EDMONTON, Nov. 9, 2017 /CNW/ - AutoCanada Inc. (TSX:
ACQ), one of Canada's largest
multi-location automobile dealership groups, today provided a
corporate update and reported its financial results for the
three-month and nine-month periods ended September 30, 2017.
"We have continued our positive momentum in this quarter," said
Steven J. Landry, President &
Chief Executive Officer, "the Company reported an increase in
revenue, gross profit, net earnings and earnings per share. New
vehicle unit sales outpaced the industry while same store revenue,
gross profit and unit sales exceed the same quarter last year. We
achieved these positive financial and unit results while also
adding a new brand and dealership, Planète Mazda, to our
portfolio."
Third Quarter Highlights
- Revenue in the quarter was $834.6
million, up 10.8% compared with the third quarter of 2016.
Operating expenses as a percentage of gross profit declined to
80.1% from 80.6% over the same period last year.
- Gross profit was $138.0 million,
up 12.2% compared with the same quarter in 2016, with gross profit
as a percentage of revenue increasing to 16.5% from 16.3%.
- New vehicle sales were 12,014, up 9.4% from 2016. Revenue from
new car sales was $497.7 million in
the quarter, up 12.0% from 2016. New car sales accounted for 59.6%
of the Company's total revenue and 25.7% of gross profit versus
59.0% of revenue and 25.7% of gross profit in the third quarter of
2016.
- Used vehicle sales were 5,118, up 2.9% from the same quarter
last year. Revenue from used car sales was $192.5 million in the quarter, up 7.2% from last
year. Used car sales accounted for 23.1% of the Company's total
revenue and 8.1% of gross profit, versus 23.8% of revenue and 10.5%
of gross profit in 2016.
- Parts, service and collision repair generated $104.8 million of revenue in the third quarter,
up 9.7% from 2016. This accounted for 12.5% of the Company's total
revenue and 39.0% of its gross profit, versus 12.6% of revenue and
39.0% of gross profit in 2016.
- Finance and insurance generated $39.6
million of revenue in the third quarter, an improvement of
18.0% from 2016. This accounted for 4.8% of the Company's total
revenue and 26.2% of its gross profit, up from 4.5% of revenue and
25.0% of profit in 2016.
- EBITDA attributable to AutoCanada shareholders increased by
$2.0 million or 8.3% to $25.8 million from $23.8
million last year.
- Adjusted earnings per share were $0.50, compared with the adjusted earnings per
share of $0.38 in the third quarter
of 2016.
"This was a good quarter with topline growth across all areas of
the business and an overall improvement in profitability," said
Chris Burrows, Chief Financial
Officer. "Sales are up in every region, and from all but two
brands. Our operations are becoming more efficient, and we are
seeing a steady rebalancing of our portfolio, across geographies
and brands."
The following table summarizes the Company's results for the
quarter ended September 30, 2017:
|
|
|
Three months ended
September 30
|
|
Consolidated
Operational Data
|
2017
|
2016
|
%
Change
|
|
EBITDA attributable
to AutoCanada shareholders
|
25,827
|
23,842
|
8.3%
|
|
Adjusted EBITDA
attributable to AutoCanada shareholders
|
27,229
|
23,722
|
14.7%
|
|
Net earnings
attributable to AutoCanada shareholders
|
12,100
|
(32,619)
|
N/A
|
|
Adjusted net earnings
attributable to AutoCanada shareholders
|
13,581
|
10,327
|
31.5%
|
|
Basic EPS
|
0.44
|
(1.19)
|
N/A
|
|
Adjusted diluted
EPS
|
0.50
|
0.38
|
31.6%
|
|
New retail vehicles
sold (units)
|
10,334
|
8,949
|
15.6%
|
|
New fleet vehicles
sold (units)
|
1,680
|
2,034
|
(17.4)%
|
|
New vehicles sold
(units)
|
12,014
|
10,983
|
9.4%
|
|
Used retail vehicles
sold (units)
|
5,118
|
4,972
|
2.9%
|
|
Total vehicles sold
(units)
|
17,132
|
15,955
|
7.4%
|
|
Revenue
|
834,571
|
753,178
|
10.8%
|
|
Gross
Profit
|
137,969
|
122,937
|
12.2%
|
|
Gross Profit
%
|
16.5%
|
16.3%
|
1.2%
|
|
Operating
expenses
|
110,560
|
99,041
|
11.6%
|
|
Operating expenses as
% of gross profit
|
80.1%
|
80.6%
|
(0.6)%
|
|
Free cash
flow
|
30,213
|
30,897
|
(2.2)%
|
|
Adjusted free cash
flow
|
23,296
|
27,766
|
(16.1)%
|
|
*See the Company's
Management's Discussion and Analysis for the quarter ended
September 30, 2017 for complete footnote disclosures.
|
Outlook
The Canadian new vehicle market continues to outpace all
previous years for sales. Nine months into the year, new vehicle
sales have hit monthly records eight times. Total sales of 1.59
million vehicles at the end of September are 5.5% greater than
2016, the previous record year. The market has grown in every
region of the country, with growth in the west being particularly
strong.
