AutoCanada Inc. Announces 2016 Annual and Fourth Quarter Results

EDMONTON, March 16, 2017 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) one of Canada's largest multi-location automobile dealership groups, today announced financial results for the year ended December 31, 2016 and the three-month period ended December 31, 2016.

2016 Financial Summary

  • Revenue from existing and new dealerships remained flat at $2,891.6 million in 2016 from $2,903.8 million in 2015.

  • Gross profit from existing and new dealerships remained flat at $486.1 million in 2016 from $487.7 million in 2015.

  • The Company generated net earnings attributable to AutoCanada shareholders of $2.6 million (after impairment expense of $54.1 million) and basic earnings per share of $0.09 versus basic earnings per share of $0.93 in 2015.

  • Adjusted net earnings attributable to AutoCanada shareholders decreased by 1.0% to $39.9 million in 2016 from $40.3 million in 2015 equivalent to basic adjusted net earnings per share of $1.45 versus $1.64 in 2015.

  • EBITDA attributable to AutoCanada shareholders increased by 5.2% to $94.5 million in 2016 compared to $89.8 million in 2015.

  • Same store revenue decreased by 5.6% in 2016 compared to 2015. Same store gross profit decreased by 5.4% in 2016 compared to 2015.

  • Free cash flow increased to $96.3 million in 2016 or $3.53 per share as compared to $38.7 million or $1.57 per share in 2015.

  • Adjusted free cash flow increased to $68.6 million in 2016 or $2.51 per share as compared to $38.8 million or $1.59 per share in 2015.

2016 Q4 Financial Summary:

  • Revenue from existing and new dealerships decreased by 6.4%, to $629.3 million in the fourth quarter of 2016 from $672.3 million in the same quarter in 2015.

  • Gross profit from existing and new dealerships decreased by 5.8% to $116.8 million in the fourth quarter of 2016 from $123.9 million in the same quarter in 2015.

  • Adjusted EBITDA attributable to AutoCanada shareholders decreased by 26.9% to $19.0 million in the fourth quarter of 2016 from $26.0 million in the same quarter in 2015.

  • EBITDA attributable to AutoCanada shareholders increased by 8.2% to $25.3 million in the fourth quarter of 2016 from $23.4 million in the same quarter in 2015.

  • The Company generated net earnings attributable to AutoCanada shareholders of $13.8 million and basic earnings per share of $0.50 versus a $7.4 million loss (after impairment expense of $18.1 million) and basic earnings per share of ($0.29) in the fourth quarter of 2015.

  • The Company generated adjusted net earnings attributable to AutoCanada shareholders of $7.5 million compared to $8.6 million in the same quarter in 2015. Basic adjusted net earnings per share of $0.28 versus $0.34 in the fourth quarter of 2015.

  • Same store revenue decreased by 10.0% in the fourth quarter of 2016 compared to the same quarter in 2015. Same store gross profit decreased by 5.8% in the fourth quarter of 2016 compared to the same quarter in 2015, while gross profit percentage increased to 18.9% versus 18.0% in the same period last year.

  • Free cash flow increased to $23.4 million in the fourth quarter of 2016 or $0.86 per share as compared to $9.1 million or $0.36 per share in the same quarter in 2015.

  • Adjusted free cash flow increased to $13.1 million in the fourth quarter of 2016 or $0.48 per share as compared to $8.1 million or $0.32 per share in the same quarter in 2015.

"Fiscal 2016 capped off the second consecutive year where our core markets faced deteriorating business conditions. However, wherever there are challenges there are also opportunities, and I believe AutoCanada is well-positioned to execute on its strategy and create value for shareholders," said Steven Landry Chief Executive Officer. "We are responding to economic conditions in our key markets by focusing on market share, operating expenses, accretive acquisitions, and delivering consistent performance across all of our dealerships."

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.

The following table summarizes the dividends declared by the Company in 2016:





Record Date

Payment Date

Per Share ($)

Total ($)

February 29, 2016

March 15, 2016

0.25

6,840

May 31, 2016

June 15, 2016

0.10

2,735

August 31, 2016

September 15, 2016

0.10

2,735

November 30, 2016

December 15, 2016

0.10

2,736



0.55

15,046

 

On February 21, 2017, the Board declared a quarterly eligible dividend of $0.10 per common share on AutoCanada's outstanding Class A shares, payable on March 15, 2017 to shareholders of record at the close of business on February 28, 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".

Outlook

The outlook regarding new retail vehicle sales in Canada is predicted by independent forecasters to be down 1% - 2%. In Canada, factors contributing to new vehicle sales will vary widely by province and brands.

