- Revenue was
$1,342.4 million as compared to$969.8 million in the prior year, an increase of 38.4% and the highest first quarter revenue reported in the Company's history - Net income for the period was
$4.3 million versus$21.3 million in the prior year and includes a loss on extinguishment of embedded derivative of$(29.3) million and a loss on extinguishment of debt of$(9.9) million in Q1 2022 - Adjusted EBITDA1 was
$62.2 million versus$47.2 million in the prior year, an increase of 31.7%; normalized increase of 60.6% as compared to prior year normalized adjusted EBITDA1 of$38.7 million - Adjusted EBITDA margin1 was 4.6% versus 4.9% in the prior year, a decrease of (0.3) percentage points; normalized increase of 0.6 percentage points as compared to prior year normalized adjusted EBITDA margin1of 4.0%
- Diluted earnings per share was
$0.10 , a decrease of$(0.61) from$0.71 in the prior year - Indebtedness of
$358.5 million at the end of Q1 2022 compares to$285.9 million at the end of Q4 2021 - Net indebtedness1 of
$248.8 million at the end of Q1 2022 compares to$212.7 million at the end of Q4 2021
"We opened 2022 with yet another record first quarter, reflecting ongoing positive momentum and our business as a whole continues to perform better than ever," said
"We continued to advance our acquisition strategy with the recent addition of the Audi Windsor and Porsche of
"Looking forward to the remainder of 2022, with our newly expanded executive team in place, we will continue to build on our strong momentum and focus on our strategic growth pillars to deliver industry-leading performance and enhance shareholder returns. We remain well positioned to continue to execute on our acquisition strategy in the coming quarters with several dealerships currently being evaluated. We also expect to see continued realization of synergies from our acquisitions which will further drive our 2022 Adjusted EBITDA performance."
1 | See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
2 | This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis (MD&A) for the three month period ended |
First Quarter Key Highlights and Recent Developments
The Company set another first quarter record as revenue reached
Net income for the period was
Adjusted EBITDA1 for the period was
Gross profit increased by
Our
Proactive inventory management for both new and used vehicles continued to be a key driver to the Company's success in delivering both strong revenue and retail margin growth across all our business operations in the first quarter. We continue to manage our new vehicle inventory as the chip shortage remains an issue, particularly impacting new vehicle inventory supply. While we are gradually seeing improvements in both available new vehicle inventory and allocations, we are not expecting a return to "normalcy" in inventory levels until late 2023 to 2024. Compensating for reduced new vehicle supply, we more than doubled our used vehicle inventory position to
Net indebtedness1 increased by
Had all of the completed acquisitions, as identified in Section 5 Acquisitions, Divestitures, Relocations and Real Estate, occurred at
We remain well-positioned to continue to execute on our acquisition strategy in the coming quarters. We continue to develop a transaction pipeline with a number of dealerships currently being evaluated.
The Company welcomed
Our performance, both in
1 | See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
2 | This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis (MD&A) for the three month period ended |
Consolidated AutoCanada Highlights
ANOTHER RECORD SETTING FIRST QUARTER
Refer to Section 5 Acquisitions, Divestitures, Relocations and Real Estate of the Company's MD&A for the three month period ended
For the three-month period ended
- Revenue was
$1,342.4 million , an increase of$372.6 million or 38.4% - Total vehicles sold2 were 23,414, an increase of 4,707 units or 25.2%
- Used retail vehicles2 sold increased by 4,338 or 44.6%
- Net income for the period was
$4.3 million (or$0.11 per basic share) versus$21.3 million (or$0.71 per diluted share) - Loss on extinguishment of embedded derivative of
$(29.3) million and loss on extinguishment of debt of$(9.9) million were recognized in Q1 2022 - Adjusted EBITDA1 increased by 31.7% to
$62.2 million , an increase of$15.0 million - Adjusted EBITDA1 increased by 60.6% over prior year normalized adjusted EBITDA1 of
$38.7 million , an increase of$23.5 million - Adjusted EBITDA1 on a trailing twelve month basis was
$266.8 million - Net indebtedness1 of
$248.8 million reflected an increase of$36.0 million from the end of Q4 2021
Canadian Operations Highlights
OUTPERFORMED NEW RETAIL MARKET BY 6.6 PPTS, USED RETAIL UNIT2 SALES INCREASED BY 30%
We outperformed the Canadian market, as same store new retail unit2 sales decreased by (6.8)% as compared to the market decrease of (13.4)%, for same store brands represented by
Our used vehicle and F&I segments were key drivers of the record earnings in Q1 2022. Used vehicle gross profit percentage2 increased to 7.0% as compared to 6.7% in the prior year. F&I gross profit per retail unit average2 increased to
Unless stated otherwise, all results for acquired businesses are included in all Canadian references in the MD&A.
