EDMONTON, AB, Jan. 17, 2022 /CNW/ - AutoCanada Inc.
("AutoCanada" or the "Company") (TSX: ACQ), a leading
multi-location North American automobile dealership group, is
pleased to announce that it is meeting with fixed income investors
to provide an update on its operations and acquisitions, including
its recently announced acquisition of 11 dealerships from the
Autopoint Group. In connection with its update to fixed
income investors, AutoCanada is providing the following preliminary
unaudited highlights of what it expects to report in respect of its
fourth quarter 2021 results, as well as management's estimates
relating to the financial impact of the acquisitions announced or
completed during Q4 2020 and fiscal 2021 (the "Acquisitions"),
including those announced in the fourth quarter of 2021.
Preliminary Unaudited Fourth Quarter 2021 Operating
Results
For the three month period ended December
31, 2021 ("Q4 2021"), on a preliminary unaudited basis (as
discussed in further detail below), management expects to report
the following highlights:
- Q4 2021 revenue of approximately $1,130 to $1,170
million, representing growth of approximately 30% over the
same period in 2020 ("Q4 2020");
- Same store1 total retail unit sales growth of
approximately 13% as compared to 3.9% in Q4 2020;
- An increase in AutoCanada's same store1 used-to-new
vehicles sold ratio to approximately 1.30 in Q4 2021 from 0.91 in
Q4 2020; and
- An increase in net debt by approximately $170 to $190
million in the quarter, from $29.8
million as at September 30,
2021, to approximately $200 to
$220 million as at December 31, 2021. The increase includes debt
incurred in connection with the acquisition of 11 dealerships from
the Autopoint Group, the acquisitions of Airdrie Autobody in
Canada and Crystal Lake Stellantis
in the U.S., and the purchase of dealership real estate under
development in Maple Ridge, BC,
which represented a total cash outflow of approximately
$191 million during the quarter.
Paul Antony, Executive Chairman
of the Company, stated, "We are on track for another record fourth
quarter, reflecting the ongoing positive momentum across our
business and the fundamental strength and resiliency of our
operating platform and balance sheet. This strong operational
and financial performance enables us to continue to develop
organically while executing on our disciplined acquisition and
innovation strategy."
Estimated Financial Impact of the Acquisitions
For the 12 month period ending September
30, 2021, AutoCanada's reported net income was $122 million and it had Normalized Adjusted
EBITDA (Pre-IFRS 16)2 of $172
million and Normalized Adjusted EBITDA (inclusive of IFRS 16
impacts)2 of $215 million.
Management estimates that if the Acquisitions had occurred on the
first day of the 12 month period ending September 30, 2021, the Company would have
reported approximately $194 million
in Pro Forma Normalized Adjusted EBITDA (Pre-IFRS 16)2
and approximately $242 million of Pro
Forma Normalized Adjusted EBITDA (inclusive of IFRS 16
impacts)2 for that period.
Management further estimates that if the Acquisitions had
occurred on the first day of the 12 month period ending
September 30, 2021, AutoCanada would
have had sales of over 94,000 new and used vehicles in that period,
as compared to over 71,000 in the 12 month period ending
September 30, 2019, and Pro Forma
Revenues2 of $4.9 billion
in the 12 month period ending September 30,
2021 as compared to $3.4
billion in the 12 month period ending September 30, 2019.
Management estimates that if the Acquisitions had been completed
on the first day of the 12 month period ending September 30, 2021, and providing for assumptions
on debt associated with such Acquisitions, it would have resulted
in the following select credit metrics as of September 30, 2021:
- Pro Forma Secured Debt2,3 / Pro Forma Normalized
Adjusted EBITDA (Pre-IFRS 16)2 of approximately
0.3x
- Pro Forma Total Debt2,3 / Pro Forma Normalized
Adjusted EBITDA (Pre-IFRS 16)2 of approximately
1.6x
- Pro Forma Net Debt2,3 / Pro Forma Normalized
Adjusted EBITDA (Pre-IFRS 16)2 of approximately
1.1x
- Pro Forma Total Debt (including Lease Liabilities)
2,3 / Pro Forma Normalized Adjusted EBITDA (inclusive of
IFRS 16 impacts)2 of approximately 3.2x
- Pro Forma Net Debt (including Lease Liabilities) 2,3
/ Pro Forma Normalized Adjusted EBITDA (inclusive of IFRS 16
impacts)2 of approximately 2.8x
The Company has not yet completed its financial closing process
for Q4 2021, and the selected unaudited results provided above, as
well as the Company's estimates of Pro Forma Normalized Adjusted
EBITDA (Pre-IFRS 16)2 and Pro Forma Normalized Adjusted
EBITDA (inclusive of IFRS 16 impacts)2 and the related
pro forma credit metrics, are preliminary estimates. Actual results
may differ materially from these estimates due to the completion of
the Company's financial closing procedures, final adjustments,
review by the Company's auditors and other developments that may
arise between now and the time the financial results are finalized.
