AutoCanada Inc. releases financial results for the reporting period ended
March 31, 2010 and announces the reinstatement of a quarterly dividend of
$0.04 per common share:
A conference call to discuss the results for the three month period ended March 31, 2010 will be held on May 13, 2010 at 10:30 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, May 12 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the three month period ended March 31, 2010.
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2010 First Quarter Operating Results
- Same store new vehicle unit sales increase of 27.0%
- Same store revenue increased by 16.9% or $26.6 million
- Same store gross profit increased by 11.1% or $3.2 million
- EBITDA increased 38.1% to $3.1 million from $2.2 million in Q1 of
2009
- Pre-tax earnings increased 66.7% to $2.0 million from $1.2 million
- Net earnings increased by 27.2% to $1.4 million from $1.1 million
- Revenue increased 16.6% or $28.7 million
- Gross profit increased by 11.3% or $3.5 million
- Repair orders completed for the quarter were up 7.6%
- The number of new and used vehicles retailed increased by 7.2%
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In commenting on the financial results for the three month period ended March 31, 2010, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "We have continued to see improvements in the automotive retail market in the first three months of 2010. As a result of the increase in new vehicle sales, our finance and insurance revenues have improved and our parts and service revenues have also benefitted from increased sales. We are also pleased to have acquired an additional Hyundai dealership in April and to have the opportunity to build on our strong partnership with Hyundai Auto Canada in Mississauga, Ontario."
First Quarter 2010 Highlights
- Net earnings of $1.4 million or basic and diluted earnings per share
of $0.072.
- Pre-tax earnings of $2.0 million or basic and diluted earnings per
share of $0.098.
- Same store revenue increased by 16.9% in the first quarter of 2010,
compared to the same quarter in 2009.
- Same store gross profit increased by 11.1% in the first quarter of
2010, compared to the same quarter in 2009.
- Revenue from existing and new dealerships increased 16.6% to
$201.5 million in the first quarter of 2010 from $172.8 million in
the same quarter in 2009.
- Gross profit from existing and new dealerships increased 11.3% to
$34.7 million in the first quarter of 2010 from $31.2 million in the
same quarter in 2009.
- EBITDA increased 38.1% to $3.1 million in the first quarter of 2010
from $2.2 million in the same quarter in 2009.
- Free cash flow generated of $0.281 per share and adjusted free cash
flow of $0.123 in the first 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.
Reinstatement of a Quarterly Dividend
AutoCanada announced today that it is resuming payment of dividends at an annual rate of $0.16 cents per common share. Accordingly, the board declared today an initial quarterly eligible dividend of $0.04 per common share on AutoCanada's outstanding Class A common shares, payable on June 15, 2010 to shareholders of record at the close of business on May 31, 2010.
"Our improved financial performance in recent months confirms to us that we remain a highly competitive company with a manageable cost structure even during a prolonged economic downturn. We are confident that we can continue to deliver solid financial performance despite a fragile economic environment," said Pat Priestner, CEO of AutoCanada. "We continue to focus on shareholder value and I am pleased to announce this milestone. The initiation of a regular quarterly dividend is a strong commitment to return cash to shareholders."
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 %)
Q2 Q3 Q4 Q1
2008 2008 2008 2009
Income Statement Data
New vehicles 128,371 118,807 96,634 87,176
Used vehicles 61,223 57,790 47,605 49,550
Parts, service &
collision repair 26,610 26,492 27,105 26,390
Finance, insurance &
other 13,121 13,597 11,023 9,683
---------------------------------------------------
Revenue 229,325 216,686 182,367 172,799
---------------------------------------------------
New vehicles 9,699 9,266 6,729 5,828
Used vehicles 5,180 5,156 3,671 3,810
Parts, service &
collision repair 12,896 13,290 13,090 12,811
Finance, insurance &
other 12,244 12,629 10,137 8,732
---------------------------------------------------
Gross profit 40,019 40,341 33,627 31,181
---------------------------------------------------
Gross profit % 17.5% 18.6% 18.4% 18.0%
Sales, general & admin
expenses 29,916 30,491 28,157 27,813
SG&A exp. as % of
gross profit 74.8% 75.5% 83.7% 89.2%
Floorplan interest
expense 1,895 1,693 1,443 970
Other interest & bank
charges 396 458 441 375
Income taxes 148 (1,869) (8,579) 97
Net earnings 6,906 (38,318) (67,121) 1,054
EBITDA 8,022 7,975 3,868 2,230
Operating Data
Vehicles (new and
used) sold 6,576 6,462 5,124 5,149
New retail vehicles
sold 3,471 3,245 2,376 2,291
