Cervus Equipment Corp. announces second quarter 2015 results

CALGARY, Aug. 12, 2015 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended June 30, 2015.

"Our diversification strategy was evident in the quarter, with our Ontario transportation operations generating its first post-acquisition quarterly profit, while the results of our Agriculture segment remained consistent with the second quarter of 2014," said Graham Drake, President and CEO of Cervus. "Strength in these areas of our business partially offset the significant impact of the recent downturn in the energy sector, which affected our Construction and Industrial segment and Saskatchewan transportation operations, resulting in the $3.0 million decrease in income before income tax in the quarter.  We continue to focus on operational efficiency across our segments and geography, in light of the general economic and industry specific factors encompassed within our diversified operations."

Highlights for the Quarter

  • The Company generated adjusted earnings1 of $2.9 million for the three months ended June 30, 2015, and adjusted basic earnings per share of $0.19.2
  • Revenues increased $65.5 million and gross profit dollars increased $10.0 million compared to the three months ended June 30, 2014.
  • Acquisitions contributed $1.3 million of income from operating activities in the second quarter, including $1.0 million from our Ontario transportation operations.
  • Acquisitions contributed $2.8 million incremental earnings before interest, taxes, depreciation, and amortization ("EBITDA") in the quarter, including $1.8 million from Transportation Ontario. Same store EBITDA was $9.5 million.
  • The Company reached an agreement with Canada Revenue Agency to adjust certain of the Company's tax pools, resulting in no federal income taxes payable for the period of December 31, 2009 through 2014.
  • The Company completed construction and relocated to a new Agriculture equipment facility in Ponoka, Alberta and relocated the Essex, Ontario Transportation dealership to a new location in Windsor, Ontario.

____________________________
1 The Company calculates adjusted earnings as income attributed to shareholders adjusted to exclude the impact of: settlements with the Canada Revenue Agency, unrealized foreign currency gains and losses, acquisition and integration costs, and gains and losses on the sale of real estate.
2 Adjusted basic earnings per share is calculated as adjusted earnings divided by the weighted average shares outstanding during the period.

Financial Highlights

Overall, the Company generated $12.3 million of EBITDA for the quarter, a $0.9 million decrease from the second quarter of 2014.  The difference reflects $2.8 million of incremental EBITDA from acquisitions offset by the impact of oil prices on equipment sales in our Saskatchewan transportation operations and the Commercial and Industrial segment.  Selling, general and administrative expenses have been reduced $3.2 million on a same store basis in the quarter.

In the Agricultural segment, income from operating activities for the three month period ended June 30, 2015 was even with the same period of 2014.  EBITDA increased $0.1 million in the quarter, comprised of a $0.9 million increase from acquisitions, while same store EBITDA decreased by $0.8 million due to a $0.7 million reduction in earnings from equity investments.

Within our Transportation segment, our Ontario operations generated $1.0 million of operating income in the quarter due to integration activities supported by positive regional economic factors. The persisting uncertainty in oil prices reduced demand for equipment in Saskatchewan, although parts and service sales were resilient.  Second quarter EBITDA for the segment increased $0.9 million compared to Q2 2014, comprised of $1.8 million of incremental EBITDA from Ontario, offset by a $0.9 million decrease in our Saskatchewan operations.

C&I income from operating activities decreased $1.3 million and EBITDA decreased by $2.0 million, primarily due to low resource prices causing a decrease in new equipment sales. This decrease was partly offset by reductions in SG&A dollars within the segment.  

Selected Quarterly Information








Three months
period ended June 30


Six months
period ended June 30



Total 2015

2015 Same Store



Total 2015

2015 Same Store


($ thousands, except per share amounts)


2015


%
Change

2015
Same
Store1


%
Change

2014


2015

%
Change

2015
Same
Store1

%
Change

2014

Revenue


302,988

28%

209,947

(12%)

237,488


541,410

34%

365,852

(10%)

404,377

Cost of sales


(247,732)

29%

(170,231)

(11%)

(192,235)


(441,842)

36%

(293,844)

(10%)

(326,003)

Gross profit


55,256

22%

39,716

(12%)

45,253


99,568

27%

72,008

(8%)

78,374

Other income (loss)


(376)


583


1,000


(223)


1,028


1,843

Unrealized foreign exchange gain (loss)


275


187


(230)


(1,051)


(417)


219

Total other income (loss)


(101)

(113%)

770

0%

770


(1,274)

(162%)

611

(70%)

2,062

Selling, general and administrative expense


(47,512)

28%

(34,101)

(8%)

(37,252)


(91,783)

30%

(66,513)

(5%)

(70,340)

Income from operating activities


7,643

(13%)

6,385

(27%)

8,771


6,511

(36%)

6,106

(40%)

10,096

Finance income


32

(54%)

32

(54%)

69


89

(28%)

87

(29%)

123

Finance costs


(2,790)

65%

(2,061)

22%

(1,686)


(5,433)

63%

(3,864)

16%

(3,338)

Share of profit of equity accounted investees, net of tax


43

(94%)

43

(94%)

751


364

884%

364

884%

37

Income before income tax expense


4,928

(38%)

4,399

(44%)

7,905


1,531

(78%)

2,693

(61%)

6,918

Income tax expense


(37,117)

1523%

(3,018)

32%

(2,287)


(36,695)

1684%

(2,805)

36%

(2,057)

Income (loss) for the period


(32,189)


1,381


5,618


(35,164)


(112)


4,861

Income (loss) attributable to shareholders


(32,203)


1,367


5,618


(35,099)


(47)


4,785

EBITDA1


12,305

(7%)

9,549

(28%)

13,247


16,433

(5%)

13,014

(25%)

17,300

EBITDA margin1


4.1%


4.5%


5.6%


3.0%


3.6%


4.3%

Ratios as a percentage of revenue:













Gross profit margin


18.2%


18.9%


19.1%


18.4%


19.7%


19.4%

Selling, general and administrative


15.7%


16.2%


15.7%


17.0%


18.2%


17.4%

Earnings (loss) per share













Adjusted - Basic1


0.19




0.39


0.11




0.35

Basic


(2.08)


0.09


0.37


(2.28)


(0.00)


0.32

Diluted


(2.08)


0.08


0.35


(2.28)


(0.00)


0.30

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 2015 results conference call on August 13, 2015 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 Thursday, August 20, 2015 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 91296943 followed by the number sign.

A live audio webcast of the conference call will be available at: http://event.on24.com/r.htm?e=1027541&s=1&k=66EB65D4D2FB78D85462D9C53C759434.

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 75 dealerships in Canada, New Zealand, and Australia, employing more than 1,700 people. 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".

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 2014 Annual Information Form of Cervus Equipment Corporation dated March 10, 2015 available electronically at www.sedar.com under Cervus' profile including but not limited to Cervus' reliance on key manufacturers for the delivery of products, their respective dependence on the strength of sales to the agricultural sector, the seasonal and cyclical nature of the business, workforce availability and acquisition related risks such as effective and timely integration into Cervus' business operations. 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.

SOURCE Cervus Equipment Corporation

For further information: Investor inquiries: Graham Drake - President & CEO, (403) 567-2095, gdrake@cervusequipment.com; Randy Muth - Chief Financial Officer, (403) 567-0392, rmuth@cervusequipment.com


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