CALGARY, Nov. 12, 2015 /CNW/ - Rocky Mountain Dealerships Inc. (hereinafter "Rocky") today reported its financial results for the quarter ended September 30, 2015.

SUMMARY OF FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2015

• Total revenues increased by 10.9% to $256.0 million from $230.8 million.
• Same store revenues increased by 6.5% to $245.7 million.
• Operating SG&A⁽¹⁾ declined by $2.2 million or 8.8%, excluding $1.9M of acquired expenses.
• Inventory decreased by $51.3 million or 9.5% to $489.7 million during the quarter.
• Product support revenues increased by 6.6% to $48.6 million from $45.6 million.
• Adjusted Diluted Earnings per Share⁽¹⁾ increased by $0.03 to $0.35. 
• Adjusted EBITDA⁽¹⁾ increased by 8.7% to $11.7 million from $10.8 million.
• Floor Plan Neutral Operating Cash Flow increased to $48.5 million from $10.6 million in Q3 2014.
• Amended the Syndicated Facility, positioning the Company for growth and providing additional headroom on the fixed charge coverage covenant.

Notwithstanding a decline in the overall market, Rocky's year-over-year market share gains delivered strong same-store revenue growth.  The successful implementation of cost containment measures realigned our resources deployed with industry demand, and facilitated the conversion of our revenue growth into improved profitability.

Across the Canadian Prairies, and particularly in Alberta and Saskatchewan, farmers contended with a warm and exceptionally dry growing season.  Late summer rainfalls provided a measure of relief to farmers as crop yields and overall production levels exceeded earlier expectations.  The precipitation also helped to restore groundwater levels, a welcome development for the 2016 agricultural outlook.

"The rainfall improved the outlook for agriculture production, increasing equipment demand during the third quarter", remarked Garrett Ganden, President and CEO of Rocky.  "Many customers continued the year-to-date trend of purchasing lightly-used equipment, helping Rocky to realize yet another quarter of meaningful inventory reduction, while generating both profit and free cash flow.

"Our product support momentum also carried through the third quarter, and I'm pleased to report that we have posted our tenth consecutive quarterly increase over the same period from the previous year.  If sustained, the shift in sales mix towards used equipment will continue to support strong demand in our parts and service departments, as our installed base ages. 

"In response to market conditions on both the agriculture and industrial fronts, we implemented several cost containment measures to better align our resource deployment.  It was these initiatives that allowed us to hold our Operating SG&A relatively flat, despite the addition of four new facilities, and translated into a $0.03 increase in Adjusted Diluted Earnings per Share over Q3 last year.

"Our focus for the balance of the year will be to continue to capitalize on the inventory reduction and product support opportunities presented in the agriculture segment as well as right-size our foot-print, cost structure and assets deployed across the business as a whole.  These areas of focus will be key drivers in both our cash generation and net earnings for the remainder of the year."

Quarterly Cash Dividend

Rocky also announced today that on November 10, 2015, its Board of Directors approved a quarterly dividend of $0.115 per common share on its outstanding common shares.  The common share dividend is payable on December 31, 2015, to shareholders of record at the close of business on November 30, 2015.

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.  Please consult with your own tax advisor for advice with respect to the income tax consequences to you from Rocky designating its dividends as "eligible dividends."

Conference Call

On Thursday, November 12, 2015, Rocky will discuss its results via live conference call and audio webcast, beginning at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time).  Senior management of Rocky will provide remarks on the quarter, followed by a question and answer session with analysts and institutional investors.

Those interested in participating in the conference call may do so by calling 1-888-231-8191 (toll free) or 1-647-427-7450.  A live webcast of the conference call will also be accessible through Rocky's website at www.rockymtn.com.

An archived recording of the conference call will be available until Thursday, November 26, 2015 by dialing 1-855-859-2056 (toll free) or 1-416-849-0833, passcode: 53043761.  This archived recording will also be available via Rocky's website.

