EDMONTON, Nov. 3, 2016 /CNW/ - AutoCanada Inc. (the
"Company" or "AutoCanada") (TSX: ACQ) today announced financial
results for the quarter ended September 30,
2016.
Year-to-Date 2016 Financial Summary
The economic cycle presently in Alberta, and other resource based economies,
have pressured the Canadian automotive industry as a whole. The new
vehicle unit sales in Canada have
marginally increased by 3.2% year-over-year1. This
includes declines in Alberta of
8.5% and Saskatchewan of 6.6% for
the nine month period ended September 30,
2016. The Company was consistent with market trend at a 1.4%
increase in revenue and 1.5% increase in gross profit for the
year-to-date.
- EBITDA attributable to AutoCanada shareholders increased by
$2.7 million or 4.2% to $69.2 million, from $66.5
million for the nine month period ended September 30, 2016 when compared to the same
period in the prior year.
- Adjusted EBITDA attributable to AutoCanada shareholders
increased by $1.7 million or 2.5% to
$69.8 million, from $68.1 million for the nine month period ended
September 30, 2016 when compared to
the same period in the prior year.
- In October 2016, the Company
purchased 100% of the voting shares of Wellington Motors Limited
which owns and operates a flagship Chrysler Dodge Jeep Ram Fiat
dealership in Guelph,
Ontario.
Third Quarter 2016 Financial Summary
For the quarter, overall Canadian new vehicle sales declined by
1.7% with Alberta down 12.5% and
Saskatchewan down
10.5%1. This correlates with third quarter results, as
the Company experienced a decline of 3.6% in revenue to
$753.2 million, and gross profit
decline of 4.5% to $122.9 million, as
compared to the same period in the prior year. We have a high
concentration of dealerships in Alberta and Saskatchewan, representing 49% of total
revenue and 52% of total gross profit.
- EBITDA attributable to AutoCanada shareholders decreased by
9.6%, or $2.6 million, to
$23.8 million in the third quarter of
2015 from $26.4 million in the same
quarter in 2015.
- Adjusted EBITDA attributable to AutoCanada shareholders
decreased by 12.7%, or $3.5 million,
to $23.7 million in the third quarter
of 2016 from $27.2 million in the
same quarter in 2015.
- Free cash flow increased 106.1% to $30.9
million in the third quarter of 2016 or $1.13 per share as compared to $15.0 million or $0.61 per share in the same quarter in 2015. This
increase is partially due to a $7.5
million tax refund. Excluding the tax refund, free cash flow
increased by 56.0% to $23.4 million.
Adjusted free cash flow increased 46.5% to $27.8 million in the third quarter of 2016 or
$1.02 per share as compared to
$19.0 million or $0.78 per share in the same quarter in 2015.
- Pre-tax earnings attributable to AutoCanada shareholders
decreased by 310.5%, or $53.1
million, to a pre-tax loss of $36.0
million in the third quarter of 2016 as compared to
$17.1 million in the same quarter in
2015. This is due to an impairment charge of $54.1 million to intangible assets and goodwill
recorded during the quarter, relating to eleven dealerships. This
charge is non-cash in nature and $45.0
million is eligible to be recovered should the dealership
results return to previous levels. Management determined it was
prudent to re-evaluate the carrying value of certain dealerships,
as a result of the downward pressure on the automotive industry
from the economic cycle in the third quarter of 2016.
- The Company generated a net loss attributable to AutoCanada
shareholders of $32.6 million and a
basic loss per share of $1.19, of
which $1.57 relates to impairment
expense and $1.40 is eligible for
recovery. Net earnings attributable to AutoCanada shareholders is
$10.7 million, without the non-cash
charge of impairment, and was an 11.3% decrease from Q3, 2015,
consistent with market results.
- The Company generated adjusted net earnings attributable to
AutoCanada shareholders of $10.3
million as compared to $12.5
million in the same quarter in 2015. Basic adjusted net
earnings per share were $0.38.
