EDMONTON, March 19, 2015 /PRNewswire/ - AutoCanada
Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced
financial results for the quarter ended December 31, 2014 and the year ended December 31, 2014.
2014 Fourth Quarter
Highlights
- Revenue increased 95.8% or $319.7
million to $653.5
million
- Gross profit increased by 80.4% or $50.1 million to $112.4
million
- Adjusted EBITDA increased by 60.7% or $9.1 million to $24.1
million
- EBITDA increased 65.5% to $24.5
million from $14.8 million in
Q4 of 2013
- Pre-tax earnings attributable to AutoCanada shareholders
increased by $7.1 million or 54.6% to
$20.1 million
- Adjusted net earnings attributable to AutoCanada
shareholders increased by $4.3
million or 47.8% to $13.3
million
- Net earnings attributable to AutoCanada shareholders
increased by $5.3 million or 55.2% to
$14.9 million
- Basic adjusted net earnings per share attributable to
AutoCanada shareholders increased by 28.6% to $0.54 from $0.42
- Basic earnings per share increased by 36.4% to
$0.60 from $0.44
- Same store revenue increased by 10.9%
- Same store gross profit increased by 5.7%
- Same store new vehicle retail revenue increased by
4.1%
- Same store used vehicles retail revenue increased by
11.7%
- Same store parts, service and collision repair revenue
increased by 11.2%
2014 Annual Highlights
- Revenue increased 57.2% or $805.7
million to $2,214.8
million
- Gross profit increased by 51.7% or $127.1 million to $373.1
million
- Adjusted EBITDA increased by 50.5% or $29.9 million to $89.1
million
- EBITDA increased 52.8% to $89.4
million from $58.5 million in
2013
- Pre-tax earnings attributable to AutoCanada shareholders
increased by $19.7 million or 38.0%
to $71.6 million
- Adjusted net earnings attributable to AutoCanada
shareholders increased by $13.6
million or 35.8% to $51.6
million
- Net earnings attributable to AutoCanada shareholders
increased by $14.9 million or 39.0%
to $53.1 million
- Basic adjusted net earnings per share attributable to
AutoCanada shareholders increased by 23.1% to $2.24 from $1.82
- Basic earnings per share increased by 26.2% to
$2.31 from $1.83
- Same store revenue increased by 8.9%
- Same store gross profit increased by 7.9%
- Same store new vehicle retail revenue increased by
7.3%
- Same store used vehicles retail revenue increased by
11.2%
- Same store parts, service and collision repair revenue
increased by 10.5%
"We are proud of our annual 2014 results and our growth in units
retailed, revenue, gross profit and net income are reflective of
the 17 stores which we added to our family during the year.
The past year was a milestone for AutoCanada as we exceeded
$2 billion in revenue and reached
$89 million in EBITDA," stated
Patrick Priestner, Executive
Chairman. "During the year we were entrusted by the
manufacturers with four new brands including Cadillac, BMW, MINI
and most recently, Kia in the form of an open point. We now
represent eight manufacturers and 19 different brands, operate in
eight provinces and employee over 3,400 dedicated staff. We
are pleased with the dealerships we acquired this past year as they
are integrating well into AutoCanada and we believe they will
provide long-term value for our stakeholders."
"Our financial results indicate the size and strength of
AutoCanada, with fiscal 2014 resulting in a 57% growth in revenues
and a 26% increase in basic earnings per share," stated
Tom Orysiuk, President & Chief
Executive Officer. "Same store gross profit grew by 7.9%
year-over-year and we now operate 48 dealerships, encompassing 56
franchises, across the country. We managed over 700,000
service repair work orders in our 822 service bays. Also
during the year we were successful in completing over $1 billion in financing transactions, including a
$200 million equity offering and a
$150 million debt issuance,
complemented by new facilities of $550
million floorplan and $200
million revolving credit."
Mr. Priestner and Mr. Orysiuk further added, "We would like to
sincerely thank our dealer partners, our dealership and dealer
support services staff, and of course our customers for their
dedication and loyalty to AutoCanada throughout 2014 and into the
future."
Fourth Quarter 2014 Highlights
- The Company generated net earnings attributable to AutoCanada
shareholders of $14.9 million or
basic earnings per share of $0.60
versus earnings per share of $0.44 in
the fourth quarter of 2013. Pre-tax earnings attributable to
AutoCanada shareholders increased by $7.1
million to $20.1 million in
the fourth quarter of 2014 as compared to $13.0 million in the same period in 2013.
- Same store revenue increased by 10.9% in the fourth quarter of
2014, compared to the same quarter in 2013. Same store gross
profit increased by 5.7% in the fourth quarter of 2014, compared to
the same quarter in 2013.
- Revenue from existing and new dealerships increased 95.8% to
$653.5 million in the fourth quarter
of 2014 from $333.8 million in the
same quarter in 2013.
- Gross profit from existing and new dealerships increased 80.4%
to $112.4 million in the fourth
quarter of 2014 from $62.3 million in
the same quarter in 2013.
- EBITDA increased 65.5% to $24.5
million in the fourth quarter of 2014 from $14.8 million in the same quarter in 2013.
- Free cash flow increased to $39.8
million in the fourth quarter of 2014 or $1.63 per share as compared to $8.4 million or $0.39 per share in the fourth quarter of
2013.
- Adjusted free cash flow increased to $17.1 million in the fourth quarter of 2014 or
$0.70 per share as compared to
$11.9 million or $0.55 per share in the same quarter in 2013.
2014 Annual Highlights
- The Company generated net earnings attributable to AutoCanada
shareholders of $53.1 million or
basic earnings per share of $2.31
versus earnings per share of $1.83 in
2013. Pre-tax earnings attributable to AutoCanada
shareholders increased by $19.7
million to $71.6 million in
2014 as compared to $51.9 million in
2013 year.
- Same store revenue increased by 8.9% in 2014, compared to
2013. Same store gross profit increased by 7.9% in 2014,
compared to 2013.
- Revenue from existing and new dealerships increased 57.2% to
$2,214.8 million in 2014 from
$1,409.0 million in 2013.