New fleet vehicles
sold 470 532 526 473
Used retail vehicles
sold 2,635 2,685 2,222 2,385
Number of service &
collision repair
orders completed 72,227 74,300 69,560 70,021
Absorption rate 100% 99% 94% 84%
No. of dealerships 20 21 22 22
No. of same store
dealerships 14 14 14 16
No. of service bays
at period end 279 284 288 323
Same store revenue
growth (3.8)% (17.1)% (16.7)% (19.8)%
Same store gross
profit growth 0.2% (3.3)% (8.0)% (12.8)%
Balance Sheet Data
Cash and cash
equivalents 18,459 19,194 19,592 12,522
Accounts receivable 35,374 39,390 31,195 33,821
Inventories 135,447 134,565 139,948 116,478
Revolving floorplan
facilities 131,505 135,562 137,453 114,625
Q2 Q3 Q4 Q1
2009 2009 2009 2010
Income Statement Data
New vehicles 108,181 117,513 102,880 115,395
Used vehicles 55,098 56,386 48,135 48,216
Parts, service &
collision repair 27,322 26,941 27,730 27,011
Finance, insurance &
other 11,669 12,027 10,252 10,918
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Revenue 202,270 212,867 188,997 201,540
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New vehicles 7,951 9,003 7,157 7,809
Used vehicles 5,677 5,744 4,309 3,977
Parts, service &
collision repair 13,708 13,374 13,447 13,106
Finance, insurance &
other 10,489 10,717 9,218 9,825
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Gross profit 37,825 38,838 34,131 34,717
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Gross profit % 18.7% 18.3% 18.1% 17.2%
Sales, general & admin
expenses 30,450 30,565 29,313 29,834
SG&A exp. as % of
gross profit 80.5% 78.7% 85.9% 85.9%
Floorplan interest
expense 1,104 1,399 1,382 1,661
Other interest & bank
charges 552 802 552 362
Income taxes 67 37 248 522
Net earnings 4,750 5,099 1,675 1,433
EBITDA 6,135 6,716 3,271 3,079
Operating Data
Vehicles (new and
used) sold 6,067 6,415 5,451 5,676
New retail vehicles
sold 3,030 3,236 2,559 2,787
New fleet vehicles
sold 446 619 695 661
Used retail vehicles
sold 2,591 2,560 2,197 2,228
Number of service &
collision repair
orders completed 75,062 79,346 76,853 75,311
Absorption rate 90% 92% 91% 85%
No. of dealerships 22 22 22 22
No. of same store
dealerships 17 18 19 19
No. of service bays
at period end 323 321 331 331
Same store revenue
growth (15.3)% (3.9)% 1.3% 16.9%
Same store gross
profit growth (8.7)% (6.3)% (1.1)% 11.1%
Balance Sheet Data
Cash and cash
equivalents 14,842 23,224 22,465 23,615
Accounts receivable 27,034 38,134 35,388 40,752
Inventories 90,141 107,431 108,324 153,847
Revolving floorplan
facilities 73,161 105,254 102,650 160,590
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 months ended March 31, 2010 on a same store basis by revenue source and compares these results to the same period in 2009.
Same Store Revenue and Vehicles Sold
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For the Three Month Period Ended
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(In thousands of dollars except March 31, March 31,
% change and vehicle data) 2010 2009 % Change
---- ---- --------
Revenue Source
New vehicles 104,729 77,816 34.6%
Used vehicles 45,087 46,806 (3.7)%
Finance, insurance and other 9,884 8,853 11.7%
----- ----- -----
Subtotal 159,700 133,475 19.6%
Parts, service and collision
repair 24,633 24,251 1.6%
Total 184,333 157,726 16.9%
------- ------- -----
------- ------- -----
New vehicles - retail sold 2,512 2,003 25.4%
New vehicles - fleet sold 624 467 33.6%
Used vehicles sold 2,055 2,208 (6.9)%
----- ----- ------
Total 5,191 4,678 11.0%
----- ----- -----
----- ----- -----
Total vehicles retailed 4,567 4,211 8.5%
----- ----- ----
----- ----- ----
The following table summarizes the gross profit for the three months ended March 31, 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
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For the Three Month Period Ended
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Gross Profit Gross Profit %
----------------------------- -----------------------------
(In thousands
of dollars
except %
change and
gross profit March 31, March 31, % March 31, March 31, %
%) 2010 2009 Change 2010 2009 Change
---- ---- ------ ---- ---- ------
Revenue Source
New vehicles 7,088 4,922 44.4% 6.8% 6.3% 7.9%
Used vehicles 3,731 3,839 (2.8)% 8.3% 8.2% 1.2%
Finance,
insurance and
other 9,092 8,143 11.7% 92.0% 92.0% 0.0%
----- ----- -----
Subtotal 19,911 16,904 17.8%
Parts, service
and collision
repair 12,003 11,832 1.4% 48.7% 48.8% 0.0%
------ ------ ---- ----- ----- ----
Total 31,914 28,736 11.1% 17.3% 18.2% (4.9)%
------ ------ ----- ----- ----- ------
------ ------ ----- ----- ----- ------
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:
- our plans for future growth and effects of future growth on financial
performance;
- assumptions regarding the upcoming launch of various Chrysler
products and timing of arrival of products;
- assumptions regarding our ability to continue to deliver solid
financial performance;
- our view that dividend reinstatement is attractive to shareholders
going forward.