- Summary of results are as follows:
|
|
|
|
|
Three months ended
September 30, 2016
|
|
Nine months ended
September 30, 2016
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
EBITDA attributable
to AutoCanada shareholders
|
23,842
|
26,379
|
(9.6%)
|
|
69,226
|
66,467
|
4.2%
|
Adjusted net earnings
attributable to AutoCanada shareholders
|
10,327
|
12,535
|
(17.6%)
|
|
32,390
|
31,832
|
1.8%
|
Adjusted diluted
EPS
|
0.38
|
0.51
|
(25.5%)
|
|
1.18
|
1.30
|
(9.2%)
|
Impairment loss,
pre-tax
|
(54,096)
|
-
|
|
|
(54,096)
|
-
|
|
Net (loss) earnings
attributable to AutoCanada shareholders
|
(32,619)
|
11,690
|
(379.0%)
|
|
(11,189)
|
30,182
|
(137.1%)
|
Basic EPS
|
(1.19)
|
0.48
|
(347.9%)
|
|
(0.41)
|
1.24
|
(133.1%)
|
"The economic pressures on Alberta, and other resource based economies,
have been challenging for the automotive industry as a whole.
AutoCanada has heightened our focus on areas where we can control,
by monitoring, improving, and adapting to future trends of the
market" said Chris Burrows, Chief
Financial Officer. "Our Balance Sheet has further strengthened this
quarter, most evidently in the increased turnover of vehicle
inventory and increased cash flow."
"It was a challenging quarter for AutoCanada and the automotive
industry. However, we are continuing to focus on operational
strategy and cost control in order to improve our business," said
Steven Landry, Chief Executive
Officer. "We will continue to pursue our growth strategy to
diversify across Canada, through
acquisitions of flagship stores in major markets, while paying
particular attention to opportunities which are financially
accretive and strategically important."
1 DesRosiers Automotive Consultants Inc.
Outlook
The fourth quarter is likely to continue to be challenging from
an automotive industry standpoint. Accordingly we will accelerate
our efforts at cost reductions to reflect the current economic
reality. Despite the current economic headwinds, we continue to run
profitable dealerships in all of our markets. Our continued focus
on operational excellence, with specific management of both
variable and fixed costs will provide improved financial results.
By focusing on process in a down economy, we will be able to fully
realize the operational and financial benefits during an eventual
economic recovery.
SELECTED QUARTERLY 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.
|
|
|
|
|
|
|
|
|
(in thousands of
dollars, except Gross Profit %,
Earnings per share, and Operating Data)
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
Q3
2015
|
Q2
2015
|
Q1
2015
|
Q4
2014
|
Income Statement
Data
|
|
|
|
|
|
|
|
|
|
New
vehicles
|
444,482
|
497,025
|
363,181
|
368,242
|
471,018
|
483,435
|
345,542
|
379,094
|
|
Used
vehicles
|
179,582
|
208,016
|
180,108
|
167,100
|
179,270
|
194,956
|
163,243
|
148,579
|
|
Parts, service and
collision repair
|
95,585
|
100,317
|
94,721
|
102,220
|
93,139
|
99,304
|
92,951
|
91,225
|
|
Finance, insurance
and other
|
33,529
|
36,899
|
28,862
|
34,752
|
37,778
|
39,182
|
31,671
|
36,355
|
Revenue
|
753,178
|
842,257
|
666,872
|
672,314
|
781,205
|
816,877
|
633,407
|
655,253
|
|
New
vehicles
|
31,578
|
34,410
|
27,267
|
27,482
|
34,300
|
34,861
|
25,765
|
