AutoCanada Inc. announces strong results for the quarter ended June 30, 2014: - San Diego, California News Station - KFMB Channel 8 - cbs8.com

AutoCanada Inc. announces strong results for the quarter ended June 30, 2014:

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SOURCE AutoCanada Inc.

A conference call to discuss the results for the reporting period ended June 30, 2014 will be held on August 8, 2014 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time).  To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call.  A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca.

EDMONTON, Aug. 7, 2014 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended June 30, 2014.

2014 Second Quarter Highlights

  • Revenue increased 19.8% or $76.9 million to $465.3 million
  • Gross profit increased by 20.4% or $13.2 million to $78.0 million
  • Adjusted EBITDA increased by 33.5% or $5.6 million to $22.3 million
  • EBITDA increased 31.5% to $21.7 million from $16.5 million in Q2 of 2013
  • Pre-tax earnings increased by $2.5 million or 16.9% to $17.3 million
  • Adjusted net earnings increased by $2.3 million or 20.9% to $13.3 million
  • Net earnings increased by $2.0 million or 18.5% to $12.8 million
  • Adjusted net earnings per share increased by 12.5% to $0.61 from $0.54
  • Earnings per share increased by 10.5% to $0.59 from $0.53
  • Same store revenue increased by 4.1%
  • Same store gross profit increased by 5.4%
  • Same store new vehicle retail revenue increased by 8.4%
  • Same store used vehicles retail revenue increased by 9.9%
  • Same store parts, service and collision repair revenue increased by 8.2%

 

In commenting on the second quarter of 2014, Pat Priestner, Chairman and Chief Executive Officer of AutoCanada Inc., stated that, "The second quarter of 2014 was productive, the Company having completed seven dealership acquisitions, as well as two additional acquisitions in early July.  We are pleased with the quality of dealerships we have acquired, which includes the Hyatt Group of Dealerships in Calgary, our largest acquisition to date; two new brands to our portfolio, being BMW and MINI, through our acquisition of BMW Canbec and MINI Mont Royal, located in Montreal, Quebec, which is also a new market for the Company; and an expansion of our Saskatoon platform with the addition of Dodge City; one of the highest volume Chrysler Dodge Jeep Ram stores in the prairies." 

Mr. Priestner further added, "Our experience over the past 18 months has made it clear to us that dealership succession has become a key issue in the Canadian automotive retail market, and, as a result, the Company increased its acquisition guidance in June of 2014. As the deal pipeline remains strong, Management maintains this guidance and is confident that, in addition to acquisitions completed to date, it shall add an additional 8 to 10 dealerships by May 31, 2015.  In order to fund the higher rate of growth, the Company successfully completed a $150 million bond offering in May, followed in early July by a $200 million equity offering providing the Company with the necessary liquidity to enable it to execute upon this increased guidance, which we believe will create substantial shareholder value in the future."

Commenting on the results for the second quarter of 2014, Mr. Priestner stated, "In addition to the acquisition activity, Management is pleased with second quarter operating performance.  In addition to revenues, gross profit and earnings each benefitting from our acquisitions over the past 12 months, Management is pleased to report further improved same store gross profit in all four operating departments, a testament to the hard work and commitment of our dealer principals, dealership staff, and our head office dealer support services team."

Regarding the increase in dividend, Mr. Priestner commented, "Since our IPO in 2006, the Company has not changed its philosophy of returning profits to our shareholders as a means of enhancing shareholder value.  With the continued strength of the Canadian auto retail market generally and the Company's strong performance, the Board decided to raise the quarterly dividend for the fourteenth consecutive quarter to $0.24 per share or $0.96 per share on an annualized basis."