These estimates are not a comprehensive statement of the Company's
financial results for Q4 2021 or for any other period and should
not be viewed as a substitute for full financial statements
prepared in accordance with International Financial Reporting
Standards, and these estimates are not necessarily indicative of
the results to be achieved for Q4 2021 or for any other period. The
Company is issuing preliminary results in order to enable it to
disclose such information in connection with its update to fixed
income investors, and the Company does not intend to provide
preliminary results in the future. The preliminary results provided
in this press release constitute forward-looking statements within
the meaning of applicable securities laws, are based on a number of
assumptions and are subject to a number of risks and uncertainties.
Please see the section below entitled "Forward-Looking Statements".
The preliminary results have been prepared by, and are the
responsibility of, management of the Company. The Company's
independent registered public accounting firm,
PricewaterhouseCoopers LLP, has not reviewed the preliminary
results. Neither PricewaterhouseCoopers LLP nor any other
independent accountants express an opinion or any other form of
assurance with respect to the preliminary results.
About AutoCanada
AutoCanada is a leading North American multi-location automobile
dealership group operating 78 franchised dealerships, comprised of
28 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, Porsche and Acura branded
vehicles. Additionally, the Company's Canadian operations segment
currently operates two used vehicle dealership supporting the Used
Digital Retail Division, and four stand-alone collision centres
(within our group of 18 collision centres). In 2020, our then
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.
Non-GAAP Measures and Pro Forma Financial Information
and Credit Metrics
This press release includes certain financial measures that do
not have any standardized meaning prescribed by Canadian GAAP
including (i) Pro Forma Normalized Adjusted EBITDA (Pre-IFRS 16);
(ii) Pro Forma Normalized Adjusted EBITDA (inclusive of IFRS 16
impacts); (iii) Pro Forma Secured Debt; (iv) Pro Forma Total Debt;
(v) Pro Forma Net Debt; (vi) Pro Forma Total Debt (including Lease
Liabilities); (vi) Pro Forma Net Debt (including Lease
Liabilities); (vii) Pro Forma Revenue; (viii) Adjusted EBITDA; (ix)
Normalized Adjusted EBITDA; and * Normalized Adjusted EBITDA
(Pre-IFRS 16). Therefore, these financial measures may not be
comparable to similar measures presented by other issuers. Readers
are cautioned these measures should not be construed as an
alternative to net income (loss), cash and cash equivalents, lease
liabilities, and total indebtedness determined in accordance with
Canadian GAAP, as indicators of our performance or as a measure of
our liquidity. We provide these measures to assist investors in
determining our ability to generate earnings and to provide
additional information on how cash resources are used.
It should be noted that certain of the financial measures
described below include pro forma items estimating the impact of
the Acquisitions if they had occurred on the first day of the
relevant period, or as of a specified date. Readers should
understand that these estimates were determined by management in
good faith and are not indicative of what the historical results of
the businesses acquired in the Acquisitions actually were for the
relevant period, or what those results would have been if the
Acquisitions had occurred on the dates indicated, or what they will
be for any future period. As a result, the pro forma financial
measures and credit metrics below may not be indicative of the
Company's financial position that would have prevailed, or
operating results that would have been obtained, if the
transactions had taken place on the dates indicated or of the
financial position or operating results which may be obtained in
the future. These pro forma financial measures and credit metrics
are not a forecast or projection of future results. The actual
financial position and results of operations of the Company for any
period following the closing of the Acquisitions will vary from the
amounts set forth following pro forma financial measures and credit
metrics, and such variation may be material.
