EDMONTON, May 5, 2016 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the quarter ended March 31, 2016.

First Quarter 2016 Highlights

• Revenue from existing and new dealerships increased by 5.3%, or $33.5 million, to $666.9 million in the first quarter of 2016 from $633.4 million in the same quarter in 2015.

• Gross profit from existing and new dealerships increased by 6.0%, or $6.3 million, to $111.7 million in the first quarter of 2016 from $105.4 million in the same quarter in 2015.

• Adjusted EBITDA attributable to AutoCanada shareholders increased by 52.7%, or $6.8 million, to $19.7 million in the first quarter of 2016 from $12.9 million in the same quarter in 2015.

• EBITDA attributable to AutoCanada shareholders increased by 44.1%, or $5.6 million, to $18.3 million in the first quarter of 2016 from $12.7 million in the same quarter in 2015.

• The Company generated net earnings attributable to AutoCanada shareholders of $7.3 million or basic earnings per share of $0.27 versus basic earnings per share of $0.20 in the first quarter of 2015. Pre-tax earnings attributable to AutoCanada shareholders increased by 44.8%, or $3.0 million, to $9.7 million in the first quarter of 2016 as compared to $6.7 million in the same period in 2015.

• The Company generated adjusted net earnings attributable to AutoCanada shareholders of $8.6 million compared to $5.3 million in the same quarter in 2015. Basic adjusted net earnings per share were $0.31 versus basic adjusted earnings per share of $0.22 in the first quarter of 2015.

• Same store revenue decreased by 3.1% in the first quarter of 2016, compared to the same quarter in 2015. Same store gross profit decreased by 5.5% in the first quarter of 2016, compared to the same quarter in 2015.
  Same store gross profit percentage increased by 0.4% in the first quarter of 2016, compared to the same quarter in 2015.

• Free cash flow increased to $4.0 million in the first quarter of 2016 or $0.15 per share as compared to $(3.2) million or $(0.13) per share in the same quarter in 2015.

• Adjusted free cash flow increased to $6.0 million in the first quarter of 2016 or $0.22 per share as compared to $(7.4) million or $(0.30) per share in the same quarter in 2015.

• Same store new vehicle retail revenue decreased by 6.3%, or $9.6 million, to $143.2 million in the first quarter of 2016 from $152.8 million in the same quarter in 2015.

• Same store used vehicle retail revenue increased by 12.9%, or $8.3 million, to $72.6 million in the first quarter of 2016 from $64.3 million in the same quarter in 2015.

• Same store parts, service and collision repair revenue decreased by 6.6%, or $2.8 million, to $39.8 million in the first quarter of 2016 from $42.6 million in the same quarter in 2015.

"The retail automotive industry continues to be challenging in many of the markets in which we operate. Our business model provides consistent profitability for AutoCanada and our dealerships. Going forward, our management team including our retailers will focus on operational excellence at our current dealerships to achieve positive same store metrics. We will also continue to seek regional diversity through acquisitions of flagship stores in major metropolitan markets" said Steven Landry, Chief Executive Officer. "I would like to thank all of our 3,700 employees for their hard work and efforts during this quarter."

"The quarter provided an increase in net earnings and gross profit. Our EPS also improved and beat consensus. However, a reduction in the dividend seems prudent and allows us to focus on growth. The $16.5 million in annualized savings will help fund future acquisitions while strengthening our balance sheet and increasing liquidity" said Chris Burrows, Chief Financial Officer. "AutoCanada continues to have significant earnings potential and we have the ability to generate increased cash-flow as the economy improves."

Dividends

On May 5, 2016, the Board declared a quarterly eligible dividend of $0.10 per common share on AutoCanada's outstanding Class A common shares, payable on June 15, 2016 to shareholders of record at the close of business on May 31, 2016.

In support of AutoCanada's continued growth, we have reduced the dividend, from $0.25 to $0.10 per quarter. This action will allow the Company to retain $16.5 million annually that can be used to support growth and fund acquisitions. The current economic conditions allows AutoCanada to be opportunistic in our due diligence around potential acquisitions. Our strategy is to acquire dealerships that provide accretive strong returns, focusing on large dealerships in major metropolitan markets. In addition to funding growth, the reduced dividend allows AutoCanada to further strengthen our balance sheet while also increasing liquidity.

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".

Outlook

The retail automotive industry is proven to provide consistent profitability in all market conditions, as all of our dealerships are profitable with the exception of one recently opened dealership. AutoCanada continues to have significant earnings potential and we have the ability to generate increased cash-flow when the economy improves in Western Canada where we have a heavy concentration of same stores.

Throughout the first quarter, and into the balance of 2016, Management continues to employ our five point strategy to deal with the current downward pressure we face in this economic environment:

• The Company continues to seek regional diversity through larger acquisitions in metropolitan markets. Management is pleased with the acquisition opportunities outside of Alberta and continues to explore and evaluate potential targets.
• The Company has directed resources to increase integration efforts for the dealerships recently acquired to support same store metric improvement year-over-year.
• The Company continues to manage the balance sheet as evidenced by the increase in free cash flow – 12 month trailing.
• The Company is rolling-out new sales process technologies to enhance the customer experience in each of our dealerships.
• The Company is reviewing all costs within the group to reduce or eliminate costs where possible. This focused effort on cost reduction is a project that began early in the first quarter and will continue throughout the calendar year. We have been able to decrease operating expenses as a percentage of gross profit from 88.4% in Q1, 2015 to 86.0% in Q1, 2016. Variable expenses have decreased by 3.3% compared to the first quarter of 2015.

Management is pleased with the progress made thus far on these strategies and we anticipate further success throughout 2016.

SELECTED QUARTERLY 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.

The following table summarizes the results for the three month period ended March 31, 2016 on a same store basis by revenue source and compares these results to the same period in 2015.

MD&A and Financial Statements

Information included in this press release is a summary of results. It should be read in conjunction with AutoCanada's consolidated financial statements and management's discussion and analysis for the three month period ended March 31, 2016, which can be found on the company's website at www.autocan.ca or on www.sedar.com.

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. The following "Non-GAAP Measures" are defined in the interim MD&A: EBITDA; Adjusted EBITDA; Adjusted Net Earnings and Adjusted Net Earnings per Share; EBIT; Free Cash Flow; Adjusted Free Cash Flow; Adjusted Average Capital Employed; Absorption Rate; Average Capital Employed; Return on Capital Employed; and Adjusted Return on Capital Employed.

Conference Call

A conference call to discuss the results for the reporting period ended March 31, 2016 will be held on May 6, 2016 at 10:00am Eastern time (8:00am Mountain time).  To participate in the conference call, please dial 1.888.231.8191 approximately 10 minutes prior to the call.  A live and archived audio webcast of the conference call will also be available at the following:

http://event.on24.com/r.htm?e=1138781&s=1&k=089ADF311C73AB1CEF1C32D7A2832166.

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 53 franchised dealerships, comprised of 60 franchises, in eight provinces and has over 3,700 employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC, Buick, Cadillac, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, KIA, BMW and MINI branded vehicles. In 2015, our dealerships sold approximately 62,800 vehicles and processed approximately 848,000 service and collision repair orders in our 912 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.

Additional Information

Additional information about AutoCanada is available at the Company's website at www.autocan.ca and www.sedar.com.

SOURCE AutoCanada Inc.