Rocky Mountain Dealerships Inc. (TSX:RME) announces strong first quarter
results for the period ended March 31, 2010
(Stock Symbol "RME" - TSX) Issued: 17,963,540 shares - Q1 Revenues increased 12.4% to $120.5 million - Q1 Net Earnings increased 148.8% to $1.8 million - Diluted EPS increased from $0.05 to $0.10 - EBITDA increased by 48.5% to $3.9 million - Declares quarterly cash dividend of $0.045 per share
CALGARY, May 11 /CNW/ - Rocky Mountain Dealerships Inc. ("Rocky Mountain" or the "Company"), a leading Canadian network of full service agriculture and construction equipment dealerships, today reported financial results for the three months ended March 31, 2010.
In the first three months of 2010, net sales were $120.5 million compared to $107.2 million for the same period of 2009. New equipment sales were $61.9 million for the three month period of 2010 compared to $47.5 million in the prior year. Used equipment sales were $38.1 million for the three month period of 2010, similar compared to the $39.2 million for the same period of 2009. Revenue generated from product support was $19.9 million in the first quarter of fiscal 2010 compared to $19.1 million for the same period of 2009.
Gross profit for the first quarter of 2010 was $19.2 million compared to $16.1 million for the same period of the prior year. The Company's gross profit margin was 16.0% for the three month period of 2010 versus 15.1% for the same period of the prior year.
Selling, general, and administrative expenses remained consistent at 11.7% of sales for both the first quarter of 2010 and for the same period of the prior year.
Net income for the first quarter of 2010 increased 148.8% to $1.8 million from $0.7 million in the prior year period. This is due to strong organic growth on the agricultural side of the business, acquired revenue growth and improved operating efficiencies.
The Company believes earnings before long-term interest, taxes, depreciation and amortization ("EBITDA") is a useful metric to monitor its operating performance. Refer to Table 3 below for reconciliation of net earnings to EBITDA. For the first quarter of 2010, EBITDA was $3.9 million compared to $2.6 million for the same period of 2009.
Commenting on the performance of Rocky, Matt Campbell, Chairman and Chief Executive Officer said, "We are pleased with our first quarter results which show continued execution of our stated objectives. The improvements in results, EPS, net income, EBITDA, and margins demonstrates that the management team at Rocky Mountain can deliver all the while maintaining best in peer group SG&A."
Mr. Campbell continued, "we will continue to pursue highly accretive acquisitions and, at the same time, devote even more energy and resources to improve our operating metrics."
Cash Flow & Liquidity
The Company ended the first quarter of 2010 in a very solid financial position. The Company's net debt to EBITDA ratio was 0.87; which positions the Company positively for growth to be within the goal of 1.0x - 1.5x. Working capital at the end of the first quarter of 2010 was $78.4 million. Inventory as of March 31, 2010, was $278.4 million, up from $247.6 million as the end of fiscal 2009. Inventory increases are due to increased large fleet whole goods sales experienced in the quarter and the acquisition completed during the quarter.
Quarterly Cash Dividend
The Company announced 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, 2010, to shareholders of record at close of business on May 31, 2010.
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 Q1 results on Tuesday, May 11, 2010, at 9:00 am MT. Investors interested in participating in the live call can dial 1-888-231-8191. A telephone replay will be available approximately two hours after the call concludes and will be available until Tuesday, May 25, 2010, by dialing 1-416-849-0833 or 1-800-642-1687 (toll free) and entering the passcode: 72259109. 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 25 dealership branches throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents and leases new and used construction and agriculture equipment, including the Case Construction, Case IH agriculture and New Holland agriculture brands, as well as offering product support and finance and insurance products to its customers. In addition, Rocky Mountain also distributes equipment from a number of other manufacturers, including but not limited to, Terex, Dynapac, Takeuchi, Leeboy, Bourgault, Claas and Kuhn-Knight
Additional information on Rocky Mountain is available on our website at www.rockymtn.com and on SEDAR at www.sedar.com.
