The landmark transaction creates Canada’s largest-ever equipment dealer network, adding 64 agriculture, transportation and material handling equipment locations to Brandt’s existing John Deere Construction & Forestry dealerships across Canada. When fully integrated, it will give Cervus’ customers access to Brandt’s national parts and technical support infrastructure.

The deal expands Brandt’s geographical footprint and enables the company to add, in select markets, Deere agricultural equipment; Peterbilt transportation equipment; and Clark, Sellick, JLG, Baumann and other material handling equipment.

With the acquisition of the Cervus locations in Canada, Australia and New Zealand, Brandt now owns and operates 120 full-service equipment dealerships.

Source: Brandt

Cervus delivered $15 million in adjusted income before tax, a record for the second quarter and a significant increase of $7 million or 84%, compared to $8 million generated in the same period last year.¹Â The company said its accelerated performance reflects the convergence of recovering activity levels in our end markets and enhanced sales practices, with Cervus’ strategic focus on growing product support revenues and gross margins.

“Our record second quarter results reflect increased demand across all segments, particularly in Transportation as economies reopened and activity rebounded from subdued pandemic levels,” said Angela Lekatsas, President and Chief Executive Officer of Cervus. “Cervus navigated the logistical challenges of extended manufacturer lead times and delayed deliveries resulting from increased demand and supply shortages exceptionally well, allowing us to establish a new high-water mark for second quarter profitability. I want to take this opportunity to thank and congratulate our 1,588 valuable employees for this remarkable achievement.

The company also announced it has entered into an arrangement agreement providing for a plan of arrangement pursuant to which all the issued and outstanding shares of the Company would be acquired by Brandt Tractor Ltd. for cash consideration of $19.50 per share.

Second Quarter 2021 Highlights

The Company reported income of $13 million compared to a $9 million in the second quarter of 2020.

Total revenue increased 18% in the quarter, with growth in both equipment and product support sales reported by all segments. This revenue growth, in concert with a 0.8% expansion in overall gross profit margin, drove a 25% increase in gross profit.

A reduction in interest-bearing debt resulted in a 29% decrease in net finance costs compared to the second quarter of 2020.

Agriculture used equipment inventory turnover for the trailing twelve-month period ended June 30, 2021, accelerated to 3.44 times, compared to 2.31 times at June 30, 2020.¹

• Agriculture equipment revenue increased 10% in the quarter and 4% year to date, primarily driven by increased customer demand for new equipment, supported by strong market fundamentals in all our geographies. Product support revenue increased 1% in the quarter and 6% year to date, as our execution on strategic parts initiatives, including online and on the road parts sales, and the addition of two new locations after the first quarter of 2020, was partly offset by the impact of parts supply shortages and a relatively easy seeding season in the second quarter of 2021.

In its agriculture segment, saw a 41 percent increase in revenue for the fourth quarter of 2021, which ended Jan. 31. For the full year in all categories, revenue increased by 8.1 percent.

Equipment revenue at increased by 12 percent for fiscal year 2020, which ended in December. For the fourth quarter, equipment revenue increased by just over 3 percent. Gross profit for the year and quarter increased 39 percent and 64 percent, respectively.

2020 Highlights

• Cervus reported income of $25 million in 2020, compared to a loss of $9 million in 2019.
  
• Adjusted income before tax increased $40 million, excluding the impact of wages subsidies, to $28 million, compared to an adjusted loss before tax of $13 million in 2019.
  
• Total revenue increased 8% in the year, comprised of a 12% increase in Agriculture revenue, a 1% increase in Transportation revenue, partly offset by a 12% decrease in Industrial revenue.
  
• Agriculture used equipment inventory turnover for the trailing twelve-month period ended December 31, 2020, surpassed our long-term objective of 2.50 times, improving to 2.87 times compared to 1.78 times at December 31, 2019.¹
  
• Adjusted free cash flow from operations was $53 million for the year ended December 31, 2020, compared to $21 million in 2019, an increase of $32 million.¹
  
• The Company repurchased and cancelled 0.3 million shares under its Normal Course Issuer Bid at a cost of $2.1 million for the year, and declared an increase in the dividend to $0.11 per share for the first quarter of 2021.

New Agriculture Facility Planned Near Penhold, Alberta
To better serve the Central Alberta region, our Red Deer and Olds John Deere dealership locations will be combining into a new facility near Penhold, Alberta, which is anticipated to be in service in early 2022. The new facility will offer increased parts availability and technician specialization, while utilizing technology to provide an enhanced customer experience. A training facility will also provide our customers and team with expanded learning and growth opportunities, while the new location will provide easier access for customers and their equipment.

