Rocky Mountain Dealerships Inc. (TSX:RME) Announces First Quarter Results for the Period ended March 31, 2009



    
    -   First quarter revenue increased 54% year over year to $107.2 million

    -   First quarter net earnings increased 24% year over year to $728,000

    -   Declares quarterly cash dividend of $0.045 per share
    

    CALGARY, May 12 /CNW/ - Rocky Mountain Dealerships Inc. ("Rocky Mountain"
or the "Company") (TSX: RME), a leading Canadian network of full service
agricultural and construction equipment dealerships, today reported financial
results for the three month period ended March 31, 2009.
    For the fiscal 2009 first quarter, net sales increased 53.7% to $107.2
million, compared to net sales of $69.7 million for the first quarter of
fiscal 2008. This growth in revenue was due to improved sales from all three
of the Company's primary revenue sources. New equipment sales were $47.5
million in the first quarter of fiscal 2009 compared to $41.6 million in the
prior year period. Used equipment sales were $39.2 million in the first
quarter of 2009, up 212% compared to $12.6 million in the first quarter of
fiscal 2008. Revenue generated from product support increased to $19.1 million
in the first quarter of fiscal 2009 compared to $13.7 million in the first
quarter of fiscal 2008.
    Gross profit for the fiscal 2009 first quarter increased 27.6% to $16.1
million, compared to $12.6 million in the first quarter of the prior year. The
Company's gross profit margin was 15.0% in the fiscal 2009 first quarter
versus 18.1% in the first quarter of the prior year. The decrease in gross
profit margin was due primarily to a higher percentage of agriculture sales
that requires less product support and a reduction in new construction gross
margins as we compete in a market with excess capacity.
    Selling, general and administrative expenses improved to 11.7% of sales,
in the fiscal 2009 first quarter versus 13.0% of sales, in the first quarter
of the prior year. This 130 basis point improvement was primarily due to the
Company's ability to achieve the benefits of economies of scale following
acquisitions completed in 2008 allowing expenses to be allocated over a larger
group of dealerships and a reduction of expenses incurred as a result of the
ongoing consolidation of the acquired companies.
    Operating income in the first quarter fiscal 2009 decreased to $1.2
million from $1.7 million in the prior year period due to reductions in gross
profit from construction equipment sales, increased short-term interest
expense, and increased amortization of property, plant, and equipment
resulting from the acquisitions completed in 2008.
    For the first quarter of fiscal 2009, EBITDA was $2.6 million compared to
EBITDA of $3.5 million in the first quarter of fiscal 2008 resulting from
lower gross profit and reduction of rental and lease fleet assets. Please see
Table 3 below for reconciliation of Net Earnings to EBITDA.
    Net income for the first quarter of fiscal 2009 was $728,000, or $0.06
per share, compared to net income of $586,000, or $0.05 per basic share, for
the first quarter of fiscal 2008.
    Matt Campbell, Chairman and Chief Executive Officer of Rocky Mountain,
said, "We are pleased with our strong start to fiscal 2009. We increased sales
from all three of our primary revenue streams which are new equipment sales,
used equipment sales, and product support. We have integrated the remaining
seven acquired dealerships into the same business system, with the costs
associated with that consolidation being expensed in the first quarter. This
integration will enable us to better rationalize inventory and streamline our
business practices going forward. Despite the costs associated with this
integration, we reduced our selling, general and administrative expenses as a
percentage of revenue by 130 basis points, underscoring our initial benefit of
economies of scale."
    Mr. Campbell continued, "On April 2, we announced our acquisition of
Heartland Equipment, which further solidifies our position as the leading CNH
dealer in western Canada. With a strong balance sheet and positive cash flow,
we will continue to further invest in our business and make strategic
acquisitions as we position ourselves for long-term growth and profitability."

    Cash Flow & Liquidity

    The Company ended the first quarter fiscal 2009 in a very solid financial
position. The Company's net debt to EBITDA ratio was 1.48, which is within the
Company's goal of 1.0x - 1.5x. This ratio was negatively affected in the
quarter as a result of inventory purchases done with cash versus through floor
plan financing to help reduce overall carrying costs of our whole goods.
Working capital at the end of the first quarter fiscal 2009 was $46.5 million.
Inventory as of March 31, 2009, was $209.1 million compared to $207.5 million
at the end of fiscal 2008. The current inventory reflects increases in new
agricultural inventory and spare parts as a result of increased demand in that
segment of the market. New and used construction inventory was down from the
end of fiscal 2008.

    Quarterly Cash Dividend

    The Company announces that the Board of Directors of Rocky Mountain
declared a dividend of $0.045 per common share on the Company's outstanding
common shares. The common share dividend is payable on June 30, 2009, to
shareholders of record at close of business on May 29, 2009.
    This dividend is designated by Rocky Mountain to be an eligible dividend
for purpose of the Income Tax Act (Canada) and any similar provincial or
territorial legislation. An enhanced dividend tax credit applies to eligible
dividends paid to Canadian residents.

    Conference Call

    The Company will host a conference call to discuss their first quarter
and full year results on Tuesday, May 12, 2009, at 12:00 Noon MT. Investors
interested in participating in the live call can dial 1-800-590-1508. A
telephone replay will be available approximately one hour after the call
concludes and will be available through May 26, 2009, by dialing
1-416-640-1917 or 1-877-289-8525 and entering the passcode: 21305121 followed
by the pound sign. A live webcast of the conference call will be accessible on
Rocky Mountain's website at www.rockymtn.com.

