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AutoCanada reports 2018 annual and fourth quarter results

CNW Group - Thu Mar 14, 8:06PM CDT

AutoCanada Inc. ("AutoCanada" or the "Company") (TSX:ACQ.TO), a multi-location North American automobile dealership group, today reported its financial results for the three and twelve-months ended December 31, 2018. All figures are in Canadian dollars, unless otherwise stated.

2018 Full Year Highlights

--  Consolidated revenues reached $3.2 billion
    --  Total vehicles sold (new and used) reached 66,073
    --  EBITDA attributable to AutoCanada shareholders totalled $56.3
        million, and on an adjusted basis totalled $69.3 million which
        includes gains totaling $13.9 million from sale-leaseback
        transactions of dealership properties
    --  Diluted earnings per share totalled $(2.85), and on an adjusted
        basis totalled $0.04

2018 Fourth Quarter Highlights

--  Consolidated revenues totalled $782.8 million
    --  Total vehicles sold (new and used) totalled 16,024
    --  EBITDA attributable to AutoCanada shareholders totalled $16.5
        million, and on an adjusted basis totalled $22.6 million
    --  Diluted earnings per share totalled $(0.98), and on an adjusted
        basis totalled $(0.34)
    --  Acquired two new dealerships during the quarter
    --  Introduced the Ford brand to the portfolio
    --  Divested two underperforming dealerships during the quarter,
        and one subsequent to quarter end
    --  Entered into sale-leaseback transactions totalling
        approximately $53 million.

"A number of months ago, we set out on an ambitious course to improve our operations and become the industry leader," said Paul Antony, Executive Chairman. "We have implemented the main parts of our Go Forward Plan in Canada and we are already seeing strong signs of adoption across our dealership network. As our new initiatives take hold, we foresee very material improvements in our performance in 2019. As such, despite being faced with increased headwinds over the past number of months, we remain committed to delivering on our goals for 2019"

2018 Full Year Highlights

--  Revenue was $3,150.8 million, up 1.6% compared with 2017. Same
        store revenue declined by 1.9%. However, operating expenses
        were also up by 11.4% when compared to 2017. This resulted in
        relatively poor performance in 2018. A large contributor to
        this was the acquisition of our U.S. Operations in April 2018
        as operating expenses in our U.S. Operations exceeded gross
        profit by $10.3 million.
    --  Also, included in operating expenses are management transition
        costs of $9.8 million, a number of non-recurring expenses such
        as inventory adjustments, a provision of $2.0 million related
        to fraud at one of our dealerships in the second quarter, and
        allowances and writedowns of $3.2 million related to the
        winding down of operations. Operating expenses as a percentage
        of gross profit were up to 93.5% from 82.2% in 2017.
    --  Gross profit was $508.0 million, down 2.1% compared with 2017,
        with gross profit as a percentage of revenue decreasing to
        16.1% from 16.7%. Same store gross profit declined 3.7% over
        the same period.
    --  New vehicle sales were 43,451, down 0.7% from 2017. Revenue
        from the sale of new vehicles was $1,802.2 million, down 1.4%
        from 2017. The sale of new vehicles accounted for 57.2% of the
        Company's total revenue and 21.5% of gross profit versus 58.9%
        of revenue and 25.3% of gross profit in 2017.
    --  Used vehicle sales were 22,622, up 16.7% from last year.
        Revenue from the sale of used vehicles was $756.2 million, up
        5.6% from the prior year. The sale of used vehicles accounted
        for 24.0% of the Company's total revenue and 8.5% of gross
        profit, versus 23.1% of revenue and 8.4% of gross profit in
        2017.
    --  Parts, service and collision repair generated $451.8 million of
        revenue, up 8.4% from 2017. This accounted for 14.3% of the
        Company's total revenue and 44.1% of its gross profit, up from
        13.4% of revenue and 41.3% of gross profit in 2017.
    --  Finance and insurance generated $140.7 million of revenue, a
        decrease of 0.4% from 2017. This accounted for 4.5% of the
        Company's total revenue and 25.9% of its gross profit, in line
        with 4.6% of revenue and an increase from 25.0% of gross profit
        in 2017.
    --  EBITDA attributable to AutoCanada shareholders decreased to
        $56.3 million from $111.8 million in the prior year.
    --  Including the impairment of non-financial assets, the Company
        generated a net loss attributable to AutoCanada shareholders of
        $(78.1) million (Adjusted net earnings attributable to
        AutoCanada shareholders of $1.2 million), or $(2.85) per share
        (Adjusted net earnings per share attributable to AutoCanada
        shareholders of $0.04) versus net income of $57.8 million in
        2017 ($42.7 million on an adjusted basis) or $2.11 per share
        ($1.56 on an adjusted basis).
    --  Included in EBITDA and net earnings are gains totaling $13.9
        million from sale-leaseback transactions of dealership
        properties.
    --  Total impairment charges attributable to AutoCanada
        shareholders were $95.1 million, or $2.55 basic earnings per
        share net of tax.