This has been of added benefit to AutoCanada, whose business is
more heavily weighted in the west. Sales for the Company were up
9.4% in the third quarter, out-performing the national sales
increase of 6.8%.
AutoCanada's growth strategy will continue to focus on
increasing the brands and range of vehicles it offers, with dealers
clustered in key markets across a broader range of geographies. The
recent addition of the Company's first Mazda dealership,
AutoCanada's 23rd brand, located in the Montreal region where it already has three
other dealerships, is in keeping with this strategy.
AutoCanada's success includes used car sales, parts, service
& collision repair, and financing & insurance. Through
acquisitions, the Company has increased its service bays to 977
from 898 one year ago and the new Mazda dealership adds 22 more.
The Mercedes-Benz Rive-Sud dealership acquired earlier in 2017
added 28 new services bays.
We will also continue to focus on advancing our progress on
integration, continuous improvements in efficiencies and deepening
our IT and analytical capabilities across AutoCanada's network of
dealerships and at the corporate office. Acquiring new dealerships
and effectively integrating them is key to our long-term success.
Same store results, reflecting the performance of dealerships that
have been owned for at least two full years since acquisition or
opening, is an important metric to assess how well we are doing at
integration. Same store sales saw an uptick in the third quarter,
with revenue up 2.9% and gross profit up 6.3%. Only one new store
was added to our same store count in the third quarter, with only
one more to follow by the end of the
year.
Dealership relocations and expansions are important steps to
provide customer loyalty and long-term earnings sustainability. Our
capital expenditure on relocations and expansions in 2017 continue
on track. At September 30, the
Company was committed to capital expenditure obligations of
$8.3 million related to dealership
facilities.
Dividends
Management reviews the Company's financial results on a monthly
basis. The Board of Directors reviews the financial results
periodically to determine whether a dividend shall be paid based on
a number of factors with a goal to efficiently allocate capital to
fuel AutoCanada's future growth while also rewarding and sharing
the company's success with our shareholders.
On November 9, 2017, the Board
declared a quarterly eligible dividend of $0.10 per common share on AutoCanada's
outstanding Class A common shares, payable on December 15, 2017 to shareholders of record at
the close of business on November 30,
2017.
For purposes of the enhanced dividend tax credit rules contained
in the Income Tax Act (Canada)
(the "ITA") and any corresponding provincial and territorial tax
legislation, all dividends paid by AutoCanada or any of its
subsidiaries in 2010 and thereafter are designated as "eligible
dividends" (as defined in 89(1) of the ITA), unless otherwise
indicated. Please consult with your own tax advisor for advice with
respect to the income tax consequences to you of AutoCanada Inc.
designating dividends as "eligible dividends".
