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CALGARY, Nov. 5, 2012 /CNW/ - Rocky Mountain Dealerships Inc. (TSX: RME, OTCQX: RCKXF, hereinafter "Rocky") today reported financial results for the three and nine months ended September 30, 2012.
HIGHLIGHTS FOR THE QUARTER ENDED SEPTEMBER 30, 2012:
- Increased revenues by 20.8% to $247.5 million (15.2% on a same store basis).
- Gross profit increased by 19.2% to $39.7 million (16.0% of sales).
- Normalized Diluted Earnings per Share(1) of $0.45, up from $0.35 in 2011.
- Generated Cash Flow from Net Earnings(1) of $10.3 million.
- EBITDA(1) increased by 12.6% to $13.5 million.
- Paid dividends of $0.0675 per share
- Completed the acquisition of Camrose Farm Equipment Ltd.
HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012:
- Increased revenues by 18.3% to $665.3 million (15.7% on a same store basis).
- Gross profit increased by 15.2% to $101.6 million (15.3% of sales).
- Normalized Diluted Earnings per Share(1) of $0.83, up from $0.81 in 2011.
- Generated Cash Flow from Net Earnings(1) of $17.4 million.
| (1) See further discussion in "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures to IFRS" sections below. |
Matt Campbell, CEO of Rocky, noted, "An excellent growing season translated into strong earnings for the period. The elimination of the dilution associated with the convertible debentures, coupled with these favourable results, generated record diluted earnings per share for our shareholders this quarter.
"As previously discussed, Rocky has made a significant investment over the last year in preparing our organization for the future. We have initiated new training programs, new procedural and technological improvements and rationalized our stores under a single, strong brand. The largest part of these costs has now been incurred, and we look forward to realizing their returns through improved operating efficiency, better brand recognition and, ultimately, an enhanced relationship with our customers.
"During the quarter, we acquired 100% of the outstanding common shares of Camrose Farm Equipment Ltd, a Case IH and New Holland Agriculture dealer with stores in Camrose and Killam, Alberta. Subsequent to the quarter end, we purchased the Case IH Agriculture dealership assets of Houlder Automotive Ltd., with stores in Grimshaw and Falher, Alberta. With these acquisitions, Rocky continues to expand its reach across the Alberta agriculture market.
"Overall, the continued strong economic conditions in both agriculture and construction have played a part in Rocky's success and growth, while at the same time our ability to be a partner of choice for equipment purchasers allowed us to expand our same store revenues. The impact of previously acquired dealerships and trade areas, along with our strong OEM relationships, position us well to pursue our revenue and earnings growth initiatives."
Quarterly Cash Dividend
On November 5, 2012, Rocky's Board of Directors declared a quarterly dividend of $0.0675 per common share on the Company's outstanding common shares. The common share dividend is payable on December 31, 2012, to shareholders of record at close of business on November 30, 2012.
This dividend is designated by Rocky to be an eligible dividend for the purposes 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
Rocky will host a conference call to discuss its Q3 results on Tuesday, November 6, 2012, at 9:00 a.m. Mountain Time. Investors interested in participating in the live call can dial 1-888-231-8191 (toll free) or 1-647-427-7450. An archived recording of the call will be available approximately two hours after its completion on Rocky's website, or by calling 1-855-859-2056 (toll free) or 1-416-849-0833, passcode: 37830714. The archive will remain available until Tuesday, November 20, 2012.
Caution regarding forward-looking statements
Certain information set forth in this news release, including, without limitation, information relating to any expected returns on recent investments in the organization, its processes and people, Rocky's ability to expand through acquisition, and Rocky's future earnings and growth potential, is considered forward-looking information within the meaning of applicable Canadian securities laws. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond Rocky's control. There is significant risk that the forward-looking statements will prove not to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements. Accordingly, this news release is subject to the disclaimer and qualified by risks and other factors discussed by Rocky in its management's discussion and analysis ("MD&A") for the period ended September 30, 2012, and as discussed in Rocky's Annual Information Form dated March 19, 2012 under the heading "Risk Factors." Except as required by law, Rocky disclaims any intention or obligation to update or revise forward-looking statements, and further reserves the right to change, at any time, at its sole discretion, its current practice of updating its guidance and outlooks.