2018 Fourth Quarter Highlights

--  Revenue was $782.8 million, up 6.8% compared with the fourth
        quarter of 2017. Same store revenue declined by 3.0%.
    --  Operating expenses were $125.0 million, up 19.5% from the same
        period last year. Operating expenses as a percentage of gross
        profit were up to 97.5% from 83.6% in the same period in 2017.
    --  Operating expenses in the U.S. Operations exceeded gross profit
        by $6.3 million. Included in the U.S. operating expenses is
        management transition costs of approximately $2.0 million. In
        addition, the Canadian operating expenses include approximately
        $3.7 million of non-recurring allowances and provisions.
    --  Gross profit was $128.2 million, up 2.4% compared with the same
        quarter in 2017, with gross profit as a percentage of revenue
        decreasing to 16.4% from 17.1%. Same store gross profit
        declined 3.0%.
    --  New vehicle sales were 10,331, up 5.2% from the same period in
        2017. Revenue from the sale of new vehicles was $432.8 million,
        up 3.6% from the same period in 2017. The sale of new vehicles
        accounted for 55.3% of the Company's total revenue and 20.2% of
        gross profit versus 57.0% of revenue and 24.0% of gross profit
        in the fourth quarter of 2017.
    --  Used vehicle sales were 5,693, up 22.4% compared with the same
        quarter last year. Revenue from the sale of used vehicles was
        $193.0 million, up 10.1% from the same quarter last year. The
        sale of used vehicles accounted for 24.7% of the Company's
        total revenue and 6.7% of gross profit, versus 23.9% of revenue
        and 6.0% of gross profit in the fourth quarter of 2017.
    --  Parts, service and collision repair generated $121.3 million of
        revenue, up 13.2% from the same period in 2017. This accounted
        for 15.5% of the Company's total revenue and 47.1% of its gross
        profit, up from 14.6% of revenue and 45.5% of gross profit in
        the same quarter of 2017.
    --  Finance and insurance generated $35.7 million of revenue, an
        increase of 8.2% from the same period in 2017. This accounted
        for 4.6% of the Company's total revenue and 26.0% of its gross
        profit, in line with 4.5% of revenue and up from 24.5% of gross
        profit in the fourth quarter of 2017.
    --  EBITDA attributable to AutoCanada shareholders decreased to
        $16.5 million from $28.1 million compared with the same quarter
        last year.
    --  Adjusted EBITDA attributable to AutoCanada shareholders
        increased to $22.6 million from $21.9 million compared with the
        same quarter last year.
    --  Including the impairment of non-financial assets, the Company
        generated a net loss attributable to AutoCanada shareholders of
        $(26.9) million (Adjusted net earnings attributable to
        AutoCanada shareholders of $(9.3) million), or $(0.98) per
        share (Adjusted net earnings per share attributable to
        AutoCanada shareholders of $(0.34)) versus net income of $17.1
        million in 2017 ($8.9 million on an adjusted basis) or $0.62
        per share ($0.33 on an adjusted basis).
    --  Included in EBITDA and net earnings is a gain of $9.2 million
        from a sale-leaseback transaction in respect of four dealership
        properties.
    --  Total impairment charges were $17.8 million in the fourth
        quarter, or $0.48 basic earnings per share net of tax. The
        impairment charges in the fourth quarter were attributable to
        our U.S. Operations.

