AutoCanada Inc. releases financial results for the reporting period ended
March 31, 2010 and announces the reinstatement of a quarterly dividend of
$0.04 per common share:

A conference call to discuss the results for the three month period ended March 31, 2010 will be held on May 13, 2010 at 10:30 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, 2010.

    
    -------------------------------------------------------------------------
                     2010 First Quarter Operating Results

    -   Same store new vehicle unit sales increase of 27.0%
    -   Same store revenue increased by 16.9% or $26.6 million
    -   Same store gross profit increased by 11.1% or $3.2 million
    -   EBITDA increased 38.1% to $3.1 million from $2.2 million in Q1 of
        2009
    -   Pre-tax earnings increased 66.7% to $2.0 million from $1.2 million
    -   Net earnings increased by 27.2% to $1.4 million from $1.1 million
    -   Revenue increased 16.6% or $28.7 million
    -   Gross profit increased by 11.3% or $3.5 million
    -   Repair orders completed for the quarter were up 7.6%
    -   The number of new and used vehicles retailed increased by 7.2%
    -------------------------------------------------------------------------
    

In commenting on the financial results for the three month period ended March 31, 2010, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "We have continued to see improvements in the automotive retail market in the first three months of 2010. As a result of the increase in new vehicle sales, our finance and insurance revenues have improved and our parts and service revenues have also benefitted from increased sales. We are also pleased to have acquired an additional Hyundai dealership in April and to have the opportunity to build on our strong partnership with Hyundai Auto Canada in Mississauga, Ontario."

First Quarter 2010 Highlights

    
    -   Net earnings of $1.4 million or basic and diluted earnings per share
        of $0.072.

    -   Pre-tax earnings of $2.0 million or basic and diluted earnings per
        share of $0.098.

    -   Same store revenue increased by 16.9% in the first quarter of 2010,
        compared to the same quarter in 2009.

    -   Same store gross profit increased by 11.1% in the first quarter of
        2010, compared to the same quarter in 2009.

    -   Revenue from existing and new dealerships increased 16.6% to
        $201.5 million in the first quarter of 2010 from $172.8 million in
        the same quarter in 2009.

    -   Gross profit from existing and new dealerships increased 11.3% to
        $34.7 million in the first quarter of 2010 from $31.2 million in the
        same quarter in 2009.

    -   EBITDA increased 38.1% to $3.1 million in the first quarter of 2010
        from $2.2 million in the same quarter in 2009.

    -   Free cash flow generated of $0.281 per share and adjusted free cash
        flow of $0.123 in the first quarter of 2010.

    -   On April 12, 2010 the Company completed the acquisition of Future
        Hyundai, located in Mississauga, Ontario, to be continued under the
        name 401/Dixie Hyundai.
    

Reinstatement of a Quarterly Dividend

AutoCanada announced today that it is resuming payment of dividends at an annual rate of $0.16 cents per common share. Accordingly, the board declared today an initial quarterly eligible dividend of $0.04 per common share on AutoCanada's outstanding Class A common shares, payable on June 15, 2010 to shareholders of record at the close of business on May 31, 2010.

"Our improved financial performance in recent months confirms to us that we remain a highly competitive company with a manageable cost structure even during a prolonged economic downturn. We are confident that we can continue to deliver solid financial performance despite a fragile economic environment," said Pat Priestner, CEO of AutoCanada. "We continue to focus on shareholder value and I am pleased to announce this milestone. The initiation of a regular quarterly dividend is a strong commitment to return cash to shareholders."

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table shows the unaudited results of the AutoCanada 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 Operating Data
     and gross profit %)

                               Q2           Q3           Q4           Q1
                              2008         2008         2008         2009

    Income Statement Data
      New vehicles            128,371      118,807       96,634       87,176
      Used vehicles            61,223       57,790       47,605       49,550
      Parts, service &
       collision repair        26,610       26,492       27,105       26,390
      Finance, insurance &
       other                   13,121       13,597       11,023        9,683
                          ---------------------------------------------------
    Revenue                   229,325      216,686      182,367      172,799
                          ---------------------------------------------------

      New vehicles              9,699        9,266        6,729        5,828
      Used vehicles             5,180        5,156        3,671        3,810
      Parts, service &
       collision repair        12,896       13,290       13,090       12,811
      Finance, insurance &
       other                   12,244       12,629       10,137        8,732
                          ---------------------------------------------------
    Gross profit               40,019       40,341       33,627       31,181
                          ---------------------------------------------------