About Rocky
Rocky is one of Canada's largest agriculture and construction equipment dealership networks with branches located throughout Alberta, Saskatchewan and Manitoba. Through its network of Rocky Mountain Equipment locations, Rocky sells, rents, and leases new and used construction and agriculture equipment and offers product support and finance to its customers.
Additional information on Rocky is available at www.rockymtn.com and on SEDAR at www.sedar.com.
Consolidated Balance Sheet Summary
Expressed in thousands of Canadian Dollars (Unaudited)
|
September 30, 2012 |
December 31, 2011 |
|||
| Assets | ||||
| Current assets | 508,524 | 434,479 | ||
| Property and equipment | 19,701 | 21,369 | ||
| Goodwill | 12,720 | 9,961 | ||
| Total assets | 540,945 | 465,809 | ||
| Liabilities and equity | ||||
| Current liabilities | 362,327 | 286,175 | ||
| Long-term debt | 39,588 | 11,701 | ||
| Obligations under finance leases | 1,102 | 1,589 | ||
| Convertible debentures | - | 28,761 | ||
| Deferred tax liability | 3,464 | 8,283 | ||
| Derivative financial instruments | 1,691 | 1,139 | ||
| 408,172 | 337,648 | |||
| Shareholders' equity | 132,773 | 128,161 | ||
| Total liabilities and equity | 540,945 | 465,809 | ||
SELECTED FINANCIAL INFORMATION
| For the three and nine months ended September 30, | ||||||||||||||||
| $ thousands, except per share amounts | ||||||||||||||||
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Sales | ||||||||||||||||
| New equipment | 109,636 | 44.3% | 90,523 | 44.2% | 353,223 | 53.1% | 291,221 | 51.8% | ||||||||
| Used equipment | 96,653 | 39.0% | 78,468 | 38.3% | 217,767 | 32.7% | 187,491 | 33.4% | ||||||||
| Parts | 31,377 | 12.7% | 26,757 | 13.1% | 68,284 | 10.3% | 59,376 | 10.6% | ||||||||
| Service | 8,465 | 3.4% | 8,034 | 3.9% | 22,526 | 3.4% | 20,569 | 3.7% | ||||||||
| Other | 1,403 | 0.6% | 1,073 | 0.5% | 3,526 | 0.5% | 3,517 | 0.5% | ||||||||
| 247,534 | 100.0% | 204,855 | 100.0% | 665,326 | 100.0% | 562,174 | 100.0% | |||||||||
| Cost of sales | 207,836 | 84.0% | 171,556 | 83.7% | 563,682 | 84.7% | 473,951 | 84.3% | ||||||||
| Gross profit | 39,698 | 16.0% | 33,299 | 16.3% | 101,644 | 15.3% | 88,223 | 15.7% | ||||||||
| Selling, general and administrative | 25,181 | 10.2% | 20,915 | 10.2% | 71,651 | 10.8% | 60,037 | 10.7% | ||||||||
| Loss on repurchase of convertible debentures | - | 0.0% | - | 0.0% | 4,232 | 0.6% | - | 0.0% | ||||||||
| Interest on short-term debt | 2,448 | 1.0% | 2,099 | 1.0% | 6,449 | 1.0% | 6,284 | 1.1% | ||||||||
| Interest on long-term debt | 599 | 0.2% | 870 | 0.5% | 2,271 | 0.3% | 2,670 | 0.5% | ||||||||
| Earnings from operations | 11,470 | 4.6% | 9,415 | 4.6% | 17,041 | 2.6% | 19,232 | 3.4% | ||||||||
| Provisions for income taxes | 3,019 | 1.2% | 2,294 | 1.1% | 4,836 | 0.8% | 4,984 | 0.9% | ||||||||
| Net earnings | 8,451 | 3.4% | 7,121 | 3.5% | 12,205 | 1.8% | 14,248 | 2.5% | ||||||||
| Earnings per share | ||||||||||||||||
| Basic | 0.45 | 0.38 | 0.65 | 0.76 | ||||||||||||
