Wajax announces 2014 second quarter earnings Français

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Wajax Corporation

Aug 06, 2014, 07:55 ET

TSX Symbol: WJX

(Dollars in millions, except per share data)

Three Months Ended June 30

Six Months Ended June 30

2014

2013

2014

2013

CONSOLIDATED RESULTS

Revenue

$374.4

$362.0

$705.8

$698.3

Net earnings

$12.3

$13.5

$19.0

$23.9

Basic earnings per share

$0.73

$0.81

$1.13

$1.43

SEGMENTS

Revenue

- Equipment

$188.2

$189.1

$348.7

$345.1

- Power Systems

$82.0

$69.5

$159.1

$149.4

- Industrial Components

$105.2

$104.5

$201.3

$205.7

Earnings

- Equipment ⁽¹⁾

$13.6

$13.0

$24.3

$20.8

% margin

7.2%

6.9%

7.0%

6.0%

- Power Systems ⁽¹⁾

$4.2

$3.3

$7.7

$7.4

% margin

5.1%

4.7%

4.8%

4.9%

- Industrial Components ⁽¹⁾

$4.6

$5.7

$5.8

$11.6

% margin

4.4%

5.5%

2.9%

5.6%

(1)

Segment earnings before finance costs and income taxes.

TORONTO, Aug. 6, 2014 /CNW/ - Wajax Corporation ("Wajax" or the "Corporation") today announced its 2014 second quarter earnings.

Second Quarter Highlights

Consolidated second quarter revenue of $374.4 million increased $12.4 million, or 3%, compared to last year. The Power Systems segment recorded an 18% increase in revenue over the previous year, primarily on stronger power generation sales and improved off-highway activity in the western Canada oil and gas sector. Revenue in the Industrial Components and Equipment segments were relatively unchanged from the previous year.
Net earnings for the quarter of $12.3 million, or $0.73 per share, decreased compared to $13.5 million, or $0.81 per share recorded in 2013. The lower earnings were mainly attributable to higher finance costs resulting from the increased cost of debt related to the issuance of long-term senior notes in the fourth quarter of last year, as well as a slightly higher income tax rate. Higher gross profit margins from improved parts and service volumes increased Equipment segment earnings 4% over the previous year, to $13.6 million, despite a $0.5 million charge for the closure of one and temporary shutdown of another British Columbia mining branch. Power Systems segment earnings increased 27% from 2013, to $4.2 million, on the increase in revenue, while Industrial Components segment earnings decreased 19%, to $4.6 million, on higher selling and administrative costs.
Consolidated backlog at June 30, 2014 of $224.5 million increased $66.7 million, or 42%, compared to March 31, 2014 on increases in all three segments.
Funded net debt of $218.2 million at June 30, 2014 was relatively unchanged compared to $217.8 million at March 31, 2014.

The Corporation disclosed that it expects to take a restructuring provision in the third quarter of 2014 of between $3.0 million and $3.6 million related to the Industrial Components segment. This provision will consist primarily of severance costs, as Industrial Components simplifies its sales organization. Annual pre-tax cost savings as a result of this restructuring are expected to be approximately $5.0 million.

Wajax also reported that it has amended its bank credit facility, extending the maturity a further three years to August 12, 2019 on more favourable terms than its previous agreement. The new terms include the allowance for dividend payments as long as the Corporation's Debt-to-EBITDA ratio (see the MD&A Liquidity and Capital Resources and the MD&A Non-GAAP and Additional GAAP Measures sections) is less than 3.25x, which is 0.25x higher than the previous agreement and equal to the level in the senior notes agreement.

Wajax also announced that monthly dividends of $0.20 per share were declared for the months of August, September and October.

Outlook

Commenting on second quarter results and the outlook for the remainder of 2014, Mark Foote, President and CEO, stated:

"As expected, second quarter earnings showed improvement compared to the first quarter of this year. The Equipment and Power Systems segments each posted improved earnings compared to the previous year despite a $0.5 million charge in the Equipment segment related to downsizing its branch operations primarily due to a slow-down in British Columbia coal mining activity. In the Industrial Components segment, trends continued to improve from the first quarter.

We are pleased with our 42% increase in backlog over the first quarter and in particular with the increased orders for oil sands related mining shovels.

During the quarter we transferred accountability for the oil sands based rotating products group from the Equipment segment to the Industrial Components segment and the impact of the transfer was reflected in the segment results for the quarter and comparative periods. The change will allow for a stronger foundation for operations in the oil sands by exploiting the engineering and repair services capabilities in Industrial Components and provides a platform for future expansion into other Canadian mining markets. We also announced plans to restructure and simplify the sales force at Industrial Components, which is expected to result in improved sales team effectiveness and lower costs. We are very committed to growth at Industrial Components with particular emphasis on the addition of products and value-added services in support of our oil sands, mining and oil and gas customers.

Heading into the third quarter, the outlook for our end markets and results for the full year, excluding the expected restructuring provision, remains substantially unchanged from our view at the end of the first quarter. While we continue to expect 2014 to be a challenging year, we are beginning to see encouraging signs of increased capital spending from oil and gas customers and we are pleased with our oil sands activity. Our increased backlog and the restructuring in the Industrial Components segment gives us added confidence as we continue to make investments in our strategic growth initiatives. As a result, we have maintained our monthly dividend at $0.20 per share, keeping to our guideline of paying out at least 75% of current year expected earnings."

Wajax Corporation

Wajax is a leading Canadian distributor engaged in the sale, rental and after-sale parts and service support of equipment, power systems and industrial components, through a network of 121 branches across Canada. The Corporation is a multi-line distributor and represents a number of leading worldwide manufacturers across its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Wajax will Webcast its Second Quarter Financial Results Conference Call. You are invited to listen to the live Webcast on Wednesday, August 6, 2014 at 2:30 p.m. ET. To access the Webcast, enter www.wajax.com and click on the link for the Webcast on the Investor Relations page.

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, the planned restructuring of our Industrial Components segment, including the simplification of its sales force and the expected benefits and cost savings therefrom, the expected benefits from the transfer of our rotating products group from our Equipment segment to our Industrial Components segment and the expansion of such group into other Canadian mining markets, our commitment to and plans for the growth of our Industrial Components segment, our outlook for several of our key end markets, such as oil and gas and the oil sands, our outlook for the remainder of 2014 and full-year results, our investment in our strategic growth initiatives and our objective regarding the future payment of dividends. These statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, and the level and volatility of prices for, commodities, financial market conditions, including interest rates, 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, commodities, fluctuations in financial market conditions, including interest rates, the level of demand for, and prices of, the products and services we offer, 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, 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. 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. 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, 2013, filed on SEDAR.

Management's Discussion and Analysis - Q2 2014

The following management's discussion and analysis ("MD&A") discusses the consolidated financial condition and results of operations of Wajax Corporation ("Wajax" or the "Corporation") for the quarter ended June 30, 2014. This MD&A should be read in conjunction with the information contained in the unaudited Condensed Consolidated Financial Statements and accompanying notes for the quarter ended June 30, 2014, the annual audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2013 and the associated MD&A. Information contained in this MD&A is based on information available to management as of August 6, 2014.

Unless otherwise indicated, all financial information within this MD&A is in millions of Canadian dollars, except share and per share data. Additional information, including Wajax's Annual Report and Annual Information Form, are available on SEDAR at www.sedar.com.

Responsibility of Management and the Board of Directors

Management is responsible for the information disclosed in this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes, and has in place appropriate information systems, procedures and controls to ensure that information used internally by management and disclosed externally is materially complete and reliable. Wajax's Board of Directors has approved this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes. In addition, Wajax's Audit Committee, on behalf of the Board of Directors, provides an oversight role with respect to all public financial disclosures made by Wajax, and has reviewed this MD&A and the unaudited Condensed Consolidated Financial Statements and accompanying notes.

Disclosure Controls and Procedures and Internal Control over Financial Reporting

Wajax's management, under the supervision of its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), is responsible for establishing and maintaining disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR").

As at June 30, 2014, Wajax's management, under the supervision of its CEO and CFO, had designed DC&P to provide reasonable assurance that information required to be disclosed by Wajax in annual filings, interim filings or other reports filed or submitted under applicable securities legislation is recorded, processed, summarized and reported within the time periods specified in such securities legislation. DC&P are designed to ensure that information required to be disclosed by Wajax in annual filings, interim filings or other reports filed or submitted under applicable securities legislation is accumulated and communicated to Wajax's management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

As at June 30, 2014, Wajax's management, under the supervision of its CEO and CFO, had designed internal control over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards ("IFRS"). In completing the design, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in its 1992 version of Internal Control - Integrated Framework. With regard to general controls over information technology, management also used the set of practices of Control Objectives for Information and related Technology ("COBIT") created by the IT Governance Institute.

There was no change in Wajax's ICFR that occurred during the three months ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, Wajax's ICFR.

