AutoCanada Inc. releases financial results for the reporting period ended
June 30, 2010 and declares a quarterly dividend of $0.04 per common share:
A conference call to discuss the results for the reporting period ended June 30, 2010 will be held on August 5, 2010 at 10:00 a.m. Eastern 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, Aug. 4 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended June 30, 2010:
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2010 Second Quarter Operating Results
- Revenue increased by 20.8% or $42.0 million
- Same store revenue increased by 19.4% or $35.1 million
- Gross profit increased by 10.6% or $4.0 million
- Same store gross profit increased by 7.5% or $2.6 million
- Pre-tax earnings increased by 3.5% to $5.0 million
- EBITDA increased 0.7% to $6.2 million
- Net earnings decreased by 23.2% to $3.6 million
- Repair orders completed for the quarter were up 6.7%
- The number of new vehicles retailed increased by 19.0%
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In commenting on the financial results for the reporting period ended June 30, 2010, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The Canadian automotive retail market continues to improve from 2009 levels with respect to new vehicle sales. Strong competition among OEM's has created what is truly a "buyer's market" as a result of large customer incentives and rebates being offered by manufacturers. The incentives and rebates being offered have attracted many customers into dealer showrooms the past six months and have also made buying a new vehicle in Canada more affordable to the average customer. We continue to focus on growing our market share in key markets and improving the sales experience for our customers in order to build and maintain long-term relationships. During the second quarter, we are pleased to have signed an exclusivity agreement which enables us to provide AIR MILES Reward Miles to our customers. This customer reward program provides us with a competitive edge and should have a positive impact on customer loyalty. "
Second Quarter 2010 Highlights
- Net earnings of $3.6 million or basic and diluted earnings per share
of $0.183.
- Pre-tax earnings of $5.0 million or basic and diluted pre-tax
earnings per share of $0.251.
- Same store revenue increased by 19.4% in the second quarter of 2010,
compared to the same quarter in 2009.
- Same store gross profit increased by 7.5% in the second quarter of
2010, compared to the same quarter in 2009.
- Revenue from existing and new dealerships increased 20.8% to $244.3
million in the second quarter of 2010 from $202.3 million in the same
quarter in 2009.
- Gross profit from existing and new dealerships increased 10.6% to
$41.8 million in the second quarter of 2010 from $37.8 million in the
same quarter in 2009.
- EBITDA increased 0.7% to $6.2 million in the second quarter of 2010
from $6.1 million in the same quarter in 2009.
- Free cash flow generated of $0.660 per share and adjusted free cash
flow of $0.258 in the second quarter of 2010.
- On April 12, 2010 the Company completed the acquisition of Future
Hyundai, located in Mississauga, Ontario, to be continued under the
name 401/Dixie Hyundai.
Declaration of a Quarterly Dividend
The Board of Directors of AutoCanada declared today a quarterly eligible dividend of $0.04 per common share on AutoCanada's outstanding Class A common shares, payable on September 15, 2010 to shareholders of record at the close of business on August 31, 2010.
"AutoCanada will continue to move forward as a re-energized company. We have renewed our focus on customer loyalty by investing in our own people and building our relationships with various stakeholders in our industry in order to better serve our customers. We are committed to delivering shareholder value by investing in our Company and by returning cash to our shareholders by way of a regular quarterly dividend." said Pat Priestner, CEO of AutoCanada.
