Investor Presentation March 2013
Forward Looking Statement This presentation contains certain forward-looking statements. Forward looking statements relate to future events or the Corporation’s future performance, and are based on management’s current expectations and assumptions regarding the business and anticipated financial results of the Corporation. Forward looking statements involve known and unknown risks, uncertainties and other factors beyond the Corporation’s control which may affect the Corporation’s business, or cause management’s expectations and assumptions to prove incorrect. As a result, actual results of operations could differ materially from those anticipated or implied by forward-looking statements. There can be no assurance any forward-looking statement will materialize. You can find a discussion of risks and uncertainties pertaining to the Corporation and its business and other factors that could cause financial results to fluctuate in our regulatory filings on SEDAR at www.sedar.com. The Corporation assumes no obligation to publicly update or revise its forward-looking statements to reflect new information, events or circumstances, except as required by law. 2
Wajax Core Businesses 2012 Revenue and EBIT Revenue EBIT 53% 54% 23% 25% 24% 21% 3
2012 Revenue by Region 128 Branches > 40,000 Customers 4
2012 Revenue by Market Other Government Oil & Gas and Utilities 6% 6% 10% Metal Processing 5% Oil Sands 11% 43% Transportation 9% Direct to Resource 12% Markets Mining 14% Industrial/ 10% Commercial 17% Forestry Construction 5
Investment Considerations Dividend Objective: Payout of at least 75% of earnings* Current Monthly Dividend: $0.27 per share ($3.24 annualized) Yield: 7.7% - 8.5% (based on $38-$42 stock price) 1.5 – 2.0X Debt-to-EBITDA Target Leverage: Average Annual ROIC: 16.6% - last 5 years (tax effected) Market Cap: ~$700 million No shareholder holds ≥ 10% of issued shares * Subject to the Corporation’s financial condition, economic outlook and capital requirements. 6
Creating Value For Shareholders Wajax Strategy Base Business New Earnings Maintain - Executional Opportunities Growth 75% Dividend Excellence Capital for Growth • Focus on organic growth: base business and new opportunities • Tuck-under acquisitions • Ensure debt capacity meets growth requirements • Manage debt within 1.50-2.0X Debt/EBITDA range 7
53% of 2012 Revenue 8
Wajax Equipment Revenue and Growth Priorities 2012 Revenue Mix Growth Priorities Base Business: Crane/ 1) Continue to grow market share in Utility existing categories: 7% Forestry • Focus: Construction and 12% Construction Material Handling 35% Material • Continued sales force Handling effectiveness improvements 16% 2) Expand Mining Mining 3) Grow aftermarket contribution 30% 4) Selected product line extensions and tuck-under acquisitions. New Opportunity: 1) Build Rotating Products division 9
Wajax Equipment Expand Mining Growth Strategies Grow Mining Building on our leadership position in Hitachi mining shovels 1) Expand infrastructure in Ontario and Eastern Canada 2) New products and services Hitachi 10
Wajax Equipment Expand Mining Product Offering Future: Underground and Drilling Now: Haul Trucks $500 Million* $400 Million* $200 Million* Provide product with Representing Fletcher Representing new entry excellent quality and cost mining effective Q4 2012 to market in 2014 for effectiveness drilling equipment Testing selected Can generate 2X original Reviewing additional underground mining lines costs in parts and service new to North American mining opportunities in over 10-year lifetime market from YMZ/Zanam equipment, parts and service (*Estimated Canadian market size relevant to expected Wajax offering) 11
Wajax Equipment Product Line Extensions – Bell Articulated Truck $225 Million* Appointed exclusive Canadian distributor November 2, 2012 Estimated Canadian unit market size - 500 units / year Estimated Canadian installed base – 300 units • Represents immediate parts and service opportunity (*Estimated Canadian market size) 12