Cautionary Statement Regarding Forward-Looking Information

This MD&A 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 MD&A are made as of the date of this MD&A, 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 MD&A includes forward looking statements regarding, among other things, our plans for revenue and earnings growth, our objective with respect to the future payment of dividends, our financing and capital requirements, as well as our capital structure and leverage ratio, the planned restructuring of our Industrial Components segment, including the simplification of its sales force and the expected benefits and cost savings therefrom, the expected benefits from the transfer of our rotating products group from our Equipment segment to our Industrial Components segment and the expansion of such group into other Canadian mining markets, our commitment to and plans for the growth of our Industrial Components segment, our outlook for several of our key end markets, such as oil and gas and the oil sands, our outlook for the remainder of 2014 and full-year results, and our investment in our strategic growth initiatives. These statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, and the level and volatility of prices for, commodities, financial market conditions, including interest rates, 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, commodities, fluctuations in financial market conditions, including interest rates, the level of demand for, and prices of, the products and services we offer, 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, 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 this MD&A under the heading "Risk Management and Uncertainties" and in our Annual Information Form for the year ended December 31, 2013, filed on SEDAR. The forward-looking statements contained in this MD&A 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. Readers are further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Wajax Corporation Overview

Wajax's core distribution businesses are engaged in the sale, rental and after-sale parts and service support of mobile equipment, power systems and industrial components through a network of 121 branches across Canada. Wajax is a multi-line distributor and represents a number of leading worldwide manufacturers in its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.

Wajax's strategy is to grow earnings in all segments through organic growth and tuck-under acquisitions while maintaining a dividend payout ratio of at least 75% of current year expected net earnings. Planned organic growth initiatives include those that are achieved within the normal scope, resources and markets of each core business, and other growth opportunities that are seen as significant, requiring more effort, planning and resources to achieve. Wajax expects to ensure sufficient capital is available to meet its growth requirements within a prudent capital structure.

Consolidated Results

	Three months ended				Six months ended
	June 30				June 30
		2014		2013		2014		2013
Revenue	$	374.4	$	362.0	$	705.8	$	698.3
Gross profit	$	75.3	$	71.4	$	144.9	$	141.6
Selling and administrative expenses	$	55.1	$	51.1	$	112.5	$	105.4
Earnings before finance costs and income taxes⁽¹⁾	$	20.1	$	20.3	$	32.5	$	36.2
Finance costs	$	3.2	$	2.0	$	6.4	$	3.7
Earnings before income taxes⁽¹⁾	$	16.9	$	18.3	$	26.0	$	32.4
Income tax expense	$	4.6	$	4.8	$	7.1	$	8.5
Net earnings	$	12.3	$	13.5	$	19.0	$	23.9

Basic earnings per share	$	0.73	$	0.81	$	1.13	$	1.43
Diluted earnings per share	$	0.72	$	0.80	$	1.11	$	1.41

(1)	See the Non-GAAP and Additional GAAP Measures section.

Oil and gas sector activity in western Canada was somewhat stronger this quarter with increases in the Power Systems segment's equipment sales.

Although mining equipment sales, including those in the oil sands market, remained soft in the quarter, mining parts and service revenues continued to grow benefitting from the segment's installed base of Hitachi mining equipment. Also, quoting activity in the oil sands has remained at reasonable levels and the Equipment segment received two multi-unit mining shovel orders in the quarter.

The Equipment segment was positively impacted in the quarter by increased demand for forestry equipment. However, overall market demand in Canada, quarter-over-quarter, was relatively flat for large excavators and was considerably lower for material handling lift trucks.

Revenue
Revenue in the second quarter of 2014 increased 3%, or $12.4 million, from $362.0 million in 2013. The Equipment segment's revenue decreased slightly by $0.9 million, the Power Systems' segment revenue increased 18%, or $12.5 million, due mainly to higher power generation volumes, and the Industrial Components' segment revenue increased 1%, or $0.7 million.

For the six months ended June 30, 2014, revenue increased 1%, or $7.5 million, over the same period last year.

Gross profit
Higher volumes in the Power System's segment and a positive sales mix in the Equipment segment were the primary contributors to the $3.9 million, or 5%, increase in gross profit in the second quarter of 2014 compared to last year. The gross profit margin percentage of 20.1% increased from 19.7% in 2013.

For the six months ended June 30, 2014, gross profit increased $3.3 million due mainly to higher volumes compared to the same period last year. The gross profit margin percentage of 20.5% increased slightly from 20.3% in 2013.

Selling and administrative expenses
Selling and administrative expenses increased $4.0 million in the second quarter of 2014, compared to the same quarter last year. This was due mainly to higher personnel related costs, including higher annual employee incentive accruals. Selling and administrative expenses as a percentage of revenue increased to 14.7% in 2014 from 14.1% in 2013.

For the six months ended June 30, 2014, selling and administrative expenses increased $7.1 million compared to the same period last year. This was due mainly to higher personnel related costs, including a $1.3 million increase in severance costs and higher annual employee incentive accruals. Selling and administrative expenses as a percentage of revenue increased to 15.9% in 2014 from 15.1% in 2013.

Finance costs
Quarterly finance costs of $3.2 million increased $1.2 million compared to 2013 due primarily to the higher cost of borrowing resulting from the Corporation's issuance of $125 million of senior notes on October 23, 2013. See the Liquidity and Capital Resources section below.

For the six months ended June 30, 2014, finance costs of $6.4 million increased $2.7 million compared to the same period in 2013. The increase was due to the higher cost of borrowing resulting from the issuance of the senior notes, and higher funded debt levels outstanding during the period.

Income tax expense
The Corporation's effective income tax rate of 27.2% for the quarter and for the six months ended June 30, 2014, increased from 26.2% in each of the previous year periods due to the reversal of certain tax accruals in 2013.

Net earnings
Quarterly net earnings decreased $1.2 million to $12.3 million, or $0.73 per share, from $13.5 million, or $0.81 per share, in the same quarter of 2013.

For the six months ended June 30, 2014, net earnings decreased $4.9 million to $19.0 million, or $1.13 per share, from $23.9 million, or $1.43 per share, in the same period in 2013.

For both the quarter and six months ended June 30, 2014, the decrease in net earnings resulted from increased selling and administrative expenses and finance costs, which more than offset the positive impact of higher volumes compared to the same periods last year.

Comprehensive income
Total comprehensive income of $11.9 million in the second quarter of 2014 included net earnings of $12.3 million offset slightly by an other comprehensive loss of $0.4 million.

For the six months ended June 30, 2014, total comprehensive income of $18.6 million included net earnings of $19.0 million offset slightly by an other comprehensive loss of $0.3 million.

Funded net debt
Funded net debt of $218.2 million at June 30, 2014 increased $0.4 million compared to $217.8 million at March 31, 2014. During the period, cash generated from operating activities of $11.4 million was slightly more than offset by dividends paid of $10.1 million, investing activities of $1.0 million and finance lease payments of $1.0 million.

Wajax's leverage ratio of 2.35 times at June 30, 2014 decreased slightly from the March 31, 2014 ratio of 2.36 times. See the Consolidated Financial Condition and the Non-GAAP and Additional GAAP Measures sections below.

Funded net debt of $218.2 million at June 30, 2014 increased $13.2 million compared to December 31, 2013. Cash generated from operating activities during the period of $10.3 million was offset by dividends paid of $20.1 million, investing activities of $2.1 million and finance lease payments of $1.8 million.

On August 6, 2014, the Corporation amended its bank credit facility on more favorable terms including a three year extension of the maturity date from August 12, 2016 to August 12, 2019. The Corporation's restriction from declaring dividends in the event the Corporation's leverage ratio, as defined in the bank credit facility agreement, exceeds 3.0 times has been amended to restrict the declaration of dividends in the event the leverage ratio exceeds 3.25 times. In addition, the fully secured facility of $250 million is now comprised of a $30 million non-revolving term portion and a $220 million revolving term portion. The $0.6 million cost of amending the facility has been capitalized and will be amortized over the remaining term of the facility. See the Liquidity and Capital Resources section below.

Dividends
For the second quarter ended June 30, 2014, monthly dividends declared totaled $0.60 per share. For the second quarter ended June 30, 2013, monthly dividends declared totaled $0.67 per share.

For the six months ended June 30, 2014 monthly dividends declared totaled $1.20 per share. For the six months ended June 30, 2013 monthly dividends declared totaled $1.48 per share.

On May 6, 2014, Wajax announced a monthly dividend of $0.20 per share ($2.40 annualized) for the month of July payable on August 20, 2014 to shareholders of record on July 31, 2014. On August 6, 2014 Wajax announced monthly dividends of $0.20 per share ($2.40 annualized) for each of the months of August, September and October payable on September 22, 2014, October 20, 2014 and November 20, 2014 to shareholders of record on August 29, 2014, September 30, 2014 and October 31, 2014, respectively. See Strategic Direction and Outlook section.

