EDMONTON, Aug. 8, 2019
/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
June 30, 2019.
"We are very proud of our strong Q2 performance - our same store
metrics are up across the board and we thoroughly outperformed the
Canadian new vehicle market. We also made solid progress in
stabilizing our U.S. Operations this quarter," said Paul Antony, Executive Chairman.
"We are going through a period of great change in implementing
our Go-Forward Plan and the results in the second quarter confirm
that we're on the right track", said Michael Rawluk, President. "Improvements
were realized in every aspect of Canadian Operations in the
quarter, from volume and margins, to an improved operating expense
profile."
Second Quarter 2019 Key Highlights (year-over-year
comparable basis)1
- Consolidated gross profit grew to $153.4
million, an increase of $12.8
million or 9.1%
- Consolidated Adjusted EBITDA increased 90.9% to $32.1 million, an increase of $15.3 million; of the $15.3 million increase, $10.4 million was attributed to the impact of
IFRS 16, and $4.9 million was due to
operational improvements
- Canadian Operations new vehicle sales increased 0.9% compared
to the decrease of 5.5% in the Canadian new vehicle market as
reported by DesRosiers Automotive Consultants.
Consolidated Results for 2019 Second Quarter
(year-over-year comparable basis)1
- Revenue was $945.8 million, an
increase of $65.2 million or 7.4%
- Gross profit grew to $153.4
million, an increase of $12.8
million or 9.1%
- Operating expenses increased to $129.2
million, up 1.3%; the adoption of IFRS 16 resulted in a
reduction of operating expenses of $3.3
million
- Operating profit (loss) was $17.9
million, up 141.9%; the adoption of IFRS 16 resulted in an
increase in Operating profit (loss) of $3.3
million
- Net income (loss) for the period was $(4.5) million (or $(0.16) per diluted share) versus $(39.4) million (or $(1.44) per diluted share) in 2018; The adoption
of IFRS 16 resulted in additional total expenses, which increased
the Company's net (loss) in 2019 by $2.6
million
- Adjusted EBITDA increased 90.9% to $32.1
million, an increase of $15.3
million; of the $15.3 million
increase, $10.4 million was
attributed to the impact of IFRS 16, and $4.9 million was due to operational
improvements
- Total vehicles sold increased to 19,353, an increase of
4.3%
Canadian Operations Highlights for 2019 Second Quarter
(year-over-year comparable basis)1
The Company made significant progress in implementing its
Go-Forward Plan for Canadian Operations during the second
quarter. This progress is projected to continue in the coming
quarters and the Company expects the ongoing impacts of the
Go-Forward Plan to continue to be realized. The plan has
improved the operational focus of the Canadian dealership network,
while new profit centres are continuing to enhance volume and
margins.
- Revenue was $829.7 million, up
6.4%
- Gross profit grew to $138.1
million, an increase of $11.5
million or 9.1%
- Operating expenses as percentage of gross profit decreased from
89.6% to 81.0%; the adoption of IFRS 16 resulted in a reduction to
operating expenses of $2.5 million or
2.3%
- Operating profit from Canadian Operations was $31.6 million, an increase of $30.6 million; the adoption of IFRS 16
contributed $2.5 million
- Operating profit before other income (loss) was $26.3 million, up 100.0% compared with the second
quarter of 2018; the adoption of IFRS 16 resulted in an increase in
Operating profit (loss) of $2.5
million
- Net income (loss) for the period was $12.8 million ($0.46 per diluted share), up 311.6% from
$(6.0) million; the adoption of IFRS
16 resulted in additional total expenses, which decreased Canadian
Operations Net income (loss) by $1.3
million
- Adjusted EBITDA increased 101.4% to $32.3 million, an increase of $16.3 million; IFRS 16 resulted in an
increase to Adjusted EBITDA of $8.4
million
- Total retail vehicles sold increased 9.4% to 15,192
- Canadian Operations new vehicle sales increased 0.9% compared
to the decrease of 5.5% in the Canadian new vehicle market as
reported by DesRosiers Automotive Consultants.