    Gross profit %              17.5%        18.6%        18.4%        18.0%
    Sales, general & admin
     expenses                  29,916       30,491       28,157       27,813
    SG&A exp. as % of
     gross profit               74.8%        75.5%        83.7%        89.2%
    Floorplan interest
     expense                    1,895        1,693        1,443          970
    Other interest & bank
     charges                      396          458          441          375
    Income taxes                  148       (1,869)      (8,579)          97
    Net earnings                6,906      (38,318)     (67,121)       1,054
    EBITDA                      8,022        7,975        3,868        2,230

    Operating Data
     Vehicles (new and
     used) sold                 6,576        6,462        5,124        5,149
    New retail vehicles
     sold                       3,471        3,245        2,376        2,291
    New fleet vehicles
     sold                         470          532          526          473
    Used retail vehicles
     sold                       2,635        2,685        2,222        2,385
    Number of service &
     collision repair
     orders completed          72,227       74,300       69,560       70,021
    Absorption rate              100%          99%          94%          84%
    No. of dealerships             20           21           22           22
    No. of same store
     dealerships                   14           14           14           16
    No. of service bays
     at period end                279          284          288          323
    Same store revenue
     growth                    (3.8)%      (17.1)%      (16.7)%      (19.8)%
    Same store gross
     profit growth               0.2%       (3.3)%       (8.0)%      (12.8)%

    Balance Sheet Data
    Cash and cash
     equivalents               18,459       19,194       19,592       12,522
    Accounts receivable        35,374       39,390       31,195       33,821
    Inventories               135,447      134,565      139,948      116,478
    Revolving floorplan
     facilities               131,505      135,562      137,453      114,625


                               Q2           Q3           Q4           Q1
                              2009         2009         2009         2010

    Income Statement Data
      New vehicles            108,181      117,513      102,880      115,395
      Used vehicles            55,098       56,386       48,135       48,216
      Parts, service &
       collision repair        27,322       26,941       27,730       27,011
      Finance, insurance &
       other                   11,669       12,027       10,252       10,918
                          ---------------------------------------------------
    Revenue                   202,270      212,867      188,997      201,540
                          ---------------------------------------------------

      New vehicles              7,951        9,003        7,157        7,809
      Used vehicles             5,677        5,744        4,309        3,977
      Parts, service &
       collision repair        13,708       13,374       13,447       13,106
      Finance, insurance &
       other                   10,489       10,717        9,218        9,825
                          ---------------------------------------------------
    Gross profit               37,825       38,838       34,131       34,717
                          ---------------------------------------------------

    Gross profit %              18.7%        18.3%        18.1%        17.2%
    Sales, general & admin
     expenses                  30,450       30,565       29,313       29,834
    SG&A exp. as % of
     gross profit               80.5%        78.7%        85.9%        85.9%
    Floorplan interest
     expense                    1,104        1,399        1,382        1,661
    Other interest & bank
     charges                      552          802          552          362
    Income taxes                   67           37          248          522
    Net earnings                4,750        5,099        1,675        1,433
    EBITDA                      6,135        6,716        3,271        3,079

    Operating Data
     Vehicles (new and
     used) sold                 6,067        6,415        5,451        5,676
    New retail vehicles
     sold                       3,030        3,236        2,559        2,787
    New fleet vehicles
     sold                         446          619          695          661
    Used retail vehicles
     sold                       2,591        2,560        2,197        2,228
    Number of service &
     collision repair
     orders completed          75,062       79,346       76,853       75,311
    Absorption rate               90%          92%          91%          85%
    No. of dealerships             22           22           22           22
    No. of same store
     dealerships                   17           18           19           19
    No. of service bays
     at period end                323          321          331          331
    Same store revenue
     growth                   (15.3)%       (3.9)%         1.3%        16.9%
    Same store gross
     profit growth             (8.7)%       (6.3)%       (1.1)%        11.1%

    Balance Sheet Data
    Cash and cash
     equivalents               14,842       23,224       22,465       23,615
    Accounts receivable        27,034       38,134       35,388       40,752
    Inventories                90,141      107,431      108,324      153,847
    Revolving floorplan
     facilities                73,161      105,254      102,650      160,590
    

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 sales for the three months ended March 31, 2010 on a same store basis by revenue source and compares these results to the same period in 2009.