Backlog
Consolidated backlog at June 30, 2014 of $224.5 million increased $66.7 million, or 42%, from $157.8 million at March 31, 2014 on increases in all segments. In particular, the Equipment segment's backlog increased $62.6 million and includes $53.1 million related to two multi-unit orders for mining shovels received in the quarter. Consolidated backlog increased $24.6 million, or 12%, compared to June 30, 2013. Backlog includes the total sales value of customer purchase commitments for future delivery or commissioning. See the Results of Operations section below for further backlog detail by segment.

Comparative figures
During the quarter, accountability for the oil sands based rotating products group was transferred from the Equipment segment to the Industrial Components segment. The change will allow for a stronger foundation for operations in the oil sands by exploiting the engineering and repair services capabilities in the Industrial Components segment and provides a platform for future expansion into other Canadian mining markets. As a result, the rotating products group's results for 2014, along with comparative figures, have been reclassified from the Equipment segment to the Industrial Components segment.

Results of Operations

Equipment

	Three months ended				Six months ended
	June 30				June 30
		2014		2013		2014		2013
Equipment⁽¹⁾	$	118.3	$	123.6	$	210.4	$	218.0
Parts and service	$	69.9	$	65.5	$	138.3	$	127.1
Segment revenue	$	188.2	$	189.1	$	348.7	$	345.1
Segment earnings⁽²⁾	$	13.6	$	13.0	$	24.3	$	20.8
Segment earnings margin		7.2%		6.9%		7.0%		6.0%

(1)	Includes rental and other revenue.
(2)	Earnings before finance costs and income taxes.

Revenue in the second quarter of 2014 decreased $0.9 million, to $188.2 million from $189.1 million in the same quarter of 2013. Segment earnings for the quarter increased $0.6 million, to $13.6 million, compared to the same quarter in the previous year. The following factors contributed to the Equipment segment's quarter-over-quarter results:

Equipment revenue for the second quarter decreased $5.3 million compared to the same quarter last year with specific variances as follows:

Forestry equipment revenue increased $3.3 million as strength in the lumber market led to higher market demand for Tigercat equipment in all regions and Hitachi equipment in western Canada.
Crane and utility equipment revenue increased $0.7 million attributable to sales to utility customers in central Canada partially offset by lower crane sales in western Canada.
Material handling equipment revenue decreased $3.6 million, due mainly to lower market demand across Canada.
Mining equipment sales decreased $2.9 million, mainly as a result of lower Hitachi mining equipment volumes in western and eastern Canada.
Construction equipment revenue decreased $2.8 million primarily attributable to decreases in JCB equipment volumes.

Parts and service volumes for the second quarter increased $4.4 million compared to the same quarter last year. The increase was led by higher mining sector volumes in western Canada, driven by the segment's installed base of Hitachi mining equipment. Higher forestry sector sales in central and eastern Canada also contributed to the increase.
Segment earnings for the second quarter increased $0.6 million, to $13.6 million, despite a $0.5 million charge taken in the quarter for the closure of one and temporary shutdown of another British Columbia mining branch. The impact of higher gross profit margins, due mainly to product mix, more than offset higher selling and administrative expenses. Selling and administrative expenses increased $0.5 million partially due to the branch closure and temporary shutdown charge.

Backlog of $137.6 million at June 30, 2014 increased $62.6 million compared to March 31, 2014, due mainly to increases in mining and forestry orders. In particular, during the quarter the segment received two multi-unit orders for mining shovels totaling $53.1 million with deliveries expected in 2014 and 2016. Backlog increased $41.3 million compared to June 30, 2013 due mainly to increases in mining and forestry orders.

During the quarter, the operational reporting structure for the oil sands based rotating products group was transferred from the Equipment segment to the Industrial Components segment. See the Results of Operations for Industrial Components section.

Power Systems

	Three months ended				Six months ended
	June 30				June 30
		2014		2013		2014		2013
Equipment⁽¹⁾	$	28.1	$	17.5	$	53.4	$	47.7
Parts and service	$	53.9	$	52.0	$	105.7	$	101.7
Segment revenue	$	82.0	$	69.5	$	159.1	$	149.4
Segment earnings⁽²⁾	$	4.2	$	3.3	$	7.7	$	7.4
Segment earnings margin		5.1%		4.7%		4.8%		4.9%

(1)	Includes rental and other revenue.
(2)	Earnings before finance costs and income taxes.

Revenue in the second quarter of 2014 increased $12.5 million, or 18%, to $82 million compared to $69.5 million in the same quarter of 2013. Segment earnings increased $0.9 million to $4.2 million in the second quarter compared to the same quarter in the previous year. The following factors impacted quarter-over-quarter revenue and earnings:

Equipment revenue increased $10.6 million due mainly to higher power generation equipment and rental volumes. In addition, higher sales to off-highway oil and gas customers in western Canada and marine customers in eastern Canada contributed to the increase.
Parts and service volumes increased $1.9 million compared to the same quarter last year as a result of increased sales to on-highway customers in western and central Canada. These increases were partially offset by lower off-highway volumes to mining customers in central Canada.
Segment earnings increased $0.9 million compared to the same quarter last year as the impact of increased sales activity was partially offset by additional selling and administrative expenses. Selling and administrative expenses increased $1.1 million due mainly to higher personnel related costs, including annual employee incentive accruals.

Backlog of $43.7 million as of June 30, 2014 increased $2.4 million compared to March 31, 2014 as higher power generation backlog in western and central Canada was offset by a decrease in off-highway orders. Backlog decreased $12.4 million compared to June 30, 2013 as the impact of lower power generation orders was partially offset by an increase in off-highway backlog.

Industrial Components

	Three months ended				Six months ended
	June 30				June 30
		2014		2013		2014		2013
Segment revenue	$	105.2	$	104.5	$	201.3	$	205.7
Segment earnings⁽¹⁾	$	4.6	$	5.7	$	5.8	$	11.6
Segment earnings margin		4.4%		5.5%		2.9%		5.6%

(1)	Earnings before finance costs and income taxes.

Revenue of $105.2 million in the second quarter of 2014 increased $0.7 million, from $104.5 million in the second quarter of 2013. Segment earnings decreased $1.1 million to $4.6 million in the second quarter of 2014 compared to the same quarter in the previous year. The following factors contributed to the segment's quarter-over-quarter results:

Bearings and power transmission parts sales increased $0.3 million, or 1%, compared to the same quarter last year.
Fluid power and process equipment products and service revenue, including the rotating products group, in the second quarter of 2014 increased $0.4 million, or 1%, compared to the same quarter last year.
Segment earnings in the second quarter of 2014 decreased $1.1 million compared to the same quarter last year. The positive impact of higher volumes and higher gross profit margins was offset by a $1.8 million increase in selling and administrative expenses. The increase in selling and administrative expenses was attributed primarily to higher personnel costs, including wage and benefit cost increases.

Backlog of $43.2 million as of June 30, 2014 increased $1.7 million compared to March 31, 2014, driven by higher orders in central and eastern Canada. Backlog decreased $4.2 million compared to June 30, 2013.

During the quarter accountability for the oil sands based rotating products group was transferred from the Equipment segment to the Industrial Components segment. The change will allow for a stronger foundation for operations in the oil sands by exploiting the engineering and repair services capabilities in the Industrial Components segment and provides a platform for future expansion into other Canadian mining markets. As a result, the rotating products group's results for 2014, along with comparative figures, have been reclassified from the Equipment segment to the Industrial Components segment.

The Industrial Components segment disclosed that it expects to take a restructuring provision in the third quarter of 2014 of between $3.0 and $3.6 million. This provision will consist primarily of severance costs, as Industrial Components simplifies its sales organization which is expected to result in improved sales team effectiveness and lower costs. Annual pre-tax cost savings as a result of this restructuring are expected to be approximately $5 million.

Selected Quarterly Information

The following table summarizes unaudited quarterly consolidated financial data for the eight most recently completed quarters. This quarterly information is unaudited but has been prepared on the same basis as the 2013 annual audited Consolidated Financial Statements.

			2014						2013												2012
			Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Revenue		$		374.4	$		331.4	$		391.7	$		338.5	$		362.0	$		336.3	$		364.9	$		356.4
Net earnings		$		12.3	$		6.7	$		12.2	$		11.6	$		13.5	$		10.4	$		14.2	$		16.2

Net earnings per share
	- Basic	$		0.73	$		0.40	$		0.73	$		0.69	$		0.81	$		0.62	$		0.85	$		0.97
	- Diluted	$		0.72	$		0.39	$		0.72	$		0.68	$		0.80	$		0.61	$		0.84	$		0.95

Quarterly fluctuations in revenue and net earnings are difficult to predict. A normally weaker first quarter for the Equipment segment can be offset by seasonally stronger activity in the oil and gas sector, primarily affecting the Power Systems and Industrial Components segments. As well, large deliveries of mining trucks and shovels and power generation packages can shift the revenue and net earnings throughout the year.

