Stock Name: ACQ
Amount: CAD 0.12
Announcement Date: 04/11/2011
Record Date: 28/11/2011
Dividend Detail:
A conference call to discuss the results for the reporting period ended
September 30, 2011 will be held on November 7, 2011 at 11:00 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. The conference ID number is 10371711. A live and archived audio
webcast of the conference call will also be available on the Company's
website www.autocan.ca.
EDMONTON, Nov. 4, 2011 /CNW/ - AutoCanada Inc. (the "Company" or
"AutoCanada") (TSX: ACQ) today announced financial results for the
reporting period ended September 30, 2011.
2011 Third Quarter Operating Results
|
In commenting on the financial results for the three month period ended
September 30, 2011, Pat Priestner, Chief Executive Officer of
AutoCanada Inc. stated that, "We are pleased to announce the results of
another great quarter. New vehicle sales and the resulting finance and
insurance product sales contributed to the significant increase in
earnings. We are also happy with the improvements made in used vehicle
volumes and gross profit. Management has been working on a number of
initiatives to improve used vehicle sales and the improvement in the
third quarter is encouraging." Mr. Priestner also commented on the
Board of Directors approval of an increase in the quarterly dividend.
"The strong results in the third quarter and our outlook for the future
were determining factors in the decision to increase the dividend to an
annual rate of $0.48 per common share from $0.40 per share. We have
tripled the annual rate of our dividend since the beginning of the year
and believe that providing significant value to our shareholders is our
best use of capital at this time."
Third Quarter 2011 Highlights
The Company generated net earnings of $5.2 million or basic and diluted
earnings per share of $0.26. Pre-tax earnings increased by $4.2
million or 155.6% to $6.9 million in the third quarter of 2011 as
compared to $2.7 million for the same period in 2010.
Same store revenue increased by 21.6% and same store gross profit
increased by 22.9% in the third quarter of 2011, compared to the same
quarter in 2010.
Revenue from existing and new dealerships increased 16.8% to $270.1
million in the third quarter of 2011 from $231.3 million in the same
quarter in 2010.
Gross profit from existing and new dealerships increased 17.8% to $44.7
million in the third quarter of 2011 from $38.0 million in the same
quarter in 2010.
EBITDA increased by 104.8% to $8.2 million in the third quarter of 2011
from $4.0 million in the same quarter in 2010.
Adjusted free cash flow increased to $7.8 million in the third quarter
of 2011 or $0.392 per share as compared to $3.5 million or $0.175 per
share in 2010.
Free cash flow increased to $10.2 million in the third quarter of 2011
or $0.511 per share as compared to $4.4 million or $0.222 per share in
the third quarter of 2010.
Adjusted return on capital employed for the trailing 12 months increased
to 18.1% for the period ended September 30, 2011 as compared to 12.1%
in same period of the prior year.
Dividends to Shareholders
Management reviews the Company's financial results on a monthly basis.
The Board of Directors reviews the financial results on a quarterly
basis, or as requested by Management or the Directors, and determine
whether a dividend shall be paid based on a number of factors.
The following table summarizes the dividends declared by the Company in
2011:
(In thousands of dollars) | | | | | | | | | | |||
| | | | | | Total | ||||||
Record date | Payment date | | | | | | Declared | Paid | ||||
| | | | | | | $ | $ | ||||
February 28, 2011 | March 15, 2011 | | | | | | 795 | 795 | ||||
May 31, 2011 | June 15, 2011 | | | | | | 995 | 995 | ||||
August 31, 2011 | September 15, 2011 | | | | | | 1,988 | 1,988 | ||||
November 30, 2011 | December 15, 2011 | | | | | | 2,386 | - | ||||
On November 4, 2011 the Board declared a quarterly eligible dividend of
$0.12 per common share on AutoCanada's outstanding Class A common
shares, payable on December 15, 2011 to shareholders of record at the
close of business on November 30, 2011. The quarterly eligible
dividend of $0.12 represents an annual dividend rate of $0.48 per share
or a 20% increase in the dividend from the prior quarter.
SELECTED QUARTERLY FINANCIAL 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.
