Jetcon triples Q3 profit despite big business expense
Auto trader Jetcon Corporation nearly doubled its sales in the September quarter, and tripled its earnings, notwithstanding a large spike in the cost of doing business.
Managing Director Andrew Jackson said, however, that while its cost of sales seemed large for the quarter, it was due to accounting procedures in which charges incurred previously were booked in the September period.
The company doubled the value of its inventory of vehicles in the past year.
"It's not that it (cost of sales) moved up, but there are some numbers that were inadvertently shifted from one quarter to another. So the overall numbers for the year will not change, but it's just that we had to book those numbers for the third quarter," Jackson said.
The numbers show that the auto trader's cost of doing business is already outpacing what it spent a year ago. But it comes alongside a big spike in sales.
In the third quarter, Jetcon, which deals in pre-owned vehicles, booked $224.55 million as the cost of doing business, up from $120 million in the comparative quarter. For the larger nine-month period, its cost of sales totalled $502 million, up from $312 million. For the 12 months of 2015, its cost of doing business was $436 million.
Notwithstanding, the auto trader's gross profit is outperforming the results produced in 2015, as is its bottom line.
In the third quarter, Jetcon made net profit of $30 million, or 16 cents per share off revenue of $267 million. That compares to profit of $9 million, or six cents per share, from revenue of $143 million in the 2015 quarter. As a newly listed junior market company subject to corporate tax waivers, Jetcon paid no income tax in the 2016 quarter, but paid $3 million in the 2015 period.
Over nine months ending September, Jetcon made $66 million profit, or 37 cents per share, from $610 million in revenue, up from $27 million profit, or 18 cents per share, and collected $379 million of revenue in the 2015 period.
Jetcon's sales over the three quarters to September 2016 have already eclipsed its annual sales for the entire year in 2015.
Jetcon expects business to continue rolling into his showroom, saying the company's decision to go public and list on the junior stock market continues to pay off.
"Attractive financing conditions and an increase in economic activity seems to be playing a role as well. Costs were held well below the increase in revenues, which also contributed to the improved profit out turn," said a joint statement from Jackson and Chairman John Jackson in Jetcon's earnings report.
Jetcon listed at $2.25 per share in March 2016, but has since quadrupled. On Wednesday, the stock closed at $10.30. Jetcon is currently weighing a stock split, which its board of directors is expected to consider at their January 28 meeting. It will also decide whether to pay a dividend at that meeting.
Jackson says the company is expected to report good fourth-quarter results.
"The last quarter, even at this stage, we can say it's looking good. The beginning of the year, too, despite the challenges and uncertainties, is also looking good," he told the Financial Gleaner this week.