Fourth Quarter Business Highlights

--  On October 1, 2018, the Company, through a wholly owned
        subsidiary, AutoCanada M LP, purchased all of the issued and
        outstanding shares of Ericksen M-B Ltd., which owns and
        operates a Mercedes-Benz dealership in Edmonton, Alberta, for
        total cash consideration of $23.9 million. The acquisition was
        funded through net proceeds of the sale and leaseback
        transactions with Automotive Properties Real Estate Investment
        Trust.
    --  The Company was awarded the right to a General Motors open
        point dealership featuring the Chevrolet, Buick and GMC brands
        in Maple Ridge, BC, a community located in the northeastern
        sector of Greater Vancouver. The Company will construct an
        approximately 33,400 square foot facility designed to General
        Motors image standards, with construction expected to be
        completed by mid 2020. As part of the Company's sale-leaseback
        transaction with Capital Automotive Real Estate Services Inc.
        (see below), Capital Automotive will fund the construction of
        the facility.
    --  On November 19, 2018, the Company sold substantially all of the
        operating and fixed assets, including the land and facilities,
        of North Edmonton Kia, located in Edmonton, AB for cash
        consideration. Net proceeds of $10.2 million resulted in a
        pre-tax gain on divestiture of $0.8 million.
    --  On December 1, 2018, the Company, through a wholly owned
        subsidiary, 2667465 Ontario Inc., purchased all of the issued
        and outstanding shares of Rose City Ford Sales Limited, which
        owns and operates a Ford dealership in Windsor, Ontario, for
        total cash consideration of $24.8 million. At the time of
        acquisition, Rose City Ford Sales Limited had net working
        capital of $6.9 million. The acquisition was funded by drawing
        on the Company's revolving term facility.
    --  On December 17, 2018, the Company sold substantially all of the
        operating and fixed assets of Courtesy Mitsubishi, located in
        Calgary, Alberta for cash consideration. Net proceeds of $2.5
        million resulted in a pre-tax loss on divestiture of $0.03
        million.
    --  The Company completed a sale-leaseback transaction for four of
        its dealership properties with Capital Automotive Real Estate
        Services Inc. AutoCanada leased the properties from Capital
        Automotive under long-term triple net leases. On the
        transaction, the Company recognized a gain of $9.2 million on
        the sale of dealership properties. $2.2 million of net proceeds
        relate to the sale of leasehold improvements on a property it
        did not own which reduced an impairment charge taken at June
        30, 2018. The transaction provided for proceeds of
        approximately $54.7 million which were used to repay the
        Company's credit facility. In addition, Capital Automotive has
        agreed to fund building improvements and construction.
        Management expects to incur approximately $32.6 million in
        Canada and $20.5 million in the U.S. ($15.0 million USD) for
        capital requirements in respect of the properties, including
        the reconstruction of three existing dealerships and the
        construction of the Maple Ridge Chevrolet Buick GMC Open Point.

Subsequent Events

--  On March 6, 2019, the Company sold substantially all of the
        operating and fixed assets of Toronto Dodge, located in
        Toronto, Ontario for cash consideration of $5.0 million.

Management Changes

Raj Juneja has resigned from his position as Chief Financial Officer for personal reasons and will remain as an advisor to effect an orderly transition. The Company has commenced a search for a new Chief Financial Officer. "I would like to thank Raj for his dedicated service to AutoCanada. Raj has been instrumental in helping AutoCanada with our balance sheet and our overall finance function," said Paul Antony, Executive Chairman.

William Berman has resigned from his position as President of U.S. Operations and Tamara Darvish has been appointed as the new President of U.S. Operations. Ms. Darvish was previously the Executive Vice President of DARCARS Automotive Group, the Chief Operating Officer of Pentagon Federal Credit Union and the Chief Operating Officer of Capital Automotive Real Estate Services. "I would like to also thank Bill for his dedicated service to AutoCanada and assisting us in diagnosing and structuring our U.S. Operations," said Paul Antony, Executive Chairman. "We welcome Tamara to the AutoCanada team. Tamara's hands-on experience will help us focus on operational efficiencies in our U.S. business."

