- Revenue was $1,657.4 million as
compared to $1,623.9 million in the
prior year, an increase of 2.1%
- Net income for the period was $22.8
million versus $32.9 million
in the prior year, a decrease of (30.6)%
- Diluted earnings per share was $0.81, a decrease of $(0.35) from $1.16
in the prior year
- Adjusted EBITDA1 was $66.7
million versus $76.4 million
in the prior year, a decrease of $(9.7)
million
EDMONTON, AB, Nov. 9, 2023
/CNW/ - AutoCanada Inc. ("AutoCanada" or the "Company") (TSX:
ACQ), a multi-location North American automobile dealership group,
today reported its financial results for the three month period
ended September 30, 2023.
"During the quarter our Canadian same store operations achieved
solid growth in new light vehicle units, as well as Parts, Service
and Collision Repair sales, and benefited from strong unit sales
growth at recently acquired stores due to the implementation of
best practices. However, the elevated rate environment resulted in
higher floorplan interest expense, impacting Canadian
adjusted EBITDA. Our US operations experienced mid-single
digit growth in new units sold, which combined with normalization
of new retail GPU, higher operating costs, and floorplan interest
expense, made for a difficult quarter for our US business." said
Paul Antony, Executive Chairman of
AutoCanada.
"In this more challenging interest rate environment, AutoCanada
remains focused on operational excellence. To this end, over the
course of the summer the management team developed Project Elevate,
which is a new 5-year strategic plan that aims to substantially
close the gap to normalized peer profitability. The recent
promotions of Jeff Thorpe to
President, North America,
Brian Feldman to Chief Operating
Officer, and the additions of Drew
Forrett as Chief Administrative & Transformation Officer
and Michael Ferra as VP, Financial
Planning & Analysis, adds to our bench strength to execute on
Project Elevate's objectives."
Project Elevate is featured in our new investor presentation,
which can be found at https://investors.autocan.ca.
Third Quarter Key Highlights and Recent
Developments
|
Three-Months Ended
September 30
|
CONSOLIDATED
FINANCIAL RESULTS
|
2023
|
2022
|
%
Change
|
Revenue
|
1,657,421
|
1,623,949
|
2.1 %
|
Gross
profit
|
290,225
|
273,634
|
6.1 %
|
Gross
profit percentage2
|
17.5 %
|
16.8 %
|
0.7 ppts
|
Operating
expenses
|
223,830
|
207,266
|
8.0 %
|
Net income
|
22,799
|
32,870
|
(30.6) %
|
Basic net income per
share attributable to AutoCanada shareholders
|
0.84
|
1.22
|
(31.1) %
|
Diluted net income per
share attributable to AutoCanada shareholders
|
0.81
|
1.16
|
(30.2) %
|
Adjusted
EBITDA1
|
66,719
|
76,374
|
(12.6) %
|
Adjusted
EBITDA Margin1
|
4.0 %
|
4.7 %
|
(0.7) ppts
|
New retail
vehicles2 sold (units)
|
10,555
|
9,186
|
14.9 %
|
Used
retail vehicles2 sold (units)
|
16,878
|
17,381
|
(2.9) %
|
Used-to-new retail units ratio2
|
1.60
|
1.89
|
(15.3) %
|
New
vehicle gross profit per retail unit2
|
5,648
|
6,322
|
(10.7) %
|
Used
vehicle gross profit per retail unit2
|
1,919
|
1,913
|
0.3 %
|
F&I gross profit
per retail unit average2
|
3,424
|
3,521
|
(2.8) %
|
New
vehicle gross profit percentage2
|
9.0 %
|
10.5 %
|
(1.5) ppts
|
Used
vehicle gross profit percentage2
|
4.6 %
|
4.0 %
|
0.6 ppts
|
Parts,
service and collision repair gross profit
percentage2
|
53.1 %
|
54.8 %
|
(1.7) ppts
|
Finance
and insurance gross profit percentage2
|
96.0 %
|
96.0 %
|
— ppts
|
LIQUIDITY
|
|
|
|
Cash
|
98,848
|
109,478
|
(9.7) %
|
Revolving floorplan
facilities
|
1,101,001
|
951,895
|
15.7 %
|
Indebtedness
|
540,965
|
460,318
|
17.5 %
|
1 See
"NON-GAAP AND OTHER FINANCIAL MEASURES" below.