Wajax Equipment Developing the Rotating Products Division Estimated Oil Sands Market (1) Wajax Strategy $1.8B 1) Grow revenue in an expanding array of oil sands products and services Products, • Primary focus: products, Parts and parts and services in slurry Services systems 29% Plant and • Secondary focus: selective Field provisioning of plant and field Services services 71% • Current market share <1% 2) Focus on oil sands markets first and then expand to other Canadian markets (1) Wajax Addressable Products and Services 13
Wajax Equipment Developing the Rotating Products Division Slurry Pumps Engineering Field Parts and Service Support Services Deliver technologically Design custom Deliver targeted superior product at turnaround/shutdown approaches to increase lower cost through plant maintenance maintenance services exclusive vendor efficiency relationships 14
23% of 2012 Revenue 15
Wajax Power Systems Revenue and Growth Priorities 2012 Revenue Mix Growth Priorities Base Business: 1) Expand our success in Electric Power Off-Highway Generation (EPG) Off-Highway mechanical drive Mechanical 26% systems Drive Systems 45% 2) Maintain our position in On-Highway On-Highway New Opportunity: 29% 1) Establish Wajax as one of Canada’s leaders in commercial EPG 16
Wajax Power Systems Mechanical Drive Systems MTU Allison Applications Oil and gas exploration and servicing (e.g., fracking) Other Off-Highway applications (e.g., marine) Growth Strategies Leverage product technology advancements by MTU and Allison Expansion of aftermarket capabilities Marine opportunities – e.g., Gov’t of Canada ship building 17
Wajax Power Systems Building Our EPG Business Estimated Canadian Market Size (1) $880M Wajax Strategy Gas 1) Currently #3 in the market Continuous 2) Lever advantages: 7% • National footprint • Diverse product portfolio • Building a world-class team Diesel Prime Diesel Standby 3) Focus for Wajax 49% 44% • Large projects capability (>$7M/5MW) • Continued success in standby and prime diesel, rental and gas (1) Wajax Addressable Segments 18
Wajax Power Systems Génératrice Drummond Establishing an Infrastructure to Drive EPG The 68,000 sq. ft. Génératrice Drummond facility opened in the summer of 2012 and will be used to support continued strength in the Quebec market and as a national integration center. 19
24% of 2012 Revenue 20
Wajax Industrial Components Revenue Mix and Growth Priorities 2012 Revenue Mix Growth Priorities Other Base Business: 3% 1) Expand branch network Process Equipment • Organic growth 15% • Acquisitions Bearings and 2) Improve efficiencies Power Transmission • Supply chain Hydraulics 52% • Inventory management 30% • E-commerce New Opportunity: 1) Expand Engineering and Repair Service 21
Wajax Industrial Components Building our Engineering and Repair Services Estimated Canadian Market Size (1) Wajax Strategy $1.4B 1) Wajax current share estimated at 4% • Driven by strength in hydraulics 12% market share Instrumentation Hydraulics 2) Build services capability: 22% 25% • Engineering design and fabrication services • Shop repairs Bearings • Field Repairs Pumps and Power 28% • Reliability services Transmission 25% 3) National branch network • Consider selected acquisitions to accelerate growth (1) Wajax Addressable Products/Services 22
Wajax Industrial Components Engineering and Repair Services Bearings and Power Hydraulics Process Equipment Transmission Gate Valve Power Unit Pillow Block Bearings Sludge Pump Fort McMurray Sept-Iles Toronto Project Value: $125K Project Value: $520K Project Value: $86K 23
2012 Results
2012 Consolidated Revenue and Earnings Earnings Revenue ($ Per Share) ($ Millions) $3.95 $1,466 $3.84 $1,377 +3% +6% 2011 2012 2011 2012 25
2012 Net Segment Earnings ($ Millions) Industrial Equipment Power Systems Components $56.1 $32.9 $23.1 $22.1 $50.2 $26.1 -4% +12% -21% 7.3%* 7.2%* 9.5%* 7.9%* 6.6%* 6.1%* 2011 2012 2011 2012 2011 2012 Revenue Increase: 14% Revenue Decrease: 4% Revenue Increase: 4% * Net Segment earnings percentage 26
2013 Outlook 2013 to be challenging as a result of mining, and oil and gas slowdown and loss of LeTourneau distribution rights. However, quoting activity in mining remains active. Achieving comparable earnings to 2012 depends on reasonable end market recovery in the second half of 2013. 27
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