The following table summarizes the Company's results for the quarter and year ended December 31, 2018:

Three months ended December 31

        Year ended December 31




              Consolidated Operational Data                                                                                                                        2018                 2017            % Change     2018                      2017                 % Change

    ---                                                                                                                                                                                                                                                                        ---


            EBITDA attributable to AutoCanada shareholders1,2                                                                                                             16,521               28,127              (41.3)                  56,262                   111,812               (49.7)
                                                                                                                                                                                                                       %                                                                    %



            Adjusted EBITDA attributable to AutoCanada shareholders1,2                                                                                                    22,638               21,880                 3.5                   69,266                    95,410               (27.4)
                                                                                                                                                                                                                       %                                                                    %



            Net (loss) income attributable to AutoCanada shareholders(1)                                                                                                (26,892)              17,089             (257.4)                (78,083)                   57,844              (235.0)
                                                                                                                                                                                                                       %                                                                    %



            Adjusted net earnings attributable to AutoCanada shareholders1,2                                                                                             (9,299)               8,935             (204.1)                   1,175                    42,665               (97.2)
                                                                                                                                                                                                                       %                                                                    %



            Basic EPS                                                                                                                                                     (0.98)                0.62             (258.1)                  (2.85)                     2.11              (235.1)
                                                                                                                                                                                                                       %                                                                    %



            Adjusted diluted EPS(2)                                                                                                                                       (0.34)                0.33             (203.0)                    0.04                      1.55               (97.3)
                                                                                                                                                                                                                       %                                                                    %



            Weighted average number of shares  - Basic                                                                                                                27,417,434           27,389,167                 0.1               27,399,117                27,379,193                  0.1
                                                                                                                                                                                                                       %                                                                    %



            Weighted average number of shares  - Diluted (3)                                                                                                          27,417,434           27,498,724               (0.3)              28,297,901                27,473,995                  3.0
                                                                                                                                                                                                                       %                                                                    %

    ---                                                                                                                                                                                                                                                                                            ---


            New retail vehicles sold (units)                                                                                                                               9,214                8,444                 9.1                   36,495                    36,076                  1.2
                                                                                                                                                                                                                       %                                                                    %



            New fleet vehicles sold (units)                                                                                                                                1,117                1,378              (18.9)                   6,956                     7,697                (9.6)
                                                                                                                                                                                                                       %                                                                    %



            New vehicles sold (units)                                                                                                                                     10,331                9,822                 5.2                   43,451                    43,773                (0.7)
                                                                                                                                                                                                                       %                                                                    %



            Used retail vehicles sold (units)                                                                                                                              5,693                4,653                22.4                   22,622                    19,379                 16.7
                                                                                                                                                                                                                       %                                                                    %




            Total vehicles sold (units)                                                                                                                                   16,024               14,475                10.7                   66,073                    63,152                  4.6
                                                                                                                                                                                                                       %                                                                    %



            Revenue                                                                                                                                                      782,790              733,060                 6.8                3,150,781                 3,101,560                  1.6
                                                                                                                                                                                                                       %                                                                    %



            Gross profit                                                                                                                                                 128,204              125,210                 2.4                  507,963                   518,629                (2.1)
                                                                                                                                                                                                                       %                                                                    %


    Gross profit %                                                                                                                                                 16.4
          %        17.1
          %              (4.1)            16.1
          %             16.7
          %               (3.6)
                                                                                                                                                                                                                       %                                                                    %



            Operating expenses                                                                                                                                           125,040              104,626                19.5                  474,804                   426,253                 11.4
                                                                                                                                                                                                                       %                                                                    %



            Operating expenses as % of gross profit                                                                                                                 97.5
          %        83.6
          %               16.7             93.5
          %             82.2
          %                13.7
                                                                                                                                                                                                                       %                                                                    %



            Operating (loss) profit                                                                                                                                        (576)              26,505             (102.2)                (32,648)                  118,969              (127.4)
                                                                                                                                                                                                                       %                                                                    %



            Free cash flow(2)                                                                                                                                            (7,658)              29,496             (126.0)                (28,805)                   72,213              (139.9)
                                                                                                                                                                                                                       %                                                                    %



            Adjusted free cash flow(2)                                                                                                                                    10,553               15,996              (34.0)                   9,657                    90,786               (89.4)
                                                                                                                                                                                                                       %                                                                    %

    ---                                                                                                                                                                                                                                                                                            ---





              See the Company's Management's Discussion and Analysis for the quarter and year ended December 31, 2018 for complete footnote disclosures.

