Rocky Mountain Dealerships Inc. (TSX:RME, OTCQX:RCKXF) Announces Annual and Fourth Quarter 2012 Results
Record earnings per share highlight strong fourth quarter and annual results
CALGARY, March 11, 2013 /CNW/ - Rocky Mountain Dealerships Inc. (hereinafter "Rocky") today reported its financial results for the three and twelve months ended December 31, 2012.
HIGHLIGHTS FOR THE QUARTER ENDED DECEMBER 31, 2012:
- Increased revenues by 25.0% to $300.8 million (17.6% on a same store basis)
- Gross profit increased by 24.1% to $45.9 million (15.2% of sales)
- Diluted Earnings per Share of $0.62, up from $0.42 in 2011
- EBITDA(1) increased by 27.2% to $18.6 million
- Paid dividends of $0.0675 per share, an increase of 50% over the prior year
HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2012:
- Increased revenues by 20.3% to $966.1 million (16.3% on a same store basis)
- Gross profit increased by 17.8% to $147.5 million (15.3% of sales)
- Normalized Diluted Earnings per Share(1) of $1.46, up from $1.22 in 2011
- Generated Cash Flow from Net Earnings(1) of $35.1 million
- Normalized EBITDA(1) increased by 4.7% to $46.5 million
- Paid dividends of $0.2475 per share after announcing a 50% dividend increase in Q1
- Repurchased all convertible debentures reducing interest exposure and shareholder dilution
- Acquired and integrated four agriculture equipment dealerships in Alberta
(1) See further discussion in "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures to IFRS" sections below.
Matt Campbell, CEO of Rocky, noted "2012 saw us undertake a number of initiatives aimed at enhancing shareholder value. We were able to repurchase our convertible debentures, resulting in considerable interest savings, as well as eliminating the dilutive effect the debentures created. We increased our dividend by 50% in 2012. We re-branded our entire dealership network, unifying it under the name "Rocky Mountain Equipment", and are working towards leveraging the benefits a single, strong brand can provide.
"In addition to those initiatives, our customers enjoyed favorable growing conditions across the network, strong commodity prices, and generally positive economic conditions in all industries that we service. Consistent with our stated objective, Rocky continued to grow its footprint, market share and installed base during the fourth quarter of 2012. Those factors, combined with the success of our efforts to be the dependable equipment partner of choice for our customers, culminated in our delivering to our shareholders record results for both the fourth quarter and the year.
"2012 saw a significant increase in the amount of new and used inventory sold. While this created some downward pressure on our gross margins during the year, we were able to increase our market share and our customer base. We will now work towards translating this larger equipment base into increased product support revenues going forward. In short, we feel we are well-positioned as a result of our 2012 initiatives and results to continue to grow well into the future."
Annual & Special Meeting of Shareholders
Rocky also announced today that its Annual & Special Meeting of Shareholders ("AGM") will take place at 2:00pm on Friday, May 10, 2013, in the showroom of Rocky Mountain Equipment, 260180 Writing Creek Crescent, Rocky View County, Alberta. Materials related to the upcoming AGM will be sent in mid-April, 2013, to shareholders of record at the close of business on April 5, 2013.
Quarterly Cash Dividend
On February 11, 2013, Rocky's Board of Directors declared a quarterly dividend of $0.0675 per common share on Rocky's outstanding common shares. The dividend is payable on March 28, 2013, to shareholders of record at the close of business on February 28, 2013.
This dividend is designated by Rocky to be an "eligible dividend" for the purposes of the Income Tax Act (Canada) and any similar provincial or territorial legislation. An enhanced dividend tax credit applies to "eligible dividends" paid to Canadian residents. Please consult with your own tax advisor for advice with respect to the income tax consequences to you from Rocky designating its dividends as "eligible dividends."