While new automobile sales in our core Alberta market continued to decline in 2016, AutoCanada is cautiously optimistic that renewed activity in the energy sector will slowly begin to translate favourably into improvements in year‑over‑year sales figures in the latter half of the year or early 2018. We will remain focused on delivering better financial performance irrespective of the impact of oil prices.

Of the 17 dealerships that became same store in 2016, 11 of these are located in Alberta. As a result, we anticipate same‑store sales results will continue to be impacted in 2017 by the depressed Alberta economy. We will continue to dedicate significant resources to newly acquired dealerships to integrate acquisitions and position them to be successful in their respective markets.

We are committed to delivering meaningful returns to our shareholders. Although we continue to confront headwinds in key markets, we believe that we can generate better results by improving employee productivity, realizing the benefits of our scale and continuing to grow our brand and geographic footprints with accretive acquisitions.

AutoCanada plans to spend approximately $30.9 million in 2017 on dealership relocations and undertaking expansions. We are under construction on the relocation of Audi Winnipeg, which we anticipate will lead to increased customer traffic and sales. We also plan to begin construction on two new open point locations in Calgary and Ottawa, Ontario.

AutoCanada's five‑year capital spending outlook is approximately $145.3 million. This level of spending, along with the Company's current dividend commitments, are expected to be balanced with internally generated cash flow.

SELECTED ANNUAL FINANCIAL INFORMATION
The following table shows the results of the Company for the years ended December 31, 2016, December 31, 2015 and December 31, 2014. The results of operations for these years 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 share, and

Operating Data)

2016

2015

2014

Income Statement Data





New vehicles

1,652,795

1,668,237

1,342,346


Used vehicles

725,430

704,569

495,352


Parts, service and collision repair

382,933

387,614

255,707


Finance, insurance and other

130,423

143,383

121,373

Revenue

2,891,581

2,903,803

2,214,778


New vehicles

118,297

122,408

106,002


Used vehicles

47,192

40,629

29,501


Parts, service and collision repair                                           

201,259

193,868

128,566


Finance, insurance and other

119,385

130,804

109,080

Gross profit

486,133

487,709

373,149

Gross Profit %

16.8%

16.8%

16.8%

Operating expenses

400,417

395,877

290,904

Operating expense as a % of gross profit

82.4%

81.2%

78.0%

Income from loan to associates

1,165

49

-

Income from investments in associates

-

-

3,490

Impairment (recovery) of intangible assets and goodwill

54,096

18,757

(1,767)

Net earnings attributable to AutoCanada shareholders

2,596

22,821

53,132

Adjusted net earnings attributable to AutoCanada shareholders

39,926

40,343

51,624

EBITDA attributable to AutoCanada shareholders

94,486

89,838

89,434

EBITDA % of Sales

3.3%

3.1%

4.0%

Free cash flow

96,288

38,675

63,723

Adjusted free cash flow

68,566

38,796

62,082

Basic earnings per share

0.09

0.93

2.31

Diluted earnings per share

0.09

0.92

2.30

Basic adjusted earnings per share

1.46

1.64

2.24

Diluted adjusted earnings per share

1.45

1.64

2.23

Dividends declared per share

0.55

1.00

0.94

Operating Data




Vehicles (new and used) sold

59,593

62,799

52,147

New vehicles sold

40,032

42,457

36,422

New retail vehicles sold

32,991

35,323

30,346

New fleet vehicles sold

7,041

7,134

6,076

Used retail vehicles sold

19,561

20,342

15,725

Number of service & collision repair orders completed

836,970

847,702

601,597

Absorption rate

86%

91%

85%

# of dealerships at year end

55

54

48

# of same store dealerships

44

28

23

# of service bays at year end

928

912

822

Same store revenue growth

(5.6)%

(5.9)%

8.9%

Same store gross profit growth

(5.4)%

(11.7)%

7.9%

     *See the Company's Management's Discussion and Analysis for the year ended December 31, 2016 for complete footnote disclosures.