Outlook

Macroeconomic factors create a degree of uncertainty for AutoCanada's business. Central banks in Canada and the United States have recently raised key interest rates, and there is a possibility of further interest rate hikes over the next year. Higher rates will adversely impact borrowing expenses on variable interest rate debt such as vehicle floorplan financing, which would increase our costs. Monthly loan payments for new and used vehicles are also typically linked to market interest rates, meaning rising interest rates will likely make vehicle ownership less affordable at the same time as other household debt becomes more expensive.

The auto industry in North America is coming off several record-setting years and the sale of new vehicles is beginning to trend downwards. While many analysts expect sales to remain healthy, most expect a decline in volume in 2019. Over the last few months there has been greater concern over the strength of the economy in both Canada and the United States. If these concerns materialize, the volume of vehicle sales could decrease more than analysts expect. New car sales in the U.S. dropped more than expected in January and February and many dealers in the U.S. are reacting by shifting to used cars and cutting costs. Some of the blame for the reduction of new car sales over these two months is being placed on the severe weather in the Midwest and the heavy rains in the Southeast and California. Vehicle leasing and manufacturer incentives remain at high levels, particularly as the new model year rolls out. If those incentives are scaled back, it could impact sales volumes.

While macro-economic factors determine total vehicle demand, we expect to deliver materially better results in our Canadian operations as we continue to implement our Go Forward Plan, even if the broader industry faces varying headwinds. This will come through a combination of focusing on less cyclical parts of our business and on lines of our business that generate higher margins. As part of our Go Forward Plan, we expect to materially increase the number of used vehicles we retail. Margins on used vehicles tend to be higher than new vehicles and retailing more vehicles will increase our returns from our finance and insurance and our parts and service lines of business. In addition, we are implementing a number of initiatives to increase the returns from our parts, service and collision businesses.

We are also optimizing our finance and insurance offerings for used vehicles at our dealerships. We expect to earn a material profit share on these new offerings. We have also created a new special finance division and a new wholesale division. Our new special finance division will arrange loans for customers who cannot qualify for traditional loans offered by banks and affiliates of vehicle manufacturers. We expect that our special finance division will increase both new and used vehicle sales at our dealerships and through a recently launched online site (www.rightride.ca). We expect that our new wholesale division will be accretive by taking advantage of the arbitrage opportunities with the sale of used vehicles in different geographical locations. Other aspects of the Company's Go Forward Plan are expected to lead to a decrease in operational expenses at our dealerships and at our collision centres as we better leverage our buying power to achieve meaningful cost reductions in our Canadian operations.

The key issue with our U.S. Operations in 2018 was the high cost structure. We are taking steps to reduce the operating expenses in our U.S. dealerships to be in line with industry norms with a view to bringing our U.S. operations to profitability in 2019. In addition, we are implementing a plan to create operational efficiencies and grow revenues with a view of creating a sustainable platform with the U.S. assets that we currently own that can withstand the economic climate over the next few years.

The fragmented nature of the automotive dealership sector will provide us with the opportunity to diversify our geographical presence and drive earnings growth through accretive acquisitions. While our principal focus at this time is on executing our Go Forward plan and optimizing all of our lines of business, we expect to grow our business by making accretive acquisitions as opportunities may arise.

