Canada NewsWire
CALGARY, May 14, 2020
CALGARY, May 14, 2020 /CNW/ - Cervus Equipment Corporation ("Cervus" or the "Company") (TSX: CERV) today announced its financial results and operational highlights for the three months ended March 31, 2020.
Cervus generated a $3.2 million increase in adjusted income before tax in the current quarter, a significant improvement compared to the ($2.7) million adjusted loss in the first quarter of 2019.1 Increased revenues were achieved in the face of continued agriculture headwinds in Western Canada, a return to mid-cycle transportation market and the onset of COVID-19.
"The substantial improvement in first quarter profitability is directly tied to the strategic and decisive actions we took in 2019 to right-size our used agriculture equipment inventory, restructure parts of our organization and focus on operational efficiencies. This performance, in what is typically a slow or loss quarter, has been accomplished through the continued commitment and dedication of our employees in the service of our customers," said Angela Lekatsas, President and CEO of Cervus. "Despite the challenging market and additional uncertainty presented late in the quarter by the COVID-19 pandemic, we achieved a 9% increase in revenue and a (7%) decrease in general and administrative expenses quarter over quarter. The continued focus in advancing towards our 2024 targets has Cervus well-positioned to navigate through the current unprecedented broader market conditions."
First Quarter 2020 Highlights
First Quarter 2020 Results
The Company generated a $3.2 million increase in adjusted income before tax in the current quarter, a significant improvement compared to the ($2.7) million adjusted loss in the first quarter of 2019. Increased earnings were achieved in the face of continued agriculture headwinds in Western Canada such as rail disruptions, China's ongoing trade embargo, a late start to seeding activity and the onset of COVID-19.
Cervus is realizing the benefits of prior year restructuring and process improvement actions that resulted in accelerated equipment sales, stable product support revenue, and sustainable cost reductions across all segments. The significant factors in achieving this result are summarized below.
Revenue
Gross Profit
G&A Expenses and Net Finance Costs
Income
Inventory
Select Financial Information
Three month periods ended March 31 | |||
($ thousands, except per share amounts) | 2020 | % Change | 2019 |
Equipment revenue | 182,497 | 13% | 161,241 |
Product support revenue | 74,380 | 1% | 73,557 |
Total revenue | 256,877 | 9% | 234,798 |
Cost of sales | (213,343) | 11% | (192,076) |
Gross profit | 43,534 | 2% | 42,722 |
Total other (expense) income | (3,286) | (397%) | 1,105 |
Equipment commissions | (2,693) | 19% | (2,271) |
G&A expenses | (37,819) | (7%) | (40,850) |
(Loss) income from operating activities | (264) | (137%) | 706 |
Net finance costs | (3,291) | 15% | (2,850) |
(Loss) before income tax expense | (3,555) | 66% | (2,144) |
Income tax recovery (expense) | 852 | 249% | (570) |
(Loss) for the period | (2,703) | (2,714) | |
EBITDA(1) | 5,267 | (24%) | 6,893 |
Ratios | |||
Gross profit margin as a % of revenue | 16.9% | 18.2% | |
Total SG&A as a % of gross profit | 93.1% | 100.9% | |
(Loss) income per share | |||
Basic | (0.17) | (0.17) | |
Diluted | (0.17) | (0.17) | |
Basic - Adjusted(1) | 0.02 | (0.20) | |
Reconciliation of adjusted income (loss) before income tax expense: | |||
(Loss) income before income tax expense | (3,555) | 66% | (2,144) |
Adjustments: | |||
Unrealized foreign exchange loss (gain) included in other income | 4,077 | (782%) | (598) |
Adjusted income (loss) before income tax expense(1) | 522 | 119% | (2,742) |
Conference Call Information
Cervus will host its first quarter 2020 earnings results conference call and webcast on May 15, 2020, at 10:00 a.m. Eastern Time. President and CEO Angela Lekatsas and CFO Adam Lowther will discuss Cervus' financial and operating results for the quarter ended March 31, 2020, followed by questions from securities analysts and institutional shareholders.
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 Friday, May 22, 2020, at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 4888164 followed by the number sign.
The webcast of the conference call, which includes a slide presentation may be accessed at:
https://produceredition.webcasts.com/starthere.jsp?ei=1296461&tp_key=68bbe0409b.
Please connect approximately 10 minutes prior to the beginning of the call to ensure adequate time for any software download that may be required to join the webcast and view the slides being presented. The webcast will be archived at the above website for 90 days.
Financial Results
All financial information presented in this press release has been prepared in accordance with International Financial Reporting Standards ("IFRS") and are reported in Canadian dollars. This press release contains only selected financial and operational highlights and should be read in conjunction with Cervus' unaudited condensed interim consolidated financial statements and related notes and Management's Discussion and Analysis ("MD&A"), as at and for the three months ended March 31, 2020, which are available on SEDAR at www.sedar.com and on the Company's website at www.cervusequipment.com. Additional information is contained in the Company's filings with Canadian securities regulators, including the 2019 Annual Report and 2019 Annual Information Form, also available on SEDAR and the Company's website.
Forward Looking Information
Information in this press release and in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws ("forward-looking statements"). These statements include, but are not limited to, statements about the Company's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to the Company's businesses or the economies of the countries where the Company operates. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "should", "might" or "will be taken", "occur", "be achieved", or other similar expressions of future or conditional verbs.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to general economic conditions, the industries and customers served by the Company, its principal equipment partners, currency exchange rates, funding requirements, fluctuating interest rates, legislative and regulatory developments, changes in accounting standards, and competition as well as those factors discussed under the heading "Business Risks and Uncertainties" in Cervus' most recent annual and quarterly Management Discussion and Analysis ("MD&A"), available electronically at www.sedar.com under Cervus' profile.
All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business, economic and market conditions and trends. Although the Company believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Company in making forward-looking statements. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
Footnotes
(1) | These non-GAAP financial measures do not have any standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and are defined and reconciled to their most directly comparable GAAP measure within Cervus' Management's Discussion and Analysis for the quarter ended March 31, 2020, under the section "Non-GAAP Financial Measures", which is available electronically at www.sedar.com under Cervus' profile. |
About Cervus Equipment
Cervus provides equipment solutions to customers in agriculture, transportation, and industrial markets across Canada, Australia, and New Zealand. Throughout its territories and across its diverse markets, Cervus dealerships are united in delivering sales and support of the market-leading equipment our customers depend on to earn a living. The Company operates 63 Cervus dealerships and is the authorized representative of leading equipment brands including: John Deere agricultural equipment; Peterbilt transportation equipment; and Clark, Sellick, Doosan, JLG and Baumann material handling equipment. Its common shares are listed on the Toronto Stock Exchange and trade under the symbol "CERV".
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
SOURCE Cervus Equipment Corporation
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