AutoCanada Reports Third Quarter 2017 Results
EDMONTON, Nov. 9, 2017 /CNW/ - AutoCanada Inc. (TSX: ACQ), one of Canada's largest multi-location automobile dealership groups, today provided a corporate update and reported its financial results for the three-month and nine-month periods ended September 30, 2017.
"We have continued our positive momentum in this quarter," said Steven J. Landry, President & Chief Executive Officer, "the Company reported an increase in revenue, gross profit, net earnings and earnings per share. New vehicle unit sales outpaced the industry while same store revenue, gross profit and unit sales exceed the same quarter last year. We achieved these positive financial and unit results while also adding a new brand and dealership, Planète Mazda, to our portfolio."
Third Quarter Highlights
- Revenue in the quarter was $834.6 million, up 10.8% compared with the third quarter of 2016. Operating expenses as a percentage of gross profit declined to 80.1% from 80.6% over the same period last year.
- Gross profit was $138.0 million, up 12.2% compared with the same quarter in 2016, with gross profit as a percentage of revenue increasing to 16.5% from 16.3%.
- New vehicle sales were 12,014, up 9.4% from 2016. Revenue from new car sales was $497.7 million in the quarter, up 12.0% from 2016. New car sales accounted for 59.6% of the Company's total revenue and 25.7% of gross profit versus 59.0% of revenue and 25.7% of gross profit in the third quarter of 2016.
- Used vehicle sales were 5,118, up 2.9% from the same quarter last year. Revenue from used car sales was $192.5 million in the quarter, up 7.2% from last year. Used car sales accounted for 23.1% of the Company's total revenue and 8.1% of gross profit, versus 23.8% of revenue and 10.5% of gross profit in 2016.
- Parts, service and collision repair generated $104.8 million of revenue in the third quarter, up 9.7% from 2016. This accounted for 12.5% of the Company's total revenue and 39.0% of its gross profit, versus 12.6% of revenue and 39.0% of gross profit in 2016.
- Finance and insurance generated $39.6 million of revenue in the third quarter, an improvement of 18.0% from 2016. This accounted for 4.8% of the Company's total revenue and 26.2% of its gross profit, up from 4.5% of revenue and 25.0% of profit in 2016.
- EBITDA attributable to AutoCanada shareholders increased by $2.0 million or 8.3% to $25.8 million from $23.8 million last year.
- Adjusted earnings per share were $0.50, compared with the adjusted earnings per share of $0.38 in the third quarter of 2016.
"This was a good quarter with topline growth across all areas of the business and an overall improvement in profitability," said Chris Burrows, Chief Financial Officer. "Sales are up in every region, and from all but two brands. Our operations are becoming more efficient, and we are seeing a steady rebalancing of our portfolio, across geographies and brands."
The following table summarizes the Company's results for the quarter ended September 30, 2017:
|
Three months ended September 30 | |||
|
Consolidated Operational Data |
2017 |
2016 |
% Change |
|
EBITDA attributable to AutoCanada shareholders |
25,827 |
23,842 |
8.3% |
|
Adjusted EBITDA attributable to AutoCanada shareholders |
27,229 |
23,722 |
14.7% |
|
Net earnings attributable to AutoCanada shareholders |
12,100 |
(32,619) |
N/A |
|
Adjusted net earnings attributable to AutoCanada shareholders |
13,581 |
10,327 |
31.5% |
|
Basic EPS |
0.44 |
(1.19) |
N/A |
|
Adjusted diluted EPS |
0.50 |
0.38 |
31.6% |
|
New retail vehicles sold (units) |
10,334 |
8,949 |
15.6% |
|
New fleet vehicles sold (units) |
1,680 |
2,034 |
(17.4)% |
|
New vehicles sold (units) |
12,014 |
10,983 |
9.4% |
|
Used retail vehicles sold (units) |
5,118 |
4,972 |
2.9% |
|
Total vehicles sold (units) |
17,132 |
15,955 |
7.4% |
|
Revenue |
834,571 |
753,178 |
10.8% |
|
Gross Profit |
137,969 |
122,937 |
12.2% |
|
Gross Profit % |
16.5% |
16.3% |
1.2% |
|
Operating expenses |
110,560 |
99,041 |
11.6% |
|
Operating expenses as % of gross profit |
80.1% |
80.6% |
(0.6)% |
|
Free cash flow |
30,213 |
30,897 |
(2.2)% |
|
Adjusted free cash flow |
23,296 |
27,766 |
(16.1)% |
|
*See the Company's Management's Discussion and Analysis for the quarter ended September 30, 2017 for complete footnote disclosures. | |||
Outlook
The Canadian new vehicle market continues to outpace all previous years for sales. Nine months into the year, new vehicle sales have hit monthly records eight times. Total sales of 1.59 million vehicles at the end of September are 5.5% greater than 2016, the previous record year. The market has grown in every region of the country, with growth in the west being particularly strong.
