- Revenue was
$1,195.8 million as compared to$876.1 million in the prior year, an increase of 36.5% and the highest fourth quarter revenue reported in the Company's history - Net income for the period was
$69.4 million versus$24.3 million in the prior year and includes recovery of non-financial assets of$39.8 million in Q4 2021 and$11.2 million in Q4 2020 - Net income margin1 was 5.8% versus 2.8% in the prior year, an increase of 3.0 percentage points
- Adjusted EBITDA2 was
$65.9 million versus$40.5 million in the prior year, an increase of 62.8% - Adjusted EBITDA margin2 was 5.5% versus 4.6% in the prior year, an increase of 0.9 percentage points
- Diluted earnings per share was
$2.38 , an increase of$1.57 from$0.81 in the prior year. - Indebtedness of
$285.9 million at the end of Q4 2021 compares to$197.2 million at the end of Q4 2020 - Net indebtedness2 of
$212.7 million at the end of Q4 2021 compares to$89.5 million at the end of Q4 2020
"Our operations delivered yet another record fourth quarter, reflecting the fundamental strength and resiliency of our business model," said
"We also significantly advanced our acquisition strategy in the fourth quarter with the recent
"Looking ahead in 2022, we will continue to build on our positive momentum and focus on strategic growth initiatives to drive industry-leading performance and enhance shareholder returns, regardless of changing market conditions. We remain well positioned to continue to execute on our acquisition strategy in the coming quarters with several dealerships representing over
In addition,
"I would like to thank Michael in his role as President of Canadian Operations, for his dedicated service and substantial contributions to
"The
2021 Fourth Quarter Key Highlights and Recent Developments
All comparisons presented below are between the three-month period ended
Executive Overview
The momentum generated by the Company's previous three quarters carried over into the record-setting fourth quarter of 2021 as revenue reached
Net income for the period was
Adjusted EBITDA2 for the period was
Gross profit increased by
Contributing to our fourth quarter, 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 fourth 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 2022 or early 2023. Compensating for reduced new vehicle inventory supply, we doubled our used vehicle inventory position to
Net indebtedness2 increased by
Had all of the acquisitions completed in fiscal 2021 occurred at
The Company remains well-positioned to continue to execute on its acquisition strategy in the coming quarters. We continue to develop a transaction pipeline with a number of dealerships currently being evaluated. We currently have approximately
Our performance, both in
1 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 year ended |
2 See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
Consolidated AutoCanada Highlights
RECORD SETTING FOURTH QUARTER
As a result of the execution of our complete business model,
For the three-month period ended
- Revenue was
$1,195.8 million , an increase of$319.7 million or 36.5% - Total vehicles1 sold were 20,296, an increase of 3,320 units or 19.6%
- Used retail vehicles1 sold increased by 4,504 or 61.0%
- Net income for the period was
$69.4 million (or$2.38 per diluted share) versus$24.3 million (or$0.81 per diluted share) - Recovery of non-financial assets of
$39.8 million was recognized in Q4 2021 and$11.2 million was recognized in Q4 2020 - Loss on redemption liabilities of
$(14.1) million was recognized in Q4 2021 and a gain of$2.1 million was recognized in Q4 2020 - Unrealized fair value gain on embedded derivative of
$24.8 million was recognized in Q4 2021 - Adjusted EBITDA2 increased by 62.8% to
$65.9 million , an increase of$25.4 million - Net indebtedness2 of
$212.7 million reflected an increase of$182.9 million from the end of Q3 2021 and an increase of$123.2 million from the end of the prior year
Canadian Operations Highlights
USED RETAIL UNIT1 SALES INCREASED BY 3,002 UNITS OR 44.6%
We outperformed the Canadian market, as same store new retail unit1 sales decreased by (11.6)% as compared to the market decrease of (11.9)%, for same store brands represented by
Our used vehicle and F&I segments were key drivers of the record earnings in Q4 2021. Used vehicle gross profit percentage1 increased to 7.8% as compared to 7.4% in the prior year. F&I gross profit per retail unit average1 increased to