Columns marked "IFRS" represent financial information which has been
restated for the Company's adoption of International Financial
Reporting Standards ("IFRS") on January 1, 2010. Columns marked
"CGAAP" represent financial information which has not been restated for
the Company's adoption of IFRS and readers are cautioned that these
columns may not provide appropriate comparative information.
(In thousands of dollars except Operating Data and gross profit %) | | | | | | | | |
| Q4 2009 CGAAP | Q1 2010 IFRS | Q2 2010 IFRS | Q3 2010 IFRS | Q4 2010 IFRS | Q1 2011 IFRS | Q2 2011 IFRS | Q3 2011 IFRS |
Income Statement Data | | | | | | | | |
New vehicles | 102,124 | 114,531 | 144,673 | 141,553 | 114,382 | 128,318 | 196,916 | 172,732 |
Used vehicles | 48,805 | 49,034 | 57,181 | 50,922 | 45,414 | 44,906 | 52,054 | 55,350 |
Parts, service & collision repair | 27,639 | 26,922 | 28,376 | 27,279 | 29,165 | 27,164 | 29,263 | 27,754 |
Finance, insurance & other | 10,069 | 10,275 | 12,663 | 11,536 | 10,771 | 11,255 | 13,775 | 14,250 |
Revenue | 188,637 | 200,672 | 242,894 | 231,290 | 199,732 | 211,643 | 292,008 | 270,086 |
| | | | | | | | |
New vehicles | 7,157 | 7,975 | 10,846 | 9,557 | 8,856 | 9,528 | 13,763 | 12,555 |
Used vehicles | 4,396 | 4,099 | 4,906 | 4,221 | 3,659 | 3,486 | 4,302 | 5,020 |
Parts, service & collision repair | 13,428 | 13,107 | 14,443 | 13,831 | 13,835 | 13,146 | 15,023 | 14,317 |
Finance, insurance & other | 9,150 | 9,300 | 11,376 | 10,351 | 9,689 | 10,133 | 12,329 | 12,817 |
Gross profit | 34,131 | 34,481 | 41,571 | 37,960 | 36,038 | 36,293 | 45,417 | 44,709 |
| | | | | | | | |
Gross profit % | 18.1% | 17.2% | 17.1% | 16.4% | 18.0% | 17.2% | 15.6% | 16.6% |
Operating expenses | 29,313 | 30,740 | 34,280 | 33,205 | 30,812 | 31,879 | 35,116 | 35,738 |
Operating exp. as % of gross profit | 85.9% | 89.2% | 82.5% | 87.5% | 85.5% | 87.8% | 77.3% | 79.9% |
Finance costs - floorplan | 1,382 | 1,670 | 2,230 | 2,042 | 1,556 | 1,685 | 2,311 | 2,190 |
Finance costs - long-term debt | 552 | 236 | 230 | 278 | 534 | 283 | 323 | 296 |
Income taxes | 248 | 516 | 1,330 | 692 | 2,404 | 690 | 2,029 | 1,646 |
Net earnings 4 | 1,675 | 1,414 | 3,624 | 1,983 | 7,585 | 1,995 | 5,949 | 5,230 |
EBITDA 1, 4 | 3,271 | 3,096 | 6,164 | 4,011 | 3,469 | 4,046 | 9,318 | 8,216 |
| | | | | | | | |
Operating Data Vehicles (new and used) sold | 5,451 | 5,676 | 6,994 | 6,350 | 5,219 | 5,826 | 8,210 | 7,649 |
New retail vehicles sold | 2,559 | 2,787 | 3,614 | 3,358 | 3,008 | 3,050 | 4,158 | 3,907 |
New fleet vehicles sold | 695 | 661 | 919 | 831 | 306 | 796 | 1,900 | 1,340 |
Used retail vehicles sold | 2,197 | 2,228 | 2,461 | 2,161 | 1,905 | 1,980 | 2,152 | 2,402 |
Number of service & collision repair orders completed | 76,853 | 75,311 | 80,072 | 77,285 | 85,035 | 72,360 | 80,851 | 76,176 |
Absorption rate 2 | 91% | 85% | 87% | 85% | 86% | 80% | 91% | 90% |
