RDO Equipment Reports Results for Fourth Quarter and Fiscal 2000
17 March 2000
RDO Equipment Reports Results for Fourth Quarter and Fiscal 2000
FARGO, N.D.--March 16, 2000--Increased Revenues Due to Truck Operations Offset Primarily by
Continuing Challenges in Agricultural and Construction Equipment
Sectors
RDO Equipment Co. announced today that revenues for its fiscal year ended January 31, 2000 increased by 19.1 percent from the prior fiscal year and were $689.0 million compared to $578.6 million for fiscal 1999. Revenues for the fourth quarter of the Company's 2000 fiscal year totaled $165.7 million, an increase of 10.8 percent when compared to $149.6 million for the same quarter one year ago. The increases in both periods were due in large part to the expansion of the Company's truck dealership operations.
Net income for fiscal 2000 was $6.5 million, or $0.50 per share, compared to $1.7 million, or $0.13 per share, for the twelve months ended January 31, 1999. Last year's results included $17.2 million, or $0.77 per share, in charges related to inventory and asset writedowns, reserves and severance costs taken in connection with a series of corporate actions designed to generate cash, to fund future growth opportunities, to discontinue non-strategic operations and to achieve more cost-efficient operations.
For the three months ended January 31, 2000, the net loss was $(1.7) million, or $(0.13) per share, compared to net income of $2.0 million, or $0.15 per share, for the same period in fiscal 1999. The results for the most recent quarter included a pre-tax gain from the sale of the Company's construction equipment rental business in the southwest which, due to the structure of the transaction, resulted in no after-tax gain.
Company officials stated that increases in revenues were offset by weakness in its construction equipment rental operations that were sold at the end of the year, and by the continuing unfavorable conditions in agriculture and increased competitive pressures in its markets and the resulting decline in margins, especially in the sale of new and used equipment.
Ronald D. Offutt, founder and Chairman of the Board of Directors of the Company, stated, "Despite the challenges that we faced in fiscal 2000 and face going forward, we remain firm in our belief that we are well positioned in our industries. Our corporate initiatives in fiscal 2000 strengthened our balance sheet and, combined with the strengthening of our management team, will allow us to continue to expand those business units in which we have an ongoing strategic advantage."
Offutt highlighted the January 2000 addition of Gary L. Weihs to the Company as Chief Operating Officer as an example of RDO Equipment's commitment to strengthen its leadership and management team and its focus on bottom-line results.
Gross profit as a percentage of total revenues was 15.7 percent for the quarter, compared to 19.4 percent for the same period one year ago. For fiscal 2000, gross profit was 17.7 percent, compared to 19.8 percent for fiscal 1999 before the one-time charges incurred during that year. Gross margins were adversely affected by the ongoing conditions in agriculture, a more competitive and price sensitive marketplace affecting the sale and rental of new and used construction equipment, and a one-time loss of $399,000 incurred in connection with the replacement of the Company's securitization financing structure with a more favorable financing arrangement. The expansion of truck revenues, which generally have lower gross margins, also resulted in lower gross profit as a percentage of total revenues.
Selling, general and administrative (SG&A) expenses as a percentage of total revenues were 15.4 percent for the quarter, compared to 14.9 percent for the same quarter in fiscal 1999. For the twelve months ended January 31, 2000, SG&A expenses as a percentage of total revenues was 14.1 percent, the same percentage as for the prior twelve-month period. The increase in SG&A expenses as a percentage of total revenues for the quarter was mostly attributable to lower sales of construction and agricultural equipment.
RDO Equipment Co. specializes in the distribution, sale, service, rental and finance of equipment and trucks to the agricultural, construction, manufacturing, transportation and warehousing industries, as well as to public service entities, government agencies and utilities. These operations, which consist of 56 retail stores in 10 states, include the largest network of John Deere construction and agricultural stores and Volvo and Mack truck centers in North America. Information about the Company, including recent news and product information, is available at its web site -- www.rdoequipment.com.
The future results of the Company, including results related to forward-looking statements in this news release, involve a number of risks and uncertainties. Important factors (such as customer confidence, economic conditions, weather, actions of the Company's suppliers and competitors, and risks associated with the Company's growth strategies) that will affect future results of the Company, including factors that could cause actual results to differ materially from those indicated by forward-looking statements, are discussed in the Company's filings with the Securities and Exchange Commission. The Company's forward-looking statements are based upon assumptions relating to these factors. These assumptions are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that are often revised. The Company makes no commitment to revise forward-looking statements, or to disclose subsequent facts, events or circumstances that may bear upon forward-looking statements.
