Rocky Mountain Dealerships Inc. (TSX:RME) announces second quarter results
for the periods ended June 30, 2010
- Second quarter ("Q2") revenues of $146.2 million and six months ended
("YTD") of $266.6 million
- Q2 net earnings of $3.1 million and YTD of $4.9 million
- Q2 diluted earnings per share of $0.17 and YTD of $0.27
- Q2 EBITDA of $5.8 million and YTD of $9.7 million
- Declares quarterly cash dividend of $0.045 per share
Issued: 18,257,849 shares
(Stock Symbol "RME" - TSX)
CALGARY, Aug. 10 /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 and six month periods ended June 30, 2010.
For Q2 2010, net sales were $146.2 million compared to $155.1 million for the same period of 2009. New equipment sales were $82.1 million for the Q2 2010 compared to $90.6 million in the prior year. Used equipment sales were $37.0 million for the Q2 2010, compared to $38.8 million for the same period of 2009 and YTD 2010 $75.1 million compared with $78.0 from the prior year. Revenues generated from product support were $26.0 million in Q2 2010 compared to $24.4 million for the same period of 2009.
Gross profit for Q2 2010 was $23.0 million compared to $21.8 million for the same period of the prior year. The Company's gross profit margin was 15.7% for the three month period of 2010 versus 14.0% for the same period of the prior year.
Selling, general, and administrative expenses increased to 10.8% of sales in Q2 2010 from 8.6% in the prior year.
Net income for Q2 2010 decreased to $3.1 million from $3.8 million in Q2 of 2009. The reductions in new and used sales revenue and net income are primarily due to the negative impacts of wet, unfavourable weather conditions experienced throughout the Canadian prairie provinces in Q2. Net income for YTD 2010 increased to $4.9 million from $4.6 million in the same period of 2009.
The Company believes earnings before long-term interest, taxes, depreciation and amortization ("EBITDA") is a useful metric to monitor its operating performance. Refer to the appendices for reconciliation of net earnings to EBITDA. For the second quarter of 2010, EBITDA was $5.8 million compared to $7.2 million for the same period of 2009. EBITDA for YTD 2010 decreased to $9.7 million from $9.8 million in the same period of 2009.
Commenting on the performance of Rocky Mountain, Matt Campbell, Chairman and Chief Executive Officer said, "The unseasonably wet weather in the second quarter adversely affected the operations of many of our construction and agriculture customers, and, consequently, resulted in lower revenues in Q2 2010 from the same period in 2009. However, the strength of our management and employees continued as evidenced in the improvement in gross profit margins from the same period in the prior year; the recent improvement in grain prices coupled with very high potential yields in much of our market area gives us optimism for a favourable second half."
Cash Flow & Liquidity
The Company's net debt to EBITDA ratio was 1.12; which positions the Company positively for growth to be within the goal of 1.0x - 1.5x. Working capital at the end of the second quarter of 2010 was $85.5 million. Inventory as of June 30, 2010, was $289.8 million, up from $247.6 million as the end of fiscal 2009. Inventory increases are due to the purchase and settlement of equipment units near the end of Q2 2010 in order to minimize carrying costs and to utilize available manufacturer incentives. Subsequent to the end of Q2, the Company issued 31,500 debentures for gross proceeds of $31.5 million. This additional cash strongly positions the Company to continue its growth organically and through acquisitions.
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 September 30, 2010, to shareholders of record at close of business on August 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 Q2 results on Tuesday, August 10, 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, August 24, 2010, by dialing 1-416-849-0833 or 1-800-642-1687 (toll free) and entering the passcode: 90706789. 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 29 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 offers 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, Doosan, Takeuchi, Leeboy, Kawasaki, Metso, 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.