 

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 share, and Operating Data)

Q4
2016

Q3
2016

Q2
2016

Q1
2016

Q4
2015

Q3
2015

Q2
2015

Q1
2015

Income Statement Data










New vehicles

348,107

444,482

497,025

363,181

368,242

471,018

483,435

345,542


Used vehicles

157,724

178,582

208,016

180,108

167,100

179,270

194,956

163,243


Parts, service and collision repair

92,310

95,585

100,317

94,721

102,220

93,139

99,304

92,951


Finance, insurance and other

31,133

33,529

36,899

28,862

34,752

37,778

39,182

31,671

Revenue

629,274

752,178

842,257

666,872

672,314

781,205

816,877

633,407


New vehicles

25,042

31,578

34,410

27,267

27,482

34,300

34,861

25,765


Used vehicles

10,064

12,950

13,758

10,420

10,326

10,949

11,000

8,354


Parts, service and collision repair                                                    

52,957

47,676

52,957

47,669

51,760

48,336

49,859

43,913


Finance, insurance and other

28,722

30,733

33,577

26,353

34,354

35,088

33,955

27,407

Gross profit

116,785

122,937

134,702

111,709

123,922

128,673

129,675

105,439

Gross Profit %

18.6%

16.3%

16.0%

16.8%

18.4%

16.5%

15.9%

16.6%

Operating expenses

97,397

99,041

107,932

96,047

101,310

100,824

100,568

93,175

Operating expenses as a % of gross profit

83.4%

80.6%

80.1%

86.0%

81.8%

78.4%

77.6%

88.4%

Income from loans to associates

(367)

607

610

315

49

-

-

-

Impairment (recovery) of intangible assets and goodwill

-

54,096

-

-

18,757

-

-

-

Net (loss) earnings attributable to AutoCanada shareholders

13,785

(32,619)

14,158

7,272

(7,631)

11,690

13,523

4,969

Adjusted Net earnings attributable to AutoCanada shareholders

7,536

10,327

13,466

8,597

8,441

12,535

13,957

5,261

EBITDA attributable to AutoCanada shareholders

25,260

23,842

27,072

18,312

23,353

26,379

27,398

12,687

EBITDA % of Sales

4.0%

3.2%

3.7%

3.2%

3.5%

3.8%

3.8%

2.2%

Free cash flow

23,424

30,897

37,922

4,045

9,066

14,955

17,776

(3,162)

Adjusted free cash flow

13,133

27,766

21,632

6,035

8,078

18,951

19,187

(7,420)

Basic earnings (loss) per share

0.50

(1.19)

0.53

0.27

(0.29)

0.48

0.56

0.20

Diluted (loss) earnings per share

0.50

(1.19)

0.53

0.27

(0.29)

0.47

0.56

0.20

Basic adjusted earnings per share

0.28

0.38

0.49

0.31

0.34

0.51

0.56

0.22

Dividends declared per share

0.10

0.10

0.10

0.25

0.25

0.25

0.25

0.25

Operating Data









Vehicles (new and used) sold

12,912

15,955

17,425

13,301

14,150

17,086

17,739

13,824

New vehicles sold

8,449

10,983

12,098

8,502

9,210

12,018

12,296

8,933

New retail vehicles sold

7,590

8,949

9,374

7,078

8,016

9,985

9,929

7,393

New fleet vehicles sold

859

2,034

2,724

1,424

1,194

2,033

2,367

1,540

Used retail vehicles sold

4,463

4,972

5,327

4,799

4,940

5,068

5,443

4,891

# of service and collision repair orders completed

217,418

209,912

227,446

209,194

230,772

202,692

215,142

199,096

Absorption rate

86%

89%

90%

83%

93%

91%

94%

85%

# of dealerships at period end

55

53

53

53

54

50

49

48

# of same store dealerships

44

33

27

27

28

26

24

23

# of service bays at period end

928

898

898

898

912

862

842

822

Same store revenue growth

(10.0)%

(9.2)%

(3.2)%

(3.1)%

(12.1)%

(6.9)%

(2.8)%

(3.5)%

Same store gross profit growth

(5.8)%

(11.0)%

(5.3)%

(5.5)%

(14.3)%

(14.1)%

(11.0)%

(8.5)%

     *See the Company's Management's Discussion and Analysis for the year ended December 31, 2016 for complete footnote disclosures.

 

The following tables summarizes the results for the year ended December 31, 2016 on a same store basis by revenue source and compares these results to the same period in 2015.