Current period results include the acquisitions of PG Klassic Autobody collision centre in Q2 2021,
For the three-month period ended
- Revenue was
$998.8 million , an increase of 28.3% - Used retail vehicles1 sold increased by 3,002 or 44.6%
- Average TTM Canadian used retail unit sales per dealership per month1, excluding Used Digital Retail Division dealerships, improved to 52, as compared to 47 in the prior year
- Used to new retail units ratio1 increased to 1.45 from 0.93
- TTM used to new retail ratio1 improved to 1.43 at Q4 2021 as compared to 0.95 at Q4 2020
- F&I gross profit per retail unit average1 increased to
$3,130 , up 11.1% or$313 per unit - Net income for the period was
$62.3 million , up 145.5% from a net income of$25.4 million in 2020 - Adjusted EBITDA2 increased 40.6% to
$55.1 million , an increase of$15.9 million - Adjusted EBITDA margin2 was 5.5% as compared to 5.0% in the prior year, an increase of 0.5 ppts
1 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 year ended |
2 See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
REVENUE INCREASED BY 102% TO
As a result of the
Current period results include the acquisition of
- Revenue was
$197.0 million , an increase of 102% - Used retail vehicles1 sold increased by 1,502 units or 226%
- Net income (loss) for the period increased by
$8.2 million to$7.1 million , from$(1.0) million in 2020 - Adjusted EBITDA2 was
$10.7 million , an increase of$9.5 million from 2020
Same Store Metrics - Canadian Operations
F&I GROSS PROFIT PER RETAIL UNIT AVERAGE INCREASED TO
We outperformed the
The Company believes that it takes two years for an acquired dealership to achieve normal operating results. All same store metrics include only Canadian dealerships which have been owned for at least two full years since acquisition to support meaningful analysis. RightRide locations are included in the same stores metrics as they are an extension of the Project 50 initiative to support Canadian dealerships in reaching credit challenged customers.
- Revenue increased to
$852.9 million , an increase of 14.1% - Gross profit increased by
$39.2 million or 29.4% - Used to new retail units ratio1 increased to 1.29 from 0.93
- Used retail unit1 sales increased by 22.6%, an increase of 1,523 units
- Average annual same store used retail unit1 sales per dealership per month reached 63, as compared to 46 in the prior year
- For the thirteenth consecutive quarter of year-over-year growth, F&I gross profit per retail unit average1 increased to
$3,312 , up 18.2% or$509 per unit; gross profit increased to$48.4 million as compared to$39.1 million in the prior year, an increase of 24.0% - Parts, service and collision repair ("PS&CR") gross profit increased to
$60.2 million , an increase of 21.1%. - PS&CR repair gross profit percentage increased to 56.0% as compared to 55.0% in the prior year
1 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 year ended |
2 See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
Financing and Investing Activities and Other Recent Developments
COMPLETED ACQUISITION OF THE AUTOPOINT GROUP, ISSUED
Net indebtedness2 of
- On
October 1, 2021 , the Company acquired 100% of the shares inAirdrie Autobody Ltd. , a collision centre located inAirdrie, Alberta . - On
November 4, 2021 , the Company acquired certain franchise rights, inventories and assets to be used in the operations ofCrystal Lake Chrysler Dodge Jeep Ram Inc. , a Stellantis dealership located inCrystal Lake, Illinois and the related dealership real estate. - On
December 1, 2021 the Company acquired substantially all of the assets of eleven dealerships from theAutopoint Group located inOntario . - On
December 17, 2021 , the Company acquired the dealership real estate under development inMaple Ridge, British Columbia . - On
December 20, 2021 , the Company received approval from the TSX to commence a Normal Course Issuer Bid. As atMarch 2, 2022 , the Company repurchased and cancelled 542,401 shares under the Normal Course Issuer Bid for$20 million . - 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 , and included the addition of The Toronto-Dominion Bank to its existing syndicate of lenders which includes The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of Montreal,HSBC Bank Canada , andATB Financial . - 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.