For the three-month period ended
- Revenue was
$1,131.0 million , an increase of 30.9% - Used retail vehicles2 sold increased by 2,620 or 29.6%
- Average TTM Canadian used retail unit2 sales per dealership per month, excluding Used Digital Retail Division dealerships2, improved to 54, as compared to 50 in the prior year
- Used to new retail units ratio2 increased to 1.50 from 1.29
- TTM used to new retail ratio2 improved to 1.48 at Q1 2022 as compared to 1.01 at Q1 2021
- F&I gross profit per retail unit average2 increased to
$3,368 , up 12.7% or$379 per unit - Net loss for the period was
$(1.0) million , down (104.8)% from a net income of$21.0 million in 2021 - Loss on extinguishment of embedded derivative of
$(29.3) million and loss on extinguishment of debt of$(9.9) million were recognized in Q1 2022 - Adjusted EBITDA1 increased 23.6% to
$53.4 million , an increase of$10.2 million - Adjusted EBITDA1 increased by 33.1% over prior year normalized adjusted EBITDA1 of
$40.1 million - Adjusted EBITDA margin1 was 4.7% as compared to normalized adjusted EBITDA margin1 of 4.6% in the prior year, an increase of 0.1 ppts
1 | See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
2 | This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis (MD&A) for the three month period ended |
REVENUE DOUBLED TO
- Revenue was
$211.4 million , an increase of 99%, from$106.0 million - Used retail vehicles2 sold increased by 1,718 units or 192%
- F&I gross profit per retail unit average2 increased to
$3,583 per unit, up 62.3% or$1,375 per unit - Net income for the period increased by
$5.0 million to$5.3 million , from$0.3 million - Net income on a trailing twelve month basis was
$22.1 million - Adjusted EBITDA1 was
$8.8 million as compared to$4.0 million , an increase of$4.8 million - Normalized adjusted EBITDA1 for the prior year was
$(1.4) million , resulting in a normalized increase of$10.2 million - Adjusted EBITDA1 on a trailing twelve month basis was
$36.0 million
Same Store Metrics - Canadian Operations
F&I GROSS PROFIT PER RETAIL UNIT AVERAGE2 INCREASED TO
We outperformed the Canadian market by 6.6 ppts as same store new retail units2 decreased by (6.8)% as compared to the market decrease of (13.4)%, for same store brands represented by
Refer to Section 19 Same Stores Results Data of the Company's MD&A for the three month period ended
- Revenue increased to
$926.7 million , an increase of 17.2% - Gross profit increased by
$33.8 million or 23.2% - Used to new retail units ratio2 increased to 1.46 from 1.19
- Used retail unit2 sales increased by 14.0%, an increase of 1,144 units
- For the fourteenth consecutive quarter of year-over-year growth, F&I gross profit per retail unit average2 increased to
$3,702 , up 20.0% or$617 per unit; gross profit increased to$58.1 million as compared to$46.3 million in the prior year, an increase of 25.4% - Parts, service and collision repair ("PS&CR") gross profit increased to
$59.2 million , an increase of 17.3% - PS&CR gross profit percentage2 decreased to 52.2% as compared to 54.6% in the prior year
Financing and Investing Activities and Other Recent Developments
ISSUED
Net indebtedness1 of
- On
January 12, 2022 ,S&P Global Ratings ("S&P") issued a research update and raised both the issuer credit rating and the Company's senior unsecured notes to 'B+'. - On
February 7, 2022 , amended and extended our existing credit facility for total aggregate bank facilities of$1.3 billion , with a maturity date ofApril 14, 2025 . - On
February 7, 2022 , issued$350 million of Senior Unsecured Notes at 5.75%, dueFebruary 7, 2029 , with the proceeds used to fund the redemption of the outstanding$250 million 8.75% Senior Unsecured Notes dueFebruary 11, 2025 , to reduce the outstanding balance under its syndicated credit facility and for general corporate purposes including acquisitions. - On
May 2, 2022 , the Company acquired substantially all of the assets used in or relating to the Audi Windsor and Porsche ofLondon dealerships, located inLondon andWindsor, Ontario , respectively. The acquisition supports management's strategic objectives of further establishing the Company's presence in the province ofOntario , increasing both brand diversity and luxury mix within our portfolio. The acquisition included the underlying real estate for both dealerships. - On
May 4, 2022 , the Company entered into an arrangement with the Bank of Nova Scotia to provide non-recourse mortgage financing for a previously purchased property inMaple Ridge, BC . The non-recourse mortgage arrangement will fund land value as well as construction costs associated with the development of two dealerships. The non-recourse mortgage is secured by the real estate as collateral. The credit facility allows for up to$100 million of non-recourse mortgage financing. The non-recourse mortgage liability is not considered a liability for purposes of calculating our credit facility financial covenants.
