Cervus Equipment (TSX:CRV) saw increases in its fourth quarter and annual profits, buoyed by “outstanding performance” from its Peterbilt truck dealerships in Canada.
Cervus, which owns heavy equipment dealers in Canada, New Zealand and Australia, reported adjusted income of C$8.1 million (a Canadian dollar currently is valued at US$0.75) in the fourth quarter, a 38 percent increase, on C$300.25 million of revenue, a 10 percent increase. Adjusted income for 2018 increased by 32 percent to 36.5 million, while revenue increased by 11 percent to C$1.35 billion.
Calgary-based Cervus’s transportation segment, which includes 16 Peterbilt dealerships, primarily in Ontario, rose by 51 percent during the fourth quarter, to C$44.56 million, and an adjusted income of C$3.7 million. Revenue for the year increased by 23 percent to C$362.16 million, and adjusted income was C$5.5 million, a 221 percent increase.
“The North American truck demand has significantly increased,” said Cervus CEO Graham Drake, during a call with analysts today [March 18]. “The question is when they [trucks] are available from the factory, in terms of when they can be delivered to the customers.”
The bulk of revenue in Cervus’ transportation division came from the sale of new equipment (C$228 million in 2018, and C$44.56 for the quarter). The company does not disclose unit sales in its financial results.
Apart from the overall demand for trucks, Cervus said it improved its performance of its dealerships through a restructuring process.
“We sold and serviced more trucks than ever before by managing our costs,” Drake said.
Drake characterized 2019 as a “positive market” for trucks.
Transportation represented 27 percent of Cervus’ revenue, while 39 percent came from agricultural equipment and four percent from industrial equipment.