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
2017
|
Q2
2017
|
Q1
2017
|
Q4
2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Q4
2015
|
|
Income Statement
Data
|
|
|
|
|
|
|
|
|
|
New
vehicles
|
497,711
|
558,682
|
353,540
|
348,107
|
444,482
|
497,025
|
363,181
|
368,242
|
|
Used
vehicles
|
192,473
|
182,913
|
165,408
|
157,724
|
179,582
|
208,016
|
180,108
|
167,100
|
|
Parts, service and
collision repair
|
104,816
|
113,983
|
90,735
|
92,310
|
95,585
|
100,317
|
94,721
|
102,220
|
|
Finance, insurance
and other
|
39,571
|
39,324
|
29,344
|
31,133
|
33,529
|
36,899
|
28,862
|
34,752
|
|
Revenue
|
834,571
|
894,902
|
639,027
|
629,274
|
753,178
|
842,257
|
666,872
|
672,314
|
|
New
vehicles
|
36,806
|
38,555
|
25,590
|
25,042
|
31,578
|
34,410
|
27,267
|
27,482
|
|
Used
vehicles
|
11,140
|
13,095
|
11,940
|
10,064
|
12,950
|
13,758
|
10,420
|
10,326
|
|
Parts, service and
collision repair
|
53,805
|
56,306
|
47,284
|
52,957
|
47,676
|
52,957
|
47,669
|
51,760
|
|
Finance, insurance
and other
|
36,218
|
35,867
|
26,813
|
28,722
|
30,733
|
33,577
|
26,353
|
34,354
|
|
Gross
profit
|
137,969
|
143,823
|
111,627
|
116,785
|
122,937
|
134,702
|
111,709
|
123,922
|
|
Gross Profit
%
|
16.5%
|
16.1%
|
17.5%
|
18.6%
|
16.3%
|
16.0%
|
16.8%
|
18.4%
|
|
Operating
expenses
|
110,560
|
112,897
|
98,170
|
97,397
|
99,041
|
107,932
|
96,047
|
101,310
|
|
Operating expenses as
a % of gross profit
|
80.1%
|
78.5%
|
87.9%
|
83.4%
|
80.6%
|
80.1%
|
86.0%
|
81.8%
|
|
Net earnings (loss)
attributable to AutoCanada shareholders
|
12,100
|
24,978
|
3,678
|
13,785
|
(32,619)
|
14,158
|
7,272
|
(7,361)
|
|
Adjusted net earnings
attributable to AutoCanada shareholders
|
13,581
|
15,547
|
4,602
|
7,536
|
10,327
|
15,523
|
6,253
|
8,610
|
|
EBITDA attributable
to AutoCanada shareholders
|
25,827
|
43,683
|
14,136
|
25,260
|
23,842
|
27,072
|
18,312
|
23,353
|
|
EBITDA attributable
to AutoCanada shareholders as a % of Sales
|
3.1%
|
4.9%
|
2.7%
|
4.5%
|
3.6%
|
3.7%
|
3.2%
|
3.5%
|
|
Free cash
flow
|
31,114
|
10,982
|
621
|
23,424
|
30,897
|
37,922
|
4,045
|
9,066
|
|
Adjusted free cash
flow
|
23,296
|
36,277
|
15,217
|
13,133
|
27,766
|
21,632
|
6,035
|
8,078
|
|
Basic earnings per
share
|
0.44
|
0.91
|
0.13
|
0.50
|
(1.19)
|
0.53
|
0.27
|
(0.29)
|
|
Diluted earnings per
share
|
0.44
|
0.91
|
0.13
|
0.50
|
(1.19)
|
0.53
|
0.27
|
(0.29)
|
|
Basic adjusted
earnings per share
|
0.50
|
0.57
|
0.17
|
0.28
|
0.38
|
0.57
|
0.23
|
0.34
|
|
Diluted adjusted
earnings per share
|
0.50
|
0.57
|
0.17
|
0.27
|
0.38
|
0.57
|
0.23
|
0.34
|
|
Operating
Data
|
|
|
|
|
|
|
|
|
|
Vehicles (new and
used) sold
|
17,132
|
18,490
|
13,055
|
12,912
|
15,955
|
17,425
|
13,301
|
14,150
|
|
New vehicles
sold
|
12,014
|
13,429
|
8,508
|
8,449
|
10,983
|
12,098
|
8,502
|
9,210
|
|
New retail vehicles
sold
|
10,334
|
10,545
|
6,753
|
7,590
|
8,949
|
9,374
|
7,078
|
8,016
|
|
New fleet vehicles
sold
|
1,680
|
2,884
|
1,755
|
859
|
2,034
|
2,724
|
1,424
|
1,194
|
|
Used retail vehicles
sold
|
5,118
|
5,061
|
4,547
|
4,463
|
4,972
|
5,327
|
4,799
|
4,940
|
|
# of service and
collision repair orders completed
|
220,669
|
228,872
|
197,069
|
217,418
|
209,912
|
227,446
|
209,194
|
230,772
|
|
Absorption
rate
|
87%
|
87%
|
82%
|
86%
|
89%
|
90%
|
83%
|
93%
|
|
# of dealerships at
period end
|
57
|
57
|
56
|
55
|
53
|
53
|
53
|
54
|
|
# of same stores
dealerships
|
48
|
47
|
47
|
44
|
33
|
27
|
27
|
28
|
|
# of service bays at
period end
|
977
|
977
|
949
|
928
|
898
|
898
|
898
|
912
|
|
Same stores revenue
growth
|
2.9%
|
0.1%
|
(7.1)%
|
(10.0)%
|
(9.2)%
|
(3.2)%
|
(3.1)%
|
(12.1)%
|
|
Same stores gross
profit growth
|
6.3%
|
1.1%
|
(1.2)%
|
(5.8)%
|
(11.0)%
|
(5.3)%
|
(5.5)%
|
(14.3)%
|
|
*See the Company's
Management's Discussion and Analysis for the quarter ended June 30,
2017 for complete footnote disclosures.