29,325
|
|
Used
vehicles
|
12,950
|
13,758
|
10,420
|
10,326
|
10,949
|
11,000
|
8,354
|
7,808
|
|
Parts, service and
collision repair
|
47,676
|
52,957
|
47,669
|
51,760
|
48,336
|
49,859
|
43,913
|
45,687
|
|
Finance, insurance
and other
|
30,733
|
33,577
|
26,353
|
34,354
|
35,088
|
33,955
|
27,407
|
31,109
|
Gross
profit
|
122,937
|
134,702
|
111,709
|
123,922
|
128,673
|
129,675
|
105,439
|
113,929
|
Gross Profit
%
|
16.3%
|
16.0%
|
16.8%
|
18.4%
|
16.5%
|
15.9%
|
16.6%
|
17.4%
|
Operating
expenses
|
99,041
|
107,932
|
96,047
|
101,310
|
100,824
|
100,568
|
93,175
|
90,283
|
Operating expenses as
a % of gross profit
|
80.6%
|
80.1%
|
86.0%
|
81.8%
|
78.4%
|
77.6%
|
88.4%
|
79.2%
|
Income from loans to
associates
|
607
|
610
|
315
|
49
|
-
|
-
|
-
|
-
|
Impairment (recovery)
of intangible assets and
goodwill
|
54,096
|
-
|
-
|
18,757
|
-
|
-
|
-
|
(1,767)
|
Net (loss) earnings
attributable to AutoCanada
shareholders
|
(32,619)
|
14,158
|
7,272
|
(7,631)
|
11,690
|
13,523
|
4,969
|
14,240
|
Adjusted Net earnings
attributable to AutoCanada
shareholders
|
10,327
|
13,466
|
8,597
|
8,441
|
12,535
|
13,957
|
5,261
|
12,797
|
EBITDA attributable
to AutoCanada shareholders
|
23,842
|
27,072
|
18,312
|
23,353
|
26,379
|
27,397
|
12,687
|
24,605
|
EBITDA % of
Sales
|
3.2%
|
3.7%
|
3.2%
|
3.5%
|
3.8%
|
3.8%
|
2.2%
|
4.0%
|
Free cash
flow
|
30,897
|
37,922
|
4,045
|
9,066
|
14,995
|
17,776
|
(3,162)
|
39,822
|
Adjusted free cash
flow
|
27,766
|
21,632
|
6,035
|
8,078
|
18,951
|
19,187
|
(7,420)
|
17,122
|
Basic (loss) earnings
per share
|
(1.19)
|
0.53
|
0.27
|
(0.29)
|
0.48
|
0.56
|
0.20
|
0.60
|
Diluted (loss)
earnings per share
|
(1.19)
|
0.53
|
0.27
|
(0.29)
|
0.47
|
0.56
|
0.20
|
0.59
|
Basic adjusted
earnings per share
|
0.38
|
0.49
|
0.31
|
0.34
|
0.51
|
0.56
|
0.22
|
0.52
|
Dividends declared
per share
|
0.10
|
0.10
|
0.25
|
0.25
|
0.25
|
0.25
|
0.25
|
0.25
|
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
Vehicles (new and
used) sold
|
15,955
|
17,425
|
13,301
|
14,150
|
17,086
|
17,739
|
13,824
|
15,415
|
New vehicles
sold
|
10,983
|
12,098
|
8,502
|
9,210
|
12,018
|
12,296
|
8,933
|
10,570
|
New retail vehicles
sold
|
8,949
|
9,374
|
7,078
|
8,016
|
9,985
|
9,929
|
7,393
|
8,907
|
New fleet vehicles
sold
|
2,034
|
2,724
|
1,424
|
1,194
|
2,033
|
2,367
|
1,540
|
1,663
|
Used retail vehicles
sold
|
4,972
|
5,327
|
4,799
|
4,940
|
5,068
|
5,443
|
4,891
|
4,845
|
|
|
|
|
|
|
|
|
|
# of service and
collision repair orders completed
|
209,912
|
227,446
|
209,194
|
230,772
|
202,692
|
215,142
|
199,096
|
216,427
|
|
|
|
|
|
|
|
|
|
Absorption
rate
|
89%
|
90%
|
83%
|
93%
|
91%
|
94%
|
85%
|
85%
|
# of dealerships at
period end
|
53
|
53
|
53
|
54
|
50
|
49
|
48
|
48
|
# of same store
dealerships
|
33
|
27
|
27
|
28
|
26
|
24
|
23
|
23
|
# of service bays at
period end
|
898
|
898
|
898
|
912
|
862
|
842
|
822
|
822
|
Same store revenue
growth
|
(9.2)%
|
(3.2)%
|
(3.1)%
|
(12.1)%
|
(6.9)%
|
(2.8)%
|
(3.5)%
|
10.9%
|
Same store gross
profit growth
|
(11.0)%
|
(5.3)%
|
(5.5)%
|
(14.3)%
|
(14.1)%
|
(11.0)%
|
(8.5)%
|
5.7%
|
|
|
|
|
|
|
|
|
|
*See the Company's
Management's Discussion and Analysis for the period ended September
30, 2016 for complete footnote disclosures.
