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A conference call to discuss the results for the reporting period ended September 30, 2012 will be held on November 9, 2012 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time). To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca. A conference call to discuss the results for the reporting period ended September 30, 2012 will be held on November 9, 2012 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time). To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca.
EDMONTON, Nov. 8, 2012 /PRNewswire/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended September 30, 2012.
2012 Third Quarter Operating Results
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In commenting on the financial results for the three month period ended September 30, 2012, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The third quarter of 2012 was the Company's most profitable quarter in its history, an achievement which reflects the continued general good health of the economy, the quality of the products we sell and the effective use of incentives by our Manufacturer partners, and the dedicated hard work of our employees. Our floorplan financing agreement with our new partner, the Bank of Nova Scotia, was implemented in October, and we look forward to working with the Bank of Nova Scotia in the coming years and to the meaningful interest rate savings our new floorplan shall provide. We are likewise very pleased with the performance of the two GM dealerships we recently purchased an interest in, and look forward to a long term relationship with GM Canada who has been a great partner to work with. With respect to new dealership opportunities, we are also pleased to have secured a suitable facility for the Kia open point dealership during the quarter, in which we plan to commence operations in late 2013 or early 2014, and we continue to aggressively seek accretive opportunities with brands that have accepted public ownership."
With respect to the announced increase in the dividend to a rate of $0.17 per share or an annual rate of $0.68 per share, Mr. Priestner further stated, "The Board of Directors continues to remain committed to a high dividend, which it shall periodically review within the context of earnings growth, opportunities to re-invest in the business, and sustainability. Management is confident that opportunities for acquisition growth will arise in the mid to long term and believe that when tangible growth opportunities are realized, the incremental earnings growth will naturally lower our payout ratio as we re-invest funds into growth opportunities. Until tangible and significant growth opportunities are realized, we will continue to reward investors by way of a high dividend."
Third Quarter 2012 Highlights
- The Company generated net earnings of $6.8 million or earnings per share of $0.344 versus earnings per share of $0.263 in the third quarter of 2011. Pre-tax earnings increased by $2.3 million to $9.2 million in the third quarter of 2012 as compared to $6.9 million in the same period in 2011.
- Same store revenue increased by 8.0% in the third quarter of 2012, compared to the same quarter in 2011. Same store gross profit increased by 7.9% in the third quarter of 2012, compared to the same quarter in 2011.
- Revenue from existing and new dealerships increased 11.0% to $298.7 million in the third quarter of 2012 from $269.1 million in the same quarter in 2011.
- Gross profit from existing and new dealerships increased 11.6% to $50.1 million in the third quarter of 2012 from $44.9 million in the same quarter in 2011.
- EBITDA increased 29.3% to $10.6 million in the third quarter of 2012 from $8.2 million in the same quarter in 2011.
- Free cash flow decreased significantly in the third quarter of 2012 to $0.004 per share as compared to $10.2 million and $0.511 per share in the third quarter of 2011, mainly due a land and building purchase in Q3 2012.
- Adjusted free cash flow increased to $9.5 million in the third quarter of 2012 or $0.48 per share as compared to $7.8 million or $0.39 per share in 2011.
- Return on capital employed on a trailing 12 month basis of 22.8% as compared to 19.1% at September 30, 2011.
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 2012:
| (In thousands of dollars) | |||||||||||
| Total | |||||||||||
| Record date | Payment date | Declared | Paid | ||||||||
| $ | $ | ||||||||||
| February 28, 2012 May 31, 2012 August 31, 2012 November 30, 2012 | March 15, 2012 June 15, 2012 September 17, 2012 December 17, 2012 | 2,783 2,982 3,181 3,380 | 2,783 2,982 3,181 - |
On November 8, 2012, the Board declared a quarterly eligible dividend of $0.17 per common share on AutoCanada's outstanding Class A common shares, payable on December 17, 2012 to shareholders of record at the close of business on November 30, 2012. The quarterly eligible dividend of $0.17 represents an annual dividend rate of $0.68 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 Inc. 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".
