- Revenue was $1,206.8 million as
compared to $1,017.1 million in the
prior year, an increase of 19% and the highest third quarter
revenue reported in the Company's history
- Net income for the period was $38.8
million versus $36.0 million
in 2020
- Adjusted EBITDA was $68.3 million
versus $61.1 million in the prior
year, an increase of 12%; normalizing for non-recurring government
assistance of $6.3 million in the
prior year, results were ahead of prior year by 25%
- Net indebtedness of $29.8 million
at the end of Q3 2021 compares to $21.6
million at the end of Q2 2021; net debt leverage on a
pre-IFRS 16 basis was 0.2x
EDMONTON, AB, Nov. 9, 2021 /CNW/ - AutoCanada Inc.
("AutoCanada" or the "Company") (TSX: ACQ), a multi-location North
American automobile dealership group, today reported its financial
results for the three month period ended September 30,
2021.
"Our team's focus on operational excellence once again delivered
record-setting results in Q3 2021, highlighting the strength and
resiliency of our business model," said Paul Antony, Executive Chairman of AutoCanada.
"We continue to make great progress on almost every key measure,
particularly driven by strong performance in our used vehicle,
F&I and U.S. operations, along with an overall improvement in
market outlook and demand.
"This strong performance reflects the sustainability of our
business model and demonstrates that we're successfully managing
through the current market environment of global supply chain
challenges impacting OEM production. We believe these OEM
production capacity issues will normalize over the coming quarters
and expect the market to return to pre-pandemic levels in late 2022
or early 2023. In the meantime, we will continue to build on our
positive momentum and focus on strategic growth initiatives to
drive industry-leading performance regardless of changing market
conditions.
"We remain well positioned to execute on our acquisition
strategy in the coming quarters with a robust pipeline of
dealerships and collision centres representing over $400 million in annual revenue currently being
evaluated."
Third Quarter Key Highlights and Recent Developments
The Company reported another record-setting performance as
revenue for the third quarter of 2021 reached $1,206.8 million compared to prior year third
quarter revenue of $1,017.1 million,
an increase of 18.6%. In particular, the record Q3 2021 was driven
by the continued strong performance of our used vehicle and finance
and insurance ("F&I") business operations, and our U.S.
Operations.
Net income for the period was $38.8
million, as compared to $36.0
million in Q3 2020. Fully diluted earnings per share was
$1.27, an increase of $0.04 from $1.23 in
the prior year.
Adjusted EBITDA for the period was $68.3
million as compared to $61.1
million reported in Q3 2020.
Normalizing for the typically non-recurring Canada Emergency Wage Subsidy ("CEWS") income
of $6.3 million in the prior year,
Adjusted EBITDA margin was 5.7% as compared to a normalized 5.4% in
the prior year, an increase of 0.3 percentage points ("ppts").
Total gross profit increased by 22.7% to $220.2 million, attributable to the Company's
continued focus on the used vehicle market and strong F&I
outperformance. Canadian used retail unit sales increased by 43.8%
and U.S. used retail unit sales increased by 178%, respectively,
over the prior year; consolidated used retail unit sales of 13,831
exceeded the 8,836 reported in the prior year, an increase of
56.5%. Strong used retail sales resulted in our consolidated used
to new retail unit ratio improving to 1.49 from 0.82, and to 1.22
on a trailing twelve month ("TTM") basis, moving beyond the
targeted annual 1.0 ratio. Consolidated used vehicle gross profit
increased by 45.1% to $43.3 million
as compared to the prior year. Same store F&I gross profit per
retail unit average increased to $3,139 per unit, an increase of $650 per unit, the twelfth consecutive quarter of
year-over-year growth.
Q3 2021 was another strong quarter for U.S. Operations, with
Adjusted EBITDA setting a third quarter U.S. record at $7.4 million, an improvement of $2.7 million or 57.7%, against $4.7 million reported in Q3 2020. The strong
performance, while capitalizing on favourable market conditions,
was a result of the successful fundamental shift in the operating
and sales culture. Specifically, gross profit increased by
$14.5 million to $32.5 million, an improvement of 80.7%.