A discussion of Wajax's previous quarterly results can be found in Wajax's quarterly MD&A available on SEDAR at www.sedar.com.

Consolidated Financial Condition

Capital Structure and Key Financial Condition Measures

($millions, except ratio calculations)		June 30 2014		March 31 2014		December 31 2013
Shareholders' equity	$	246.1	$	244.1	$	247.2
Funded net debt⁽¹⁾		218.2		217.8		205.0
Total capital	$	464.3	$	461.9	$	452.2
Funded net debt to total capital⁽¹⁾		47.0%		47.2%		45.3%
Leverage ratio⁽¹⁾		2.35		2.36		2.15

(1)	See Non-GAAP and Additional GAAP Measures section.

The Corporation's objective is to manage the capital structure such that it maintains a relatively low leverage ratio as the Corporation pays dividends to shareholders equal to a significant portion of its earnings. The Corporation's objective is to maintain a leverage ratio between 1.5 times and 2.0 times. However, there may be instances where the Corporation is willing to maintain a leverage ratio outside the range to either support key growth initiatives or fluctuations in working capital levels during changes in economic cycles. See the Funded Net Debt section below.

In addition, the Corporation's tolerance to interest rate risk decreases/increases as the Corporation's leverage ratio increases/decreases. At June 30, 2014, $125 million of the Corporation's funded net debt, or 57%, was at a fixed interest rate which is within the Corporation's interest rate risk policy. See the Liquidity and Capital Resources section.

Shareholders' Equity

The Corporation's shareholders' equity at June 30, 2014 of $246.1 million increased $2.0 million from March 31, 2014, as earnings exceeded dividends declared during the quarter. For the six months ending June 30, 2014 the Corporation's shareholder's equity decreased $1.1 million, as dividends declared exceeded earnings during the period.

The Corporation's share capital, included in shareholders' equity on the balance sheet, consists of:

Issued and fully paid common shares as at June 30, 2014

Number

Amount

Balance at the beginning and end of the quarter

16,778,883

107.5

At the date of this MD&A, the Corporation had 16,778,883 common shares outstanding.

At June 30, 2014, Wajax had five share-based compensation plans; the Wajax Share Ownership Plan ("SOP"), the Directors' Deferred Share Unit Plan ("DDSUP"), the Mid-Term Incentive Plan for Senior Executives ("MTIP"), the Deferred Share Unit Plan ("DSUP") and the Deferred Share Program ("DSP"). During the first quarter of 2014 all of the outstanding DSP rights were settled. SOP, DSP and DDSUP rights are issued to the participants and are settled by issuing Wajax Corporation shares on a one-for-one basis. As of June 30, 2014, there were 268,739 (2013 - 273,045) SOP, DSP and DDSUP rights outstanding. The cash-settled MTIP and DSUP consist of annual grants that vest over three years and are subject to time and performance vesting criteria. A portion of the MTIP and the full amount of the DSUP grants are determined by the price of the Corporation's shares. Compensation expense for the SOP, DSP and DDSUP is determined based upon the fair value of the rights at the date of grant and charged to earnings on a straight line basis over the vesting period, with an offsetting adjustment to contributed surplus. Compensation expense for the DSUP and the share-based portion of the MTIP varies with the price of the Corporation's shares and is recognized over the vesting period. Wajax recorded compensation cost of $0.3 million for the quarter (2013 - $0.3 million) and $0.7 million for the six months ended (2013 - $0.4 million) in respect of these plans.

Funded Net Debt

($millions)		June 30 2014		March 31 2014		December 31 2013
Bank indebtedness (cash)	$	4.6	$	4.0	$	(4.2)
Obligations under finance lease		12.3		12.7		13.3
Long-term debt		201.3		201.1		195.9
Funded net debt⁽¹⁾	$	218.2	$	217.8	$	205.0

(1)	See the Non-GAAP and Additional GAAP Measures section.

Funded net debt of $218.2 million at June 30, 2014 increased $0.4 million compared to March 31, 2014. During the quarter, $11.4 million of cash generated from operating activities was slightly more than offset by dividends paid of $10.1 million, cash used in investing activities of $1.0 million and finance lease payments of $1.0 million. The cash generated from operating activities of $11.4 million included increases in non-cash working capital of $3.2 million and rental fleet additions of $5.6 million.

The Corporation's ratio of funded net debt to capital decreased slightly to 47.0% at June 30, 2014 from 47.2% at March 31, 2014.

The Corporation's leverage ratio of 2.35 times at June 30, 2014 decreased slightly from the March 31, 2014 ratio of 2.36 times.

See the Liquidity and Capital Resources and the Non-GAAP and Additional GAAP Measures sections below.

Financial Instruments

Wajax uses derivative financial instruments in the management of its foreign currency and interest rate exposures. Wajax's policy restricts the use of derivative financial instruments for trading or speculative purposes. Significant derivative financial instruments outstanding at the end of the period were as follows:

Wajax enters into short-term currency forward contracts to hedge the exchange risk associated with the cost of certain inbound inventory and certain foreign currency-denominated sales to customers along with the associated receivables as part of its normal course of business. As at June 30, 2014, Wajax had contracts outstanding to buy U.S. $33.0 million (December 31, 2013 - to buy U.S. $31.1 million, June 30, 2013 - to buy U.S. $30.2 million). The U.S. dollar contracts expire between July 2014 and April 2015, with a weighted average U.S./Canadian dollar rate of 1.0946.

Wajax measures derivative instruments not accounted for as hedging items at fair value with subsequent changes in fair value being recorded in earnings. Derivatives designated as effective hedges are measured at fair value with subsequent changes in fair value being recorded in other comprehensive income until the related hedged item is recorded and affects income or inventory. The fair value of derivative instruments is estimated based upon market conditions using appropriate valuation models. The carrying values reported in the balance sheet for financial instruments are not significantly different from their fair values. A change in foreign currency, relative to the Canadian dollar, on transactions with customers that include unhedged foreign currency exposures is not expected to have a material impact on the Corporation's results of operations or financial condition.

Wajax is exposed to the risk of non-performance by counterparties to short-term currency forward contracts. These counterparties are large financial institutions with a "Stable" outlook and high short-term and long-term credit ratings from Standard and Poor's. To date, no such counterparty has failed to meet its financial obligations to Wajax. Management does not believe there is a significant risk of non-performance by these counterparties and will continue to monitor the credit risk of these counterparties.

Contractual Obligations

There have been no material changes to the Corporation's contractual obligations since December 31, 2013 except for the amendment of the bank credit agreement. See Liquidity and Capital Resources section.

Off Balance Sheet Financing

Off balance sheet financing arrangements include operating lease contracts for facilities with various landlords and other equipment related mainly to office equipment. There have been no material changes to the Corporation's total obligations for all operating leases since December 31, 2013. See the Contractual Obligations section above.

Although Wajax's consolidated contractual annual lease commitments decline year-by-year, it is anticipated that existing leases will either be renewed or replaced, resulting in lease commitments being sustained at current levels. In the alternative, Wajax may incur capital expenditures to acquire equivalent capacity.

The Equipment segment had $73.8 million (2013 - $96.1 million) of consigned inventory on-hand from a major manufacturer at June 30, 2014. In the normal course of business, Wajax receives inventory on consignment from this manufacturer which is generally sold to customers or purchased by Wajax. This consigned inventory is not included in Wajax's inventory as the manufacturer retains title to the goods. In the event the inventory consignment program was terminated, Wajax would utilize interest free financing, if any, made available by the manufacturer and/or utilize capacity under its credit facilities.

Liquidity and Capital Resources

The Corporation's liquidity is maintained through various sources, including bank and non-bank credit facilities, senior notes and cash generated from operations.

Bank and Non-bank Credit Facilities and Senior Notes

On August 6, 2014, the Corporation amended its bank credit facility on more favorable terms including a three year extension of the maturity date from August 12, 2016 to August 12, 2019. The Corporation's restriction from declaring dividends in the event the Corporation's leverage ratio, as defined in the bank credit facility agreement, exceeds 3.0 times has been amended to restrict the declaration of dividends in the event the leverage ratio exceeds 3.25 times, which is the same level as under the senior note agreement. In addition, the fully secured facility of $250 million is now comprised of a $30 million non-revolving term portion and a $220 million revolving term portion. The reduction in the term portion of the facility from $60 million to $30 million provides additional flexibility regarding the Corporation's debt levels. The $0.6 million cost of amending the facility has been capitalized and will be amortized over the remaining term of the facility.

At June 30, 2014, Wajax had borrowed $80.0 million and issued $5.6 million of letters of credit for a total utilization of $85.6 million of its $250 million bank credit facility. In addition, Wajax had $125 million of senior notes outstanding bearing an interest rate of 6.125% per annum, payable semi-annually, maturing on October 23, 2020. Borrowing capacity under the bank credit facility is dependent on the level of inventories on-hand and outstanding trade accounts receivables. At June 30, 2014, borrowing capacity under the bank credit facility was equal to $250 million.