Second Quarter 2014 Highlights

  • The Company generated net earnings of $12.8 million or earnings per share of $0.588 versus earnings per share of $0.532 in the second quarter of 2013.  Pre-tax earnings increased by $2.5 million to $17.3 million in the second quarter of 2014 as compared to $14.8 million in the same period in 2013.
  • Same store revenue increased by 4.1% in the second quarter of 2014, compared to the same quarter in 2013.  Same store gross profit increased by 5.4% in the second quarter of 2014, compared to the same quarter in 2013.
  • Revenue from existing and new dealerships increased 19.8% to $465.3 million in the second quarter of 2014 from $388.4 million in the same quarter in 2013.
  • Gross profit from existing and new dealerships increased 20.4% to $78.0 million in the second quarter of 2014 from $64.9 million in the same quarter in 2013.
  • EBITDA increased 31.5% to $21.7 million in the second quarter of 2014 from $16.5 million in the same quarter in 2013.
  • Free cash flow decreased to $9.9 million in the second quarter of 2014 or $0.45 per share as compared $13.5 million or $0.66 per share in the first quarter of 2013.
  • Adjusted free cash flow increased to $15.5 million in the second quarter of 2014 or $0.71 per share as compared to $13.4 million or $0.66 per share in 2013.

Dividends

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, 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 2014:

(In thousands of dollars)













Total

    Record date

Payment date





Declared

Paid








$

$


February 28, 2014

March 17, 2014





4,760

4,760


May 30, 2014

June 16, 2014





5,022

5,022











 

On August 7, 2014, the Board declared a quarterly eligible dividend of $0.24 per common share on AutoCanada's outstanding Class A common shares, payable on September 15, 2014 to shareholders of record at the close of business on August 29, 2014.  The quarterly eligible dividend of $0.24 represents an annual dividend rate of $0.96 per share.  

Eligible dividend designation

For purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) (the "ITA") and any corresponding provincial and territorial tax legislation, all dividends paid by AutoCanada or any of its subsidiaries in 2010 and thereafter are designated as "eligible dividends" (as defined in 89(1) of the ITA), unless otherwise indicated.  Please consult with your own tax advisor for advice with respect to the income tax consequences to you of AutoCanada Inc. designating dividends as "eligible dividends".


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. 

 

(in thousands of dollars,
except Operating
Data and gross profit %)

Q3
2012

Q4
2012

Q1
2013

Q2
2013

Q3
2013

Q4
2013

Q1
2014

Q2
2014

Income Statement Data









New vehicles

190,065

159,026

174,279

254,261

257,222

197,097

216,524

289,918

Used vehicles

62,816

57,260

62,656

77,113

85,975

75,137

85,968

102,025

Parts, service and collision
repair

28,488

29,920

29,515

34,455

37,104

41,267

40,724

46,078

Finance, insurance and other

16,783

14,931

17,604

22,557

22,533

20,276

21,050

27,304

Revenue

298,152

261,137

284,054

388,386

402,834

333,777

364,266

465,325

New vehicles

15,556

15,527

16,039

20,792

20,694

18,326

17,813

23,822

Used vehicles

4,004

3,637

3,789

5,795

6,240

4,450

5,550

6,506

Parts, service and collision

15,133

15,418

15,232

17,586

20,114

20,822

20,593

23,373

Finance and insurance

15,436

13,788

16,082

20,678

20,669

18,738

19,517

24,342

Gross profit

50,129

48,370

51,142

64,851

67,717

62,336

63,473

78,043

Gross Profit %

16.8%

18.5%

18.0%

16.7%

16.8%

18.7%

17.4%

16.8%

Operating expenses

38,361

37,739

40,353

48,639

51,080

48,447

50,402

58,920

Operating exp. as a % of
gross profit

76.5%

78.0%

78.9%

75.0%

75.4%

77.7%

79.4%

75.5%

Finance costs - floorplan

2,745

1,859

1,675

1,888

1,903

1,887

1,965

2,146

Finance costs - long term
debt

250

257

237

218

163

388

764

1,844

Reversal of impairment of
intangibles

-

(222)

-

-

-

(746)

-

-

Income from investments in
associates

130

255

201

648

555

836

893

2,238

Income tax

2,379

2,540

2,309

3,976

3,920

3,490

2,881

4,477

Net earnings (4)

6,803

6,607

6,821

10,823

10,966

9,553

8,296

12,831

EBITDA (1)(4)