Same Store Metrics
Total same store new and used retail unit sales for Canadian
Operations increased 8.3% to 13,651, with new retail units
down 1.4% and used retail units up 24.5%. The decrease of new
retail units by 1.4% compares with a decrease of 7.8% in the
Canadian new vehicle market for the brands represented by
AutoCanada, as reported by DesRosiers Automotive Consultants.
Total same store gross profit for Canadian Operations increased
$8.0 million or 6.8%. This was
comprised of:
|
|
Department
|
% Increase in same
store gross profit
|
New vehicle
retail
|
6.9%
|
Used vehicle
retail
|
25.4%
|
Parts, service and
collision repair
|
1.8%
|
Finance, insurance
and other
|
9.1%
|
- Revenue increased to $741.4
million, an increase of 4.7%
- Same store new vehicle gross profit per retail unit grew 8.5%
or $279 per unit
- Same store used to new units sold ratio increased to 76% from
60%
U.S. Operations Highlights for 2019 Second Quarter
(year-over-year comparable basis)1
Tamara Darvish took over as the
President of U.S. Operations in March
2019 and formulated a go forward plan for U.S. Operations
based on expense management, dealership-level initiatives and
department-focused gross profit initiatives. An emphasis was placed
on top-grading talent at the dealerships and executing on the
expense management initiatives during the second quarter.
A key area of focus has been shifting from a fixed to variable
cost structure which has driven positive changes as highlighted on
a first quarter 2019 vs second quarter 2019 comparison:
- Operating expenses decreased to 113.6% in the second quarter of
2019 from 152.7% in the first quarter of 2019
- Operating profit (loss) for the second quarter of 2019 improved
to $(1.8) million after normalizing
for impairment charges of $11.9
million versus $(6.9) million
for the first quarter of 2019
Additionally, the U.S. Operations have been rebranded to "Leader
Automotive Group" during the second quarter.
The Company remains committed to optimizing the US dealership
portfolio and disposing of non-performing assets.
The U.S. Operations were acquired in April 2018 and as such, the prior year U.S.
Operations results do not represent a full three months under our
ownership for the three months period ended June 30, 2018. The comparisons presented below
are between the three-month period ended June 30, 2019 and the three-month period ended
June 30, 2018.
- Revenue was $116.0 million, an
increase of 15.6%
- Gross profit was $15.3 million, a
change of $1.3 million or 9.6%
- Operating profit (loss) from the U.S. Operations segment was
$(13.7) million, an increase of
$30.0 million; the adoption of IFRS
16 contributed $0.5 million
- Operating profit (loss) before other income was $(2.1) million, a decrease of $(2.0) million; the adoption of IFRS 16 resulted
in an increase in Operating profit (loss) of $0.5 million
- Net (loss) income for the period was $(17.3) million versus $(33.5) million in 2018; the adoption of IFRS 16
resulted in additional total expenses, which increased U.S.
Operations Net income (loss) by $0.3
million
- Adjusted EBITDA was $(0.2)
million, a decrease of $(1.0)
million from 2018; IFRS 16 resulted in an increase to
Adjusted EBITDA of $2.0 million
1
The Company adopted IFRS 16 on January 1, 2019 but the
comparatives for the second quarter of 2018 have not been restated.
Accordingly, 2018 comparatives for the second quarter of 2018 may
not provide for a meaningful comparison to the corresponding
measures for the second quarter of 2019.
|
Statement of Financial Position Update
On July 29, 2019, the previously
granted increase to the Company's maximum permitted Total Funded
Debt to EBITDA ratio from 4.00:1.00 to 4.50:1.00 under the
Company's syndicated credit facility was extended for the period
from July 1, 2019 to March 31, 2020. After March 31, 2020, the Company's maximum permitted
Total Funded Debt to EBITDA Ratio will be 4.00:1.00.
AutoCanada continues to dispose of unproductive real estate
assets, which resulted in the sale of $4.4
million of vacant land in the second quarter of 2019.
AutoCanada realized a pre-tax net loss of $(0.6) million from these land sales. The
Company is actively marketing $23.1
million of unproductive real estate.