    About Rocky Mountain

    Rocky Mountain represents one of Canada's largest agriculture and
construction equipment dealerships with a total of 22 dealership branches
throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents and
leases new and used construction and agriculture equipment, including the Case
Construction and Case IH Agriculture brands, as well as offering product
support and finance and insurance products to its customers.



    
    INCOME STATEMENT (UNAUDITED)
    -------------------------------------------------------------------------
                                                      March 31,     March 31,
                                                        2009          2008
                                                          $             $
                                                      -----------------------
    SALES
      New units                                         47,484        41,624
      Used units                                        39,222        12,570
      Product support                                   19,053        13,672
      Finance and insurance                                296           427
      Rental and leases                                  1,095         1,421
                                                      -----------------------
                                                       107,150        69,714
    COST OF SALES (including amortization of
     $476 (2008 - $1,041))                              91,028        57,080
                                                      -----------------------

    GROSS PROFIT                                        16,122        12,634
                                                      -----------------------

    EXPENSES
      Selling and administrative                        12,521         9,083
      Interest on short-term debt                        1,436         1,083
      Interest on long-term debt                           277           378
      Amortization of intangible assets                      -           758
      Amortization of property, plant and equipment        653           390
                                                      -----------------------
                                                        14,887        11,692
                                                      -----------------------
    EARNINGS BEFORE INCOME TAXES                         1,235           942
                                                      -----------------------

    PROVISION FOR (RECOVERY OF) INCOME TAXES
      Current                                              506           566
      Future                                                 1          (210)
                                                      -----------------------
                                                           507           356
                                                      -----------------------
    NET EARNINGS AND COMPREHENSIVE INCOME                  728           586

    (DEFICIT) RETAINED EARNINGS, BEGINNING OF PERIOD   (89,116)          328

    DIVIDENDS                                             (595)            -
                                                      -----------------------

    (DEFICIT) RETAINED EARNINGS, END OF PERIOD         (88,983)          914
                                                      -----------------------
                                                      -----------------------

    Earnings per share (Note 17)
      Basic                                               0.06          0.05
                                                      -----------------------
                                                      -----------------------
      Diluted                                             0.05          0.05
                                                      -----------------------
                                                      -----------------------



    BALANCE SHEET (UNAUDITED)
    -------------------------------------------------------------------------
                                                      March 31,  December 31,
                                                        2009         2008
                                                          $            $
                                                      -----------------------
    ASSETS
    CURRENT
      Cash                                               3,070           493
      Accounts receivable and other (Note 6)            37,383        40,614
      Inventory (Note 7)                               209,127       207,467
      Prepaid expenses                                     753           392
                                                      -----------------------
                                                       250,333       248,966

    Property, plant and equipment (Note 10)             20,547        21,458
    Intangible assets (Note 9)                               -             -
    Goodwill (Notes 5 and 8)                                 -             -
                                                      -----------------------
                                                       270,880       270,424
                                                      -----------------------
                                                      -----------------------
    LIABILITIES
    CURRENT
      Bank indebtedness (Note 11)                       14,410         5,223
      Accounts payable and accrued liabilities
       (Note 12)                                        30,295        29,973
      Floor plan payable (Note 13)                     143,955       150,449
      Deferred revenue                                   8,126         9,437
      Due to related parties (Note 19)                       -         3,691
      Current portion of long-term debt (Note 14)        6,802         5,910
      Current portion of obligations
       under capital lease                                 289           300
                                                      -----------------------
                                                       203,877       204,983

    Long-term debt (Note 14)                            18,890        17,803
    Obligations under capital lease                        313           343
    Future income taxes                                  1,127         1,126
                                                      -----------------------
                                                       224,207       224,255
                                                      -----------------------
    CONTINGENCY AND GUARANTEE (Note 15)

    COMMITMENTS (Note 18)

    SHAREHOLDERS' EQUITY
    Common shares (Note 16a)                           133,879       133,879
    Contributed surplus (Note 16d)                       1,777         1,406
    Deficit                                            (88,983)      (89,116)
                                                      -----------------------
                                                        46,673        46,169
                                                      -----------------------
                                                       270,880       270,424
                                                      -----------------------
                                                      -----------------------



    RECONCILIATION OF NET INCOME TO EBITDA

                                                     3 Months      3 Months
                                                       ended         ended
                                                      March 31,     March 31,
                                                        2009          2008
                                                    (unaudited)   (unaudited)
                                                          $             $

    Net Earnings                                           728           586
    Long-term interest                                     277           378
    Depreciation                                           653           390
    Amortization of intangibles                              -           758
    Income taxes                                           507           356
    Rental depreciation                                    147           442
    Lease depreciation                                     329           600
                                                    -------------------------
    EBITDA                                               2,641         3,510
                                                    -------------------------
                                                    -------------------------

    Absorption                                             74%           65%
    

    %SEDAR: 00026106E




For further information:

For further information: M.C. (Matt) Campbell, Chairman and Chief
Executive Officer; Brian Taschuk, Chief Operating Officer; or Garrett Ganden,
Chief Financial Officer, 828 - 46th Avenue S.E., Calgary, Alberta, T2G 2A6,
Telephone: (403) 243-8600, Fax (403) 243-2264; Or Investor Relations, ICR,
Inc., John Mills, Senior Managing Director, jmills@icrinc.com, (310) 954-1100


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