Slide 1: Investor Presentation – Scotiabank Conference
AUTOCANADA INVESTOR PRESENTATION SCOTIABANK CONFERENCE SEPTEMBER 15, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation looks forward in time and deals with other than historical or current facts for AutoCanada Inc. (the “Company”). The use of any of the words “could”, “expect”, “believe”, “will”, “projected”, “estimated”, “anticipated” and
Slide 3: Who We Are
WHO WE ARE
Slide 4: AutoCanada Overview
AutoCanada Overview A Leading North American Multi-Location Automobile Dealership Group At a Glance1 • One of Canada’s largest multi-location automobile dealership groups with 3,700 49 13 Franchises in Canada Franchises in Illinois, U.S. employees • Only publicly listed auto dealership group in Cana
Slide 5: Investment Highlights
Investment Highlights Large and Highly Fragmented Canadian Resilient Strong Stewards Market with Significant Business Model of Capital Consolidation Opportunities Accelerated Growth Through Complete Business Model Significant Experienced First Mover Advantage Organic Growth Leadership with Canadian
Slide 6: Attractive Canadian Market
Attractive Canadian Market 3,357 Dealerships in Canada AutoCanada NEW 2% VEHICLE MARKET Other Dealers 98% $246 BILLION + 1.9 Million New Vehicles MARKET 3.2 Million Used Vehicles Used Car USED Dealers Franchised New Car VEHICLE 36% Dealers 40% MARKET SHARE Private Parties AutoCanada 22% 2% 6 Source:
Slide 7: Stable Canadian Automotive Markets
Stable Canadian Automotive Markets Resilient Business Model Historically Stable Growing New and Used Retail Vehicle Sales in Canada1 ($M) New Used Units in Operation 27.7 5.0 5.0 5.2 4.6 4.8 17.1 4.4 4.5 4.5 4.5 4.5 4.3 4.3 4.3 3.8 3.9 3.9 4.0 3.6 3.6 3.8 00' 01' 02' 03' 04' 05' 06' 07' 08' 09' 10'
Slide 8: Revenue Diversity Across Brands and Geographies
Revenue Diversity Across Brands and Geographies Resilient Business Model % of AutoCanada Revenue by Region 1 AUTOCANADA CANADIAN BC NEW VEHICLE MIX 13% 23.6% Brand 13.0% Segment AB Segment Brand Revenue % % 23.6% (excl. Calgary) MB Hyundai 9% 7.5% Nissan 6% CALGARY SK QC Import 26% Infiniti 1% 10.1%
Slide 9: Dealership Locations and Brands
Dealership Locations and Brands Resilient Business Model AutoCanada Owns Some of the Best Performing Dealerships in Canada British Columbia Alberta Dealership Awards1 Abbotsford Volkswagen Airdrie Dodge Fish Creek Nissan Grande Prairie Volkswagen Ponoka Chrysler Chilliwack Volkswagen Capital Jeep Do
Slide 10: Profitable Product Mix & Diverse Earnings Streams Provide Stability
Profitable Product Mix & Diverse Earnings Streams Provide Stability Resilient Business Model New Used PS&CR F&I 5% 19% 14% 27% 26% 68% Go Forward initiatives 41% focused on higher margin 81% segments 55% 9% 32% 23% REVENUE1 GROSS PROFIT1 ~20% of our revenue drives ~70% of gross profit 10 1Data refle
Slide 11: Drive Growth Through Optimization of Finance & Insurance
Drive Growth Through Optimization of Finance & Insurance Significant Organic Growth Opportunities Resiliency • Dedicated F&I team with in-house training team to Same Store F&I Gross Profit ($M) educate dealership network on standardized 35 product portfolio and sales process 29 31 27 32 33 24 26 • E
Slide 12: Service Bay Occupancy & Business Development Centre
Service Bay Occupancy & Business Development Centre (BDC) Significant Organic Growth Opportunities • BDC is a call centre dedicated to handle all Same Store Parts, Service & Collision Repair service work appointment bookings across Gross Profit ($M) our Canadian dealerships 52 49 47 49 45 44 41 38 P
Slide 13: RightRide – Fueling Organic Growth
RightRide – Fueling Organic Growth Significant Organic Growth Opportunities • Operate within 4 dealerships and opened 3 standalone locations as at Q2 2020 • Ability to offer attractive financing products to credit-challenged customers • No credit risk retained by AutoCanada • Geared to today’s econo
Slide 14: Project 50 – Increasing Used Vehicles Sales
Project 50 – Increasing Used Vehicles Sales Significant Organic Growth Opportunities • Additive to new vehicles to grow total unit sales • Large addressable used market in Canada • Drives incremental revenues in high margin business segments (F&I and PS&CR) • Counter-cyclical and protects against re
Slide 15: Collision Centre Expansion
Collision Centre Expansion Significant Organic Growth Opportunities • Currently operating 15 locations, predominantly within dealerships • Collision centre operations add to stability of revenues, significant growth opportunity in a $6B market1 • Initiatives include: o Consolidation of existing cent