SELECTED QUARTERLY FINANCIAL INFORMATION
The following table shows the unaudited results of the AutoCanada 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 Operating Data
and gross profit %)
Q3 Q4 Q1 Q2
2008 2008 2009 2009
Income Statement Data
New vehicles 118,807 96,634 87,176 108,181
Used vehicles 57,790 47,605 49,550 55,098
Parts, service &
collision repair 26,492 27,105 26,390 27,322
Finance, insurance &
other 13,597 11,023 9,683 11,669
--------------------------------------------------
Revenue 216,686 182,367 172,799 202,270
--------------------------------------------------
New vehicles 9,266 6,729 5,828 7,951
Used vehicles 5,156 3,671 3,810 5,677
Parts, service &
collision repair 13,290 13,090 12,811 13,708
Finance, insurance &
other 12,629 10,137 8,732 10,489
--------------------------------------------------
Gross profit 40,341 33,627 31,181 37,825
--------------------------------------------------
Gross profit % 18.6% 18.4% 18.0% 18.7%
Sales, general & admin
expenses 30,491 28,157 27,813 30,450
SG&A exp. as % of
gross profit 75.5% 83.7% 89.2% 80.5%
Floorplan interest
expense 1,693 1,443 970 1,104
Other interest & bank
charges 458 441 375 552
Income taxes (1,869) (8,579) 97 67
Net earnings(4) (38,318) (67,121) 1,054 4,750
EBITDA(1)(4) 7,975 3,868 2,230 6,135
Operating Data
Vehicles (new and
used) sold 6,462 5,124 5,149 6,067
New retail vehicles
sold 3,245 2,376 2,219 3,030
New fleet vehicles
sold 532 526 473 446
Used retail vehicles
sold 2,685 2,222 2,385 2,591
Number of service &
collision repair
orders completed 74,300 69,560 70,021 75,062
Absorption rate(2) 99% 94% 84% 90%
No. of dealerships 21 22 22 22
No. of same store
dealerships(3) 14 14 16 17
No. of service bays
at period end 284 284 319 319
Same store revenue
growth(3) (17.1)% (16.7)% (19.8)% (15.3)%
Same store gross
profit growth(3) (3.3)% (8.0)% (12.8)% (8.7)%
Balance Sheet Data
Cash and cash
equivalents 19,194 19,592 12,522 14,842
Accounts receivable 39,390 31,195 33,821 27,034
Inventories 134,565 139,948 116,478 90,141
Revolving floorplan
facilities 135,562 137,453 114,625 73,161
Q3 Q4 Q1 Q2
2009 2009 2010 2010
Income Statement Data
New vehicles 117,513 102,880 115,395 146,664
Used vehicles 56,386 48,135 48,216 56,124
Parts, service &
collision repair 26,941 27,730 27,011 28,555
Finance, insurance &
other 12,027 10,252 10,918 12,958
--------------------------------------------------
Revenue 212,867 188,997 201,540 244,301
--------------------------------------------------
New vehicles 9,003 7,157 7,809 11,017
Used vehicles 5,744 4,309 3,977 4,720
Parts, service &
collision repair 13,374 13,447 13,106 14,443
Finance, insurance &
other 10,717 9,218 9,825 11,666
--------------------------------------------------
Gross profit 38,838 34,131 34,717 41,846
--------------------------------------------------
Gross profit % 18.3% 18.1% 17.2% 17.1%
Sales, general & admin
expenses 30,565 29,313 29,834 33,273
SG&A exp. as % of
gross profit 78.7% 85.9% 85.9% 79.5%
Floorplan interest
expense 1,399 1,382 1,661 2,198
Other interest & bank
charges 802 552 362 442
Income taxes 37 248 522 1,337
Net earnings(4) 5,099 1,675 1,433 3,647
EBITDA(1)(4) 6,716 3,271 3,079 6,180
Operating Data
Vehicles (new and
used) sold 6,415 5,451 5,676 7,017
New retail vehicles
sold 3,236 2,559 2,787 3,613
New fleet vehicles
sold 619 695 661 943
Used retail vehicles
sold 2,560 2,197 2,228 2,461
Number of service &
collision repair
orders completed 79,346 76,853 75,311 80,072
Absorption rate(2) 92% 91% 85% 87%
No. of dealerships 22 22 22 23
No. of same store
dealerships(3) 18 19 19 19
No. of service bays
at period end 321 331 331 339
Same store revenue
growth(3) (3.9)% 1.3% 16.9% 19.4%
Same store gross
profit growth(3) (6.3)% (1.1)% 11.1% 7.5%
Balance Sheet Data
Cash and cash
equivalents 23,224 22,465 23,615 31,880
Accounts receivable 38,134 35,388 40,752 46,826
Inventories 107,431 108,324 153,847 177,524
Revolving floorplan
facilities 105,254 102,650 160,590 194,388
Company management considers same store gross profit and sales information to be an important operating metric when comparing the results of the Company to other industry participants.
The following table summarizes the sales for the three and six months ended June 30, 2010 on a same store basis by revenue source and compares these results to the same periods in 2009.
