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

  • The increase in equipment revenue, combined with overall stable product support revenue and a significant reduction in inventory impairments resulted in gross profit increasing 9% or $4.2 million in the quarter.
  • Gross profit margin as a percent of revenue improved in the quarter, primarily due to the reduction in inventory impairments.

G&A Expenses and Net Finance Costs

  • G&A expenses, which exclude sales commissions, decreased 6% or $2.2 million in the quarter, reflecting the ongoing efficiencies of the 2019 restructuring in Agriculture, along with COVID-19 specific cost discipline, including aligning our staffing levels with customer activity across the business. This quarter over quarter cost reduction was achieved despite the accrual of performance incentives in 2020, whereas 2019 results were inadequate to accrue performance incentives at June 30, 2019.
  • Net finance costs decreased 10% in the quarter, resulting from a reduction in inventory and interest rates.

Income

  • Income before income tax increased $8 million in the quarter, primarily due to the increase in gross profit and decrease in G&A expenses, as discussed above. Adjusted income before income tax increased $6 million for the quarter.

Inventory

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