The following table illustrates Pro Forma Revenue, for the
twelve-month periods ended September
30, over the last two years of operations:
|
|
|
|
(dollars in
thousands)
|
September
30, 2021
|
|
September
30, 2020
|
Period from
October 1 to September 30
|
|
|
|
Revenue
|
4,333,754
|
|
3,262,476
|
Pro Forma
Item:
|
|
|
|
Estimate of the
impact of the Acquisitions if they had occurred on the first day of
the period,
prior to any synergies
|
544,660
|
|
-
|
Pro Forma
Revenue
|
4,878,414
|
|
3,262,476
|
The following table illustrates Pro Forma Normalized Adjusted
EBITDA (Pre-IFRS 16) and Pro Forma Normalized Adjusted EBITDA
(inclusive of IFRS 16 impacts), for the twelve-month periods ended
September 30, over the last two years
of operations:
|
|
|
|
(dollars in
thousands)
|
September
30, 2021
|
|
September
30, 2020
|
Period from
October 1 to September 30
|
|
|
|
Net income (loss) for
the period
|
122,121
|
|
(47,729)
|
Add
back:
|
|
|
|
Income tax
expense (recovery)
|
37,588
|
|
(10,786)
|
Depreciation of
property and equipment
|
17,265
|
|
17,933
|
Interest on long-term
indebtedness
|
19,703
|
|
15,966
|
Depreciation of right
of use assets
|
24,992
|
|
24,897
|
Lease liability
interest
|
21,798
|
|
22,891
|
|
243,467
|
|
23,172
|
Add
back:
|
|
|
|
Impairment of
non-financial assets, net
|
(11,248)
|
|
59,456
|
Share-based
compensation (Used Digital Retail Division)
|
435
|
|
-
|
Loss on redemption
liabilities
|
(2,108)
|
|
1,896
|
Loss on extinguishment
of debt
|
1,128
|
|
4,002
|
Unrealized fair value
changes in derivative instruments
|
(5,861)
|
|
3,650
|
Amortization of loss
on terminated hedges
|
3,268
|
|
1,491
|
Unrealized foreign
exchange losses
|
532
|
|
711
|
Unrealized fair value
changes on embedded derivative
|
(4,528)
|
|
-
|
Loss on land and
building sales (Q4 2019)
|
-
|
|
227
|
Loss (gain) on
disposal of assets
|
1,377
|
|
(1,919)
|
Adjusted
EBITDA
|
226,462
|
|
92,686
|
Normalizing
Items:
|
|
|
|
Add
back:
|
|
|
|
Inventory
write-down
|
1,841
|
|
20,884
|
Severance
charges
|
-
|
|
8,170
|
Write-off of prepaid
advertising leads
|
-
|
|
2,131
|
One-time retention and
recognition payments for key dealership employees
|
1,209
|
|
1,742
|
One-time write-off of
accounts receivable and onerous provisions
|
-
|
|
5,633
|
Other charges
including true-up of accruals and other liabilities
|
-
|
|
4,686
|
Less:
|
|
|
|
Canada Emergency Wage
Subsidy
|
(7,177)
|
|
(32,475)
|
Canada Emergency Rent
Subsidy
|
(536)
|
|
-
|
Forgiveness of PPP
loans
|
(6,728)
|
|
-
|
Normalized
Adjusted EBITDA
|
215,071
|
|
103,457
|
Pro Forma
Item:
|
|
|
|
Estimate of the
impact of the Acquisitions if they had occurred on the first day of
the period,
prior to any synergies
|
27,392
|
|
-
|
Pro Forma
Normalized Adjusted EBITDA (inclusive of IFRS 16
impacts)
|
242,463
|
|
103,457
|
Pre-IFRS 16
Adjustments:
|
|
|
|
Rental
expense
|
(46,370)
|
|
(44,940)
|
FMV rent
adjustment
|
4,240
|
|
4,531
|
Step lease
adjustment
|
(653)
|
|
(973)
|
|
(42,783)
|
|
(41,382)
|
Pro Forma
Item:
|
|
|
|
Estimate of the
impact of the Acquisitions if they had occurred on the first day of
the period,
prior to any synergies
|
(5,235)
|
|
-
|
Pro Forma
Normalized Adjusted EBITDA (Pre-IFRS 16)
|
194,445
|
|
62,075
|
The following table illustrates Normalized Adjusted EBITDA
(Pre-IFRS 16), for the twelve-month periods ended September 30, over the last two years of
operations:
|
|
|
|
(dollars in
thousands)
|
September
30, 2021
|
|
September
30, 2020
|
Period from
October 1 to September 30
|
|
|
|
Normalized Adjusted
EBITDA
|
215,071
|
|
103,457
|
Pre-IFRS 16
Adjustments:
|
|
|
|
Rental
expense
|
(46,370)
|
|
(44,940)
|
FMV rent
adjustment
|
4,240
|
|
4,531
|
Step lease
adjustment
|
(653)
|
|
(973)
|
|
(42,783)
|
|
(41,382)
|
Normalized
Adjusted EBITDA (Pre-IFRS 16)
|
172,288
|
|
62,075
|
The following table illustrates Pro Forma Secured Debt, Pro
Forma Total Debt, and Pro Forma Net Debt as at September 30:
|
|
|
(dollars in
thousands)
|
September 30,
2021
|
September 30,
2020
|
Total
indebtedness
|
246,140
|
192,281
|
Add
back:
|
|
|
Embedded
derivative
|
4,528
|
-
|
|