Proactive inventory management for both new and used vehicles
continued to be a key driver to the Company's success in delivering
both strong revenue and retail margin growth across all our
business operations in the third quarter.
Normalizing for CEWS income in the prior year, operating
expenses as a percentage of gross profit improves by 1.0 ppts to
72.6% in the current year as compared to a normalized 73.6% in the
prior year, and is well below the five-year third quarter
historical average of 81.5%. The Company's ability to control and
rationalize costs underscores the effectiveness of the actions
taken during 2020 to streamline the Company's cost structure while
optimizing operating leverage.
Net indebtedness increased by $8.2
million from June 30, 2021 to
$29.8 million. Acquisition
expenditures in the quarter were $18.2
million. Free cash flow for the quarter was $12.4 million at Q3 2021 as compared to
$53.4 million in Q3 2020, and on a
TTM basis was $118.8 million at Q3
2021 as compared to $178.0 million in
Q3 2020. Additionally, our net indebtedness leverage ratio remained
well below our target range at 0.2x at the end of Q3 2021, as
compared to 0.1x in Q2 2021.
The Company remains well-positioned to execute on its
acquisition strategy in the coming quarters. We have established a
substantial transaction pipeline with a number of dealerships
currently being evaluated. We currently have $400 million in annual revenue under signed
letters of intent ("LOI's") and purchase agreements. LOI's, subject
to due diligence, represent $100
million in annual revenue. Signed purchase agreements for
dealerships located in Ontario,
subject to OEM approvals and other standard closing conditions,
represent $300 million in annual
revenue – inclusive of brands we do not currently operate
today.
Our performance, both in Canada
and U.S. Operations, continues our trend of sustainable improvement
and demonstrates the efficacy of our complete business model and
strategic initiatives. We remain aware that uncertainty continues
to exist in the macroeconomic environment given the ongoing
challenges associated with the global pandemic. Uncertainties may
include potential economic recessions or downturns, continued
disruptions to the global automotive manufacturing supply chain,
and other general economic conditions resulting in reduced demand
for vehicle sales and service. We will continue to remain proactive
and vigilant in assessing how COVID-19 may impact our organization
and remain committed to optimizing and building stability and
resiliency into our business model to ensure we are able to drive
industry-leading performance regardless of changing market
conditions.
Consolidated AutoCanada Highlights
RECORD SETTING THIRD QUARTER
Owing to execution against its complete business model strategy,
AutoCanada delivered a record setting third quarter and continues
to experience strong performance.
For the three-month period ended September 30, 2021:
- Revenue was $1,206.8 million, an
increase of $189.7 million or 18.6%
and the highest third quarter revenue reported in the Company's
history
- Total vehicles sold were 23,444, an increase of 3,276 units or
16.2%
-
- Used retail vehicles sold increased by 4,995 or 56.5%
- Net income for the period was $38.8
million (or $1.37 per basic
share) versus $36.0 million (or
$1.29 per basic share) in 2020
- Adjusted EBITDA increased by 11.8% to $68.3 million, an increase of $7.2 million
-
- Adjusting for CEWS income of $6.3
million in Q3 2020, Adjusted EBITDA was $68.3 million, ahead of normalized prior year
Adjusted EBITDA by $13.5 million or
24.6%
- Pre-IFRS 16 Adjusted EBITDA was $57.4
million, as compared to normalized $43.9 million in the prior year, an improvement
of 30.7%
- Ending net indebtedness of $29.8
million reflected an increase of $8.2
million from Q2 2021.
Canadian Operations Highlights
USED RETAIL UNIT SALES GROWTH OF 44%
Used vehicle and F&I segments were key drivers of improved
earnings in Q3 2021. Total gross profit percentage increased to
18.4% as compared to 17.7% in the prior year. Used vehicle gross
profit increased by 32.2% to $35.0
million as compared to the prior year. For the twelfth
consecutive quarter of year-over-year growth, same store F&I
gross profit per retail unit average increased to $3,139, up 26.1% or $650 per unit from prior year.