10,575

10,299

10,557

16,507

16,626

14,754

14,453

21,702

Basic earnings (loss) per
share

0.344

0.334

0.345

0.532

0.507

0.441

0.383

0.588

Diluted earnings per share

0.344

0.334

0.345

0.532

0.507

0.441

0.383

0.588

Operating Data









Vehicles (new and used)
sold

8,087

6,703

7,341

10,062

10,325

8,046

8,766

9,887

Vehicles (new and used)
sold including GM (5)

8,783

7,378

8,123

11,399

11,405

9,209

9,945

12,414

New vehicles sold including
GM (5)

6,178

4,956

5,665

8,246

8,023

6,090

6,570

8,658

New retail vehicles sold

4,410

3,982

4,118

5,487

5,986

4,932

4,773

5,980

New fleet vehicles sold

1,265

549

1,036

1,923

1,365

552

1,132

1,146

Used retail vehicles sold

2,412

2,172

2,187

2,652

2,974

2,562

2,861

2,761

Number of service & collision
repair orders completed

78,944

78,001

77,977

93,352

97,074

95,958

91,999

97,559

Absorption rate (2)

89%

85%

82%

90%

90%

90%

85%

92%

# of wholly-owned
dealerships at period end

24

24

25

27

29

28

28

34

# of wholly-owned same
store dealerships (3)

21

22

22

22

22

21

23

23

# of service bays at
period end

333

333

341

368

413

406

406

516

Same store revenue
growth (3)

8.0%

7.4%

12.9%

26.2%

19.9%

8.9%

13.0%

4.1%

Same store gross profit
growth (3)

7.9%

11.9%

16.9%

25.8%

18.5%

9.2%

8.1%

5.4%

Balance Sheet Data









Cash and cash equivalents

54,255

34,471

41,991

35,058

38,034

35,113

41,541

91,622

Restricted cash

-

10,000

10,000

10,000

-

-

-

-

Trade and other receivables

54,148

47,993

64,719

69,714

62,098

57,662

69,747

85,837

Inventories

194,438

199,085

217,663

232,837

237,421

278,062

261,768

324,077

Revolving floorplan facilities

212,840

203,525

225,387

246,325

228,526

264,178

261,263

313,752

 

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.

5

The Company has investments in General Motors dealerships that are not consolidated. This number includes 100% of vehicles sold by these dealerships in which we have less than 100% investment.



 

The following table summarizes the results for the three and six month periods ended June 30, 2014 on a same store basis by revenue source and compares these results to the same period in 2013. 


Same Store Revenue and Vehicles Sold





For the Three Months Ended

For the Six Months Ended

(in thousands of dollars)

June 30, 2014

June 30, 2013

% Change

June 30, 2014

June 30, 2013

%

Change

Revenue Source







New vehicles - retail

200,237

184,780

8.4%

353,000

325,599

8.4%

New vehicles - fleet

37,534

54,704

(31.4)%

72,892

84,038

(13.3)%

New vehicles

237,771

239,484

(0.7)%

425,892

409,637

4.0%

Used vehicles - retail

60,184

54,765

9.9%

116,503

101,083

15.3%

Used vehicles - wholesale

24,875

17,584

41.5%

43,157

32,754

31.8%

Used vehicles

85,059

72,349

17.6%

159,660

133,837

19.3%

Finance, insurance and other

22,423

21,109

6.2%

40,701

38,153

6.7%

Subtotal

345,253

332,942

3.7%

626,253

581,627

7.7%

Parts, service and collision repair

33,539

30,993

8.2%

65,596

59,425

10.4%

Total

378,792

363,935

4.1%

691,849

641,052

7.9%








New retail vehicles sold

5,390

5,159

4.5%

9,505

9,177

3.6%

New fleet vehicles sold

1,109

1,906

(41.8)%

2,153

2,933

(26.6)%

Used retail vehicles sold

2,589

2,521

2.7%

5,036

4,666

7.9%

Total

9,088

9,586

(5.2)%

16,694

16,776

(0.5)%

Total vehicles retailed

7,979

7,680

3.7%

14,541

13,843

5.0%

 

The following table summarizes the results for the three and six month periods ended June 30, 2014 on a same store basis by revenue source and compares these results to the same period in 2013.