1 | See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
2 | This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis (MD&A) for the three month period ended |
First Quarter Financial Information
The following table summarizes the Company's performance for the quarter:
Three Months Ended | |||
Consolidated Operational Data | 2022 | 2021 | % Change |
Revenue | 1,342,438 | 969,824 | 38.4% |
Gross profit | 247,339 | 167,636 | 47.5% |
Gross profit % | 18.4% | 17.3% | 1.1% |
Operating expenses | 193,646 | 127,948 | 51.3% |
Operating profit | 56,690 | 41,664 | 36.1% |
Net income for the period | 4,322 | 21,334 | (79.7)% |
Basic net income per share attributable to | 0.11 | 0.77 | (85.7)% |
Diluted net income per share attributable to | 0.10 | 0.71 | (85.9)% |
Adjusted EBITDA1 | 62,196 | 47,234 | 31.7% |
New retail vehicles2 sold (units) | 9,052 | 8,233 | 9.9% |
New fleet vehicles2 sold (units) | 290 | 740 | (60.8)% |
Total new vehicles2 sold (units) | 9,342 | 8,973 | 4.1% |
Used retail vehicles2 sold (units) | 14,072 | 9,734 | 44.6% |
Total vehicles2 sold | 23,414 | 18,707 | 25.2% |
Same store new retail vehicles2 sold (units) | 6,383 | 6,848 | (6.8)% |
Same store new fleet vehicles2 sold (units) | 264 | 739 | (64.3)% |
Same store used retail vehicles2 sold (units) | 9,306 | 8,162 | 14.0% |
Same store total vehicles2 sold | 15,953 | 15,749 | 1.3% |
Same store2 revenue | 926,660 | 790,798 | 17.2% |
Same store2 gross profit | 179,559 | 145,799 | 23.2% |
Same store2 gross profit % | 19.4% | 18.4% | 1.0% |
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.
MD&A | Q1 2022 | Q4 2021 | Q3 2021 REVISED | Q2 2021 REVISED | Q1 2021 REVISED | Q4 2020 | Q3 2020 | Q2 2020 | |
Income Statement Data | 4 | ||||||||
New vehicles 4 | 7 | 511,195 | 467,085 | 498,142 | 547,593 | 451,061 | 466,468 | 544,415 | 381,427 |
Used vehicles 4 | 7 | 595,514 | 524,043 | 518,791 | 539,785 | 354,922 | 257,301 | 309,193 | 215,032 |
Parts, service and collision repair 4 | 7 | 152,009 | 136,800 | 116,953 | 122,459 | 108,427 | 105,362 | 111,739 | 90,417 |
Finance, insurance and other 4 | 7 | 83,720 | 67,854 | 72,868 | 71,218 | 55,414 | 46,990 | 51,753 | 40,571 |
Revenue | 1,342,438 | 1,195,782 | 1,206,754 | 1,281,055 | 969,824 | 876,121 | 1,017,100 | 727,447 | |
New vehicles 4 | 7 | 53,384 | 50,632 | 46,525 | 44,619 | 34,639 | 31,199 | 42,230 | 10,634 |
Used vehicles 4 | 7 | 36,772 | 38,118 | 39,669 | 40,269 | 23,206 | 19,787 | 29,819 | 4,224 |
Parts, service and collision repair 4 | 7 | 78,431 | 75,917 | 64,748 | 68,115 | 57,874 | 58,109 | 59,056 | 45,836 |
Finance, insurance and other 4 | 7 | 78,752 | 63,847 | 69,250 | 64,838 | 51,917 | 43,642 | 48,307 | 37,185 |
Gross Profit | 247,339 | 228,514 | 220,192 | 217,841 | 167,636 | 152,737 | 179,412 | 97,879 | |
Gross profit % | 18.4% | 19.1% | 18.2% | 17.0% | 17.3% | 17.4% | 17.6% | 13.5% | |
Operating expenses | 193,646 | 170,008 | 159,880 | 154,773 | 127,948 | 119,442 | 125,785 | 99,736 | |
