Cervus Equipment reported its first quarter revenues increased $71.5 million, or 43% compared to the same quarter last year. However, on a same-store basis, revenues were down $11 million or 7% vs. the first quarter of 2014. Gross profits were up by $11.2 million compared to the three months ended March 31, 2014.
For the agriculture segment, new equipment revenue was up 22%, but on a same store basis it was down 14%. Used equipment revenue for the quarter was up 69%, or 28% for same store revenues vs. the same quarter of 2014.
“Parts revenue increased 21% on targeted aftermarket account management, while total equipment revenues remained comparable although shifting in favor of used equipment. The strengthening of the U.S. dollar has increased the price of new equipment, contributing to the value proposition of used equipment and supporting used profit margin,” the company says.
As at March 31, 2015, inventories had increased by $40.2 million to $364.8 million when compared to $324.6 million at Dec. 31, 2014. Of the $40.2 million increase, $28.0 million relates to new equipment, $7.6 million in used and $3.7 million in parts. Inventory has increased $142.0 million when compared to March 31, 2014. Included in the increase is $95.2 million of inventory from acquisitions. On a same store basis, inventory has increased by $46.8 million compared to March 31, 2014, comprised of a $32.5 million increase in new equipment, a $10.8 million increase in used equipment, and a $3.3 million increase in parts. In the Canadian agriculture sector, a later harvest in 2014 drove increased in-season new sales, which generally come with used equipment taken on trade, increasing used inventory levels at Dec. 31, 2014 into the first quarter of 2015.
“The increase in our same store new equipment inventory at March 31, 2015 compared to March 31, 2014 is primarily in our transportation and construction inventory. These groups have been impacted by reduced Q1 demand for equipment due to market factors, combined with carrying additional inventory as OEM manufacturing lead times have increased,” the company says.