Go Forward Plan

Following a comprehensive review of the Company's operations, the Board of Directors endorsed a Go Forward Plan that was announced concurrent with the Company's third quarter 2018 financial results. The plan involves managing costs while increasing sales and employee productivity, and is being implemented across AutoCanada's Canadian dealerships. Highlights of the plan include the following:

--  Enhancing the Company's finance and insurance offerings at
        dealerships. The Company has appointed a new Vice President
        responsible for the division. The Company expects to improve
        its finance and insurance business through a combination of new
        AutoCanada white-label products for used car sales, where it
        will earn a profit share, and manager training at dealerships.
    --  Creating a new specialty finance division to make
        non-traditional (near-prime) financing available at all
        dealerships, as well as through a new online presence,
        rightride.ca.
    --  Optimizing the Company's collision centres, through a
        combination of renegotiated supply contracts to realize savings
        in operating expenses, along with greater coordination by
        tracking and managing their performance independent from other
        business lines. Long term, the Company expects to increase the
        number of collision centres it owns through acquisitions of
        stand-alone facilities in areas where the Company currently has
        multiple dealerships and no collision centre.
    --  Disposing of non-performing assets in order to eliminate
        carrying costs. These assets include parcels of land acquired
        for open points that were not obtained.
    --  Establishing a new wholesale division to take advantage of
        arbitrage opportunities with the sale of used cars across
        different geographic locations.
    --  Leveraging the Company's buying power to reduce costs at our
        dealerships.

In addition to these initiatives, the Company is taking other actions to increase the sale of used vehicles and drive more business to its service bays. AutoCanada's growth will also continue to be supported through disciplined, accretive acquisitions that offer brand and geographical diversity.

Dividends

Management reviews the Company's financial results on a monthly basis. The Board of Directors reviews the financial results periodically to determine whether a dividend is to be paid based on a number of factors with a goal to efficiently allocate capital to fuel AutoCanada's future growth while also rewarding and sharing the Company's success with our shareholders.

On February 22, 2019, the Board of Directors of the Company declared a quarterly eligible dividend of $0.10 per common share on the Company's outstanding Class A common shares, payable on March 15, 2019 to shareholders of record at the close of business on March 1, 2019.

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 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                                                                                                        Q4       Q3        Q2        Q1       Q4       Q3       Q2       Q1
    Gross Profit %, Earnings per share,                                                                                                                           2018      2018       2018       2018      2017      2017      2017      2017
    and Operating Data)

    ---



                Income Statement Data



              New vehicles                                                                                                                                    432,756   509,281    522,150    338,016   417,626   497,711   558,682   353,540



              Used vehicles                                                                                                                                   192,988   206,668    198,597    157,901   175,251   192,473   182,913   165,408



              Parts, service and collision repair                                                                                                             121,304   113,087    121,476     95,893   107,156   104,816   113,983    90,735



              Finance, insurance and other                                                                                                                     35,742    37,882     38,365     28,675    33,027    39,571    39,324    29,344

    ---



                Revenue                                                                                                                            782,790   866,918    880,588    620,485   733,060   834,571   894,902   639,027

    ---


              New vehicles                                                                                                                                     25,861    29,150     30,648     23,473    30,033    36,806    38,555    25,590



              Used vehicles                                                                                                                                     8,637    12,955     13,173      8,562     7,563    11,140    13,095    11,940



              Parts, service and collision repair                                                                                                              60,380    57,206     60,868     45,533    56,915    53,805    56,306    47,284



              Finance, insurance and other                                                                                                                     33,326    35,524     35,891     26,776    30,699    36,218    35,867    26,813

    ---



                Gross Profit                                                                                                                       128,204   134,835    140,580    104,344   125,210   137,969   143,823   111,627

    ---

    Gross profit %                                                                                                                                              16.4      15.6       16.0       16.8      17.1      16.5      16.1      17.5
                                                                                                                                                                     %        %         %         %        %        %        %        %



              Operating expenses                                                                                                                              125,039   126,492    127,492     95,781   104,626   110,560   112,897    98,170



              Operating expenses as a % of gross profit                                                                                                          97.5      93.8       90.7       91.8      83.6      80.1      78.5      87.9
                                                                                                                                                                     %        %         %         %        %        %        %        %



              Operating (loss) profit                                                                                                                           (576)  (5,259)  (42,719)    15,906    26,505    30,287    46,539    15,638



              Impairment (recovery) of non-financial assets                                                                                                    17,834    19,569     58,097               (816)



              Net (loss) income attributable to AutoCanada shareholders                                                                                      (26,892) (15,563)  (40,458)     4,830    17,089    12,100    24,978     3,678



              Adjusted net earnings attributable to AutoCanada shareholders2,4,6                                                                              (9,299)      333      5,298      4,830     8,935    13,581    15,547     4,602