250,668
|
192,281
|
Pro Forma
Item:
|
|
|
Estimate of the
impact of the Acquisitions, if they had occurred on such date, on
the
Company's borrowings under the Revolving facilities
|
65,000
|
-
|
Pro Forma Total
Debt3
|
315,668
|
192,281
|
Less:
|
|
|
Senior unsecured
notes
|
(256,494)
|
(123,920)
|
Add
back:
|
|
|
Unamortized deferred
financing cost
|
5,122
|
3,360
|
Pro Forma Secured
Debt3
|
64,296
|
71,721
|
|
|
|
(dollars in
thousands)
|
September 30,
2021
|
September 30,
2020
|
Pro Forma Total
Debt3
|
315,668
|
192,281
|
Cash and cash
equivalents
|
(220,857)
|
(110,858)
|
Pro Forma
Item:
|
|
|
Estimated reduction
in Cash and cash equivalents as a result of the Acquisitions, if
they
had occurred on such date
|
126,295
|
-
|
Pro Forma Net
Debt3
|
221,106
|
81,423
|
The following table illustrates Pro Forma Total Debt (including
Lease Liabilities) and Pro Forma Net Debt (including Lease
Liabilities) as at September 30:
|
|
|
(dollars in
thousands)
|
September 30,
2021
|
September 30,
2020
|
Pro Forma Total
Debt3
|
315,668
|
192,281
|
Lease
liabilities
|
390,670
|
377,184
|
Pro Forma
Item:
|
|
|
Estimate of the
impact of the Acquisitions on Lease liabilities, if they had
occurred on such
date
|
63,543
|
-
|
Pro Forma Total
Debt (including Lease Liabilities) 3
|
769,881
|
569,465
|
|
|
|
(dollars in
thousands)
|
September 30,
2021
|
September 30,
2020
|
Pro Forma Net
Debt4
|
221,106
|
81,423
|
Lease
liabilities
|
390,670
|
377,184
|
Pro Forma
Item:
|
|
|
Estimate of the
impact of the Acquisitions on Lease liabilities, if they had
occurred on such
date
|
63,544
|
-
|
Pro Forma Net Debt
(including Lease Liabilities) 3
|
675,320
|
458,607
|
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 of 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. In particular, this press release contains
forward-looking statements with respect to, among other
things, AutoCanada's preliminary operating and financial
results for Q4 2021 and the expected impact of acquisitions
completed in fiscal 2021.
The forward-looking statements included in this press release
are not guarantees of future performance and should not be unduly
relied upon. Readers are cautioned that forward-looking statements
are based on current expectations, estimates and projections that,
by their nature, involve a number of known and unknown risks and
uncertainties, which could cause actual results to differ
materially from those anticipated and described in the
forward-looking statements. These known and unknown risks and
uncertainties include, but are not limited to: potential changes in
the regulatory and legislative environment; political uncertainty
and instability in North America
and internationally; volatility in interest and tax rates;
operating risks inherent in the automotive retail industry; and
changes in general economic conditions including the capital and
credit markets.
Forward-looking statements 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. In particular, in presenting its
forward-looking statements, AutoCanada has made assumptions
respecting, among other things: the relative stability of general
North American economic conditions; and regulatory and legislative
conditions. Therefore, any such forward-looking statements are
qualified in their entirety by reference to the factors discussed
throughout this press release.
AutoCanada cautions that the foregoing list of assumptions,
risks and uncertainties is not exhaustive.
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.
_______________________________
|
1 Same
stores includes only Canadian dealerships which have been owned for
at least two full years since acquisition.
|
2 See
"Non-GAAP Measures and Pro Forma Financial Information and
Credit Metrics" below.
|
3 Pro
forma includes debt incurred in connection with the acquisition of
11 dealerships from the Autopoint Group, the acquisitions of
Airdrie Autobody in Canada and Crystal Lake Stellantis in the U.S.,
and the purchase of dealership real estate under development in
Maple Ridge, BC, during the fourth quarter of 2021.
|
SOURCE AutoCanada Inc.