# of dealerships at period end | 22 | 22 | 23 | 23 | 23 | 23 | 22 | 22 |
# of same store dealerships 3 | 19 | 19 | 19 | 19 | 21 | 22 | 21 | 21 |
# of service bays at period end | 331 | 331 | 339 | 339 | 339 | 339 | 322 | 322 |
Same store revenue growth 3 | 1.3% | 16.9% | 19.4% | 6.7% | 2.4% | 2.7% | 19.3% | 21.6% |
Same store gross profit growth 3 | (1.1)% | 11.1% | 7.5% | (4.0)% | 2.9% | 2.9% | 8.2% | 22.9% |
| | | | | | | | |
Balance Sheet Data | | | | | | | | |
Cash and cash equivalents | 22,465 | 23,615 | 31,880 | 34,329 | 37,541 | 39,337 | 43,837 | 49,366 |
Accounts receivable | 35,388 | 40,701 | 46,787 | 37,149 | 32,853 | 42,260 | 51,539 | 44,172 |
Inventories | 108,324 | 153,847 | 177,294 | 137,507 | 118,365 | 134,865 | 149,481 | 159,732 |
Revolving floorplan facilities | 102,650 | 160,590 | 194,388 | 145,652 | 124,609 | 152,075 | 172,600 | 175,291 |
1 | EBITDA has been calculated as described under "NON-GAAP MEASURES". |
2 | Absorption has been calculated as described under "NON-GAAP MEASURES". |
3 | Same store revenue growth & same store gross profit growth is calculated using franchised automobile dealerships that we have owned for at least 2 full years. |
4 | The results from operations have been lower in the first and fourth quarters of each year, largely due to consumer purchasing patterns during the holiday season, inclement weather and the reduced number of business days during the holiday season. As a result, our financial performance is generally not as strong during the first and fourth quarters than during the other quarters of each fiscal year. The timing of acquisitions may have also caused substantial fluctuations in operating results from quarter to quarter. |
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.
Same Store Revenue and Vehicles Sold | ||||||||
| | | | | | | | |
| For the Three Months Ended | | For the Nine Months Ended | |||||
(In thousands of dollars except % change and vehicle data) | September 30, 2011 | September 30, 2010 | % Change | | September 30, 2011 | September 30, 2010 | % Change | |
| | | | | | | | |
Revenue Source New vehicles | 166,873 | 130,291 | 28.1% | | 468,910 | 376,045 | 24.7% | |
Used vehicles | 54,222 | 49,045 | 10.6% | | 147,133 | 151,473 | (2.9)% | |
Finance & insurance and other | 13,818 | 10,803 | 27.9% | | 37,353 | 32,819 | 13.8% | |
Subtotal | 234,913 | 190,140 | | | 653,396 | 560,337 | | |
Parts, service & collision repair | 26,990 | 25,233 | 7.0% | | 79,726 | 76,780 | 3.8% | |
Total | 261,903 | 215,373 | 21.6% | | 733,122 | 637,118 | 15.1% | |
New vehicles - retail sold | 3,680 | 3,023 | 21.7% | | 10,189 | 9,051 | 12.6% | |
New vehicles - fleet sold | 1,341 | 782 | 71.5% | | 3,931 | 2,295 | 71.3% | |
Used vehicles sold | 2,330 | 2,063 | 12.9% | | 6,228 | 6,607 | (5.7)% | |
Total | 7,351 | 5,868 | 25.3% | | 20,348 | 17,953 | 13.3% | |
Total vehicles retailed | 6,010 | 5,086 | 18.2% | | 16,417 | 15,658 | 4.8% | |
The following table summarizes the results for the three and nine month
periods ended September 30, 2011 on a same store basis by revenue
source, and compare these results to the same period in 2010.
