Cervus Achieves Record Second Quarter Revenue for the Three Months Ended June 30, 2017, Board of Directors Approves Normal Course Issuer Bid

CALGARY, Aug. 10, 2017 /CNW/ - Cervus Equipment Corporation ("Cervus" or the "Company") (TSX: CERV) today announced its financial results and operational highlights for the quarter ended June 30, 2017.

"Cervus reported record second quarter revenue on strong equipment sales along with accelerated parts and service activity across all divisions, resulting in a $57.4 million, or 26% increase in sales," said Graham Drake, President and CEO of Cervus. "Further, our ongoing focus on service optimization increased overall service gross profit margin by 1.8% compared to the second quarter of 2016. I am pleased to see the continued progress of our service initiatives reflected in the quarter's positive financial results."

Cervus' Board of Directors have approved proceeding with a Normal Course Issuer Bid (the "NCIB") for up to 10% of the Company's public float, subject to the approval of the Toronto Stock Exchange.

Highlights for the Quarter

  • Revenue increased $62.6 million and 21% in the second quarter ended June 30, 2017, compared to the same period of 2016.
  • Income for the quarter increased $5.9 million or 237% to $8.4 million, compared to $2.5 million of income for the comparable period in 2016.
     
  • Adjusted income1 and adjusted basic income per share1 improved to $7.3 million and $0.46 per share respectively, compared to adjusted income of $2.3 million and adjusted income per share of $0.15 in the second quarter of 2016.

  • Earnings before interest, taxes, depreciation, and amortization ("EBITDA1") was $17.5 million for the three months ended June 30, 2017, compared to $11.0 million in 2016, an increase of 59% quarter over quarter.

  • Service department process improvement initiatives contributed to an increase in overall service gross profit margin of 1.8% quarter over quarter.
     
  • All divisions generated increased parts and service revenue in the three month period ended June 30, 2017 compared to the same period in 2016.

  • The Agriculture Segment achieved record second quarter equipment sales of $200 million.
     
  • Dividends of $0.07 per share were declared to shareholders of record as at June 30, 2017.

Financial Highlights

Income before tax for the three months ended June 30, 2017 increased $7.9 million while EBITDA increased $6.5 million compared to the second quarter of 2016. This change in income before tax and EBITDA includes a $0.5 million increase in unrealized foreign exchange gains, and a $0.4 million gain on sale of real estate related to a sale and leaseback in our Australian operations. Excluding unrealized foreign exchange gains and gains on sale of property, income before tax increased $6.7 million and EBITDA increased $5.3 million.

Agriculture income before tax increased $4.4 million for the three-month period ended June 30, 2017, while EBITDA increased $3.5 million compared to the second quarter of 2016. A 25% increase in revenue generated a 23% increase in gross profit dollars, partially offset by a 13% increase in SG&A primarily related to increased commissions on record second quarter sales. 

Transportation income before tax increased by $1.4 million in the second quarter, while EBITDA increased by $1.2 million compared to the three-month period ended June 30, 2016.  Excluding the fluctuation in unrealized foreign exchange, income before tax increased $0.9 million and EBITDA increased $0.7 million quarter over quarter. The improvements in the quarter are due to accelerated performance in our Saskatchewan dealerships, partly offset by reduced profitability in our Ontario dealerships.

In our C&I segment income before tax improved by $2.0 million compared to the three-month period ended June 30, 2016, as sentiment is improving in the sector. The additional sales generated were achieved on a stable expense base, reducing SG&A to 22.9% as a percent of revenue, while EBITDA increased by $1.8 million quarter over quarter.

