Cervus Equipment Corp. Announces Third Quarter 2012 Results

Symbol: CVL (TSX)

CALGARY, Nov. 7, 2012 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended September 30, 2012.

"Cervus met several strategic milestones this quarter, including the acquisition of five John Deere dealerships in New Zealand and 30 per cent interest in four John Deere dealerships in Australia, as well as the closing of a $34.5 million public offering of convertible debentures to support these and future acquisitions," said Graham Drake, President and CEO of Cervus, "These acquisitions demonstrate Cervus' growth strategy of consolidating dealerships where we have already established operations, while pursuing opportunities in new markets with the potential for expansion."

Highlights since July 1, 2012:

  • Closed a $34.5 million public offering of convertible debentures for net proceeds of $32.9 million
  • Purchased five John Deere dealerships in New Zealand for an aggregate purchase price of approximately $3.6 million
  • Acquired 30% of the shares in Windmill AG Pty Ltd, an Australian John Deere agriculture dealer, for approximately $2.7 million. Subsequent to the end of the quarter, Cervus partially funded Windmill's acquisition of an additional store, increasing Cervus's ownership in Windmill to approximately 35%.
  • Purchased the remaining 39.7% interest in Cervus Equipment NZ Ltd., formerly Agriturf Limited, that Cervus did not already own for approximately $1.6 million
  • Increased gross revenue by $47.8 million (same store $17.6 million) to $234.7 million from $186.9 million in the third quarter of 2011
  • Increased net profit for the period by $811 thousand to $8.8 million, from the third quarter 2011 profit of $8.0 million
  • Increased basic earnings per share 7.1% to $0.60 in the third quarter of 2012 from $0.56 reported in the same period of 2011
  • Ranked 92nd on the Alberta Venture's list of the 250 highest revenue companies in Alberta

Financial Highlights:

During the third quarter of 2012, revenue grew by $47.8 million or 25.6% to $234.7 million when compared to the same quarter of 2011. Same store sales increased $17.6 million or 9.4%.  Both operating segments reported increases in revenues with the agricultural equipment segment increasing by 14.1% to $170.6 million and the commercial and industrial equipment segment increasing by 71.2% to $64.1 million.

For the quarter ended September 30, 2012, overall gross margin increased to 18.0% from 17.3% reported in the same period of 2011. The increase was primarily a result of a change in sales mix as well as an increase in overall equipment margins.

Net profit increased by 10.1% to $8.8 million in the third quarter of 2012 from $8.0 million in 2011. The increase was due to higher sales and the marginal change in overall gross profit margins, which was offset in part by an increase in selling, general and administrative (SG&A) expenses.

SG&A expenditures increased to 12.7% of total revenue for the three month period ended September 30, 2012 compared to 11.8% for the same period in 2011.

EBITDA increased by $4.0 million to $17.3 million, or $1.12 per fully diluted share, in the third quarter of 2012 compared with $13.4 million or $0.88 per fully diluted share for the same period in 2011. The most significant factor contributing to the increase in EBITDA during the three and month period ended September 30, 2012 was the addition of Frontier and increased earnings from same stores.

As at September 30, 2012, Cervus had working capital of $91.0 million, an increase of $11.9 million compared to $79.1 million at December 31, 2011.

Selected Quarterly Information

                             
$ thousands, except per share amounts Three Months
Ended
September 30,
2012
  Three Months
Ended
September 30,
2011
  % Change   Nine Months
Ended
September 30,
2012
  Nine Months
Ended
September 30,
2011
  % Change  
Revenues 234,680   186,878   25.6   541,116   418,242   29.4  
Gross profit 42,337   32,286   31.1   103,002   78,188   31.7  
Gross margin 18.0 % 17.3 % 4.0   19.0 % 18.7 % 1.6  
Net profit 8,836   8,025   10.1   17,670   13,602   29.9  
Net profit attributable to shareholders 8,836   8,193   7.8   17,482   14,049   24.4  
  Per share  - Basic 0.60   0.56   7.1   1.18   0.97   21.6  
  Per share - Diluted 0.57   0.54   5.5   1.14   0.94   21.3  
Cash provided by (used in) operating activities 2,936   14,674   (80.0 ) 20,467   22,602   (9.4 )
  Per share - Basic 0.20   1.00   (80.0 ) 1.39   1.56   (10.9 )
EBITDA 17,334   13,365   29.7   36,720   26,189   40.2  
EBITDA margin 7.4 % 7.2 % 2.8   6.8 % 6.3 % 7.9  
  Per share - basic 1.17   0.91   28.6   2.49   1.81   37.6  
Dividends declared to shareholders 2,780   2,643   5.2   8,201   7,837   4.6  
  Per share 0.1875   0.18   4.2   0.555   0.54   2.8  
Weighted average shares outstanding            
  Basic 14,826   14,659   1.1   14,756   14,495   1.8  
  Diluted 15,416   15,152   1.7   15,344   14,988   2.4  
Actual shares outstanding       14,880   14,686   1.3  
Closing market price per share       19.6   14.41   36.0  
Total assets       421,096   282,105   49.3  
Long-term liabilities       75,366   7,639   886.6  
Total liabilities       222,478   100,806   120.7  
Shareholders' equity       198,218   181,299   9.3  
Net book value per share - diluted       12.92   12.10   6.9  

Notes:  (1) These financial measures are identified and defined under the section "Non-IFRS Financial Measures".

Conference Call Information

Cervus will host its third quarter 2012 results conference call on November 8, 2012 at 1:00 p.m. Eastern Time. Interested parties may access the conference call by dialling (888) 231-8191 (domestic) or (647) 427-7450 (international). The conference call will be archived for replay until Thursday, November 15, 2012 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 55025875 followed by the number sign.

About Cervus Equipment Corporation

Cervus acquires and manages authorized agricultural, commercial, industrial and transportation equipment dealerships with interests in 57 dealerships located in Western Canada, New Zealand and Australia.   The primary equipment brands represented by Cervus include John Deere agricultural equipment; Bobcat and JCB construction equipment; Clark, Sellick, Nissan and Doosan material handling equipment; and Peterbilt transportation equipment.  The common shares of Cervus are listed on the Toronto Stock Exchange and trade under the symbol "CVL".

 

SOURCE: Cervus Equipment Corporation

For further information:

Graham Drake - President & CEO
Telephone: (403) 567-2095
Fax: (403) 567-0309
Email: gdrake@cervuscorp.com   

Randy Muth - Chief Financial Officer
Telephone: (403) 567-2097
Fax: (403) 567-0392
Email: rmuth@cervuscorp.com