ACQ AutoCanada Inc

• Revenue from continuing operations was $1,261.9 million as compared to $1,277.8 million in the prior year, a decrease of $(15.9) million
• Net loss for the period from total operations was $(38.4) million as compared to a net loss of $(22.6) million in the prior year
  • Net income (loss) from continuing operations was $7.1 million as compared to a net loss of $(16.0) million in the prior year
  • Net loss from discontinued operations was $(45.5) million as compared to a loss of $(6.6) million in the prior year
• Diluted net income (loss) per share from continuing operations was $0.33 as compared to $(0.54) in the prior year
• Adjusted EBITDA¹ on a total operations basis¹ was $47.1 million as compared to $46.4 million in the prior year
  • Adjusted EBITDA from continuing operations¹ was $54.1 million as compared to $47.9 million in the prior year
  • Adjusted EBITDA from discontinued operations¹ was a loss of $(7.0) million as compared to a loss of $(1.5) million in the prior year

EDMONTON, AB, March 19, 2025 /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 December 31, 2024.

Paul Antony, Executive Chairman, stated, "In Q4 2024, lower interest rates and OEM incentives drove strong new light vehicle demand in Canada, particularly in October and November, contributing to a 12.8% year-over-year increase in Adjusted EBITDA from our Canadian operations. A major milestone was the completion of our Strategic Review, which resulted in the sale of three non-core Stellantis dealerships for $59.5 million, the closure of all RightRide locations, eliminating an $11 million annual Adjusted EBITDA loss, and the decision to divest our U.S. business, which recorded a $24.2 million Adjusted EBITDA loss in 2024 and is now classified as a Discontinued Operation while we seek buyers. With this review behind us, we are now fully focused on executing our Operational Transformation Plan. 

Launched in Q3 2024, this plan targets $100 million in annual run-rate cost savings by the end of 2025, as compared to trailing-twelve-months Q2 2024 operating expenses excluding depreciation and amortization. It began with heightened restrictions on discretionary spending and hiring in September and expanded in Q4 with the introduction of the ACX Operating Method at four pilot dealerships. The plan is progressing as expected, with savings driven by four key areas: $63 million from standardizing dealership operations, $23 million from enhanced cost controls, $9 million from improved inventory management, and $5 million from centralizing administrative functions. As of December 31st, we have already realized $9 million in permanent annual run-rate savings."

Paul Antony concluded, "So far in 2025, the Canadian new light vehicle market has cooled, and while industry forecasts project flat sales this year, we are navigating a complex environment. The North American and Canadian automotive markets remain highly vulnerable to U.S. tariffs, posing serious risks to market stability and demand. Despite these challenges, our transformation plan remains on track, and we are committed to operational excellence, cost discipline, deleveraging, and long-term value creation. I want to thank our team for their dedication and our investors and OEM partners for their ongoing support."

Fourth Quarter Key Highlights and Recent Developments

Consolidated revenue decreased due to weaker used vehicle performance. Consolidated gross profit decreased due to declining new vehicle gross profit per retail unit² as seen industry wide, as the new vehicle market normalizes, and declining used vehicle sales as a result of current used vehicle market dynamics resulting in the prioritization of lower priced vehicles and lower number of used retail vehicles² sold, partially offset by positive contributions from P&S, and recent acquisitions.

Operating expenses before depreciation² declined due to one-time $36.8 million share-based compensation expenses related to the consolidation of ownership of the Used Digital Division in the prior year, and lower variable employee costs as a result of weaker gross profit, greater restrictions on hiring and discretionary spend, and the ongoing initiative targeting $100 million in annual run-rate cost savings by the end of 2025, partially offset by $9.9 million of restructuring charges related to the noted ongoing cost savings initiative.

Floorplan financing expenses decreased as a result of lower new and used inventory levels, and interest rates.

Net income for the period improved as a result of reduced operating expenses before depreciation² and floorplan financing expenses as discussed above, and an increase in the add back of unrealized fair value changes in derivative instruments as a result of an increase in the CAD to USD foreign exchange rate, partially offset by a $7.6 million writedown of wholesale losses related to Capital Chrysler from 2018.

Adjusted EBITDA¹ for the period and adjusted EBITDA margin¹ increased primarily as a result of lower operating expenses before depreciation and floorplan financing expenses as discussed above

Collision Operations Highlights

Revenue increased as a result of strong customer demand, additional OEM certifications, increased insurance referrals and increased hail repairs. Gross profit and gross profit percentage² decreased due to higher labour costs and a rise in lower margin paintless dent repair work.

Same store revenue increased, and gross profit and gross profit percentage² decreased for the reasons noted above.