SELECTED FINANCIAL AND OPERATING DATA
(in thousands, except store and per share data)
(unaudited)
Three Months Ended Twelve Months Ended
January 31, January 31,
------------------ -------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenue Data:
Total segmented revenues $165,695 $149,578 $688,970 $578,624
Construction 46.7% 55.2% 48.9% 53.9%
Agricultural 16.7% 23.1% 18.5% 27.3%
Truck 30.7% 14.8% 25.9% 13.0%
Rental 5.2% 6.0% 5.7% 4.9%
Financial services 0.7% 0.9% 1.0% 0.9%
Construction revenue mix $ 77,385 $ 82,586 $336,964 $312,194
Equipment sales 69.9% 73.4% 70.8% 74.0%
Parts and service 28.9% 25.3% 28.1% 25.3%
Rental 1.2% 1.3% 1.1% 0.7%
Agricultural revenue mix $ 27,603 $ 34,591 $127,605 $157,776
Equipment sales 67.2% 76.0% 67.4% 70.8%
Parts and service 32.8% 23.9% 32.6% 29.0%
Rental ---% 0.1% ---% 0.2%
Truck revenue mix $ 50,912 $ 22,160 $178,774 $ 75,119
Truck sales 80.8% 75.3% 80.1% 76.1%
Parts and service 19.2% 24.7% 19.9% 23.9%
Rental revenue mix $ 8,597 $ 8,962 $ 38,944 $ 28,547
Equipment sales 21.9% 20.5% 23.2% 14.8%
Parts and service 5.2% 1.9% 4.0% 2.0%
Rental 72.9% 77.6% 72.8% 83.2%
Income Statement Data:
Revenues:
Equipment and
truck sales $115,619 $105,461 $476,773 $404,093
Parts and service 41,690 34,806 173,336 143,335
Rental 7,188 8,032 32,178 26,208
Financial services 1,198 1,279 6,683 4,988
-------- -------- -------- --------
Total revenues 165,695 149,578 688,970 578,624
Cost of revenues 139,732 120,620 566,877 479,275(1)
-------- -------- -------- --------
Gross profit 25,963 28,958 122,093 99,349
Selling, general
and administrative
expenses 25,468 22,260 97,431 81,682
Restructuring charges ---- ---- ---- 2,200
-------- -------- -------- --------
Operating income 495 6,698 24,662 15,467
Gain on sale of
RDO Rental Co. 786 ---- 786 ----
Interest expense, net (3,568) (3,452) (13,719) (12,427)
-------- -------- -------- --------
Income (loss) before
income taxes and
minority interest (2,287) 3,246 11,729 3,040
Provision for (benefit from)
income taxes (453) 1,321 5,252 1,237
Minority interest (86) (32) (60) 135
-------- -------- -------- --------
Net income (loss) $(1,748) $ 1,957 $ 6,537 $ 1,668
======== ======== ======== ========
Net income (loss)
per share - basic
and diluted $ (0.13) $ 0.15 $ 0.50 $ 0.13
======== ======== ======== ========
Operating Data:
Comparable store revenues
increase (decrease) (11)% 11% (2)% 5%
Stores open at beginning
of period 68 64 64 50
Stores opened 0 0 0 6
Stores acquired 0 1 5 10
Stores consolidated/
closed/sold (12) (1) (13) (2)
-------- -------- -------- --------
Stores open at end
of period 56 64 56 64
-------- -------- -------- --------
Net purchases of
rental equipment $ 832 $ 4,286 $ 485 $19,769
Net purchases of property
and equipment 1,168 783 3,409 5,132
Depreciation and
amortization 2,990 3,661 12,950 10,506
As of January 31,
--------------------
2000 1999
---- ----
Balance Sheet Data:
Working capital $ 63,353 $ 36,739
Inventories 217,556 208,368
Total assets 361,997 379,220
Interest-bearing
floorplan payables 157,404 146,172
Noninterest-bearing
floorplan payables 32,838 44,858
Total floor plan
payables 190,242 191,030
Total debt 26,604 55,533
Stockholders' equity 109,275 102,738
(1) Includes $15 million inventory charge