ROCKY MOUNTAIN DEALERSHIPS INC. APPENDIX 1
Consolidated Balance Sheets
In thousands of dollars (Unaudited)
-------------------------------------------------------------------------
June 30, December 31,
2010 2009
$ $
------------------------
ASSETS
CURRENT
Cash 5,259 8,912
Accounts receivable and other 23,523 24,186
Inventory 289,779 247,627
Prepaid expenses 666 509
------------------------
319,227 281,234
Property, plant and equipment 20,389 19,343
Goodwill 6,795 4,086
------------------------
346,411 304,663
------------------------
------------------------
LIABILITIES
CURRENT
Bank indebtedness 12,567 1,947
Accounts payable and accrued liabilities 29,300 30,595
Floor plan payable 179,363 158,793
Deferred revenue 4,139 3,154
Current portion of long-term debt 7,653 8,545
Current portion of obligations under capital
lease 656 619
------------------------
233,678 203,653
Long-term debt 13,629 12,968
Obligations under capital lease 1,677 896
Future income taxes 3,224 1,051
------------------------
252,208 218,568
------------------------
SHAREHOLDERS' EQUITY
Common shares 74,538 70,601
Contributed surplus 3,783 2,915
Retained earnings 15,882 12,579
Accumulated and other comprehensive income - -
------------------------
94,203 86,095
------------------------
346,411 304,663
------------------------
------------------------
ROCKY MOUNTAIN DEALERSHIPS INC. APPENDIX 2
Consolidated Statements of Earnings, Comprehensive Income and Retained
Earnings (Deficit)
Three and Six Month Periods Ended
In thousands of dollars, except per share amounts (Unaudited)
-------------------------------------------------------------------------
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
$ $ $ $
--------------------------------------------------
SALES
New units 82,065 90,624 144,003 138,108
Used units 36,981 38,756 75,068 77,978
Product support 25,948 24,424 45,815 43,477
Finance and insurance 896 580 1,307 876
Rental and leases 279 743 451 1,838
--------------------------------------------------
146,169 155,127 266,644 262,277
COST OF SALES
(including
amortization of $175
and $260 for the
three and six months
ended) (2009 - $366
and $842) 123,213 133,352 224,456 224,380
--------------------------------------------------
GROSS PROFIT 22,956 21,775 42,188 37,897
--------------------------------------------------
EXPENSES
Selling and
administrative 15,856 13,303 29,887 25,824
Interest on short-
term debt 1,506 1,669 2,869 3,105
Interest on long-
term debt 231 270 459 547
Amortization of
property, plant
and equipment 1,059 707 2,035 1,360
--------------------------------------------------
18,652 15,949 35,250 30,836
--------------------------------------------------
EARNINGS BEFORE
INCOME TAXES 4,304 5,826 6,938 7,061
--------------------------------------------------
PROVISION FOR (RECOVERY
OF) INCOME TAXES
Current (990) 2,048 (25) 2,554
Future 2,186 (51) 2,043 (50)
--------------------------------------------------
1,196 1,997 2,018 2,504
--------------------------------------------------
NET EARNINGS AND
COMPREHENSIVE INCOME 3,108 3,829 4,920 4,557
RETAINED EARNINGS
(DEFICIT), BEGINNING
OF PERIOD 13,582 (88,983) 12,579 (89,116)
REDUCTION OF STATED
CAPITAL - 89,116 - 89,116
DIVIDENDS (808) (624) (1,617) (1,219)
--------------------------------------------------
RETAINED EARNINGS, END
OF PERIOD 15,882 3,338 15,882 3,338
--------------------------------------------------
--------------------------------------------------
EARNINGS PER SHARE
Basic $ 0.17 $ 0.28 $ 0.27 $ 0.34
--------------------------------------------------
--------------------------------------------------
Diluted $ 0.17 $ 0.28 $ 0.27 $ 0.34
--------------------------------------------------
--------------------------------------------------
RECONCILIATION OF NET EARNINGS TO EBITDA APPENDIX 3
In Thousands
3 months ended 3 months ended 6 months ended 6 months ended
June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Net earnings 3,108 3,829 4,920 4,577
Long-term interest 231 270 459 547
Depreciation 1,059 707 2,035 1,360
Income taxes 1,196 1,997 2,018 2,504
Rental depreciation 166 206 234 307
Lease depreciation 9 160 26 535
----------------------------------------------------
EBITDA 5,769 7,169 9,692 9,830
----------------------------------------------------
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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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