Same Store Gross Profit and Gross Profit Percentage | ||||||||||||||||
| For the Three Months Ended | | For the Nine months Ended | |||||||||||||
| Gross Profit | Gross Profit % | | Gross Profit | Gross Profit % | |||||||||||
(In thousands of dollars except % change and gross profit %) | Sept 30, 2011 | Sept 30, 2010 | % Change | Sept 30, 2011 | Sept 30, 2010 | Change | | Sept 30, 2011 | Sept 30, 2010 | % Change | Sept 30, 2011 | Sept 30, 2010 | Change | |||
| | | | | | | | | | | | | | |||
Revenue Source New vehicles | 12,245 | 9,040 | 35.5% | 7.3% | 6.9% | 0.4% | | 34,346 | 27,071 | 26.9% | 7.3% | 7.2% | 0.1% | |||
Used vehicles | 5,314 | 4,202 | 26.5% | 9.8% | 8.6% | 1.2% | | 12,499 | 13,152 | (5.0)% | 8.5% | 8.7% | (0.2)% | |||
Finance & insurance and other | 12,524 | 9,761 | 28.3% | 90.6% | 90.4% | 0.2% | | 33,833 | 29,671 | 14.0% | 90.6% | 90.4% | 0.2% | |||
Subtotal | 30,083 | 23,003 | 30.8% | | | | | 80,678 | 69,894 | 15.4% | | | | |||
Parts, service & collision repair | 13,944 | 12,832 | 8.7% | 51.7% | 50.9% | 0.8% | | 40,263 | 38,456 | 4.7% | 50.5% | 50.1% | 0.4% | |||
Total | 44,027 | 35,835 | 22.9% | 16.8% | 16.6% | 0.2% | | 120,940 | 108,350 | 11.6% | 16.5% | 17.0% | (0.5)% | |||
AutoCanada Inc. Interim Consolidated Statement of Financial Position (Unaudited) (in thousands of Canadian dollars) | | | |
| September 30, 2011 $ | December 31, 2010 $ | January 1, 2010 $ |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents (Note 11) | 49,366 | 37,541 | 21,528 |
Trade and other receivables (Note 12) | 44,172 | 32,854 | 35,323 |
Inventories (Note 13) | 159,732 | 118,262 | 108,324 |
Other current assets | 1,568 | 1,148 | 1,646 |
| 254,838 | 189,805 | 166,821 |
Property and equipment (Note 14) | 25,223 | 25,590 | 17,600 |
Intangible assets (Note 15) | 40,018 | 40,018 | 30,600 |
Goodwill | 309 | 309 | - |
Other long-term assets (Note 17) | 7,180 | 5,909 | 2,198 |
Deferred tax | - | - | 3,492 |
| 327,568 | 261,631 | 220,711 |
LIABILITIES | | | |
Current liabilities | | | |
Trade and other payables (Note 18) | 30,204 | 26,818 | 24,831 |
Revolving floorplan facilities (Note 19) | 175,291 | 124,609 | 102,370 |
Current tax payable | 2,026 | - | - |
Current lease obligations (Note 20) | 1,291 | 907 | 175 |
Current indebtedness (Note 19) | 2,884 | 277 | 96 |
| 211,791 | 152,611 | 127,472 |
Long-term lease obligations (Note 20) | 51 | 120 | 289 |
Long-term indebtedness (Note 19) | 20,159 | 24,974 | 22,785 |
Deferred tax | 3,796 | 1,552 | - |
| 235,797 | 179,257 | 150,546 |
EQUITY | | | |
Share capital (Note 22) | 190,435 | 190,435 | 190,435 |
Contributed surplus | 3,918 | 3,918 | 3,918 |
Accumulated deficit | (102,582) | (111,979) | (124,188) |
| 91,711 | 82,374 | 70,165 |
| 327,568 | 261,631 | 220,711 |
Approved on behalf of the Company: | |||||||||||
| |||||||||||
(Signed) "Gordon R. Barefoot", Director | | | | | | | | | (Signed) "Robin Salmon", Director | ||
AutoCanada Inc. Interim Consolidated Statement of Comprehensive Income (Unaudited) (in thousands of Canadian dollars except for share and per share amounts) | | | ||
| Three month period ended | Three month period ended | Nine month period ended | Nine month period ended |
| September 30, 2011 $ | September 30, 2010 $ | September 30, 2011 $ | September 30, 2010 $ |
Revenue (Note 4) | 270,086 | 231,290 | 773,737 | 674,946 |
Cost of sales (Note 5) | (225,377) | (193,330) | (647,318) | (560,934) |
Gross profit | 44,709 | 37,960 | 126,419 | 114,012 |
Operating expenses (Note 6) | (35,738) | (33,205) | (102,733) | (98,227) |
Operating profit before other income | 8,971 | 4,755 | 23,686 | 15,785 |
Gain on disposal of assets | 1 | 10 | 29 | 14 |
Operating profit | 8,972 | 4,765 | 23,715 | 15,799 |