Fourth Quarter Financial Information
The following table summarizes the Company's results for the quarter and year ended
Three Months Ended | Year Ended | ||||||
Consolidated Operational Data | 2021 | 2020 | % Change | 2021 | 2020 | % Change | |
Revenue | 1,195,782 | 876,121 | 36.5% | 4,653,415 | 3,329,494 | 39.8% | |
Gross profit | 228,514 | 152,737 | 49.6% | 834,183 | 547,326 | 52.4% | |
Gross profit % | 19.1% | 17.4% | 1.7 ppts | 17.9% | 16.4% | 1.5 ppts | |
Operating expenses | 170,008 | 119,442 | 42.3% | 612,609 | 461,663 | 32.7% | |
Operating profit | 99,410 | 46,664 | 113.0% | 270,068 | 70,212 | 284.6% | |
Net income (loss) for the period | 69,398 | 24,320 | 185.4% | 167,199 | (6,623) | 2624.5% | |
Basic net income (loss) per share attributable to | 2.54 | 0.87 | 192.0% | 5.98 | (0.27) | 2314.8% | |
Diluted net income (loss) per share attributable to | 2.38 | 0.81 | 193.8% | 5.60 | (0.27) | 2174.1% | |
Adjusted EBITDA 2 | 65,873 | 40,472 | 62.8% | 251,863 | 112,093 | 124.7% | |
New retail vehicles1 sold (units) | 8,204 | 8,623 | (4.9)% | 35,799 | 33,188 | 7.9% | |
New fleet vehicles1 sold (units) | 199 | 964 | (79.4)% | 1,872 | 2,923 | (36.0)% | |
Total new vehicles1 sold (units) | 8,403 | 9,587 | (12.4)% | 37,671 | 36,111 | 4.3% | |
Used retail vehicles1 sold (units) | 11,893 | 7,389 | 61.0% | 48,729 | 29,862 | 63.2% | |
Total vehicles1 sold | 20,296 | 16,976 | 19.6% | 86,400 | 65,973 | 31.0% | |
Same store new retail vehicles1 sold (units) | 6,380 | 7,215 | (11.6)% | 28,762 | 28,277 | 1.7% | |
Same store new fleet vehicles1 sold (units) | 192 | 963 | (80.1)% | 1,864 | 2,919 | (36.1)% | |
Same store used retail vehicles1 sold (units) | 8,248 | 6,725 | 22.6% | 37,035 | 26,935 | 37.5% | |
Same store total vehicles1 sold | 14,820 | 14,903 | (0.6)% | 67,661 | 58,131 | 16.4% | |
Same store1 revenue | 852,913 | 747,707 | 14.1% | 3,598,793 | 2,876,957 | 25.1% | |
Same store1 gross profit | 172,663 | 133,429 | 29.4% | 675,771 | 486,961 | 38.8% | |
Same store1 gross profit % | 20.2% | 17.8% | 2.4% | 18.8% | 16.9% | 1.9% |
1 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 year ended |
2 See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
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 | Q4 2021 | Q3 2021 REVISED | Q2 2021 REVISED | Q1 2021 REVISED | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | |
Income Statement Data | 4 | ||||||||
New vehicles4 | 7 | 467,085 | 498,142 | 547,593 | 451,061 | 466,468 | 544,415 | 381,427 | 341,582 |
Used vehicles4 | 7 | 524,043 | 518,791 | 539,785 | 354,922 | 257,301 | 309,193 | 215,032 | 229,355 |
Parts, service and collision repair4 | 7 | 136,800 | 116,953 | 122,459 | 108,427 | 105,362 | 111,739 | 90,417 | 102,453 |
Finance, insurance and other4 | 7 | 67,854 | 72,868 | 71,218 | 55,414 | 46,990 | 51,753 | 40,571 | 35,436 |
Revenue | 1,195,782 | 1,206,754 | 1,281,055 | 969,824 | 876,121 | 1,017,100 | 727,447 | 708,826 | |
New vehicles4 | 7 | 50,632 | 46,525 | 44,619 | 34,639 | 31,199 | 42,230 | 10,634 | 24,267 |
Used vehicles4 | 7 | 38,118 | 39,669 | 40,269 | 23,206 | 19,787 | 29,819 | 4,224 | 10,173 |
Parts, service and collision repair4 | 7 | 75,917 | 64,748 | 68,115 | 57,874 | 58,109 | 59,056 | 45,836 | 49,969 |
Finance, insurance and other4 | 7 | 63,847 | 69,250 | 64,838 | 51,917 | 43,642 | 48,307 | 37,185 | 32,889 |
Gross Profit | 228,514 | 220,192 | 217,841 | 167,636 | 152,737 | 179,412 | 97,879 | 117,298 | |
Gross profit % | 19.1% | 18.2% | 17.0% | 17.3% | 17.4% | 17.6% | 13.5% | 16.5% | |