 



Same Store Gross Profit and Gross Profit Percentage


For the Three Months Ended


Gross Profit

Gross Profit %

(in thousands of dollars)

June 30, 2014

June 30, 2013

% Change

June 30, 2014

June 30, 2013

Change

Revenue Source







New vehicles - Retail

19,859

19,363

2.6%

9.9%

10.5%

(0.6)%

New vehicles - Fleet

220

402

(45.3)%

0.6%

0.7%

(0.1)%

New vehicles

20,079

19,765

1.6%

8.4%

8.3%

0.1%

Used vehicles - Retail

4,418

4,695

(5.9)%

7.3%

8.6%

(1.3)%

Used vehicles - Wholesale

1,172

877

33.6%

4.7%

5.0%

(0.3)%

Used vehicles

5,590

5,572

0.3%

6.6%

7.7%

(1.1)%

Finance and insurance

20,508

19,338

6.1%

91.5%

91.6%

(0.1)%

Subtotal

46,177

44,675

3.4%

13.4%

13.4%

-%

Parts, service and collision

17,645

15,853

11.3%

52.6%

51.1%

1.5%

Total

63,822

60,528

5.4%

16.8%

16.6%

0.2%






For the Six Months Ended


Gross Profit

Gross Profit %

(in thousands of dollars)

June 30, 2014

June 30, 2013

% Change

June 30, 2014

June 30, 2013

Change

Revenue Source







New vehicles - Retail

35,582

34,871

2.0%

10.1%

10.1%

-%

New vehicles - Fleet

238

523

(54.5)%

0.3%

0.8%

(0.5)%

New vehicles

35,820

35,394

1.2%

8.4%

8.6%

(0.2)%

Used vehicles - Retail

8,720

8,071

8.0%

7.5%

7.8%

(0.3)%

Used vehicles - Wholesale

1,867

1,227

52.2%

4.3%

4.1%

0.2%

Used vehicles

10,587

9,298

13.9%

6.6%

6.9%

(0.3)%

Finance and insurance

37,289

34,922

6.8%

91.6%

91.5%

0.1%

Subtotal

83,696

79,614

5.1%

13.4%

13.7%

(0.3)%

Parts, service and collision

33,991

30,584

11.1%

51.8%

52.4%

(0.6)%

Total

117,687

110,198

6.8%

17.0%

17.2%

(0.2)%

 

 

AutoCanada Inc.
Condensed Interim Consolidated Statements of Comprehensive Income

(Unaudited)
(in thousands of Canadian dollars except for share and per share amounts)


Three month

period ended

June 30,

2014

$

Three month

period ended

June 30,

2013

$

          Six month

period ended 

June 30,

2014

$

          Six month

period ended

June 30,

2013

$


Revenue (Note 7)

465,325

388,386

829,592

672,441

Cost of sales (Note 8)

(387,282)

(323,535)

(688,075)

(556,448)

Gross profit

78,043

64,851

141,517

115,993

Operating expenses (Note 9)

(58,920)

(48,639)

(109,323)

(88,992)

Operating profit before other income (expense)

19,123

16,212

32,194

27,001

Gain (loss) on disposal of assets, net

(1)

(1)

37

(7)

Income from investments in associates (Note 13)

2,238

648

3,131

850

Operating profit

21,360

16,859

35,362

27,844

Finance costs (Note 10)

(4,444)

(2,338)

(7,502)

(4,501)

Finance income (Note 10)

392

278

623

588

Net income for the period before taxation

17,308

14,799

28,483

23,931

Income tax (Note 11)

4,477

3,976

7,358

6,285

Net and comprehensive income for the period

12,831

10,823

21,125

17,646











Earnings per share (Note 21)                                            





Basic                                                                                       

0.588

0.532

0.971

0.879

Diluted                                                                                    

0.588

0.532

0.971

0.879











Weighted average shares (Note 21)                                 





Basic                                                                                       

21,832,777

20,346,713

21,759,732

20,075,885

Diluted                                                                                    

21,832,777

20,346,713

21,759,732

20,075,885

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Approved on behalf of the Company:

