Cervus Equipment Corp. announces third quarter 2016 results

CALGARY, Nov. 8, 2016 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended September 30, 2016.

"I am very pleased with the results of the quarter, which generated record third quarter net income for the Company. All divisions showed improvement and our expense management and inventory reduction initiatives have good traction. The agriculture sector led the way, supported by this year's bumper crops. Supporting our customers as they work through very difficult harvest conditions was reflected in strong demand for equipment and service," said Graham Drake, President and CEO of Cervus.

Highlights for the Quarter

  • The Company generated $10.5 million of net income for the third quarter of 2016 compared, to $3.9 million for the comparable period in 2015.

  • Income from operating activities1  was $16.1 million, an increase of $5.6 million from the third quarter in 2015.

  • Adjusted income2 for the third quarter of 2016 was $10.5 million with adjusted basic earnings per share1 of $0.66. For the comparable period in 2015, the Company generated adjusted income of $6.6 million and adjusted basic earnings per share of $0.43.

  • Earnings before interest, taxes, depreciation, and amortization ("EBITDA1") was $22.0 million compared to $14.9 million in 2015, an increase of $7.1 million.  

  • Cost reduction initiatives resulted in a $2.8 million reduction in selling, general, and administrative ("SG&A") expenses quarter over quarter, decreasing SG&A as a percentage of revenue to 12.7% in the third quarter of 2016 from 13.5% in 2015.

  • The Company achieved inventory reductions totaling $62.7 million (18.6%) compared to September 30, 2015.

  • Dividends of $0.07 per share were declared to shareholders of record as at September 30, 2016.

___________________________________

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

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

 

Financial Highlights

Income before tax for the three months ended September 30, 2016 increased $6.7 million, comprised of increases in all three operating segments compared to the same period in 2015. EBITDA increased $7.1 million:  a $4.1 million increase in our Agricultural segment, a $2.4 million increase in our Transportation segment, and a $0.6 million EBITDA increase within the Commercial and Industrial ("C&I") segment.  

Agriculture income before tax increased $3.7 million for the three month period ended September 30, 2016 to $12.6 million, and EBITDA increased $4.1 million compared to the third quarter of 2015.  The change in both EBITDA and income before tax was primarily due to improved gross profit margins, stable revenue, and a $0.7 million increase in income from equity investments. 

Total Transportation income before tax increased $2.2 million and EBITDA increased $2.4 million compared to the three month period ended September 30, 2015.  These results were generated by improvements in both Saskatchewan and Ontario geographies. Increased new truck sales in our Saskatchewan dealerships, combined with increased gross profit in Ontario's parts and service generated an incremental $0.6 million of gross profit. Further, cost reductions resulted in $0.8 million of SG&A savings quarter over quarter. 

Commercial and Industrial (C&I) segment income before tax improved $0.8 million for the three-month period ended September 30, 2016 to income of $0.4 million, compared to a loss of $0.4 million in the prior period. EBITDA also increased by $0.6 million in the third quarter of 2016 compared to the same period in 2015. The positive changes in both EBITDA and loss before tax were primarily due to SG&A expense reductions of $2.0 million (or 26%) which offset the $1.1 million decrease in gross profit.

Selected Quarterly Information




Three months period ended September 30

($ thousands, except per share amounts)

2016

% Change
Compared to
2015

2015

Revenue

334,682

(0%)

334,742

Cost of sales

(277,111)

(1%)

(279,464)

Gross profit

57,571

4%

55,278

Other income

689

(41%)

1,169

Unrealized foreign exchange gain (loss)

336

150%

(676)

Total other income (loss)

1,025

108%

493

Selling, general and administrative expense

(42,505)

(6%)

(45,314)

Income from operating activities

16,091

54%

10,457

Finance income

24

(59%)

58

Finance costs

(2,677)

(16%)

(3,172)

Share of profit (loss) of equity accounted investees, net of tax

583

957%

(68)

Income before income tax expense

14,021

93%

7,275

Income tax expense

(3,477)

3%

(3,365)

Income (loss) for the period

10,544

170%

3,910

Income (loss) attributable to shareholders

10,741

175%

3,910

EBITDA1

21,981

48%

14,863

EBITDA margin1

6.6%


4.4%

Ratios as a percentage of revenue:




Gross profit margin

17.2%


16.5%

Selling, general and administrative

12.7%


13.5%

Earnings (loss) per share




Adjusted - Basic1

0.66


0.43

Basic

0.67


0.25

Diluted

0.64


0.24

Notes: 

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

 

Conference Call Information

Cervus will host its third quarter 2016 results conference call on November 9, 2016 at 2:00 p.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 Wednesday, November 16, 2016 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 96967765 followed by the number sign.

A live audio webcast of the conference call will be available at:  
http://event.on24.com/r.htm?e=1286356&s=1&k=2B9793D82F6F5BB105433AF4AA9973E2 

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 72 dealerships in 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".

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 2015 Annual Information Form of Cervus Equipment Corporation dated March 15, 2016, 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.

SOURCE Cervus Equipment Corp.

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


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890