Acquisition of Vapormatic Distribution Rights for the North Island of New Zealand
The Cervus New Zealand team is pleased to announce the acquisition of Vapormatic’s exclusive distribution rights for the North Island, effective February 28, 2021. Vapormatic sells replacement parts for multiple brands of agriculture equipment, providing Cervus the opportunity to grow our product support offerings for this region.

2020 Annual Results
Our annual results demonstrate significant progress towards our strategic objectives, including a dramatic improvement in profitability, despite the challenges presented by the pandemic.

Cervus generated $13 million in adjusted income before income tax, an increase of $15 million from the third quarter of 2019¹, driven by improved performance and profitability across all segments. In the midst of significant industry challenges, Cervus delivered 12% growth in revenue from both equipment sales and product support.

“Cervus has progressed towards our strategic performance objectives, achieving a 9% increase in overall product support revenue, a 33% increase in gross profit and continued G&A expense efficiencies. We also surpassed our used inventory turn¹ objective in Agriculture and reduced inventory levels across all segments, bolstering our already healthy balance sheet,” said Angela Lekatsas, President and CEO of Cervus. 

“I am pleased to share, that in recognition of the unprecedented nature of the pandemic and our role as an essential service, we are providing a pandemic bonus to our Canadian front-line employees. Our employees have demonstrated exceptional commitment to safely supporting our customers, while also implementing innovative initiatives in support of our long-term objectives. These actions have Cervus well positioned to perform in current market conditions and to take advantage of an eventual economic recovery.”

Third Quarter 2020 Highlights

• The Company reported income of $13 million or $0.84 per basic share in the third quarter of 2020, compared to loss of $1.7 million or ($0.11) per basic share in the third quarter of 2019. 
• Income for the quarter includes $5 million of Canada Emergency Wage Subsidy, related to the results of the second quarter.
• Adjusted income per basic share was $0.57, and excludes the impact of the wage subsidy, compared to adjusted loss per basic share of ($0.10) in the third quarter of 2019.¹
• Total revenue increased 12% in the quarter, comprised of a 17% increase in Agriculture revenue, a 6% increase in Transportation revenue, partly offset by a 21% decrease in Industrial revenue.
• Our Agriculture used equipment inventory turnover for the trailing twelve-month period ended September 30, 2020, surpassed our long-term objective, improving to 2.78 times compared to 1.65 times at September 30, 2019.¹
• Adjusted free cash flow from operations was $49 million for the nine months ended September 30, 2020, compared to $14 million for the nine months ended September 30, 2019.¹    
• During the quarter, Cervus repaid all amounts owing under its syndicated operating facility and capital facilities, and as at September 30, 2020, had a $27 million cash balance and well positioned financial covenants.
• The Company repurchased 290 thousand shares under its Normal Course Issuer Bid at a cost of $2.1 million in the quarter and declared a dividend of $0.015 per share to shareholders as at September 30, 2020. 
• The Company completed the acquisition of a John Deere dealership located in North Geelong, Victoria, Australia on September 30, 2020. Cervus plans to relocate the John Deere dealership to Colac, Victoria, with an opening planned for November 2020.

Third Quarter 2020 Results

Increased performance and profitability were delivered across all segments, accomplishing $13 million in adjusted income before income tax in the quarter, a $15 million increase compared to the prior period. The results of the quarter demonstrate progress towards our strategic performance objectives, despite the impact of COVID-19. We achieved a 9% increase in overall product support revenue, a 33% increase in gross profit, and G&A expense reductions, culminating in the $15 million improvement in adjusted income before income tax. During the year we surpassed our used equipment inventory turn objective in Agriculture and reduced inventory levels across all segments, bolstering our already healthy balance sheet and generating $49 million in adjusted free cash flow for the year to date period.

In our Agriculture segment, total revenue increased 17% with significant contributions from both equipment and product support sales. This revenue growth translated to a 56% increase in gross profit through improved margins and focused delivery of sales strategies, and an $8 million reduction in inventory impairments. Increased product support gross profit, along with sustainable cost reductions, resulted in Agriculture absorption¹ improving to 94% for September 30, 2020 year to date, compared to 87% in the prior period. These results were enabled by strategic product support sales and growth initiatives, enhanced by an earlier harvest and favourable growing conditions. 

Our Transportation and Industrial segments contributed a nearly threefold increase in adjusted income before income tax in the quarter, despite being most heavily impacted by the adverse economic conditions presented by the pandemic. Transportation new equipment revenue rebounded relative to a slow second quarter, as we were successful in completing truck orders previously deferred due to COVID-19. This resulted in a $55 million reduction in new truck inventory compared to the end of the first quarter. Both segments continue to manage costs in alignment with customer activity levels, while seeking areas of growth within the existing market.