Conference Call
Rocky will host a conference call to discuss its year-end results on Tuesday, March 12, 2013, at 9:00 a.m. Mountain Time. Investors interested in participating in the live call can dial 1-888-231-8191 (toll free) or 1-647-427-7450. An archived recording of the call will be available approximately two hours after its completion on Rocky's website at www.rockymtn.com, or by calling 1-855-859-2056 (toll free) or 1-416-849-0833, passcode: 97869994. The archive will remain available until Tuesday, March 26, 2013.
Caution regarding forward-looking statements
Certain information set forth in this news release, including, without limitation, the information regarding the financial impact, future interest savings, and improved returns to shareholders resulting from Rocky's repurchase of its convertible debentures, any effects, financial or otherwise, of Rocky's re-branding initiatives in 2012 and Rocky's ability to increase its product support revenues going forward is forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond Rocky's control. While this forward-looking information is based on information and assumptions that Rocky's management believes to be reasonable, there is significant risk that the forward-looking statements will prove not to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements. Accordingly, this news release is subject to the disclaimer and qualified by risks and other factors discussed by Rocky in its management's discussion and analysis ("MD&A") for the year ended December 31, 2012, and as discussed in Rocky's Annual Information Form dated March 11, 2013 under the heading "Risk Factors." Except as required by law, Rocky disclaims any intention or obligation to update or revise forward-looking statements, and further reserves the right to change, at any time, at its sole discretion, its current practice of updating its guidance and outlooks.
About Rocky
Rocky is one of Canada's largest agriculture and construction equipment dealership networks with branches located throughout Alberta, Saskatchewan, and Manitoba. Through its network of Rocky Mountain Equipment locations, Rocky sells, rents, and leases new and used agriculture and construction equipment and offers product support and finance to its customers.
Additional information on Rocky is available at www.rockymtn.com and on SEDAR at www.sedar.com.
| CONSOLIDATED BALANCE SHEET SUMMARY | |||||
| $ thousands (unaudited) | |||||
|
December 31, 2012 |
December 31, 2011 |
||||
| Assets | |||||
| Current assets | 586,722 | 434,479 | |||
| Property and equipment | 21,558 | 21,369 | |||
| Goodwill | 13,884 | 9,961 | |||
| Total assets | 622,164 | 465,809 | |||
| Liabilities and equity | |||||
| Current liabilities | 421,767 | 286,175 | |||
| Long-term debt (including convertible debentures) | 45,977 | 40,462 | |||
| Obligations under finance leases | 1,379 | 1,589 | |||
| Deferred income taxes | 7,042 | 8,283 | |||
| Derivative financial instruments | 1,438 | 1,139 | |||
| 477,603 | 337,648 | ||||
| Shareholders' equity | 144,561 | 128,161 | |||
| Total liabilities and equity | 622,164 | 465,809 | |||
SELECTED QUARTERLY AND ANNUAL FINANCIAL INFORMATION
| $ thousands, except per share amounts (unaudited) | |||||||||||||||||
|
For the quarter ended December 31, |
For the year ended December 31, |
||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Sales | |||||||||||||||||
| New equipment | 195,813 | 65.1% | 132,712 | 55.2% | 549,036 | 56.8% | 423,933 | 52.8% | |||||||||
| Used equipment | 79,709 | 26.5% | 82,318 | 34.2% | 297,476 | 30.8% | 269,809 | 33.6% | |||||||||