- Gross profit from existing and new dealerships increased 51.7%
to $373.1 million in 2014 from
$246.0 million in 2013.
- EBITDA increased 52.8% to $89.4
million in 2014 from $58.5
million in 2013.
- Free cash flow increased to $63.7
million in 2014 as compared $34.6
million in 2013.
- Adjusted free cash flow increased to $62.1 million in 2014 as compared to $44.9 million in 2013.
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.
The following table summarizes the dividends declared by the
Company in 2014 (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
Record date
|
|
|
Payment date
|
|
|
Per Share
$
|
|
|
Total
$
|
|
February 28,
2014
|
|
|
March 17,
2014
|
|
|
0.22
|
|
|
4,760
|
|
May 30,
2014
|
|
|
June 16,
2014
|
|
|
0.23
|
|
|
5,022
|
|
August 29,
2014
|
|
|
September 15,
2014
|
|
|
0.24
|
|
|
5,858
|
|
November 28,
2014
|
|
|
December 15,
2014
|
|
|
0.25
|
|
|
6,105
|
|
|
|
|
|
|
0.94
|
|
|
21,745
|
|
|
|
|
|
|
|
|
|
|
On February 17, 2015, the Board
declared a quarterly eligible dividend of $0.25 per common share on AutoCanada's
outstanding shares, payable on March 16,
2015 to shareholders of record at the close of business on
February 28, 2015. The quarterly
eligible dividend of $0.25 represents
an annual dividend rate of $1.00 per
share.
Eligible dividend designation
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".
Outlook
The outlook for the Canadian economy has softened with
economists revising their previous estimates downward, especially
affecting the West in general and Alberta in particular, much as a result of
falling oil prices. Revised GDP growth forecasts for Canada
presently sit at 1.9 percent for 2015, down from 2.4 percent in
previous forecasts from November
2014. As a result, the economy, especially in Alberta, has observed a slowdown in capital
spending and a reduction in employment levels. More importantly,
there has been a significant reduction in consumer confidence with
a recent study showing that 40% of Albertans are deferring major
purchases of homes and automobiles (Source: ATB Financial,
Economics and Research, Alberta Economic Outlook, Q1 2015,
January 5, 2015).
The first two months of 2015, and the latter half of
December 2014, have, however, proved
very challenging for the Company. We note, for example,
R.L. Polk reported a 9.4% decline in
retail volumes in January 2015
compared to January 2014 in the
Calgary area. Relating to brands
which the Company operates in Calgary, this decline includes decreases in
retail sales of 17.5%, 10.2%, and 33.3%, for FCA Canada (formerly
Chrysler Canada), Japanese, and Korean manufacturers, respectively.
Edmonton and Grande Prairie, markets where the Company also
has significant market presence, have likewise proved challenging.
Additionally, the Company has experienced volume and/or margin
challenges at a number of its dealerships elsewhere in Canada. Consequently, the Company has
experienced significantly lower than forecasted vehicle sales and
margins with a corresponding decline in dealership profitability in
early fiscal 2015, resulting in weak performance relative to the
comparative results of 2014.
To the extent the challenges are related to the price of oil and
its impact on consumer confidence, the Company is taking the
necessary steps to reduce variable costs to mitigate the impact.
The Company's ability to moderate the effect of reduced sales
activity is encompassed in the variable cost structure. However,
such reductions are not immediate for several reasons, including:
(i) the acceptance of lower vehicle sales margins to stimulate unit
sales to achieve manufacturer sales-based performance targets; (ii)
higher than normal per unit advertising cost due to reduced volume;
(iii) inventory carrying costs incurred to support forecasted
stronger sales volumes in excess of actual sales volumes; and (iv)
the industry practice of paying advances to top-up the incomes of
front line key sales staff in order to retain key individuals.
Other operational challenges incurred to date with respect to the
first two months of 2015 would include record snowfall in the
Maritimes and a more pronounced seasonality impact experienced by
certain recently purchased dealerships compared to the Company's
experience. The Company is aggressively taking the necessary steps
to address these challenges at the individual dealership level.
Management remains fully confident in its model and that it can
take full advantage of its variable cost structure should the
period of reduced economic activity continue. Furthermore, the
Company believes that the West and Alberta in particular shall continue to
provide superior long-term shareholder returns. Further, should the
Western economy continue for a period at a slower pace, Management
anticipates that acquisition multiples for Western dealerships
shall decline, thus providing more attractive buying opportunities,
further enhancing long term shareholder value. Additionally, the
Company shall continue to seek opportunities elsewhere in
Canada so as to provide continued
diversity where appropriate. With a strong balance sheet, available
liquidity and cash flow, the Company has maintained the current
quarterly dividend rate at $0.25, to
allow it to be in a position to patiently pursue its acquisition
strategy thereby maximizing its ability to take advantage of
anticipated buying opportunities that times of economic uncertainty
generally provide. Management believes the current acquisition
guidance of 3-5 additional dealerships to be announced by the end
of May 2015 is accurate and we are
presently monitoring the impact current market conditions are
having on acquisition multiples so that we can continue to grow the
company through acquisitions at reasonable multiples.
During the second half of fiscal 2014, the Company was pleased
to open its first Kia Canada store,
an open point in Edmonton,
Alberta. Although the store's performance is typical for
most open points where losses in the first one or two years are
common, the Company is pleased with its most recent progress and is
very confident in its future. During fiscal 2015 and 2016, the
Company also plans to open additional open points including a
Nissan dealership in Calgary, a
Volkswagen dealership in Sherwood
Park (Edmonton), and a
second Kia dealership in North
Winnipeg. Management believes these stores will provide long
term shareholder value.
The decline in the exchange rate of the Canadian dollar to the
US dollar should have a limited impact on AutoCanada. All of its
vehicle purchases and predominantly all of its automotive parts
purchases are denominated in Canadian currency resulting in limited
foreign exchange risk. Furthermore, the price of vehicles from the
manufacturers are determined annually, in the first quarter, and
typically do not move in close correlation with the spot market
foreign exchange rates.