2 This press release contains "SUPPLEMENTARY
FINANCIAL MEASURES". Section 14. NON-GAAP AND OTHER FINANCIAL
MEASURES of the Company's Management's Discussion & Analysis
for the three-month periods and nine-month periods ended September
30, 2023 ("MD&A") is hereby incorporated by reference for
further information regarding the composition of these measures
(accessible through the SEDAR website at
www.sedarplus.ca).
|
Consolidated revenue increased as a result of higher new vehicle
revenues arising from increased new vehicle sales volumes and
higher average selling price per new vehicle2. The
growth in new vehicle revenues reflects the continued recovery in
new vehicle inventory levels with new vehicle inventory days of
supply2 increasing by 14 days to 72 days. Increases in
parts, service and collision repair ("PS&CR") revenues coupled
with contributions from recent acquisitions also resulted in higher
revenues. This was offset by declines in used vehicle revenues
reflecting lower used vehicle sales volumes and lower average
selling price per used vehicle2 reflecting consumer
demand and payment sensitivity in the current high interest rate
environment.
Consolidated gross profit and gross profit
percentage2 increased as a result of contributions from
new vehicles, PS&CR operations and recent acquisitions.
Both operating expenses before depreciation2 and
normalized operating expenses before depreciation1,
which excludes stock based compensation and transaction costs,
increased primarily due to recent acquisitions and higher expenses
in the U.S. Operations. Overall, normalized operating expenses
before depreciation as a percentage of gross profit1
declined in Canada but was offset
by an increase in the U.S. reflecting higher insurance premiums,
advertising expenses and property taxes.
Floorplan financing expenses increased significantly as a result
of higher interest rates and higher new inventory levels, partially
offset by interest rate swaps in place and lower used vehicle
inventory levels, with used vehicle inventory days of
supply2 decreasing by (10) days to 67 days.
Net income for the period was $22.8
million as compared to $32.9
million in Q3 2022, as a result of contributions from recent
acquisitions and PS&CR operations, offset by higher floorplan
financing expenses. Diluted earnings per share was $0.81, a decrease of $(0.35) from $1.16
in the prior year.
Adjusted EBITDA1 for the period was $66.7 million as compared to $76.4 million in Q3 2022. Adjusted EBITDA
margin1 was 4.0% compared to 4.7% in the prior year, a
decrease of (0.7) ppts. This decrease was a result of lower
contributions primarily from the U.S. Operations coupled with an
increase in floorplan financing expenses.
Canadian Operations Highlights
|
Three-Months Ended
September 30
|
CANADIAN FINANCIAL
RESULTS
|
2023
|
2022
|
%
Change
|
REVENUE
|
|
|
|
New
vehicles
|
593,734
|
480,775
|
23.5 %
|
Used
vehicles
|
593,934
|
686,397
|
(13.5) %
|
Parts, service and
collision repair
|
169,233
|
140,215
|
20.7 %
|
Finance, insurance and
other
|
83,671
|
80,624
|
3.8 %
|
Total
revenue
|
1,440,572
|
1,388,011
|
3.8 %
|
GROSS
PROFIT
|
|
|
|
New
vehicles
|
53,600
|
47,024
|
14.0 %
|
Used
vehicles
|
29,707
|
33,136
|
(10.3) %
|
Parts, service and
collision repair
|
89,502
|
76,487
|
17.0 %
|
Finance, insurance and
other
|
79,889
|
76,909
|
3.9 %
|
Total gross
profit
|
252,698
|
233,556
|
8.2 %
|
Gross
profit percentage2
|
17.5 %
|
16.8 %
|
0.7 ppts
|
Operating
expenses
|
188,683
|
175,000
|
7.8 %
|
Net Income
|
25,910
|
30,288
|
(14.5) %
|
Adjusted
EBITDA1
|
64,856
|
67,575
|
(4.0) %
|
New retail
vehicles2 sold (units)
|
9,185
|
7,896
|
16.3 %
|
Used
retail vehicles2 sold (units)
|
14,642
|
14,523
|
0.8 %
|
New
vehicle gross profit per retail unit2
|
5,761
|
5,869
|
(1.8) %
|
Used
vehicle gross profit per retail unit2
|
1,986
|
2,256
|
(12.0) %
|
F&I gross profit
per retail unit average2
|
3,353
|
3,431
|
(2.3) %
|
New
vehicle gross profit percentage2
|
9.0 %
|
9.8 %
|
(0.8) ppts
|
Used
vehicle gross profit percentage2
|
5.0 %
|
4.8 %
|
0.2 ppts
|
Parts,
service and collision repair gross profit
percentage2
|
52.9 %
|
54.5 %
|
(1.7) ppts
|
Finance
and insurance gross profit percentage2
|
95.5 %
|
95.4 %
|
0.1 %
|
Revenue increased as a result of contributions from new vehicles
sales reflecting higher new retail2 sales volumes and
higher average selling price per new vehicle2, as well
as growth in PS&CR revenues and contributions from new
acquisitions. This was offset by declines in used vehicle revenues
reflecting lower used vehicle sales volumes and average selling
price per used vehicle2. The increase in new vehicle
inventories contributed to higher new retail vehicle2
sales volumes while change in sales mix contributed to a lower new
vehicle gross profit percentage2. PS&CR gross profit
increased as a result of strong customer demand as the age of
vehicles continued to increase due to the limited availability of
new vehicles over the past few years. F&I gross profit per
retail unit average2 decreased as well reflecting a
growing proportion of retail vehicle sales being purchased with
cash resulting in fewer opportunities to sell warranties and
insurance.
