EDMONTON, Aug. 10, 2017 /CNW/ - AutoCanada Inc. (TSX: ACQ), one of Canada's largest, and only publicly traded, multi-location automobile dealership groups, today provided a corporate update and reported its financial results for the three-month and six-month periods ended June 30, 2017.

"Management has undertaken several significant steps over the last number of months toward achieving our strategic goals of broadening our brand portfolio and our geographic footprint," said Steven J. Landry, President & Chief Executive Officer. "We added Alfa Romeo to our brand profile April of this year. The acquisition of Mercedes-Benz Rive-Sud in Montreal not only adds the Mercedes-Benz and Smart brands, but also provides us with a facility in full compliance with brand image standards, adds 28 service bays and is one of only three authorized Mercedes-Benz collision centres in Quebec. We are very pleased with the early results from this store and will continue to pursue similar opportunities in other markets while our discussions continue to enhance our various OEM relationships. In short, we are very committed to organic year-over-year margin growth at our existing stores while generating incremental growth through smart accretive acquisitions. While we have set high performance dealership goals for ourselves, our Q2 operating profit performance is an example of having a strong focus on margin improvement."

Second Quarter Highlights

• Revenue in the quarter was up 6.3% compared with the second quarter of 2016. Operating expenses as a percentage of gross profit declined to 78.5% compared with 80.1% over the same period last year.
• Gross profit was $143.8 million in the second quarter, compared with $134.7 million in the same quarter of 2016, with gross profit as a percentage of revenue increasing slightly to 16.1% from 16.0%.
• New vehicle unit sales were 13,429, up 11.0% from the same period in 2016. Revenue from new vehicle sales was $558.7 million in the quarter, up 12.4% from 2016. New vehicle sales accounted for 62.4% of the Company's total revenue and 26.8% of gross profit versus 59.0% of revenue and 25.5% of gross profit in the second quarter of 2016.
• Used vehicle unit sales were 5,061, down 5.0% from the same quarter last year. Revenue from used vehicle sales was $182.9 million in the quarter, down 12.1% from last year. Used vehicle sales accounted for 20.4% of the Company's total revenue and 9.1% of gross profit, versus 24.6% of revenue and 10.2% of gross profit in 2016.
• Parts, service and collision repair generated $114.0 million of revenue in the second quarter, up 13.6% from 2016. This accounted for 12.7% of the Company's total revenue and 39.1% of its gross profit, versus 11.9% of revenue and 39.3% of gross profit in 2016.
• Finance and insurance generated $39.3 million of revenue in the second quarter, an improvement of 6.6% from 2016. This accounted for 4.5% of the Company's total revenue and 25.0% of its gross profit, reflecting similar numbers from 2016.
• EBITDA attributable to AutoCanada shareholders was $43.7 million, up 61.4% from last year. Operating profit before other income was $30.9 million, up 15.5% from last year.
• Adjusted earnings per share were $0.57. Including a one-time payment of $9.8 million, net of related expenses and tax, as part of a settlement with an OEM, earnings per share were $0.91 in 2017.
• The Company renegotiated the terms of one of its credit facilities to match an existing facility and free-up $20.5 million of working capital.

"There were a number of encouraging signs for the Company this quarter," said Chris Burrows, Chief Financial Officer. "New vehicle sales were up as was revenue from parts, service and collision repair. We continue to focus on managing costs at both the store and corporate level, and that contributed to an improvement in operating profit. While the gains have been incremental to date, they speak to the success of our broader strategy of maintaining operational excellence, continuously managing costs, and capturing market share through accretive acquisitions."

The following table summarizes the Company's results for the quarter ended June 30, 2017:

Outlook

New vehicle sales are on track to set a record in Canada this year as the economy, business investment and historically low interest rates all contribute to the positive outlook. Sales exceeded one million units for the first time ever in the first half of the year and, despite the Bank of Canada raising its overnight rate in July, the contributing factors for January to June performance are expected to continue throughout the balance of the year, fueling a strong second half of sales.

While the macro climate bodes well for AutoCanada, the Company's new vehicle sales do not always mirror the national trends. This is in part owing to the current geographical over-weighting in western Canada (and particularly Alberta) and in part due to the brand mix not being a direct comparable to the brand mix in national sales. It is for both of these reasons that the Company continues to pursue its dual diversification strategy of broadening its geographical footprint while expanding the number of brands offered.

The Company also continues to look to enhance its used vehicle sales, its parts, service and collision repair business and its sales of financing and insurance products, each of which contributes to the total revenue and profitability of AutoCanada. The improvement in new vehicle sales often leads to improvements in each of these other parts of the Company's business.

We remain keenly focused on making further 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 a slight uptick in the second quarter, with revenue up 0.1% and gross profit up 1.1%. Since the end of the second quarter last year, twenty stores have transitioned into our same store count, leaving only ten stores not yet part of the count. Only one new store will be added to the same-store category in each of the next two quarters, so while cost control will continue to be an important focus for the Company, integrating new stores is not expected to have as much of an impact on the Company's performance in the near term.    

Dealership relocations and expansions are important steps to provide long-term earnings sustainability and improvements in overall profitability for growing locations. Our capital expenditure on relocations and expansions in 2017 continue on track. By the end of the second quarter, we invested $10.3 million in dealership relocations and expansions of a planned $29.9 million investment this year. The Company has identified approximately $65.3 million in capital costs that it may incur in order to expand or renovate various current locations through to the end of 2021. Our five-year total capital plan is $124.7 million for contemplated future capital projects.

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 August 10, 2017, the Board declared a quarterly eligible dividend of $0.10 per common share on AutoCanada's outstanding Class A shares, payable on September 15, 2017 to shareholders of record at the close of business on August 31, 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.

The following tables summarizes the results for the quarter ended June 30, 2017 on a same store basis by revenue source and compares these results to the same period in 2016.

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 quarter ended June 30, 2017, 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 annual 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 quarter ended June 30, 2017 will be held on August 11, 2017 at 9:00 am MT (11:00 am ET).  To participate in the conference call, please dial 1.888.231.8191 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:  http://investors.autocan.ca/Q22017

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 57 franchised dealerships, comprised of 65 franchises, in eight provinces and has over 4,500 employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, Kia, Mercedes-Benz, Smart, BMW, and MINI branded vehicles.  In 2016 with $2.9 billion in revenue, our dealerships sold approximately 60,000 vehicles and processed approximately 864,000 service and collision repair orders in our 928 service bays.

Dealerships generate 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 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. The Company earns fees for arranging financing on new and used vehicle purchases on behalf of third parties. Under agreements with retail financing sources, the Company is 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.