Finally, in early 2015, the Company filed for a normal course
issuer bid in order to opportunistically repurchase our shares.
Share purchases will only be conducted if, based on the Company's
share price, Management believes it is the best use of its capital
at that time to drive long term shareholder value.
By-Law No. 2
The Company also announces that the Board has approved and
adopted an advance notice by-law ("By-Law No. 2") for the Company.
Among other things, By-Law No. 2 fixes a deadline by which
shareholders must submit a notice of director nominations to the
Company prior to any annual or special meeting of shareholders
where directors are to be elected. By-Law No. 2 also sets forth the
information that a shareholder must include in the notice for it to
be valid. Advance notice by-laws benefit shareholders by
facilitating an orderly and efficient meeting process, ensuring
that all shareholders receive adequate notice of director
nominations and sufficient information with respect to all
nominees. This allows the Company and shareholders to evaluate each
nominee's qualifications and suitability as a director of Company
in advance of a meeting, so that shareholders can cast an informed
vote.
By-Law No. 2 is effective immediately, subject to confirmation
by the shareholders. At the next meeting of shareholders of
Company, scheduled to be held on May 8,
2015, shareholders will be asked to confirm By-Law No. 2.
The full text of By-Law No. 2 has been filed under the Company's
profile at www.sedar.com.
Conference Call
A conference call to discuss the results for the year ended
December 31, 2014 will be held on
March 20, 2015 at 11:00am Eastern time (9:00am Mountain time). To participate in
the conference call, please dial 1.888.231.8191 approximately 10
minutes prior to the call. A live and archived audio webcast
of the conference call will also be available at the
following http://www.newswire.ca/en/webcast/detail/1473187/1639949.
SELECTED ANNUAL FINANCIAL INFORMATION
The following table shows the results of the Company for the
years ended December 31, 2014, 2013,
and 2012. 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) Income
Statement Data
|
|
2014(1)
|
|
2013
|
|
2012
|
|
New
vehicles
|
|
1,342,346
|
|
882,858
|
|
683,375
|
|
Used
vehicles
|
|
495,352
|
|
300,881
|
|
243,351
|
|
Parts, service and
collision repair
|
|
255,707
|
|
142,343
|
|
114,600
|
|
Finance, insurance
and other
|
|
121,373
|
|
82,958
|
|
62,587
|
|
Revenue
|
|
2,214,778
|
|
1,409,040
|
|
1,103,913
|
|
|
|
|
|
|
|
|
|
New
vehicles
|
|
106,002
|
|
75,835
|
|
57,575
|
|
Used
vehicles
|
|
29,501
|
|
20,273
|
|
16,311
|
|
Parts, service and
collision repair
|
|
128,566
|
|
73,755
|
|
59,643
|
|
Finance, insurance
and other
|
|
109,080
|
|
76,172
|
|
56,836
|
|
Gross profit
|
|
373,149
|
|
246,035
|
|
190,365
|
|
|
|
|
|
|
|
|
Gross Profit
%
|
|
16.8 %
|
|
17.5 %
|
|
17.2 %
|
|
Operating
expenses
|
|
290,904
|
|
188,519
|
|
149,140
|
|
Operating expenses as
a % of gross profit
|
|
78.0 %
|
|
76.6 %
|
|
78.3 %
|
|
Income from
investments in associates
|
|
3,490
|
|
2,241
|
|
468
|
|
Net earnings
attributable to AutoCanada shareholders
|
|
53,132
|
|
38,166
|
|
24,236
|
|
EBITDA(2)
|
|
89,434
|
|
58,469
|
|
37,885
|
|
Basic earnings per
share
|
|
2.31
|
|
1.83
|
|
1.22
|
|
Diluted earnings per
share
|
|
2.30
|
|
1.83
|
|
1.22
|
|
Operating Data
Vehicles (new and
used) sold excluding GM
|
|
46,393
|
|
35,774
|
|
29,780
|
|
Vehicles (new and
used) sold including GM (3)
|
|
52,147
|
|
40,136
|
|
31,554
|
|
New vehicles sold
including GM (3)
|
|
36,422
|
|
28,024
|
|
21,501
|
|
New retail vehicles
sold
|
|
30,346
|
|
20,523
|
|
16,226
|
|
New fleet vehicles
sold
|
|
6,076
|
|
4,876
|
|
4,096
|
|
Used retail vehicles
sold
|
|
15,725
|
|
10,375
|
|
9,458
|
|
Number of service
& collision repair orders completed(4)
|
|
601,597
|
|
364,361
|
|
309,488
|
|
Absorption
rate(2)
|
|
85 %
|
|
87 %
|
|
86 %
|
|
# of dealerships at
year end(4)
|
|
48
|
|
28
|
|
24
|
|
# of same store
dealerships
|
|
23
|
|
21
|
|
22
|
|
# of service bays at
year end(4)
|
|
822
|
|
406
|
|
333
|
|
Same store revenue
growth(5)
|
|
8.9 %
|
|
17.2 %
|
|
8.6 %
|
|
Same store gross
profit growth(5)
|
|
7.9 %
|
|
17.5 %
|
|
10.9 %
|
|
Balance Sheet Data
Cash and cash
equivalents
|
|
72,462
|
|
35,113
|
|
34,472
|
|
Restricted
cash
|
|
-
|
|
-
|
|
10,000
|
|
Trade and other
receivables
|
|
92,138
|
|
57,771
|
|
47,944
|
|
Inventories
|
|
563,277
|
|
278,091
|
|
199,226
|
|
Revolving floorplan
facilities
|
|
527,780
|
|
264,178
|
|
203,525
|
|
|
|
1
|
In conjunction with
the business combination under common control completed on July 11,
2014, the Selected Annual Financial Information for 2014 includes
the consolidated results of the Company's GM stores from July 11,
2014. All 2014 financial information includes 100% of the results
of the GM stores, except for Net earnings, EBITDA, and EPS amounts,
which are presented net of non-controlling interests. Had the
consolidation been effected for fiscal 2013, additional revenues of
$205.6 million and gross profit of $33.1 million would have been
recognized.