| Parts | 16,369 | 5.4% | 16,155 | 6.7% | 84,653 | 8.8% | 75,531 | 9.4% | |||||||||
| Service | 7,933 | 2.6% | 7,459 | 3.1% | 30,459 | 3.2% | 28,028 | 3.5% | |||||||||
| Other | 956 | 0.4% | 1,945 | 0.8% | 4,482 | 0.4% | 5,462 | 0.7% | |||||||||
| 300,780 | 100.0% | 240,589 | 100.0% | 966,106 | 100.0% | 802,763 | 100.0% | ||||||||||
| Cost of sales | 254,913 | 84.8% | 203,620 | 84.6% | 818,595 | 84.7% | 677,571 | 84.4% | |||||||||
| Gross profit | 45,867 | 15.2% | 36,969 | 15.4% | 147,511 | 15.3% | 125,192 | 15.6% | |||||||||
| Selling, general and administrative | 26,060 | 8.7% | 21,964 | 9.1% | 97,711 | 10.1% | 82,001 | 10.2% | |||||||||
|
Loss on repurchase of convertible
debentures |
- | 0.0% | - | 0.0% | 4,232 | 0.4% | - | 0.0% | |||||||||
| Interest on short-term debt | 2,622 | 0.9% | 2,022 | 0.8% | 9,071 | 0.9% | 8,306 | 1.0% | |||||||||
| Interest on long-term debt | 572 | 0.1% | 917 | 0.5% | 2,843 | 0.4% | 3,587 | 0.5% | |||||||||
| Earnings before income taxes | 16,613 | 5.5% | 12,066 | 5.0% | 33,654 | 3.5% | 31,298 | 3.9% | |||||||||
| Income taxes | 4,843 | 1.6% | 3,105 | 1.3% | 9,679 | 1.0% | 8,089 | 1.0% | |||||||||
| Net earnings | 11,770 | 3.9% | 8,961 | 3.7% | 23,975 | 2.5% | 23,209 | 2.9% | |||||||||
| Earnings per share | |||||||||||||||||
| Basic | 0.63 | 0.48 | 1.28 | 1.24 | |||||||||||||
| Diluted | 0.62 | 0.42 | 1.28 | 1.12 | |||||||||||||
| Dividends per share | 0.0675 | 0.0450 | 0.2475 | 0.1800 | |||||||||||||
| Non-IFRS Measures(1) | |||||||||||||||||
| EBITDA | 18,557 | 6.2% | 14,587 | 6.1% | 42,008 | 4.3% | 41,225 | 5.1% | |||||||||
| Normalized EBITDA | 18,579 | 6.2% | 14,529 | 6.0% | 46,510 | 4.8% | 44,437 | 5.5% | |||||||||
| Operating SG&A | 24,671 | 8.2% | 20,804 | 8.6% | 92,391 | 9.6% | 73,872 | 9.2% | |||||||||
| Cash Flow from Net Earnings | 17,717 | 5.9% | 13,462 | 5.6% | 35,120 | 3.6% | 33,087 | 4.1% | |||||||||
| Normalized Diluted Earnings per Share | 0.62 | 0.42 | 1.46 | 1.22 | |||||||||||||
(1) See further discussion in "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures to IFRS" sections below.
NON-IFRS MEASURES
Throughout this MD&A, we use terms which do not have standardized meanings under IFRS. As these measures do not have standardized meanings prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other issuers. Our definition for each term is as follows:
- "EBITDA" is a commonly used metric in the dealership industry. EBITDA is calculated by adding long-term interest, income taxes and depreciation to net earnings. Adding back non-operating expenses allows management to consistently compare periods by removing changes in tax rates, long-term assets and financing costs.
- "Normalized EBITDA" is calculated by adding back non-recurring charges to EBITDA. In addition to the non-recurring charges in SG&A, the loss on the repurchase of the Debentures is considered to be a non-recurring charge. Adding back these non-recurring charges to net earnings allows management to assess the EBITDA from ongoing operations.
- "Cash Flow from Net Earnings" is calculated by adding back non-cash items such as depreciation of property and equipment, non-cash finance charges on the Debentures and long-term debt, deferred income taxes, share-based payment expense, losses (gains) on the disposal of property and equipment, losses (gains) on derivative financial instruments and the loss on the repurchase of the Debentures to net earnings. Adding back these non-cash items allows management to isolate and analyze the operating cash flows generated through earnings, prior to any consideration of changes in working capital balances and the impact of acquisitions.
