Cervus Announces Second Quarter 2020 Results, $6 Million Increase in Adjusted Income Before Income Tax(1)

Due to the strong performance of our Agriculture segment, the Company did not qualify for payments under the Canadian Emergency Wage Subsidy (“CEWS”) during the quarter, and the results of the quarter do not include any Canadian government assistance. However, subsequent to the quarter legislation was passed on July 27, 2020, which we anticipate will provide some limited eligibility for our Transportation and Industrial segments, retroactive to the second quarter of 2020.

Revenue

  • Total revenue increased 4% in the quarter, comprised of a 16% increase in Agriculture revenue from the combined performance of our Canadian, Australian and New Zealand (ANZ) dealerships, partly offset by a 15% decrease in Transportation revenue, and a 29% decrease in Industrial revenue.
  • Our Agriculture equipment revenue increased 17% in the quarter, primarily driven by increased demand for used equipment in Canada as producers were cautious in committing capital following continued headwinds. Lower new equipment demand in Canada was offset by strong demand in ANZ tied to favorable short-term accelerated depreciation rules.
  • In our Transportation and Industrial segments, the impact of COVID-19 was significant and compounded by a weakened energy sector. While the transportation of consumer and industrial products remains essential, many subsets of the supply chain have experienced significant curtailment in transportation and logistics demand. These customers have in turn slowed or deferred acceptance of trucks previously ordered under more favorable short-term industry expectations. As a result, our combined Transportation and Industrial revenue declined by 17% in the quarter.
  • Product support revenue in our Agriculture segment increased 14% in the quarter, achieving strong performance despite the headwinds created by COVID-19. This was offset by a decrease in our Transportation and Industrial segments due to the impact of COVID-19 on economic activity in the quarter.

Gross Profit

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