    
                    Same Store Revenue and Vehicles Sold
    -------------------------------------------------------------------------
                                          For the Three Month Period Ended
                                       --------------------------------------
    (In thousands of dollars except      March 31,    March 31,
     % change and vehicle data)            2010         2009       % Change
                                           ----         ----       --------
    Revenue Source

    New vehicles                           104,729       77,816        34.6%
    Used vehicles                           45,087       46,806       (3.7)%
    Finance, insurance and other             9,884        8,853        11.7%
                                             -----        -----        -----
    Subtotal                               159,700      133,475        19.6%
    Parts, service and collision
     repair                                 24,633       24,251         1.6%
    Total                                  184,333      157,726        16.9%
                                           -------      -------        -----
                                           -------      -------        -----

    New vehicles - retail sold               2,512        2,003        25.4%
    New vehicles - fleet sold                  624          467        33.6%
    Used vehicles sold                       2,055        2,208       (6.9)%
                                             -----        -----       ------
    Total                                    5,191        4,678        11.0%
                                             -----        -----        -----
                                             -----        -----        -----

    Total vehicles retailed                  4,567        4,211         8.5%
                                             -----        -----         ----
                                             -----        -----         ----
    

The following table summarizes the gross profit for the three months ended March 31, 2010 on a same store basis by revenue source and compares these results to the same period in 2009.

    
             Same Store Gross Profit and Gross Profit Percentage
    -------------------------------------------------------------------------
                               For the Three Month Period Ended
                  -----------------------------------------------------------
                           Gross Profit                Gross Profit %
                  ----------------------------- -----------------------------
    (In thousands
     of dollars
     except %
     change and
     gross profit  March 31, March 31,   %       March 31, March 31,   %
     %)              2010      2009    Change      2010      2009    Change
                     ----      ----    ------      ----      ----    ------
    Revenue Source

    New vehicles     7,088     4,922     44.4%      6.8%      6.3%      7.9%
    Used vehicles    3,731     3,839    (2.8)%      8.3%      8.2%      1.2%
    Finance,
     insurance and
     other           9,092     8,143     11.7%     92.0%     92.0%      0.0%
                     -----     -----     -----
    Subtotal        19,911    16,904     17.8%
    Parts, service
     and collision
     repair         12,003    11,832      1.4%     48.7%     48.8%      0.0%
                    ------    ------      ----     -----     -----      ----
    Total           31,914    28,736     11.1%     17.3%     18.2%    (4.9)%
                    ------    ------     -----     -----     -----    ------
                    ------    ------     -----     -----     -----    ------
    

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 2009, the 22 franchised automobile dealerships owned by the Company, sold approximately 23,000 vehicles and processed approximately 300,000 service and collision repair orders in our 331 service bays. We have grown, and intend to continue to grow, our business through the acquisition of franchised automobile dealerships in key markets, the organic growth of our existing dealerships, the opening of new franchised automobile dealerships, or "Open Points", and the management of franchised automobile dealerships.

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 and therefore we do not have an in-house lease program and as a result we do not have exposure to residual value risk of returned lease vehicles.

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.

In particular, material forward-looking statements in this press release include:

    
    -   our plans for future growth and effects of future growth on financial
        performance;
    -   assumptions regarding the upcoming launch of various Chrysler
        products and timing of arrival of products;
    -   assumptions regarding our ability to continue to deliver solid
        financial performance;
    -   our view that dividend reinstatement is attractive to shareholders
        going forward.
    

The foregoing factors are further discussed in the Company's Annual Information Form dated March 22, 2010 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.

NON-GAAP MEASURES

Our 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. 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.

Free Cash Flow

Free cash flow is a measure used by management to evaluate its performance. While the closest Canadian 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 expenditure.

Adjusted Free Cash Flow

Adjusted free cash flow is a measure used by management to evaluate its performance. 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.

Cautionary Note Regarding Non-GAAP Measures

EBITDA and Free Cash Flow 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 and Free Cash Flow may differ from the methods used by other issuers. Therefore, the Company's EBITDA and Free Cash Flow 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.

    
    AutoCanada Inc.
    Interim Consolidated Balance Sheet
    -------------------------------------------------------------------------
    (expressed in Canadian dollar thousands)
                                                       March 31, December 31,
                                                           2010         2009
                                                     (Unaudited)
                                                              $            $

    ASSETS
    Current assets
    Cash and cash equivalents                            23,615       22,465
    Accounts receivable                                  40,752       35,388
    Inventories (note 4)                                153,847      108,324
    Prepaid expenses                                      2,013        1,649
    Future income taxes                                       -          500
                                                    ------------ ------------
                                                        220,227      168,326

    Property & equipment                                 17,400       17,794
    Intangible assets                                    43,700       43,700
    Future income taxes                                   1,160        1,647
    Leasehold inducements (note 7)                        2,569        2,142
    Other assets                                             56           56
                                                    ------------ ------------

                                                        285,112      233,665
                                                    ------------ ------------
                                                    ------------ ------------

