Autocanada Inc. · TSX:ACQ
Autocanada — Q1 2021 Earnings Presentation
36 slides from Autocanada's earnings presentation, May 2021
Slide 1: AutoCanada Investor Presentation May 2021
AUTOCANADA INVESTOR PRESENTATION MAY 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statement Certain information contained in this presentation is forward-looking information within the meaning of applicable Canadian securities legislation. The use of any of the words “could”, “expect”, “believe”, “will”, “projected”, “estimated” and simi
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 ~4,000 49 17 Franchises in Canada Franchises in Illinois, U.S. employees • Only publicly listed auto dealership group in Can
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 3,359 Dealerships in Canada AutoCanada NEW 2% VEHICLE MARKET Other Dealers 98% $244 BILLION + 1.6 Million New Vehicles MARKET 3.0 Million Used Vehicles Used Car USED Dealers 33% Franchised VEHICLE New Car Dealers MARKET 44% SHARE Private Parties AutoCanada 21% 2% 6 Source:
Slide 7: Stable Canadian Automotive Markets
Stable Canadian Automotive Markets Resilient Business Model Historically Stable Growing New and Used Retail Vehicle Sales in Canada1 ($M) • Consumers continue to buy more vehicles every • Increase in first-time buyers supports increasing year, further supporting our continued growth used vehicle sal
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 % 23.6% 13.0% 13.9 Segment Brand AB Segment Brand Revenue % % 27.1% (excl. Calgary) MB Hyundai 7% 7.8% Nissan 4% CALGARY SK QC Import 24% Infiniti 1% 9.
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 6% 17% 11% 31% 37% 66% Go Forward initiatives 35% focused on higher margin 83% segments 14% 46% 34% 20% REVENUE1 GROSS PROFIT1 ~20% of our revenue drives ~70% of gross profit 1 As at Q1 20
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 ($M) educate dealership network on standardized 46 product portfolio and sales process 36 41 36 32 33 31 29 • T
Slide 12: Service Bay Occupancy & Business Development Centre (BDC)
Service Bay Occupancy & Business Development Centre (BDC) Significant Organic Growth Opportunities • BDC is a call centre dedicated to handle all Same Store Parts, Service & Collision Repair service work appointment bookings across Gross Profit ($M) our Canadian dealerships 52 49 50 50 50 48 44 38 P
Slide 13: 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 14: RightRide – Fueling Organic Growth
RightRide – Fueling Organic Growth Significant Organic Growth Opportunities • Operate within 1 dealership and have opened 6 standalone locations as at Q1 2021 • Ability to offer attractive financing products to credit-challenged customers • No credit risk retained by AutoCanada • Geared to today’s e
Slide 15: Collision Centre Expansion
Collision Centre Expansion Significant Organic Growth Opportunities • Currently operating 17 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: Generated $145M of Free Cash Flow
Generated $145M of Free Cash Flow Increase of ~$40M TTM Compared to Prior Year PROVEN ABILITY TO REDUCE LEVERAGE ($M) Debt EBITDA NET DEBT LEVERAGE Q1 2021 ($M) Floorplan 893.1 Long Term Debt 192.2 Cash on Hand (119.6) Net Debt Plus Floorplan 965.7 Less: Floorplan 893.1 Net Debt 72.6 Adjusted EBITDA
Slide 17: 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 18: 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 • Advance and actively assess strategic acquisition capital allocation strategy opportunities and develop a robust acquisition pipeline Disciplined appro
Slide 19: 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 Peter Hong Executive Chairman President of Canadian Operations Chief Financial Officer Chief Strategy Officer & General Counsel, Joined May 2018 Joined June 2018 J
Slide 20: Used Digital Retail Strategy
USED DIGITAL RETAIL STRATEGY
Slide 21: COVID-19 Pandemic Accelerating Consumer Shift to Digital
COVID-19 Pandemic Accelerating Consumer Shift to Digital U.S. eCommerce penetration experienced Increased Focus on Car Ownership and 10 years’ growth in 3 months eCommerce1 93% Using personal cars more often 40% Considering buying a car 33% Moving faster to buy a car due to COVID-19 Open to Car Buyi