Operating expenses | 170,008 | 159,880 | 154,773 | 127,948 | 119,442 | 125,785 | 99,736 | 116,700 | |
Operating expenses as a % of gross profit | 74.4% | 72.6% | 71.0% | 76.3% | 78.2% | 70.1% | 101.9% | 99.5% | |
Operating profit (loss) | 99,410 | 62,841 | 66,153 | 41,664 | 46,664 | 56,884 | (4,388) | (28,948) | |
(Recoveries) impairment of non-financial assets | (39,846) | — | — | — | (11,248) | — | 3,910 | 31,545 | |
Net income (loss) | 69,398 | 38,769 | 37,698 | 21,334 | 24,320 | 35,962 | (20,052) | (46,853) | |
Basic net income (loss) per share attributable to | 2.54 | 1.37 | 1.33 | 0.77 | 0.87 | 1.29 | (0.72) | (1.70) | |
Diluted net income (loss) per share attributable to | 2.38 | 1.27 | 1.23 | 0.71 | 0.81 | 1.23 | (0.72) | (1.70) | |
Dividends declared per share | — | — | — | — | — | — | — | 0.10 | |
Adjusted EBITDA 2 | 2 | 65,873 | 68,265 | 70,491 | 47,234 | 40,472 | 61,054 | 4,828 | 5,739 |
Free cash flow 2 | 2 | 7,603 | 12,372 | 67,803 | 19,391 | 19,240 | 53,444 | 52,557 | 6,155 |
Operating Data | 4 | ||||||||
New retail vehicles1 sold | 3 | 8,204 | 9,255 | 10,107 | 8,233 | 8,623 | 10,750 | 7,526 | 6,289 |
New fleet vehicles1 sold | 3 | 199 | 358 | 575 | 740 | 964 | 582 | 340 | 1,037 |
Total new vehicles1 sold | 3 | 8,403 | 9,613 | 10,682 | 8,973 | 9,587 | 11,332 | 7,866 | 7,326 |
Used retail vehicles1 sold | 3 | 11,893 | 13,831 | 13,271 | 9,734 | 7,389 | 8,836 | 7,228 | 6,409 |
Total vehicles sold1 | 3 | 20,296 | 23,444 | 23,953 | 18,707 | 16,976 | 20,168 | 15,094 | 13,735 |
# of service and collision repair orders completed | 3, 5 | 232,373 | 199,870 | 214,149 | 182,869 | 203,086 | 195,004 | 172,956 | 185,452 |
# of dealerships at period end | 6 | 80 | 68 | 67 | 67 | 67 | 62 | 63 | 63 |
# of same store dealerships | 1 | 49 | 49 | 49 | 49 | 47 | 47 | 48 | 48 |
# of service bays at period end | 1,303 | 1,108 | 1,098 | 1,098 | 1,098 | 1,039 | 1,044 | 1,044 | |
Same stores1 revenue growth | 1 | 14.1% | 15.0% | 54.2% | 27.8% | 6.3% | (1.1)% | (22.4)% | 0.8% |
Same stores1 gross profit growth | 1 | 29.4% | 18.6% | 102.5% | 35.0% | 7.7% | 17.1% | (33.9)% | (2.1)% |
1 This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15 of the Company's MD&A for the year ended |
2 See "NON-GAAP AND OTHER FINANCIAL MEASURES" below. |
3 See the Company's MD&A for the quarter and year 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 |
The following tables summarize the results for the quarter and year ended
Same Store Revenue and Vehicles Sold1
Three Months Ended | Year Ended | ||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||
Revenue source | |||||||
New vehicles - retail | 359,400 | 367,151 | (2.1)% | 1,533,513 | 1,406,109 | 9.1% | |
New vehicles - fleet | 11,958 | 40,203 | (70.3)% | 91,826 | 122,806 | (25.2)% | |
Total new vehicles | 371,358 | 407,354 | (8.8)% | 1,625,339 | 1,528,915 | 6.3% | |
Used vehicles - retail | 267,151 | 176,013 | 51.8% | 1,110,137 | 678,742 | 63.6% | |
Used vehicles - wholesale | 54,796 | 31,683 | 73.0% | 241,861 | 149,608 | 61.7% | |
Total used vehicles | 321,947 | 207,696 | 55.0% | 1,351,998 | 828,350 | 63.2% | |
Parts, service and collision repair | 107,491 | 90,496 | 18.8% | 399,918 | 360,197 | 11.0% | |
Finance, insurance and other | 52,117 | 42,161 | 23.6% | 221,538 | 159,495 | 38.9% | |
Total | 852,913 | 747,707 | 14.1% | 3,598,793 | 2,876,957 | 25.1% | |
New retail vehicles sold (units) | 6,380 | 7,215 | (11.6)% | 28,762 | 28,277 | 1.7% | |