On June 25, 2019, the Company
completed the sale and leaseback of three dealership properties to
Automotive Properties Real Estate Investment Trust for a purchase
price of $30.4 million. On the
transaction, the Company recognized a pre-tax loss $(0.4) million. Funds from this sale were used to
pay down our revolving credit facilities.
Corporate Development
In June 2019, AutoCanada disposed
of a Hyundai dealership in Victoria. In July
2019, the Company disposed of a Hyundai dealership in
Calgary. The Company is not
planning to sell any further Canadian dealerships at this time.
As part of the plan to optimize the U.S. dealership portfolio,
the Company is actively engaged in seeking buyers for four of its
US dealerships.
Dividends
The Company has declared a quarterly eligible dividend of
$0.10 per common share on
AutoCanada's outstanding common shares, payable on September 15, 2019 to shareholders of record at
the close of business on August 31,
2019.
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
designating dividends as "eligible dividends".
Second Quarter Financial Information
The following table summarizes the Company's performance for the
quarter:
|
|
|
Three Months Ended
June 30
|
Consolidated
Operational Data
|
2019
|
2018
|
%
Change
|
Revenue
|
945,767
|
880,588
|
7.4%
|
Gross
profit
|
153,366
|
140,580
|
9.1%
|
Gross profit
%
|
16.2%
|
16.0%
|
0.2%
|
Operating
expenses
|
129,192
|
127,492
|
1.3%
|
Operating
profit
|
17,904
|
(42,719)
|
141.9%
|
Net (loss) income for
the period
|
(4,521)
|
(39,426)
|
88.5%
|
Basic net (loss)
income per share attributable to AutoCanada shareholders
2
|
(0.19)
|
(1.47)
|
87.1%
|
Adjusted EBITDA
1,3
|
32,100
|
16,814
|
90.9%
|
New retail vehicles
sold (units)
|
10,310
|
10,264
|
0.4%
|
New fleet vehicles
sold (units)
|
1,794
|
2,242
|
(20.0)%
|
Total New vehicles
sold (units)
|
12,104
|
12,506
|
(3.2)%
|
Used retail vehicles
sold (units)
|
7,249
|
6,042
|
20.0%
|
Total vehicles
sold
|
19,353
|
18,548
|
4.3%
|
Same store new retail
vehicles sold (units)
|
7,764
|
7,874
|
(1.4)%
|
Same store new fleet
vehicles sold (units)
|
1,684
|
1,939
|
(13.2)%
|
Same store used
retail vehicles sold (units)
|
5,887
|
4,730
|
24.5%
|
Same store total
vehicles sold
|
15,335
|
14,543
|
5.4%
|
Same store
revenue
|
741,380
|
707,783
|
4.7%
|
Same store gross
profit
|
124,534
|
116,564
|
6.8%
|
Same store gross
profit %
|
16.8%
|
16.5%
|
0.3%
|
See the Company's
Management's Discussion and Analysis or the quarter ended June 30,
2019 for complete footnote disclosures.
|
The following table shows the segmented operating results for
the Company for the three month periods ended June 30, 2019
and June 30, 2018.
|
|
|
|
|
Three Months
Ended
June 30, 2019
|
|
Three Months
Ended
June 30, 2018
|
|
Canada
$
|
U.S.
$
|
Total
$
|
|
Canada
$
|
U.S.