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 Operating Data and gross profit %) | |||||||||
| Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | Q4 2011 | Q1 2012 | Q2 2012 | Q3 2012 | ||
| Income Statement Data | |||||||||
| New vehicles | 113,967 | 128,304 | 196,850 | 172,688 | 142,880 | 147,383 | 186,649 | 190,139 | |
| Used vehicles | 45,414 | 44,906 | 52,054 | 55,351 | 53,719 | 60,454 | 62,822 | 62,816 | |
| Parts, service & collision repair | 28,351 | 26,539 | 28,374 | 26,980 | 28,673 | 27,029 | 29,004 | 28,593 | |
| Finance, insurance & other | 10,151 | 11,125 | 13,588 | 14,115 | 13,046 | 13,659 | 16,512 | 17,133 | |
| Revenue | 197,883 | 210,874 | 290,866 | 269,134 | 238,318 | 248,525 | 294,987 | 298,681 | |
| New vehicles | 9,023 | 9,725 | 13,974 | 12,740 | 11,267 | 12,046 | 14,646 | 15,461 | |
| Used vehicles | 3,659 | 3,486 | 4,301 | 5,020 | 4,573 | 4,412 | 4,238 | 3,994 | |
| Parts, service & collision repair | 13,994 | 13,277 | 15,159 | 14,492 | 14,551 | 14,004 | 15,227 | 15,078 | |
| Finance, insurance & other | 9,050 | 9,959 | 12,129 | 12,647 | 11,853 | 12,398 | 14,939 | 15,579 | |
| Gross profit | 35,725 | 36,435 | 45,563 | 44,899 | 42,244 | 42,860 | 49,050 | 50,112 | |
| Gross profit % | 18.1% | 17.3% | 15.7% | 16.7% | 17.7% | 17.2% | 16.6% | 16.8% | |
| Operating expenses | 32,010 | 31,891 | 35,127 | 35,742 | 34,086 | 35,381 | 37,661 | 38,361 | |
| Operating exp. as % of gross profit | 89.6% | 87.5% | 77.1% | 79.6% | 80.7% | 82.6% | 76.9% | 76.6% | |
| Finance costs - floorplan | 1,594 | 1,685 | 2,310 | 2,190 | 1,871 | 1.935 | 2,511 | 2,645 | |
| Finance costs - long-term debt | 332 | 283 | 323 | 296 | 234 | 230 | 256 | 267 | |
| Reversal of impairment of intangibles | (8,059) | - | - | - | (25,543) | - | - | - | |
| Income taxes | 2,418 | 690 | 2,029 | 1,646 | 8,144 | 1,441 | 2,216 | 2,379 | |
| Net earnings 4 | 7,575 | 1,994 | 5,950 | 5,230 | 23,608 | 4,113 | 6,711 | 6,807 | |
| EBITDA 1, 4 | 3,469 | 4,047 | 9,319 | 8,216 | 7,547 | 6,808 | 10,210 | 10,592 | |
| Basic earnings (loss) per share | 0.381 | 0.100 | 0.299 | 0.263 | 1.187 | 0.207 | 0.338 | 0.344 | |
| Diluted earnings (loss) per share | 0.381 | 0.100 | 0.299 | 0.263 | 1.187 | 0.207 | 0.338 | 0.344 | |
| Operating Data | |||||||||
| Vehicles (new and used) sold | 5,219 | 5,826 | 8,210 | 7,649 | 6,313 | 6,836 | 8,154 | 8,087 | |
| New retail vehicles sold | 3,008 | 3,050 | 4,158 | 3,886 | 3,405 | 3,434 | 4,400 | 4,410 | |
| New fleet vehicles sold | 306 | 796 | 1,900 | 1,361 | 775 | 969 | 1,313 | 1,265 | |
| Used retail vehicles sold | 1,905 | 1,980 | 2,152 | 2,402 | 2,133 | 2,433 | 2,441 | 2,412 | |
| Number of service & collision repair orders completed | 77,037 | 72,360 | 80,851 | 76,176 | 75,911 | 74,439 | 78,104 | 78,944 | |
| Absorption rate 2 | 86% | 80% | 91% | 90% | 91% | 81% | 89% | 89% | |
| # of dealerships at period end | 23 | 23 | 22 | 22 | 24 | 24 | 24 | 24 | |
| # of same store dealerships 3 | 21 | 22 | 21 | 21 | 21 | 21 | 21 | 22 | |
| # of service bays at period end | 339 | 339 | 322 | 322 | 333 | 333 | 333 | 333 | |
| Same store revenue growth 3 | 2.4% | 2.7% | 19.3% | 21.6% | 24.8% | 20.2% | 2.4% | 8.0% | |
| Same store gross profit growth 3 | 2.9% | 2.9% | 8.2% | 22.9% | 20.6% | 18.3% | 7.1% | 7.9% | |
| Balance Sheet Data | |||||||||
| Cash and cash equivalents | 37,541 | 39,337 | 43,837 | 49,366 | 53,641 | 53,403 | 51,198 | 54,255 | |
| Accounts receivable | 32,832 | 42,108 | 51,539 | 44,172 | 42,448 | 51,380 | 52,042 | 54,148 | |
| Inventories | 118,088 | 134,710 | 149,481 | 159,732 | 136,869 | 155,778 | 201,302 | 193,990 | |
| Revolving floorplan facilities | 124,609 | 152,075 | 172,600 | 175,291 | 150,816 | 178,145 | 221,174 | 212,840 |
| 1 | EBITDA has been calculated as described under "NON-GAAP MEASURES". |
| 2 | Absorption has been calculated as described under "NON-GAAP MEASURES". |
| 3 | 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. |
| 4 | 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 substantial fluctuations in operating results from quarter to quarter. |
The following table summarizes the results for the three and nine month periods ended September 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011.
