Third quarter net earnings increased 98% year over year to $4.9 million
Declares quarterly cash dividend of $0.045 per share
CALGARY, Nov. 10 /CNW/ - Rocky Mountain Dealerships Inc. ("Rocky Mountain" or the "Company") (TSX: RME), a leading Canadian network of full service agricultural and construction equipment dealerships, today reported financial results for the period ended September 30, 2009. In addition to announcing consecutive record quarters the Company closed two acquisitions effective as of November 1, 2009, Enns Agri in Winkler, Manitoba and Mayor Equipment in Neepawa, Manitoba.
For the fiscal 2009 third quarter, net sales increased 56% to $145.8 million, compared to net sales of $93.2 million for the third quarter of fiscal 2008. This growth in revenue was due to improved sales from all three of the Company's primary revenue sources. New equipment sales were $69.4 million in the third quarter of fiscal 2009 compared to $46.5 million in the prior year period. Used equipment sales were $46.1 million in the third quarter of 2009, an increase of 119% compared to $21.1 million in the third quarter of fiscal 2008. Revenue generated from product support increased to $29.1 million in the third quarter of fiscal 2009 compared to $23.2 million in the third quarter of fiscal 2008.
Gross profit for the fiscal 2009 third quarter increased 22% to $22.3 million, compared to $18.2 million in the third quarter of the prior year. The Company's gross profit margin was 15.3% in the fiscal 2009 third quarter, 16.0% when normalized for the construction equipment inventory write-down of $1.0 million taken in the quarter due to an exchange rate variance. Gross profit margin has increased from 14.0% in the previous quarter reflecting the improved margins of the acquisitions as we integrate them into the Company's business system and share best practices.
Selling, general and administrative expenses improved to 8.6% of sales in the fiscal 2009 third quarter, 9.3% when normalized for the foreign exchange gain recognized in the quarter of approximately $1.0 million, versus 10.3% of sales, in the third quarter of the prior year. This 100 basis point improvement was due to the Company's ability to achieve the benefits of economies of scale following acquisitions completed in 2008 and 2009 allowing expenses to be allocated over a larger group of dealerships. In addition, synergies obtained through systems integration and cost cutting measures positively impacted the Company's results.
Operating income in the third quarter 2009 increased to $7.2 million from $4.6 million, an increase of 56.5%, as a result of the increased sales and reduction in operating expenses over the period. For the third quarter of fiscal 2009, EBITDA was $8.6 million compared to $6.7 million in the third quarter of fiscal 2008 notwithstanding the reduction in both the rental and leasing depreciation, of approximately $0.9 million in the quarter, as a result of management's commitment to reducing the size of the rental and lease fleet. The impact from depreciation was offset by the increase in net earnings of approximately $2.4 million over the quarter.
Net income for the third quarter of fiscal 2009 was $4.9 million, or $0.34 per share, compared to net income of $2.5 million, or $0.19 per basic share, for the third quarter of fiscal 2008, which is an increase of approximately 79%.
Cash Flow & Liquidity
The Company ended the third quarter fiscal 2009 in a very solid financial position. The Company's net debt to EBITDA ratio was 0.45, which is below the Company's goal of 1.0x - 1.5x. The bought deal financing the Company completed in the third quarter has decreased the net debt to EBITDA ratio and has positioned the Company well to continue with its expansion strategies. Working capital at the end of the third quarter fiscal 2009 was $74.6 million. Inventory as of September 30, 2009, was $210.0 million compared to $207.5 million at the end of fiscal 2008. The current inventory reflects increases in new agricultural equipment and parts inventory as a result of increased demand in that segment of the market. New and used construction inventory was down from the end of fiscal 2008.
Quarterly Cash Dividend
The Company announces 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, 2009, to shareholders of record at close of business on November 30, 2009.
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.
The Company will host a conference call to discuss its third quarter results on Tuesday, November 10, 2009, at 9:00 am MT. Investors interested in participating in the live call can dial 1-877-974-0452. An archived recording of the conference call will be available approximately one hour after the completion of the call on Rocky Mountain's website or by dialing 1-416-640-1917 or 1-877-289-8525, passcode: 4179486 followed by the pound sign. The archive will remain available until Tuesday, November 24, 2009.
About Rocky Mountain
Rocky Mountain represents one of Canada's largest agriculture and construction equipment dealerships with a total of 24 dealership branches throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents and leases new and used construction and agriculture equipment, including the Case Construction and Case IH Agriculture brands, as well as offering product support and finance and insurance products to its customers.