During the third quarter, the Government of Canada enacted changes to the existing Canada Emergency Wage Subsidy legislation. As a result, Cervus’  Transportation and Industrial segments qualified for $5 million of wage subsidy for the months of April, May and June 2020. This has been reported in other income in the current quarter and is excluded in the calculation of adjusted income. 

Revenue

• Total revenue increased 12% in the quarter, comprised of a 17% increase in Agriculture revenue, a 6% increase in Transportation revenue, partly offset by 21% decrease in Industrial revenue. 
• In our Agriculture segment, our sales team aligned re-conditioned and attractively priced used equipment with the needs of customers through the Western Canada harvest window, resulting in used equipment revenue increasing 22% in the quarter. Product support revenue increased 19% in the quarter, as we continue to execute on strategic parts initiatives driving towards our 50/50 balanced sales and product support goal, including the opening of our new dealership in Nipawin, Saskatchewan during the second quarter, driving increases in over the counter, on-site, and online parts revenue.
• Transportation new equipment revenue increased 12% in the quarter, as the easing of COVID-19 restrictions on the Ontario construction industry supported our focused efforts to deliver vocational truck orders in season. While showing some signs of recovery, product support revenue declined 2% in the quarter, resulting from the broader economic impacts of COVID-19.

Gross Profit

• The 12% increase in equipment and product support revenues in the quarter, combined with the significant reduction in inventory impairments of $8 million, resulted in gross profit increasing 33%. Actions to improve our Agriculture equipment sales and trade-in practices, resulted in enhanced marketability and accelerated turnover of used equipment inventory, substantially reducing inventory impairments compared to the prior year. 

G&A Expenses and Net Finance Costs

• G&A expenses, which exclude equipment commissions, decreased 1% or $0.5 million in the quarter. These costs reductions were achieved despite recognizing performance incentives and a pandemic bonus to front-line workers in 2020, compared to 2019 when no performance incentives were earned. Excluding the current period increase in performance incentives, G&A decreased 13% or $5 million in the quarter. 
• Net finance costs decreased 33% in the quarter, resulting from reductions in inventory levels and interest rates.

Income

• Income before income tax increased $21 million in the quarter, including the wage subsidy reported in other income of $5 million. 
• The increase in equipment and product support revenues, reduced inventory impairments and a decrease in G&A expenses, as discussed above, resulted in adjusted income before income tax increasing $15 million for the quarter. 

±ő˛Ô±ą±đ˛ÔłŮ´Ç°ů˛âĚý

• Total inventory decreased $115 million from September 30, 2019, including a $95 million decrease in the Agriculture segment and a $20 million decrease in the Transportation segment. This decrease in inventory, combined with strong used sales in the quarter, resulted in Agriculture used equipment turnover for the trailing twelve-month period ended September 30, 2020 improving to 2.78 times from 1.65 times at September 30, 2019. 

AgriVision Equipment CEO Jeremy Ostrander shared the announcement at a Sioux Center city council meeting, asking to purchase 15 acres of city-owned land on which to build the dealership. It will serve customers in the agricultural, residential and construction markets.

Agrivision’s previous acquisition was in June of 2018, when they acquired Van Wall Equipment’s Onawa, Iowa location.

Calgary-based Cervus Equipment, a 36-store Deere dealer, reported that its consolidated revenue for the quarter ended Sept. 30 declined by 19 percent year-over-year. Total equipment revenue for the period was down by 26 percent. For the first nine months of the year, Cervus’ total revenues were down 16 percent compared to the same period last year.

In the agriculture segment, equipment revenue declined 28 percent in the quarter and 24 percent year-to-date.

“In this environment, producers are choosing to postpone new equipment purchases as they hold late model equipment purchased in recent years,” the company said.

Cervus reduced its ag equipment inventory by 18 percent compared to the second quarter of 2019.

Rocky Mountain Dealerships Inc. reported its financial results for the third quarter ended September 30.

Sales decreased by 21.1 percent compared to the same period in 2018, due primarily to declines in new and used same-store equipment sales. These declines reflect weaker 2019 demand and a considerable delay in harvest progress across the Canadian Prairies. Gross profit dollars decreased by 23.7 percent.

Total equipment inventory increased by 8.3 percent in the third quarter. That follows a total equipment inventory decrease of 10 percent in the second quarter of this year, which was the second largest equipment inventory decrease in the company’s history.

Sources: Business Wire, Companies, Ag Equipment Intelligence