| Same Store Revenue and Vehicles Sold | |||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||
| (In thousands of dollars except % change and vehicle data) | September 30, 2012 | September 30, 2011 | % Change | September 30, 2012 | September 30, 2011 | % Change | |
| Revenue Source | |||||||
| New vehicles | 185,963 | 172,688 | 7.7% | 511,856 | 485,476 | 5.4% | |
| Used vehicles | 60,402 | 55,351 | 9.1% | 180,511 | 149,638 | 20.6% | |
| Finance & insurance and other | 16,499 | 14,114 | 16.9% | 45,881 | 38,210 | 20.1% | |
| Subtotal | 262,864 | 242,153 | 738,248 | 673,324 | |||
| Parts, service & collision repair | 27,826 | 26,978 | 3.1% | 82,413 | 79,560 | 3.6% | |
| Total | 290,690 | 269,131 | 8.0% | 820,661 | 752,884 | 9.0% | |
| New vehicles - retail sold | 4,278 | 3,886 | 10.1% | 11,866 | 10,812 | 9.7% | |
| New vehicles - fleet sold | 1265 | 1,361 | (7.1)% | 3,547 | 3,961 | (10.5)% | |
| Used vehicles sold | 2,326 | 2,402 | (3.2)% | 7,063 | 6,445 | 9.6% | |
| Total | 7,869 | 7,649 | 2.9% | 22,476 | 21,218 | 5.9% | |
| Total vehicles retailed | 6,604 | 6,288 | 5.0% | 18,929 | 17,257 | 9.7% | |
The following table summarizes the results for the three and nine month periods ended September 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011.
| Same Store Gross Profit and Gross Profit Percentage | ||||||||||||
| For the Three Months Ended | For the Nine months Ended | |||||||||||
| Gross Profit | Gross Profit % | Gross Profit | Gross Profit % | |||||||||
| (In thousands of dollars except % change and gross profit %) | September 30, 2012 | September 30, 2011 | % Change | September 30, 2012 | September 30, 2011 | % Change | September 30, 2012 | September 30, 2011 | % Change | September 30, 2012 | September 30, 2011 | % Change |
| Revenue Source | ||||||||||||
| New vehicles | 14,953 | 12,727 | 17.5% | 8.0% | 7.4% | 0.7% | 40,720 | 35,794 | 13.8% | 8.0% | 7.4% | 0.6% |
| Used vehicles | 3,806 | 5,019 | (24.2)% | 6.3% | 9.1% | (2.8)% | 12,121 | 12,767 | (5.1)% | 6.7% | 8.5% | (1.8)% |
| Finance & insurance and other | 15,024 | 12,646 | 18.8% | 91.1% | 89.6% | 1.5% | 41,673 | 34,204 | 21.8% | 90.8% | 89.5% | 1.3% |
| Subtotal | 33,783 | 30,392 | 94,614 | 82,765 | ||||||||
| Parts, service & collision repair | 14,645 | 14,507 | 0.9% | 52.6% | 53.8% | (1.1)% | 43,102 | 41,722 | 3.3% | 52.3% | 52.4% | (0.1)% |
| Total | 48,428 | 44,899 | 7.9% | 16.7% | 16.7% | 0.0% | 137,616 | 124,487 | 10.5% | 16.8% | 16.5% | 0.3% |
| AutoCanada Inc. Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited) (in thousands of Canadian dollars except for share and per share amounts) | |||||
| Three month period ended | Three month period ended | Nine month period ended | Nine month period ended | ||
| September 30, 2012 $ | September 30, 2011 $ | September 30, 2012 $ | September 30, 2011 $ | ||
| Revenue (Note 6) | 298,681 | 269,134 | 842,193 | 770,874 | |
| Cost of sales (Note 7) | (248,569) | (224,235) | (700,172) | (643,965) | |
| Gross profit | 50,112 | 44,899 | 142,021 | 126,909 | |
| Operating expenses (Note 8) | (38,361) | (35,742) | (111,402) | (102,760) | |
| Operating profit before other income | 11,751 | 9,157 | 30,619 | 24,149 | |
| (Loss) Gain on disposal of assets | (1) | 1 | (61) | 29 | |
| Income from investment in associate (Note 11) | 130 | - | 213 | - | |