New fleet vehicles sold (units) | 192 | 963 | (80.1)% | 1,864 | 2,919 | (36.1)% | |
Total new vehicles sold (units) | 6,572 | 8,178 | (19.6)% | 30,626 | 31,196 | (1.8)% | |
Used retail vehicles sold (units) | 8,248 | 6,725 | 22.6% | 37,035 | 26,935 | 37.5% | |
Total vehicles sold (units) | 14,820 | 14,903 | (0.6)% | 67,661 | 58,131 | 16.4% | |
Total vehicles retailed (units) | 14,628 | 13,940 | 4.9% | 65,797 | 55,212 | 19.2% |
Same Store Gross Profit and Profit Percentage1
Three Months Ended | ||||||
Gross Profit | Gross Profit % | |||||
2021 | 2020 | % Change | 2021 | 2020 | ||
Revenue source | ||||||
New vehicles - retail | 35,684 | 28,426 | 25.5% | 9.9% | 7.7% | |
New vehicles - fleet | 247 | 406 | (39.2)% | 2.1% | 1.0% | |
Total new vehicles | 35,931 | 28,832 | 24.6% | 9.7% | 7.1% | |
Used vehicles - retail | 26,079 | 14,370 | 81.5% | 9.8% | 8.2% | |
Used vehicles - wholesale | 1,972 | 1,393 | 41.6% | 3.6% | 4.4% | |
Total used vehicles | 28,051 | 15,763 | 78.0% | 8.7% | 7.6% | |
Parts, service and collision repair | 60,240 | 49,762 | 21.1% | 56.0% | 55.0% | |
Finance, insurance and other | 48,441 | 39,072 | 24.0% | 92.9% | 92.7% | |
Total | 172,663 | 133,429 | 29.4% | 20.2% | 17.8% |
Year Ended | ||||||
Gross Profit | Gross Profit % | |||||
2021 | 2020 | % Change | 2021 | 2020 | ||
Revenue source | ||||||
New vehicles - retail | 140,962 | 103,062 | 36.8% | 9.2% | 7.3% | |
New vehicles - fleet | (510) | 1,015 | (150.2)% | (0.6)% | 0.8% | |
Total new vehicles | 140,452 | 104,077 | 35.0% | 8.6% | 6.8% | |
Used vehicles - retail | 94,767 | 43,581 | 117.5% | 8.5% | 6.4% | |
Used vehicles - wholesale | 14,021 | 6,772 | 107.0% | 5.8% | 4.5% | |
Total used vehicles | 108,788 | 50,353 | 116.1% | 8.0% | 6.1% | |
Parts, service and collision repair | 221,888 | 185,015 | 19.9% | 55.5% | 51.4% | |
Finance, insurance and other | 204,643 | 147,516 | 38.7% | 92.4% | 92.5% | |
Total | 675,771 | 486,961 | 38.8% | 18.8% | 16.9% |
1 This press release contains "SUPPLEMENTARY FINANCIAL MEASURES". See Section 15. NON-GAAP AND OTHER FINANCIAL MEASURES of the Company's Management's Discussion & Analysis for the year ended |
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 AND OTHER FINANCIAL 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, 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. In addition, at the onset of the pandemic and related government lockdowns, the Company used the opportunity to complete a comprehensive review of all aspects of the business, in essence re-engineering the business model where applicable. As a result of the impacts of COVID-19 and the accompanying initial review, the Company recognized income, subsidies, write-downs, provisions, and non-recurring charges for impacts related to the pandemic.
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"), expected to recur until the Company is no longer eligible for the subsidy;- One-time forgiveness of Small Business Association Paycheck Protection Program ("PPP") loans;
- One-time inventory write-downs for decreased demand for new and used vehicle inventory;
- One-time severance charges related to the reduction in the Company's workforce;
- One-time retention and recognition payments for key dealership employees;
- One-time write-off of prepaid advertising leads provisions for decreased new and used vehicles demand;
- One-time write-off of aged accounts receivable and onerous provisions; and
- True-up of accruals and other liabilities as a result of the COVID-19 related comprehensive review.