(Signed) "Gordon R. Barefoot", Director

  (Signed) "Michael Ross", Director

 

AutoCanada Inc.
Condensed Interim Consolidated Statements of Financial Position

(Unaudited)
(in thousands of Canadian dollars)


June 30,

2014

(Unaudited)

$

December 31,

2013

(Audited)

$

ASSETS



Current assets



Cash and cash equivalents

91,622

35,113

Trade and other receivables (Note 14)

85,837

57,662

Inventories (Note 15)

324,077

278,062

Other current assets

4,535

1,603


506,071

372,440

Property and equipment (Note 16)

141,618

122,915

Investments in associates (Note 13)

67,777

13,131

Intangible assets (Note 17)

179,242

96,985

Goodwill (Note 17)

8,984

6,672

Other long-term assets

7,023

6,797


910,715

618,940

LIABILITIES



Current liabilities



Trade and other payables (Note 18)

65,565

50,469

Revolving floorplan facilities (Note 19)

313,752

264,178

Current tax payable

13,331

4,785

Current lease obligations

3,361

1,398

Current indebtedness (Note 19)

2,830

2,866


398,839

323,696

Long-term indebtedness (Note 19)

294,289

83,580

Deferred income tax

9,336

21,422


702,464

428,698

EQUITY

208,251

190,242


910,715

618,940

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.


AutoCanada Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the Periods Ended

(Unaudited)
(in thousands of Canadian dollars)


Share

capital

$

Contributed

surplus

$

Accumulated

deficit

$

Equity

$

Balance,  January 1, 2014 

232,938

4,758

(47,454)

190,242

Net and comprehensive income

-

-

21,125

21,125

Dividends declared on common shares (Note 21)

-

-

(9,782)

(9,782)

Common shares issued (Note 21)

9,073

-

-

9,073

Treasury shares acquired (Note 21)

(2,727)

-

-

(2,727)

Shares settled from treasury (Note 21)

755

(760)

-

(5)

Share-based compensation

-

325

-

325

Balance, June 30, 2014

240,039

4,323

(36,111)

208,251

 


Share

capital

$

Contributed

surplus

$

Accumulated

deficit

$

Equity

$

Balance, January 1, 2013 

189,500

4,423

(69,423)

124,500

Net and comprehensive income

-

-

17,645

17,645

Dividends declared on common shares (Note 21)

-

-

(7,326)

(7,326)

Common shares issued

43,599

-

-

43,599

Treasury shares acquired

(541)

-

-

(541)

Shares settled from treasury

202

-

-

202

Share-based compensation

-

11

-

11

Balance, June 30, 2013

232,760

4,434

(59,104)

178,090

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

 


AutoCanada Inc.
Interim Consolidated Statements of Cash Flows
For the Periods Ended
(Unaudited)
(in thousands of Canadian dollars)

 




Three month

period ended

June 30, 2014

Three month

period ended

June 30, 2013

Six month

period ended

June 30, 2014

Six month

period ended

June 30, 2013

Cash provided by (used in):







Operating activities







Net comprehensive income



12,831

10,823

21,125

17,645

Income taxes (Note 11)



4,477

3,976

7,358

6,285

Amortization of prepaid rent



113

113

226

226

Depreciation of property and equipment (Note 9)



2,550

1,490

5,061

2,679

Loss on disposal of assets



1

1

(37)

7

Share-based compensation - equity-settled



169

113

326

250

Share-based compensation - cash-settled



875

475

1,852

743

Income from investments in associates (Note 13)



(2,238)

(648)

(3,131)

(850)

Dividends received from investments in associates (Note 23)



200

-

1,458

-

Income taxes paid



(2,480)

(2,083)

(9,759)

(7,159)

Net change in non-cash working capital



(5,580)

131

(4,712)

691




10,918

14,391

19,767

20,517

Investing activities







Business acquisitions (Note 12)



(108,536)

(22,831)

(108,536)

(26,612)

Investment in associate (Note 13)



(11,322)

-

(43,900)

(7,057)

Purchases of property and equipment (Note 16)



(3,702)

(6,073)

(9,037)

(6,752)