TABLE 1 ROCKY MOUNTAIN DEALERSHIPS INC. Consolidated Balance Sheets In thousands of dollars (Unaudited) ------------------------------------------------------------------------- March 31, December 31, 2010 2009 $ $ ----------------------- ASSETS CURRENT Cash 8,243 8,912 Accounts receivable and other 29,109 24,186 Inventory 278,365 247,627 Prepaid expenses 671 509 ----------------------- 316,388 281,234 Property, plant and equipment 20,025 19,343 Goodwill 5,386 4,086 ----------------------- 341,799 304,663 ----------------------- ----------------------- LIABILITIES CURRENT Bank indebtedness 10,889 1,947 Accounts payable and accrued liabilities 30,740 30,595 Floor plan payable 186,570 158,793 Deferred revenue 1,210 3,154 Current portion of long-term debt 7,815 8,545 Current portion of obligations under capital lease 747 619 ----------------------- 237,971 203,653 Long-term debt 12,599 12,968 Obligations under capital lease 1,293 896 Future income taxes 1,037 1,051 ----------------------- 252,900 218,568 ----------------------- SHAREHOLDERS' EQUITY Common shares 71,978 70,601 Contributed surplus 3,339 2,915 Retained earnings 13,582 12,579 Accumulated other comprehensive income - - ----------------------- 88,899 86,095 ----------------------- 341,799 304,663 ----------------------- ----------------------- TABLE 2 ROCKY MOUNTAIN DEALERSHIPS INC. Consolidated Statement of Net Earnings, Comprehensive Income and Retained Earnings (Deficit) Three Month Period Ended In thousands of dollars (Unaudited) ------------------------------------------------------------------------- March 31, March 31, 2010 2009 $ $ ----------------------- SALES New units 61,938 47,484 Used units 38,087 39,222 Product support 19,867 19,053 Finance and insurance 411 296 Rental and leases 172 1,095 ----------------------- 120,475 107,150 COST OF SALES (including amortization of $85 (2009 - $476)) 101,244 91,028 ----------------------- GROSS PROFIT 19,231 16,122 ----------------------- EXPENSES Selling, general and administrative 14,031 12,521 Interest on short-term debt 1,363 1,436 Interest on long-term debt 228 277 Amortization of property, plant and equipment 976 653 ----------------------- 16,598 14,887 ----------------------- EARNINGS BEFORE INCOME TAXES 2,633 1,235 ----------------------- PROVISION FOR (RECOVERY OF) INCOME TAXES Current 965 506 Future (143) 1 ----------------------- 822 507 ----------------------- NET EARNINGS AND COMPREHENSIVE INCOME 1,811 728 RETAINED EARNINGS (DEFICIT), BEGINNING OF PERIOD 12,579 (89,116) DIVIDENDS (808) (595) ----------------------- RETAINED EARNINGS (DEFICIT), END OF PERIOD 13,582 (88,983) ----------------------- ----------------------- Earnings per share Basic 0.10 0.06 ----------------------- ----------------------- Diluted 0.10 0.05 ----------------------- ----------------------- TABLE 3 RECONCILIATION OF NET EARNINGS TO EBITDA (IN THOUSANDS) 3 months 3 months ended ended March 31, March 31, 2010 2009 (unaudited) (unaudited) $ $ Net earnings 1,811 728 Long-term interest 228 277 Depreciation 976 653 Income taxes 822 507 Rental depreciation 69 147 Lease depreciation 16 329 ----------------------- EBITDA 3,922 2,641 ----------------------- ----------------------- Overhead Absorption 70% 74%
For further information: Rocky Mountain Dealerships Inc., 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; Investor Relations, Renmark Financial Communications Inc., John Boidman, Vice President, Telephone: (514) 939-3989, Email: [email protected]
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