Adjusted EBITDA1 was down due to lower gross profit
from used vehicle sales and F&I coupled with higher floorplan
financing expenses offset by contributions from recent
acquisitions.
1 See
"NON-GAAP AND OTHER FINANCIAL MEASURES" below.
2 This press release contains "SUPPLEMENTARY
FINANCIAL MEASURES". Section 14. NON-GAAP AND OTHER FINANCIAL
MEASURES of the Company's Management's Discussion & Analysis
for the three-month periods and nine-month periods ended September
30, 2023 ("MD&A") is hereby incorporated by reference for
further information regarding the composition of these measures
(accessible through the SEDAR website at
www.sedarplus.ca).
|
U.S. Operations Highlights
|
Three-Months Ended
September 30
|
U.S. FINANCIAL
RESULTS
|
2023
|
2022
|
%
Change
|
REVENUE
|
|
|
|
New
vehicles
|
79,629
|
76,717
|
3.8 %
|
Used
vehicles
|
96,137
|
120,839
|
(20.4) %
|
Parts, service and
collision repair
|
26,929
|
21,590
|
24.7 %
|
Finance, insurance and
other
|
14,154
|
16,792
|
(15.7) %
|
Total
revenue
|
216,849
|
235,938
|
(8.1) %
|
GROSS
PROFIT
|
|
|
|
New
vehicles
|
6,704
|
11,736
|
(42.9) %
|
Used
vehicles
|
2,155
|
(509)
|
523.4 %
|
Parts, service and
collision repair
|
14,633
|
12,220
|
19.7 %
|
Finance, insurance and
other
|
14,035
|
16,631
|
(15.6) %
|
Total gross
profit
|
37,527
|
40,078
|
(6.4) %
|
Gross
profit percentage2
|
17.3 %
|
17.0 %
|
0.3 ppts
|
Operating
expenses
|
35,147
|
32,266
|
8.9 %
|
Net (Loss)
Income
|
(3,111)
|
2,582
|
(220.5) %
|
Adjusted
EBITDA1
|
1,863
|
8,799
|
(78.8) %
|
New retail
vehicles2 sold (units)
|
1,370
|
1,290
|
6.2 %
|
Used
retail vehicles2 sold (units)
|
2,236
|
2,858
|
(21.8) %
|
New
vehicle gross profit per retail unit2
|
4,893
|
9,098
|
(46.2) %
|
Used
vehicle gross profit per retail unit2
|
1,481
|
169
|
776.3 %
|
F&I gross profit
per retail unit average2
|
3,892
|
4009
|
(2.9) %
|
New
vehicle gross profit percentage2
|
8.4 %
|
15.3 %
|
(6.9) ppts
|
Used
vehicle gross profit percentage2
|
2.2 %
|
(0.4) %
|
2.7 ppts
|
Parts,
service and collision repair gross profit
percentage2
|
54.3 %
|
56.6 %
|
(2.3) ppts
|
Finance,
insurance and other gross profit percentage2
|
99.2 %
|
99.0 %
|
0.1 ppts
|
Revenue and gross profit declined due to lower used vehicle
sales volumes and lower average selling price per new
vehicle2 offset by higher new retail unit sales and
strong PS&CR performance. The recovery of new vehicle inventory
contributed to rising new vehicles sales volumes. However, the
current selling environment has changed and average selling prices
have declined compared to the prior year when customers were
frequently paying above manufacturers suggested retail price
("MSRP"). For used vehicles, management has prioritized gross
profit over sales volumes with decreased availability of quality
retail used vehicle inventory. PS&CR gross profit increased due
to strong customer demand for vehicle maintenance as the average
age of vehicles increase. F&I gross profit per retail unit
average2 decreased reflecting a growing proportion of
retail vehicle sales being purchased with cash, which resulted in
fewer warranty and insurance product sales.
Adjusted EBITDA1 declined due to lower used and new
vehicle gross profits coupled with higher operating expenses and
floorplan financing expenses, offset by contributions from
PS&CR operations.
1 See
"NON-GAAP AND OTHER FINANCIAL MEASURES" below.
|
2 This
press release contains "SUPPLEMENTARY FINANCIAL MEASURES". Section
14. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's
Management's Discussion & Analysis for the three-month periods
and nine-month periods ended September 30, 2023 ("MD&A")
is hereby incorporated by reference for further information
regarding the composition of these measures (accessible through the
SEDAR website at www.sedarplus.ca).
|
Other Recent Developments
During the quarter:
- On September 8, 2023, the Company
and CanadaOne Auto agreed to resolve their legal proceedings that
were commenced in 2019. As part of this resolution, AutoCanada has
agreed to sell to CanadaOne Auto properties on which two of
CanadaOne Auto's dealerships are located, and CanadaOne Auto has
agreed to amend the leases for two AutoCanada dealerships located
on properties owned by CanadaOne Auto. The transaction is expected
to close during the fourth quarter of 2023.
