Rocky Mountain Dealerships Inc. (TSX:RME) announces results for the periods
ended September 30, 2010

Issued: 18,427,250 shares

CALGARY, Nov. 9 /CNW/ - Rocky Mountain Dealerships Inc. ("Rocky Mountain" or the "Company") today reported financial results for the three and nine month periods ended September 30, 2010.

• Third quarter ("Q3") revenues of $170.5 million (2009 - $145.8 million) and nine months ended ("YTD") of $437.1 million (2009 - $408.1 million)
• Q3 net earnings of $3.8 million (2009 - $4.9 million) and YTD of $8.7 million (2009 - $9.5 million)
• Q3 diluted earnings per share of $0.20 (2009 - $0.34) and YTD of $0.48 (2009 - $0.69)
• Q3 EBITDA of $7.7 million (2009 - $8.6 million) and YTD of $17.4 million (2009 - $18.4 million)
• Declares quarterly cash dividend of $0.045 per share
• Announces upcoming transition of current Chief Executive Officer ("CEO"), Matt Campbell to Executive Chairman of the Board of Directors of the Company and Brian Taschuk, Chief Operating Officer ("COO") as successor CEO, effective January 1, 2011

New equipment sales were $68.3 million for Q3 2010 compared to $69.4 million in the prior year.  Used equipment sales were $68.7 million for Q3 2010, compared to $46.1 million for the same period of 2009.  Revenues generated from product support were $32.3 million in Q3 2010 compared to $29.1 million for the same period of 2009. 

Gross profit for the third quarter of 2010 was $26.0 million compared to $22.3 million for the same period of the prior year. The Company's gross profit margin was consistent at 15.3% in Q3 2010 compared with 2009.

Selling, general, and administrative expenses increased to $17.0 million in Q3 2010 from $12.5 million in the prior year.  This increase arose from the addition of 9 new locations since Q3 of 2009 as well as the foreign exchange gain of approximately $1.0 million recognized in Q3 of 2009.

The increased selling, general and administrative expenses reduced net income over the quarter to $3.8 million. As well, the unfavourable weather conditions experienced throughout the Canadian prairie provinces in the second quarter, and beginning of Q3 2010, reduced product support revenues in July and early August affecting the gross profit achieved. 

CEO Transition

Mr. Campbell is transitioning from his role as CEO to Executive Chairman of the Board of Directors of the Company.  Mr. Taschuk, who is currently COO of the Company, will transition into the CEO role.  The transitions are expected to be completed and become effective on January 1, 2011.

Commenting on his transition Mr. Campbell stated, "This is an exciting time for the Company as we continue to grow.  As Executive Chairman, I will take a less active role in the day-to-day operations, but it will allow me to continue to provide value for our shareholders.  Mr. Taschuk has extensive experience with the Company, and the agriculture and construction industries, and we anticipate his transition from COO to CEO to be relatively seamless.  We continue to have positive outlooks for the Company as we progress and move through this transition."

Cash Flow & Liquidity

During the quarter, the Company secured $31.5 million in cash through the issuance of convertible debentures.  Working capital at the end of the third quarter of 2010 was $117.9 million.  Inventory as of September 30, 2010, was $273.8 million, up from $247.6 million as the end of fiscal 2009. 

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 December 31, 2010, to shareholders of record at close of business on November 30, 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 Q3 results on Tuesday, November 9, 2010, at 9:00 am MT.  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 conference call will be available approximately two hours after the call concludes and will be available until Tuesday, November 23, 2010, by dialing 1-416-849-0833 or 1-800-642-1687 (toll free) and entering the passcode: 21298955.  A live webcast of the conference call will be accessible on Rocky Mountain's website at www.rockymtn.com.

About Rocky Mountain

Rocky Mountain is one of Canada's largest agriculture and construction equipment dealerships with 34 branches throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents, and leases new and used construction and agriculture equipment and offers product support, and finance to its customers.

Additional information on Rocky Mountain is available on our website at www.rockymtn.com and on SEDAR at www.sedar.com.