$
|
Total
$
|
New
vehicles
|
480,903
|
73,783
|
554,686
|
|
464,160
|
57,990
|
522,150
|
Used
vehicles
|
200,716
|
22,542
|
223,258
|
|
175,096
|
23,501
|
198,597
|
Parts, service and
collision repair
|
109,989
|
15,833
|
125,822
|
|
106,485
|
14,991
|
121,476
|
Finance, insurance
and other
|
38,120
|
3,881
|
42,001
|
|
34,442
|
3,923
|
38,365
|
Total
revenue
|
829,728
|
116,039
|
945,767
|
|
780,183
|
100,405
|
880,588
|
New
vehicles
|
35,196
|
1,449
|
36,645
|
|
30,376
|
272
|
30,648
|
Used
vehicles
|
12,172
|
1,764
|
13,936
|
|
11,910
|
1,263
|
13,173
|
Parts, service and
collision repair
|
56,118
|
8,400
|
64,518
|
|
52,335
|
8,533
|
60,868
|
Finance, insurance
and other
|
34,591
|
3,676
|
38,267
|
|
32,006
|
3,885
|
35,891
|
Total gross
profit
|
138,077
|
15,289
|
153,366
|
|
126,627
|
13,953
|
140,580
|
Employee
costs
|
67,348
|
8,957
|
76,305
|
|
66,132
|
8,945
|
75,077
|
Administrative
costs
|
34,889
|
5,241
|
40,130
|
|
38,582
|
3,491
|
42,073
|
Facility lease and
storage costs 2
|
75
|
910
|
985
|
|
4,775
|
920
|
5,695
|
Depreciation of
property and equipment
|
4,302
|
696
|
4,998
|
|
4,009
|
638
|
4,647
|
Depreciation of
right-of-use assets 2
|
5,210
|
1,564
|
6,774
|
|
—
|
—
|
—
|
Total operating
expenses
|
111,824
|
17,368
|
129,192
|
|
113,498
|
13,994
|
127,492
|
|
|
|
|
|
|
|
|
Operating profit
(loss) before other income
|
26,253
|
(2,079)
|
24,174
|
|
13,129
|
(41)
|
13,088
|
|
|
|
|
|
|
|
|
Operating
data
|
|
|
|
|
|
|
|
New retail vehicles
sold 1
|
8,768
|
1,542
|
10,310
|
|
8,692
|
1,572
|
10,264
|
New fleet vehicles
sold 1
|
1,791
|
3
|
1,794
|
|
2,242
|
—
|
2,242
|
Total New vehicles
sold 1
|
10,559
|
1,545
|
12,104
|
|
10,934
|
1,572
|
12,506
|
Used retail vehicles
sold 1
|
6,424
|
825
|
7,249
|
|
5,195
|
847
|
6,042
|
Total Vehicles sold
1
|
16,983
|
2,370
|
19,353
|
|
16,129
|
2,419
|
18,548
|
# of service and
collision repair orders completed 1
|
205,104
|
37,030
|
242,134
|
|
214,533
|
33,634
|
248,167
|
# of dealerships at
period end
|
51
|
14
|
65
|
|
54
|
14
|
68
|
# of service bays at
period end
|
897
|
200
|
1,097
|
|
906
|
200
|
1,106
|
See the Company's
Management's Discussion and Analysis or the quarter ended June 30,
2019 for complete footnote disclosures.
|
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 June 30, 2019, 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 and
quarterly report: Adjusted EBITDA; Free Cash Flow; Average Capital
Employed; and Return on Capital Employed.
Conference Call
A conference call to discuss the results for the three months
ended June 30, 2019 will be held on August 9 at 9:00am
Mountain (11:00am Eastern). To
participate in the conference call, please dial 1.888.231.8191
approximately 10 minutes prior to the call.
AutoCanada's presentation that will be discussed on the
conference call is available at the Company's website at
www.autocan.ca.
This conference call will also be webcast live over the internet
and can be accessed by all interested parties at the following URL:
https://www.autocan.ca/investors/Q22019
About AutoCanada
AutoCanada is a leading North American multi-location
automobile dealership group currently operating 64 franchised
dealerships, comprised of 27 brands, in eight provinces in
Canada as well as a group in
Illinois, USA and has over 4,200
employees. 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,
Smart, BMW, MINI, Volvo, Toyota, Lincoln, and Honda branded vehicles. In 2018,
our dealerships sold approximately 66,000 vehicles and processed
approximately 915,000 service and collision repair orders in our
1,157 service bays generating revenue in excess of $3 billion.
Additional information about AutoCanada Inc. is available
at www.sedar.com and the Company's website
at www.autocan.ca.
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", "plan", "seek", "may", "intend", "likely",
"will", "believe" and similar expressions) are not historical facts
and are forward‑looking. Forward-looking statements 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, actual results or outcomes may
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.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.