Strong sales growth in all sectors, offer to repurchase debentures lead highlights
Rocky Mountain Dealerships Inc. (TSX:RME) today reported financial results for the three months ended March 31, 2012.
- Increased revenues by 28.2% to $192.1 million.
- Gross profit increased by 16.3% to $27.7 million.
- Generated net earnings of $2.2 million ($0.11 per fully diluted share) compared to $2.7 million ($0.14 per fully diluted share) in 2011.
- Cash Flow from Net Earnings* of $2.3 million, up from ($0.3) million in 2011.
- Announced 50% increase in annual dividend to $0.27 per common share.
Announced offer, and repurchased, all of the 7% unsecured subordinated convertible debentures in the principal amount of $31.5 million (the "Debentures"), reducing future dilution and interest rate costs.
Matt Campbell, CEO of Rocky, noted "Our results for the first quarter of 2012 reflect our success across several key areas, including same-store equipment and product support sales. Although our gross margin percentage declined, due primarily to a decrease in manufacturer incentives in the amount of $1.2 million, our increased revenues bolstered our total gross profit.
Of particular note, we posted yet another quarter of positive cash flow from operations, further enhancing our already strong cash position. As a result of continued generation of free cash flow, we have increased our annual dividend by 50% to $0.27 per common share. This reflects our continued confidence not only in our industry, but in our ability to generate cash and return value to shareholders.
SG&A as a percentage of revenue declined in the quarter, despite the increased costs associated with the ongoing assessment of our organizational structure and rebranding initiatives, as well as increased commissions associated with our elevated sales levels.
Rocky's success and growth, while predicated on improved economic conditions and factors, was also affected by our ability to be a partner of choice for equipment purchasers. The positive outlook for the agriculture and construction end-markets, the impact of previously added dealerships and trade areas, and the number of available acquisition targets in our core operating areas leave us in a good position for revenue and earnings growth into the future.
Subsequent to the quarter end, we announced that we were successful in repurchasing 100% of our Debentures. We expect that this will result in cash interest savings for Rocky and an increase in shareholder value by eliminating the dilutive impact caused by the Debentures."
Quarterly Cash Dividend
On May 14, 2012, Rocky's Board of Directors declared a dividend of $0.0675 per common share on its outstanding common shares. The common share dividend is payable on June 29, 2012 to shareholders of record at close of business on May 31, 2012.
This dividend is designated by Rocky to be an eligible dividend for the purposes 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.
Rocky is one of Canada's largest agriculture and construction equipment dealerships with 36 branches throughout Alberta, Saskatchewan and Manitoba. Rocky sells, rents, and leases new and used construction and agriculture equipment and offers product support, and finance to its customers.