TSX: RME. Investor Presentation January 8, 2018

Transcription

1 Investor Presentation January 8, 2018

2 Forward Looking Statements and Non-IFRS Measures This presentation may include certain statements or disclosures relating to Rocky Mountain Dealerships Inc. and its subsidiaries (hereinafter collectively Rocky ) that are based on the expectations of its Management, as well as assumptions made by and information currently available to Rocky which may constitute forward-looking information under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that Rocky anticipates or expects may, or will occur in the future should be considered forward-looking information. Forward-looking information presented in such statements or disclosures may, among other things, relate to: Rocky's business outlook; plans and objectives of Management for future operations; and anticipated financial performance. We caution that many factors could cause the performance or achievements of Rocky to be materially different from any future results, performance or achievements that may be expressed or implied by such forwardlooking statements, as a result of the risk factors as set forth in Rocky s March 14, 2017 Annual Information Form, which is available on SEDAR at Non-IFRS Measures Certain financial measures in this presentation are not prescribed by IFRS. All non-ifrs measures presented herein do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. Therefore, these non-ifrs measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. All non-ifrs measures are included because management uses the information to analyze operating performance and results, and therefore may be considered useful information by investors. Rocky Mountain Dealerships Inc., is a publicly traded corporation that conducts all of its operations through its wholly-owned subsidiary Rocky Mountain Equipment Canada Ltd. (hereinafter RME ). Rocky Mountain Equipment is the operating brand name of RME and this name is found on all of our stores across Canada. Our shares trade on the Toronto Stock Exchange under the symbol RME. 2

3 Who We Are: CANADA S LARGEST AGRICULTURE EQUIPMENT DEALER An active consolidator in Western Canada $972 million TTM sales 3

4 Our Customers: CHOICE BETWEEN NEW / USED IS GENERALLY DRIVEN BY THE SIZE OF THE FARM OPERATION Market Segments Equipment Lifecycle (Years) Segment Farms Characteristics Large / Corporate 2,100 Buy Multiple Units Access OEM Incentives Prize Latest Technology Replace After 1-2 Years New Sale Corporate Farmer Midsize 12,800 Achieve favorable price/technology balance Replace after 3-5 years Used Sale Midsized Farmer Maintenance Expenditure Smaller 29,700 Seek lowest purchase price Maintain until end of productive life Smaller Farmer Used Sale Increasing Parts & Service Expenditure End of Life 4

5 TTM Canadian Prairie Crop Receipts (AB, SK, MB) ($ Billions) Our Customers: FARM BALANCE SHEETS BENEFITTING FROM STRONG CROP RECEIPTS IN RECENT YEARS Canadian Prairie Crop Receipts (Billions) Source: CANSIM Table Total cash receipts for crops in AB, SK, MB - Last Updated May 24, 2017 for Q

6 TTM Units Delivered Our Market: THE CANADIAN AGRICULTURE EQUIPMENT MARKET IS RETURNING TO BALANCE Agriculture Equipment Units Delivered in Canada: Source: AEM Canada Ag Tractor and Combine Report September

7 Our Operations: EARNINGS GROWTH THROUGH AN IMPROVED OPERATIONAL MODEL Consolidated Locations April 2015 Dec Combined Industrial with our agriculture locations STREAMLINED OPERATIONAL MODEL ENHANCES INTEGRATION CAPABILITIES 7

8 Rocky Mountain s Results Q TSX: 8 RME

9 Our Results SEVEN PERCENT YEAR-OVER-YEAR INCREASE IN SALES COUPLED WITH STREAMLINED COST STRUCTURE LED TO A GREAT QUARTER Q3: 7% Year-over-year Increase in Revenue to $239 M Q3: 16% Year-over-year Increase in Adjusted EBITDA To $14 M Revenue ($ millions) Adjusted EBITDA ($ millions) $1,200 $50 $1,000 $45 $40 $800 $35 $30 $600 $400 $200 $966 $1,008 $965 $975 $930 $972 $25 $20 $15 $10 $5 $47 $30 $35 $29 $32 $36 $ TTM $ TTM Definitions: YoY=Year-over-Year, Adjusted EBITDA=See further discussion in Non-IFRS Measures and Reconciliation of Non-IFRS Measures to IFRS in the most recent MD&A 9

10 Our Results: Q3: Financial Highlights CONTINUED SALES GROWTH, OPERATIONAL EFFICIENCIES, AND LOWER FINANCE COSTS DROVE GROWTH OF ADJUSTED DILUTED EPS IN Q Q3: 19% Year-over-year Increase in Adjusted Diluted EPS ($ millions) 2017 Q3 Q3 Change (%) Sales % Gross Profit % Operating SG&A % Adjusted EBITDA % Earnings % Margins (%) 2017 Q3 Q3 Change (%) Gross Profit 16.3% 16.6% (0.3%) Operating SG&A 9.2% 9.6% (0.4%) Net Earnings 3.8% 3.0% 0.8% $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Adjusted Diluted EPS $1.46 $0.97 $0.99 $0.79 $0.83 $ TTM 10

11 Inventory ($ millions) TTM Inventory Days (COGS Method) Our Inventory: FOCUS ON SALES AND INVENTORY MANAGEMENT CONTINUES TO INCREASE INVENTORY TURNOVER AND, BY EXTENSION, OUR RETURN ON ASSETS $30 million Decrease in total inventory (year-over-year) 16% Increase in inventory turns (year-over-year) Inventory Inventory Days (COGS Method) Q Q1 Q2 Q3 Q4 Q Q Q Q Q1 Q2 Q3 Q4 Q Q Q Equipment Inventory Other Inventory Inventory Days 11

12 Balance Sheet: RME CONTINUES TO PAY DOWN DEBT, STRENGTHEN ITS BALANCE SHEET AND NOW HAS $389 MILLION IN AVAILABLE CREDIT $16 million Decrease in total liabilities since Q2 $16 million In Cash Available ($ millions) Facility Limit Amount Drawn Available Operating Facility Term Facility Various floor plan facilities OEM floor plan facilities Syndicated flooring facility Other floor plan facility Information as at September 30, Refer to our most recent MD&A for restrictions on the availability of liquidity 12

13 Investment Thesis Dividend and Growth

14 Our Dividend A CONSISTENT DIVIDEND STRIKING THE RIGHT BALANCE BETWEEN GROWTH AND YIELD Our success is enabling us to consider accretive acquisitions, dividend growth, and further debt reduction. $1.00 $0.75 $0.50 $0.25 $0.00 Dividends/Share $0.25 $0.37 $0.45 $0.46 $0.46 $ TTM 14

15 Our Growth SINCE 2008, RME HAS ACQUIRED 19 DEALERSHIPS IN ALBERTA, SASKATCHEWAN AND MANITOBA ACQUISITION Revenue INTEGRATION EXPANSION Territory Rights Customer Relationships Human Capital Systems Processes Finance Structure Physical and Human Capital Investment Increase Market Share LEVERAGE Product Support Annuity Pricing Strength Purchasing Strength Store Efficiency Network Power Accretive Growth WE ARE CONTINUOUSLY EVALUATING POTENTIAL TRANSACTIONS TO DETERMINE WHETHER THEY ARE THE RIGHT FIT FOR RME 15

16 Thank You!

17 Our Information: MARKET INFORMATION AS AT CLOSE OF: JANUARY 8, 2018 Share Price $ Week Low - High $ $14.34 Investor Relations Contact: Tom McMillan M: E: tom@marketclimber.com Annual Dividend $0.46 Shares Outstanding 19.9 million Current Market Capitalization $278 million 90D Average Trading Volume 55,933 Management Ownership 22% 17