Finance costs (Note 8) | (2,651) | (2,464) | (7,564) | (7,127) |
Finance income (Note 8) | 555 | 374 | 1,388 | 886 |
Net comprehensive income for the period before taxation | 6,876 | 2,675 | 17,539 | 9,558 |
Income tax (Note 9) | 1,646 | 692 | 4,365 | 2,538 |
Net comprehensive income for the period | 5,230 | 1,983 | 13,174 | 7,020 |
| | | | |
Earnings per share | | | | |
Basic | 0.263 | 0.100 | 0.663 | 0.353 |
Diluted | 0.263 | 0.100 | 0.663 | 0.353 |
| | | | |
Weighted average shares | | | | |
Basic | 19,880,930 | 19,880,930 | 19,880,930 | 19,880,930 |
Diluted | 19,880,930 | 19,880,930 | 19,880,930 | 19,880,930 |
AutoCanada Inc. Interim Consolidated Statement of Changes in Equity (Unaudited) (in thousands of Canadian dollars) | | ||||
| Share capital $ | Contributed surplus $ | Total capital $ | Accumulated deficit $ | Total $ |
Balance, January 1, 2011 | 190,435 | 3,918 | 194,353 | (111,979) | 82,374 |
Net comprehensive income | - | - | - | 13,174 | 13,174 |
Dividends declared on common shares | - | - | - | (3,777) | (3,777) |
Balance, September 30, 2011 | 190,435 | 3,918 | 194,353 | (102,582) | 91,771 |
| | | | | |
| Share capital $ | Contributed surplus $ | Total capital $ | Accumulated deficit $ | Total $ |
Balance, January 1, 2010 | 190,435 | 3,918 | 194,353 | (124,188) | 70,165 |
Net comprehensive income | - | - | - | 7,020 | 7,020 |
Dividends declared on common shares | - | - | - | (1,590) | (1,590) |
Balance, September 30, 2010 | 190,435 | 3,918 | 194,353 | (118,758) | 75,595 |
AutoCanada Inc. Interim Consolidated Statement of Cash Flows (Unaudited) (in thousands of Canadian dollars) | ||||||
| | | Three month period ended September 30, 2011 | Three month period ended September 30, 2010 | Nine month period ended September 30, 2011 | Nine month period ended September 30, 2010 |
Cash provided by (used in): | | | | | | |
Operating activities | | | | | | |
Net comprehensive income | | | 5,230 | 1,983 | 13,174 | 7,020 |
Income taxes (Note 9) | | | 1,646 | 692 | 4,365 | 2,538 |
Amortization of prepaid rent (Note 24) | | | 113 | 113 | 339 | 339 |
Amortization of property and equipment | | | 1,044 | 1,058 | 3,141 | 2,964 |
Gain on disposal of assets | | | (1) | (11) | (29) | (14) |
Net change in non-cash working capital | | | 2,818 | 1,148 | (681) | 13,680 |
| | | 10,850 | 4,983 | 20,309 | 26,527 |
Investing activities | | | | | | |
Business acquisitions | | | - | - | - | (3,550) |
Purchases of property and equipment | | | (694) | (6,660) | (2,236) | (8,358) |
Disposal of other assets | | | 2 | - | 7 | - |
Prepayments of rent (Note 24) | | | (540) | (540) | (1620) | (1,620) |
Proceeds on sale of property and equipment | | | - | 23 | - | 94 |
Proceeds on divestiture of subsidiary (Note 10) | | | - | - | 1,464 | - |
| | | (1,232) | (7,177) | (2,385) | (13,434) |
Financing activities | | | | | | |
Proceeds from long-term debt | | | - | 5,510 | - | 5,510 |
Repayment of long-term indebtedness | | | (2,102) | (72) | (2,322) | (4,212) |
Dividends paid | | | (1,987) | (795) | (3,777) | (1,590) |
| | | (4,089) | 4,643 | (6,099) | (292) |
Increase in cash | | | 5,529 | 2,449 | 11,825 | 12,801 |
Cash and cash equivalents at beginning of period | | | 43,837 | 31,880 | 37,541 | 21,528 |
Cash and cash equivalents at end of period | | | 49,366 | 34,329 | 49,366 | 34,329 |
About AutoCanada
AutoCanada is one of Canada's largest multi-location automobile
dealership groups, currently operating 22 franchised dealerships in
British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova
Scotia. In 2010, our dealerships sold approximately 24,000 vehicles and
processed approximately 317,000service and collision repair orders in
our 339 service bays at that time.