The bank credit facility contains customary restrictive covenants including limitations on the payment of cash dividends and the maintenance of certain financial ratios all of which were met as at June 30, 2014. Wajax is restricted from the declaration of monthly dividends in the event the Corporation's leverage ratio, as defined in the bank credit facility agreement, exceeds 3.25 times.

The senior notes are unsecured and contain customary incurrence based covenants that, although different from those under the bank credit facility described above, are not expected to be any more restrictive than under the bank credit facility. All covenants were met as at June 30, 2014.

Under the terms of the bank credit facility, Wajax is permitted to have additional interest bearing debt of $15 million. As such, Wajax has up to $15 million of demand inventory equipment financing capacity with three non-bank lenders. At June 30, 2014 Wajax had no utilization of the interest bearing equipment financing facilities.

As of August 6, 2014, Wajax's $250 million bank credit facility, along with the additional $15 million of capacity permitted under the bank credit facility should be sufficient to meet Wajax's short-term normal course working capital and maintenance capital requirements. However, Wajax may be required to access the equity or debt markets or reduce dividends in order to fund significant acquisitions and growth related working capital and capital expenditures.

Credit Rating
During the quarter Standard & Poor's completed its six month review of the Corporation's credit rating which resulted in an unchanged corporate credit rating of BB+.

Cash Flow

The following table highlights the major components of cash flow as reflected in the Consolidated Statements of Cash Flows for the three and six months ended June 30, 2014 and June 30, 2013.

	Three months ended				Six months ended
	June 30				June 30
($millions)		2014		2013		2014		2013
Net earnings	$	12.3	$	13.5	$	19.0	$	23.9
Items not affecting cash flow		14.5		11.8		25.7		22.0
Net change in non-cash operating working capital		(3.2)		(1.7)		(10.2)		4.3
Income taxes paid		(3.2)		(2.9)		(7.7)		(53.4)
Other cash items⁽¹⁾		(9.0)		(8.3)		(16.5)		(15.0)
Cash generated from (used in) operating activities	$	11.4	$	12.4	$	10.3	$	(18.2)
Cash used in investing activities	$	(1.0)	$	(1.5)	$	(2.1)	$	(2.2)
Cash (used in) generated from financing activities	$	(11.1)	$	(11.0)	$	(16.9)	$	28.7

(1)	Other cash items includes rental equipment additions, changes in other non-current liabilities and finance costs paid.

Cash Generated From (Used In) Operating Activities
Cash flows generated from operating activities amounted to $11.4 million in the second quarter of 2014, compared to $12.4 million in the same quarter of the previous year. The reduction of $1.0 million was mainly attributed to increased changes in non-cash working capital in the quarter compared to the same quarter of the previous year.

Other cash items in the second quarter of 2014 include rental equipment additions of $5.6 million (2013 - $6.2 million) related to lift trucks in the Equipment segment and power generation equipment in the Power Systems segment.

For the six months ended June 30, 2014, cash flows generated from operating activities amounted to $10.3 million, compared to $18.2 million of cash used in operating activities for the same period in the previous year. The $28.5 million increase in cash flows generated from operating activities was mainly attributed to lower income taxes paid in the period of $45.7 million partially offset by a use of working capital of $10.2 million in 2014 compared to $4.3 million of cash generated from changes in non-cash working capital in 2013.

Other cash items for the six months ended June 30, 2014 include rental equipment additions of $12.4 million (2013 - $9.6 million) related to lift trucks in the Equipment segment and power generation equipment in the Power Systems segment.

Significant components of non-cash operating working capital, along with changes for the three and six months ended June 30, 2014 and June 30, 2013 include the following:

($millions)	Three months ended				Six months ended
Changes in Non-cash Operating Working Capital⁽¹⁾		June 30 2014		June 30 2013		June 30 2014		June 30 2013
Trade and other receivables	$	(7.7)	$	8.6	$	(0.3)	$	10.6
Inventories		(9.7)		6.9		(23.5)		(3.8)
Prepaid expenses		1.1		(0.8)		(0.8)		0.1
Accounts payable and accrued liabilities		13.4		(16.1)		16.7		(1.3)
Provisions		(0.4)		(0.3)		(2.2)		(1.3)
Total Changes in Non-cash Operating Working Capital	$	(3.2)	$	(1.7)	$	(10.2)	$	4.3

(1)	Increase (decrease) in cash flow

Significant components of the changes in non-cash operating working capital for the quarter ended June 30, 2014 compared to the quarter ended June 30, 2013 are as follows:

Trade and other receivables increased $7.7 million in 2014 compared to a decrease of $8.6 million in 2013. The increase in 2014 was mainly attributable to higher sales activity in the Power Systems and Industrial Components segments. The decrease in 2013 resulted primarily from lower sales activity in the Equipment and Power Systems segments.
Inventories increased $9.7 million in 2014 compared to a decrease of $6.9 million in 2013. The increase in 2014 was primarily related to power generation projects in progress in the Power Systems segment. The decrease in 2013 was due mainly to lower mining and construction equipment inventory in the Equipment segment.
Accounts payable and accrued liabilities increased $13.4 million in 2014 compared to a decrease of $16.1 million in 2013. The increase in 2014 resulted primarily from higher inventory trade payables in all segments. The decrease in 2013 resulted primarily from lower inventory trade payables in the Equipment and Power Systems segments during the quarter.

Significant components of the changes in non-cash operating working capital for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 are as follows:

Trade and other receivables increased $0.3 million in 2014 compared to a decrease of $10.6 million in 2013. The decrease in 2013 resulted primarily from lower sales activity in all segments and the collection of a large mining equipment receivable in the Equipment segment.
Inventories increased $23.5 million in 2014 compared to an increase of $3.8 million in 2013. The increase in 2014 was primarily related to power generation projects in process in the Power Systems segment and higher stock levels in the Equipment segment.
Accounts payable and accrued liabilities increased $16.7 million in 2014 compared to a decrease of $1.3 million in 2013. The increase in 2014 resulted primarily from higher trade payables and supplier financed inventory in the Equipment segment reduced somewhat by lower trade payables in the Industrial Components segments.

Investing Activities
During the second quarter of 2014, Wajax invested $1.0 million in property, plant and equipment additions, net of disposals, compared to $1.5 million in the second quarter of 2013.

For the six months ended June 30, 2014 and June 30, 2013, Wajax invested $2.1 million in property, plant and equipment additions, net of disposals.

Financing Activities
The Corporation used $11.1 million of cash from financing activities in the second quarter of 2014 compared to $11.0 million used in the same quarter of 2013. Financing activities in the quarter included dividends paid to shareholders totaling $10.1 million (2013 - $12.4 million) and finance lease payments of $1.0 million (2013 - $0.6 million).

For the six months ended June 30, 2014, the Corporation used $16.9 million of cash from financing activities compared to generating $28.7 million cash from financing activities in the same period of 2013. Financing activities for the six months ended June 30, 2014 included a net bank credit facility drawdown of $5.0 million (2013 - $56.0 million), for general corporate purposes, offset by dividends paid to shareholders totaling $20.1 million (2013 - $25.9 million), and finance lease payments of $1.8 million (2013 - $1.3 million).

Dividends

Dividends to shareholders were declared as follows:

Record Date	Payment Date		Per Share		Amount
April 30, 2014	May 20, 2014	$	0.20	$	3.4
May 30, 2014	June 20, 2014		0.20		3.4
June 30, 2014	July 21, 2014		0.20		3.4
Three months ended June 30, 2014		$	0.60	$	10.2

On May 6, 2014, Wajax announced a monthly dividend of $0.20 per share ($2.40 annualized) for the month of July payable on August 20, 2014 to shareholders of record on July 31, 2014.

On August 6, 2014 Wajax announced monthly dividends of $0.20 per share ($2.40 annualized) for each of the months of August, September and October payable on September 22, 2014, October 20, 2014 and November 20, 2014 to shareholders of record on August 29, 2014, September 30, 2014 and October 31, 2014, respectively. See the Strategic Direction and Outlook section.

Non-GAAP and Additional GAAP Measures

The MD&A contains certain non-GAAP and additional GAAP measures that do not have a standardized meaning prescribed by GAAP. Therefore, these financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that these measures should not be construed as an alternative to net earnings or to cash flow from operating, investing, and financing activities determined in accordance with GAAP as indicators of the Corporation's performance. The Corporation's management believes that:

(i)	these measures are commonly reported and widely used by investors,
(ii)	the non-GAAP measures are commonly used as an indicator of a company's cash operating performance and ability to raise and service debt, and
(iii)	the additional GAAP measures are commonly used to assess a company's earnings performance excluding its capital and tax structures.

Non-GAAP financial measures are identified and defined below:

Funded net debt						Funded net debt includes bank indebtedness, long-term debt and obligations under finance leases, net of cash.

EBITDA						Net earnings before finance costs, income tax expense, depreciation and amortization.