| Diluted | 0.45 | 0.34 | 0.65 | 0.70 | ||||||||||||
| Dividends per share | 0.0675 | 0.045 | 0.18 | 0.135 | ||||||||||||
| Non-IFRS Measures(1) | ||||||||||||||||
| EBITDA | 13,504 | 5.5% | 11,996 | 5.9% | 23,451 | 3.5% | 26,638 | 4.7% | ||||||||
| Operating SG&A | 23,900 | 9.7% | 19,224 | 9.4% | 67,720 | 10.2% | 53,068 | 9.4% | ||||||||
| Cash Flow from Net Earnings | 10,318 | 4.2% | 11,993 | 5.9% | 17,403 | 2.6% | 19,625 | 3.5% | ||||||||
| Normalized Diluted Earnings per Share | 0.45 | 0.35 | 0.83 | 0.81 | ||||||||||||
| (1) See further discussion in "Non-IFRS Measures" and "Reconciliation of Non-IFRS Measures to IFRS" sections below. |
NON-IFRS MEASURES
We use terms which do not have standardized meanings under IFRS. As these non-IFRS financial measures do not have standardized meanings prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other issuers. Our definition for each term is as follows:
- "EBITDA" is a commonly used metric in the dealership industry. EBITDA is calculated by adding long-term interest, income taxes and depreciation to net earnings. Adding back non-operating expenses allows management to consistently compare periods by removing changes in tax rates, long-term assets and financing costs.
- "Cash Flow from Net Earnings" is calculated by adding back non-cash items such as depreciation of property and equipment, non-cash finance charges on the Debentures and long-term debt, deferred income taxes, share-based payment expense, losses (gains) on the disposal of property and equipment, losses (gains) on derivative financial instruments and the loss on the repurchase of the Debentures to net earnings. Adding back these non-cash items allows management to isolate and analyze the operating cash flows generated through earnings, prior to any consideration of changes in working capital balances and the impact of acquisitions.
- "Operating SG&A" is calculated by adding back depreciation of property and equipment and any non-recurring charges incurred during the period to SG&A. Management deems non-recurring charges to be unusual and/or infrequent charges that the Company incurs outside of its common day-to-day operations. For the three and nine months ended September 30, 2012 and 2011, the ineffective portion of hedged financial instruments and acquisition transaction costs are considered by management to be non-recurring charges in SG&A. Adding back these items allows management to assess the discretionary expenses from ongoing operations. We target a sub-10% Operating SG&A as a percentage of total sales on an annual basis.
- "Normalized Diluted Earnings per Share" is calculated by adding back the after-tax impact of non-recurring charges to net earnings when calculating diluted earnings per share. In addition to the non-recurring charges in SG&A, the loss on the repurchase of the Debentures is considered to be a non-recurring charge. Adding back these non-recurring charges to net earnings allows management to assess the fully diluted earnings per share from ongoing operations.
