Two unusual items totaling $21.4 million after tax ($20.3 million pretax) were recorded in the quarter. A $23.0 million, or $1.09 per share charge was taken as a result of the Company's decision to dispose of Pacific North Equipment (PNE), its mobile equipment operation based in Seattle, Washington. This amount provides for the write-off of unamortized goodwill, the closure of the Alaska operations, the writedown of other assets to their estimated net realizable value and other anticipated disposition costs. The Company has decided to dispose of PNE as the product lines carried by this business unit do not fit the Company's overall growth strategy and due to the less than satisfactory operating performance. A favourable $2.7 million pretax pension income amount ($1.6 million after tax) was also recorded in the quarter resulting from the purchase of annuities to satisfy the Company's obligations to retirees and deferred vested pension plan members, offset in part by the cost of certain benefit enhancements awarded to these members. As a result of these two items, the Company reported a net loss of $17.0 million or $1.09 per share for the fourth quarter of 2000. Revenues for the quarter of $296.9 million increased by 10% compared to 1999, while full year revenues of $1,147.5 million were 10.5% ahead of last year. Revenue increases in the fourth quarter were supported by a continuing trend of increased sales from the Company's eastern Canada bearing operations and its western Canada based business units. Walter Fox, President and CEO stated "We are extremely pleased with the progress made this year, not only from an operating earnings standpoint, but also from the tremendous progress we have made in reducing our working capital requirements and debt level. The year 2000 represented a turning point for Wajax. With the operating improvements made to date we are now in a position to drive forward our strategy of transforming the Company from an equipment and parts distribution focus to an after-market parts and service orientation. A number of initiatives are already underway that will expand our service capabilities, our JD Edwards based ERP computer system is on schedule and budget to meet its first "go live" date in the third quarter of 2001 and we have earmarked resources to expand our e-commerce presence. We are committed to making the required investments necessary to achieve a continuation of improved returns in the years ahead." In keeping with the Company's Mobile Equipment strategy to secure national representation of leading quality product lines, the Company today announced an agreement with Hitachi Construction Machinery Canada Limited for Wajax to be the exclusive distributor of the entire Hitachi product line across Canada effective June 1, 2001. This effectively adds the Hitachi forestry and construction product lineup to the Company's eastern Canada and Manitoba operations. Also, effective May 17, 2001, the Company will cease to have western Canada Volvo construction product distribution rights, but will remain committed to its customers for their future after-market requirements. Hitachi came to be the Company's supplier of choice due to its strong product lineup in the mining, forestry and construction sectors, and due to its near-term product expansion plans. Looking forward to 2001, Mr. Fox commented, "Obtaining the Hitachi product line for all of Canada goes a long way towards meeting our Mobile Equipment strategic objective of securing national representation of quality product lines in each key industry sector. This will complement our existing national representation of Euclid-Hitachi mining trucks and shovels, LeTourneau loaders, Hyster forklifts, and the Terex/Telelect line of crane and utility products. 2001 will be a transition year for this business as we ramp up our eastern Canada operation to handle the new Hitachi line and transition out of the discontinued line in the west. In the rest of our businesses we are determined to enhance our operating performance. The translation of operating improvements into higher earnings is influenced by general economic conditions. While there has been evidence of a slowing North American economy during the early part of 2001, the continued robustness of the western Canada petroleum sector should continue to benefit the Company". Mobile Equipment Mobile Equipment quarterly segment earnings before unusual items increased year-over-year by more than 46% to $7.2 million on revenue of $170.0 million, up 13% over 1999. The Company's western Canada operation led the way as the sale of a large mining package in the quarter helped drive revenue and earnings higher. As well, as a result of implementing cost reduction programs throughout the year, PNE broke even for the quarter before the $23.0 million charge, a much improved performance from the loss sustained the previous year. For the full year 2000, revenues of $648.6 million were up almost 8% versus the previous year as a result of sales growth in Canada. Comparative full-year segment earnings before unusual items increased by 52% with significant improvements evident in all operating units. Industrial Components Fourth quarter segment revenues of $83.5 million increased by more than 9% as strong growth was experienced in all operating units with the exception of the eastern Canada based hydraulics and process pumps business. Increased sales to customers in the resource sectors in Canada and the western U.S., coupled with the benefits of recently secured national supply contracts with several large bearing customers, accounted for this revenue growth. These revenue gains combined with no increase in SG&A costs year-over-year resulted in a 300% increase in segment earnings before unusual items to $3.4 million. The same factors that led to the positive results in fourth quarter revenues and earnings have also been largely responsible