Operating expenses as a % of gross profit | 78.3% | 74.4% | 72.6% | 71.0% | 76.3% | 78.2% | 70.1% | 101.9% | |
Operating profit (loss) | 56,690 | 99,410 | 62,841 | 66,153 | 41,664 | 46,664 | 56,884 | (4,388) | |
(Recoveries) impairment of non-financial assets | — | (39,846) | — | — | — | (11,248) | — | 3,910 | |
Net income (loss) | 4,322 | 69,398 | 38,769 | 37,698 | 21,334 | 24,320 | 35,962 | (20,052) | |
Basic net income (loss) per share attributable to | 0.11 | 2.54 | 1.37 | 1.33 | 0.77 | 0.87 | 1.29 | (0.72) | |
Diluted net income (loss) per share attributable to | 0.10 | 2.38 | 1.27 | 1.23 | 0.71 | 0.81 | 1.23 | (0.72) | |
Dividends declared per share | — | — | — | — | — | — | — | — | |
Adjusted EBITDA1 | 2 | 62,196 | 65,873 | 68,265 | 70,491 | 47,234 | 40,472 | 61,054 | 4,828 |
Free cash flow1 | 2 | 5,852 | 7,603 | 12,372 | 67,803 | 19,391 | 19,240 | 53,444 | 52,557 |
Operating Data | 4 | ||||||||
New retail vehicles2 sold | 3 | 9,052 | 8,204 | 9,255 | 10,107 | 8,233 | 8,623 | 10,750 | 7,526 |
New fleet vehicles2 sold | 3 | 290 | 199 | 358 | 575 | 740 | 964 | 582 | 340 |
Total new vehicles2 sold | 3 | 9,342 | 8,403 | 9,613 | 10,682 | 8,973 | 9,587 | 11,332 | 7,866 |
Used retail vehicles2 sold | 3 | 14,072 | 11,893 | 13,831 | 13,271 | 9,734 | 7,389 | 8,836 | 7,228 |
Total vehicles2 sold | 3 | 23,414 | 20,296 | 23,444 | 23,953 | 18,707 | 16,976 | 20,168 | 15,094 |
# of service and collision repair orders2 completed | 3, 5, 6 | 221,632 | 232,373 | 199,870 | 214,149 | 182,869 | 203,086 | 195,004 | 172,956 |
# of dealerships at period end | 6 | 80 | 80 | 68 | 67 | 67 | 67 | 62 | 63 |
# of same store dealerships | 1 | 49 | 49 | 49 | 49 | 49 | 47 | 47 | 48 |
# of service bays at period end | 1,293 | 1,303 | 1,108 | 1,098 | 1,098 | 1,098 | 1,039 | 1,044 | |
Same stores2 revenue growth | 1 | 17.2% | 14.1% | 15.0% | 54.2% | 27.8% | 6.3% | (1.1)% | (22.4)% |
Same stores2 gross profit growth | 1 | 23.2% | 29.4% | 18.6% | 102.5% | 35.0% | 7.7% | 17.1% | (33.9)% |
1 | See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
2 | This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis (MD&A) for the three month period ended |
3 | See the Company's MD&A for the quarter ended |
4 | In Q4 2021, it was determined there were Revenues and Cost of sales accounts incorrectly classified between revenue streams in the first three quarters of 2021 within the |
MD&A and Financial Statements
Information included in this press release is a summary of results. It should be read in conjunction with
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, financing activities, cash and cash equivalents, and indebtedness determined in accordance with Canadian GAAP, as indicators of our performance. We provide these additional non-GAAP measures, capital management measures, and supplementary financial 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.