Same Store Revenue and Vehicles Sold




Year Ended December 31

(in thousands of dollars)

2016

2015


%  Change

Revenue Source






New vehicles ‑ Retail

1,106,413

1,214,938


(8.9)%


New vehicles ‑ Fleet

228,812

213,173


7.3%

Total New vehicles

1,335,225

1,428,111


(6.5)%


Used vehicles ‑ Retail

411,122

460,237


(10.7)%


Used vehicles ‑ Wholesale

204,470

164,747


24.1%

Total Used vehicles

615,592

624,984


(1.5)%

Finance, insurance and other

112,961

128,270


(11.9)%

Subtotal

2,063,778

2,181,365


(5.4)%

Parts, service and collision repair

305,771

328,312


(6.9)%

Total

2,369,549

2,509,677


(5.6)%






New retail vehicles sold

26,333

30,437


(13.5)%

New fleet vehicles sold

6,415

6,688


(4.1)%

Used retail vehicles sold

16,840

18,238


(7.7)%

Total

49,588

55,363


(10.4)%

Total vehicles retailed

43,173

48,675


(11.3)%

 

Same Store Gross Profit and Gross Profit Percentage




Year Ended December 31


Gross Profit

Gross Profit %

(in thousands of dollars)

2016

2015

% Change

2016

2015

Revenue Source







New vehicles ‑ Retail

89,997

98,492

(8.6)%

8.1%

8.1%


New vehicles ‑ Fleet

6,566

6,763

(2.9)%

2.9%

3.2%

Total New vehicles

96,563

105,255

(8.3)%

7.2%

7.4%


Used vehicles ‑ Retail

35,650

34,072

4.6%

8.7%

7.4%


Used vehicles ‑ Wholesale

3,914

2,073

88.8%

1.9%

1.3%

Total Used vehicles

39,564

36,145

9.5%

6.4%

5.8%

Finance, insurance and other

103,311

117,634

(12.2)%

91.5%

91.7%

Subtotal

239,438

259,034

(7.6)%

11.6%

11.9%

Parts, service and collision repair

162,728

166,221

(2.1)%

53.2%

50.6%

Total

402,166

425,255

(5.4)%

17.0%

16.9%

 

The following tables summarizes the results for the three-month period ended December 31, 2016 on a same store basis by revenue source and compares these results to the same period in 2015.

Same Store Revenue and Vehicles Sold




Three Months Ended December 31

(in thousands of dollars)

2016

2015

% Change

Revenue Source





New vehicles ‑ Retail

244,096

269,056

(9.3)%


New vehicles ‑ Fleet

26,656

27,764

(4.0)%

Total New vehicles

270,752

296,820

(8.8)%


Used vehicles ‑ Retail

93,480

109,899

(14.9)%


Used vehicles ‑ Wholesale

37,223

39,347

(5.4)%

Total Used vehicles

130,703

149,246

(12.4)%

Finance, insurance and other

27,240

28,345

(3.9)%

Subtotal

428,695

474,411

(9.6)%

Parts, service and collision repair

72,273

82,311

(12.2)%

Total

500,968

556,722

(10.0)%





New retail vehicles sold

5,924

6,621

(10.5)%

New fleet vehicles sold

730

1,016

(28.1)%

Used retail vehicles sold

3,791

4,287

(11.6)%

Total

10,445

11,924

(12.4)%

Total vehicles retailed

9,715

10,908

(10.9)%

 

Same Store Gross Profit and Gross Profit Percentage




Three Months Ended December 31


Gross Profit

Gross Profit %

(in thousands of dollars)

2016

2015

% Change

2016

2015

Revenue Source







New vehicles ‑ Retail

17,844

20,947

(14.8)%

7.3%

7.8%


New vehicles ‑ Fleet

2,181

1,760

23,9%

8.2%

6.3%

Total New vehicles

20,025

22,707

(11.8)%

7.4%

7.7%


Used vehicles ‑ Retail

7,404

8,090

(8.5)%

7.9%

7.4%


Used vehicles ‑ Wholesale

797

814

(2.1)%

2.1%

2.1%

Total Used vehicles

8,201

8,904

(7.9)%

6.3%

6.0%

Finance, insurance and other

25,030

26,712

(6.3)%

91.9%

94.2%

Subtotal

53,256

58,323

(8.7)%

12.4%

12.3%

Parts, service and collision repair

41,328

42,081

(1.8)%

57.2%

51.1%

Total

94,584

100,404

(5.8)%

18.9%

18.0%

 

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, 2016, 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 year ended December 31, 2016 will be held on March 17, 2017 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=1357897&s=1&k=DF1EACF46C59718BE91B332467699E7B

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 56 franchised dealerships, comprised of 64 franchises, in eight provinces and has over 4,250 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 2016, our dealerships sold approximately 60,000 vehicles and processed approximately 864,000 service and collision repair orders in our 928 service bays.

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 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.

For further information: Glen Nelson, Investor Relations, Phone: 780.732.3135, Email: gnelson@autocan.ca

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