Strategy


Strategy Overview
At Rocky Mountain Equipment, our objective is to be the largest and most profitable independent equipment dealer for the manufacturers we represent. We intend to increase net income through a combination of growth in existing operations, and the realization of synergies as a result of past strategies, business combination and selective acquisitions in attractive markets.

Multi-Source Revenue & Profit Model
Our interrelated revenue and profit model creates long-term business relationships by serving the customer throughout the equipment life cycle.

It all starts with new equipment sales and rentals that generate higher-margin revenue streams through:
•    Finance & insurance products bought by the customer at the time of sale, including extended warranty
•    Used equipment sales and trade-ins
•    Recurring parts and service revenue from new, used and refurbished equipment

The ability to leverage equipment sales to drive higher margin product support revenues is a key component of our business model.

We will continue to focus on those areas of our operations that enable us to grow market share and increase profitability. Key areas include:
•    Improving market share performance
•    Expanding product support and financing operations
•    Controlling expenses
•    Expanding margins

Selective Acquisitions
We expect the CNH dealership network to experience consolidation similar to the consolidation of Caterpillar, Komatsu and Deere dealerships that began in the 1980s. The automotive dealership industry has also experienced a consolidation trend with a large number of consolidated dealership groups, including publicly traded entities. We believe that consolidation within the CNH dealer network has been less rapid due, in part, to Case Construction equipment dealerships in Alberta having been corporately owned until 1993. 

Our view is that consolidation is a natural and logical outcome within the CNH dealer network. Some of the factors that we believe will drive consolidation include:
•    Exit strategies for dealership owners
•    The need for increased operating efficiencies in an increasingly competitive market
•    The improved cost-managements a dealership network affords

This hypothesis has been supported by our real-world experience. Following the IPO of Rocky Mountain Dealerships in 2007, we have grown from 12 to 38 dealerships based on our ability to acquire and consolidate existing dealerships.