Same Store Revenue and Vehicles Sold
For the Three Months Ended For the Six Months Ended
(In thousands of -------------------------- --------------------------
dollars except
% change and June 30, June 30, % June 30, June 30, %
vehicle data) 2010 2009 Change 2010 2009 Change
-------- --------
Revenue Source
New vehicles 128,116 94,436 35.7% 232,844 172,252 35.2%
Used vehicles 51,959 51,387 1.1% 97,046 98,193 (1.2)%
Finance & insurance
and other 11,133 10,656 4.5% 21,017 19,509 7.7%
-------- -------- -------- -------- -------- --------
Subtotal 191,208 156,479 350,907 289,954
Parts, service &
collision repair 25,226 24,862 1.5% 49,860 49,113 1.5%
-------- -------- -------- -------- -------- --------
Total 216,434 181,341 19.4% 400,767 339,067 18.2%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
New vehicles
- retail sold 3,039 2,560 18.7% 5,528 4,618 19.7%
New vehicles
- fleet sold 941 464 102.8% 1,588 876 81.3%
Used vehicles sold 2,267 2,398 (5.5)% 4,322 4,606 (6.2)%
-------- -------- -------- -------- -------- --------
Total 6,247 5,422 15.2% 11,438 10,100 13.2%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total vehicles
retailed 5,306 4,958 7.0% 9,850 9,224 6.8%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
The following table summarizes the gross profit for the three and six months ended June 30, 2010 on a same store basis by revenue source and compares these results to the same period in 2009.
Same Store Gross Profit and Gross Profit Percentage
For the Three Months Ended
Gross Profit Gross Profit %
(In thousands of
dollars except
% change and June 30, June 30, % June 30, June 30, %
gross profit %) 2010 2009 Change 2010 2009 Change
-------- --------
Revenue Source
New vehicles 9,702 7,204 34.7% 7.5% 7.6% (1.3)%
Used vehicles 4,522 5,146 (12.1)% 8.7% 10.0% (13.0)%
Finance & insurance
and other 10,351 9,788 5.8% 93.0% 91.9% 1.2%
-------- -------- --------
Subtotal 24,575 22,138 10.5%
Parts, service &
collision repair 12,728 12,559 1.3% 50.5% 50.5% 0.0%
-------- -------- -------- -------- -------- --------
Total 37,303 34,697 7.5% 17.2% 19.1% (9.9)%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
For the Six Months Ended
Gross Profit Gross Profit %
(In thousands of
dollars except
% change and
gross profit %) June 30, June 30, % June 30, June 30, %
vehicle data) 2010 2009 Change 2010 2009 Change
-------- --------
Revenue Source
New vehicles 16,791 12,126 38.5% 7.2% 7.0% 2.9%
Used vehicles 8,253 8,984 (8.1)% 8.5% 9.2% (7.6)%
Finance & insurance
and other 19,444 17,931 8.4% 92.5% 91.9% 0.7%
-------- -------- --------
Subtotal 44,488 39,041 14.0%
Parts, service &
collision repair 24,730 24,393 1.4% 49.6% 49.7% (0.2)%
-------- -------- -------- -------- -------- --------
Total 69,218 63,434 9.1% 17.3% 18.7% (7.5)%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
About AutoCanada
AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 23 franchised dealerships in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2009, the 22 franchised automobile dealerships owned by the Company, sold approximately 23,000 vehicles and processed approximately 300,000 service and collision repair orders in our 331 service bays. We have grown, and intend to continue to grow, our business through the acquisition of franchised automobile dealerships in key markets, the organic growth of our existing dealerships, the opening of new franchised automobile dealerships, or "Open Points", and the management of franchised automobile dealerships.
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 and therefore we do not have an in-house lease program and as a result we do not have exposure to residual value risk of returned lease vehicles.
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.
In particular, material forward-looking statements in this press release include:
- The impact that the AIR MILES Reward Miles program may have on
customer loyalty;
- Our commitment to future quarterly dividends;
The foregoing factors are further discussed in the Company's Annual Information Form dated March 22, 2010 which is filed on SEDAR at www.sedar.com.
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
Our 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.
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 expenditure.
Adjusted Free Cash Flow
Adjusted free cash flow is a measure used by management to evaluate its performance. 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.
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.
Cautionary Note Regarding Non-GAAP Measures
EBITDA and Free Cash Flow 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 and Free Cash Flow may differ from the methods used by other issuers. Therefore, the Company's EBITDA and Free Cash Flow 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.
Interim Consolidated Balance Sheet
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(expressed in Canadian dollar thousands)
June 30, December 31,
2010 2009
(Unaudited)
$ $
ASSETS
Current assets
Cash and cash equivalents 31,880 22,465
Accounts receivable 46,826 35,388
Inventories (note 5) 177,524 108,324
Prepaid expenses 3,037 1,649
Future income taxes - 500
--------- ---------
259,267 168,326
Property & equipment 18,070 17,794
Intangible assets (note 4) 45,059 43,700
Goodwill (note 4) 221 -
Future income taxes - 1,647
Leasehold inducements (note 8) 2,996 2,142
Other assets 56 56
--------- ---------
325,669 233,665
--------- ---------
--------- ---------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 25,965 25,556
Revolving floorplan facilities (note 6) 194,388 102,650
Income taxes payable 1,533 -
Current portion of long-term debt (note 7) 263 271
Future income taxes - 2,012
--------- ---------
222,149 130,489
Long-term debt (note 7) 18,942 23,074
Future income taxes 191 -
--------- ---------
241,282 153,563
--------- ---------
Economic dependence (note 2)
SHAREHOLDERS' EQUITY
Share capital 190,435 190,435
Contributed surplus 3,918 3,918
Deficit (109,966) (114,251)
--------- ---------
84,387 80,102
--------- ---------
325,669 233,665
--------- ---------
--------- ---------
AutoCanada Inc.