|
The following tables summarizes the results for the three and
nine month periods ended September 30,
2016 on a same store basis by revenue source and compares
these results to the same period in 2015.
|
Same Store Revenue
and Vehicles Sold
|
|
|
|
For the Three
Months Ended
|
Revenue
Source
(in thousands of
dollars)
|
September
30, 2016
|
September
30, 2015
|
%
Change
|
|
New vehicles ‑
Retail
|
211,907
|
250, 363
|
(15.4)%
|
|
New vehicles ‑
Fleet
|
57,279
|
49,060
|
16.8%
|
Total New
vehicles
|
269,186
|
299,423
|
(10.1)%
|
|
Used vehicles ‑
Retail
|
72,491
|
86,755
|
(16.4)%
|
|
Used vehicles ‑
Wholesale
|
35,177
|
30,772
|
14.3%
|
Total Used
vehicles
|
107,668
|
117,527
|
(8.4)%
|
Finance, insurance
and other
|
20,427
|
24,138
|
(15.4)%
|
Subtotal
|
397,281
|
441,088
|
(9.9)%
|
Parts,
service
|
48,490
|
49,759
|
(2.6)%
|
Collision
repair
|
3,888
|
4,297
|
(9.5)%
|
Parts, service and
collision repair
|
52,378
|
54,056
|
(3.1)%
|
Total
|
449,659
|
495,144
|
(9.2)%
|
|
|
|
|
New retail vehicles
sold
|
5,238
|
6,442
|
(18.7)%
|
New fleet vehicles
sold
|
1,679
|
1,632
|
2.9%
|
Used retail vehicles
sold
|
3,071
|
3,213
|
(4.4)%
|
Total
|
9,988
|
11,287
|
(11.5)%
|
Total vehicles
retailed
|
8,309
|
9,655
|
(13.9)%
|
Same Store Gross
Profit and Gross Profit Percentage
|
|
|
|
For the Three
Months Ended
|
|
Gross
Profit
|
Gross Profit
%
|
Revenue
Source
(in thousands of
dollars)
|
September 30, 2016
|
September 30, 2015
|
%
Change
|
September 30, 2016
|
September 30, 2015
|
Change
|
|
New vehicles ‑
Retail
|
16,850
|
20,689
|
(18.6)%
|
8.0%
|
8.3%
|
(0.3)%
|
|
New vehicles ‑
Fleet
|
812
|
884
|
(8.1)%
|
1.4%
|
1.8%
|
(0.4)%
|
Total New
vehicles
|
17,662
|
21,573
|
(18.1)%
|
6.6%
|
7.2%
|
(0.6)%
|
|
Used vehicles ‑
Retail
|
6,356
|
6,019
|
5.6%
|
8.8%
|
6.9%
|
1.9%
|
|
Used vehicles ‑
Wholesale
|
952
|
408
|
133.3%
|
2.7%
|
1.3%
|
1.4%
|
Total Used
vehicles
|
7,308
|
6,427
|
13.7%
|
6.8%
|
5.5%
|
1.3%
|
Finance, insurance
and other
|
18,639
|
21,944
|
(15.1)%
|
91.2%
|
90.9%
|
3.0%
|
Subtotal
|
43,609
|
49,944
|
(12.7)%
|
11.0%
|
11.3%
|
(0.3)%
|
Parts,
service
|
24,509
|
26,633
|
(8.0)%
|
50.5%
|
53.5%
|
(3.0)%
|
Collision
repair
|
2,054
|
2,270
|
(9.5)%
|
52.8%
|
52.8%
|
- %
|
Parts, service and
collision repair
|
26,563
|
28,903
|
(8.1)%
|
50.7%
|
53.5%
|
(2.8)%
|
Total
|
70,172
|
78,847
|
(11.0)%
|
15.6%
|
15.9%
|
(0.3)%
|
The following table summarizes the number of same stores for the
period ended September 30, 2016 by
Province:
Number of Same
Stores by Province
|
|
|
|
|
|
|
|
|
|
|
British
Columbia
|
Alberta
|
Saskatchewan
|
Manitoba
|
Ontario
|
Quebec
|
Atlantic
|
Total
|
FCA
|
3
|
5
|
1
|
1
|
-
|
-
|
2
|
12
|
Hyundai
|
2
|
4
|
-
|
-
|
2
|
-
|
-
|
8
|
Volkswagen
|
3
|
2
|
-
|
1
|
-
|
-
|
-
|
6
|
Nissan/Infiniti
|
1
|
1
|
-
|
-
|
-
|
-
|
-
|
2
|
Audi
|
-
|
-
|
-
|
1
|
-
|
-
|
-
|
1
|
Mitsubishi
|
-
|
2
|
-
|
-
|
-
|
-
|
-
|
2
|
Subaru
|
-
|
1
|
-
|
-
|
-
|
-
|
-
|
1
|
BMW
|
-
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
Total
|
9
|
15
|
1
|
3
|
2
|
1
|
2
|
33
|