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
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. The Company believes 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, Normalized Adjusted EBITDA, Pro Forma Adjusted EBITDA, and Pro Forma Normalized Adjusted EBITDA Reconciliation
The following table illustrates adjusted EBITDA and normalized adjusted EBITDA for the three-month periods ended
2021 | 2020 | |
Period from | ||
Net income for the period | 69,398 | 24,320 |
Add back: | ||
Income tax expense | 24,463 | 8,030 |
Depreciation of property and equipment | 4,830 | 4,823 |
Interest on long-term indebtedness | 6,161 | 3,964 |
Depreciation of right of use assets | 7,465 | 6,037 |
Lease liability interest | 6,520 | 5,256 |
118,837 | 52,430 | |
Add back: | ||
Recoveries of non-financial assets, net | (39,846) | (11,248) |
Share-based compensation (Used Digital Retail Division) | — | 435 |
Loss (gain) on redemption liabilities | 14,116 | (2,108) |
Unrealized fair value changes in derivative instruments | (2,853) | (841) |
Amortization of loss on terminated hedges | 817 | 817 |
Unrealized foreign exchange losses | 25 | 442 |
Unrealized fair value changes on embedded derivative | (24,778) | — |
Gain on termination of lease | (492) | — |
Loss on disposal of assets, net | 47 | 545 |
Adjusted EBITDA | 65,873 | 40,472 |
Normalizing items: | ||
Add back: | ||
Inventory write-down | — | 1,841 |
One-time employee recognition payments | — | 309 |
Operational incentive payments | — | 851 |
Less: | ||
— | (2,789) | |
— | (200) | |
Normalized Adjusted EBITDA | 65,873 | 40,484 |
The following table illustrates adjusted EBITDA, normalized adjusted EBITDA, pro forma adjusted EBITDA, and pro forma normalized adjusted EBITDA for the year ended
2021 | 2020 | |
Period from | ||
Net income (loss) for the period | 167,199 | (6,623) |
Add back: | ||
Income tax expense | 54,021 | 5,418 |
Depreciation of property and equipment | 17,272 | 17,372 |
Interest on long-term indebtedness | 21,900 | 16,200 |
Depreciation of right of use assets | 26,420 | 24,759 |
Lease liability interest | 23,062 | 22,189 |
309,874 | 79,315 | |
Add back: | ||
(Recoveries) impairment of non-financial assets, net | (39,846) | 24,207 |
Share-based compensation (Used Digital Retail Division) | — | 435 |
Loss (gain) on redemption liabilities | 14,116 | (762) |
Loss on extinguishment of debt | 1,128 | 4,002 |
Unrealized fair value changes in derivative instruments | (7,873) | 2,809 |
Amortization of loss on terminated hedges | 3,268 | 2,308 |
Unrealized foreign exchange losses | 115 | 1,153 |
Unrealized fair value changes on embedded derivative | (29,306) | — |
Loss on termination of lease, net | 427 | — |
Gain on disposal of assets, net | (40) | (1,374) |
Adjusted EBITDA | 251,863 | 112,093 |
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: | ||
(4,388) | (35,264) | |
(336) | (200) | |
Forgiveness of PPP loans | (6,728) | — |
Normalized Adjusted EBITDA | 240,411 | 122,876 |
Pro forma items had the acquisitions occurred on | ||
Net income (loss) for the period | 7,634 | — |
Add back: | ||
Income tax expense (recovery) | 2,464 | — |
Depreciation of property and equipment | 1,765 | — |
Interest on long-term indebtedness | 5,698 | — |
Depreciation of right of use assets | 3,224 | — |
Lease liability interest | 5,235 | — |
Pro Forma Adjusted EBITDA | 277,883 | 112,093 |
Pro Forma Normalized Adjusted EBITDA | 266,431 | 122,876 |
See the Company's Management's Discussion and Analysis for the year ended
Segmented Adjusted EBITDA and Segmented Normalized Adjusted EBITDA Reconciliation
The following table illustrates segmented adjusted EBITDA and normalized adjusted EBITDA for the three-month period ended
Three Months Ended | Three Months Ended | ||||||
Total | Total | ||||||