Adjusted EBITDA, adjusted EBITDA margin, normalized adjusted EBITDA, normalized adjusted EBITDA margin, income statement impacts and adjusted EBITDA on a pre-IFRS 16 basis, adjusted EBITDA margin on a pre-IFRS 16 basis, pro forma adjusted EBITDA, pro forma normalized adjusted EBITDA, free cash flow, net indebtedness, and net indebtedness leverage ratio 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 referenced non-GAAP measures may differ from the methods used by other issuers. Therefore, these measures may not be comparable to similar measures presented by other issuers.
It should be noted that certain of the financial measures described below include pro forma items estimating the impact of the acquisitions if they had occurred on the first day of the relevant period, or as of a specified date. Readers should understand that these estimates were determined by management in good faith and are not indicative of what the historical results of the businesses acquired in the acquisitions actually were for the relevant period, or what those results would have been if the acquisitions had occurred on the dates indicated, or what they will be for any future period. As a result, the pro forma financial measures may not be indicative of the Company's financial position that would have prevailed, or operating results that would have been obtained, if the transactions had taken place on the dates indicated or of the financial position or operating results which may be obtained in the future. These pro forma financial measures are not a forecast or projection of future results. The actual financial position and results of operations of the Company for any period following the closing of the acquisitions will vary from the amounts set forth following pro forma financial measures, and such variation may be material.
We list and define these "NON-GAAP MEASURES" below:
Adjusted EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is an indicator of a company's operating performance over a period of time and ability to incur and service debt. Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to:
- Interest expense (other than interest expense on floorplan financing), income taxes, depreciation, and amortization;
- Charges that introduce volatility unrelated to operating performance by virtue of the impact of external factors (such as share-based compensation amounts attributed to certain equity issuances as a part of the Used Digital Retail Division);
- Non-cash charges (such as impairment, recoveries, gains or losses on free-standing derivatives, revaluation of contingent consideration and revaluation of redemption liabilities);
- Charges outside the normal course of business (such as restructuring, gains and losses on dealership divestitures and real estate transactions); and
- Charges that are non-recurring in nature (such as provisions for wholesale fraud and settlement income).
The Company believes adjusted EBITDA provides improved continuity with respect to the comparison of our operating performance over a period of time.
Normalized Adjusted EBITDA
With the onset of COVID-19 during the second quarter of 2020, the impact of COVID-19 related government restrictions resulted in charges that are one-time in nature, and related government programs resulted in subsidies that are non-recurring in the future.
Normalized adjusted EBITDA is an indicator of a company's operating performance over a period of time and ability to incur and service debt, normalized for charges that are non-recurring in nature related to the pandemic such as:
Canada Emergency Wage Subsidy ("CEWS") income expected to recur until the Company is no longer eligible for the subsidy;Canada Emergency Rent Subsidy ("CERS") income expected to recur until the Company is no longer eligible for the subsidy; and- One-time forgiveness of Small Business Association Paycheck Protection Program ("PPP") loans.
The Company believes normalized adjusted EBITDA provides improved continuity with respect to the comparison of our operating performance normalized for impacts related to the COVID-19 pandemic.
Pro Forma Adjusted EBITDA and Pro Forma Normalized Adjusted EBITDA
The Company believes pro forma adjusted EBITDA and pro forma normalized adjusted EBITDA provides improved understanding of the progress of our acquisition strategy as if the acquisitions had occurred at the beginning of the period. Pro forma adjusted EBITDA and pro forma normalized adjusted EBITDA includes management's estimate of the net income generated by our acquisitions prior to interest expense (other than interest expense on floorplan financing), income taxes, depreciation, and amortization, assuming acquisitions in the year had occurred on the first day of the 12 month period ended
Refer to the MD&A for the year ended
Adjusted EBITDA Margin, Normalized Adjusted EBITDA Margin, and Adjusted EBITDA Margin on a Pre-IFRS 16 Basis
Adjusted EBITDA margin is an indicator of a company's operating performance specifically in relation to our revenue performance. Normalized adjusted EBITDA margin is an indicator of a company's operating performance specifically in relation to our revenue performance, normalized for government programs subsidies that are non-recurring in nature related to the pandemic such as:
- CEWS income expected to recur until the Company is no longer eligible for the subsidy;
- CERS expected to recur until the Company is no longer eligible for the subsidy; and
- One-time forgiveness of Small Business Association PPP loans.