              EBITDA attributable to AutoCanada shareholders(2)                                                                                                16,521    11,972     12,042     15,692    28,127    25,827    43,722    14,136



              EBITDA attributable to AutoCanada shareholders as a % of sales(2)                                                                                   2.1       1.4        1.4        2.5       3.8       3.1       4.9       2.7
                                                                                                                                                                     %        %         %         %        %        %        %        %



              Free cash flow(2)                                                                                                                               (7,658)    6,993   (13,751)  (14,388)   29,496    31,114    10,982       621



              Adjusted free cash flow(2)                                                                                                                       10,553     (965)   (3,652)     3,721    15,996    23,296    36,277    15,217



              Basic earnings per share                                                                                                                         (0.98)   (0.57)    (1.48)      0.18      0.62      0.44      0.91      0.13



              Diluted earnings per share                                                                                                                       (0.98)   (0.57)    (1.48)      0.18      0.62      0.44      0.91      0.13



              Basic adjusted earnings per share2,4,6                                                                                                           (0.34)     0.01       0.19       0.18      0.33      0.50      0.57      0.17



              Diluted adjusted earnings per share2,4,6                                                                                                         (0.34)     0.01       0.19       0.18      0.33      0.50      0.57      0.17



              Dividends declared per share                                                                                                                       0.10      0.10       0.10       0.10      0.10      0.10      0.10      0.10




                Operating Data



              Vehicles (new and used) sold(3)                                                                                                                  16,024    18,863     18,519     12,667    14,475    17,132    18,490    13,055



              New vehicles sold(3)                                                                                                                             10,331    12,474     12,506      8,140     9,822    12,014    13,429     8,508



              New retail vehicles sold(3)                                                                                                                       9,214    10,353     10,264      6,664     8,444    10,334    10,545     6,753



              New fleet vehicles sold(3)                                                                                                                        1,117     2,121      2,242      1,476     1,378     1,680     2,884     1,755



              Used retail vehicles sold(3)                                                                                                                      5,693     6,389      6,013      4,527     4,653     5,118     5,061     4,547



              # of service and collision repair orders completed(3)                                                                                           245,682   241,103    248,167    180,429   224,006   220,669   228,872   197,069



              Absorption rate(2)                                                                                                                                   87        82         88         84        90        87        87        82
                                                                                                                                                                     %        %         %         %        %        %        %        %



              # of dealerships at year end                                                                                                                         68        63         63         54        58        57        57        56



              # of same stores dealerships(1)                                                                                                                      47        49         49         49        49        48        47        47



              # of service bays at year end                                                                                                                     1,157     1,106      1,106        906       999       977       977       949



              Same stores revenue growth(1)                                                                                                                     (3.0)    (3.0)     (5.1)       4.6      11.1       2.9       0.1     (7.1)
                                                                                                                                                                     %        %         %         %        %        %        %        %



              Same stores gross profit growth(1)                                                                                                                (3.0)    (8.5)     (4.3)       1.0       1.4       6.3       1.1     (1.2)
                                                                                                                                                                     %        %         %         %        %        %        %        %

    ---





                See the Company's Management's Discussion and Analysis for the quarter ended December 31, 2018 for complete footnote disclosures.

The following tables summarize the results for the quarter and year ended December 31, 2018 on a same store basis by revenue source and compares these results to the same period in 2017.

Same Store Revenue and Vehicles Sold


                                                           Three months ended December 31                           Year ended December 31


                     (in thousands of dollars)    2018               2017                                  % Change                   2018      2017 % Change

    ---



                Revenue Source



       New vehicles ? Retail                  258,289            279,051                                    (7.4)%              1,123,438 1,203,580   (6.7)%



       New vehicles ? Fleet                    48,810             50,350                                    (3.1)%                281,627   266,731     5.6%

    ---

                     Total New vehicles        307,099            329,401                                    (6.8)%              1,405,065 1,470,311   (4.4)%



       Used vehicles ? Retail                 105,170             95,038                                     10.7%                441,500   410,536     7.5%



       Used vehicles ? Wholesale               34,770             41,451                                   (16.1)%                151,791   175,333  (13.4)%

