Investor Presentation October 2012
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 2011 Revenue and EBIT Revenue EBIT 50% 47% 25% 31% 25% 22% 3
2011 Revenue by Region 117 Branches > 40,000 Customers 4
2011 Revenue by Market Other Government Oil & Gas and Utilities 6% 7% 13% Metal Processing 4% Oil Sands 11% 44% Transportation 9% Direct to Resource Markets 11% Mining 16% Industrial/ Commercial 9% 14% Forestry Construction 5
2012 Team of 2,800 By Division By Role Other 32% Industrial Components Equipment 28% Sales 36% Professionals 32% Service Power Systems Technicians 36% 36% 6
Investment Considerations Dividend Objective: Payout of at least 75% of earnings* Current Monthly Dividend: $0.27 per share ($3.24 annualized) Yield: 6.75% - 7.2% (based on $45-$48 stock price) 1.5 – 2.0X Debt-to-EBITDA Target Leverage: Average Annual ROIC: 17.4% - last 5 years (tax effected) Market Cap: ~$750 million No shareholder holds ≥ 10% of issued shares * Subject to the Corporation’s financial condition, economic outlook and capital requirements. 7
Creating Value For Shareholders Wajax Strategy Base Business New Earnings Maintain - Executional Opportunities Growth 75% Dividend Excellence Debt Capacity for Growth • Focus on organic growth: base business and new opportunities • Tuck-under acquisitions • Ensure capacity meets growth requirements • Manage debt within 1.50-2.0X Debt/EBITDA range 8
50% of 2011 Revenue 9
Wajax Equipment Revenue and Growth Priorities Growth Priorities 2011 Revenue Mix 1) Continue to grow market share in Crane/ existing categories: Utility • Focus: Construction and 7% Forestry Material Handling 13% Construction • Continued sales force 33% Material effectiveness improvements Handling 2) Expand Mining 16% 3) Build Rotating Products division Mining 4) Grow aftermarket contribution 31% 5) Selected product line extensions and tuck-under acquisitions. 10
Wajax Equipment Product Offering 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 11
Wajax Equipment Product Offering Growth Strategies 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) 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 Deliver targeted Design custom superior product at approaches to increase turnaround/shutdown lower cost through plant maintenance maintenance services exclusive vendor efficiency relationships Estimated EBIT margins in Rotating Products are greater than 7% for overall Equipment division 14
25% of 2011 Revenue 15
Wajax Power Systems Revenue and Growth Priorities 2011 Revenue Mix Growth Priorities 1) Establish Wajax as one of Electric Power Off-Highway Canada’s leaders in commercial Generation (EPG) Mechanical EPG 23% Drive Systems 53% 2) Expand our success in Off-Highway mechanical drive On-Highway systems 24% 3) Maintain our position in On-Highway 16
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 17
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. 18
Wajax Power Systems Product Offering Growth Strategies 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 19
25% of 2011 Revenue 20
Wajax Industrial Components Revenue Mix and Growth Priorities 2011 Revenue Mix Other Growth Priorities 1% 1) Expand Engineering and Repair Process Service Equipment 17% 2) Expand branch network Bearings and • Organic growth Power • Acquisitions Transmission Hydraulics 3) Improve efficiencies 52% 30% • Supply chain • Inventory management • E-commerce 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 Product Offering Growth Strategies 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: $86K EBIT margins on Engineering and Repair Services sales are greater than overall Industrial Components EBIT margin target of 7% 23
2012 Q2 YTD Results
Q2 YTD Consolidated Revenue and Earnings Revenue Earnings ($ Millions) ($ Per Share) $2.13 $744.7 $638.0 $1.77 +17% +20% 2011 2012 2011 2012 25
Q2 YTD Segment Earnings $ Millions Industrial Equipment Power Systems Components $15.3 $15.1 $13.0 $28.8 $11.0 $23.1 +25% -1% +18% 7.3%* 7.5%* 9.9%* 8.5%* 6.4%* 6.9%* 2011 2012 2011 2012 2011 2012 Revenue Increase: 21% Revenue Increase: 15% Revenue Increase: 10% * EBIT percentage 26
2012 Outlook Slightly more cautious regarding outlook for the remainder of 2012. Quoting in most markets remains buoyant. Expect results for full year 2012 will be modestly higher than the previous year. 27
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