- On September 19, 2023, the
Company entered into a $25.0 million
forward interest rate swap with a deferred start date of
December 1, 2023 and fixed one-month
Canadian Collar Offered Rate ("CDOR") of 4.53%. The swap has an
initial settlement date of December 1,
2026 and may be extended by the counterparty to December 1, 2028. This swap will replace an
existing $25 million interest rate
swap with a fixed one-month CDOR of 2.18% that matures on
December 1, 2023.
Outlook
Canadian new light vehicle inventory days supply2
increased by 13 days to 75 days during the third quarter, with the
trend of replenishing inventory continuing so far during November.
Greater consumer choice due to improved inventory levels, as well
as consumer preference for lower price point vehicles and cash
deals, resulting from higher interest rates, are expected to
persist in the near term, and may impact gross profit per new, used
and F&I retail units sold. That said, our diversified business
model allows us to quickly adapt to changing market conditions, and
our operational team is actively managing the shift in market
dynamics. While higher interest rates are expected to continue to
impact customer affordability, some of the direct impacts may be
partially offset by inventory management practices, vehicle
financing products which provide flexibility in financing terms,
inclusive of incentives and term extensions. Additionally, limited
new light vehicle supply during 2020-2022 has resulted in fewer new
vehicles being converted to used vehicles in the market, which has
increased the average age of vehicles on the road. This is expected
to continue to benefit our Parts, Service and Collision Repair
business in the coming months.
Conference Call
A conference call to discuss the results for the three months
ended September 30, 2023 will be held on November 9, 2023
at 9:00am Mountain (11:00am Eastern). To participate in the
conference call, please dial 1-888-664-6392 approximately 10
minutes prior to the call.
This conference call will also be webcast live over the internet
and can be accessed by all interested parties at the following URL:
https://investors.autocan.ca/event/2023-q3-conference-call/
MD&A and Financial Statements
Information included in this press release is a summary of
results. It should be read in conjunction with AutoCanada's Interim
Consolidated Financial Statements and Management's Discussion and
Analysis for the three-month periods and nine-month periods ended
September 30, 2023, which can be
found on the Company's website at www.autocan.ca or on
www.sedarplus.ca.
All comparisons presented in this press release are between the
three-month period ended September 30,
2023 and the three-month period ended September 30, 2022, unless otherwise indicated.
Results are reported in Canadian dollars and have been rounded to
the nearest thousand dollars, unless otherwise stated.
1 See
"NON-GAAP AND OTHER FINANCIAL MEASURES" below.
|
2 This
press release contains "SUPPLEMENTARY FINANCIAL MEASURES". Section
14. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's
Management's Discussion & Analysis for the three-month periods
and nine-month periods ended September 30, 2023 ("MD&A")
is hereby incorporated by reference for further information
regarding the composition of these measures (accessible through the
SEDAR website at www.sedarplus.ca).
|
Condensed Interim Consolidated Statements of Comprehensive
Income
(Unaudited)
(in thousands of Canadian
dollars except for share and per share amounts)
|
Three-month period
ended
|
Nine-month period
ended
|
|
September 30,
2023
$
|
September 30,
2022
$
|
September 30,
2023
$
|
September 30,
2022
$
|
Revenue (Note 5)
|
1,657,421
|
1,623,949
|
4,953,009
|
4,652,413
|
Cost
of sales (Note 6)
|
(1,367,196)
|
(1,350,315)
|
(4,089,064)
|
(3,852,162)
|
Gross
profit
|
290,225
|
273,634
|
863,945
|
800,251
|
Operating expenses (Note 7)
|
(223,830)
|
(207,266)
|
(664,447)
|
(613,621)
|
Operating profit
before other income
|
66,395
|
66,368
|
199,498
|
186,630
|
Lease and other