|
|
2
|
EBITDA and absorption
rate have been calculated as described under "NON-GAAP
MEASURES".
|
|
3
|
Until July 10, 2014,
the Company had investments in General Motors dealerships that were
not consolidated. In Q3 2014, these GM dealerships were
consolidated. This number includes 100% of vehicles sold by these
dealerships in which we have less than 100% investment.
|
|
4
|
The results presented
for 2013 and 2012 do not include the GM stores and their associated
service bays or repair orders.
|
|
5
|
Same store revenue
growth & same store gross profit growth is calculated using
franchised automobile dealerships that we have owned for at least 2
full years, excluding the GM stores, as these stores have been
treated as acquisitions as at July 11, 2014.
|
SELECTED QUARTERLY FINANCIAL 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)
|
Q4
2014(1)
|
Q3
2014(1)
|
Q2
2014
|
Q1
2014
|
Q4
2013
|
Q3
2013
|
Q2
2013
|
Q1
2013
|
|
Income Statement Data
|
|
|
|
|
|
|
|
|
|
New
vehicles
|
379,094
|
457,198
|
289,918
|
216,524
|
197,097
|
257,543
|
254,403
|
174,410
|
|
Used
vehicles
|
148,579
|
158,779
|
102,025
|
85,969
|
75,137
|
85,975
|
77,113
|
62,656
|
|
Parts, service and
collision repair
|
91,045
|
78,371
|
46,078
|
40,724
|
41,268
|
37,341
|
34,629
|
29,667
|
|
Finance, insurance
and other
|
34,749
|
39,002
|
27,304
|
21,047
|
20,271
|
22,676
|
22,620
|
17,529
|
|
Revenue(7)
|
653,467
|
733,350
|
465,325
|
364,264
|
333,773
|
403,535
|
388,765
|
284,262
|
|
|
|
|
|
|
|
|
|
|
New
vehicles
|
28,390
|
35,711
|
23,822
|
17,813
|
18,326
|
20,510
|
20,664
|
15,947
|
|
Used
vehicles
|
7,817
|
9,637
|
6,506
|
5,551
|
4,450
|
6,242
|
5,795
|
3,789
|
|
Parts, service and
collision repair
|
45,631
|
38,942
|
23,373
|
20,593
|
20,822
|
20,113
|
17,586
|
15,232
|
|
Finance, insurance
and other
|
30,606
|
35,615
|
24,342
|
19,514
|
18,734
|
20,831
|
20,783
|
16,157
|
|
Gross profit(7)
|
112,444
|
119,905
|
78,043
|
63,471
|
62,332
|
67,696
|
64,828
|
51,125
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
%
|
17.2%
|
16.4%
|
16.8%
|
17.4%
|
18.7%
|
16.8%
|
16.7%
|
18.0%
|
|
Operating
expenses
|
89,482
|
89,713
|
58,920
|
50,400
|
48,447
|
51,080
|
48,639
|
40,353
|
|
Operating expenses as
a % of gross profit
|
79.6%
|
74.8%
|
75.5%
|
79.4%
|
77.7%
|
75.5%
|
75.0%
|
78.9%
|
|
Income from
investments in associates
|
-
|
359
|
2,238
|
893
|
837
|
555
|
648
|
201
|
|
Net earnings
attributable to AutoCanada shareholders(6)
|
14,918
|
17,765
|
12,831
|
8,296
|
9,553
|
10,968
|
10,823
|
6,822
|
|
EBITDA(2,6,7)
|
24,527
|
28,674
|
21,702
|
14,453
|
14,754
|
16,607
|
16,463
|
10,511
|
|
Basic earnings per
share
|
0.60
|
0.74
|
0.59
|
0.38
|
0.44
|
0.51
|
0.53
|
0.35
|
|
Diluted earnings per
share
|
0.59
|
0.74
|
0.59
|
0.38
|
0.44
|
0.51
|
0.53
|
0.35
|
|
Operating Data
|
|
|
|
|
|
|
|
|
|
Vehicles (new and
used) sold excluding GM
|
12,774
|
14,966
|
9,887
|
8,766
|
8,046
|
10,325
|
10,062
|
7,341
|
|
Vehicles (new and
used) sold including GM(3)
|
15,415
|
18,079
|
12,414
|
9,945
|
9,209
|
11,405
|
11,399
|
8,123
|
|
New vehicles sold
including GM(3)
|
10,570
|
12,821
|
8,658
|
6,570
|
6,090
|
8,023
|
8,246
|
5,665
|
|
New retail vehicles
sold
|
8,907
|
10,686
|
5,980
|
4,773
|
4,932
|
5,986
|
5,487
|
4,118
|
|
New fleet vehicles
sold
|
1,663
|
2,135
|
1,146
|
1,132
|
552
|
1,365
|
1,923
|
1,036
|
|
Used retail vehicles
sold
|
4,845
|
5,258
|
2,761
|
2,861
|
2,562
|
2,974
|
2,652
|
2,187
|
|
Number of service
& collision repair orders completed (4)
|
214,077
|
198,612
|
97,559
|
91,999
|
95,958
|
97,074
|
93,352
|
77,977
|
|
Absorption
rate(2)
|
85%
|
93%
|
92%
|
85%
|
90%
|
88%
|
90%
|
82%
|
|
# of dealerships at
period end(4)
|
48
|
45
|
34
|
28
|
28
|
29
|
27
|
25
|
|
# of same store
dealerships
|
23
|
23
|
23
|
23
|
21
|
22
|
22
|
22
|
|
# of service bays at
period end(4)
|
822
|
734
|
516
|
406
|
406
|
413
|
368
|
341
|
|
Same store revenue
growth(5)
|
10.9%
|
8.9%
|
4.1%
|
13.0%
|
8.9%
|
19.9%
|
26.2%
|
12.9%
|
|
Same store gross
profit growth(5)
|
5.7%
|
11.4%
|
5.4%
|
8.1%
|
9.2%
|
18.5%
|
25.8%
|
16.9%
|
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
72,462
|
64,559
|
91,622
|
41,541
|
35,113
|
37,940
|
35,058
|
41,991
|
|
Restricted
cash
|
-
|
-
|
-
|
-
|
-
|
-
|
10,000
|
10,000
|
|
Trade and other
receivables
|
92,138
|
115,074
|
85,837
|
69,747
|
57,771
|
62,105
|
69,656
|
57,663
|
|
Inventories
|
563,277
|
471,664
|
324,077
|
261,764
|
278,091
|
236,351
|
232,319
|
217,268
|
|
Revolving floorplan
facilities
|
527,780
|
437,935
|
313,752
|
261,263
|
264,178
|
228,526
|
246,325
|
225,387
|
|
|
|
1
|
In conjunction with
the business combination under common control completed on July 11,
2014, the Selected Quarterly Financial Information for Q3 2014 and
Q4 2014 includes the consolidated results of the Company's GM
stores from July 11, 2014. All Q3 2014 and Q4 2014 financial
information includes 100% of the results of the GM stores, except
for Net earnings, EBITDA, and EPS amounts, which are presented net
of non-controlling interests.