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 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.
The foregoing factors are further discussed in the Company's Annual
Information Form dated March 17, 2011 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.
TRANSITION TO IFRS
This press release contains information representing the interim
consolidated financial statements of the Company prepared in accordance
with IFRS, as issued by the IASB. The Company's consolidated financial
statements were previously prepared in accordance with Canadian GAAP.
The Company adopted IFRS in accordance with IFRS 1 - First-time Adoption of International Financial Reporting Standards. The first date at which IFRS was applied was January 1, 2010. For
further detail regarding the transition to IFRS, readers may refer to
Note 29 - Transition to IFRS of the interim consolidated financial statements of the Company for the
period ended March 31, 2011.
NON-GAAP MEASURES
This press release contains certain financial measures that do not have
any standardized meaning prescribed by 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 income (loss) or to cash provided by
(used in) operating, investing, and financing activities determined in
accordance with 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.
EBIT
EBIT is a measure used by management in the calculation of Return on
capital employed (defined below). Management's calculation of EBIT is
EBITDA (calculated above) less depreciation and amortization.
Free Cash Flow
Free cash flow is a measure used by management to evaluate its
performance. While the closest 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
expenditures (not including acquisitions of dealerships and dealership
facilities).
Adjusted Free Cash Flow
Adjusted free cash flow is a measure used by management to evaluate its
performance. Adjusted 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.
Adjusted Average Capital Employed
Adjusted average capital employed is a measure used by management to
determine the amount of capital invested in AutoCanada and is used in
the measure of Adjusted Return on Capital Employed (described below).
Adjusted average capital employed is calculated as the average balance
of interest bearing debt for the period (including current portion of
long term debt, excluding revolving floorplan facilities) and the
average balance of shareholders equity for the period, adjusted for
impairments of intangible assets, net of deferred tax. Management does
not include future income tax, non-interest bearing debt, or revolving
floorplan facilities in the calculation of adjusted average capital
employed as it does not consider these items to be capital, but rather
debt incurred to finance the operating activities of the Company.
Adjusted Return on Capital Employed
Adjusted return on capital employed is a measure used by management to
evaluate the profitability of our invested capital. As a corporation,
management of AutoCanada may use this measure to compare potential
acquisitions and other capital investments against our internally
computed cost of capital to determine whether the investment shall
create value for our shareholders. Management may also use this
measure to look at past acquisitions, capital investments and the
Company as a whole in order to ensure shareholder value is being
achieved by these capital investments. Adjusted return on capital
employed is calculated as EBIT (defined above) divided by Adjusted
Average Capital Employed (defined above).
Cautionary Note Regarding Non-GAAP Measures
EBITDA, EBIT, Free Cash Flow, Absorption Rate, Adjusted Average Capital
Employed and Adjusted Return on Capital Employed 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, EBIT, Free Cash Flow, Absorption Rate, Adjusted
Average Capital Employed and Adjusted Return on Capital Employed may
differ from the methods used by other issuers. Therefore, the Company's
EBITDA, EBIT, Free Cash Flow, Absorption Rate, Adjusted Average Capital
Employed and Adjusted Return on Capital Employed 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.
For further information:
Jeff Christie, CA
Vice-President, Finance
Phone: (780) 732-7164 Email:jchristie@autocan.ca
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