The Company believes adjusted EBITDA margin, normalized adjusted EBITDA margin and adjusted EBITDA margin on a pre-IFRS 16 basis provides improved continuity with respect to the comparison of our operating performance with retaining and growing profitability as our revenue and scale increases over a period of time.
Income Statement Impacts and Adjusted EBITDA on a Pre-IFRS 16 basis
The Company adopted IFRS 16 on
The Company believes adjusted EBITDA on a pre-IFRS 16 basis provides improved continuity for purposes of comparing to our historical operating performance prior to fiscal year 2019. Our Credit Facility financial covenants are calculated and presented on a pre-IFRS 16 basis. In addition, the net indebtedness leverage ratio is calculated on a pre-IFRS 16 basis.
Adjusted EBITDA on a pre-IFRS 16 basis is calculated as adjusted EBITDA less the rental expense, fair market value rent adjustment, and step lease rent adjustment eliminated from the adoption of IFRS 16 lease liabilities accounting standards.
Free Cash Flow
Free cash flow is a measure used by Management to evaluate the Company's 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 such purposes. 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 (not including acquisitions of dealerships and dealership facilities).
Net Indebtedness Leverage Ratio
Net indebtedness leverage ratio is a measure used by management to evaluate the liquidity of the Company.
The Company believes presenting the net indebtedness leverage ratio on a pre-IFRS 16 basis provides improved continuity for purposes of comparing to our historical operating performance prior to fiscal year 2019 and remains relevant while our Credit Facility financial covenants continues to be calculated and presented on a pre-IFRS 16 basis. Net indebtedness leverage ratio is calculated as net indebtedness compared to Adjusted EBITDA pre-IFRS 16 on a TTM basis.
We list and define "CAPITAL MANAGEMENT MEASURES" below:
Net Indebtedness
Net indebtedness is used by management to evaluate the liquidity of the Company.
Net indebtedness is calculated as indebtedness, net of unamortized deferred financing costs, adding back embedded derivative asset, and less cash and cash equivalents.
NON-GAAP AND OTHER FINANCIAL MEASURES RECONCILIATIONS
Adjusted EBITDA and Normalized Adjusted EBITDA
The following table illustrates adjusted EBITDA and normalized adjusted EBITDA, for the three-month period ended
2022 | 2021 | |
Period from | ||
Net income for the period | 4,322 | 21,334 |
Add back: | ||
Income tax (recovery) expense | (463) | 7,220 |
Depreciation of property and equipment | 4,740 | 4,054 |
Interest on long-term indebtedness | 7,158 | 4,663 |
Depreciation of right of use assets | 7,431 | 6,344 |
Lease liability interest | 7,372 | 5,722 |
30,560 | 49,337 | |
Add back: | ||
Loss on extinguishment of debt | 9,860 | — |
Unrealized fair value changes in derivative instruments | (7,795) | (2,919) |
Amortization of loss on terminated hedges | 817 | 817 |
Unrealized foreign exchange (gains) losses | (268) | 57 |
Loss on extinguishment of embedded derivative | 29,306 | — |
Gain on disposal of assets | (284) | (58) |
Adjusted EBITDA | 62,196 | 47,234 |
Normalizing items: | ||
Less: | ||
| — | (2,901) |
| — | (200) |
Forgiveness of PPP loans | — | (5,398) |
Normalized Adjusted EBITDA | 62,196 | 38,735 |
Segmented Adjusted EBITDA and Segmented Normalized Adjusted EBITDA
The following table illustrates the segmented adjusted EBITDA and normalized adjusted EBITDA, for the three-month period ended
Three Months Ended | Three Months Ended | ||||||
Total | Total | ||||||
Period from | |||||||
Net (loss) income for the period | (1,006) | 5,328 | 4,322 | 21,044 | 290 | 21,334 | |
Add back: | |||||||