|
|
2
|
EBITDA and absorption
rate have been calculated as described under "NON-GAAP
MEASURES".
|
|
3
|
Until July 10, 2014,
the Company had investments in General Motors dealerships that were
not consolidated. In Q3 2014, these GM dealerships were
consolidated. This number includes 100% of vehicles sold by these
dealerships in which we have less than 100% investment.
|
|
4
|
The results presented
for all quarters prior to Q3 2014 do not include the GM stores and
their associated service bays or repair orders.
|
|
5
|
Same store revenue
growth & same store gross profit growth is calculated using
franchised automobile dealerships that we have owned for at least 2
full years, excluding the GM stores, as these stores have been
treated as acquisitions as at July 11, 2014.
|
|
6
|
The results from
operations have been lower in the first and fourth quarters of each
year, largely due to consumer purchasing patterns during the
holiday season, inclement weather and the reduced number of
business days during the holiday season. As a result, our financial
performance is generally not as strong during the first and fourth
quarters than during the other quarters of each fiscal year. The
timing of acquisitions may have also caused significant
fluctuations in operating results from quarter to
quarter.
|
|
7
|
Due to the impact of
financial rounding throughout the interim periods, the aggregate
quarterly results may not equal the annual total for the
corresponding year.
|
The following table summarizes the results for the year ended
December 31, 2014 on a same store
basis by revenue source and compare these results to the same
period in 2013.
|
Same Store Revenue and Vehicles Sold
|
|
For the Year Ended
|
|
|
(in thousands of dollars)
|
December 31,
2014
|
December 31,
2013
|
% Change
|
|
Revenue Source
|
|
|
|
|
New vehicles -
Retail
|
711,924
|
663,665
|
7.3 %
|
|
New vehicles -
Fleet
|
134,973
|
139,005
|
(2.9)%
|
|
New vehicles
|
846,897
|
802,670
|
5.5 %
|
|
Used vehicles -
Retail
|
228,327
|
205,384
|
11.2 %
|
|
Used vehicles -
Wholesale
|
97,180
|
69,961
|
38.9 %
|
|
Used Vehicles
|
325,507
|
275,345
|
18.2 %
|
|
Finance, insurance
and other
|
81,867
|
75,561
|
8.3 %
|
|
Subtotal
|
1,254,271
|
1,153,576
|
8.7 %
|
|
Parts, service and
collision repair
|
135,116
|
122,298
|
10.5 %
|
|
Total
|
1,389,387
|
1,275,874
|
8.9 %
|
|
(in number of units)
New retail vehicles
sold
|
19,229
|
18,591
|
3.4 %
|
|
New fleet vehicles
sold
|
4,264
|
4,756
|
(10.3)%
|
|
Used retail vehicles
sold
|
9,888
|
9,457
|
4.6 %
|
|
Total
|
33,381
|
32,804
|
1.8 %
|
|
Total vehicles
retailed
|
29,117
|
28,048
|
3.7 %
|
|
|
|
|
|
|
|
|
Same Store Gross Profit and Gross Profit
Percentage
|
|
For the Year Ended
|
|
|
|
|
|
|
|
|
Gross Profit
|
Gross Profit %
|
|
(in thousands of dollars)
|
December
31, 2014
|
December
31, 2013
|
% Change
|
December
31, 2014
|
December
31, 2013
|
% Change
|
|
Revenue Source
|
|
|
|
|
|
|
|
New vehicles -
Retail
|
71,869
|
68,037
|
5.6 %
|
10.1 %
|
10.3 %
|
(0.2)%
|
|
New vehicles -
Fleet
|
1,272
|
1,171
|
8.6 %
|
0.9 %
|
0.8 %
|
0.1 %
|
|
New vehicles
|
73,141
|
69,208
|
5.7 %
|
8.6 %
|
8.6 %
|
- %
|
|
Used vehicles -
Retail
|
17,569
|
16,044
|
9.5 %
|
7.7 %
|
7.8 %
|
(0.1)%
|
|
Used vehicles -
Wholesale
|
1,288
|
2,830
|
(54.5)%
|
1.3 %
|
4.0 %
|
(2.7)%
|
|
Used Vehicles
|
18,857
|
18,874
|
(0.1)%
|
5.8 %
|
6.9 %
|
(1.1)%
|
|
Finance, insurance
and other
|
75,267
|
69,115
|
8.9 %
|
91.9 %
|
91.5 %
|
0.4 %
|
|
Subtotal
|
167,265
|
157,197
|
6.4 %
|
13.3 %
|
13.6 %
|
(0.3)%
|
|
Parts, service and
collision repair
|
71,536
|
64,020
|
11.7 %
|
52.9 %
|
52.3 %
|
0.6 %
|
|
Total
|
238,801
|
221,217
|
7.9 %
|
17.2 %
|
17.3 %
|
(0.1)%
|
The following table summarizes the results for the three month
period and the year ended December 31,
2014 on a same store basis by revenue source and compares
these results to the same period in 2013.
