EDMONTON, Nov. 5, 2015 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Highlights

• Revenue from existing and new dealerships increased by 6.9%, or $50.7 million, to $781.2 million in the third quarter of 2015 from $730.5 million in the same quarter in 2014.
  
  
• Gross profit from existing and new dealerships increased by 8.7%, or $10.3 million, to $128.7 million in the third quarter of 2015 from $118.4 million in the same quarter in 2014.
  
  
• Adjusted EBITDA attributable to AutoCanada shareholders decreased by 1.1%, or $0.3 million, to $27.2 million in the third quarter of 2015 from $27.5 million in the same quarter in 2014.
  
  
• EBITDA attributable to AutoCanada shareholders decreased by 8.0%, or $2.3 million, to $26.4 million in the third quarter of 2015 from $28.7 million in the same quarter in 2014.
  
  
• The Company generated net earnings attributable to AutoCanada shareholders of $11.7 million or basic earnings per share of $0.48 versus earnings per share of $0.74 in the third quarter of 2014. Pre-tax earnings attributable to AutoCanada shareholders decreased by 24.3%, or $5.5 million, to $17.1 million in the third quarter of 2015 as compared to $22.6 million in the same period in 2014.
  
  
• The Company generated adjusted net earnings attributable to AutoCanada shareholders of $12.5 million from $16.8 million in the same quarter in 2014. Basic adjusted net earnings per share of $0.51 versus $0.70 in the third quarter of 2014.
  
  
• Same store revenue decreased by 6.9% in the third quarter of 2015, compared to the same quarter in 2014. Same store gross profit decreased by 14.1% in the third quarter of 2015, compared to the same quarter in 2014.
  
  
• Free cash flow increased to $15.0 million in the third quarter of 2015 or $0.61 per share as compared to $6.3 million or $0.26 per share in the same quarter in 2014.
  
  
• Adjusted free cash flow decreased to $19.0 million in the third quarter of 2015 or $0.78 per share as compared to $22.1 million or $0.92 per share in the same quarter in 2014.
  
  
• Same store new vehicle retail revenue decreased by 13.4%, or $28.5 million, to $184.5 million in the third quarter of 2015 from $213.0 million in the same quarter in 2014.
  
  
• Same store used vehicle retail revenue increased by 13.0%, or $8.0 million, to $69.1 million in the third quarter of 2015 from $61.1 million in the same quarter in 2014.
  
  
• Same store parts, service and collision repair revenue decreased by 3.1%, or $1.1 million, to $35.7 million in the third quarter of 2015 from $36.8 million in the same quarter in 2014.
  
  
• The increase in income tax expense is mainly due to the 2% increase in the corporate tax rate for the province of Alberta from 10% to 12%. The increase in tax rate has negatively impacted diluted earnings per share for the three month period ended September 30, 2015 by $0.01 from $0.48 to $0.47, and for the nine month period ended September 30, 2015, negatively impacted basic earnings per share by $0.03 from $1.27 to $1.24 and the diluted earnings per share by $0.04 from $1.27 to $1.23.

"With our third quarter and year-to-date operating and financial results as the back-drop, we are looking forward to a strong finish to 2015 and towards ensuring AutoCanada being well prepared to face continued challenges in Alberta in fiscal 2016," stated Thomas Orysiuk, President & Chief Executive Officer.  "In order to provide us with flexibility to execute on our continuing acquisition strategy and to fund our capital expenditure requirements, while maintaining appropriate operating liquidity, we are in advanced stages of negotiations towards expanding our revolving credit facility.  As part of this process, we have amended our banking covenants to align with current industry lending practices. Together with our free cash flow from operations, the expanded revolving credit facility will provide us with the necessary flexibility to meet our capital requirements."

Dividends

On November 5, 2015, the Board declared a quarterly eligible dividend of $0.25 per common share on AutoCanada's outstanding Class A shares, payable on December 15, 2015 to shareholders of record at the close of business on November 30, 2015.

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".

Outlook

The Canadian economy remains flat overall, with continued downward pressure on the Alberta economy, mitigated by modest growth in each of British Columbia and Ontario. With consumer credit access remaining strong, the Company's outlook for vehicle sales is primarily driven by employment and consumer confidence in its primary markets. Although employment levels have improved in some of the Company's markets, employment levels in Alberta have yet to rebound; additionally, ongoing concerns regarding crude oil prices continues to negatively impact consumer confidence in Alberta. Management is unsure of when the Alberta economy will improve and the outlook for the retail automotive industry in Alberta remains challenging.

Management is cautiously optimistic that it will be able to manage the impact of the current Alberta economic challenges by more effectively marketing its vehicles with a greater emphasis on cost effective digital strategies, and by focusing on gross margins where volumes are constrained.

In order to mitigate the impact of the declining Alberta economy, the Company is directing its acquisition efforts to Eastern Canada, in particular Ontario, in an effort to further diversify. Management believes Ontario offers attractive returns in a growing market, and is currently engaged in discussions with potential acquisition targets. As part of this strategy, the Company has recently completed the purchase of Hunt Club Nissan in Ottawa, Ontario, along with an Ottawa Nissan Open Point dealership. Management is confident that it will meet its prior guidance to acquire six to eight dealerships by May 2016, three of which have closed to date. Management continues to engage those manufacturers which currently do not accept public ownership and believes that it is making progress.

Regarding Volkswagen's recent recall issues, Management has assessed the matter and does not expect it to have a significant impact on its operations, as sales of the affected vehicles do not represent a significant amount of the Company's new and used vehicle sales. Additionally, the Company is pleased with the measures taken by Volkswagen Canada and is confident that Volkswagen Canada shall continue to take the steps appropriate to ensure the continued success of the brand and its dealerships, as well as the continued satisfaction of Volkswagen vehicle owners.

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.

The following tables summarizes the results for the three and nine month periods ended September 30, 2015 on a same store basis by revenue source and compares these results to the same period in 2014.

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 three and nine month periods ended September 30, 2015, which can be found on the company's website at www.autocan.ca or on www.sedar.com.

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. The following "Non-GAAP Measures" are defined in the interim MD&A; EBITDA; Adjusted EBITDA; Adjusted Net Earnings and Adjusted Net Earnings per Share; EBIT; Free Cash Flow; Adjusted Free Cash Flow; Adjusted Average Capital Employed; Absorption Rate; Average Capital Employed; Return on Capital Employed; and Adjusted Return on Capital Employed.

Conference Call

A conference call to discuss the results for the reporting period ended September 30, 2015 will be held on   November 6, 2015 at 11:00am Eastern time (9:00am Mountain time).  To participate in the conference call, please dial 1.888.231.8191 approximately 10 minutes prior to the call.  A live and archived audio webcast of the conference call will also be available at the following:

http://event.on24.com/r.htm?e=1045364&s=1&k=DF5128EDA5A03B1CA0393EC6A1CB7D45.

About AutoCanada

AutoCanada is one of Canada's largest multi‑location automobile dealership groups, currently operating 52 dealerships, comprised of 60 franchises, (see "GROWTH, ACQUISITIONS, RELOCATIONS AND REAL ESTATE") in 8 provinces and has over 3,600 employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC, Buick, Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, Kia, BMW and MINI branded vehicles. In 2014, our dealerships sold approximately 57,000 vehicles and processed approximately 786,000 service and collision repair orders in our 822 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 management's discussion and analysis 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", "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.

Additional Information

Additional information about AutoCanada is available at the Company's website at www.autocan.ca and www.sedar.com.

SOURCE AutoCanada Inc.