ACQ AutoCanada Inc

A conference call to discuss the results for the year ended December 31, 2013 will be held on March 21, 2014 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time). To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca.

EDMONTON, March 20, 2014 /PRNewswire/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the year ended December 31, 2013 and the three month period ended December 31, 2013.

In commenting on the financial results for the three month period ended December 31, 2013, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The fourth quarter of 2013 was very strong with $14.8 million in EBITDA, an increase of over 40% compared to the same quarter of the prior year.  A combination of same store sales increases and acquisitions completed during the year is the main contributor to the strong results we achieved in the fourth quarter. We are also pleased to have completed the real estate transaction at the end of the year and look forward to the additional cash flow as a result of the purchase. With record results throughout the year, we were very pleased to complete 2013 with such a strong finish."

In commenting on the financial results for the year ended December 31, 2013, Mr. Priestner stated that, "2013 was a record year in terms of sales and earnings for AutoCanada due to the six dealership acquisitions completed and double digit growth in same store sales and gross profit during the year. We are very proud of the performance of our dealership teams, head office team and Manufacturer partners, all of whom performed exceptionally well in 2013." With respect to recent growth opportunities announced, Mr. Priestner further commented, "We are very pleased to have invested in two General Motors dealerships, located in the province of Saskatchewan, with the Mann family. Both stores are very well established and we are eager to begin operations in the great province of Saskatchewan, a new and exciting market with great potential. The award of a Volkswagen open point in Sherwood Park, Alberta also presents a great opportunity for AutoCanada to grow its dealership base with another excellent brand in a market so close to home."  Mr. Priestner further stated.

Acquisition Guidance Update

Over the past 15 months it has become apparent to Management that the Canadian dealer succession issue which industry analysts have been forecasting over the past number of years is beginning to materialize.  As such, the Company has experienced a significant increase in the number of interested sellers of auto dealerships in Canada and has noticed that many of these opportunities are large, more profitable premium dealerships.

In recognition of this increased activity, Management is raising its guidance to ten to twelve dealership acquisitions over the coming 24 months. Should the Company be able to acquire a larger group, this would increase the guidance.

Highlights of Fourth Quarter 2013 Results

• Same store revenue increased by 8.9% in the fourth quarter of 2013, compared to the same quarter in 2012.  Same store gross profit increased by 9.2% in the fourth quarter of 2013, compared to the same quarter in 2012.
• Revenue from existing and new dealerships increased 27.8% to $333.8 million in the fourth quarter of 2013 from $261.1 million in the same quarter in 2012.
• Gross profit from existing and new dealerships increased 28.9% to $62.3 million in the fourth quarter of 2013 from $48.4 million in the same quarter in 2012.
• EBITDA increased 43.3% to $14.8 million in the fourth quarter of 2013 from $10.3 million in the same quarter in 2012.
• Free cash flow increased to $8.4 million in the fourth quarter of 2013 or $0.39 per share as compared to $0.9 million or $0.05 per share in the fourth quarter of 2012.
• Adjusted free cash flow increased to $11.9 million in the fourth quarter of 2013 or $0.55 per share as compared to $9.0 million or $0.45 per share in 2012.
• Adjusted return on capital employed decreased to 5.4% in the fourth quarter of 2013 as compared to 6.6% in 2012.
• The Company generated adjusted earnings of $9.0 million in the fourth quarter of 2013.  Adjusted pre-tax earnings increased by $3.4 million to $12.3 million in the fourth quarter of 2013 as compared to $8.9 million in the same period in 2012.

Highlights of 2013 Annual Results

• Same store revenue and gross profit increased by 17.2% and 17.5% respectively in the year ended December 31, 2013, compared to the results of the Company for the 2012 year.
• Revenue from existing and new dealerships increased 27.9% to $1.41 billion in the year ended December 31, 2013 from the $1.10 billion that was generated by the Company in 2012.
• Gross profit from existing and new dealerships increased by 29.2% to $246.0 million in the year ended December 31, 2013 from the $190.4 million that was generated by the Company in the 2012 year.
• EBITDA increased 54.4% to $58.5 million for the year ended December 31, 2013 from the $37.9 million that was generated by the Company in the 2012 year.
• Free cash flow increased to $34.5 million in the year ended December 31, 2013 or $1.65 per share as compared to $18.9 million or $0.95 per share in 2012.
• Adjusted free cash flow increased to $44.9 million in the year ended December 31, 2013 or $2.15 per share as compared to $31.8 million or $1.60 per share in 2012.
• The Company generated adjusted earnings of $37.6 million.  Adjusted pre-tax earnings increased by $18.5 million to $51.1 million for the year ended December 31, 2013 as compared to $32.6 million in 2012.

