- 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)
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March 31, March 31,
2009 2008
$ $
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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
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107,150 69,714
COST OF SALES (including amortization of
$476 (2008 - $1,041)) 91,028 57,080
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GROSS PROFIT 16,122 12,634
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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
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14,887 11,692
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EARNINGS BEFORE INCOME TAXES 1,235 942
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PROVISION FOR (RECOVERY OF) INCOME TAXES
Current 506 566
Future 1 (210)
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507 356
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NET EARNINGS AND COMPREHENSIVE INCOME 728 586
(DEFICIT) RETAINED EARNINGS, BEGINNING OF PERIOD (89,116) 328
DIVIDENDS (595) -
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(DEFICIT) RETAINED EARNINGS, END OF PERIOD (88,983) 914
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Earnings per share (Note 17)
Basic 0.06 0.05
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Diluted 0.05 0.05
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BALANCE SHEET (UNAUDITED)
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March 31, December 31,
2009 2008
$ $
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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
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250,333 248,966
Property, plant and equipment (Note 10) 20,547 21,458
Intangible assets (Note 9) - -
Goodwill (Notes 5 and 8) - -
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270,880 270,424
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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
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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
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224,207 224,255
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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)
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46,673 46,169
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270,880 270,424
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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
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EBITDA 2,641 3,510
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Absorption 74% 65%
%SEDAR: 00026106E