- "Operating SG&A" is calculated by adding back depreciation of property and equipment included in SG&A, and any non-recurring charges incurred during the period to SG&A. Management deems non-recurring charges to be unusual and/or infrequent charges that the Company incurs outside of its common day-to-day operations. For the years ended December 31, 2012 and 2011, the ineffective portion of hedged financial instruments, syndication charges, severance charges and acquisition transaction costs are considered by management to be non-recurring charges in SG&A. Adding back these items allows management to assess the discretionary expenses from ongoing operations. We target a sub-10% Operating SG&A as a percentage of total sales on an annual basis.
- "Normalized Diluted Earnings per Share" is calculated by adding back the after-tax impact of non-recurring charges to net earnings when calculating diluted earnings per share. In addition to the non-recurring charges in SG&A, the loss on the repurchase of the Debentures is considered to be a non-recurring charge. Adding back these non-recurring charges to net earnings allows management to assess the fully diluted earnings per share from ongoing operations.
RECONCILIATION OF NON-IFRS MEASURES TO IFRS
Reconciliation of Quarterly Net Earnings to EBITDA and Normalized EBITDA
| $ thousands | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | Q4 2011 | Q3 2011 | Q2 2011 | Q1 2011 | Q4 2010 | ||||||||||
| Net earnings | 11,770 | 8,451 | 1,595 | 2,159 | 8,961 | 7,121 | 4,464 | 2,663 | 6,345 | ||||||||||
| Interest on long-term debt | 572 | 599 | 802 | 870 | 917 | 870 | 933 | 867 | 943 | ||||||||||
| Depreciation expense | 1,372 | 1,435 | 1,271 | 1,433 | 1,604 | 1,711 | 1,663 | 1,362 | 1,517 | ||||||||||
| Income taxes | 4,843 | 3,019 | 937 | 880 | 3,105 | 2,294 | 1,750 | 940 | 2,564 | ||||||||||
| EBITDA | 18,557 | 13,504 | 4,605 | 5,342 | 14,587 | 11,996 | 8,810 | 5,832 | 11,369 | ||||||||||
| Non-recurring charges | |||||||||||||||||||
| Ineffective portion of derivative financial instruments | (44) | (38) | 274 | (18) | (58) | 523 | - | - | - | ||||||||||
| Syndication charges | - | - | - | - | - | - | 1,083 | - | - | ||||||||||
| Severance charges | - | - | - | - | - | - | 1,634 | - | - | ||||||||||
| Acquisition transaction charges | 66 | 30 | - | - | - | 3 | 26 | 1 | 32 | ||||||||||
| Loss on repurchase of convertible debentures | - | - | 4,232 | - | - | - | - | - | - | ||||||||||
| Normalized EBITDA | 18,579 | 13,496 | 9,111 | 5,324 | 14,529 | 12,522 | 11,553 | 5,833 | 11,401 | ||||||||||
Reconciliation of Annual Net Earnings to EBITDA and Normalized EBITDA
| $ thousands |
For the year ended December 31, |
||||||||
| 2012 | 2011 | 2010 | |||||||
| Net earnings | 23,975 | 23,209 | 14,899 | ||||||
| Interest on long-term debt | 2,843 | 3,587 | 2,064 | ||||||
| Depreciation expense | 5,511 | 6,340 | 5,280 | ||||||
| Income taxes | 9,679 | 8,089 | 6,327 | ||||||
| EBITDA | 42,008 | 41,225 | 28,570 | ||||||
| Non-recurring charges | |||||||||
| Ineffective portion of derivative financial instruments | 174 | 465 | - | ||||||
| Syndication charges | - | 1,083 | - | ||||||
| Severance charges | - | 1,634 | - | ||||||
| Acquisition transaction charges | 96 | 30 | 270 | ||||||