Income tax (recovery) expense | (677) | 214 | (463) | 7,220 | — | 7,220 | |
Depreciation of property and equipment | 4,382 | 358 | 4,740 | 3,745 | 309 | 4,054 | |
Interest on long-term indebtedness | 5,787 | 1,371 | 7,158 | 2,825 | 1,838 | 4,663 | |
Depreciation of right of use assets | 6,759 | 672 | 7,431 | 5,677 | 667 | 6,344 | |
Lease liability interest | 6,492 | 880 | 7,372 | 4,786 | 936 | 5,722 | |
21,737 | 8,823 | 30,560 | 45,297 | 4,040 | 49,337 | ||
Add back: | |||||||
Loss on extinguishment of debt | 9,860 | — | 9,860 | — | — | — | |
Unrealized fair value changes in derivative instruments | (7,795) | — | (7,795) | (2,919) | — | (2,919) | |
Amortization of loss on terminated hedges | 817 | — | 817 | 817 | — | 817 | |
Unrealized foreign exchange (gains) losses | (268) | — | (268) | 57 | — | 57 | |
Loss on extinguishment of embedded derivative | 29,306 | — | 29,306 | — | — | — | |
Gain on disposal of assets | (284) | — | (284) | (58) | — | (58) | |
Adjusted EBITDA | 53,373 | 8,823 | 62,196 | 43,194 | 4,040 | 47,234 | |
Normalizing Items: | |||||||
Less: | |||||||
Canada Emergency Wage Subsidy | — | — | — | (2,901) | — | (2,901) | |
Canada Emergency Rent Subsidy | — | — | — | (200) | — | (200) | |
Forgiveness of PPP loans | — | — | — | — | (5,398) | (5,398) | |
Normalized Adjusted EBITDA | 53,373 | 8,823 | 62,196 | 40,093 | (1,358) | 38,735 |
Pro Forma Adjusted EBITDA and Pro Forma Normalized Adjusted EBITDA Reconciliation
The following table illustrates pro forma adjusted EBITDA and pro forma normalized adjusted EBITDA for the trailing twelve month period ended
2022 | 2021 | |
Period from | ||
Net income for the period | 150,187 | 61,564 |
Add back: | ||
Income tax expense | 46,338 | 15,775 |
Depreciation of property and equipment | 17,958 | 17,039 |
Interest on long-term indebtedness | 24,395 | 17,190 |
Depreciation of right of use assets | 27,507 | 24,895 |
Lease liability interest | 24,712 | 22,274 |
291,097 | 158,737 | |
Add back: | ||
(Recoveries) impairment of non-financial assets, net | (39,846) | (7,338) |
Share-based compensation (Used Digital Retail Division) | — | 435 |
Loss (gain) on redemption liabilities | 14,116 | (762) |
Loss on extinguishment of debt | 10,988 | — |
Unrealized fair value changes in derivative instruments | (12,749) | (1,579) |
Amortization of loss on terminated hedges | 3,268 | 2,810 |
Unrealized foreign exchange (gains) losses | (210) | 2,193 |
Loss on termination of lease, net | 427 | — |
Gain on disposal of assets | (266) | (1,399) |
Adjusted EBITDA | 266,825 | 153,097 |
Normalizing items: | ||
Add back: | ||
Inventory write-down | — | 22,725 |
Severance charges | — | 8,170 |
Write-off of prepaid advertising leads | — | 2,131 |
One-time retention and recognition payments for key dealership employees | — | 1,742 |
One-time write-off of accounts receivable and onerous provisions | — | 5,633 |
Other charges including true-up of accruals and other liabilities | — | 4,686 |
One-time employee recognition payments | — | 309 |
Operational incentive payments | — | 851 |
Less: | ||
Canada Emergency Wage Subsidy | (1,487) | (38,165) |
Canada Emergency Rent Subsidy | (136) | (400) |
Forgiveness of PPP loans | (1,330) | (5,398) |
Normalized Adjusted EBITDA | 263,872 | 155,381 |
Pro forma items had the acquisitions occurred on | ||
Net income for the period | 5,481 | 2,153 |
Add back: | ||
Income tax expense | 1,769 | 695 |
Depreciation of property and equipment | 1,262 | 504 |
Interest on long-term indebtedness | 3,966 | 1,732 |
Depreciation of right of use assets | 2,278 | 946 |
Lease liability interest | 3,738 | 1,498 |
Pro Forma Adjusted EBITDA | 285,319 | 160,625 |
Pro Forma Normalized Adjusted EBITDA | 282,366 | 162,909 |
Quarter-to-Date Adjusted EBITDA Margin