|
Same Store Revenue and Vehicles Sold
|
|
For the Three Months Ended
|
|
|
(in thousands of dollars)
|
December
31,
2014
|
December
31,
2013
|
% Change
|
|
Revenue Source
|
|
|
|
|
New vehicles -
Retail
|
156,602
|
150,463
|
4.1 %
|
|
New vehicles -
Fleet
|
24,748
|
16,767
|
47.6 %
|
|
New vehicles
|
181,350
|
167,230
|
8.4 %
|
|
Used vehicles -
Retail
|
53,225
|
47,655
|
11.7 %
|
|
Used vehicles -
Wholesale
|
23,410
|
17,031
|
37.5 %
|
|
Used vehicles
|
76,635
|
64,686
|
18.5 %
|
|
Finance, insurance
and other
|
18,781
|
17,754
|
5.8 %
|
|
Subtotal
|
276,766
|
249,670
|
10.9 %
|
|
Parts, service and
collision repair
|
35,889
|
32,271
|
11.2 %
|
|
Total
|
312,655
|
281,941
|
10.9 %
|
|
|
|
|
|
New retail vehicles
sold
|
4,307
|
4,191
|
2.8 %
|
|
New fleet vehicles
sold
|
896
|
515
|
74.0 %
|
|
Used retail vehicles
sold
|
2,329
|
2,177
|
7.0 %
|
|
Total
|
7,532
|
6,883
|
9.4 %
|
|
Total vehicles
retailed
|
6,636
|
6,368
|
4.2 %
|
|
|
|
|
|
|
|
Same Store Gross Profit and Gross Profit
Percentage
|
|
For the Three Months Ended
|
|
|
|
Gross Profit
|
Gross Profit %
|
|
(in thousands of dollars)
|
December
31, 2014
|
December
31, 2013
|
% Change
|
December
31, 2014
|
December
31, 2013
|
Change
|
|
Revenue Source
|
|
|
|
|
|
|
|
New vehicles -
Retail
|
14,626
|
15,563
|
(6.0)%
|
9.3 %
|
10.3 %
|
(1.0)%
|
|
New vehicles -
Fleet
|
550
|
49
|
1,022.4 %
|
2.2 %
|
0.3 %
|
1.9 %
|
|
New vehicles
|
15,176
|
15,612
|
(2.8)%
|
8.4 %
|
9.3 %
|
(0.9)%
|
|
Used vehicles -
Retail
|
3,759
|
2,230
|
68.6 %
|
7.1 %
|
4.7 %
|
2.4 %
|
|
Used vehicles -
Wholesale
|
63
|
1,970
|
(96.8)%
|
0.3 %
|
11.6 %
|
(11.3)%
|
|
Used vehicles
|
3,822
|
4,200
|
(9.0)%
|
5.0 %
|
6.5 %
|
(1.5)%
|
|
Finance, insurance
and other
|
17,283
|
16,017
|
7.9 %
|
92.0 %
|
90.2 %
|
1.8 %
|
|
Subtotal
|
36,281
|
35,829
|
1.3 %
|
13.1 %
|
14.4 %
|
(1.3)%
|
|
Parts, service and
collision repair
|
19,069
|
16,550
|
15.2 %
|
53.1 %
|
51.3 %
|
1.8 %
|
|
Total
|
55,350
|
52,379
|
5.7 %
|
17.7 %
|
18.6 %
|
(0.9)%
|
|
Consolidated Statements of Comprehensive
Income
|
|
|
|
|
For the Years Ended
|
|
|
|
|
(in thousands of
Canadian dollars except for share and per share
amounts)
|
|
|
|
|
|
|
|
|
December 31,
2014
$
|
|
December 31,
2013
$
|
|
Revenue
|
2,214,778
|
|
1,409,040
|
|
Cost of sales
|
(1,841,629)
|
|
(1,163,005)
|
|
Gross profit
|
373,149
|
|
246,035
|
|
Operating expenses
|
(290,904)
|
|
(188,519)
|
|
Operating profit before other income
(expense)
|
82,245
|
|
57,516
|
|
Lease and other
income, net
|
5,524
|
|
-
|
|
Loss on disposal of
assets, net
|
(183)
|
|
(210)
|
|
Recovery of
impairment of intangible assets
|
1,767
|
|
746
|
|
Income from
investments in associates
|
3,490
|
|
2,241
|
|
Operating profit
|
92,843
|
|
60,293
|
|
Finance
costs
|
(20,363)
|
|
(9,618)
|
|
Finance
income
|
2,147
|
|
1,187
|
|
Net income for the year before taxation
|
74,627
|
|
51,862
|
|
Income tax
|
18,335
|
|
13,696
|
|
Net and comprehensive income for the
year
|
56,292
|
|
38,166
|
|
Net and comprehensive income for the year
attributable to:
|
|
|
|
|
AutoCanada
shareholders
|
53,132
|
|
38,166
|
|
Non‑controlling
interests
|
3,160
|
|
-
|
|
56,292
|
|
38,166
|
|
Net earnings per share attributable to AutoCanada
shareholders
|
|
|
|
|
Basic
|
2.31
|
|
1.83
|
|
Diluted
|
2.30
|
|
1.83
|
|
|
|
|
|
Weighted average
shares
|
|
|
|
|
Basic
|
23,018,588
|
|
20,868,726
|
|
Diluted
|
23,139,403
|
|
20,934,828
|
|
Consolidated Statements of Financial
Position
|
|
(in thousands of
Canadian dollars)
|
|
December 31,
2014
$
|
December 31,
2013
$
|
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash
equivalents
|
72,462
|
35,113
|
|
Trade and other
receivables
|
92,138
|
57,771
|
|
Inventories
|
563,277
|
278,091
|
|
Current portion of
finance lease receivables
|
3,537
|
-
|
|
Other current
assets
|
5,166
|
1,603
|
|
736,580
|
372,578
|
|
Property and equipment
|
214,938
|
122,915
|
|
Investments in associates
|
-
|
13,131
|
|
Intangible assets
|
356,612
|
96,985
|
|
Goodwill
|
29,620
|
6,672
|
|
Long‑term portion of finance lease
receivables
|
10,292
|
-
|
|
Other long‑term assets
|
6,713
|
6,797
|
|
1,354,755
|
619,078
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Bank
indebtedness
|
2,181
|
-
|
|
Trade and other
payables
|
82,670
|
50,428
|
|
Revolving floorplan
facilities
|
527,780
|
264,178
|
|
Current tax
payable
|
9,708
|
4,906
|
|
Vehicle repurchase
obligations
|
1,539
|
1,398
|
|
Current
indebtedness
|
4,651
|
2,866
|
|
Current portion of
redemption liabilities
|
7,665
|
-
|
|
636,194
|
323,776
|
|
Long‑term indebtedness
|
223,009
|
83,580
|
|
Deferred income tax
|
24,963
|
21,480
|
|
Redemption liabilities
|
34,133