Current period results include the acquisitions of Auto Bugatti
collision centre and Haldimand Motors which occurred in Q4 2020, PG
Klassic Autobody collision centre on April
1, 2021, Mark Wilson's Better
Used Cars on August 9, 2021, and
Autolux MB Collision on September 9,
2021. Unless stated otherwise, all results for acquired
businesses are included in all Canadian references in the
MD&A.
For the three-month period ended September 30, 2021:
- Revenue was $1,018.4 million, an
increase of 11.7%; the highest third quarter Canadian revenue
reported in the Company's history
- Total retail vehicles sold were 19,264, an increase of 2,000
units or 11.6%
-
- Used retail unit sales increased by 3,499 or 43.8%
- Average TTM Canadian used retail unit sales per dealership per
month, excluding Used Digital Retail Division dealerships, reached
59, as compared to 45 in the prior year
- Used to new retail units ratio increased to 1.48 from 0.86
-
- Trailing twelve month ratio improved to 1.30 at Q3 2021 as
compared to 0.93 at Q3 2020
- Finance and insurance gross profit per retail unit average
increased to $3,005, up 15.9% or
$412 per unit
- Net income for the period was $33.8
million, down $(0.5) million
from a net income of $34.3 million in
2020
-
- Income tax expense increased by $3.6
million to $8.4 million
primarily due to adjustments in respect of prior years and other
permanent items
- Adjusted EBITDA increased 8% to $60.8
million, an increase of $4.5
million
-
- Adjusting for CEWS income in the prior year, Adjusted EBITDA
increases to $60.8 million, ahead of
normalized prior year Adjusted EBITDA by $10.8 million or 21.5%
- Adjusted EBITDA margin was 6.0% as compared to normalized 5.5%
in the prior year, an increase of 0.5 ppts
- Pre-IFRS 16 Adjusted EBITDA was $51.1
million, as compared to normalized $40.1 million in the prior year, an improvement
of 27.4%
U.S. Operations Highlights
USED RETAIL UNIT SALES GROWTH OF 178%
The U.S. management team transition that occurred in late Q1
2021 drove a fundamental shift in the operating and sales culture
of the dealerships and led to improved metrics on multiple fronts.
Strategic decisions executed throughout Q2 2021 set the U.S.
Operations for another strong quarter, where, along with a 64.6%
improvement in retail unit sales, total gross profit
percentage set a third quarter record of 17.3%. Actions taken over
the last two quarters included the strategic build-up of used
vehicle inventory, the creation of a dedicated used vehicle team,
top-grading dealership management, expanding team across all levels
of the business, and the execution of operational best
practices.
Current period results include the acquisition of Autohaus of
Peoria which occurred on October 29,
2020.
- Revenue was $188.3 million, an
increase of 79.3%
- Retail unit sales increased to 3,822 units, up 1,500 units or
64.6%
-
- Used retail unit sales increased by 1,496 or 177.7%
- Net income for the period increased by $3.3 million to $4.9
million from $1.7 million in
2020
- Adjusted EBITDA was $7.4 million,
an increase of $2.7 million from
2020, an improvement of 57.7%
-
- Adjusting for COVID-19 related typically non-recurring items,
normalized Adjusted EBITDA on a TTM basis was $15.0 million as compared to $1.6 million in 2020
Same Store Metrics - Canadian Operations
SAME STORE F&I GROSS PROFIT PER RETAIL
UNIT AVERAGE OF $3,139 PER
UNIT
We outperformed the Canada
market by 1.5 ppts. Same store new retail units decreased by
(16.2)% as compared to the market decrease of (17.7)%, for brands
represented by AutoCanada as reported by DesRosiers Automotive
Consultants ("DesRosiers"). Same store used retail units increased
by 2,032 retail units to 10,026, an increase of 25.4% as compared
to prior year. The continued optimization of the Company's complete
business model is highlighted by the year-over-year 18.6%
improvement in gross profit across every business segment which
collectively totaled $28.2
million.
