John Deere dealer Cervus Equipment generated $3.2 million in adjusted income before tax, a significant increase of $2.7 million compared to the $0.5 million generated in the first quarter of 2020.
The company attributes this improved performance on a strategic focus on growing product support revenue, as well as lower finance costs associated with decreased equipment inventory levels.
“In what is typically our slowest quarter, I am proud of our team’s successful execution on initiatives to grow parts sales, which increased 11% in the quarter, driving a 7% increase in overall product support revenue,” said Angela Lekatsas, president and CEO of Cervus. “Despite a decrease in equipment and service revenues from continued impacts of the global pandemic, we achieved a 5% increase in gross profit quarter over quarter, from this change in the proportion of revenue from product support.
“Strong industry demand, compounded by supply chain constraints related to the pandemic and severe weather events, impacted the availability and timing of equipment from our manufacturers in the quarter. We expect manufacturer supply chain issues, including semiconductor shortages, may continue into the second and third quarters of the year, and are working in partnership with our manufacturers to minimise the impact to our customers and our business.”