Leverage ratio						The leverage ratio is defined as funded net debt at the end of a particular quarter divided by trailing 12-month EBITDA. The Corporation's objective is to maintain this ratio between 1.5 times and 2.0 times.

Funded net debt to total capital						Defined as funded net debt divided by total capital. Total capital is the funded net debt plus shareholder's equity.

Additional GAAP measures are identified and defined below:

Earnings before finance costs and income taxes (EBIT)						Earnings before finance costs and income taxes, as presented on the Consolidated Statements of Earnings.

Earnings before income taxes (EBT)						Earnings before income taxes, as presented on the Consolidated Statements of Earnings.

Reconciliation of the Corporation's net earnings to EBT, EBIT and EBITDA is as follows:

	For the twelve months ended June 30		For the twelve months ended March 31		For the twelve months ended December 31
		2014		2014		2013
Net earnings	$	42.7	$	43.9	$	47.7
Income tax expense		15.6		15.8		17.0
EBT		58.3		59.7		64.7
Finance costs		11.6		10.4		9.0
EBIT		69.9		70.1		73.7
Depreciation and amortization		22.7		22.2		21.6
EBITDA	$	92.7	$	92.3	$	95.3

Calculation of the Corporations funded net debt and leverage ratio is as follows:

		June 30		March 31		December 31
		2014		2014		2013
Bank indebtedness (cash)	$	4.6	$	4.0	$	(4.2)
Obligations under finance leases		12.3		12.7		13.3
Long-term debt		201.3		201.1		195.9
Funded net debt	$	218.2	$	217.8	$	205.0

Leverage ratio⁽¹⁾		2.35		2.36		2.15

(1)	Calculation uses trailing four-quarter EBITDA and finance costs.

Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results could differ from those judgements, estimates and assumptions. The Corporation bases its estimates on historical experience and various other assumptions that are believed to be reasonable in the circumstances.

The areas where significant judgements and assumptions are used to determine the amounts recognized in the financial statements include the allowance for doubtful accounts, inventory obsolescence and the valuation of goodwill and intangible assets. In preparing the financial statements for the quarter ended June 30, 2014, the significant judgments made by management in applying the Corporation's accounting policies and the key sources of estimation uncertainty are the same as those applied in the audited consolidated financial statements for the year ended December 31, 2013 which can be found on SEDAR at www.sedar.com.

Changes in Accounting Policies

The following new standards have been adopted in the current year:

On January 1, 2014, the Corporation adopted the amendments to IAS 32 Offsetting Financial Assets and Liabilities, which clarifies when an entity has a right to set-off and when a settlement mechanism provides for net settlement or gross settlement. The impact on the current year's condensed consolidated financial statements from adopting IAS 32 was not material.

On January 1, 2014, the Corporation adopted IFRIC 21 Levies, which provides guidance on accounting for levies in accordance with the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The impact on the current year's condensed consolidated financial statements from adopting IFRIC 21 was not material.

New standards and interpretations not yet adopted

The new standards or amendments to existing standards that may be significant to the Corporation set out below are not yet effective for the year ended December 31, 2014 and have not been applied in preparing these consolidated financial statements.

The Corporation will be required to adopt IFRS 9 Financial Instruments, which is the result of the first phase of the IASB's project to replace IAS 39 Financial Instruments: Recognition and Measurement. The mandatory effective date has been tentatively set at January 1, 2018. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The Corporation is currently assessing the impact of this standard on its consolidated financial statements.

The Corporation will be required to adopt IFRS 15 Revenue from Contracts with Customers effective January 1, 2017. The standard contains a single model that applies to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. The Corporation is currently assessing the impact of this standard on its consolidated financial statements.

Risk Management and Uncertainties

As with most businesses, Wajax is subject to a number of marketplace and industry related risks and uncertainties which could have a material impact on operating results and Wajax's ability to pay cash dividends to shareholders. Wajax attempts to minimize many of these risks through diversification of core businesses and through the geographic diversity of its operations. In addition, Wajax has adopted an annual enterprise risk management assessment which is prepared by the Corporation's senior management and overseen by the Board of Directors and Committees of the Board. The enterprise risk management framework sets out principles and tools for identifying, evaluating, prioritizing and managing risk effectively and consistently across Wajax. There are however, a number of risks that deserve particular comment which are discussed in detail in the MD&A for the year ended December 31, 2013 which can be found on SEDAR at www.sedar.com. There have been no material changes to the business of Wajax that require an update to the discussion of the applicable risks discussed in the MD&A for the year ended December 31, 2013.

Strategic Direction and Outlook

As expected, second quarter earnings showed improvement compared to the first quarter of this year. The Equipment and Power Systems segments each posted improved earnings compared to the previous year despite a $0.5 million charge in the Equipment segment related to downsizing its branch operations primarily due to a slow-down in British Columbia coal mining activity. In the Industrial Components segment, trends continued to improve from the first quarter.

Management is pleased with the 42% increase in backlog over the first quarter and in particular with the increased orders for oil sands related mining shovels.

During the quarter, accountability for the oil sands based rotating products group was transferred from the Equipment segment to the Industrial Components segment and the impact of the transfer was reflected in the segment results for the quarter and comparative periods. The change will allow for a stronger foundation for operations in the oil sands by exploiting the engineering and repair services capabilities in Industrial Components and provides a platform for future expansion into other Canadian mining markets. Wajax also announced plans to restructure and simplify the sales force at Industrial Components, which is expected to result in improved sales team effectiveness and lower costs. Management is very committed to growth in the Industrial Components segment with particular emphasis on the addition of products and value-added services in support of its oil sands, mining and oil and gas customers.

Heading into the third quarter, the outlook for the Corporation's end markets and results for the full year, excluding the expected restructuring provision, remains substantially unchanged from management's view at the end of the first quarter. While management continues to expect 2014 to be a challenging year, encouraging signs of increased capital spending from oil and gas customers are beginning to be seen and management is pleased with activity in the oil sands. Increased backlog and the restructuring in the Industrial Components segment gives management added confidence as continued investments are made in the Corporation's strategic growth initiatives. As a result, Wajax has maintained its monthly dividend at $0.20 per share, keeping to the guideline of paying out at least 75% of current year expected earnings.

Additional information, including Wajax's Annual Report and Annual Information Form, are available on SEDAR at www.sedar.com.

WAJAX CORPORATION

Unaudited Condensed Consolidated Financial Statements

For the three and six months ended June 30, 2014

Notice required under National Instrument 51-102, "Continuous Disclosure Obligations" Part 4.3(3) (a):

The attached condensed consolidated financial statements have been prepared by Management of Wajax Corporation and have not been reviewed by the Corporation's auditors.

WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ____________________

As at (unaudited, in thousands of Canadian dollars)	Note		June 30, 2014		December 31, 2013
ASSETS
CURRENT
Cash		$	-	$	4,153
Trade and other receivables			188,279		187,974
Inventories			314,423		289,299
Income taxes receivable			1,660		203
Prepaid expenses			6,790		5,980
Derivative instruments			-		323
			511,152		487,932

NON-CURRENT
Rental equipment	4		57,367		52,285
Property, plant and equipment	5		48,267		49,716
Intangible assets			85,078		85,944
Deferred taxes	9		330		1,076
			191,042		189,021
		$	702,194	$	676,953

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness		$	4,647	$	-
Accounts payable and accrued liabilities			218,721		201,122
Provisions			4,807		7,011
Dividends payable	7		3,356		3,349
Obligations under finance leases			3,982		4,053
Derivative instruments			678		-
			236,191		215,535

NON-CURRENT
Provisions			3,911		2,939
Employee benefits			5,770		5,549
Other liabilities			629		624
Obligations under finance leases			8,316		9,208
Long-term debt			201,255		195,906
			219,881		214,226

SHAREHOLDERS' EQUITY
Share capital	6		107,454		106,704
Contributed surplus			4,709		5,058
Retained earnings			134,165		135,317
Accumulated other comprehensive (loss) income			(206)		113
Total shareholders' equity			246,122		247,192
		$	702,194	$	676,953

These condensed consolidated financial statements were approved by the Board of Directors on August 6, 2014.


WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ____________________

(unaudited, in thousands of Canadian dollars,		Three months ended June 30				Six months ended June 30
except per share data)	Note		2014		2013		2014		2013

Revenue		$	374,396	$	362,025	$	705,765	$	698,294
Cost of sales			299,126		290,622		560,826		556,700
Gross profit			75,270		71,403		144,939		141,594
Selling and administrative expenses			55,134		51,070		112,473		105,412
Earnings before finance costs and income taxes			20,136		20,333		32,466		36,182
Finance costs			3,246		2,016		6,430		3,745
Earnings before income taxes			16,890		18,317		26,036		32,437
Income tax expense	9		4,588		4,802		7,068		8,512
Net earnings		$	12,302	$	13,515	$	18,968	$	23,925

Basic earnings per share	10	$	0.73	$	0.81	$	1.13	$	1.43
Diluted earnings per share	10	$	0.72	$	0.80	$	1.11	$	1.41


WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME _____________________

	Three months ended June 30				Six months ended June 30
(unaudited, in thousands of Canadian dollars)		2014		2013		2014		2013

Net earnings	$	12,302	$	13,515	$	18,968	$	23,925

Items that may be subsequently reclassified to income Gains on derivative instruments designated as cash flow hedges in prior periods reclassified to cost of inventory during the period, net of tax expense of $46 (2013 - $47) and year to date, net of tax expense of $82 (2013 - $22)		(131)		(132)		(232)		(62)

(Losses) gains on derivative instruments outstanding at the end of the period designated as cash flow hedges, net of tax recovery of $101 (2013 - expense of $71) and year to date, net of tax recovery of $31 (2013 - expense of $120)		(285)		201		(87)		339

Other comprehensive (loss) income, net of tax		(416)		69		(319)		277

Total comprehensive income	$	11,886	$	13,584	$	18,649	$	24,202


WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY __________________________________

						Accumulated other comprehensive income (loss) ("AOCI")

For the six months ended June 30, 2014 (unaudited, in thousands of Canadian dollars)	Note		Share capital	Contributed surplus	Retained earnings	Cash flow hedges		Total

January 1, 2014		$	106,704	5,058	135,317	113	$	247,192

Net earnings			-	-	18,968	-		18,968

Other comprehensive loss			-	-	-	(319)		(319)

Total comprehensive income for the period			-	-	18,968	(319)		18,649
Shares issued to settle share-based compensation plans	8		750	(750)	-	-		-
Dividends	7		-	-	(20,120)	-		(20,120)
Share-based compensation expense	8		-	401	-	-		401
June 30, 2014		$	107,454	4,709	134,165	(206)	$	246,122


WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY __________________________________________

						AOCI

For the six months ended June 30, 2013 (unaudited, in thousands of Canadian dollars)	Note		Share capital	Contributed surplus	Retained earnings	Cash flow hedges		Total

January 1, 2013		$	106,651	4,346	130,944	(56)	$	241,885

Net earnings			-	-	23,925	-		23,925

Other comprehensive income			-	-	-	277		277

Total comprehensive income for the period			-	-	23,925	277		24,202
Dividends	7		-	-	(24,770)	-		(24,770)
Share-based compensation expense	8		-	375	-	-		375
June 30, 2013		$	106,651	4,721	130,099	221	$	241,692


WAJAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS __________________________________________

				Three months ended June 30				Six months ended June 30
(unaudited, in thousands of Canadian dollars)			Note		2014		2013		2014		2013
OPERATING ACTIVITIES
	Net earnings			$	12,302	$	13,515	$	18,968	$	23,925
	Items not affecting cash flow:
		Depreciation and amortization:
		Rental equipment			2,890		2,360		5,716		4,581
		Property, plant and equipment			2,304		2,280		4,438		4,402
		Intangible assets			453		460		885		929
		Loss (gain) on disposal of property, plant and equipment	5		18		(2)		(27)		(7)
		Share-based compensation expense	8		204		191		401		375
		Non-cash rental expense			13		(51)		27		(180)
		Employee benefits expense, net of payments			114		161		221		305
		Unrealized loss (gain) derivative instruments			659		(465)		569		(645)
		Finance costs			3,246		2,016		6,430		3,745
		Income tax expense	9		4,588		4,802		7,068		8,512
					26,791		25,267		44,696		45,942
	Changes in non-cash operating working capital		11		(3,215)		(1,687)		(10,199)		4,286
	Rental equipment additions		4		(5,594)		(6,235)		(12,382)		(9,579)
	Other non-current liabilities				690		(122)		977		(1,736)
	Finance costs paid				(4,054)		(1,960)		(5,169)		(3,724)
	Income taxes paid				(3,242)		(2,885)		(7,667)		(53,434)
	Cash generated from (used in) operating activities				11,376		12,378		10,256		(18,245)

INVESTING ACTIVITIES
	Property, plant and equipment additions		5		(996)		(1,595)		(2,244)		(2,290)
	Proceeds on disposal of property, plant and equipment		5		34		106		133		156
	Intangible assets additions				(19)		(9)		(19)		(30)
	Cash used in investing activities				(981)		(1,498)		(2,130)		(2,164)

FINANCING ACTIVITIES
	Net increase in bank debt				-		2,000		5,000		56,000
	Finance lease payments				(983)		(578)		(1,813)		(1,328)
	Dividends paid				(10,067)		(12,385)		(20,113)		(25,942)
	Cash (used in) generated from financing activities				(11,050)		(10,963)		(16,926)		28,730
Change in (bank indebtedness) cash					(655)		(83)		(8,800)		8,321
(Bank indebtedness) cash - beginning of period					(3,992)		(1,791)		4,153		(10,195)
Bank indebtedness - end of period				$	(4,647)	$	(1,874)	$	(4,647)	$	(1,874)

WAJAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
_______________________

JUNE 30, 2014
(unaudited, amounts in thousands of Canadian dollars, except share and per share data)

1. COMPANY PROFILE

Wajax Corporation (the "Corporation") is incorporated in Canada. The address of the Corporation's registered office is 3280 Wharton Way, Mississauga, Ontario, Canada. The Corporation's core distribution businesses are engaged in the sale, rental and after-sale parts and service support of mobile equipment, power systems and industrial components, through a network of 121 branches across Canada. The Corporation is a multi-line distributor and represents a number of leading worldwide manufacturers across its core businesses. Its customer base is diversified, spanning natural resources, construction, transportation, manufacturing, industrial processing and utilities.

2. BASIS OF PREPARATION

Statement of compliance
These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and do not include all of the disclosures required for full consolidated financial statements. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Wajax Corporation for the year ended December 31, 2013. The significant accounting policies follow those disclosed in the most recently reported audited consolidated financial statements except as disclosed in Note 3.

Basis of measurement
The condensed consolidated financial statements have been prepared under the historical cost basis except for derivative financial instruments and liabilities for cash-settled share-based payment arrangements that have been measured at fair value. The defined benefit liability is recognized as the net of the fair value of the plan assets less the present value of the defined benefit obligation.

Functional and presentation currency
These condensed consolidated financial statements are presented in Canadian dollars, which is the Corporation's functional currency. All financial information presented in Canadian dollars has been rounded to the nearest thousand, unless otherwise stated and except share and per share data.

3. CHANGE IN ACCOUNTING POLICIES

The following new standard has been adopted in the current year:

On January 1, 2014, the Corporation adopted the amendments to IAS 32 Offsetting Financial Assets and Liabilities, which clarifies when an entity has a right to set-off and when a settlement mechanism provides for net settlement or gross settlement. The impact on the current year's condensed consolidated financial statements from adopting IAS 32 was not material.

On January 1, 2014, the Corporation adopted IFRIC 21 Levies, which provides guidance on accounting for levies in accordance with the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The impact on the current year's condensed consolidated financial statements from adopting IFRIC 21 was not material.

4. RENTAL EQUIPMENT

The Corporation acquired rental equipment with a cost of $5,594 during the quarter (2013 - $6,235) and $12,382 year to date (2013 - $9,579). Rental equipment with a carrying amount of $1,407 during the quarter (2013 - $512) and $1,584 year to date (2013 - $980) ceased to be rented and was classified as held for sale in the normal course of business and transferred to inventories.

5. PROPERTY, PLANT AND EQUIPMENT

The Corporation acquired property, plant and equipment with a cost of $996 during the quarter (2013 - $1,595) and $2,244 year to date (2013 - $2,290). Assets with a carrying amount of $52 during the quarter (2013 - $104) and $106 year to date (2013 - $149) were disposed of, resulting in a loss on disposal of $18 during the quarter (2013 - gain of $2) and a gain of $27 year to date (2013 - $7).

6. SHARE CAPITAL

	Number of Common Shares		Amount
Balance, December 31, 2013	16,743,520	$	106,704
Common shares issued to settle share-based compensation plans	35,363		750
Balance, June 30, 2014	16,778,883	$	107,454

7. DIVIDENDS DECLARED

During the three months ended June 30, 2014, the Corporation declared cash dividends of $0.60 per share or $10,067 (2013 - dividends of $0.67 per share or $11,213).

Year to date, the Corporation declared cash dividends of $1.20 per share or $20,120 (2013 - dividends of $1.48 per share or $24,770).

The Corporation has declared dividends of $0.20 per share or $3,356 for each of July, August, September and October 2014.

8. SHARE-BASED COMPENSATION PLANS

The Corporation has five share-based compensation plans: the Wajax Share Ownership Plan ("SOP"), the Deferred Share Program ("DSP"), the Directors' Deferred Share Unit Plan ("DDSUP"), the Mid-Term Incentive Plan for Senior Executives ("MTIP") and the Deferred Share Unit Plan ("DSUP").

a) Share rights plans

The Corporation recorded compensation cost of $204 for the quarter (2013 - $191) and $401 for the year to date (2013 - $375) in respect of these plans.