Same stores metrics include only Canadian dealerships which have
been owned for at least two full years since acquisition.
- Revenue increased to $983.9
million, an increase of 15.0%
- Gross profit increased by $28.2
million or 18.6%
- Used to new retail units ratio increased to 1.29 from 0.86
-
- Used retail unit sales increased by 25.4%, an increase of 2,032
units
- F&I gross profit per retail unit average increased to
$3,139, up 26.1% or $650 per unit; gross profit increased to
$55.9 million as compared to
$43.0 million in the prior year, an
increase of $12.9 million or
30.0%
- Parts, service and collision repair gross profit increased to
$54.4 million, an increase of
5.2%
-
- Parts, service and collision repair gross profit percentage
increased to 55.7% as compared to 52.4% in the prior year, an
increase of 3.4 ppts, driven by various initiatives to improve
margin retention
Financing and Investing Activities and Other Recent
Developments
ACQUISITION PIPELINE SUPPORTED BY HEALTHY
BALANCE SHEET AND LIQUIDITY STRUCTURE
In the quarter, net indebtedness increased by $8.2 million to $29.8
million, resulting in a net debt leverage of 0.2x.
Acquisition expenditures in the quarter were $18.2 million.
The following acquisitions occurred:
- On August 9, 2021, the Company
acquired 100% of the shares in Mark
Wilson's Better Used Cars, an independent used vehicle
dealership in Guelph, Ontario as
part of the development of the Used Digital Retail Division.
- On September 9, 2021, the Company
acquired 100% of the shares in Autolux MB Collision, a luxury-brand
focused collision centre located in Montreal, Quebec.
- On October 1, 2021, the Company
acquired 100% of the shares in Airdrie Autobody Ltd., a collision
centre located in Airdrie,
Alberta.
- On November 4, 2021, the Company
acquired substantially all of the assets of Crystal Lake Chrysler
Jeep Dodge Ram Inc., a Stellantis dealership located in
Crystal Lake, Illinois.
Third Quarter Financial Information
The following table summarizes the Company's performance for the
quarter:
|
Three Months Ended
September 30
|
Consolidated
Operational Data
|
2021
|
2020
|
%
Change
|
Revenue
|
1,206,754
|
1,017,100
|
18.6%
|
Gross
profit
|
220,192
|
179,412
|
22.7%
|
Gross profit
%
|
18.2%
|
17.6%
|
0.6%
|
Operating
expenses
|
159,880
|
125,785
|
27.1%
|
Operating
profit
|
62,841
|
56,884
|
10.5%
|
Net income for the
period
|
38,769
|
35,962
|
7.8%
|
Basic net income per
share attributable to AutoCanada shareholders
|
1.37
|
1.29
|
6.2%
|
Diluted net income per
share attributable to AutoCanada shareholders
|
1.27
|
1.23
|
3.3%
|
Adjusted EBITDA
1
|
68,265
|
61,054
|
11.8%
|
|
|
|
|
New retail vehicles
sold (units)
|
9,255
|
10,750
|
(13.9)%
|
New fleet vehicles
sold (units)
|
358
|
582
|
(38.5)%
|
Total new vehicles
sold (units)
|
9,613
|
11,332
|
(15.2)%
|
Used retail vehicles
sold (units)
|
13,831
|
8,836
|
56.5%
|
Total vehicles
sold
|
23,444
|
20,168
|
16.2%
|
Same store new retail
vehicles sold (units)
|
7,771
|
9,270
|
(16.2)%
|
Same store new fleet
vehicles sold (units)
|
358
|
582
|
(38.5)%
|
Same store used retail
vehicles sold (units)
|
10,026
|
7,994
|
25.4%
|
Same store total
vehicles sold
|
18,155
|
17,846
|
1.7%
|
Same store
revenue
|
983,897
|
855,591
|
15.0%
|
Same store gross
profit
|
179,870
|
151,636
|
18.6%
|
Same store gross
profit %
|
18.3%
|
17.7%
|
0.6%
|
See the Company's
Management's Discussion and Analysis for the quarter ended
September 30, 2021 for complete footnote
disclosures.