Period from | |||||||
Net income (loss) for the period | 62,253 | 7,145 | 69,398 | 25,355 | (1,035) | 24,320 | |
Add back: | |||||||
Income tax expense (recovery) | 24,144 | 319 | 24,463 | 8,155 | (125) | 8,030 | |
Depreciation of property and equipment | 4,467 | 363 | 4,830 | 4,494 | 329 | 4,823 | |
Interest on long-term indebtedness | 4,818 | 1,343 | 6,161 | 3,739 | 225 | 3,964 | |
Depreciation of right of use assets | 6,796 | 669 | 7,465 | 5,387 | 650 | 6,037 | |
Lease liability interest | 5,630 | 890 | 6,520 | 4,303 | 953 | 5,256 | |
108,108 | 10,729 | 118,837 | 51,433 | 997 | 52,430 | ||
Add back: | |||||||
(Recoveries) of non-financial assets, net | (39,846) | — | (39,846) | (11,248) | — | (11,248) | |
Share-based compensation (Used Digital Retail Division) | — | — | — | 435 | — | 435 | |
Loss (gain) on redemption liabilities | 14,116 | — | 14,116 | (2,108) | — | (2,108) | |
Unrealized fair value changes in derivative instruments | (2,853) | — | (2,853) | (841) | — | (841) | |
Amortization of loss on terminated hedges | 817 | — | 817 | 764 | 53 | 817 | |
Unrealized foreign exchange losses | 25 | — | 25 | 442 | — | 442 | |
Unrealized fair value changes on embedded derivative | (24,778) | — | (24,778) | — | — | — | |
Gain on termination of lease | (492) | — | (492) | — | — | — | |
Loss on disposal of assets, net | 47 | — | 47 | 352 | 193 | 545 | |
Adjusted EBITDA | 55,144 | 10,729 | 65,873 | 39,229 | 1,243 | 40,472 | |
Normalizing Items: | |||||||
Add back: | |||||||
Inventory write-down | — | — | — | 1,841 | — | 1,841 | |
One-time employee recognition payments | — | — | — | 309 | — | 309 | |
Operational incentive payments | — | — | — | 851 | — | 851 | |
Less: | |||||||
— | — | — | (2,789) | — | (2,789) | ||
— | — | — | (200) | — | (200) | ||
Normalized Adjusted EBITDA | 55,144 | 10,729 | 65,873 | 39,241 | 1,243 | 40,484 |
The following table illustrates segmented adjusted EBITDA and normalized adjusted EBITDA for the year ended
Year Ended | Year Ended | ||||||
Total | Total | ||||||
Period from | |||||||
Net income (loss) for the period | 150,104 | 17,095 | 167,199 | 13,343 | (19,966) | (6,623) | |
Add back: | |||||||
Income tax expense (recovery) | 53,702 | 319 | 54,021 | 5,543 | (125) | 5,418 | |
Depreciation of property and equipment | 15,995 | 1,277 | 17,272 | 16,151 | 1,221 | 17,372 | |
Interest on long-term indebtedness | 15,631 | 6,269 | 21,900 | 13,350 | 2,850 | 16,200 | |
Depreciation of right of use assets | 23,759 | 2,661 | 26,420 | 22,405 | 2,354 | 24,759 | |
Lease liability interest | 19,503 | 3,559 | 23,062 | 18,481 | 3,708 | 22,189 | |
278,694 | 31,180 | 309,874 | 89,273 | (9,958) | 79,315 | ||
Add back: | |||||||
(Recoveries) impairment of non-financial assets, net | (39,846) | — | (39,846) | 15,312 | 8,895 | 24,207 | |
Share-based compensation (Used Digital Retail Division) | — | — | — | 435 | — | 435 | |
Loss (gain) on redemption liabilities | 14,116 | — | 14,116 | (762) | — | (762) | |
Loss on extinguishment of debt | 1,128 | — | 1,128 | 4,002 | — | 4,002 | |
Unrealized fair value changes in derivative instruments | (7,873) | — | (7,873) | 2,809 | — | 2,809 | |
Amortization of loss on terminated hedges | 3,268 | — | 3,268 | 1,993 | 315 | 2,308 | |
Unrealized foreign exchange losses | 115 | — | 115 | 1,153 | — | 1,153 | |
Unrealized fair value changes on embedded derivative | (29,306) | — | (29,306) | — | — | — | |
Loss on termination of lease, net | 427 | — | 427 | — | — | — | |
(Gain) loss on disposal of assets, net | (40) | — | (40) | (1,567) | 193 | (1,374) | |
Adjusted EBITDA | 220,683 | 31,180 | 251,863 | 112,648 | (555) | 112,093 | |
Normalizing Items: | |||||||
Add back: | |||||||
Inventory write-down | — | — | — | 19,735 | 2,990 | 22,725 | |
Severance charges | — | — | — | 8,170 | — | 8,170 | |