| Loss on repurchase of convertible debentures | 4,232 | - | - | ||||||
| Normalized EBITDA | 46,510 | 44,437 | 28,840 | ||||||
Reconciliation of Cash Flow from Net Earnings
| $ thousands |
For the quarter ended December 31, |
For the year ended December 31, |
||||||||||
| 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||
| Net earnings | 11,770 | 8,961 | 6,345 | 23,975 | 23,209 | 14,899 | ||||||
| Depreciation expense | 1,372 | 1,604 | 1,517 | 5,511 | 6,340 | 5,280 | ||||||
| Accretion expense | - | 91 | 82 | 123 | 350 | 118 | ||||||
| Deferred tax expense (recovery) | 3,525 | 2,551 | 2,633 | (1,080) | 1,655 | 5,013 | ||||||
| Share-based payment expense | 420 | 312 | 386 | 1,613 | 1,087 | 1,643 | ||||||
| Non-cash impact - credit promissory note | 2 | 8 | - | 18 | (18) | - | ||||||
| Loss (gain) on disposal of property and equipment | 672 | (7) | 42 | 554 | (1) | (229) | ||||||
| Loss (gain) on derivative financial instruments | (44) | (58) | - | 174 | 465 | - | ||||||
| Loss on repurchase of convertible debentures | - | - | - | 4,232 | - | - | ||||||
| Cash Flow from Net Earnings | 17,717 | 13,462 | 11,005 | 35,120 | 33,087 | 26,724 | ||||||
Reconciliation of SG&A to Operating SG&A
| $ thousands |
For the quarter ended December 31, |
For the year ended December 31, |
|||||||||||
| 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | ||||||||
| SG&A | 26,060 | 21,964 | 18,082 | 97,711 | 82,001 | 63,409 | |||||||
| Depreciation expense in SG&A | (1,367) | (1,218) | (1,270) | (5,050) | (4,917) | (4,444) | |||||||
| Non-recurring charges | |||||||||||||
| Ineffective portion of derivative financial instruments | 44 | 58 | - | (174) | (465) | - | |||||||
| Syndication charges | - | - | - | - | (1,083) | - | |||||||
| Severance charges | - | - | - | - | (1,634) | - | |||||||
| Acquisition transaction charges | (66) | - | (32) | (96) | (30) | (270) | |||||||
| Operating SG&A | 24,671 | 20,804 | 16,780 | 92,391 | 73,872 | 58,695 | |||||||
Reconciliation of Normalized Diluted Earnings per Share
| $ thousands, except share and per share amounts |
For the quarter ended December 31, |
For the year ended December 31, |
||||||||||
| 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||
| Earnings used in the calculation of diluted earnings per share | 11,770 | 9,459 | 6,636 | 23,975 | 25,179 | 15,682 | ||||||
|
After tax impact of non-recurring charges in SG&A and loss on repurchase of Debentures(1) |
17 | (43) | 23 | 3,399 | 2,361 | 194 | ||||||
|
Earnings used in the calculation of Normalized Diluted Earnings per Share |
11,787 | 9,416 | 6,659 | 27,374 | 27,540 | 15,876 | ||||||
|
Weighted average diluted shares used in the calculation of diluted earnings per share |
18,996 | 22,626 | 21,478 | 18,778 | 22,565 | 19,910 | ||||||
| Normalized Diluted Earnings per Share | 0.62 | 0.42 | 0.31 | 1.46 | 1.22 | 0.80 | ||||||
| (1) After applying statutory rate of 25% (2011 - 26.5%) |
SOURCE: Rocky Mountain Dealerships Inc.
For further information: Rocky Mountain Dealerships Inc.
Matt Campbell, Chief Executive Officer;
Garrett Ganden, Chief Operating Officer; or,
David Ascott, Chief Financial Officer
#301, 3345 - 8th Street S.E.
Calgary, Alberta T2G 3A4
Telephone: (403) 265-7364
Fax: (403) 214-5644