Slide 22: AutoCanada's Digital Evolution Begins with Canadian Pre-Owned Vehicle Market
AutoCanada’s Digital Evolution Begins with a Focus on the Stable Canadian Pre-Owned Vehicle Market Canadian Used Vehicle Market – Stable Through Economic Cycles1 (units, 000’s) 3000 2000 1000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sou
Slide 23: Embracing Secular Trends
Used Digital Retail Initiative Focus on the Canadian Pre-Owned Seamless Omni-Channel Vehicle Market Experience (Largest Segment of Market) (Fully Online to In-Store) AutoCanada’s Used Digital Retail Strategy Build-out / Acquire Used Car Superstores to Build Foundation Draw on AutoCanada’s Expertise
Slide 24: Used Digital Retail Strategy Highlights
Used Digital Retail Strategy Highlights First-mover with significant structural advantage – scale, AutoCanada leadership and domain expertise Attractive market entry with low capital intensity Drive meaningful improvement beyond current ~1:1 Used to New ratio Attract consumers earlier in car buying
Slide 25: Crawl, Walk, Run – Disciplined Approach
Crawl, Walk, Run – Disciplined Approach • First-mover with significant structural advantage – scale, AutoCanada leadership and domain expertise • Attractive market entry with low capital intensity • Drive meaningful improvement beyond current ~1:1 Used to New ratio • Attract consumers earlier in car
Slide 26: In Conclusion – Key Takeaways
In Conclusion – Key Takeaways • Strong progress on building a ‘Complete’ Business Model o Go Forward Plan initiatives taking hold, driving resiliency to deliver top-decile performance in any economic environment • Strengthened balance sheet and capital structure supports ample liquidity to address a
Slide 27: Q1 2021 Results
Q1 2021 RESULTS
Slide 28: Q1 2021 Results Overview
Q1 2021 Results Overview Record First Quarter Results - AEBITDA of $47.2 Million, Outpaces Prior Year by 723% • Revenue was highest first quarter revenue reported in Company’s history • Outperformed the Canadian new retail vehicle market for the ninth consecutive quarter • Canadian used to new retai
Slide 29: Q1 2021 Results Continued
Q1 2021 Results Continued Record Setting First Quarter ($M, unless otherwise noted) Q1 2021 Q1 2020 Change Consolidated Revenue 969.8 708.8 36.8% Gross Profit % 17.3% 16.5% 0.7 ppts Adjusted EBITDA1 47.2 5.7 723.1% Adjusted EBITDA % 4.9% 0.8% 4.1 ppts Adjusted EBITDA Pre-IFRS 16 36.1 -4.4 912.9% Adj
Slide 30: Q1 2021 Results Continued – Canadian Operations
Q1 2021 Results Continued Canadian Operations Results • For the ninth consecutive quarter, we outperformed the Canadian market as same store new retail unit sales increased by 29.8% as compared to the market increase of 15.2%1 • Canadian used to new retail unit ratio increased to 1.29 from 1.08 last
Slide 31: Q1 2021 Results Continued – U.S. Operations
Q1 2021 Results Continued U.S. Operations Results • Despite facing market headwinds, including inventory shortages and stringent pandemic related restrictions in the City of Chicago, U.S. operations were buoyed by strong market demand and posted improved results compared to prior year. Q1 2021 resul
Slide 32: Free Cash Flow
Free Cash Flow Strong and Consistent Free Cash Flow Generation Over the Past Seven Quarters • Free cash flow was $19.4 million in Q1 2021 as compared to $6.2 million in the prior year Year Over Year Swing of Close to $40M ($M) 75 $105.0M $144.6M 65.8 54.8 52.6 53.4 50 25 19.2 19.4 6.2 0 (21.8) Q2 20
Slide 33: Consistent and Sustained Market Outperformance
Consistent and Sustained Market Outperformance Q1 2021 is AutoCanada’s Ninth Consecutive Quarter of Market Outperformance • AutoCanada’s outperformance is attributable to a combination of time in position related to the establishment of our complete business model, an alignment of compensation struc
Slide 34: Appendix
APPENDIX
Slide 35: Supplemental Information
Supplemental Information EBITDA and Adjusted EBITDA $M Q1 2021 Q1 2020 Q1 2019 Net (loss) income 21 (47) (3) Addback: Income taxes 7 (3) - Depreciation and amortization 10 11 10 Interest charges 11 9 10 EBITDA 49 (30) 17 Addback: Impairment of non-financial assets, net - 32 - Financing and risk mana
Slide 36: Thank You
AUTOCANADA THANK YOU INVESTORS.AUTOCAN.CA