Adjusted EBITDA¹ increased largely due to lower operating expenses as a result of improvements in controlling cost of insurance referral and bad debt collections.

Other Recent Developments

During the quarter:

• On November 18, 2024, the Company sold substantially all of the operating assets of Okanagan Chrysler Chrysler, located in Kelowna, British Columbia, for cash consideration of $26.2 million plus closing adjustments resulting in a gain of $7.5 million. This disposition aligns with the Company's commitment to improve profitability and reduce leverage.
• On December 27, 2024, the Company amended its senior credit facility to include add-backs of up to CAD $35 million for specific one-time expenses, including $20 million USD provisioned for Federal Trade Commission settlement expenses, in the definition of EBITDA, for purposes of determining compliance with the Company's financial covenants under the senior credit facility for the rolling four quarter period from December 31, 2024 to September 30, 2025.

After the quarter:

• On February 14, 2025, the Company terminated its Volvo franchise at Bloomington/Normal Auto Mall, located in Illinois, for cash consideration of $0.9 million. The Volvo franchise was presented as assets held for sale in the U.S. Operations segment, which was presented as a discontinued operation, as at December 31, 2024. This decision is part of our active program to discontinue U.S. Operations
• On March 4, 2025, the Company closed all remaining locations within RightRide. This decision is part of a larger strategic shift to refocus on core business and reduce leverage.
• On March 7, 2025, the Company terminated an agreement with a subsidiary within the Canadian Operations segment, which impacts the contractual rights over the subsidiary. The termination agreement requires the counterparty to pay the Company $14.5 million for repayment of loans in addition to $15.6 million for accrued interest, accrued royalty fees, and a termination fee. This decision is part of a larger strategic shift to optimize operations and reduce leverage.

Conference Call

A conference call to discuss the results for the three months ended December 31, 2024 will be held on March 19, 2025 at 4:00 pm Mountain (6:00 pm 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://investors.autocan.ca/2024-q4-conference-call/

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 year ended December 31, 2024, which can be found on the Company's website at www.autocan.ca or on SEDAR+ at www.sedarplus.ca.

All comparisons presented in this press release are between the three-month period ended December 31, 2024 and the three-month period ended December 31, 2023, unless otherwise indicated. Results are reported in Canadian dollars and have been rounded to the nearest thousand dollars, unless otherwise stated.

Consolidated Statements of Comprehensive (Loss) Income
For the Years Ended
(in thousands of Canadian dollars except for share and per share amounts)

Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

Consolidated Statements of Cash Flows
For the Years Ended
(in thousands of Canadian dollars)

NON-GAAP AND OTHER FINANCIAL MEASURES

This press release contains certain financial measures that do not have any standardized meaning prescribed by 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 income (loss) or to cash provided by (used in) operating, investing, financing activities, cash, and indebtedness determined in accordance with GAAP, as indicators of our performance. We provide these additional non-GAAP measures ("Non-GAAP Measures"), capital management measures, and supplementary financial measures to assist investors in determining the Company's ability to generate earnings and cash provided by (used in) operating activities and to provide additional information on how these cash resources are used.

Adjusted EBITDA and adjusted EBITDA margin 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, cash flows from operating, investing and financing activities or as a measure of liquidity and cash flows. The Company's methods of calculating referenced Non-GAAP Measures may differ from the methods used by other issuers. Therefore, these measures may not be comparable to similar measures presented by other issuers.

We list and define these "NON-GAAP MEASURES" below:

Adjusted EBITDA

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is an indicator of a company's operating performance over a period of time and ability to incur and service debt. Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to:

• Interest expense (other than interest expense on floorplan financing), income taxes, depreciation, and amortization;
• Charges that introduce volatility unrelated to operating performance by virtue of the impact of external factors (such as share-based compensation amounts attributed to certain equity issuances as part of the Used Digital Division);
• Non-cash charges (such as impairment, recoveries, gains or losses on derivatives, revaluation of contingent consideration and revaluation of redemption liabilities);
• Charges outside the normal course of business (such as restructuring, gains and losses on dealership divestitures, and real estate transactions); and
• Charges that are non-recurring in nature (such as resolution of lawsuits and legal claims).

The Company considers this measure meaningful as it provides improved continuity with respect to the comparison of our operating performance over a period of time.

Adjusted EBITDA Margin

Adjusted EBITDA margin is an indicator of a company's operating performance specifically in relation to our revenue performance.

The Company considers this measure meaningful as it provides improved continuity with respect to the comparison of our operating performance with retaining and growing profitability as our revenue and scale changes over a period of time.

