AUTOCANADA ANNOUNCES FOURTH QUARTER RESULTS

Revenue was $1,483.8 million as compared to $1,388.2 million in the prior year, an increase of 6.9%
Net (loss) income for the period was $(22.6) million versus $14.8 million in the prior year, a decrease of (252.8)%
Diluted earnings per share was $(0.81), a decrease of $(1.33) from $0.52 in the prior year
Consolidated ownership of the Used Digital Division, recognizing $36.7 million of share-based compensation expense and $1.8 million of related transaction costs in operating expenses, resulting in a $1.50 reduction to diluted earnings per share
Adjusted EBITDA1 was $46.4 million versus $51.0 million in the prior year, a decrease of $(4.6) million

EDMONTON, AB, March 7, 2024 /CNW/ – AutoCanada Inc. (“AutoCanada” or the “Company”) (TSX:ACQ), a multi-location North American automobile dealership group, today reported its financial results for the three month period ended December 31, 2023.

“During the fourth quarter, AutoCanada experienced solid growth in new vehicle sales and a robust contribution from parts, service, and collision repair. These gains were tempered by a decrease in used vehicle sales, primarily in the U.S. market, as well as higher interest rates impacting floorplan, finance costs, and consumer preferences for affordable vehicles and minimal financing,” said Paul Antony, AutoCanada’s Executive Chair.

“Significant progress has been made on Project Elevate initiatives since its launch at the end of August, with key management changes announced in November 2023 allowing us to begin executing against this five-year strategic plan in earnest. To date this has included completing a U.S. restructuring, initiating best practice playbooks across several functions, implementing training programs, beginning corporate infrastructure modernization projects, and creating operating expense targets by brand, which are expected to be implemented in Canada this summer. This foundational work is critical to our core Project Elevate objectives which are to maximize gross profit, optimize our cost structure, and modernize our corporate infrastructure. I am very proud of the hard work and dedication of our team, who are doing an excellent job navigating challenging market conditions. I would like to thank our OEM partners for their continued support.”

Fourth Quarter Key Highlights and Recent Developments

Consolidated revenue increased due to higher new vehicle sales, contributions from PS&CR and recent acquisitions offset by lower used vehicle sales in U.S. Operations. Growth in new vehicle revenue was driven primarily from higher new vehicle sales volumes and reflecting the continued recovery in new vehicle inventories. PS&CR revenue growth reflected continued strong demand, with aftermarket operations continuing to benefit from increased average age of vehicle that resulted from constrained new light vehicle supply during the pandemic.

Consolidated gross profit increased as a result of contributions from new vehicle sales, PS&CR operations and recent acquisitions.

Operating expenses increased primarily as a result of share-based compensation expenses related to the consolidation of ownership of Used Digital Division. Normalized operating expenses before depreciation1, which excludes stock based compensation, transaction costs, and other non-recurring costs, increased as a result of recent acquisitions.

Floorplan financing expenses increased as a result of higher interest rates and rising new inventory levels partially offset by lower used vehicle inventory levels.

The net loss for the period resulted from higher gross profits and operating expenses for the reasons stated above, including share-based compensation expense related to the ownership consolidation of the Used Digital Division, combined with higher floorplan financing expenses.

Adjusted EBITDA1 for the period and adjusted EBITDA margin1 decreased primarily as result of higher operating expenses combined with increased flooring expenses.

Canadian Operations Highlights

Revenue increased as a result of contributions from new vehicle sales, higher PS&CR operating performance, and recent acquisitions, offset by declines in used vehicle revenues. Growth in new vehicle revenue was driven by higher new retail vehicle sales volumes and higher average selling prices. PS&CR gross profit increased as a result of strong customer demand for maintaining existing vehicles and recent acquisitions. F&I gross profit per retail unit average2 decreased reflecting a growing proportion of retail vehicle sales being purchased without dealer financing, resulting in fewer opportunities to sell higher margin warranty and insurance products.

Adjusted EBITDA1 was up due to contributions from stronger new vehicle sales and PS&CR operations, and recent acquisitions, partially offset by higher operating expenses and floorplan financing expenses.

U.S. Operations Highlights

Revenue and gross profit declined due …

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