Appendix 1
ROCKY MOUNTAIN DEALERSHIPS INC. Consolidated Balance Sheets In thousands of dollars (Unaudited)
	September 30, 2010	December 31, 2009
	$	$
ASSETS
CURRENT
Cash	21,576	8,912
Accounts receivable and other	26,501	24,186
Inventory	273,781	247,627
Prepaid expenses	1,568	509
	323,426	281,234
Property, plant and equipment	20,280	19,343
Goodwill	7,391	4,086
	351,097	304,663
LIABILITIES
CURRENT
Bank indebtedness	-	1,947
Accounts payable and accrued liabilities	30,790	30,595
Floor plan payable	166,079	158,793
Deferred revenue	1,070	3,154
Current portion of long-term debt	6,839	8,545
Current portion of obligations under capital lease	794	619
	205,572	203,653
Long-term debt	12,650	12,968
Obligations under capital lease	1,308	896
Convertible debentures	28,329	-
Future income taxes	3,640	1,051
	251,499	218,568
SHAREHOLDERS' EQUITY
Common shares	75,159	70,601
Convertible debentures - equity component	1,343	-
Contributed surplus	4,221	2,915
Retained earnings	18,875	12,579
Accumulated and other comprehensive income	-	-
	99,598	86,095
	351,097	304,663

Appendix 2

ROCKY MOUNTAIN DEALERSHIPS INC.
Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings (Deficit)
Three and Nine Month Periods Ended
In thousands of dollars, except per share amounts (Unaudited)

Three Months
Ended
September 30,
2010

Three Months
Ended
September 30,
2009

Nine Months
Ended
September 30,
2010

Nine Months
Ended
September 30,
2009

$

$

$

$

SALES

      New units

68,298

69,353

212,301

207,461

      Used units

68,694

46,144

143,762

124,122

      Product support

32,348

29,068

78,163

72,545

      Finance and insurance

690

527

1,997

1,403

      Rental and leases

448

713

899

2,551

170,478

145,805

437,122

408,082

COST OF SALES (including amortization of $329 and $589 for the three and nine months ended) (2009 - $294 and $1,136)

144,434

123,537

368,889

347,917

GROSS PROFIT

26,044

22,268

68,233

60,165

EXPENSES

       Selling and administrative

16,962

12,497

46,849

38,321

       Interest on short-term debt

1,725

1,481

4,594

4,586

       Interest on long-term debt

662

237

1,121

784

       Amortization of property, plant and equipment

1,139

810

3,174

2,170

20,488

15,025

55,738

45,861

EARNINGS BEFORE INCOME TAXES

5,556

7,243

12,495

14,304

PROVISION FOR (RECOVERY OF) INCOME TAXES

       Current

1,408

2,484

1,384

5,038

       Future

334

(182)

2,377

(232)

1,742

2,302

3,761

4,806

NET EARNINGS AND COMPREHENSIVE INCOME

3,814

4,941

8,734

9,498

RETAINED EARNINGS (DEFICIT), BEGINNING OF PERIOD

15,882

3,339

12,579

(89,116)

REDUCTION OF STATED CAPITAL

-

-

-

89,116

DIVIDENDS

(821)

(624)

(2,438)

(1,842)

RETAINED EARNINGS, END OF PERIOD

18,875

7,656

18,875

7,656

Earnings per share

       Basic

$0.21

      $0.34

$0.48

      $0.69

       Diluted

$0.20

      $0.34

$0.48

      $0.69

 

 

Appendix 3
RECONCILIATION OF NET EARNINGS TO EBITDA IN THOUSANDS
	3 months ended September 30, 2010 (unaudited)	3 months ended September 30, 2009 (unaudited)	9 months ended September 30, 2010 (unaudited)	9 months ended September 30, 2009 (unaudited)
	$	$	$	$
Net earnings	3,814	4,941	8,734	9,498
Long-term interest	662	237	1,121	784
Depreciation	1,139	810	3,174	2,170
Income taxes	1,742	2,302	3,761	4,806
Rental depreciation	325	241	559	776
Lease depreciation	4	53	30	360
EBITDA	7,686	8,584	17,379	18,394
Overhead Absorption	75%	114%	74%	92%

 

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 - 46^th Avenue S.E.
Calgary, Alberta T2G 2A6
Telephone: [phone], Fax [phone]

Investor Relations
Renmark Financial Communications Inc.
John Boidman, Vice President
Telephone: [phone]
Email: [email protected]