Cervus Equipment Corp. (CVL), one of John Deere's largest ag equipment retailers in Western Canada, late yesterday reported its third-quarter 2012 revenue grew by $47.8 million or 25.6% to $234.7 million when compared to the same quarter of 2011. Same store sales increased $17.6 million or 9.4%.
Both of the company's major operating segments reported increases in revenues with the agricultural equipment segment gaining 14.1% to $170.6 million and the commercial and industrial equipment segment growing by 71.2% to $64.1 million.
Cervus has interests in 57 dealerships located in Western Canada, New Zealand and Australia. In addition to John Deere agricultural equipment, Cervus also represents Bobcat and JCB construction equipment; Clark, Sellick, Nissan and Doosan material handling equipment; and Peterbilt transportation equipment.
During the three month period ended September 30, 2012, ag equipment revenue increased by $21.1 million and revenues generated by the commercial and industrial equipment segment grew by $26.7 million. During the most recent reporting period, overall gross margin increased slightly to 18% from 17.3% reported in the same period of 2011, an increase of 0.7 basis points. The increase was primarily a result of a change in sales mix as well as an increase in overall equipment margins. The increase in company sales, combined with the marginal change in overall gross profit margins, offset in part by an increase in selling, general and administrative expenditures, resulted in an increase in the company's net profit for the third quarter of 2012 when compared to 2011.
Revenue for our agricultural equipment segment increased by $21.1 million or 14.1% for the three month period ended September 30, 2012 when compared to the same period of 2011 and $50.3 million or 16% year to date. New equipment sales increased by $19.1 million or 26.2% during the period vs. the same period of 2011 and $34.5 million or 21.8% year to date. Used equipment sales decreased by $624 thousand or 1.2% when compared to the same period of 2011 and increased $9.2 million or 9.4% year to date. The most significant area of sales improvements has been in the company's harvest, sprayer, windrower and implement product lines.
Gross profit dollars increased $5.5 million during the three month period ended September 30, 2012 when compared to the same period of 2011 and $10.5 million year to date. Overall gross profit margin has increased by 130 basis points or 8.6% for the three month period and 70 basis points or 4.3% year to date when compared to the same periods in 2011. The most significant movement in gross margin percentage was seen in new equipment sales which have increased primarily due to the recording of $1.4 million in volume bonus additive funds received by John Deere in the third quarter whereas the amount was recorded in the fourth quarter of 2011.
"Cervus met several strategic milestones this quarter, including the acquisition of five John Deere dealerships in New Zealand and 30% interest in four John Deere dealerships in Australia, as well as the closing of a $34.5 million public offering of convertible debentures to support these and future acquisitions," said Graham Drake, president and CEO of Cervus, "These acquisitions demonstrate Cervus' growth strategy of consolidating dealerships where we have already established operations, while pursuing opportunities in new markets with the potential for expansion."
Operational highlights since July 1, 2012:
- Closed a $34.5 million public offering of convertible debentures for net proceeds of $32.9 million
- Purchased five John Deere dealerships in New Zealand for an aggregate purchase price of approximately $3.6 million
- Acquired 30% of the shares in Windmill AG Pty Ltd., an Australian John Deere agriculture dealer, for approximately $2.7 million. Subsequent to the end of the quarter, Cervus partially funded Windmill's acquisition of an additional store, increasing Cervus's ownership in Windmill to approximately 35%.
- Purchased the remaining 39.7% interest in Cervus Equipment NZ Ltd., formerly Agriturf Ltd., that Cervus did not already own for approximately $1.6 million
- Increased gross revenue by $47.8 million (same store $17.6 million) to $234.7 million from $186.9 million in the third quarter of 2011
- Increased net profit for the period by $811 thousand to $8.8 million, from the third quarter 2011 profit of $8.0 million
- Increased basic earnings per share 7.1% to $0.60 in the third quarter of 2012 from $0.56 reported in the same period of 2011
- Ranked 92nd on the Alberta Venture's list of the 250 highest revenue companies in Alberta
Source: Cervus Equipment Corp.