RECONCILIATION OF NON-IFRS MEASURES TO IFRS
| Reconciliation of Quarterly Net Earnings to EBITDA | ||||||||||
| $ thousands | ||||||||||
|
Q3 2012 |
Q2 2012 |
Q1 2012 |
Q4 2011 |
Q3 2011 |
Q2 2011 |
Q1 2011 |
Q4 2010 |
Q3 2010 |
||
| Net earnings | 8,451 | 1,595 | 2,159 | 8,961 | 7,121 | 4,464 | 2,663 | 6,345 | 3,702 | |
| Interest on long-term debt | 599 | 802 | 870 | 917 | 870 | 933 | 867 | 943 | 662 | |
| Depreciation | 1,435 | 1,271 | 1,433 | 1,604 | 1,711 | 1,663 | 1,362 | 1,517 | 1,468 | |
| Income taxes | 3,019 | 937 | 880 | 3,105 | 2,294 | 1,750 | 940 | 2,564 | 1,745 | |
| EBITDA | 13,504 | 4,605 | 5,342 | 14,587 | 11,996 | 8,810 | 5,832 | 11,369 | 7,577 | |
Reconciliation of Year to Date Net Earnings to EBITDA
| $ thousands |
For the nine months ended September 30, |
|
| 2012 | 2011 | |
| Net earnings | 12,205 | 14,248 |
| Interest on long-term debt | 2,271 | 2,670 |
| Depreciation | 4,139 | 4,736 |
| Income taxes | 4,836 | 4,984 |
| EBITDA | 23,451 | 26,638 |
Reconciliation of Cash Flow from Net Earnings
| $ thousands |
For the three months ended September 30, |
For the nine months ended September 30, |
||
| 2012 | 2011 | 2012 | 2011 | |
| Net earnings | 8,451 | 7,121 | 12,205 | 14,248 |
| Depreciation expense | 1,435 | 1,711 | 4,139 | 4,736 |
| Accretion expense | - | 88 | 123 | 259 |
| Deferred tax expense (recovery) | 66 | 2,280 | (4,605) | (896) |
| Share-based payment expense | 437 | 264 | 1,193 | 775 |
| Non-cash impact - credit promissory note | 4 | 6 | 16 | (26) |
| Loss (gain) on disposal of property and equipment | (37) | - | (118) | 6 |
| Loss (gain) on derivative financial instruments | (38) | 523 | 218 | 523 |
| Loss on repurchase of convertible debentures | - | - | 4,232 | - |
| Cash Flow from Net Earnings | 10,318 | 11,993 | 17,403 | 19,625 |
Reconciliation of Operating SG&A to selling, general and administrative expenses
| $ thousands |
For the three months ended September 30, |
For the nine months ended September 30, |
||||
| 2012 | 2011 | 2012 | 2011 | |||
| Operating SG&A | 23,900 | 19,224 | 67,720 | 53,068 | ||
| Depreciation | 1,289 | 1,165 | 3,683 | 3,699 | ||
| Non-recurring charges | ||||||
| Ineffective portion of derivative financial instruments | (38) | 523 | 218 | 523 | ||
| Syndication charges | - | - | - | 1,083 | ||
| Severance charges | - | - | - | 1,634 | ||
| Acquisition transaction charges | 30 | 3 | 30 | 30 | ||
| SG&A | 25,181 | 20,915 | 71,651 | 60,037 | ||
Reconciliation of Normalized Diluted Earnings per Share
| $ thousands, except per share amounts |
For the three months ended September 30, |
For the nine months ended September 30, |
||
| 2012 | 2011 | 2012 | 2011 | |
|
Earnings used in the calculation of diluted earnings per share |
8,451 | 7,617 | 12,205 | 15,719 |
|
After tax impact of non-recurring charges in SG&A and loss on repurchase of Debentures(1) |
(6) | 390 | 3,382 | 2,407 |
|
Earnings used in the calculation of Normalized Diluted Earnings per Share |
8,445 | 8,007 | 15,587 | 18,126 |
|
Weighted average diluted shares used in the calculation of diluted earnings per share |
18,895 | 22,556 | 18,888 | 22,458 |
| Normalized Diluted Earnings per Share | 0.45 | 0.35 | 0.83 | 0.81 |
| (1) - After applying statutory rate of 25% (2011 - 26.5%) | ||||
SOURCE: Rocky Mountain Dealerships Inc.
Rocky Mountain Dealerships Inc.
Matt Campbell, Chief Executive Officer; or
Garrett Ganden, Chief Operating Officer
#301, 3345 - 8th Street S.E.
Calgary, Alberta T2G 3A4
Telephone: (403) 265-7364, Fax (403) 214-5644