income, net
|
2,182
|
3,486
|
7,770
|
9,489
|
(Loss) gain on
disposal of assets, net
|
(39)
|
(551)
|
67
|
(172)
|
Operating
profit
|
68,538
|
69,303
|
207,335
|
195,947
|
Finance costs (Note
8)
|
(38,112)
|
(24,659)
|
(106,699)
|
(100,078)
|
Finance income (Note
8)
|
202
|
655
|
2,112
|
1,341
|
Other (losses) gains,
net
|
(156)
|
1,179
|
(288)
|
1,870
|
Income for the
period before taxation
|
30,472
|
46,478
|
102,460
|
99,080
|
Income tax expense
(Note 9)
|
7,673
|
13,608
|
26,049
|
22,830
|
Net income for the
period
|
22,799
|
32,870
|
76,411
|
76,250
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
Items that may be
reclassified to profit or loss
|
|
|
|
|
Foreign operations
currency translation
|
3,933
|
(5,108)
|
7,213
|
(7,847)
|
Change in fair value of
cash flow hedge (Note 18)
|
396
|
1,284
|
1,486
|
5,736
|
Income tax relating to
these items
|
(101)
|
(324)
|
(379)
|
(1,455)
|
Other comprehensive
income (loss) for the period
|
4,228
|
(4,148)
|
8,320
|
(3,566)
|
Comprehensive
income for the period
|
27,027
|
28,722
|
84,731
|
72,684
|
|
|
|
|
|
Net income for the
period attributable to:
|
|
|
|
|
AutoCanada
shareholders
|
19,897
|
31,529
|
70,266
|
71,694
|
Non-controlling
interests
|
2,902
|
1,341
|
6,145
|
4,556
|
|
22,799
|
32,870
|
76,411
|
76,250
|
Comprehensive
income for the period attributable to:
|
|
|
|
|
AutoCanada
shareholders
|
24,125
|
27,381
|
78,586
|
68,128
|
Non-controlling
interests
|
2,902
|
1,341
|
6,145
|
4,556
|
|
27,027
|
28,722
|
84,731
|
72,684
|
Net income per
share attributable to AutoCanada shareholders:
|
|
|
|
|
Basic
|
0.84
|
1.22
|
2.98
|
2.72
|
Diluted
|
0.81
|
1.16
|
2.87
|
2.56
|
|
|
|
|
|
Weighted average
shares
|
|
|
|
|
Basic (Note
20)
|
23,593,493
|
25,876,198
|
23,548,608
|
26,368,404
|
Diluted (Note
20)
|
24,498,108
|
27,177,819
|
24,443,285
|
27,961,427
|
The accompanying
notes are an integral part of these condensed interim consolidated
financial statements and can be found on the Company's
website at www.autocan.ca or on www.sedarplus.ca.
|
Condensed Interim Consolidated Statements of Financial
Position
(Unaudited)
(in thousands of Canadian
dollars)
|
September 30,
2023
(Unaudited)
$
|
December
31,
2022
$
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash
|
98,848
|
108,301
|
Trade and other
receivables (Note 12)
|
263,554
|
217,790
|
Inventories (Note
13)
|
1,050,242
|
979,540
|
Current tax
receivable
|
11,393
|
—
|
Other current assets
(Note 15)
|
14,391
|
10,142
|
Assets held for
sale
|
29,841
|
—
|
|
1,468,269
|
1,315,773
|
Property and equipment (Note 14)
|
364,602
|
345,592
|
Right-of-use assets
|
398,578
|
396,369
|
Other long-term assets (Note 15)
|
16,323
|
17,298
|
Deferred income
tax
|
38,687
|
40,984
|
Derivative financial instruments (Note 18)
|
4,901
|
4,970
|
Intangible
assets
|
678,969
|
659,261
|
Goodwill
|
95,009
|
78,084
|
|
3,065,338
|
2,858,331
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
Trade and other
payables (Note 16)
|
261,665
|
229,696
|
Revolving floorplan
facilities (Note 17)
|
1,101,001
|
992,254
|
Current tax
payable
|
—
|
13,952
|
Vehicle repurchase
obligations
|
1,860
|
2,277
|
Indebtedness (Note
17)
|
759
|
777
|
Lease
liabilities
|
29,065
|
27,766
|
Redemption
liabilities
|
26,219
|
26,219
|
Other
liabilities (Note 18)
|
12,594
|
4,338
|
|
1,433,163
|
1,297,279
|
Long-term indebtedness (Note 17)
|
540,206
|
554,351
|
Long-term lease liabilities
|
461,640
|
457,111
|
Long-term redemption liabilities
|
1,050
|
1,050
|
Derivative financial instruments (Note 18)
|
1,989
|
1,939
|
Other long-term
liabilities (Note 18)
|
1,721
|
8,894
|
Deferred income
tax
|
54,166
|
50,910
|
|
2,493,935
|
2,371,534
|
EQUITY
|
|
|
Attributable to
AutoCanada shareholders
|
540,190
|
457,899
|
Attributable to
non-controlling interests
|
31,213
|
28,898
|
|
571,403
|
486,797
|
|
3,065,338
|
2,858,331
|
The accompanying
notes are an integral part of these condensed interim consolidated
financial statements and can be found on the Company's
website at www.autocan.ca or on www.sedarplus.ca.
