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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