Cervus Equipment Corp. ("Cervus" or the "Company") (TSX: CVL) today announced its financial results and operational highlights for the quarter ended March 31, 2014. The company operates 56 dealerships locations in Western Canada, New Zealand, and Australia.
“We continued to execute on our growth strategy in the first quarter by increasing our ownership interest in five Australian agricultural dealerships to 100%,” said Graham Drake, president and CEO of Cervus.
“In Canada, the recent rail capacity issues are resolving and we are seeing an improvement in farmer sentiment as farmers realize 2013 income. When combined with current period growth and favorable economic indicators for our construction, industrial, and transportation segments, we see positive conditions heading into the spring and summer months.”
Highlights for the Quarter:
- On March 25th, 2014, the Company completed the acquisition of the remaining 46.7% interest for total consideration of $4,370 thousand bringing the Company’s ownership to 100%.
- Gross revenue increased by $25.2 million or by 17.8% to $167 million for the three months ended March 31, 2014 when compared to 2013. Same store sales increased 6.7% or $9.5 million.
- Achieved consistent performance in the agriculture segment combined with significant same store revenue growth of $9.6 million in the commercial, industrial and transportation segment (“CIT”), primarily attributable to the transportation and construction operations.
- For the three months ended March 31, 2014, overall gross profit margin increased to 19.8%, and gross margin dollars increased $5.4 million to $33.1 million compared to 19.5% and $27.7 million during the period ended March 31, 2013, respectively.
- Income from operating activities increased $387 thousand or 41.3% on increased same store revenues, driven primarily by $9.6 million of increased revenues in the CIT segment.
- Profit before income tax for the three months ended March 31, 2014 decreased by $0.8 million compared to the first quarter of 2013, primarily due to increases in operating income offset by a reduction in earnings from equity investments.
- Declared a dividend of $0.2025 per share to shareholders of record as at March 31, 2014.
For the quarter ended March 31, 2014, revenue increased by $25.2 million or 17.8% ($15.6 million from the agricultural equipment segment and $9.6 million from the CIT segment. Same store revenue increased $9.5 million or 6.7% compared to the quarter ended March 31, 2013.
Overall gross margin for the quarter ended March 31, 2014 increased to 19.8% from 19.5% during the same period in 2013. The increase in sales and gross margin percentage resulted in an overall increase in gross margin dollars of $5.4 million for the three month period ended March 31, 2014 compared to the same period in 2013. The agriculture and CIT segments generated increases in gross margin dollars of $3.17 million and $2.28 million, respectively.
Selling, general and administrative ("SG&A") expenditures were 19.8% of total revenue in the first quarter of 2014, compared to 19.4% for the same period in 2013. SG&A expenditure dollars increased during the period by $5.6 million compared to the same period in 2013. For the quarter ended March 31, 2014, $2.8 million of the increase in SG&A costs were related to consolidating the operating results of Windmill.
During the quarter ended March 31, 2014, income from operating activities increased by $387 thousand, or 0.1% of total revenues compared to the same period in 2013. Profit before income tax for the three month period decreased by $0.8 million in 2014 compared to 2013, primarily due to decreased income from equity investments of $1.1 million in the three months ended March 31, 2014 compared to the same period in 2013.