    ---

                     Total Used vehicles       139,940            136,489                                      2.5%                593,291   585,869     1.3%



       Finance, insurance and other            24,757             27,849                                   (11.1)%                112,415   116,315   (3.4)%

    ---



                Subtotal                  471,796            493,739                                    (4.4)%              2,110,771 2,172,495   (2.8)%

    ---

        Parts, service and collision repair     90,205             85,871                                      5.0%                350,514   337,675     3.8%

    ---



                Total                     562,001            579,610                                    (3.0)%              2,461,285 2,510,170   (1.9)%

    ---

        New retail vehicles sold (units)         6,106              6,806                                   (10.3)%                 26,616    29,591  (10.1)%


        New fleet vehicles sold (units)          1,039              1,114                                    (6.7)%                  6,663     6,322     5.4%


        Used retail vehicles sold (units)        4,020              3,682                                      9.2%                 17,082    16,000     6.8%

    ---



                Total                      11,165             11,602                                    (3.8)%                 50,361    51,913   (3.0)%

    ---

        Total vehicles retailed (units)         10,126             10,488                                    (3.5)%                 43,698    45,591   (4.2)%

    ---
Same Store Gross Profit and Profit Percentage

                                                                 ---



                Three Months Ended December 31





                Gross Profit                   Gross Profit %



                     (in thousands of dollars)       2018                       2017                          % Change  2018   2017

    ---



                Revenue Source



       New vehicles ? Retail                      19,326                     19,634                            (1.6)%  7.5%  7.0%



       New vehicles ? Fleet                        1,143                      1,360                           (16.0)%  2.3%  2.7%

    ---

                     Total New vehicles            20,469                     20,994                            (2.5)%  6.7%  6.4%



       Used vehicles ? Retail                      6,014                      6,641                            (9.4)%  5.7%  7.0%



       Used vehicles ? Wholesale                     519                      1,151                           (54.9)%  1.5%  2.8%

    ---

                     Total Used vehicles            6,533                      7,792                           (16.2)%  4.7%  5.7%



       Finance, insurance and other               23,757                     24,302                            (2.2)% 96.0% 87.3%

    ---



                Subtotal                      50,759                     53,088                            (4.4)% 10.8% 10.8%

    ---

        Parts, service and collision repair        44,799                     45,446                            (1.4)% 49.7% 52.9%

    ---



                Total                         95,558                     98,534                            (3.0)% 17.0% 17.0%

    ---

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 quarter ended December 31, 2018, 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 annual MD&A; Operating (loss) profit; EBITDA; Adjusted EBITDA; Adjusted Net Earnings, Adjusted Net Earnings per Share and Adjusted Diluted Net Earnings Per Share; EBIT; Free Cash Flow; Adjusted Free Cash Flow; Absorption Rate; Average Capital Employed; Adjusted Average Capital Employed; Return on Capital Employed; and Adjusted Return on Capital Employed.

Conference Call

A conference call to discuss the results for the quarter and year ended December 31, 2018 will be held on March 15 at 9:00am Mountain (11:00am Eastern). To participate in the conference call, please dial 1.888.231.8191 approximately 10 minutes prior to the call.

AutoCanada's presentation that will be discussed on the conference call is available at the Company's website at www.autocan.ca.

This conference call will also be webcast live over the internet and can be accessed by all interested parties at the following URL: https://www.autocan.ca/investors/Q42018/

About AutoCanada

AutoCanada, a leading North American multi-location automobile dealership group currently operating 67 franchised dealerships, comprised of 28 brands, in eight provinces in Canada as well as a group in Illinois, USA and has over 4,200 employees. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, Smart, BMW, MINI, Volvo, Toyota, Lincoln, and Honda branded vehicles. In 2018, our dealerships sold approximately 66,000 vehicles and processed approximately 915,000 service and collision repair orders in our 1,157 service bays generating revenue in excess of $3 billion.

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

Forward Looking Statements

Certain statements contained in management's discussion and analysis 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 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.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/March2019/14/c4158.html

SOURCE: AutoCanada Inc.

Raj Juneja, Chief Financial Officer, Phone: 780.509.2808, Email: rjuneja@autocan.ca

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