- Second quarter revenue increased 65% year over year to $155.1 million
- Second quarter net earnings increased 43% year over year to
$3.8 million
- Declares quarterly cash dividend of $0.045 per share
CALGARY, AB, Aug. 11 /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 periods ended June 30, 2009.
For the fiscal 2009 second quarter, net sales increased 64.5% to $155.1 million, compared to net sales of $94.3 million for the second 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 $90.6 million in the second quarter of fiscal 2009 compared to $61.7 million in the prior year period. Used equipment sales were $38.8 million in the second quarter of 2009, up 188% compared to $13.5 million in the second quarter of fiscal 2008. Revenue generated from product support increased to $24.4 million in the second quarter of fiscal 2009 compared to $16.8 million in the second quarter of fiscal 2008.
Gross profit for the fiscal 2009 second quarter increased 35% to $21.8 million, compared to $16.1 million in the second quarter of the prior year. The Company's gross profit margin was 14% in the fiscal 2009 second quarter versus 17.1% in the second 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 some lower margin highly competitive sales. In addition, during the first six months of 2009 the Company maintained a strong focus on the reduction of aged construction equipment inventory which put pressure on the margins.
Selling, general and administrative expenses improved to 8.6% of sales, in the fiscal 2009 second quarter versus 10.3% of sales, in the second quarter of the prior year. This 170 basis point improvement was due to the Company's ability to achieve the benefits of economies of scale following acquisitions completed in 2008 and 2009 allowing expenses to be allocated over a larger group of dealerships. In addition, synergies obtained through systems integration and cost cutting measures positively impacted the Company's results.
Operating income in the second quarter fiscal 2009 increased to $3.8 million from $2.7 million as a result of the increased sales and reduction in operating expenses over the period. The Company increased earnings 41% notwithstanding the reduction in gross profit as management continued to focus on reducing aged construction equipment inventory.
For the second quarter of fiscal 2009, EBITDA was $7.2 million compared to $6.6 million in the second quarter of fiscal 2008. EBITDA was negatively impacted by the reduction in both the rental and leasing depreciation, of approximately $1.5 million, as a result of management's commitment to reducing the size of the rental and lease fleet over the next few years. The impact from deprecation was offset by the increase in net earnings of approximately $1.1 million over the quarter.
Net income for the second quarter of fiscal 2009 was $3.8 million, or $0.28 per share, compared to net income of $2.7 million, or $0.21 per basic share, for the second quarter of fiscal 2008, which is an increase of approximately 33%.
Cash Flow & Liquidity
The Company ended the second quarter fiscal 2009 in a very solid financial position. The Company's net debt to EBITDA ratio was 1.27, which is within the Company's goal of 1.0x - 1.5x. Working capital at the end of the second quarter fiscal 2009 was $46.9 million. Inventory as of June 30, 2009, was $215.2 million compared to $207.5 million at the end of fiscal 2008. The current inventory reflects increases in new agricultural and parts inventory 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 September 30, 2009, to shareholders of record at close of business on August 31, 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 second quarter and full year results on Tuesday, August 11, 2009, at 9:00 am 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 August 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.
Rocky Mountain announces that it has retained the services of Renmark Financial Communications Inc. ("Renmark") to supply investor communications services.
"We are pleased to announce that we have selected Renmark to reinforce Rocky Mountain's profile in the financial community to enhance the visibility of our portfolio. We choose Renmark because its standards and methodologies fit best with the message we wish to communicate to the investing public" noted Matt Campbell, Chairman and CEO.
Renmark does not have any interest, directly or indirectly, in Rocky Mountain or its securities, or any rights or intent to acquire such interest.