|
The following table shows the segmented operating results for
the Company for the three month periods ended September 30,
2021 and September 30, 2020.
|
Three Months Ended
September 30, 2021
|
|
Three Months Ended
September 30, 2020
|
|
Canada
$
|
U.S.
$
|
Total
$
|
|
Canada
$
|
U.S.
$
|
Total
$
|
New
vehicles
|
422,605
|
66,587
|
489,192
|
|
483,117
|
61,298
|
544,415
|
Used
vehicles
|
430,712
|
98,115
|
528,827
|
|
282,396
|
26,797
|
309,193
|
Parts, service and
collision repair
|
103,357
|
13,367
|
116,724
|
|
98,539
|
13,200
|
111,739
|
Finance, insurance and
other
|
61,770
|
10,241
|
72,011
|
|
47,998
|
3,755
|
51,753
|
Total
revenue
|
1,018,444
|
188,310
|
1,206,754
|
|
912,050
|
105,050
|
1,017,100
|
New
vehicles
|
37,345
|
6,810
|
44,155
|
|
38,639
|
3,591
|
42,230
|
Used
vehicles
|
34,971
|
8,291
|
43,262
|
|
26,444
|
3,375
|
29,819
|
Parts, service and
collision repair
|
57,449
|
7,777
|
65,226
|
|
51,553
|
7,503
|
59,056
|
Finance, insurance and
other
|
57,895
|
9,654
|
67,549
|
|
44,769
|
3,538
|
48,307
|
Total gross
profit
|
187,660
|
32,532
|
220,192
|
|
161,405
|
18,007
|
179,412
|
Employee
costs
|
85,969
|
16,428
|
102,397
|
|
73,760
|
7,340
|
81,100
|
Government
assistance
|
(317)
|
—
|
(317)
|
|
(6,252)
|
—
|
(6,252)
|
Administrative
costs
|
38,608
|
8,502
|
47,110
|
|
34,971
|
5,282
|
40,253
|
Facility lease and
storage costs
|
105
|
—
|
105
|
|
377
|
—
|
377
|
Depreciation of
property and equipment
|
3,811
|
310
|
4,121
|
|
3,815
|
296
|
4,111
|
Depreciation of
right-of-use assets 2
|
5,767
|
697
|
6,464
|
|
5,710
|
486
|
6,196
|
Total operating
expenses
|
133,943
|
25,937
|
159,880
|
|
112,381
|
13,404
|
125,785
|
|
|
|
|
|
|
|
|
Operating profit
(loss) before other income
|
53,717
|
6,595
|
60,312
|
|
49,024
|
4,603
|
53,627
|
|
|
|
|
|
|
|
|
Operating
data
|
|
|
|
|
|
|
|
New retail vehicles
sold 1
|
7,771
|
1,484
|
9,255
|
|
9,270
|
1,480
|
10,750
|
New fleet vehicles
sold 1
|
358
|
—
|
358
|
|
582
|
—
|
582
|
Total new vehicles
sold 1
|
8,129
|
1,484
|
9,613
|
|
9,852
|
1,480
|
11,332
|
Used retail vehicles
sold 1
|
11,493
|
2,338
|
13,831
|
|
7,994
|
842
|
8,836
|
Total vehicles sold
1
|
19,622
|
3,822
|
23,444
|
|
17,846
|
2,322
|
20,168
|
# of service and
collision repair orders completed 1, 2
|
169,510
|
30,360
|
199,870
|
|
167,834
|
27,170
|
195,004
|
# of dealerships at
period end
|
51
|
17
|
68
|
|
49
|
13
|
62
|
# of service bays at
period end
|
912
|
196
|
1,108
|
|
865
|
174
|
1,039
|
See the Company's
Management's Discussion and Analysis for the quarter ended
September 30, 2021 for complete footnote
disclosures.
