Strong sales growth in all sectors, offer to repurchase debentures lead highlights
CALGARY, May 14, 2012 /CNW/ - Rocky Mountain Dealerships Inc. (TSX: RME, hereinafter "Rocky") today reported financial results for the three months ended March 31, 2012.
HIGHLIGHTS:
- Increased revenues by 28.2% to $192.1 million.
- Gross profit increased by 16.3% to $27.7 million.
- Generated net earnings of $2.2 million ($0.11 per fully diluted share) compared to $2.7 million ($0.14 per fully diluted share) in 2011.
- Cash Flow from Net Earnings* of $2.3 million, up from ($0.3) million in 2011.
- Announced 50% increase in annual dividend to $0.27 per common share.
- Announced offer, and repurchased, all of the 7% unsecured subordinated convertible debentures in the principal amount of $31.5 million (the "Debentures"), reducing future dilution and interest rate costs.
| * Non-IFRS measures are defined and discussed further in the Management's Discussion and Analysis for the three months ended March 31, 2012, which can be found at www.sedar.com. |
Matt Campbell, CEO of Rocky, noted "Our results for the first quarter of 2012 reflect our success across several key areas, including same-store equipment and product support sales. Although our gross margin percentage declined, due primarily to a decrease in manufacturer incentives in the amount of $1.2 million, our increased revenues bolstered our total gross profit.
Of particular note, we posted yet another quarter of positive cash flow from operations, further enhancing our already strong cash position. As a result of continued generation of free cash flow, we have increased our annual dividend by 50% to $0.27 per common share. This reflects our continued confidence not only in our industry, but in our ability to generate cash and return value to shareholders.
SG&A as a percentage of revenue declined in the quarter, despite the increased costs associated with the ongoing assessment of our organizational structure and rebranding initiatives, as well as increased commissions associated with our elevated sales levels.
Rocky's success and growth, while predicated on improved economic conditions and factors, was also affected by our ability to be a partner of choice for equipment purchasers. The positive outlook for the agriculture and construction end-markets, the impact of previously added dealerships and trade areas, and the number of available acquisition targets in our core operating areas leave us in a good position for revenue and earnings growth into the future.
Subsequent to the quarter end, we announced that we were successful in repurchasing 100% of our Debentures. We expect that this will result in cash interest savings for Rocky and an increase in shareholder value by eliminating the dilutive impact caused by the Debentures."
Quarterly Cash Dividend
On May 14, 2012, Rocky's Board of Directors declared a dividend of $0.0675 per common share on its outstanding common shares. The common share dividend is payable on June 29, 2012 to shareholders of record at close of business on May 31, 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 Q1 results on Tuesday, May 15th, 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: 74706466. The archive will remain available until Tuesday, May 29, 2012.
Caution regarding forward-looking statements
Certain information set forth in this news release, including, without limitation, the information regarding agriculture and construction outlooks, the economic impact of previously-acquired stores, and the financial impact of potential acquisition targets, is 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 March 31, 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 dealerships with 36 branches throughout Alberta, Saskatchewan and Manitoba. 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.
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Consolidated Balance Sheet Summary Expressed in thousands of Canadian Dollars except shares outstanding (Unaudited) |
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March 31, 2012 |
December 31, 2011 |
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| Assets | |||
| Current assets | 485,946 | 434,479 | |
| Property and equipment | 17,941 | 21,369 | |
| Goodwill | 9,961 | 9,961 | |
| Total assets | 513,848 | 465,809 | |
| Liabilities and equity | |||
| Current liabilities | 334,909 | 286,175 | |
| Long-term debt | 11,119 | 11,701 | |
| Obligations under finance leases | 1,440 | 1,589 | |
| Convertible debenture | 28,853 | 28,761 | |
| Deferred income taxes | 6,782 | 8,283 | |
| Derivative financial instruments | 477 | 1,139 | |
| 383,580 | 337,648 | ||
| Shareholders' equity | 130,268 | 128,161 | |
| Total liabilities and equity | 513,848 | 465,809 | |
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Selected Financial Information For the three months ended March 31 Expressed in thousands of Canadian dollars, except per share amounts and percentages (Unaudited) |
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| 2012 | 2011 | ||||
| Sales | |||||
| New equipment | 112,432 | 58.5% | 84,724 | 56.5% | |
| Used equipment | 58,004 | 30.2% | 46,542 | 31.1% | |
| Parts | 13,840 | 7.2% | 11,905 | 7.9% | |
| Service | 6,640 | 3.5% | 5,650 | 3.8% | |
| Other | 1,135 | 0.6% | 1,006 | 0.7% | |
| 192,051 | 100.0% | 149,827 | 100.0% | ||
| Cost of sales | 164,331 | 85.6% | 125,990 | 84.1% | |
| Gross profit | 27,720 | 14.4% | 23,837 | 15.9% | |
| Selling, general and administrative | 22,084 | 11.5% | 17,823 | 11.9% | |
| Interest on short-term debt | 1,727 | 0.9% | 1,544 | 1.0% | |
| Interest on long-term debt | 870 | 0.4% | 867 | 0.6% | |
| Earnings before income taxes | 3,039 | 1.6% | 3,603 | 2.4% | |
| Provision for income taxes | 880 | 0.5% | 940 | 0.6% | |
| Net earnings | 2,159 | 1.1% | 2,663 | 1.8% | |
| Earnings per share | |||||
| Basic | 0.12 | 0.14 | |||
| Diluted | 0.11 | 0.14 | |||
| Dividends per share | 0.045 | 0.045 | |||
| Non-IFRS Measures* | |||||
| EBITDA | 5,342 | 2.8% | 5,832 | 3.9% | |
| Operating SG&A | 20,916 | 10.9% | 16,548 | 11.0% | |
| Cash Flow from Net Earnings | 2,310 | 1.2% | (280) | (0.2%) | |
| Normalized Diluted Earnings per Share | 0.11 | 0.14 | |||
| * Non-IFRS measures are defined and discussed further in the Management's Discussion and Analysis for the three months ended March 31, 2012, which can be found at www.sedar.com. |
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