CALGARY, Alberta (May 10, 2017)
- Cervus Equipment Corporation ("Cervus" or the "Company") (TSX: CERV) today announced its financial results and operational highlights for the quarter ended March 31, 2017.
"Increased sales activity in our Agriculture and Transportation markets generated revenue growth of 11% and a $0.6 million, or 25%, improvement in Adjusted Loss1 compared to the first quarter of 2016," said Graham Drake, President and CEO of Cervus. "Profit capture on these increased sales was hampered in part by increased margin pressure in our Agriculture and Transportation segments during the quarter. We will continue to focus on sales generation and combat the pressure on margins through disciplined execution of our service optimization and expense management programs throughout the remainder of the year."
Highlights for the Quarter
- Revenue increased $22.6 million and 11 % in the first quarter ended March 31, 2017, compared to the same period of 2016.
- The Company had $1.6 million of loss for the first quarter of 2017, compared to $1.7 million of income for the comparable period in 2016.
- Adjusted loss 1 and adjusted loss per share7 forthe first quarter of 2017 improved to $1.8 million and $0.12 per share respectively, compared to an adjusted loss of $2.4 million and adjusted loss per share of $0.16 in the first quarter of 2016.
- Earnings before interest, taxes, depreciation, and amortization ("EBITDA 1") was $4.1 million compared to $10.0 million in 2016, a decrease of $5.9 million.
- Service optimization initiatives improved overall service gross profit margin by 1.7% quarter over quarter.
- Dividends of $0.07 per share were declared to shareholders of record as at March 31, 2017.
Loss before tax for the three months ended March 31, 2017 increased $3.7 million and EBITDA decreased $5.9 million compared to the first quarter of 2016. The change in loss before tax and EBITDA includes a $2.5 million decrease in unrealized foreign exchange gains and a $1.4 million decrease in gains on sale of a property. Excluding unrealized foreign exchange gains and gains on sale of property, adjusted loss improved $0.6 million to $1.8 million compared to $2.4 million in the first quarter of 2016.
Agriculture loss before tax increased $0.5 million in the three-month period ended March 31, 2017 to $0.9 million, and EBITDA decreased $1.9 million compared to the first quarter of 2016. Increased revenues were offset by continued compression of equipment margins, while SG&A expenses increased $2.1 million principally due to increased personnel, occupancy and marketing costs.
First quarter 2017 Transportation loss before tax increased by $3.8 million and EBITDA decreased by $4.4 million compared to the three-month period ended March 31, 2016. Excluding the fluctuation in unrealized foreign exchange gains and losses, loss before tax increased $1.3 million and EBITDA decreased $1.9 million. The increased loss is primarily related to Cervus' Ontario operations, as Saskatchewan dealership performance remained consistent with the first quarter of 2016.
Within our Ontario dealerships, increased equipment and parts sales were offset by reduced gross profit margin resulting from a higher mix offleet sales in the quarter, while several unanticipated overhauls in our rental fleet reduced rental margins by $0.4 million in the quarter. SG&A expenses in our Ontario geography increased $1.0 million quarter over quarter due to an increase in personnel expenses. The focus through the remainder of 2017 is profitability, and we have initiated an accelerated program of operational performance and cost management.
Commercial and Industrial (C&I) segment income before tax improved $0.5 million for the three-month period ended March 31, 2017 due to continued expense reductions and a $0.4 million recovery of inventory impairment. EBITDA increased by $0.3 million in the first quarter of 2017 compared to the same period in 2016. Excluding the nonrecurring gain on sale of real estate in the first quarter of 2016, income before tax increased $1.9 million in the first quarter of 2017.
Conference Call Information
Cervus will host its first quarter 2017 results conference call on May 11, 2017 at 11 :00 a.m. Eastern Time. Interested parties may access the conference call by dialling (647) 427-7450 or 1-888-231-8191. Please connect approximately 10 minutes prior to the beginning of the call. The conference call will be archived for replay until Thursday, May 18, 2017 at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 12909264 followed by the number sign.
A live audio webcast of the conference call will be available at:
http://event.on24.com/r.htm ?e= 1415152&s= 1 &k=285A3DBF74FDADD6AAB774BB28E20ABC
Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.
About Cervus Equipment Corporation
Cervus acquires and operates authorized agricultural, construction, materials handling and transportation equipment dealerships. The Company has interests in 64 dealerships in Canada, New Zealand, and Australia, employing more than 1,500 people. The primary equipment brands represented by Cervus include John Deere agricultural equipment; Bobcat and JCB construction equipment; Clark, Sellick and Doosan material handling equipment; and Peterbilt transportation equipment. The common shares of Cervus are listed on the Toronto Stock Exchange and trade under the symbol "CERV".
For more information, please contact:
Graham Drake, President & CEO
Randy Muth, Chief Financial Officer
Forward Looking Information
This press release contains certain forward-looking information ("forward-looking information") within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. Forward-looking information is not a guarantee of future performance and involves a number of assumptions and a number of risks and uncertainties some of which are described herein. These risks and uncertainties include the risks identified under the heading "Risk Factors - Risks Related to the Business" in the 2016 Annual Information Form of Cervus Equipment Corporation dated March 15, 2017, available electronically at www.sedar.com under Cervus' profile. Cervus believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon. You are cautioned that the preceding list of assumptions and risks is not exhaustive. Any forward-looking information is made as of the date hereof and, except as required by law, Cervus assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.