Dividends

Management reviews the Company's financial results on a monthly basis.  The Board of Directors reviews the financial results on a quarterly basis, or as requested by Management, and determines the level of dividend based on a number of factors.

The following table summarizes the dividends declared by the Company in 2013:

On February 14, 2014, the Board declared a quarterly eligible dividend of $0.22 per common share on AutoCanada's outstanding Class A common shares, payable on March 17, 2014 to shareholders of record at the close of business on February 28, 2014. The quarterly eligible dividend of $0.22 represents an annual dividend rate of $0.88 per share. The next scheduled dividend review will be in May 2014.

SELECTED ANNUAL FINANCIAL INFORMATION

The following table shows the audited results of the Company for the years ended December 31, 2011, December 31, 2012 and December 31, 2013.  The results of operations for these periods are not necessarily indicative of the results of operations to be expected in any given comparable period.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table shows the unaudited results of the Company for each of the eight most recently completed quarters.  The results of operations for these periods are not necessarily indicative of the results of operations to be expected in any given comparable period.

The following table summarizes the results for the year ended December 31, 2013, on a same store basis by revenue source, and compare these results to the same periods in 2012.

The following table summarizes the results for the three month period ended December 31, 2013, on a same store basis by revenue source, and compares these results to the same period in 2012.

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 28 wholly-owned franchised dealerships and managing 5 franchised dealership investments in seven provinces and has about 1,600 employees.  AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC, Buick, Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi and Volkswagen branded vehicles.  In 2013, our dealerships sold approximately 36,000 vehicles and processed approximately 364,000 service and collision repair orders in our 381 service bays during that time.

Our dealerships derive their revenue from the following four inter-related business operations: new vehicle sales; used vehicle sales; parts, service and collision repair; and finance and insurance. While new vehicle sales are the most important source of revenue, they generally result in lower gross profits than used vehicle sales, parts, service and collision repair operations and finance and insurance sales. Overall gross profit margins increase as revenues from higher margin operations increase relative to revenues from lower margin operations. We earn fees for arranging financing on new and used vehicle purchases on behalf of third parties.  Under our agreements with our retail financing sources we are required to collect and provide accurate financial information, which if not accurate, may require us to be responsible for the underlying loan provided to the consumer.

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 our 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", "expect", "plan", "seek", "may", "intend", "likely", "will", "believe" 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 document.

The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com 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 our 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.

NON-GAAP 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, and financing activities determined in accordance with Canadian GAAP, as indicators of our performance.  We provide these 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.  We list and define these "NON-GAAP MEASURES" below:

EBITDA

EBITDA is a measure commonly reported and widely used by investors as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric.  The Company believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization and asset impairment charges which are non-cash in nature and can vary significantly depending upon accounting methods or non-operating factors such as historical cost.  References to "EBITDA" are to earnings before interest expense (other than interest expense on floorplan financing and other interest), income taxes, depreciation, amortization and asset impairment charges.

EBIT

EBIT is a measure used by management in the calculation of Return on capital employed (defined below).  Management's calculation of EBIT is EBITDA (calculated above) less depreciation and amortization.

Adjusted Earnings

Adjusted earnings are calculated by adding back the after-tax effect of impairment or reversals of impairment of intangible assets and impairments of goodwill.  Adding back these non-cash charges to net earnings allows management to assess the net earnings of the Company from ongoing operations.

Adjusted Pre-Tax Earnings

Adjusted pre-tax earnings are calculated by adding back the impairment or reversals of impairment of intangible assets and impairments of goodwill.  Adding back these non-cash charges to pre-tax net earnings allows management to assess the pre-tax net earnings of the Company from ongoing operations.

Free Cash Flow

Free cash flow is a measure used by management to evaluate its performance.  While the closest Canadian GAAP measure is cash provided by operating activities, free cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures.  It shall be noted that although we consider this measure to be free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes.  Investors should be cautioned that free cash flow may not actually be available for growth or distribution of the Company.  References to "Free cash flow" are to cash provided by (used in) operating activities (including the net change in non-cash working capital balances) less capital expenditures (not including acquisitions of dealerships and dealership facilities).