Write-off of prepaid advertising leads | — | — | — | 2,131 | — | 2,131 | |
One-time retention and recognition payments for key dealership employees | — | — | — | 1,742 | — | 1,742 | |
One-time write-off of accounts receivable and onerous provisions | — | — | — | 5,633 | — | 5,633 | |
Other charges including true-up of accruals and other liabilities | — | — | — | 3,240 | 1,446 | 4,686 | |
One-time employee recognition payments | — | — | — | 309 | — | 309 | |
Operational incentive payments | — | — | — | 851 | — | 851 | |
Less: | |||||||
(4,388) | — | (4,388) | (35,264) | — | (35,264) | ||
(336) | — | (336) | (200) | — | (200) | ||
Forgiveness of PPP loans | — | (6,728) | (6,728) | — | — | — | |
Normalized Adjusted EBITDA | 215,959 | 24,452 | 240,411 | 118,995 | 3,881 | 122,876 |
Quarter-to-Date Adjusted EBITDA Margin
The following table illustrates adjusted EBITDA margin for the three-month periods ended
2021 | 2020 | |
Period from | ||
Adjusted EBITDA | 65,873 | 40,472 |
Revenue | 1,195,782 | 876,121 |
Adjusted EBITDA Margin | 5.5% | 4.6% |
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
2021 | 2020 | |
Period from | ||
Adjusted EBITDA on a pre-IFRS 16 basis | 53,464 | 30,559 |
Revenue | 1,195,782 | 876,121 |
Adjusted EBITDA Margin on a Pre-IFRS 16 basis | 4.5% | 3.5% |
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 | 55,144 | 10,729 | 65,873 | 39,229 | 1,243 | 40,472 | |
Rental expense 1 | (11,040) | (2,149) | (13,189) | (8,522) | (2,210) | (10,732) | |
FMV rent adjustment 1 | — | 1,044 | 1,044 | — | 1,103 | 1,103 | |
Step lease adjustment 1 | (252) | (12) | (264) | (225) | (59) | (284) | |
Adjusted EBITDA on a pre-IFRS 16 basis | 43,852 | 9,612 | 53,464 | 30,482 | 77 | 30,559 |
See the Company's Management's Discussion and Analysis for the quarter and year ended |
Year-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 year ended
Year Ended | Year Ended | ||||||
Total | Total | ||||||
Adjusted EBITDA | 220,683 | 31,180 | 251,863 | 112,648 | (555) | 112,093 | |
Rental expense 1 | (40,230) | (8,597) | (48,827) | (36,067) | (8,263) | (44,330) | |
FMV rent adjustment 1 | — | 4,181 | 4,181 | — | 4,433 | 4,433 | |
Step lease adjustment 1 | (722) | 89 | (633) | (1,013) | (244) | (1,257) | |
Adjusted EBITDA on a pre-IFRS 16 basis | 179,731 | 26,853 | 206,584 | 75,568 | (4,629) | 70,939 |
See the Company's Management's Discussion and Analysis for the quarter and year ended |
Free Cash Flow
The following table illustrates free cash flow for the last eight consecutive quarters:
Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | |
Cash provided by operating activities | 10,153 | 13,721 | 68,604 | 20,506 | 20,447 | 54,366 | 54,114 | 7,350 |
Deduct: | ||||||||
Purchase of non-growth property and equipment | (2,550) | (1,349) | (801) | (1,115) | (1,207) | (922) | (1,557) | (1,195) |
Free cash flow | 7,603 | 12,372 | 67,803 | 19,391 | 19,240 | 53,444 | 52,557 | 6,155 |
Free cash flow - TTM | 107,169 | 118,806 | 159,878 | 144,632 | 131,396 | 177,981 | 179,325 | 104,987 |
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 | 63,842 | 68,827 |
Senior unsecured notes (including embedded derivative asset) | 221,965 | 120,716 |
Mortgage and other debt | 101 | 7,688 |
Indebtedness as reported | 285,908 | 197,231 |
Add back: | ||
Embedded derivative asset | 29,306 | — |
Indebtedness for net indebtedness purpose | 315,214 | 197,231 |
Cash and cash equivalents | (102,480) | (107,704) |
Net indebtedness | 212,734 | 89,527 |
Adjusted EBITDA - pre-IFRS 16 - trailing twelve months | 206,584 | 70,939 |
Net indebtedness leverage ratio | 1.0x | 1.3x |
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/2021-q4-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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