The following table illustrates adjusted EBITDA margin for the three-month periods ended
2022 | 2021 | |
Period from | ||
Adjusted EBITDA | 62,196 | 47,234 |
Revenue | 1,342,438 | 969,824 |
Adjusted EBITDA Margin | 4.6% | 4.9% |
Quarter-to-Date Normalized Adjusted EBITDA Margin
The following table illustrates normalized adjusted EBITDA margin for the three-month periods ended
2022 | 2021 | |
Period from | ||
Normalized Adjusted EBITDA | 62,196 | 38,735 |
Revenue | 1,342,438 | 969,824 |
Normalized Adjusted EBITDA Margin | 4.6% | 4.0% |
Quarter-to-Date Adjusted EBITDA Margin on a Pre-IFRS 16 basis
The following table illustrates adjusted EBITDA margin on a pre-IFRS 16 basis for the three-month periods ended
2022 | 2021 | |
Period from | ||
Adjusted EBITDA on a pre-IFRS 16 basis | 49,196 | 36,100 |
Revenue | 1,342,438 | 969,824 |
Adjusted EBITDA Margin on a Pre-IFRS 16 basis | 3.7% | 3.7% |
Quarter-to-Date Adjusted EBITDA on a Pre-IFRS 16 Basis Reconciliation
The following table illustrates segmented adjusted EBITDA on a pre-IFRS 16 basis, for the three-month periods ended
Three Months Ended | Three Months Ended | ||||||
Total | Total | ||||||
Adjusted EBITDA | 53,373 | 8,823 | 62,196 | 43,194 | 4,040 | 47,234 | |
Rental expense | (11,616) | (2,160) | (13,776) | (9,921) | (2,182) | (12,103) | |
FMV rent adjustment | — | 1,040 | 1,040 | — | 1,056 | 1,056 | |
Step lease adjustment | (252) | (12) | (264) | (87) | — | (87) | |
Adjusted EBITDA on a pre-IFRS 16 basis | 41,505 | 7,691 | 49,196 | 33,186 | 2,914 | 36,100 |
Free Cash Flow
The following table illustrates free cash flow for the last eight consecutive quarters.
Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |
Cash provided by operating activities | 7,279 | 10,153 | 13,721 | 68,604 | 20,506 | 20,447 | 54,366 | 54,114 |
Deduct: | ||||||||
Purchase of non-growth property and equipment | (1,427) | (2,550) | (1,349) | (801) | (1,115) | (1,207) | (922) | (1,557) |
Free cash flow | 5,852 | 7,603 | 12,372 | 67,803 | 19,391 | 19,240 | 53,444 | 52,557 |
Free cash flow - TTM | 93,630 | 107,169 | 118,806 | 159,878 | 144,632 | 131,396 | 177,981 | 179,325 |
Net Indebtedness and Net Indebtedness Leverage Ratio Reconciliation
The following table illustrates the Company's net indebtedness and net indebtedness leverage ratio as at
$ | $ | |
Syndicated Credit Facility - Revolving Credit | 13,886 | 63,842 |
Senior unsecured notes (including embedded derivative asset) | 344,120 | 221,965 |
Mortgage and other debt | 501 | 101 |
Total indebtedness | 358,507 | 285,908 |
Add back: | ||
Embedded derivative asset | — | 29,306 |
Indebtedness for net indebtedness purpose | 358,507 | 315,214 |
Cash and cash equivalents | (109,753) | (102,480) |
Net indebtedness | 248,754 | 212,734 |
Adjusted EBITDA pre-IFRS 16 - trailing twelve months | 219,680 | 206,584 |
Net indebtedness leverage ratio | 1.1x | 1.0x |
Conference Call
A conference call to discuss the results for the three months ended
This conference call will also be webcast live over the internet and can be accessed by all interested parties at the following URL: https://investors.autocan.ca/event/2022-q1-conference-call/
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Forward Looking Statements
Certain statements contained in this press release are forward-looking statements and information (collectively "forward-looking statements", including "with respect to", "among other things", "future performance", "expense reductions" and the "Go Forward Plan"), 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", "shall" 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 press release.
The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at 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.
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