|
-
|
|
918,299
|
428,836
|
|
EQUITY
|
|
|
|
Attributable to AutoCanada shareholders
|
381,428
|
190,242
|
|
Attributable to Non‑controlling interests
|
55,028
|
-
|
|
436,456
|
190,242
|
|
1,354,755
|
619,078
|
|
Consolidated Statements of Changes in
Equity
|
|
For the Years Ended
|
|
(in thousands of
Canadian dollars)
|
|
|
|
|
|
Attributable to AutoCanada shareholders
|
|
|
|
Share
capital
$
|
Contributed
surplus
$
|
Accumulated
deficit
$
|
Total
$
|
Non‑controlling
interests
$
|
Total
Equity
$
|
|
Balance, January 1, 2014
|
232,938
|
4,758
|
(47,454)
|
190,242
|
-
|
190,242
|
|
Net and comprehensive
income
|
-
|
-
|
53,132
|
53,132
|
3,160
|
56,292
|
|
Dividends declared on
common shares
|
-
|
-
|
(21,745)
|
(21,745)
|
-
|
(21,745)
|
|
Non‑controlling
interests arising on business combinations and
acquisitions
|
-
|
-
|
-
|
-
|
52,309
|
52,309
|
|
Recognition of
redemption liability granted to non‑controlling
interests
|
-
|
-
|
(41,798)
|
(41,798)
|
-
|
(41,798)
|
|
Dividends declared by
subsidiaries to non‑controlling interests
|
-
|
-
|
-
|
-
|
(441)
|
(441)
|
|
Common shares
issued
|
203,655
|
-
|
-
|
203,655
|
-
|
203,655
|
|
Treasury shares
acquired
|
(2,776)
|
-
|
-
|
(2,776)
|
-
|
(2,776)
|
|
Shares settled from
treasury
|
755
|
(760)
|
-
|
(5)
|
-
|
(5)
|
|
Share‑based
compensation
|
-
|
723
|
-
|
723
|
-
|
723
|
|
Balance, December 31, 2014
|
434,572
|
4,721
|
(57,865)
|
381,428
|
55,028
|
436,456
|
|
|
|
|
|
|
|
|
|
Attributable to AutoCanada shareholders
|
|
|
|
Share
capital
$
|
Contributed
surplus
$
|
Accumulated
deficit
$
|
Total
capital
$
|
Non‑controlling
interests
$
|
Equity
$
|
|
Balance, January 1, 2013
|
189,500
|
4,423
|
(69,423)
|
124,500
|
-
|
124,500
|
|
Net and comprehensive
income
|
-
|
-
|
38,166
|
38,166
|
-
|
38,166
|
|
Dividends declared on
common shares
|
-
|
-
|
(16,197)
|
(16,197)
|
-
|
(16,197)
|
|
Common shares
issued
|
43,811
|
-
|
-
|
43,811
|
-
|
43,811
|
|
Treasury shares
acquired
|
(579)
|
-
|
-
|
(579)
|
-
|
(579)
|
|
Shares settled from
treasury
|
206
|
(240)
|
-
|
(34)
|
-
|
(34)
|
|
Share‑based
compensation
|
-
|
575
|
-
|
575
|
-
|
575
|
|
Balance, December 31, 2013
|
232,938
|
4,758
|
(47,454)
|
190,242
|
-
|
190,242
|
|
Consolidated Statements of Cash Flows For the Years
Ended (in thousands of
Canadian dollars)
|
|
|
|
|
Cash provided by (used in):
|
December 31,
2014
$
|
December 31,
2013
$
|
|
Operating activities
|
|
|
|
Net and comprehensive
income
|
56,292
|
38,166
|
|
Income
taxes
|
18,335
|
13,696
|
|
Amortization of
prepaid rent
|
452
|
452
|
|
Depreciation of
property and equipment
|
13,624
|
6,346
|
|
Loss on disposal of
assets
|
183
|
210
|
|
Recovery of
impairment of intangible assets
|
(1,767)
|
(746)
|
|
Share‑based
compensation ‑ equity‑settled
|
723
|
575
|
|
Share‑based
compensation ‑ cash‑settled
|
(487)
|
2,054
|
|
Income from
investment in associates
|
(3,490)
|
(2,241)
|
|
Income taxes
paid
|
(16,824)
|
(10,559)
|
|
Gain on embedded
derivative
|
(243)
|
-
|
|
Net change in
non‑cash working capital
|
4,339
|
(9,968)
|
|
71,137
|
37,985
|
|
Investing activities
|
|
|
|
Business
acquisitions, net of cash acquired
|
(269,983)
|
(65,368)
|
|
Investments in
associates
|
(43,900)
|
(7,057)
|
|
Dividends received
from investments in associates
|
1,458
|
897
|
|
Combination of
entities under common control
|
4,699
|
-
|
|
Purchases of property
and equipment
|
(23,441)
|
(67,105)
|
|
Proceeds on sale of
property and equipment
|
32
|
3,304
|
|
Proceeds on
divestiture of dealership
|
-
|
1,354
|
|
Reduction in
restricted cash
|
-
|
10,000
|
|
(331,135)
|
(123,975)
|
|
Financing activities
|
|
|
|
Proceeds from
long‑term indebtedness
|
770,449
|
241,287
|
|
Repayment of
long‑term indebtedness
|
(787,945)
|
(181,757)
|
|
Common shares
repurchased
|
(2,776)
|
(513)
|
|
Dividends
paid
|
(21,745)
|
(16,197)
|
|
Dividends paid to
non‑controlling interests by subsidiaries
|
(441)
|
-
|
|
Proceeds from
issuance of common shares
|
191,262
|
43,811
|
|
Proceeds from senior
unsecured notes
|
146,362
|
-
|
|
295,166
|
86,631
|
|
Increase in cash
|
35,168
|
641
|
|
Cash and cash equivalents at beginning of
year
|
35,113
|
34,472
|
|
Cash and cash equivalents at end of
year
|
70,281
|
35,113
|
ABOUT AUTOCANADA
AutoCanada is one of Canada's largest multi-location automobile
dealership groups, currently operating 48 dealerships, comprised of
56 franchises, in eight provinces and has over 3,400 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 2014, our dealerships sold
approximately 57,000 vehicles and processed approximately 786,000
service and collision repair orders in our 822 service bays during
that time.
