RE:RE:WAJAX - 9.5%C32BTT wrote: No free cashflow, quite a bit of debt, and dividend may have to be cut in order to survive the coming tough events.
Excluding working capital changes (due in total to increased inventory) and rental equipment additions, Wajax had over $80M in free cashflow last year, or $4 per share.
They didn't forecast any increase in inventory for 2020, so that's over $50M in FCF and they can likely reduce rental equipment additions by at least 50% for another $18M in FCF for 2020.
Their debt is $225M on a $1040M balance sheet, I wouldn't call that "quite a bit". Leverage is less than 22%. It's 275M if you include debentures (or a bit under 27%). Their EBITDA was 125M last year (6.25$ per share, so more EBITDA than current share price). They have inventory and equipment worth $570M on the balance sheet, or more than 2x debt.
Wajax remains fully functional, with their equipments and services still required despite the virus. I expect lower revenues, especially from their western activities. If they are hit too hard, they will reduce selling and administrative expenses. Wajax's "survival" ain't at risk at all even with the virus and a recession down the line.
I won't speculate on the dividend, since it could go both ways (maintain or reduce) simply due to the boards decision. They can likely work around to maintain the dividend, but at the same time they may want to keep more cash for acquisitions or something else.