|
Condensed Interim Consolidated Statements of Cash
Flows
(Unaudited)
(in thousands of Canadian
dollars)
|
Three-month period
ended
|
Nine-month period
ended
|
|
September 30,
2023
$
|
September 30,
2022
$
|
September 30,
2023
$
|
September 30,
2022
$
|
Cash provided by
(used in):
Operating
activities
|
|
|
|
|
Net income for the
period
|
22,799
|
32,870
|
76,411
|
76,250
|
Adjustments
for:
|
|
|
|
|
Income tax expense
(Note 9)
|
7,673
|
13,608
|
26,049
|
22,830
|
Depreciation of
property and equipment (Note 7)
|
6,782
|
5,371
|
18,571
|
15,188
|
Depreciation of
right-of-use assets (Note 7)
|
8,298
|
7,463
|
24,757
|
22,455
|
Loss (gain) on
disposal of assets, net
|
39
|
551
|
(67)
|
172
|
Share-based
compensation (Note 19)
|
1,740
|
1,347
|
4,677
|
3,717
|
Loss on extinguishment
of debt (Note 8)
|
—
|
—
|
1,382
|
9,860
|
Amortization of
deferred financing costs
|
299
|
350
|
915
|
1,013
|
Amortization of note
premium
|
—
|
—
|
—
|
(322)
|
Amortization of
terminated hedges (Note 8)
|
817
|
817
|
2,451
|
2,451
|
Amortization of
intangible assets (Note 7)
|
401
|
—
|
401
|
—
|
Unrealized fair value
changes on non-hedging instruments (Note 8, 18)
|
241
|
(879)
|
(283)
|
(9,039)
|
Unrealized fair value
changes on foreign exchange forward contracts (Note 18)
|
932
|
2,031
|
381
|
2,214
|
Loss on extinguishment
of embedded derivative (Note 8)
|
—
|
—
|
—
|
29,306
|
Income taxes
paid
|
(9,527)
|
(2,692)
|
(46,875)
|
(24,417)
|
Settlement of
share-based awards, net
|
389
|
(148)
|
(622)
|
(2,649)
|
Net change in non-cash
working capital (Note 23)
|
(9,855)
|
(23,236)
|
31,239
|
(39,362)
|
|
31,028
|
37,453
|
139,387
|
109,667
|
Investing
activities
|
|
|
|
|
Business acquisitions,
net of cash acquired (Note 10)
|
(41)
|
(41,969)
|
(47,027)
|
(120,654)
|
Purchases
of property and equipment (Note 14)
|
(16,161)
|
(16,719)
|
(64,939)
|
(33,083)
|
Additions to
intangible assets
|
(241)
|
—
|
(1,227)
|
—
|
Settlement of prior
year business acquisitions
|
—
|
(4)
|
254
|
(454)
|
Proceeds on sale of
property and equipment
|
328
|
103
|
844
|
2,613
|
|
(16,115)
|
(58,589)
|
(112,095)
|
(151,578)
|
Financing
activities
|
|
|
|
|
Proceeds from
indebtedness
|
160,486
|
199,832
|
472,528
|
792,298
|
Repayment of
indebtedness
|
(140,054)
|
(114,905)
|
(488,969)
|
(646,808)
|
Repayment of Executive
Advance (Note 24)
|
1,374
|
209
|
1,624
|
209
|
Repurchase of common
shares under Normal Course Issuer Bid
|
—
|
—
|
—
|
(56,605)
|
Shares settled from
treasury, net (Note 20)
|
1
|
678
|
353
|
1,394
|
Proceeds from exercise
of stock options, net
|
—
|
—
|
—
|
8,573
|
Settlement of
substantial issuer bid
|
—
|
(32,496)
|
—
|
(32,496)
|
Dividends paid to
non-controlling interests
|
—
|
—
|
(3,830)
|
(3,247)
|
Repayment of loan by
non-controlling interests
|
—
|
—
|
3,087
|
2,162
|
Principal portion of
lease payments, net
|
(7,256)
|
(6,965)
|
(21,423)
|
(20,546)
|
|
14,551
|
46,353
|
(36,630)
|
44,934
|
Effect of exchange
rate changes on cash
|
986
|
3,270
|
(115)
|
3,975
|
Net increase
(decrease) in cash
|
30,450
|
28,487
|
(9,453)
|
6,998
|
Cash at beginning
of period
|
68,398
|
80,991
|
108,301
|
102,480
|
Cash at end of
period
|
98,848
|
109,478
|
98,848
|
109,478
|
The accompanying
notes are an integral part of these condensed interim consolidated
financial statements and can be found on the Company's website at
www.autocan.ca or on www.sedarplus.ca.
|
NON-GAAP AND OTHER FINANCIAL MEASURES
This press release contains certain financial measures that do
not have any standardized meaning prescribed by Canadian GAAP.
Therefore, these financial measures may not be comparable to
similar measures presented by other issuers. Investors are
cautioned these measures should not be construed as an alternative
to net earnings (loss) or to cash provided by (used in) operating,
investing, financing activities, cash, and indebtedness determined
in accordance with Canadian GAAP, as indicators of our performance.