		June 30, 2014			June 30, 2013
		Number of Rights		Fair value at time of grant	Number of Rights		Fair value at time of grant
Outstanding at beginning of year		282,573	$	5,403	254,952	$	4,932
Granted in the period	- new grants	12,537		452	7,395		253
	- dividend equivalents	8,992		-	10,698		-
Settled in the period		(35,363)		(750)	-		-
Outstanding at end of period		268,739	$	5,105	273,045	$	5,185

During the year the Corporation settled 35,363 DSP rights. At June 30, 2014, none were outstanding.
At June 30, 2014, 247,068 share rights were vested (2013 - 257,575).

b) Cash-settled rights plans
The Corporation recorded compensation cost of $129 for the quarter (2013 - $83) and $295 for the year to date (2013 - recovery of $4) in respect of the share-based portion of the MTIP and DSUP. At June 30, 2014, the carrying amount of the share-based portion of these liabilities was $453 (2013 - $903).

9. INCOME TAXES
Income tax expense comprises current and deferred tax as follows:

For the six months ended June 30		2014		2013
Current	$	6,210	$	8,764
Deferred - Origination and reversal of temporary difference		858		(252)
Income tax expense	$	7,068	$	8,512

The calculation of current tax is based on a combined federal and provincial statutory income tax rate of 26.1% (2013 - 26.0%). Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax assets and liabilities have been measured using an expected average combined statutory income tax rate of 26.1% based on the tax rates in years when the temporary differences are expected to reverse.

The reconciliation of effective income tax rate is as follows:

		2014		2013
Combined statutory income tax rate		26.1%		26.0%

Expected income tax expense at statutory rates	$	6,795	$	8,433
Non-deductible expenses		297		281
Other		(24)		(202)
Income tax expense	$	7,068	$	8,512

10. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:

		Three months ended June 30				Six months ended June 30
		2014		2013		2014		2013
Numerator for basic and diluted earnings per share:
- net earnings	$	12,302	$	13,515	$	18,968	$	23,925
Denominator for basic earnings per share: - weighted average shares		16,778,883		16,736,447		16,766,554		16,736,447
Denominator for diluted earnings per share:
- weighted average shares		16,778,883		16,736,447		16,766,554		16,736,447
- effect of dilutive share rights		250,166		252,006		256,794		249,013
Denominator for diluted earnings per share		17,029,049		16,988,453		17,023,348		16,985,460
Basic earnings per share	$	0.73	$	0.81	$	1.13	$	1.43
Diluted earnings per share	$	0.72	$	0.80	$	1.11	$	1.41

No share rights were excluded from the above calculations as none were anti-dilutive.

11. CHANGES IN NON-CASH OPERATING WORKING CAPITAL

		Three months ended June 30				Six months ended June 30
		2014		2013		2014		2013
Trade and other receivables	$	(7,730)	$	8,616	$	(305)	$	10,570
Inventories		(9,682)		6,949		(23,540)		(3,794)
Prepaid expenses		1,141		(796)		(810)		139
Accounts payable and accrued liabilities		13,414		(16,124)		16,660		(1,349)
Provisions		(358)		(332)		(2,204)		(1,280)
Total	$	(3,215)	$	(1,687)	$	(10,199)	$	4,286

12. OPERATING SEGMENTS

The Corporation operates through a network of 121 branches in Canada in three core businesses which reflect the internal organization and management structure according to the nature of the products and services provided. The Corporation's three core businesses are: i) the distribution, modification and servicing of equipment; ii) the distribution, servicing and assembly of power systems; and iii) the distribution, servicing and assembly of industrial components.


For the three months ended June 30, 2014		Equipment		Power Systems		Industrial Components		Segment Eliminations		Total
Equipment	$	107,472	$	25,678	$	-	$	-	$	133,150
Parts		47,893		36,405		95,987		-		180,285
Service		21,969		17,495		9,218		-		48,682
Rental and other		10,835		2,428		-		(984)		12,279
Revenue	$	188,169	$	82,006	$	105,205	$	(984)	$	374,396
Earnings before finance costs and income taxes	$	13,571	$	4,172	$	4,623	$	(2,230)	$	20,136
Finance costs										3,246
Income tax expense										4,588
Net earnings									$	12,302


For the six months ended June 30, 2014		Equipment		Power Systems		Industrial Components		Segment Eliminations		Total
Equipment	$	189,808	$	49,062	$	-	$	-	$	238,870
Parts		95,097		70,926		184,300		-		350,323
Service		43,169		34,754		16,953		-		94,876
Rental and other		20,632		4,388		-		(3,324)		21,696
Revenue	$	348,706	$	159,130	$	201,253	$	(3,324)	$	705,765
Earnings before finance costs and income taxes	$	24,288	$	7,679	$	5,788	$	(5,289)	$	32,466
Finance costs										6,430
Income tax expense										7,068
Net earnings									$	18,968

As at June 30, 2014

Segment assets excluding intangible assets	$	317,135	$	157,111	$	140,095	$	-	$	614,341
Intangible assets		21,560		14,090		49,350		78		85,078
Corporate and other assets		-		-		-		2,775		2,775
Total assets	$	338,695	$	171,201	$	189,445	$	2,853	$	702,194

Segment liabilities	$	135,453	$	44,156	$	57,585	$	-	$	237,194
Corporate and other liabilities		-		-		-		218,878		218,878
Total liabilities	$	135,453	$	44,156	$	57,585	$	218,878	$	456,072


For the three months ended June 30, 2013		Equipment		Power Systems		Industrial Components		Segment Eliminations		Total
Equipment	$	112,883	$	15,999	$	-	$	-	$	128,882
Parts		42,584		34,902		95,906		-		173,392
Service		22,919		17,107		8,623		-		48,649
Rental and other		10,673		1,497		-		(1,068)		11,102
Revenue	$	189,059	$	69,505	$	104,529	$	(1,068)	$	362,025
Earnings before finance costs and income taxes	$	13,004	$	3,292	$	5,707	$	(1,670)	$	20,333
Finance costs										2,016
Income tax expense										4,802
Net earnings									$	13,515


For the six months ended June 30, 2013		Equipment		Power Systems		Industrial Components		Segment Eliminations		Total
Equipment	$	195,007	$	43,821	$	-	$	-	$	238,828
Parts		84,006		68,663		185,737		-		338,406
Service		43,111		33,075		19,937		-		96,123
Rental and other		22,935		3,806		-		(1,804)		24,937
Revenue	$	345,059	$	149,365	$	205,674	$	(1,804)	$	698,294
Earnings before finance costs and income taxes	$	20,751	$	7,358	$	11,609	$	(3,536)	$	36,182
Finance costs										3,745
Income tax expense										8,512
Net earnings									$	23,925

As at June 30, 2013

Segment assets excluding intangible assets	$	300,370	$	137,235	$	140,294	$	-	$	577,899
Intangible assets		21,739		14,355		50,646		-		86,740
Corporate and other assets		-		-		-		4,502		4,502
Total assets	$	322,109	$	151,590	$	190,940	$	4,502	$	669,141

Segment liabilities	$	112,113	$	37,304	$	54,226	$	-	$	203,643
Corporate and other liabilities		-		-		-		223,806		223,806
Total liabilities	$	112,113	$	37,304	$	54,226	$	223,806	$	427,449

Segment eliminations include costs, assets and liabilities related to the corporate office. Corporate office assets and liabilities include deferred financing costs, income taxes, bank indebtedness, bank debt, employee benefits, and dividends payable.

During the period, the Rotating Equipment business has been moved from the Equipment to the Industrial Components segment due to a change in operational reporting structure. Segment information for comparative periods has been reclassified to reflect the change.

13. SUBSEQUENT EVENT
On August 6, 2014, the Corporation amended its bank credit facility on more favorable terms including a three year extension of the maturity date from August 12, 2016 to August 12, 2019. The Corporation's restriction from declaring dividends in the event the Corporation's leverage ratio, as defined in the bank credit facility agreement, exceeds 3.0 times has been amended to restrict the declaration of dividends in the event the leverage ratio exceeds 3.25 times. In addition, the fully secured facility of $250,000 is now comprised of a $30,000 non-revolving term portion and a $220,000 revolving term portion. The $600 cost of amending the facility has been capitalized and will be amortized over the remaining term of the facility.

The Industrial Components segment expects to take a restructuring provision in the third quarter of 2014 of between $3,000 and $3.600. This provision will consist primarily of severance costs, as Industrial Components simplifies its sales organization which is expected to result in improved sales team effectiveness and lower costs.

14. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform to the current year's presentation.

SOURCE: Wajax Corporation

Mark Foote, President and Chief Executive Officer
Email: [email protected]

John Hamilton, Chief Financial Officer
Email: [email protected]

Telephone #: (905) 212-3300

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