|
MD&A and Financial Statements
Information included in this press release is a summary of
results. It should be read in conjunction with AutoCanada's
Consolidated Financial Statements and Management's Discussion and
Analysis for the quarter ended September 30, 2021, which can
be found on the Company's website at www.autocan.ca or on
www.sedar.com.
Non-GAAP Measures
This press release contains certain financial measures that do
not have any standardized meaning prescribed by Canadian
GAAP. Therefore, these financial measures may not be
comparable to similar measures presented by other issuers.
Investors are cautioned these measures should not be construed as
an alternative to net earnings (loss) or to cash provided by (used
in) operating, investing, and financing activities determined in
accordance with Canadian GAAP, as indicators of our
performance. We provide these measures to assist investors in
determining our ability to generate earnings and cash provided by
(used in) operating activities and to provide additional
information on how these cash resources are used. The following
"Non-GAAP Measures" are defined in the quarterly MD&A: adjusted
EBITDA; normalized adjusted EBITDA; free cash flow; net
indebtedness, net indebtedness leverage ratio and lease adjusted
leverage ratio.
Conference Call
A conference call to discuss the results for the three months
ended September 30, 2021 will be held on November 10,
2021 at 9:00am Mountain (11:00am Eastern). To participate in the
conference call, please dial 1.888.664.6392 approximately 10
minutes prior to the call.
This conference call will also be webcast live over the internet
and can be accessed by all interested parties at the following
URL:
https://www.autocan.ca/investors/q32021-presentation/
About AutoCanada
AutoCanada is a leading North American multi-location automobile
dealership group currently operating 67 franchised dealerships,
comprised of 27 brands, in eight provinces in Canada as well as a group in Illinois, USA. AutoCanada currently sells
Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC,
Buick, Cadillac, Ford, Infiniti,
Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda,
Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Honda and Porsche branded vehicles.
Additionally, the Company's Canadian Operations segment currently
operates 2 used vehicle dealerships supporting the Used Digital
Retail Division, and 4 stand-alone collision centres (within our
group of 18 collision centres). In 2020, our dealerships sold
approximately 66,000 vehicles and processed over 756,000 service
and collision repair orders in our 1,098 service bays generating
revenue in excess of $3 billion.
Additional information about AutoCanada Inc. is available at
www.sedar.com and the Company's website at www.autocan.ca.
Forward Looking Statements
Certain statements contained in this press release are
forward-looking statements and information (collectively
"forward-looking statements", including "with respect to", "among
other things", "future performance", "expense reductions" and the
"Go Forward Plan"), within the meaning of the applicable Canadian
securities legislation. We hereby provide cautionary statements
identifying important factors that could cause our actual results
to differ materially from those projected in these forward-looking
statements. Any statements that express, or involve discussions as
to, expectations, beliefs, plans, objectives, assumptions or future
events or performance (often, but not always, through the use of
words or phrases such as "will likely result", "are expected to",
"will continue", "is anticipated", "projection", "vision", "goals",
"objective", "target", "schedules", "outlook", "anticipate",
"expect", "estimate", "could", "should", "plan", "seek", "may",
"intend", "likely", "will", "believe", "shall" 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 press release.
The Company's Annual Information Form and other documents filed
with securities regulatory authorities (accessible through the
SEDAR website at www.sedar.com) describe the risks, material
assumptions and other factors that could influence actual results
and which are incorporated herein by reference.
Further, any forward-looking statement speaks only as of the
date on which such statement is made, and, except as required by
applicable law, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all of such
factors and to assess in advance the impact of each such factor on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
Additional Information
Additional information about AutoCanada is available at the
Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.