for the improved performance on a full year basis. Revenues of $344.9 million grew by almost 15%, while segment earnings before unusual items more than doubled to $12.4 million. Diesel Engines Quarterly revenue and earnings before unusual items in the Diesel Engines segment were slightly improved compared to the previous year. Increased equipment sales, and parts and service revenues in western Canada were somewhat offset by lessened activity in eastern Canada where a surge of Y2K related generator sales had been experienced in the fourth quarter of 1999. On a twelve-month basis, revenues of $157.1 million were up 14% over the previous year and segment earnings before unusual items of $11.8 million increased by 18%. *********************** For the full year 2000, the Company generated $39.8 million of cash before financing activities compared to $28.8 million in 1999. Positive cash flow from earnings combined with a reduction in working capital were responsible for this performance. This cash was used to reduce funded debt as management continues to focus on debt reduction. After accounting for the equity charge from the unusual items, the year-end debt-to-equity ratio improved from 1.16:1 in 1999 to 1.04:1 in 2000. Wajax is a diversified company that has three core distribution businesses engaged in the sale and after-sales parts and service support of mobile equipment, diesel engines and industrial components, through a network of close to 150 branches across Canada and the western United States. Its customer base spans natural resources, construction, transportation, manufacturing, industrial processing and utilities. Wajax will Webcast its Fourth Quarter Financial Results Conference Call. You are invited to listen to the live Webcast on Monday, March 5, 2001 at 11:00am EST. To access the Webcast, enter www.wajax.com and click on the link for the Webcast on the Investor Relations page. The archived Webcast will be available at the above mentioned website within 24 hours after the conference call. This news release contains forward-looking information. Actual future results may differ from expected results. For further information, please contact: Walter Fox, President and Chief Executive Officer
Email: wfox@wajax.com
John Hamilton, Chief Financial Officer
Email: jhamilton@wajax.com Telephone #: (905) 212-3300 CONSOLIDATED BALANCE SHEETS
(unaudited) ---------------------------------------------------------------
December 31 December 31
(in thousands of dollars) 2000 1999
--------------------------------------------------------------- Current Assets
Cash $22,579 $-
Accounts receivable 165,897 151,515
Inventories 282,534 286,771
Prepaid expenses 4,266 3,205
Income taxes receivable - 7,345
Future income taxes 9,135 11,521
---------------------------------------------------------------
484,411 460,357
---------------------------------------------------------------Non-Current Assets
Rental equipment 14,507 28,197
Capital assets 55,137 46,481
Goodwill and other assets 65,729 81,390
Future income taxes 2,809 1,081
---------------------------------------------------------------
138,182 157,149
---------------------------------------------------------------
$622,593 $617,506
=============================================================== Current Liabilities
Bank indebtedness $- $9,237
Accounts payable and accrued liabilities 194,581 168,370
Income taxes payable 2,622 -
Current portion of long-term debt 3,229 3,850
---------------------------------------------------------------
200,432 181,457
--------------------------------------------------------------- Non-Current Liabilities
Future income taxes 2,880 4,268
Long-term debt 223,157 225,991
---------------------------------------------------------------
226,037 230,259
--------------------------------------------------------------- Shareholders' Equity
Share capital 102,212 102,212
Retained earnings 93,912 103,578
---------------------------------------------------------------
196,124 205,790
---------------------------------------------------------------
$622,593 $617,506
=============================================================== CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited) ---------------------------------------------------------------
For the three months ended December 31
--------------------------------------
Reported Excluding Unusual Items
---------------------------------------------------------------
(in thousands of dollars,
except per share data) 2000 1999 2000 1999
---------------------------------------------------------------
Revenue $296,881 $270,171 $296,881 $270,171
===============================================================
Gross Profit 63,187 58,867 63,187 58,867
Selling and
administrative
expenses 48,216 48,948 48,216 48,948
---------------------------------------------------------------
Earnings before unusual
items, interest
and taxes 14,971 9,919 14,971 9,919
Unusual items
(See Note 1) 20,252 - - -
---------------------------------------------------------------
(Loss) Earnings before
interest and taxes (5,281) 9,919 14,971 9,919
Interest expense 5,068 5,065 5,068 5,065
---------------------------------------------------------------
(Loss) Earnings
before taxes (10,349) 4,854 9,903 4,854
Income taxes 6,721 2,921 5,544 2,921
---------------------------------------------------------------
Net (Loss) Earnings $(17,070) $1,933 $4,359 $1,933
===============================================================
(Loss) Earnings per
share $(1.09) $0.12 $0.28 $0.12
===============================================================
Number of common
shares outstanding 15,696,960 15,696,960 15,696,960 15,696,960
=============================================================== CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
For the twelve months ended December 31
---------------------------------------
Reported Excluding Unusual Items