During the quarter, 6 stores moved from newly acquired stores
and into the same store designation. Over the next quarter, 11
additional stores will move into same store.
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 consolidated financial statements and
management's discussion and analysis for the three and nine month
periods ended September 30, 2016,
which can be found on the company's website at www.autocan.ca or on
www.sedar.com.
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 the Company's performance. The
Company provides these measures to assist investors in determining
the Company's ability to generate earnings and cash provided by
(used in) operating activities and to provide additional
information on how these cash resources are used. The following
"Non-GAAP Measures" are defined in the interim MD&A: EBITDA;
Adjusted EBITDA; Adjusted Net Earnings and Adjusted Net Earnings
per Share; EBIT; Free Cash Flow; Adjusted Free Cash Flow; Adjusted
Average Capital Employed; Absorption Rate; Average Capital
Employed; Return on Capital Employed; and Adjusted Return on
Capital Employed.
Conference Call
A conference call to discuss the results for the reporting
period ended September 30, 2016 will
be held on November 4, 2016 at 9:00am
Mountain Time (11:00am
Eastern). To participate in the conference call, please dial
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About AutoCanada
AutoCanada is one of Canada's
largest multi-location automobile dealership groups, currently
operating 54 franchised dealerships, comprised of 62 franchises, in
eight provinces and has over 3,800 employees. AutoCanada currently
sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC,
Buick, Cadillac, Infiniti, Nissan,
Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, KIA, BMW and MINI
branded vehicles. In 2015, the dealerships sold approximately
62,800 vehicles and processed approximately 848,000 service and
collision repair orders in 912 service bays during that time.
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 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. The Company earns fees for arranging financing
on new and used vehicle purchases on behalf of third parties. Under
agreements with retail financing sources, the Company is 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. Forward-looking statements in this
press release include but are not limited to the following: the
ability of the Company to recover goodwill impairment charges in
the future; the ability of the Company to continue to acquire and
integrate additional cash flow generating dealerships; the
stability of the new and used retail vehicle market in Canada and the ability of the Company to
realize cost savings. 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 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, the Company undertakes 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.
Additional Information
Additional information about AutoCanada is available at the
Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.