Slide 16: Well Positioned for Industry Consolidation Through Disciplined M&A Strategy
Well Positioned for Industry Consolidation Through Disciplined M&A Strategy Significant Consolidation Opportunities Acquisitions are a key part of Elements of Attractive Acquisitions capital allocation strategy Disciplined approach to evaluating ▪ Accretive acquisitions ▪ Attractive balance sheet me
Slide 17: Embracing Secular Trends
Digital Retail Initiative Initial Focus on the Canadian Pre-Owned Seamless Omni-Channel Vehicle Market Experience (Largest Segment of Market) (Fully Online to In-Store) AutoCanada’s Digital Retail Strategy Build-out / Acquire Used Car Superstores Draw on to Build Foundation AutoCanada’s Expertise ac
Slide 18: Generated $178M of Free Cash Flow
Generated $178M of Free Cash Flow Increase of ~$200M TTM Compared to Prior Year PROVEN ABILITY TO REDUCE LEVERAGE ($M) • Target net debt leverage of ~2.5x Debt EBITDA NET DEBT LEVERAGE Q2 2020 ($M) Floorplan 727.7 • Expect to trend back towards target debt leverage or better in 2021 Long Term Debt 2
Slide 19: Capital Allocation Strategy
Capital Allocation Strategy Strong Stewards of Capital • AutoCanada capital allocation aligned with business strategy, growth opportunities and free cash flow profile CAPITAL ALLOCATION PRIORITIES 1 2 3 4 Organic Growth / Internal M&A / Strategic Liability Management Return to Shareholders Investmen
Slide 20: New Management Team With Proven Track Record Driving Vision & Strategy
New Management Team With Proven Track Record Driving Vision & Strategy Experienced Leadership Team Paul Antony Michael Rawluk Mike Borys Tamara Darvis Peter Hong Executive Chairman President of Canadian Chief Financial Officer President of U.S. Chief Strategy Officer Operations Operations Joined May
Slide 21: Q2 2020 Results
Q2 2020 RESULTS
Slide 22: Q2 2020 Results Overview
Q2 2020 Results Overview Outperformed Market, Significantly Reduced Net Debt, Advanced Strategies Second Quarter 2020 Highlights • Canadian total YoY retail unit sales progressively improved from a decrease of (50)% for the month of April to a decrease of (25)% for the month of May to an increase of
Slide 23: Q2 2020 Results Continued
Q2 2020 Results Continued Despite COVID-19 Impacts, Free Cash Flow of $52.6M ($M, unless otherwise noted) Q2 2020 Q2 2019 Change YTD 2020 YTD 2019 Change Consolidated Revenue 725.5 945.8 (23.1)% 1,436.3 1,685.2 (14.9)% Gross Profit % 13.5% 16.2% (2.7)% 15.0% 16.6% (1.6)% Adjusted EBITDA 4.8 32.1 (85
Slide 24: Q2 2020 Results – Canadian Operations
Q2 2020 Results Continued Canadian Operations Results • Same store new retail unit sales outperformed market for sixth consecutive quarter, down 23.9% compared to market decrease of 44.3% for brands represented by AutoCanada1 • Used to new retail units ratio increased to 1.00 from 0.73, an increase
Slide 25: Q2 2020 Results – U.S. Operations
Q2 2020 Results Continued U.S. Operations Results • Ongoing government restrictions greater in Chicago than rest of Illinois and most other parts of U.S. • Management continues to focus on profitability by ensuring profits are not sacrificed in pursuit of vehicle unit sales and continued improvement
Slide 26: Free Cash Flow
Free Cash Flow Significant Free Cash Flow Generation – Increase of ~$200M TTM Compared to Prior Year • Free cash flow was $52.6M in Q2 2020 as compared to ($21.8M) in the prior year Year Over Year Swing of ~$200M ($ Millions) (18.5) 178.7 65.8 53.5 52.6 6.1 6.2 1.0 (4.9) (21.8) Q3 18 Q4 18 Q1 19 Q2
Slide 27: Proven Ability to Outperform in New Vehicle Sales
Proven Ability to Outperform in New Vehicle Sales For Sixth Consecutive Quarter, Outperformed Canadian New Retail Market • AutoCanada has been able to outperform the Canadian new vehicle market despite the impact of COVID 19 in 2020 Outperformance largely due to increased experience of general manag
Slide 28: Managing Through COVID-19 Enhancing Agility and Financial Flexibility
Managing Through COVID-19 Enhancing Agility and Financial Flexibility Focus on Preserving Cash and Strengthening the Business • Actions taken with both an eye to managing range of COVID-19 impacts and ensuring we move forward well positioned to deliver exceptional operating performance ✓ Amended Cre
Slide 29: Appendix
APPENDIX
Slide 30: Supplemental Information
Supplemental Information EBITDA and Adjusted EBITDA $M YTD 2020 FY 2019 FY 2018 Net (loss) income (67) (27) (85) Addback: Income taxes (7) 1 2 Depreciation and amortization 21 43 20 Interest charges 19 39 20 EBITDA (34) 56 (43) Addback: Impairment of non-financial assets, net 35 36 102 Financing and
Slide 31: Thank You
AUTOCANADA THANK YOU INVESTORS.AUTOCAN.CA