January 13, 2020 - 2:09 PM EST
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Wajax Announces Acquisition of NorthPoint Technical Services

Canada NewsWire

TSX Symbol:  WJX

TORONTO, Jan. 13, 2020 /CNW/ - Wajax Corporation ("Wajax" or the "Corporation") today announced that it has acquired all of the issued and outstanding shares (the "Shares") of Calgary, Alberta-based NorthPoint Technical Services ULC ("NorthPoint"). The Shares were acquired from an affiliate of Denver, Colorado-based Lion Equity Partners for an aggregate purchase price of $18 million.

Wajax Corporation (CNW Group/Wajax Corporation)

NorthPoint was formed in 2018 as a national electro-mechanical services provider and serves a broad range of resource and industrial customers. Specializing in the repair of rotating industrial equipment, including motors, generators, gearboxes, switchgear, transformers, pumps, fans and turbines, NorthPoint operates nine branches across Canada and employs approximately 177 people. Northpoint's branches are located in Grand Prairie and Calgary, Alberta; Regina, Saskatchewan; Winnipeg, Manitoba; Kirkland Lake, Sudbury and Sarnia, Ontario; Moncton, New Brunswick; and St. John's, Newfoundland.

Transaction Highlights

  • Consistent with Wajax's strategy, the acquisition of NorthPoint is expected to provide meaningful growth in the Corporation's Engineered Repair Services ("ERS") business. For the twelve months ended December 31, 2019, NorthPoint had revenues of approximately $49.2 million.

  • NorthPoint is complementary to Wajax's existing ERS business, which includes Montréal, Québec-based Groupe Delom Inc., acquired by Wajax in October 2018. The addition of NorthPoint provides further technical expertise, a skilled workforce and minimal branch overlap with Wajax's current ERS locations.

  • The acquisition is expected to be immediately accretive to Wajax shareholders in an anticipated range of $0.05$0.10 for the 2020 fiscal year, on an earnings per share basis.

"We are extremely pleased to welcome NorthPoint and its team of dedicated professionals to Wajax," said Mark Foote, President and Chief Executive Officer of Wajax. "The addition of NorthPoint gives our ERS platform strengthened national coverage, complementing the expanded footprint we acquired with Groupe Delom in 2018 and allowing us to better serve our customers.  We continue to view ERS as a critical part of our growth strategy as it is expected to enhance our EBITDA margins, requires a lower total working capital investment when compared to our distribution businesses and further enhances our overall value proposition to new and existing customers."(1)

Paul Crawford, Chief Executive Officer of NorthPoint, stated, "Partnering with Wajax provides our team with a significant opportunity to grow our volume nationally, leveraging Wajax's extensive sales, marketing and customer relationships. Combining with Wajax offers customers a national partner for all their ERS needs and sets us apart in the marketplace."

The transaction will be subject to normal post-closing adjustments.

Wajax Corporation

Founded in 1858, Wajax (TSX: WJX) is one of Canada's longest-standing and most diversified industrial products and services providers. The Corporation operates an integrated distribution system providing sales, parts and services to a broad range of customers in diverse sectors of the Canadian economy, including: construction, forestry, mining, industrial and commercial, oil sands, transportation, metal processing, government and utilities and oil and gas.

The Corporation's goal is to be Canada's leading industrial products and services provider, distinguished through its three core capabilities: sales force excellence, the breadth and efficiency of repair and maintenance operations, and the ability to work closely with existing and new vendor partners to constantly expand its product offering to customers. The Corporation believes that achieving excellence in these three areas will position it to create value for its customers, employees, vendors and shareholders.

Notes:

(1)

"EBITDA" and "EBITDA margin" are financial measures which do not have standardized meanings prescribed under generally accepted accounting principles and may not be comparable to similar measures presented by other issuers. "EBITDA" is defined as net earnings before finance costs, income tax expense, depreciation and amortization. "EBITDA margin" is defined as EBITDA divided by revenue.

 

Cautionary Statement Regarding Forward-Looking Information

This news release contains certain forward-looking statements and forward-looking information, as defined in applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements relate to future events or the Corporation's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "anticipates", "intends", "predicts", "expects", "is expected", "scheduled", "believes", "estimates", "projects" or "forecasts", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors beyond the Corporation's ability to predict or control which may cause actual results, performance and achievements to differ materially from those anticipated or implied in such forward-looking statements. There can be no assurance that any forward-looking statement will materialize. Accordingly, readers should not place undue reliance on forward looking statements. The forward-looking statements in this news release are made as of the date of this news release, reflect management's current beliefs and are based on information currently available to management. Although management believes that the expectations represented in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct. Specifically, this news release includes forward looking statements regarding, among other things, our expectation that the acquisition of NorthPoint will provide meaningful growth in our ERS business; our expectation that the NorthPoint acquisition will be immediately accretive to Wajax shareholders in an anticipated range of $0.05$0.10 for the 2020 financial year, on an earnings per share basis; our view of ERS as a critical part of our growth strategy as it is expected to enhance our EBITDA margins, requires a lower total working capital investment when compared to our distribution businesses and further enhances our overall value proposition to new and existing customers; our goal of becoming Canada's leading industrial products and services provider, distinguished through our core capabilities; and our belief that achieving excellence in our areas of core capability will position Wajax to create value for its customers, employees, vendors and shareholders. These statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, general business and economic conditions; the supply and demand for, and the level and volatility of prices for, oil, natural gas and other commodities; financial market conditions, including interest rates; our ability to execute our updated Strategic Plan, including our ability to develop our core capabilities, execute on our organic growth priorities, complete and effectively integrate acquisitions, such as NorthPoint and Group Delom, and to successfully implement new information technology platforms, systems and software; the future financial performance of the Corporation; our costs; market competition; our ability to attract and retain skilled staff; our ability to procure quality products and inventory; and our ongoing relations with suppliers, employees and customers. The foregoing list of assumptions is not exhaustive. Factors that may cause actual results to vary materially include, but are not limited to, a deterioration in general business and economic conditions; volatility in the supply and demand for, and the level of prices for, oil, natural gas and other commodities; a continued or prolonged decrease in the price of oil or natural gas; fluctuations in financial market conditions, including interest rates; the level of demand for, and prices of, the products and services we offer; levels of customer confidence and spending; market acceptance of the products we offer; termination of distribution or original equipment manufacturer agreements; unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, our inability to reduce costs in response to slow-downs in market activity, unavailability of quality products or inventory, supply disruptions, job action and unanticipated events related to health, safety and environmental matters); our ability to attract and retain skilled staff and our ability to maintain our relationships with suppliers, employees and customers. The foregoing list of factors is not exhaustive. Further information concerning the risks and uncertainties associated with these forward looking statements and the Corporation's business may be found in our Annual Information Form for the year ended December 31, 2018, filed on SEDAR. The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. The Corporation does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

Additional information, including Wajax's Annual Report, is available on SEDAR at www.sedar.com.

SOURCE Wajax Corporation

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Mark Foote, President and Chief Executive Officer, Email: [email protected]; Stuart Auld, Chief Financial Officer, Email: [email protected]; Trevor Carson, Vice President, Supply Chain and Corporate Development, Email: [email protected], Telephone #: (905) 212-3300Copyright CNW Group 2020


Source: Canada Newswire (January 13, 2020 - 2:09 PM EST)

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