Energy decline hurts Cervus

Equipment retailer Cervus Equipment Corp. posted weaker financial results in the quarter ended June 30 due mostly to the slowdown in the energy sector.

The agriculture segment, which focuses on John Deere equipment, was consistent with the same quarter in 2014 and the Ontario transportation business posted a profit, said Graham Drake, president and chief executive of Cervus.

“Strength in these areas of our business partially offset the significant impact of the recent downturn in the energy sector, which affected our construction and industrial segment and Sask-atchewan transportation operations, resulting in the $3 million decrease in income before in-come tax in the quarter,” he said in a news release.

Revenues increased $65.5 million and gross profit increased $10 million compared to the three months ended June 30, 2014.

In the agricultural segment, equipment sales were up 11 percent and parts sales rose 25 percent from the same quarter in 2014.

Company-wide earnings before interest, taxes, depreciation and amortization were $8.195 million, up one percent from 2014. The bottom line for the quarter was a loss of $37.117 million but that was due to a one time tax adjustment.

The Canada Revenue Agency had challenged the company’s filings related to the conversion from a limited partnership structure into a business corporation in October 2009.

During the quarter the company reached an agreement with CRA to adjust some of the company’s tax pools, and record a $31.6 million non-cash charge to earnings derecognizing deferred income tax assets related to the conversion.

This means the company has no federal income taxes payable for the period of Dec. 31, 2009 through 2014.


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