Proceeds on sale of property and equipment



2

7

14

14




(123,558)

(28,897)

(161,459)

(40,407)

Financing activities







Proceeds from long-term debt



232,729

37,457

368,193

83,242

Repayment of long-term indebtedness



(208,588)

(69,104)

(303,812)

(98,496)

Treasury shares purchased (Note 21)



(2,713)

(513)

(2,713)

(513)

Dividends paid



(5,022)

(3,778)

(9,782)

(7,356)

Proceeds from issuance of common shares



-

43,599

-

43,599

Proceeds from senior unsecured notes (Note 19)



146,315

-

146,315

-




162,721

7,661

198,201

20,476

(Decrease) Increase in cash



50,081

(6,845)

56,509

586

Cash and cash equivalents at beginning of period



41,541

41,903

35,113

34,472

Cash and cash equivalents at end of period



91,622

35,058

91,622

35,058

 

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

ABOUT AUTOCANADA

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 36 franchised dealerships in eight provinces and has approximately 2,500 employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC, Buick, Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, BMW and MINI branded vehicles. In 2013, our dealerships sold approximately 36,000 vehicles and processed approximately 364,000 service and collision repair orders in our 406 service bays during 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 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 Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website 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.

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, and financing activities determined in accordance with Canadian GAAP, as indicators of our performance.  We provide these measures to assist investors in determining our ability to generate earnings and cash provided by (used in) operating activities and to provide additional information on how these cash resources are used.  We list and define these "NON-GAAP MEASURES" below:

EBITDA

EBITDA is a measure commonly reported and widely used by investors as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric.  The Company believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization and asset impairment charges which are non-cash in nature and can vary significantly depending upon accounting methods or non-operating factors such as historical cost.  References to "EBITDA" are to earnings before interest expense (other than interest expense on floorplan financing and other interest), income taxes, depreciation, amortization and asset impairment charges. 

Adjusted EBITDA

Adjusted EBITDA is an indicator of a company's operating performance and ability to incur and service debt prior to recognizing the portion of share-based compensation related to changes in the share price and its impact on the Company's cash-settled portions of its share-based compensation programs. The Company considers this expense to be non-cash in nature as we maintain a share purchase trust in which we purchase shares on the open market as these units are granted to reduce the cash flow risk associated with fluctuations in the share price. Share-based compensation, a component of employee remuneration, can vary significantly with changes in the price of the Company's common shares. The Company believes adjusted EBITDA provides improved continuity with respect to the comparison of our operating results over a period of time.

Adjusted net earnings and Adjusted net earnings per share

Adjusted net earnings and adjusted net earnings per share are measures of our profitability. Adjusted net earnings is calculated by adding back the after-tax effect of impairment or reversals of impairment of intangible assets, impairments of goodwill, and the portion of share-based compensation related to changes in the share price and its impact on the Company's cash-settled portions of its share-based compensation programs. The Company considers this expense to be non-cash in nature as we maintain a share purchase trust in which we purchase shares on the open market as these units are granted to reduce the cash flow risk associated with fluctuations in the share price. Share-based compensation, a component of employee remuneration, can vary significantly with changes in the price of the Company's common shares. Adding back these amounts to net earnings allows management to assess the net earnings of the Company from ongoing operations. Adjusted net earnings per share is calculated by dividing adjusted net earnings by the weighted-average number of shares outstanding.

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 Canadian GAAP measure is cash provided by operating activities, free cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures.  It shall be noted that although we consider this measure to be free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes.  Investors should be cautioned that free cash flow may not actually be available for growth or distribution of the Company.  References to "Free cash flow" are to cash provided by (used in) operating activities (including the net change in non-cash working capital balances) less capital 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.

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.

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. 

Average Capital Employed

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 Return on Capital Employed (described below).  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.  Management does not include future income tax, non-interest bearing debt, or revolving floorplan facilities in the calculation of 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.

Return on Capital Employed

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.  Return on capital employed is calculated as EBIT (defined above) divided by Average Capital Employed (defined above).

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, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and 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, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed may differ from the methods used by other issuers.­ Therefore, the Company's EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and 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.

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