Slide 1: AutoCanada Q3 2018
AutoCanada Q3 2018 NOVEMBER 9, 2018
Slide 2: Forward Looking Statement; Non-GAAP Measures
FORWARD LOOKING STATEMENT Certain statements in this presentation are forward-looking in nature including with respect to, among other things, future performance, non- recurring expenses and the implementation of the Go Forward Plan. These statements include involving known and unknown risks, uncert
Slide 3: Agenda
AGENDA 1. The Business Today 2. Q3 Overview 3. Go Forward Plan 4. Acquisition Strategy 5. Real Estate Strategy 6. Q&A 3
Slide 4: The Business Today
The Business Today
Slide 5: Executive Team
Executive Team Paul Antony, Executive Chair Canada U.S. Michael Rawluk, President Bill Berman, President Raj Juneja, CFO Michael Cunningham, CFO Peter Hong, Chief Strategy Officer 5
Slide 6: AutoCanada: Unprecedented Opportunity
AutoCanada: Unprecedented Opportunity 1. Strong Sector • Strong sales continue, though off record-setting 2017 levels • ACQ has considerable growth potential in existing markets • Advances in technology & low unemployment are expected to continue to drive sales long term 2. Experienced and Motivated
Slide 7: Rebalancing Dealerships Results in Improved Distribution of Revenue and Gross Profit
Rebalancing Dealerships Results in Improved Distribution of Revenue and Gross Profit 2017 to 2018 Revenue (%) Illinois 2017 Atlantic Atlan+c 2018 Provinces Quebec British 2 Ontario Columbia Alberta Manitoba 10 Manitoba 22 Sask. 4 Saskatchewan 4 Ontario Alberta 8 Quebec Bri+sh Columbia 4 0 10 20 30 4
Slide 8: Brand Revenue/Line of Business Revenue & Gross Profit
Brand Revenue/Line of Business Revenue & Gross Profit Brand Revenue % Revenue (%) New vehicles Q317 Q318 FCA Used vehicles Parts, service and collision GM repair Finance, insurance and other Hyundai 0 10 20 30 40 50 60 70 Nissan / Infini+ Gross Profit (%) VW Audi Q317 New vehicles Q318 Used vehicles
Slide 9: Q3 Overview
Q3 Overview
Slide 10: Q3 Corporate Developments
Q3 Corporate Developments Sale/Leaseback Amended Credit Agreement • Executed sale and leaseback transaction with • Negotiated amendment to existing three- Automotive Properties Real Estate year credit agreement Investment Trust for two properties • Increased Total Funded Debt to EBITDA • $55.5 milli
Slide 11: Q3 Financial Highlights
Q3 Financial Highlights Three Months Ended September 30 Consolidated Operational Data 2018 2017 Revenue $866.9 $834.6 - New Vehicle Sales 509.3 497.7 - Used Vehicle Sales 206.7 192.5 - Parts, Service & Collision Repair 113.1 104.8 - Finance & Insurance 37.9 39.6 Gross Profit 134.8 138.0 Operating Ex
Slide 12: Q3 Operating Expenses
Q3 Operating Expenses Go Forward Plan Costs Non-Recurring Expenses • Start-up costs related to new operating • Inventory adjustments divisions • Management transition and other severance – Finance & Insurance costs – Special Finance • Costs associated with winding down dealerships for disposal as pa
Slide 13: U.S. Operations - Update
U.S. Operations - Update • U.S. operations lost $2.2M • Non-recurring expenses of ~$1.4M • Further expense reductions expected by Q1 2019 • Several initiatives being implemented to increase revenues over the course of 2019 in all lines of business 13
Slide 14: FCA Update: Positive Outlook
FCA Update Positive Outlook • Dealerships have significantly reduced inventory levels and are focused on selling down past-model inventory • Better position on this today than at this time last year • Expect new models will lead to an increase in sales – specifically the all new Ram 1500 – Ram has a
Slide 15: Change » Accelerate » Succeed » Grow
Go Forward Plan Change » Accelerate » Succeed » Grow
Slide 16: At AutoCanada, we strive for the best
At AutoCanada, we strive for the best. The best dealerships in Canada, best practices, and nothing but the best for our customers. Our Go Forward Plan is our action plan that will not only get us on the same page, it will also target new opportunities, help streamline our processes, and see us excel
Slide 17: Go Forward Plan Overview
Go Forward Plan Overview 1. Operating as a cohesive team • Leveraging our buying power • Phantom options for GMs to align interests with ACQ shareholders 2. Disposing of non-performing assets • Includes dealerships, land for open points not awarded • Expect to reduce carrying costs and realize proce
Slide 18: Go Forward Plan: Finance & Insurance
Go Forward Plan Optimizing Our Business Finance & Insurance • Optimizing F&I at dealerships for the first time • New offering launched under AutoCanada’s name for used vehicle sales • Training of F&I managers underway • Expect meaningful results in 2019 18
Slide 19: Go Forward Plan: Special Finance
Go Forward Plan Optimizing Our Business Special Finance • New Special Finance Division launched • Led by newly appointed VP with previous success in this area • Heavily focused on sub-prime offering through dealership network • New online special finance brand will launch in 2019 • Expect meaningful
Slide 20: Go Forward Plan: Other Initiatives
Go Forward Plan Optimizing Our Business Other Initiatives • Collision – Initial focus is on optimizing division – New supply contracts; other efficiencies expected • Wholesale Division – Launched new wholesale division to increase sales of used cars 20
Slide 21: Go Forward Plan: Long Term Initiatives
Go Forward Plan Optimizing Our Business Long Term Initiatives • Used Vehicles - Long-term goal is to sell one used vehicle for every new vehicle sold - Project 50 launching this month as a start: initiative to have every dealership sell min. 50 used vehicles/month -Less cyclical part of our business
Slide 22: Acquisition Strategy
Acquisition Strategy • Decisions at attractive EV/EBITDA multiples that are immediately accretive to earnings and free cash flow • Focusing on brand and geographical diversity • Disciplined approach, with proper due diligence on acquisitions • Currently have robust pipeline with many opportunities u
Slide 23: Real Estate Strategy
Real Estate Strategy • Value of our real estate not reflected in our share price • Acquiring real estate increases EV/EBITDA multiples • Plan to dispose of and leaseback up to $50M of real estate in Q4 • Considering longer term real estate strategy 23
Slide 24: We're Changing the Company
We’re Changing the Company • We have a strong foundation from which we can build • We have adopted an ambitious plan, appointed a skilled team, and have over 4,000 people ready to make a difference • We are seeing early signs of improvement … with much more to come
Slide 25: Q&A
Q&A NOVEMBER 9, 2018