|
The following tables summarizes the results for the quarter
ended September 30, 2017 on a same
store basis by revenue source and compares these results to the
same period in 2016.
|
Same Store Revenue
and Vehicles Sold
|
|
|
Three Months Ended
September 30
|
|
(in thousands of
dollars)
|
2017
|
2016
|
%
Change
|
|
Revenue
Source
|
|
|
|
|
New vehicles ‑
Retail
|
373,749
|
348,102
|
7.4%
|
|
New vehicles ‑
Fleet
|
59,999
|
68,720
|
(12.7)%
|
|
Total New
vehicles
|
433,748
|
416,822
|
4.1%
|
|
Used vehicles ‑
Retail
|
116,218
|
114,402
|
1.6%
|
|
Used vehicles ‑
Wholesale
|
54,145
|
54,203
|
(3.8)%
|
|
Total Used
vehicles
|
168,363
|
168,605
|
(0.1)%
|
|
Finance, insurance
and other
|
35,542
|
31,358
|
13.3%
|
|
Subtotal
|
637,653
|
616,785
|
3.4%
|
|
Parts, service and
collision repair
|
89,169
|
89,358
|
(0.2)%
|
|
Total
|
726,822
|
706,143
|
2.9%
|
|
New retail vehicles
sold (units)
|
8,779
|
8,246
|
6.5%
|
|
New fleet vehicles
sold (units)
|
1,634
|
2,003
|
(18.4)%
|
|
Used retail vehicles
sold (units)
|
4,403
|
4,609
|
(4.5)%
|
|
Total
|
14,816
|
14,858
|
(0.3)%
|
|
Total vehicles
retailed (units)
|
13,182
|
12,855
|
2.5%
|
|
Same Store Gross
Profit and Profit Percentage
|
|
|
|
Three Months Ended
September 30
|
|
Gross
Profit
|
Gross Profit
%
|
|
(in thousands of
dollars)
|
2017
|
2016
|
%
Change
|
2017
|
2016
|
|
Revenue
Source
|
|
|
|
|
|
|
New vehicles ‑
Retail
|
29,769
|
28,135
|
5.8%
|
8.0%
|
8.1%
|
|
New vehicles ‑
Fleet
|
1,199
|
1,057
|
13.4%
|
2.0%
|
1.5%
|
|
Total New
vehicles
|
30,968
|
29,192
|
6.1%
|
7.1%
|
7.0%
|
|
Used vehicles ‑
Retail
|
9,844
|
10,391
|
(5.3)%
|
8.5%
|
9.1%
|
|
Used vehicles ‑
Wholesale
|
1,372
|
1,619
|
(15.3)%
|
2.6%
|
3.0%
|
|
Total Used
vehicles
|
11,216
|
12,010
|
(6.6)%
|
6.7%
|
7.1%
|
|
Finance, insurance
and other
|
32,566
|
28,530
|
14.1%
|
91.6%
|
91.0%
|
|
Subtotal
|
74,750
|
69,732
|
7.2%
|
11.7%
|
11.3%
|
|
Parts, service and
collision repair
|
46,856
|
44,657
|
4.9%
|
52.5%
|
50.0%
|
|
Total
|
121,606
|
114,389
|
6.3%
|
16.7%
|
16.2%
|
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 quarter ended September 30,
2017, 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 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. The following
"Non-GAAP Measures" are defined in the annual 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 quarter ended
September 30, 2017 will be held on
November 10, 2017 at 9:00 am MT (11:00 am
ET). To participate in the conference call, please
dial 1.888.231.8191 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:
http://www.autocan.ca/investors/Q32017.
About AutoCanada
AutoCanada is one of Canada's
largest multi-location automobile dealership groups, currently
operating 57 franchised dealerships, comprised of 65
franchises, in eight provinces and has over 4,500 employees.
AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa
Romeo, Chevrolet, GMC, Buick,
Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi,
Volkswagen, Kia, Mercedes-Benz, Smart, BMW, and MINI branded
vehicles. In 2016 with $2.9
billion in revenue, our dealerships sold approximately
60,000 vehicles and processed approximately 864,000 service and
collision repair orders in our 928 service bays.
Dealerships generate 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 management's discussion and
analysis 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", "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.
Additional Information
Additional information about AutoCanada is available at the
Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.