Cervus Equipment Corp. Announces Second Quarter 2014 Results

Symbol: CVL (TSX)

CALGARY, Aug. 13, 2014 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended June 30, 2014.

"Parts and service sales generated significant growth in the second quarter of 2014, although new equipment sales decreased on a softer overall agricultural market.  Gross profit was maintained with the growth in higher margin parts and service sales offsetting decreased new equipment sales, however, selling, general, and administrative costs ("SG&A") increased due to the SG&A-intensive nature of parts and service," said Graham Drake, President and CEO of Cervus. "Despite the near-term softness in the agricultural segment, 2014 crop production forecasts suggest positive mid-term trends for farmers in our geography. Further, the agreement to acquire Peterbilt of Ontario entered into subsequent to quarter-end demonstrates how developing strong OEM relationships supports Cervus' continued growth."

Highlights for the Quarter:

  • Parts and service sales in our agricultural equipment segment for the three months ended June 30, 2014 increased $6.0 million, or 30.6%, over the same period in 2013, and increased $4.2 million, or 21.5%, on a same store basis.
  • An increase in same store revenues in our Construction, Industrial, and Transportation ("CIT") segment of $2.2 million.
  • Overall gross profit percentage increased to 19.1% compared to 18.4%, and gross profit dollars increased $0.3 million to $45.3 million for the three months ended June 30, 2014, when compared to the period ended June 30, 2013.
  • Net profit attributable to shareholders for the three months ended June 30, 2014 decreased $2.7 million to $5.6 million, compared to $8.3 million for same period in 2013.
  • Dividends of $0.2050 per share were declared to shareholders of record as at June 30, 2014.

Financial Highlights:

For the quarter ended June 30, 2014, revenue decreased by $6.8 million, or 2.8% as a result of a $9.0 million or 5.2% decrease in agricultural equipment segment revenue, offset by a $2.2 million or 3.1% increase in CIT equipment segment revenue. Same store revenue decreased $21.5 million or 8.8% as a result of a $23.7 million decrease in agricultural segment revenue, offset by a $2.2 million increase in CIT equipment segment revenue.

Despite a reduction in new agricultural equipment sales, gross profit dollars increased $0.3 million in the second quarter of 2014 compared to the second quarter of 2013, primarily due to substantial increases in agricultural parts and service sales offsetting declines in new agricultural equipment sales.  On this change in sales mix, overall gross margin percentage for the quarter ended June 30, 2014 increased to 19.1% from 18.4% in the same period in 2013.

Second quarter 2014 SG&A expenditures increased by $4.3 million compared to the same period in 2013, increasing to 15.7% of total revenue in the second quarter of 2014, compared to 13.5% for the same period in 2013. SG&A expenditures increased by $3.3 and $1.0 million in the agricultural and CIT equipment segments, respectively, compared to the same period in 2013.

During the quarter ended June 30, 2014, income from operating activities decreased by $3.3 million resulting in a profit before income tax decrease of $3.8 million compared to the same period in 2013. The decrease in income and profit is primarily a factor of reduced new equipment sales (and resulting decrease in contributed gross margin) in the agricultural equipment segment, combined with increased costs to facilitate parts and service revenue, and reduced earnings from equity accounted investments.

As at June 30, 2014, Cervus had working capital of $112.6 million, including $24.8 million in cash and cash equivalents, down $0.6 million compared to $113.2 million at December 31, 2013.

Selected Quarterly Information

         
  Three months ended Six months ended
(in $ thousands, except per share amounts) June 30,
2014
June 30,
2013
% change June 30,
2014
June 30,
2013
% change
Revenues 237,488 244,245 -2.8% 404,377 385,931 4.8%
Gross profit 45,253 45,001 0.6% 78,374 72,675 7.8%
Gross profit percentage 19.1% 18.4% 3.8% 19.4% 18.8% 3.2%
Net profit 5,618 8,336 -32.6% 4,861 8,214 -40.8%
Net profit attributable to shareholders 5,618 8,318 -32.5% 4,785 8,196 -41.6%
  Per share  - Basic 0.37 0.56 -33.9% 0.32 0.55 -41.8%
  Per share - Diluted 0.35 0.53 -34.0% 0.30 0.53 -43.4%
Cash provided (used) in operating activities 19,133 6,076 214.9% 18,686 (1,796) 1140.4%
  Per share - Basic 1.26 0.41 207.3% 1.24 (0.12) 1133.3%
EBITDA1 13,247 17,081 -22.4% 17,300 21,522 -19.6%
EBITDA margin 1 5.6% 7.0% -20.0% 4.3% 5.6% -23.2%
  Per share - basic 0.88 1.14 -22.8% 1.15 1.44 -20.1%
Dividends declared to shareholders 3,117 2,918 6.8% 6,192 5,795 6.9%
  Per share 0.2050 0.1900 7.9% 0.4075 0.3880 5.0%
Weighted average shares outstanding            
  Basic 15,130 14,956 1.2% 15,084 14,937 1.0%
  Diluted     15,835 15,576 1.7%     15,791 15,557 1.5%
Actual shares outstanding 15,132 14,967 1.1% 15,132 14,967 1.1%
  Closing market price per share       21.18       19.91 6.4%       21.18       19.91 6.4%
Total assets       501,262 461,428 8.6%
Long-term liabilities       84,337 75,111 12.3%
Total liabilities       283,466 254,357 11.4%
Shareholders' equity       217,796 207,071 5.2%
Net book value per share - diluted       13.79 13.31 3.6%
     
Notes:    [1] These financial measures are identified and defined under the section "Non-IFRS Financial Measures".
     

Conference Call Information

Cervus will host its second quarter 2014 results conference call on August 14, 2014 at 11:00 a.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, August 21, 2014 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 78928471 followed by the number sign. A live audio webcast of the conference call will be available at: http://www.newswire.ca/en/webcast/detail/1390148/1542546. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.

About Cervus Equipment Corporation

Cervus acquires and manages authorized agricultural, commercial, industrial and transportation equipment dealerships with interests in 67 dealership locations 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 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".

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

 

 

SOURCE Cervus Equipment Corporation

For further information:

Graham Drake - President & CEO
Telephone: (403) 567-2095
Fax: (403) 567-0392
Email: gdrake@cervusequipment.com

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