| Operating profit | 11,880 | 9,158 | 30,771 | 24,178 | |
| Finance costs (Note 9) | (3,136) | (2,651) | (8,410) | (7,564) | |
| Finance income (Note 9) | 442 | 369 | 1,303 | 925 | |
| Net comprehensive income for the period | |||||
| before taxation | 9,186 | 6,876 | 23,664 | 17,539 | |
| Income tax (Note 10) | 2,379 | 1,646 | 6,036 | 4,365 | |
| Net comprehensive income for the period | 6,807 | 5,230 | 17,628 | 13,174 | |
| Earnings per share | |||||
| Basic | 0.344 | 0.263 | 0.884 | 0.663 | |
| Diluted | 0.344 | 0.263 | 0.884 | 0.663 | |
| Weighted average shares | |||||
| Basic | 19,804,014 | 19,880,930 | 19,853,694 | 19,880,930 | |
| Diluted | 19,804,014 | 19,880,930 | 19,853,694 | 19,880,930 | |
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. |
Approved on behalf of the Company:
(Signed) "Gordon R. Barefoot", Director (Signed) "Robin Salmon", Director
| AutoCanada Inc. Condensed Interim Consolidated Statements of Financial Position (Unaudited) (in thousands of Canadian dollars except for share and per share amounts) | ||
| September 30, 2012 (Unaudited) $ | December 31, 2011 (Audited) $ | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 54,255 | 53,641 |
| Trade and other receivables (Note 12) | 54,148 | 42,448 |
| Inventories (Note 13) | 193,990 | 137,016 |
| Other current assets | 1,794 | 1,120 |
| 304,187 | 234,225 | |
| Property and equipment | 37,125 | 25,975 |
| Investment in associate (Note 11) | 4,367 | - |
| Intangible assets | 66,181 | 66,181 |
| Goodwill | 380 | 380 |
| Other long-term assets | 7,810 | 7,609 |
| 420,050 | 334,370 | |
| LIABILITIES | ||
| Current liabilities | ||
| Trade and other payables (Note 15) | 35,665 | 32,279 |
| Revolving floorplan facilities (Note 11) | 212,840 | 150,816 |
| Current tax payable | 4,600 | 2,046 |
| Current lease obligations (Note 17) | 1,783 | 1,204 |
| Current indebtedness (Note 16) | 5,973 | 2,859 |
| 260,861 | 189,204 | |
| Long-term indebtedness (Note 16) | 26,039 | 20,115 |
| Deferred tax | 11,897 | 12,056 |
| 298,797 | 221,375 | |
| EQUITY | 121,253 | 112,995 |
| 420,050 | 334,370 | |
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. |
| AutoCanada Inc. Condensed Interim Consolidated Statements of Changes in Equity For the Periods Ended (Unaudited) (in thousands of Canadian dollars) | ||||||
| Share capital $ | Treasury shares $ | Contributed surplus $ | Total capital $ | Accumulated deficit $ | Equity $ | |
| Balance, January 1, 2012 | 190,435 | - | 3,918 | 194,353 | (81,358) | 112,995 |
| Net comprehensive income | - | - | - | - | 17,628 | 17,628 |
| Dividends declared on common shares | - | - | - | - | (8,935) | (8,935) |
| Common shares repurchased (Note 20) | - | (910) | - | (910) | - | (910) |
| Share-based compensation | - | - | 475 | 475 | - | 475 |
| Balance, September 30, 2012 | 190,435 | (910) | 4,393 | 193,918 | (72,665) | 121,253 |
| Share capital $ | Treasury shares $ | Contributed surplus $ | Total capital $ | Accumulated deficit $ | Equity $ | |
| Balance, January 1, 2011 | 190,435 | - | 3,918 | 194,353 | (111,979) | 82,374 |
| Net comprehensive income | - | - | - | - | 13,174 | 13,174 |
| Dividends declared on common shares | - | - | - | - | (3,777) | (3,777) |
| Balance, September 30, 2011 | 190,435 | - | 3,918 | 194,353 | (102,582) | 91,771 |