Adjusted Free Cash Flow

Adjusted free cash flow is a measure used by management to evaluate its performance.  Adjusted free cash flow is considered relevant because it provides an indication of how much cash generated by operations before changes in non-cash working capital is available after deducting expenditures for non-growth capital assets.  It shall be noted that although we consider this measure to be adjusted free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes.  Investors should be cautioned that adjusted free cash flow may not actually be available for growth or distribution of the Company.  References to "Adjusted free cash flow" are to cash provided by (used in) operating activities (before changes in non-cash working capital balances) less non-growth capital expenditures.

Adjusted Average Capital Employed

Adjusted average capital employed is a measure used by management to determine the amount of capital invested in AutoCanada and is used in the measure of Adjusted Return on Capital Employed (described below).  Adjusted average capital employed is calculated as the average balance of interest bearing debt for the period (including current portion of long term debt, excluding revolving floorplan facilities) and the average balance of shareholders equity for the period, adjusted for impairments of intangible assets, net of deferred tax.  Management does not include future income tax, non-interest bearing debt, or revolving floorplan facilities in the calculation of adjusted average capital employed as it does not consider these items to be capital, but rather debt incurred to finance the operating activities of the Company.

Absorption Rate

Absorption rate is an operating measure commonly used in the retail automotive industry as an indicator of the performance of the parts, service and collision repair operations of a franchised automobile dealership. Absorption rate is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, absorption rate may not be comparable to similar measures presented by other issuers that operate in the retail automotive industry.  References to ''absorption rate'' are to the extent to which the gross profits of a franchised automobile dealership from parts, service and collision repair cover the costs of these departments plus the fixed costs of operating the dealership, but does not include expenses pertaining to our head office. For this purpose, fixed operating costs include fixed salaries and benefits, administration costs, occupancy costs, insurance expense, utilities expense and interest expense (other than interest expense relating to floor plan financing) of the dealerships only.

Average Capital Employed

Average capital employed is a measure used by management to determine the amount of capital invested in AutoCanada and is used in the measure of Return on Capital Employed (described below). Average capital employed is calculated as the average balance of interest bearing debt for the period (including current portion of long term debt, excluding revolving floorplan facilities) and the average balance of shareholders equity for the period.  Management does not include future income tax, non-interest bearing debt, or revolving floorplan facilities in the calculation of average capital employed as it does not consider these items to be capital, but rather debt incurred to finance the operating activities of the Company.

Return on Capital Employed

Return on capital employed is a measure used by management to evaluate the profitability of our invested capital.  As a corporation, management of AutoCanada may use this measure to compare potential acquisitions and other capital investments against our internally computed cost of capital to determine whether the investment shall create value for our shareholders.  Management may also use this measure to look at past acquisitions, capital investments and the Company as a whole in order to ensure shareholder value is being achieved by these capital investments.  Return on capital employed is calculated as EBIT (defined above) divided by Average Capital Employed (defined above).

Adjusted Return on Capital Employed

Adjusted return on capital employed is a measure used by management to evaluate the profitability of our invested capital.  As a corporation, management of AutoCanada may use this measure to compare potential acquisitions and other capital investments against our internally computed cost of capital to determine whether the investment shall create value for our shareholders.  Management may also use this measure to look at past acquisitions, capital investments and the Company as a whole in order to ensure shareholder value is being achieved by these capital investments.  Adjusted return on capital employed is calculated as EBIT (defined above) divided by Adjusted Average Capital Employed (defined above).

Cautionary Note Regarding Non-GAAP Measures

EBITDA, EBIT, Adjusted Earnings, Adjusted Pre-tax Earnings, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed 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 EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed may differ from the methods used by other issuers. Therefore, the Company's EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed may not be comparable to similar measures presented by other issuers.

Additional information about AutoCanada Inc. is available at the Company's website at www.autocan.ca and www.sedar.com.

AutoCanada Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended
(in thousands of Canadian dollars except for share and per share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

Approved on behalf of the Company:

AutoCanada Inc.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

Commitments and contingencies (Note 27)

The accompanying notes are an integral part of these consolidated financial statements.

AutoCanada Inc.
Consolidated Statements of Changes in Equity
For the Years Ended
(in thousands of Canadian dollars)

The accompanying notes are an integral part of these consolidated financial statements.

AutoCanada Inc.
Consolidated Statements of Cash Flows
For the Years Ended
(in thousands of Canadian dollars)

SOURCE AutoCanada Inc.