Caution regarding forward-looking statements

Certain information set forth in this news release, including, without limitation, statements that imply any future earnings, profitability, economic benefit or other financial results, statements about the shift in demand from new to used equipment having a positive effect on overall inventory levels, statements that this shift in demand from new to used equipment will result in a reduction in procurement, statements implying any continued or sustained demand for used equipment going forward both in Canada and the United States, statements that the reduction in new equipment sales is expected to translate into an aging installed base and increased product support opportunities, any implied economic or financial benefit arising from Rocky's headcount rationalization and other cost containment measures, and statements dealing with future headcount or cost rationalizations and the benefit of the same, statements discussing ongoing inventory reductions, product support improvements and cost rationalization creating or leading to cash generation and net earnings, and statements associating any amendments to Rocky's credit facilities with potential growth, are forward-looking information within the meaning of applicable Canadian securities laws.  By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond Rocky's control.  While this forward-looking information is based on information and assumptions that Rocky's management believes to be reasonable, there is significant risk that the forward-looking statements will prove not to be accurate.  Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future performance and events to differ materially from that expressed in the forward-looking statements.  Accordingly, this news release is subject to the disclaimer and qualified by risks and other factors discussed by Rocky in its management's discussion and analysis ("MD&A") for the quarter ended March 31, 2015, and as discussed in Rocky's Annual Information Form dated March 10, 2015 under the heading "Risk Factors."  Except as required by law, Rocky disclaims any intention or obligation to update or revise forward-looking statements, and further reserves the right to change, at any time, at its sole discretion, its current practice of updating its guidance and outlooks.

About Rocky

Rocky is one of Canada's largest agriculture and industrial equipment dealership networks with branches located throughout Alberta, Saskatchewan, and Manitoba.  Through its network of Rocky Mountain Equipment locations, Rocky sells, rents, and leases new and used agriculture and industrial equipment and offers product support and finance to its customers.

Additional information on Rocky is available at www.rockymtn.com and on SEDAR at www.sedar.com.

NON-IFRS MEASURES

We use terms which do not have standardized meanings under IFRS.  As these non-IFRS financial measures do not have standardized meanings prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other issuers.  Our definition for each term is as follows:

• "Adjusted Diluted Earnings per Share" is calculated by eliminating from net earnings, the after-tax impact of the losses (gains) arising from the Company's derivative financial instruments and DSUs, as well as the expense (recovery) associated with its SARs.  These items arise from changes in the Company's share price as well as fluctuations in interest rates and are not reflective of the Company's core operations. 

The Company also adjusts for any non-recurring charges (recoveries) recognized in net earnings.  Management deems non-recurring charges (recoveries) to be unusual or infrequent items that the Company incurs outside of its common day-to-day operations.  Adjusting for these items allows management to isolate and analyze diluted earnings per share from core business operations.  For the periods presented, no non-recurring charges (recoveries) have been identified.

• "EBITDA" is a commonly used metric in the dealership industry.  EBITDA is calculated by adding interest on long-term debt, income taxes and depreciation to net earnings.  Adding back non-operating expenses allows management to consistently compare periods by removing changes in tax rates, long-term assets and financing costs related to the Company's capital structure.
  
  
• "Adjusted EBITDA" is calculated by eliminating from EBITDA, the impact of the losses (gains) arising from the Company's derivative financial instruments and DSUs, as well as the expense (recovery) associated with its SARs. These items arise from changes in the Company's share price as well as fluctuations in interest rates and are not reflective of the Company's core operations. 

The Company also adjusts for any non-recurring charges (recoveries) recognized in EBITDA.  Management deems non-recurring charges (recoveries) to be unusual or infrequent items that the Company incurs outside of its common day-to-day operations.  Adjusting for these items allows management to isolate and analyze EBITDA from core business operations.  For the periods presented, no non-recurring charges (recoveries) have been identified.

• "Operating SG&A" is calculated by eliminating from SG&A, the impact of the losses (gains) arising from the Company's derivative financial instruments and DSUs, as well as the expense (recovery) associated with its SARs. These items arise from changes in the Company's share price as well as fluctuations in interest rates and are not reflective of the Company's core operations. 

The Company also adjusts for depreciation of property and equipment and any non-recurring charges (recoveries) recognized in SG&A.  Management deems non-recurring charges (recoveries) to be unusual or infrequent items that the Company incurs outside of its common day-to-day operations.  Adjusting for these items allows management to assess discretionary expenses from ongoing operations.  For the periods presented, no non-recurring charges (recoveries) have been identified.  We target a sub-10% Operating SG&A as a percentage of total sales on an annual basis.  

During the quarter, the Company changed this metric such that the aforementioned charges (recoveries) on its derivative financial instruments, DSUs and SARs are also eliminated from SG&A in calculating Operating SG&A. 

• "Floor Plan Neutral Operating Cash Flow" is calculated by eliminating the impact of the change in floor plan payable (excluding floor plan assumed pursuant to business combinations) from cash flows from operating activities.  Adjusting cash flows from operating activities for changes in the balance of floor plan payable allows management to isolate and analyze operating cash flows during a period, prior to any sources or uses of cash associated with equipment financing decisions. 

RECONCILIATION OF NON-IFRS MEASURES TO IFRS

SOURCE Rocky Mountain Dealerships Inc.