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 Statements (Unaudited)
-------------------------------------------------------------------------
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
$ $ $ $
------------------------------------------------------
SALES
New units 90,624 61,692 138,108 103,316
Used units 38,756 13,470 77,978 26,040
Product support 24,424 16,828 43,477 30,500
Finance and
insurance 580 759 876 1,186
Rental and leases 743 1,501 1,838 2,922
------------------------------------------------------
155,127 94,250 262,277 163,964
COST OF SALES
(including
amortization of
$366 and $842 for
the three and six
months ended) (2008 -
$1,275 and $2,317)
(Note 10) 133,352 78,110 224,380 135,190
------------------------------------------------------
GROSS PROFIT 21,775 16,140 37,897 28,774
------------------------------------------------------
EXPENSES
Selling and
administrative 13,303 9,760 25,824 18,843
Interest on
short-term debt 1,669 1,065 3,105 2,147
Interest on
long-term debt 270 328 547 707
Amortization of
intangible
assets (Note 9) - 758 - 1,516
Amortization of
property, plant
and equipment 707 396 1,360 785
------------------------------------------------------
15,949 12,307 30,836 23,998
------------------------------------------------------
EARNINGS BEFORE
INCOME TAXES 5,826 3,833 7,061 4,776
------------------------------------------------------
PROVISION FOR
(RECOVERY OF)
INCOME TAXES
Current 2,048 1,600 2,554 2,166
Future (51) (449) (50) (660)
------------------------------------------------------
1,997 1,151 2,504 1,506
------------------------------------------------------
NET EARNINGS AND
COMPREHENSIVE
INCOME 3,829 2,682 4,557 3,270
(DEFICIT) RETAINED
EARNINGS, BEGINNING
OF PERIOD (88,983) 916 (89,116) 328
REDUCTION OF STATED
CAPITAL (Note 16a) 89,116 - 89,116 -
DIVIDENDS (624) (565) (1,219) (565)
------------------------------------------------------
RETAINED EARNINGS,
END OF PERIOD 3,338 3,033 3,338 3,033
------------------------------------------------------
------------------------------------------------------
Earnings per share
(Note 17)
Basic $0.28 $0.21 $0.34 $0.26
------------------------------------------------------
------------------------------------------------------
Diluted $0.28 $0.21 $0.34 $0.26
------------------------------------------------------
------------------------------------------------------
Balance Sheets (Unaudited)
-------------------------------------------------------------------------
June 30, December 31,
2009 2008
$ $
--------------------------
ASSETS
CURRENT
Cash 413 493
Accounts receivable and other (Notes 6 and 19) 29,200 40,614
Inventory (Note 7) 215,214 207,467
Prepaid expenses 625 392
--------------------------
245,452 248,966
Property, plant and equipment (Note 10) 19,661 21,458
Intangible assets (Note 9) - -
Goodwill and other (Notes 5 and 8) 3,886 -
--------------------------
268,999 270,424
--------------------------
--------------------------
LIABILITIES
CURRENT
Bank indebtedness (Note 11) 8,233 5,223
Accounts payable and accrued liabilities
(Note 12) 39,052 29,973
Floor plan payable (Note 13) 137,298 150,449
Deferred revenue 3,890 9,437
Due to related parties (Note 19) 1,273 3,691
Current portion of long-term debt (Note 14) 8,461 5,910
Current portion of obligations under capital
lease 332 300
--------------------------
198,539 204,983
Long-term debt (Note 14) 15,833 17,803
Obligations under capital lease 430 343
Future income taxes 1,199 1,126
--------------------------
216,001 224,255
--------------------------
CONTINGENCY AND GUARANTEE (Note 15)
COMMITMENTS (Note 18)
SHAREHOLDERS' EQUITY
Common shares (Note 16a) 47,501 133,879
Contributed surplus (Note 16d) 2,159 1,406
Retained earnings (deficit) (Note 16a) 3,338 (89,116)
--------------------------
52,998 46,169
--------------------------
268,999 270,424
--------------------------
--------------------------
Reconciliation of Net Income to EBITDA
3 Months 3 Months 6 Months 6 Months
ended ended ended ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
EBITDA $ $ $ $
Net Earnings 3,829 2,682 4,577 3,270
Long-term interest 270 328 547 707
Depreciation 707 396 1,360 785
Amortization of
intangibles - 758 - 1,516
Income taxes 1,997 1,150 2,504 1,506
Rental depreciation 206 624 307 1,065
Lease depreciation 160 652 535 1,251
------------------------------------------------------
EBITDA 7,169 6,590 9,830 10,100
------------------------------------------------------
------------------------------------------------------
Overhead Absorption 89% 78% 82% 72%
%SEDAR: 00026106E