A conference call to discuss the results for the three month period ended March 31, 2011 will be held on May 13, 2011 at 10:00 a.m. Eastern 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, May 12 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the three month period ended March 31, 2011.

2011 First Quarter Operating Results

• Revenue increased 5.4% or $10.9 million
• Gross profit increased by 5.3% or $1.8 million
• Same store revenue increased by 2.7% or $5.4 million
• Same store gross profit increased by 2.9% or $1.0 million
• EBITDA increased by 30.7% to $4.0 million from $3.1 million
• The number of new vehicles retailed increased by 3.3%
• The number of used vehicles retailed decreased by 13.7%
• Repair orders completed for the quarter were down 6.8%
  
  

In commenting on the financial results for the three month period ended March 31, 2011, Pat Priestner, Chief Executive Officer of AutoCanada Inc., stated that, "We are pleased to see a significant improvement in our operating results for the first quarter of 2011 when compared to the first quarter of 2010. As a result of this strong performance and the successful reorganization of our management team we are pleased to announce a 25% increase in our quarterly dividend: from $0.04 per share to $0.05 per share. We are pleased to share the improved results of the Company's performance with its shareholders."

AutoCanada today announced the retirement of Mr. Rusty Goepel from the Board of Directors, having served as a Board Member since the inception of AutoCanada in May of 2006. "The Board benefited greatly from Mr. Goepel's experience and good counsel, particularly through the economic challenges of late 2008 and 2009, and we are thankful and appreciative of his contribution, and wish Rusty well with his future endeavours," stated Mr. Gordon Barefoot, Chair of the Board of Directors.

In addition, AutoCanada announced that Mr. Pat Priestner, CEO of AutoCanada, would continue in such role for an agreed period of time, followed by a further commitment to continue as Chair of AutoCanada thereafter. Mr. Barefoot stated that "As part of the restructuring of the head office functions last year, Mr. Priestner agreed to provide enhanced day to day operational guidance for an interim period. Both the Board and Mr. Priestner are pleased with the development of the senior management team that was put in place at that time, and are wholly satisfied that Mr. Priestner may reduce his current commitment without disruption or risk to operations. As such, the Board of Directors and Mr. Priestner have agreed upon a framework which will ensure Mr. Priestner's continued significant role in the business of AutoCanada. Specifically, Mr. Priestner shall continue on as CEO for the balance of 2011, to be extended by the Board as it deems appropriate for up to a maximum of an additional 12 months, following which Mr. Priestner shall become Chair of the Board of Directors, which in turn shall appoint an independent Board Member as Lead Director. In addition, for a period of not less than three years, Mr. Priestner shall continue to play a meaningful role as it relates to the direction of AutoCanada and its day to day management of its strategic relationships. In return, the Board has granted to Mr. Priestner the right to privately purchase a limited number of dealerships which sell brands not available to AutoCanada during his three year non-competition term, such right to continue without restriction thereafter, provided further that Mr. Priestner has agreed not to purchase brands which have accepted public ownership for a five year period, that is a period two years greater than his current three year non-competition term."

Mr. Barefoot further stated, "Mr. Priestner's experience, expertise, and reputation in the auto retail business in Canada are quite possibly without peer, and as the largest shareholder, his continued significant role in the business and affairs of AutoCanada is critical to its future success. Mr. Priestner, as someone who is by nature a builder of businesses, expressed the desire to continue to build relationships with those brands which were not prepared to accept the public model, and as a private relationship model was the only means available, to pursue these relationships through that structure. Although both the Board's and Mr. Priestner's preference was to build all brands within the AutoCanada family, that is not within AutoCanada's control, and thus the Board of Directors concluded that the interests of AutoCanada were best served by ensuring the continued commitment of Mr. Priestner to play a significant role in the management and operation of AutoCanada, and its growth with those brands available to it. The agreement thus reached offers a framework to both parties to achieve their respective needs and objectives, and hence the Board is very satisfied and pleased with its terms."

First Quarter 2011 Highlights

• For the first quarter of 2011, the Company generated net earnings of $2.0 million or basic and diluted earnings per share of $0.10. Pre-tax earnings increased by $0.8 million or 39.0% to $2.7 million in the first quarter of 2011 as compared to $1.9 million for the same period in 2010.
  