NON-GAAP AND OTHER FINANCIAL MEASURES RECONCILIATIONS

Adjusted EBITDA and Segmented Adjusted EBITDA

The following table illustrates segmented adjusted EBITDA for the three-month periods ended December 31:

The following table illustrates segmented collision adjusted EBITDA from continuing operations for the three-months ended December 31. There is no discontinued operation in Collision Operations.

Adjusted EBITDA Margin

The following table illustrates segmented adjusted EBITDA margin from continuing operations for the three-month periods ended December 31:

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 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) and the financial outlook with respect to the transformation plan are not all 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.

Forward-looking statements and financial outlook in this press release include: AutoCanada's future financial position and expected run-rate operational expense savings from the transformation plan.

Forward-looking statements and financial outlook provide information about management's expectations and plans for the future and may not be appropriate for other purposes. Forward looking statements and financial outlook are based on various assumptions, and expectations that AutoCanada believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove correct. Those assumptions and expectations are based on information currently available to AutoCanada, including information obtained from third-party consultants and other third-party sources, and the historic performance of AutoCanada's businesses. AutoCanada cautions that the assumptions used to prepare such forward-looking statements and financial outlook, including AutoCanada's expected run-rate operational expense savings through the transformation plan, could prove to be incorrect or inaccurate.

In preparing the forward-looking statements and financial outlook, AutoCanada considered numerous economic, market and operational assumptions, including key assumptions listed under Section 3 Market and Financial Outlook of the MD&A.

The forward-looking statements and financial outlook are also subject to the risks and uncertainties set forth below. By their very nature, forward-looking statements involve numerous assumptions, risks and uncertainties, both general and specific. Should one or more of these risks and uncertainties materialize or should underlying assumptions prove incorrect, as many important factors are beyond our control, AutoCanada's actual performance and financial results may vary materially from those estimates and expectations contemplated, expressed or implied in the forward-looking statements. These risks and uncertainties include risks relating to failure to realize expected cost-savings, cost overruns in one-time restructuring expenses, compliance with laws and regulations, reduced customer demand, operational risks, force majeure, labour relations matters, our ability to access external sources of debt and equity capital, and the risks identified in (i) the MD&A under Section 12 Risk Factors and (ii) AutoCanada's most recent Annual Information Form (the "AIF"). The preceding list of assumptions, risks and uncertainties is not exhaustive.

Accordingly, these factors could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements and financial outlook. Therefore, any such forward-looking statements and financial outlook are qualified in their entirety by reference to the factors discussed throughout this press release and in the MD&A.

Details of the Company's material forward-looking statements are included in the Company's most recent AIF. The AIF and other documents filed with securities regulatory authorities (accessible through the SEDAR+ website (www.sedarplus.ca) describe the risks, material assumptions, and other factors that could influence actual results and which are incorporated herein by reference.

When relying on our forward-looking statements and financial outlook to make decisions with respect to AutoCanada, investors and others should carefully consider the preceding factors, other uncertainties and potential events. Any forward-looking statements and financial outlook are provided as of the date of this press release and, except as required by law, AutoCanada does not undertake to update or revise such statements to reflect new information, subsequent or otherwise. For the reasons set forth above, investors should not place undue reliance on forward-looking statements or financial outlook.

About AutoCanada

AutoCanada's Canadian Operations segment currently operates 64 franchised dealerships in Canada, comprised of 25 brands, in 8 provinces. AutoCanada currently sells Acura, Alfa Romeo, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, FIAT, Ford, GMC, Honda, Hyundai, Infiniti, Jeep, Kia, Mazda, Mercedes-Benz, MINI, Nissan, Porsche, Ram, Subaru, and Volkswagen branded vehicles. In addition, AutoCanada's Canadian Operations segment currently operates 4 Used Digital Division dealerships ("Used Vehicle Operations") and 12 stand-alone collision centres within our group of 29 collision centres ("Collision Centres"). In 2024, our Canadian dealerships sold approximately 85,000 new and used retail vehicles. In addition, our Collision Centres offer an opportunity for the Company to retain customers at every touchpoint within the automotive ecosystem.

AutoCanada's U.S. Operations segment, operating as Leader Automotive Group ("Leader"), currently operates 17 franchised dealerships comprised of 15 brands, in Illinois, USA. Leader currently sells Audi, Chevrolet, Chrysler, Dodge, Honda, Hyundai, Jeep, Kia, Lincoln, Mercedes-Benz, Porsche, Ram, Subaru, Toyota, and Volkswagen branded vehicles. In 2024, our U.S. dealerships sold approximately 12,900 new and used retail vehicles.

Additional Information

Additional information about AutoCanada is available at the Company's website at www.autocan.ca and on the SEDAR+ website at www.sedarplus.ca.

SOURCE AutoCanada Inc.