---------------------------------------------------------------
(in thousands of dollars,
except per share data) 2000 1999 2000 1999
---------------------------------------------------------------
Revenue $1,147,489 $1,038,367 $1,147,489 $1,038,367
---------------------------------------------------------------
Gross Profit 241,348 222,405 241,348 222,405
Selling and
administrative
expenses 195,777 192,279 195,777 192,279
---------------------------------------------------------------
Earnings before unusual
items, interest
and taxes 45,571 30,126 45,571 30,126
Unusual items
(See Note 1) 20,252 - - -
---------------------------------------------------------------
Earnings before
interest and taxes 25,319 30,126 45,571 30,126
Interest expense 20,250 20,195 20,250 20,195
---------------------------------------------------------------
Earnings before taxes 5,069 9,931 25,321 9,931
Income taxes 14,735 5,968 13,558 5,968
---------------------------------------------------------------
Net (Loss) Earnings $(9,666) $3,963 $11,763 $3,963
===============================================================
(Loss) Earnings
per share $(0.62) $0.25 $0.75 $0.25
===============================================================
Number of common
shares outstanding 15,696,960 15,696,960 15,696,960 15,696,960
=============================================================== CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) ---------------------------------------------------------------
Year to date
December 31
(in thousands of dollars) 2000 1999
--------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) earnings $(9,666) $3,963 Amortization - Rental equipment 6,318 7,685 - Capital assets 7,811 8,627 - Goodwill and deferred expenses 4,229 4,653 Future income taxes (730) 3,420 Unusual items (See Note 1) 20,252 - --------------------------------------------------------------- Cash flows before changes in non-cash working capital 28,214 28,348 --------------------------------------------------------------- Changes in non-cash working capital:
Accounts receivable (13,678) (8,280)
Inventories 8,947 15,156
Prepaid expenses (1,009) 3,069
Accounts payable and accrued liabilities 26,828 10,025
Income taxes receivable 10,033 (3,350)
---------------------------------------------------------------
31,121 16,620
---------------------------------------------------------------
Cash flows provided by operating activities 59,335 44,968
--------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES
Rental equipment additions (5,473) (18,342)
Rental equipment disposals 2,223 15,551
Capital asset additions (16,515) (15,510)
Proceeds on disposal of capital assets 245 2,816
Acquisition of business - (713)
---------------------------------------------------------------
(19,520) (16,198)
---------------------------------------------------------------
Cash flows before financing activities 39,815 28,770
--------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in current bank indebtedness (10,104) (11,033)
(Decrease) Increase in notes payable (907) 581
Decrease in long-term debt (3,588) (15,773)
Repayment of debentures (2,943) (2,683)
Deferred financing charges - (299)
Other 306 437
---------------------------------------------------------------
(17,236) (28,770)
---------------------------------------------------------------
Net change in cash and cash equivalents $22,579 $-
Cash and cash equivalents - beginning of year - -
===============================================================
Cash and cash equivalents - end of year $22,579 $-
=============================================================== SEGMENTED INFORMATION
(unaudited)
---------------------------------------------------------------
(in thousands of dollars)
Industry Segments For the three months ended December 31 Mobile Industrial Diesel Segment 2000 Equipment Components Engines Eliminations Total --------------------------------------------------------------- Revenue $169,980 $83,476 $44,372 $(947) $296,881 --------------------------------------------------------------- Segment earnings before unusual items, interest and taxes $7,197 $3,422 $4,352 $- $14,971 Unusual items (See Note 1) (21,430) 842 336 - (20,252) --------------------------------------------------------------- Segment (loss) earnings before interest and taxes $(14,233) $4,264 $4,688 $- $(5,281) --------------------------------------------------------------- Mobile Industrial Diesel Segment 1999 Equipment Components Engines Eliminations Total --------------------------------------------------------------- Revenue $149,923 $76,442 $44,110 $(304) $270,171 --------------------------------------------------------------- Segment earnings before interest and taxes $4,905 $851 $4,171 $(8) $9,919 --------------------------------------------------------------- For the twelve months ended December 31 Mobile Industrial Diesel Segment 2000 Equipment Components Engines Eliminations Total --------------------------------------------------------------- Revenue $648,597 $344,928 $157,071 $(3,107) $1,147,489 --------------------------------------------------------------- Segment earnings before unusual items, interest and taxes $21,363 $12,404 $11,804 $- $45,571 Unusual items (See Note 1) (21,430) 842 336 - (20,252) --------------------------------------------------------------- Segment (loss) earnings before interest and taxes $(67) $13,246 $12,140 $- $25,319 --------------------------------------------------------------- Mobile Industrial Diesel Segment 1999 Equipment Components Engines Eliminations Total --------------------------------------------------------------- Revenue $601,806 $301,201 $138,011 $(2,651) $1,038,367 --------------------------------------------------------------- Segment earnings before interest and taxes $14,058 $6,084 $10,001 $(17) $30,126 --------------------------------------------------------------- |
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