    LIABILITIES
    Current liabilities
    Accounts payable and accrued liabilities             22,158       25,556
    Revolving floorplan facilities (note 5)             160,590      102,650
    Income taxes payable                                  1,547            -
    Current portion of long-term debt (note 6)              272          271
    Future income taxes                                       -        2,012
                                                    ------------ ------------
                                                        184,567      130,489
    Long-term debt (note 6)                              19,010       23,074
                                                    ------------ ------------

                                                        203,577      153,563
                                                    ------------ ------------
    Economic dependence (note 2)

    SHAREHOLDERS' EQUITY
    Share capital                                       190,435      190,435
    Contributed surplus                                   3,918        3,918
    Deficit                                            (112,818)    (114,251)
                                                    ------------ ------------

                                                         81,535       80,102
                                                    ------------ ------------

                                                        285,112      233,665
                                                    ------------ ------------
                                                    ------------ ------------



    AutoCanada Inc.
    Interim Consolidated Statement of
    Operations, Comprehensive Income and Deficit
    -------------------------------------------------------------------------
    (expressed in Canadian dollar thousands except share and per
    share amounts)

                                                          Three        Three
                                                   Months ended Months ended
                                                       March 31,    March 31,
                                                           2010         2009
                                                     (unaudited)  (unaudited)

                                                              $            $

    Revenue
    Vehicles                                            173,569      145,946
    Parts, service and collision repair                  27,055       26,395
    Other                                                   916          458
                                                    -------------------------

                                                        201,540      172,799
    Cost of sales (note 4)                              166,823      141,618
                                                    -------------------------

    Gross profit                                         34,717       31,181
                                                    -------------------------
    Expenses
    Selling, general and administrative                  29,834       27,813
    Interest                                              2,023        1,345
    Amortization                                            905          872
                                                    -------------------------

                                                         32,762       30,030
                                                    -------------------------

    Earnings before income taxes                          1,955        1,151

    Income taxes                                            522           97
                                                    -------------------------

    Net earnings & comprehensive
    income for the period                                 1,433        1,054

    Deficit, beginning of period                       (114,251)    (124,344)
    Distributions declared                                    -       (2,485)
                                                    -------------------------

    Deficit, end of period                             (112,818)    (125,778)
                                                    -------------------------
                                                    -------------------------

    Earnings per share
    Basic                                                 0.072        0.053
                                                    -------------------------
                                                    -------------------------

    Diluted                                               0.072        0.053
                                                    -------------------------
                                                    -------------------------

    Weighted average shares
    Basic                                            19,880,930   19,880,930
                                                    -------------------------
                                                    -------------------------

    Diluted                                          19,880,930   19,880,930
                                                    -------------------------
                                                    -------------------------



    AutoCanada Inc.
    Interim Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------
    (expressed in Canadian dollar thousands)
                                                          Three        Three
                                                   Months ended Months ended
                                                       March 31,    March 31,
                                                           2010         2009
                                                     (unaudited)  (unaudited)

    Cash provided by (used in)                                $            $

    Operating activities
    Net earnings for the period                           1,433        1,054
    Items not affecting cash
      Income taxes                                          522           97
      Unit-based compensation                                 -           39
      Amortization                                          905          872
      Loss (gain) on disposal of property & equipment        (2)           9
                                                    -------------------------

                                                          2,858        2,071
    Net change in non-cash working capital balances       3,260       (5,284)
                                                    -------------------------

                                                          6,118       (3,213)
                                                    -------------------------

    Investing activities
    Purchase of property & equipment                       (541)      (1,065)
    Disposal of other assets                                  -           44
    Payment of leasehold inducements                       (427)           -
    Proceeds on sale of property & equipment                 63            -
    Restricted cash                                           -         (218)
                                                    -------------------------

                                                           (905)      (1,239)
                                                    -------------------------

    Financing activities
    Proceeds from long-term debt                              -          286
    Repayment of long-term debt                          (4,063)        (419)
    Distributions paid                                        -       (2,485)
                                                    -------------------------

                                                         (4,063)      (2,618)
                                                    -------------------------

    Increase (decrease) in cash                           1,150       (7,070)
    Cash and cash equivalents, beginning
     of period                                           22,465       19,592
                                                    -------------------------

    Cash and cash equivalents, end of period             23,615       12,522
                                                    -------------------------
                                                    -------------------------

    Supplementary information
      Cash interest paid                                  1,857        1,486
      Transfer of inventory to property & equipment         107          176
      Transfer of property & equipment to inventory          77          252
    

SOURCE AutoCanada Inc.

For further information: For further information: Tom Orysiuk, CA, Executive Vice-President and Chief Financial Officer, Phone: (780) 732-3139, Email: torysiuk@autocan.ca


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