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)
March 31, December 31,
2010 2009
(Unaudited)
$ $
ASSETS
Current assets
Cash and cash equivalents 23,615 22,465
Accounts receivable 40,752 35,388
Inventories (note 4) 153,847 108,324
Prepaid expenses 2,013 1,649
Future income taxes - 500
------------ ------------
220,227 168,326
Property & equipment 17,400 17,794
Intangible assets 43,700 43,700
Future income taxes 1,160 1,647
Leasehold inducements (note 7) 2,569 2,142
Other assets 56 56
------------ ------------
285,112 233,665
------------ ------------
------------ ------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 22,158 25,556
Revolving floorplan facilities (note 5) 160,590 102,650
Income taxes payable 1,547 -
Current portion of long-term debt (note 6) 272 271
Future income taxes - 2,012
------------ ------------
184,567 130,489
Long-term debt (note 6) 19,010 23,074
------------ ------------
203,577 153,563
------------ ------------
Economic dependence (note 2)
SHAREHOLDERS' EQUITY
Share capital 190,435 190,435
Contributed surplus 3,918 3,918
Deficit (112,818) (114,251)
------------ ------------
81,535 80,102
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285,112 233,665
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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
Months ended Months ended
March 31, March 31,
2010 2009
(unaudited) (unaudited)
$ $
Revenue
Vehicles 173,569 145,946
Parts, service and collision repair 27,055 26,395
Other 916 458
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201,540 172,799
Cost of sales (note 4) 166,823 141,618
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Gross profit 34,717 31,181
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Expenses
Selling, general and administrative 29,834 27,813
Interest 2,023 1,345
Amortization 905 872
-------------------------
32,762 30,030
-------------------------
Earnings before income taxes 1,955 1,151
Income taxes 522 97
-------------------------
Net earnings & comprehensive
income for the period 1,433 1,054
Deficit, beginning of period (114,251) (124,344)
Distributions declared - (2,485)
-------------------------
Deficit, end of period (112,818) (125,778)
-------------------------
-------------------------
Earnings per share
Basic 0.072 0.053
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-------------------------
Diluted 0.072 0.053
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Weighted average shares
Basic 19,880,930 19,880,930
-------------------------
-------------------------
Diluted 19,880,930 19,880,930
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AutoCanada Inc.
Interim Consolidated Statement of Cash Flows
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(expressed in Canadian dollar thousands)
Three Three
Months ended Months ended
March 31, March 31,
2010 2009
(unaudited) (unaudited)
Cash provided by (used in) $ $
Operating activities
Net earnings for the period 1,433 1,054
Items not affecting cash
Income taxes 522 97
Unit-based compensation - 39
Amortization 905 872
Loss (gain) on disposal of property & equipment (2) 9
-------------------------
2,858 2,071
Net change in non-cash working capital balances 3,260 (5,284)
-------------------------
6,118 (3,213)
-------------------------
Investing activities
Purchase of property & equipment (541) (1,065)
Disposal of other assets - 44
Payment of leasehold inducements (427) -
Proceeds on sale of property & equipment 63 -
Restricted cash - (218)
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(905) (1,239)
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Financing activities
Proceeds from long-term debt - 286
Repayment of long-term debt (4,063) (419)
Distributions paid - (2,485)
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(4,063) (2,618)
-------------------------
Increase (decrease) in cash 1,150 (7,070)
Cash and cash equivalents, beginning
of period 22,465 19,592
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Cash and cash equivalents, end of period 23,615 12,522
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Supplementary information
Cash interest paid 1,857 1,486
Transfer of inventory to property & equipment 107 176
Transfer of property & equipment to inventory 77 252
For further information: Tom Orysiuk, CA, Executive Vice-President and Chief Financial Officer, Phone: (780) 732-3139, Email: [email protected]
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