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. |
| AutoCanada Inc. Condensed Interim Consolidated Statements of Cash Flows For the Periods Ended (Unaudited) (in thousands of Canadian dollars) | ||||||
| Three month period ended September 30, 2012 | Three month period ended September 30, 2011 | Nine month period ended September 30, 2012 | Nine month period ended September 30, 2011 | |||
| Cash flows from operating activities: | ||||||
| Net comprehensive income | 6,807 | 5,230 | 17,628 | 13,174 | ||
| Income taxes (Note 10) | 2,379 | 1,646 | 6,036 | 4,365 | ||
| Amortization of prepaid rent | 113 | 113 | 339 | 339 | ||
| Amortization of property and equipment (Note 8) | 1,139 | 1,044 | 3,189 | 3,141 | ||
| Gain (Loss) on disposal of assets | 1 | (1) | 61 | (29) | ||
| Share-based compensation | 205 | - | 565 | - | ||
| Income from investment in associate (Note 11) | (130) | - | (213) | - | ||
| Income taxes paid | (485) | - | (3,584) | - | ||
| Net change in non-cash working capital | (794) | 2,818 | (4,704) | (681) | ||
| 9,235 | 10,850 | 19,317 | 20,309 | |||
| Cash flows from investing activities: | ||||||
| Business acquisitions (Note 11) | - | - | (4,154) | - | ||
| Purchases of property and equipment (Note 14) | (9,161) | (694) | (13,150) | (2,236) | ||
| Disposal of other assets | - | 2 | - | 7 | ||
| Prepayments of rent (Note 21) | - | (540) | (540) | (1,620) | ||
| Proceeds on sale of property and equipment | - | - | 28 | - | ||
| Proceeds on divestiture of subsidiary | - | - | - | 1,464 | ||
| (9,161) | (1,232) | (17,816) | (2,385) | |||
| Cash flows from financing activities: | ||||||
| Proceeds from long-term debt (Note 16) | 6,250 | - | 9,250 | - | ||
| Repayment of long-term indebtedness | (98) | (2,102) | (292) | (2,322) | ||
| Common shares repurchased (Note 20) | - | - | (910) | - | ||
| Dividends paid | (3,169) | (1,987) | (8,935) | (3,777) | ||
| 2,983 | (4,089) | (887) | (6,099) | |||
| Increase in cash | 3,057 | 5,529 | 614 | 11,825 | ||
| Cash and cash equivalents at beginning of period | 51,198 | 43,837 | 53,641 | 37,541 | ||
| Cash and cash equivalents at end of period | 54,255 | 49,366 | 54,255 | 49,366 | ||
| The accompanying notes are an integral part of these condensed interim consolidated financial statements. |
ABOUT AUTOCANADA
AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 24 wholly owned franchised dealerships and 2 dealership investments in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2011, our dealerships sold approximately 28,000 vehicles and processed approximately 300,000 service and collision repair orders in our 333 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 used vehicle sales, parts, service and collision repair operations and finance and insurance sales. Overall gross profit margins increase as revenues from higher margin operations increase relative to revenues from lower margin operations. We earn fees for arranging financing on new and used vehicle purchases on behalf of third parties. 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.
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 about AutoCanada Inc. is available at the Company's website at www.autocan.ca and www.sedar.com.
SOURCE AutoCanada Inc.
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