Interim Consolidated Statement of Operations, Comprehensive Income
and Deficit
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(expressed in Canadian dollar thousands except share and per share
amounts)
Three Three Six Six
Months ended Months ended Months ended Months ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Revenue
Vehicles 215,064 174,549 389,188 320,495
Parts, service and
collision repair 28,747 27,323 55,802 53,718
Other 490 398 851 856
---------------------------------------------------
244,301 202,270 445,841 375,069
Cost of sales (note 5) 202,454 164,445 369,277 306,063
---------------------------------------------------
Gross profit 41,847 37,825 76,564 69,006
---------------------------------------------------
Expenses
Selling, general and
administrative 33,273 30,450 63,107 58,263
Interest 2,640 1,656 4,663 3,001
Amortization 950 902 1,855 1,774
---------------------------------------------------
36,863 33,008 69,625 63,038
---------------------------------------------------
Earnings before income
taxes 4,984 4,817 6,939 5,968
Income taxes 1,337 67 1,859 164
---------------------------------------------------
Net earnings &
comprehensive income
for the period 3,647 4,750 5,080 5,804
Deficit, beginning of
period (112,818) (125,775) (114,251) (124,344)
Dividends declared (795) - (795) (2,485)
---------------------------------------------------
Deficit, end of period (109,966) (121,025) (109,966) (121,025)
---------------------------------------------------
---------------------------------------------------
Earnings per share
Basic 0.183 0.239 0.256 0.292
---------------------------------------------------
---------------------------------------------------
Diluted 0.183 0.239 0.256 0.292
---------------------------------------------------
---------------------------------------------------
Weighted average
shares
Basic 19,880,930 19,880,930 19,880,930 19,880,930
---------------------------------------------------
---------------------------------------------------
Diluted 19,880,930 19,880,930 19,880,930 19,880,930
---------------------------------------------------
---------------------------------------------------
AutoCanada Inc.
Interim Consolidated Statement of Cash Flows
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(expressed in Canadian dollar thousands)
Three Three Six Six
Months ended Months ended Months ended Months ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
Cash provided by
(used in) $ $ $ $
Operating activities
Net earnings
for the period 3,647 4,750 5,080 5,804
Items not affecting cash
Future income taxes 1,351 67 326 164
Unit based compensation - 22 - 61
Amortization 950 902 1,855 1,774
(Gain) loss on
disposal of
property &
equipment - (18) (2) (9)
---------------------------------------------------
5,948 5,723 7,259 7,794
Net change in non-cash
working capital
balances 8,321 (3,112) 13,128 (8,397)
---------------------------------------------------
14,269 2,611 20,387 (603)
---------------------------------------------------
Investing activities
Business acquisitions
(note 4) (3,550) - (3,550) -
Payments of leasehold
inducements (427) - (854) -
Purchase of property &
equipment (1,156) (2,175) (1,697) (3,240)
Proceeds on sale of
property & equipment 1 11 64 55
Restricted cash - 2,531 - 2,313
---------------------------------------------------
(5,132) 367 (6,037) (872)
---------------------------------------------------
Financing activities
Proceeds from
long term debt - - - 286
Repayment of
long term debt (77) (658) (4,140) (1,076)
Dividends paid (795) - (795) (2,485)
---------------------------------------------------
(872) (658) (4,935) (3,275)
---------------------------------------------------
Increase (decrease)
in cash 8,265 2,320 9,415 (4,750)
Cash and cash
equivalents,
beginning of
period 23,615 12,522 22,465 19,592
---------------------------------------------------
Cash and cash
equivalents,
end of period 31,880 14,842 31,880 14,842
---------------------------------------------------
---------------------------------------------------
Supplementary information
Cash interest paid 2,685 1,306 4,542 2,792
Transfer of inventory
to property & equipment 395 189 502 366
Transfer of property &
equipment to inventory 333 168 410 420
For further information: Tom Orysiuk, CA, Executive Vice-President and Chief Financial Officer, Phone: (780) 732-3139, Email: [email protected]
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