This has been of added benefit to AutoCanada, whose business is more heavily weighted in the west. Sales for the Company were up 9.4% in the third quarter, out-performing the national sales increase of 6.8%.
AutoCanada's growth strategy will continue to focus on increasing the brands and range of vehicles it offers, with dealers clustered in key markets across a broader range of geographies. The recent addition of the Company's first Mazda dealership, AutoCanada's 23rd brand, located in the Montreal region where it already has three other dealerships, is in keeping with this strategy.
AutoCanada's success includes used car sales, parts, service & collision repair, and financing & insurance. Through acquisitions, the Company has increased its service bays to 977 from 898 one year ago and the new Mazda dealership adds 22 more. The Mercedes-Benz Rive-Sud dealership acquired earlier in 2017 added 28 new services bays.
We will also continue to focus on advancing our progress on integration, continuous improvements in efficiencies and deepening our IT and analytical capabilities across AutoCanada's network of dealerships and at the corporate office. Acquiring new dealerships and effectively integrating them is key to our long-term success. Same store results, reflecting the performance of dealerships that have been owned for at least two full years since acquisition or opening, is an important metric to assess how well we are doing at integration. Same store sales saw an uptick in the third quarter, with revenue up 2.9% and gross profit up 6.3%. Only one new store was added to our same store count in the third quarter, with only one more to follow by the end of the year.
Dealership relocations and expansions are important steps to provide customer loyalty and long-term earnings sustainability. Our capital expenditure on relocations and expansions in 2017 continue on track. At September 30, the Company was committed to capital expenditure obligations of $8.3 million related to dealership facilities.
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 with a goal to efficiently allocate capital to fuel AutoCanada's future growth while also rewarding and sharing the company's success with our shareholders.
On November 9, 2017, the Board declared a quarterly eligible dividend of $0.10 per common share on AutoCanada's outstanding Class A common shares, payable on December 15, 2017 to shareholders of record at the close of business on November 30, 2017.
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".
SELECTED QUARTERLY 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 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 | |
|
Income Statement Data |
|||||||||
|
New vehicles |
497,711 |
558,682 |
353,540 |
348,107 |
444,482 |
497,025 |
363,181 |
368,242 | |
|
Used vehicles |
192,473 |
182,913 |
165,408 |
157,724 |
179,582 |
208,016 |
180,108 |
167,100 | |
|
Parts, service and collision repair |
104,816 |
113,983 |
90,735 |
92,310 |
95,585 |
100,317 |
94,721 |
102,220 | |
|
Finance, insurance and other |
39,571 |
39,324 |
29,344 |
31,133 |
33,529 |
36,899 |
28,862 |
34,752 | |
|
Revenue |
834,571 |
894,902 |
639,027 |
629,274 |
753,178 |
842,257 |
666,872 |
672,314 | |
|
New vehicles |
36,806 |
38,555 |
25,590 |
25,042 |
31,578 |
34,410 |
27,267 |
27,482 | |
|
Used vehicles |
11,140 |
13,095 |
11,940 |
10,064 |
12,950 |
13,758 |
10,420 |
10,326 | |
|
Parts, service and collision repair |
53,805 |
56,306 |
47,284 |
52,957 |
47,676 |
52,957 |
47,669 |
51,760 | |
|
Finance, insurance and other |
36,218 |
35,867 |
26,813 |
28,722 |
30,733 |
33,577 |
26,353 |
34,354 | |
|
Gross profit |
137,969 |
143,823 |
111,627 |
116,785 |
122,937 |
134,702 |
111,709 |
123,922 | |
|
Gross Profit % |
16.5% |
16.1% |
17.5% |
18.6% |
16.3% |
16.0% |
16.8% |
18.4% | |
|
Operating expenses |
110,560 |
112,897 |
98,170 |
97,397 |
99,041 |
107,932 |
96,047 |
101,310 | |
|
Operating expenses as a % of gross profit |
80.1% |
78.5% |
87.9% |
83.4% |
80.6% |
80.1% |
86.0% |
81.8% | |
|
Net earnings (loss) attributable to AutoCanada shareholders |
12,100 |
24,978 |
3,678 |
13,785 |
(32,619) |
14,158 |
7,272 |
(7,361) | |
|
Adjusted net earnings attributable to AutoCanada shareholders |
13,581 |
15,547 |
4,602 |
7,536 |
10,327 |
15,523 |
6,253 |
8,610 | |
|
EBITDA attributable to AutoCanada shareholders |
25,827 |
43,683 |
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