  
• Same store revenue increased by 2.7% in the first quarter of 2011, compared to the same quarter in 2010. Same store gross profit increased by 2.9% in the first quarter of 2011, compared to the same quarter in 2010.
  
  
• Revenue from existing and new dealerships increased 5.4% to $211.6 million in the first quarter of 2011 from $201.0 million in the same quarter in 2010.
  
  
• Gross profit from existing and new dealerships increased 5.3% to $36.3 million in the first quarter of 2011 from $34.7 million in the same quarter in 2010.
  
  
• EBITDA increased 30.7% to $4.0 million in the first quarter of 2011 from $3.1 million in the same quarter in 2010.
  
  
• Free cash flow decreased to $3.2 million in the first quarter of 2011 or $0.163 per share as compared to $6.6 million or $0.333 per share in the first quarter of 2010.
  
  
• Adjusted free cash flow increased to $3.7 million in the first quarter of 2011 or $0.184 per share as compared to $2.6 million or $0.129 per share in 2010.
  
  
• Adjusted return on capital employed increased to 2.6% in the first quarter of 2011 as compared to 2.1% in 2010.

Dividends

Management reviews the Company's financial results on a monthly basis. The Board of Directors reviews the financial results on a quarterly basis, or as requested by Management, and determine whether a dividend shall be paid based on a number of factors.

Management reviews the Company's financial results on a monthly basis. The Board of Directors reviews the financial results on a quarterly basis, or as requested by Management, and determine whether a dividend shall be paid based on a number of factors.

The following table summarizes the dividends declared by the Company in 2011:

On May 12, 2011 the Board of Directors of AutoCanada Inc. were pleased to declare a quarterly eligible dividend of $0.05 per common share on AutoCanada's outstanding Class A common shares, payable on June 15, 2011 to shareholders of record at the close of business on May 31, 2011. The declaration of the dividend represents a 25% increase over the previously declared dividend of $0.04 per share. The newly announced quarterly dividend represents an annual dividend rate of $0.20 per share as compared to $0.16 per share previously.

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. Columns marked "IFRS" represent financial information which has been restated for the Company's adoption of International Financial Reporting Standards ("IFRS") on January 1, 2010. Columns marked "CGAAP" represent financial information which has not been restated for the Company's adoption of IFRS and readers are cautioned that these columns may not provide appropriate comparative information.

Company management considers same store gross profit and sales information to be an important operating metric when comparing the results of the Company to other industry participants.

The following table summarizes the results for the three months ended March 31, 2011 on a same store basis by revenue source and compares these results to the same period in 2010.

AutoCanada Inc.
Interim Consolidated Statement of Financial Position
(Unaudited)
(in thousands of Canadian dollars)

Approved on behalf of the Company:

AutoCanada Inc.
Interim Consolidated Statement of Comprehensive Income
(Unaudited)
(in thousands of Canadian dollars except for share and per share amounts)

AutoCanada Inc.
Interim Consolidated Statement of Changes in Equity
(Unaudited)
(in thousands of Canadian dollars)

AutoCanada Inc.
Interim Consolidated Statement of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 23 franchised dealerships in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2010, our dealerships sold approximately 24,000 vehicles and processed approximately 317,000 service and collision repair orders in our 339 service bays.

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 foregoing factors are further discussed in the Company's Annual Information Form dated March 17, 2011 which is filed on SEDAR at www.sedar.com.

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.

TRANSITION TO IFRS

This press release contains information representing the first consolidated financial statements of the Company prepared in accordance with IFRS, as issued by the IASB. The Company's consolidated financial statements were previously prepared in accordance with Canadian GAAP. The Company adopted IFRS in accordance with IFRS 1 - First-time Adoption of International Financial Reporting Standards. The first date at which IFRS was applied was January 1, 2010. For further detail regarding the transition to IFRS, readers may refer to Note 29 - Transition to IFRS of the interim consolidated financial statements of the Company for the period ended March 31, 2011.

NON-GAAP 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, and financing activities determined in accordance with 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 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.

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.

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.

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, Absorption Rate, Adjusted Average Capital Employed and Adjusted 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, Absorption Rate, Adjusted Average Capital Employed and Adjusted Return on Capital Employed may differ from the methods used by other issuers. Therefore, the Company's EBITDA, EBIT, Free Cash Flow, Absorption Rate, Adjusted Average Capital Employed and Adjusted 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.