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 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. Under our
agreements with our retail financing sources we are 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. 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.
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.
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. 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.
Adjusted EBITDA
Adjusted EBITDA is an indicator of a company's operating
performance and ability to incur and service debt prior to
recognizing the portion of share‑based compensation related to
changes in the share price and its impact on the Company's
cash‑settled portions of its share‑based compensation programs. The
Company considers this expense to be non-cash in nature as we
maintain a share purchase trust in which we purchase shares on the
open market as these units are granted to reduce the cash flow risk
associated with fluctuations in the share price. Share‑based
compensation, a component of employee remuneration, can vary
significantly with changes in the price of the Company's common
shares. The Company believes adjusted EBITDA provides improved
continuity with respect to the comparison of our operating results
over a period of time.
Adjusted Net Earnings and Adjusted Net Earnings per
Share
Adjusted net earnings and adjusted net earnings per share are
measures of our profitability. Adjusted net earnings is calculated
by adding back the after‑tax effect of impairment or reversals of
impairment of intangible assets, impairments of goodwill, and the
portion of share‑based compensation related to changes in the share
price and its impact on the Company's cash‑settled portions of its
share‑based compensation programs. The Company considers this
expense to be non-cash in nature as we maintain a share purchase
trust in which we purchase shares on the open market as these units
are granted to reduce the cash flow risk associated with
fluctuations in the share price. Share‑based compensation, a
component of employee remuneration, can vary significantly with
changes in the price of the Company's common shares. Adding back
these amounts to net earnings allows management to assess the net
earnings of the Company from ongoing operations. Adjusted net
earnings per share is calculated by dividing adjusted net earnings
by the weighted‑average number of shares outstanding.
EBIT
EBIT is a measure used by management in the calculation of
Return on capital employed (defined below). Management's
calculation of EBIT is EBITDA (calculated above) less depreciation
and amortization.
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 expenditures (not including
acquisitions of dealerships and dealership facilities).
Adjusted Free Cash Flow
Adjusted free cash flow is a measure used by management to
evaluate its performance. Adjusted 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.
Adjusted Average Capital Employed
Adjusted average capital employed is a measure used by
management to determine the amount of capital invested in
AutoCanada and is used in the measure of Adjusted Return on Capital
Employed (described below). Adjusted average capital employed
is calculated as the average balance of interest bearing debt for
the period (including current portion of long term debt, excluding
revolving floorplan facilities) and the average balance of
shareholders equity for the period, adjusted for impairments of
intangible assets, net of deferred tax. Management does not
include future income tax, non-interest bearing debt, or revolving
floorplan facilities in the calculation of adjusted average capital
employed as it does not consider these items to be capital, but
rather debt incurred to finance the operating activities of the
Company.
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.
Average Capital Employed
Average capital employed is a measure used by management to
determine the amount of capital invested in AutoCanada and is used
in the measure of Return on Capital Employed (described
below). Average capital employed is calculated as the average
balance of interest bearing debt for the period (including current
portion of long term debt, excluding revolving floorplan
facilities) and the average balance of shareholders equity for the
period. Management does not include future income tax,
non-interest bearing debt, or revolving floorplan facilities in the
calculation of average capital employed as it does not consider
these items to be capital, but rather debt incurred to finance the
operating activities of the Company.
Return on Capital Employed
Return on capital employed is a measure used by management to
evaluate the profitability of our invested capital. As a
corporation, management of AutoCanada may use this measure to
compare potential acquisitions and other capital investments
against our internally computed cost of capital to determine
whether the investment shall create value for our
shareholders. Management may also use this measure to look at
past acquisitions, capital investments and the Company as a whole
in order to ensure shareholder value is being achieved by these
capital investments. Return on capital employed is calculated
as EBIT (defined above) divided by Average Capital Employed
(defined above).
Adjusted Return on Capital Employed
Adjusted return on capital employed is a measure used by
management to evaluate the profitability of our invested
capital. As a corporation, management of AutoCanada may use
this measure to compare potential acquisitions and other capital
investments against our internally computed cost of capital to
determine whether the investment shall create value for our
shareholders. Management may also use this measure to look at
past acquisitions, capital investments and the Company as a whole
in order to ensure shareholder value is being achieved by these
capital investments. Adjusted return on capital employed is
calculated as EBIT (defined above) divided by Adjusted Average
Capital Employed (defined above).
Cautionary Note Regarding Non-GAAP Measures
EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow,
Absorption Rate, Average Capital Employed and Return on Capital
Employed 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, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption
Rate, Average Capital Employed and Return on Capital Employed may
differ from the methods used by other issuers. Therefore, the
Company's EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow,
Absorption Rate, Average Capital Employed and Return on Capital
Employed may not be comparable to similar measures presented by
other issuers.
Additional Information
Additional information about AutoCanada Inc. is available at the
Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.