Wajax Corp T.WJX

Results are out

[stinkdetector]

Well,  Revenue decline is not as high as I would have suspected, coming in at -12.8%.   Thats good.  

Net earnings are at 10.2 million on the Quarter;  Note this includes the impact of +15.5 million in wage subsidies.  So in reality wajax has a -5.3 million loss.

Margins took a VERY big hit > and and there is something very 'incincere' in their news release which says.....

Gross profit margin of 16.8% in the second quarter of 2020 decreased 2.3% compared to the same period of 2019. (Note - was 19.1% in 2019)  Excluding the $7.1 million CEWS recovery discussed above, gross profit margin was 14.9% in the second quarter of 2020, representing a decrease of 4.3% compared to the same period of 2019.

A 4.3% decline in from 19.1% to 14.9% is a 22.5% decrease.  Very significant and they are using language which is inaccurate at best and misleading at worst.

Summary 

They are actually doing better than I would have thought on the revenue front (-12.8%), but far worse on the GM front (-22.5%).   

GM is what pays the bills.   They've done a good job at soft selling the 22.5% reduction in the size of the business.     

They are not actually profitable;  Subsidy programs have kept them in the black this quarter.  

GLTA !

[Capharnaum]

TBH... I think you're nitpicking considering the circumstances. If they didn't have access to the subsidies, they would have let more people temporarily go, so their costs would have been down regardless. As to the margins, it's understandable considering the circumstances. I don't think it's a new runrate.

[stinkdetector]

It is great they got the subsidies,  But to state 'Earnings' when they aren't (they are emergency subsidies) is kinda misleading. The company lost money on the quarter and also was not clear about thier very large decline in GM.    Could be semanitics, but one has to wonder why the sematics always seem to make the reporting company better look than they are. 

[Capharnaum]

It's standard accounting to consider subsidies against costs. Say you have a $100M project where you receive a $20M subsidy. Without the subsidy, the project generates losses. With the subsidy, the project generates positive earnings. Should the company say their project generate losses? Not at all, from the company standpoint, they generated gains and it's the proper way to report it. I&

[stinkdetector]

I don't have an agenda, I just enjoy following WJX and occasionally investing in it.   I've bought it when its been in the dumps before and done quite well.   I'm looking for a reason to invest in it but can't find any right now.    Agree, no subsidies would have been worse for employees.  But a company that 'makes' money due to

[Paddy902]

Quarterly report out and it looks like Deja vu all over again! Meaning same discussion from last quarter is relevant. I would say all things considered it is doing a good job remaining viable, and we need a cyclical recovery to see the mid 20's again. Until then its essentially the dividend to keep us happy.