CALGARY, Alb. (Nov. 7, 2018) — Cervus Equipment Corp. (TSX: CERV) announced that third quarter profitability growth was driven by performance in its Transportation segment, as well as solid agricultural results for the quarter ended Sept. 30, 2018.
“In our Agriculture segment, Western Canadian producers experienced difficult harvest conditions in the third quarter, increasing demand for our reliable, well-conditioned used equipment,” said Graham Drake, Cervus Equipment’s president and CEO. “With favorable weather returning in October, harvest has resumed along with our parts and service support for producers in their critical window. Looking ahead, we will continue to leverage opportunities to market used agricultural equipment and parts in the fourth quarter.”
Cervus achieved record third quarter equipment sales in our Agriculture segment, increasing 9% compared to the third quarter of 2017, while equipment gross profit margins contracted.
The Transportation segment achieved a $2.9 million increase in adjusted income before income tax expense, where gross profit increased $2.2 million while SG&A expense decreased by $1.2 million, largely due to performance in its Ontario Transportation dealerships.
Income in the third quarter of 2018 was $12.2 million, a $2.7 million increase compared to income of $9.5 million for the same period of 2017.
For the 3 months ended Sept. 30, 2018, adjusted income before income tax expense was $15.1 million, a $2 million increase compared to $13.1 million of adjusted income before income tax expense in the third quarter of 2017.
Total service gross profit margin percentage increased by 3.6% in the third quarter of 2018, compared to the same period in 2017, due to continued service optimization progress.
- Selling, general, and administrative expenses as a percentage of revenue improved to 11.3% in the current quarter, compared to 12.5% in the third quarter of 2017.
Third Quarter 2018 Financial Highlights
Adjusted income before income tax expense improved $2 million in the third quarter of 2018 compared to 2017. This was comprised of a $2.9 million increase in the Transportation segment, partially offset by a $0.8 million decrease in the Industrial segment and a $0.1 million decrease in the Agriculture segment. Income before income tax expense increased $2.5 million in the third quarter of 2018 compared to the same period in 2017.
Within the Agriculture segment, income before income tax expense decreased $0.1 million compared to the third quarter of 2017. The company said it achieved a significant increase in third quarter used equipment sales due to focused sales efforts, while delayed harvest activity compared to 2017 shifted associated parts and service activity into the fourth quarter. Gross profit increased $1.7 million, while SG&A expenses increased $2 million, resulting in income before income tax expense decreasing $0.1 million.