Selected Quarterly Information


Three month
 periods ended June 30


Six month
periods ended June 30

($ thousands, except per share amounts)

2017


% Change
Compared
to 2016

2016


2017


% Change
Compared
to 2016

2016

Revenue

357,361

21%

294,772


588,471

17%

503,314

Cost of sales

(300,602)

22%

(246,984)


(491,325)

18%

(416,308)

Gross profit

56,759

19%

47,788


97,146

12%

87,006

Other income

504

17%

432


1,043

(46%)

1,916

Unrealized foreign exchange gain

633

311%

154


823

(71%)

2,861

Total other income

1,137

94%

586


1,866

(61%)

4,777

Selling, general and administrative expense

(44,856)

7%

(41,758)


(86,033)

8%

(79,981)

Income from operating activities

13,040

97%

6,616


12,979

10%

11,802

Finance income

137

496%

23


231

344%

52

Finance costs

(1,680)

(39%)

(2,749)


(3,329)

(41%)

(5,612)

Share of loss of equity accounted investees, net of tax

-

(100%)

(252)


-

(100%)

(501)

Income before income tax expense

11,497

216%

3,638


9,881

72%

5,741

Income tax expense

(3,132)

172%

(1,153)


(3,149)

107%

(1,523)

Income for the period

8,365

237%

2,485


6,732

60%

4,218

Income attributable to shareholders

8,365

237%

2,485


6,737

60%

4,218

EBITDA1

17,478

59%

10,997


21,530

2%

21,036

EBITDA margin1

4.9%


3.7%


3.7%


4.2%

Ratios as a percentage of revenue:








Gross profit margin

15.9%


16.2%


16.5%


17.3%

Selling, general and administrative

12.6%


14.2%


14.6%


15.9%

Income per share








Adjusted - Basic1

0.46


0.15


0.35


(0.01)

Basic

0.53


0.16


0.43


0.27

Diluted

0.50


0.15


0.41


0.26


Notes:

1 These financial measures are identified and defined within Cervus' second quarter Management's Discussion and Analysis under the section "Non-IFRS Financial Measures".

 

Conference Call Information

Cervus will host its second quarter 2017 results conference call on August 11, 2017 at 11:00 a.m. Eastern Time. Interested parties may access the conference call by dialling (647) 427-7450 or 1-888-231-8191. Please connect approximately 10 minutes prior to the beginning of the call. The conference call will be archived for replay until Friday, August 18, 2017 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 58494446 followed by the number sign.

A live audio webcast of the conference call will be available at:  

http://event.on24.com/r.htm?e=1472329&s=1&k=736535A0E1503C2B91E9602A0504B5FB  

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 operates authorized agricultural, construction, materials handling and transportation equipment dealerships. The company has interests in 64 dealerships in Canada, New Zealand and Australia, employing more than 1,500 people.  The primary equipment brands represented by Cervus include John Deere agricultural equipment; Peterbilt transportation equipment; Bobcat, CMI and JCB construction equipment; and Clark, Sellick and Doosan material handling equipment. The common shares of Cervus are listed on the Toronto Stock Exchange and trade under the symbol "CERV".

Forward Looking Information

This press release contains certain forward‐looking information ("forward‐looking information") within the meaning of applicable Canadian securities laws. Forward‐looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. Forward‐looking information is not a guarantee of future performance and involves a number of assumptions and a number of risks and uncertainties some of which are described herein. These risks and uncertainties include the risks identified under the heading "Risk Factors – Risks Related to the Business" in the 2016 Annual Information Form of Cervus Equipment Corporation dated March 15, 2017, available electronically at www.sedar.com under Cervus' profile. Cervus believes the expectations reflected in such forward‐looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward‐looking information should not be unduly relied upon. You are cautioned that the preceding list of assumptions and risks is not exhaustive. Any forward‐looking information is made as of the date hereof and, except as required by law, Cervus assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.

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

_________________________________

1 These non-financial measures are identified and defined within Cervus' second quarter 2017 Management's Discussion and Analysis, under the section "Non-IFRS Financial Measures."

 

SOURCE Cervus Equipment Corp.

For further information: Investor inquiries: Graham Drake - President & CEO, (403) 567-2095, gdrake@cervusequipment.com; Randy Muth - Chief Financial Officer, (403) 567-2097, rmuth@cervusequipment.com


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