We provide these additional non-GAAP measures ("Non-GAAP
Measures"), capital management measures, and supplementary
financial measures to assist investors in determining our ability
to generate earnings and cash provided by (used in) operating
activities and to provide additional information on how these cash
resources are used.
Adjusted EBITDA, adjusted EBITDA margin, normalized operating
expenses before depreciation, and normalized operating expenses
before depreciation as a percentage of gross profit are not
earnings measures recognized by GAAP and do not have standardized
meanings prescribed by GAAP. Investors are cautioned that these
Non-GAAP Measures should not replace net earnings or loss (as
determined in accordance with GAAP) as an indicator of the
Company's performance, of its cash flows from operating, investing
and financing activities or as a measure of its liquidity and cash
flows. The Company's methods of calculating referenced Non-GAAP
Measures may differ from the methods used by other issuers.
Therefore, these measures may not be comparable to similar measures
presented by other issuers.
We list and define these "NON-GAAP MEASURES" below:
Adjusted EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation,
and amortization) is an indicator of a company's operating
performance over a period of time and ability to incur and service
debt. Adjusted EBITDA provides an indication of the results
generated by our principal business activities prior to:
- Interest expense (other than interest expense on floorplan
financing), income taxes, depreciation, and amortization;
- Charges that introduce volatility unrelated to operating
performance by virtue of the impact of external factors (such as
share-based compensation);
- Non-cash charges (such as impairment, recoveries, gains or
losses on derivatives, revaluation of contingent consideration and
revaluation of redemption liabilities);
- Charges outside the normal course of business (such as
restructuring, gains and losses on dealership divestitures and real
estate transactions); and
- Charges that are non-recurring in nature (such as provisions
for settlement income).
The Company believes adjusted EBITDA provides improved
continuity with respect to the comparison of our operating
performance over a period of time.
Adjusted EBITDA Margin
Adjusted EBITDA margin is an indicator of a company's operating
performance specifically in relation to our revenue
performance.
The Company believes adjusted EBITDA margin, provides improved
continuity with respect to the comparison of our operating
performance with retaining and growing profitability as our revenue
and scale increases over a period of time.
Normalized Operating Expenses Before Depreciation
Normalized operating expenses before depreciation is an
indicator of a company's operating expense before depreciation over
a period of time, normalized for the following items:
- Transaction costs related to acquisitions, dispositions, and
open points; and
- Share-based compensation expense.
The Company believes normalized operating expenses before
depreciation provides a comparison of our operating expense
normalized for impacts that are not indicative of the Company's
operating expenses over time. Note the current definition of
normalized operating expenses before depreciation differs from
previous definitions.
Normalized Operating Expenses Before Depreciation as a
Percentage of Gross Profit
Normalized operating expenses before depreciation as a
percentage of gross profit is a measure of a company's normalized
operating expenses before depreciation over a period of time in
relation to gross profit.
The Company believes this measure provides a comparison of our
operating performance normalized for impacts that are not
indicative of the Company's operating expenses over time.
NON-GAAP AND OTHER FINANCIAL MEASURES RECONCILIATIONS
Adjusted EBITDA and Segmented Adjusted EBITDA
The following table illustrates the adjusted EBITDA and
segmented adjusted EBITDA for the three-month period ended
September 30, over the last two years
of operations:
|
Three-Months Ended
September
30, 2023
|
|
Three-Months Ended
September
30, 2022
|
|
Canada
|
U.S.
|
Total
|
|
Canada
|
U.S.
|
Total
|
Period from July 1
to September 30
|
|
|
|
|
|
|
|
Net income (loss) for
the period
|
25,910
|
(3,111)
|
22,799
|
|
30,288
|
2,582
|
32,870
|
Add back:
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
7,777
|
(104)
|
7,673
|
|
10,941
|
2,667
|
13,608
|
Depreciation of
property and equipment
|
6,140
|
642
|
6,782
|
|
4,958
|
413
|
5,371
|
Depreciation of right
of use assets
|
7,565
|
733
|
8,298
|
|
6,758
|
705
|
7,463
|
Amortization of
intangible assets
|
401
|
—
|
401
|
|
—
|
—
|
—
|
Interest on long-term
indebtedness
|
7,525
|
2,859
|
10,384
|
|
5,887
|
1,549
|
7,436
|
Lease liability
interest
|
7,546
|
844
|
8,390
|
|
6,344
|
883
|
7,227
|
|
62,864
|
1,863
|
64,727
|
|
65,176
|
8,799
|
73,975
|
Add back:
|
|
|
|
|
|
|
|
Unrealized fair value
changes in derivative instruments
|
1,173
|
—
|
1,173
|
|
1,152
|
—
|
1,152
|
Amortization of loss
on terminated hedges
|
817
|
—
|
817
|
|
817
|
—
|
817
|
Unrealized foreign
exchange losses
|
(37)
|
—
|
(37)
|
|
(121)
|
—
|
(121)
|
Loss on disposal of
assets
|
39
|
—
|
39
|
|
551
|
—
|
551
|
Adjusted
EBITDA
|
64,856
|
1,863
|
66,719
|
|
67,575
|
8,799
|
76,374
|
Adjusted EBITDA Margin
The following tables illustrates adjusted EBITDA margin for the
three-month period ended September
30, over the last two years of operations:
|
2023
|
2022
|
Period from July 1
to September 30
|
|
|
Adjusted
EBITDA
|
66,719
|
76,374
|
Revenue
|
1,657,421
|
1,623,949
|
Adjusted EBITDA
Margin
|
4.0 %
|
4.7 %
|
Normalized Operating Expenses Before Depreciation and
Normalized Operating Expenses Before Depreciation as a Percentage
of Gross Profit
The following table illustrates segmented normalized operating
expenses before depreciation and normalized operating expenses
before depreciation as a percentage of gross profit, for the
three-month periods ended September
30, over the last two years of operations:
|
Three-Months Ended
September 30, 2023
|
|
Three-Months Ended
September 30, 2022
|
|
Canada
|
U.S.
