CERVUS EQUIPMENT CORP. ANNOUNCES FIRST QUARTER 2011 RESULTS

CALGARY, May 10 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended March 31, 2010.

"Solid improvements in our construction and industrial equipment business helped offset the challenges imposed by the strong Canadian dollar, which put downward pressure on gross margins this quarter," said Peter Lacey, President and CEO of Cervus. "Despite this, and a later, wetter spring than normal, sustained strong demand for agricultural equipment and increasing grain prices helped us, and are expected to support improved performance in the balance of the fiscal year."

Highlights for the Quarter:

  • Graduation of Cervus' common stock from the TSX Venture Exchange to the Toronto Stock Exchange on January 31, 2011;

  • Revenue increased by $17.1 million (same store $11.7 million) to $84.3 million from $67.2 million for the same period in 2010;

  • Net cash from operating activities increased by $3.5 million to $525 thousand from a use of cash of $3.0 million in the same period of 2010;

  • Net loss for the period decreased to $155 thousand from $613 thousand for the same period of 2010, with an increase in earnings of $458 thousand; and

  • Subsequent to the end of the quarter, redeemed and converted all of its 425 thousand outstanding Series 1 Preferred Shares plus cumulative and unpaid dividends for 433 thousand common shares.

Financial Highlights:
During the first quarter of 2011 revenue grew by $17.1 million to $84.3 million compared to $67.2 million in 2010, an increase of 25%.  Same store sales increased by $11.7 million or 17% ($5.4 million or 12% in the agricultural equipment segment and $6.3 million or 28% in the construction and industrial equipment segment).

For the three months ended March 31, 2011, gross margin decreased by 1.2% to 21.5% when compared to 22.7% for the same period of 2010.  The agricultural equipment segment gross margin decreased to 17.7% compared to 18.8% and the construction and industrial equipment segment gross margin to 28.6% compared to 30.3% for the same period of 2010.  The decrease in gross margin is primarily related to new and used equipment revenue per unit which has decreased as a result of the strengthening Canadian dollar, putting margin pressures on previously purchased equipment.

Net loss for the three months ended March 31, 2011 decreased by $458 thousand to $155 thousand or $0.01 per basic share from $613 thousand or $0.04 per basic share for the same period of 2010.  The agricultural equipment segment reported a net loss of $792 thousand (a decrease of $192 thousand over a net loss of $518 thousand in 2010) and the construction and industrial equipment segment reported net profit of $637 thousand (an increase of $732 thousand over a net loss of $95 thousand reported in 2010).  The primary change in the agricultural equipment segment's reported net loss was from the acquisition of Agriturf in the third quarter of 2010 which reported a net loss of $243 thousand. This was offset by a gain in the construction and industrial equipment segment as a result of significant increases in sales activity from the lows experienced in 2009.

As a result of increased earnings, depreciation and amortization, and other non-cash working capital adjustments, net cash flows from operating activities increased to $525 thousand ($0.04 per basic share) from a net use of cash flows $3.0 million ($0.21 per basic share) in 2010. EBITDA increased to $2.1 million ($0.15 per basic share) in 2011 when compared to $1.2 million ($0.09 per basic share) for 2010.

Selected Quarterly Information

           
$ thousands, except per share amounts March 31, 2011   March 31, 2010   % change
Revenues 84,273   67,201   25.4
Gross profit 18,094   15,272   18.5
Gross margin 21.5%   22.7%   (5.3)
Loss for the period (155)   (613)   (74.7)
  Per share - Basic and diluted (0.01)   (0.04)   (75.0)
Net cash provided by (used in) operating activities 525   (2,960)   n/a
  Per share - Basic 0.04   (0.18)   n/a
EBITDA1 2,137   1,244   71.8
EBITDA margin1 2.5%   1.8%   38.9
  Per share - basic 0.15   0.09   100.0
Dividends to preferred shareholders 78   78   -
Dividends declared to common shareholders 2,557   2,547   0.4
  Per share 0.18   0.18   -
Weighted average shares outstanding          
  Basic 14,201   14,140   0.4
  Diluted 14,654   14,473   1.3
Actual common shares outstanding 14,204   14,151   0.4
Closing market price per share 16.15   13.40   20.5
Total assets 267,524   252,574   6.0
Long-term liabilities 9,986   11,478   (13.0)
Total liabilities 96,418   86,537   11.4
Total equity 171,106   166,037   3.1
Net book value per share - diluted 11.68   11.47   1.8

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

Conference Call Information

Cervus will host its First Quarter 2011 results conference call on May 11, 2011 at 10:00 a.m. Eastern Time. Interested parties may access the conference call by dialling (888) 231-8191 (domestic) or (647) 427-7450 (international).

About Cervus Equipment Corporation

Cervus acquires and manages authorized agricultural, commercial and industrial equipment dealerships in Western Canada through 30 dealership locations in Alberta, Saskatchewan and Manitoba. Cervus holds an approximate 60% equity interest in Agriturf Limited, a New Zealand-based corporation that offers authorized John Deere equipment, parts and service in the Manawatu, Rotorua, Hawke's Bay and Taranaki regions. The primary equipment brands represented by Cervus include John Deere agricultural equipment, Bobcat and JCB construction equipment, and Clark, Sellick, Nissan and Doosan material handling 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:

Peter Lacey - President & CEO     Randy Muth - Chief Financial Officer
Telephone: (403) 567-0339     Telephone: (403) 567-0339
Fax: (403) 567-0392      Fax: (403) 567-0392
Email: placey@cervuscorp.com     Email: rmuth@cervuscorp.com

 


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