|
Total
|
|
Canada
|
U.S.
|
Total
|
Operating
expenses
|
188,683
|
35,147
|
223,830
|
|
175,000
|
32,266
|
207,266
|
Deduct:
|
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
(6,140)
|
(642)
|
(6,782)
|
|
(4,958)
|
(413)
|
(5,371)
|
Depreciation of right
of use assets
|
(7,565)
|
(733)
|
(8,298)
|
|
(6,758)
|
(705)
|
(7,463)
|
Amortization of
intangible assets
|
(401)
|
—
|
(401)
|
|
—
|
—
|
—
|
Operating expenses
before depreciation
|
174,577
|
33,772
|
208,349
|
|
163,284
|
31,148
|
194,432
|
Normalizing
Items:
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
(799)
|
—
|
(799)
|
|
(677)
|
—
|
(677)
|
Share-based
compensation expense
|
(1,740)
|
—
|
(1,740)
|
|
(1,347)
|
—
|
(1,347)
|
Normalized operating
expenses before depreciation
|
172,038
|
33,772
|
205,810
|
|
161,260
|
31,148
|
192,408
|
Gross profit
|
252,698
|
37,527
|
290,225
|
|
233,556
|
40,078
|
273,634
|
Normalized operating
expenses before
depreciation as a percentage of gross profit
|
68.1 %
|
90.0 %
|
70.9 %
|
|
69.0 %
|
77.7 %
|
70.3 %
|
Forward Looking Statements
Certain statements contained in this press release are
forward-looking statements and information (collectively
"forward-looking statements"), within the meaning of the applicable
Canadian securities legislation. We hereby provide cautionary
statements identifying important factors that could cause actual
results to differ materially from those projected in these
forward-looking statements. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always,
through the use of words or phrases such as "will likely result",
"are expected to", "will continue", "is anticipated", "projection",
"vision", "goals", "objective", "target", "schedules", "outlook",
"anticipate", "expect", "estimate", "could", "should", "plan",
"seek", "may", "intend", "likely", "will", "believe", "shall" and
similar expressions) are not historical facts and are
forward-looking and may involve estimates and assumptions and are
subject to risks, uncertainties and other factors some of which are
beyond our control and difficult to predict.
Accordingly, these factors could cause actual results or
outcomes to differ materially from those expressed in the
forward-looking statements. Therefore, any such forward-looking
statements are qualified in their entirety by reference to the
factors discussed throughout this press release.
The Company's Annual Information Form and other documents filed
with securities regulatory authorities (accessible through the
SEDAR website at www.sedarplus.ca) describe the risks, material
assumptions and other factors that could influence actual results
and which are incorporated herein by reference.
Further, any forward-looking statement speaks only as of the
date on which such statement is made, and, except as required by
applicable law, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all of such
factors and to assess in advance the impact of each such factor on
the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
About AutoCanada
AutoCanada is a leading North American multi-location automobile
dealership group currently operating 83 franchised dealerships,
comprised of 28 brands, in eight provinces in Canada as well as a group in Illinois, USA. AutoCanada currently sells
Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC,
Buick, Cadillac, Ford, Infiniti,
Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda,
Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Acura, Honda and Porsche branded
vehicles. In addition, AutoCanada's Canadian Operations segment
currently operates 3 used vehicle dealerships and 1 used vehicle
auction business supporting the Used Digital Retail Division, 12
RightRide division locations, and 11 stand-alone collision centres
within our group of 27 collision centres. In 2022, our dealerships
sold approximately 100,000 vehicles and processed over 900,000
service and collision repair orders in our 1,367 service bays
generating revenue in excess of $6
billion.
Additional Information
Additional information about AutoCanada is available at the
Company's website at www.autocan.ca and www.sedarplus.ca.
SOURCE AutoCanada Inc.