Autocanada Inc. · TSX:ACQ
Autocanada — Q3 2020 Earnings Presentation
33 slides from Autocanada's earnings presentation, Nov 13, 2020
Slide 1: AutoCanada Q3 2020 Investor Presentation
AUTOCANADA Q3 2020 INVESTOR PRESENTATION NOVEMBER 13, 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 17 Franchises in Canada Franchises in Illinois, U.S.2 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 3,357 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 % 23.6% 13.0% 12.6 Segment Brand AB Segment Brand Revenue % % 23.1% (excl. Calgary) MB Hyundai 8% 7.4% Nissan 6% CALGARY SK QC Import 26% Infiniti 1% 10
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 ($M) educate dealership network on standardized 41 product portfolio and sales process 33 36 31 32 26 27 • Eigh
Slide 12: Service Bay Occupancy & Business Development Centre (BDC)
Service Bay Occupancy & Business Development Centre (BDC) Significant Organic Growth Opportunities • BDC is a call centre dedicated to handle all Same Store Parts, Service & Collision Repair service work appointment bookings across Gross Profit ($M) our Canadian dealerships 49 52 49 50 47 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 Q3 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: Acquisitions Post Q3 2020
Acquisitions Post Q3 2020 Auto Bugatti Inc., Dorval Quebec ▪ In October 2020, the Company acquired a controlling interest in Auto Bugatti Inc., a collision repair facility specializing in luxury vehicles ▪ The acquired collision repair facility is BMW MINI certified and will provide support to AutoC
Slide 18: 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 19: Generated $178M of Free Cash Flow
Generated $178M of Free Cash Flow Increase of ~$150M TTM Compared to Prior Year PROVEN ABILITY TO REDUCE LEVERAGE ($M) • Target net debt leverage of ~2.5x Debt EBITDA NET DEBT LEVERAGE Q3 2020 ($M) Floorplan 632.9 • Expect to trend back towards target debt leverage or better in 2021 Long Term Debt 1
Slide 20: 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 21: 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 Darvish Peter Hong Executive Chairman President of Canadian Chief Financial Officer President of U.S. Chief Strategy Officer Operations Operations Joined Ma
Slide 22: 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 23: Q3 2020 Results
Q3 2020 RESULTS
Slide 24: Q3 2020 Results Overview
Q3 2020 Results Overview Record-Setting Quarter, Outperformed Market, Significantly Reduced Net Debt Third Quarter 2020 Highlights • Revenue was $1,017.1 million as compared to $981.9 million in the prior year, an increase of 3.6% and the first time the Company has exceeded $1 billion in sales in a
Slide 25: Q3 2020 Results Continued
Q3 2020 Results Continued Record Adjusted EBITDA of $61.1 Million ($M, unless otherwise noted) Q3 2020 Q3 2019 Change Consolidated Revenue 1,017.1 981.9 3.6% Gross Profit % 17.6% 15.4% 2.2 ppts Adjusted EBITDA 61.1 32.5 87.9% Adjusted EBITDA % 6.0% 3.3% 2.7 ppts Adjusted EBITDA Pre-IFRS 16 50.2 23.0
Slide 26: Canadian Operations Results
Q3 2020 Results Continued Canadian Operations Results • Same store new retail unit sales outperformed market for seventh consecutive quarter, up 3.4% compared to market decrease of 4.3% for brands represented by AutoCanada1 • Used to new retail units ratio increased to 0.86 from 0.72 • Finance and i
Slide 27: U.S. Operations Results
Q3 2020 Results Continued U.S. Operations Results • Continued focus on cost management and profitability along with the easing of government restrictions imposed during Q2 2020, and strong market demand contributed to improved results for the U.S. platform • Adjusted EBITDA was $4.7 million, an incr
Slide 28: Free Cash Flow
Free Cash Flow Strong and Consistent Free Cash Flow Generation Over the Past Five Quarters • Free cash flow was $53.4 million in Q3 2020 as compared to $54.8 million in the prior year Year Over Year Swing of Close to $150M ($M) 75 $29.2M $178M 65.8 54.8 52.6 53.4 50 25 6.2 1.0 0 (4.9) (21.8) Q4 18 Q
Slide 29: Proven Ability to Outperform in New Vehicle Sales
Proven Ability to Outperform in New Vehicle Sales For Seventh 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 man
Slide 30: 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 31: Appendix
APPENDIX
Slide 32: Supplemental Information
Supplemental Information EBITDA and Adjusted EBITDA $M YTD 2020 FY 2019 FY 2018 Net (loss) income (31) (27) (85) Addback: Income taxes (3) 1 2 Depreciation and amortization 32 43 20 Interest charges 29 39 20 EBITDA 27 56 (43) Addback: Impairment of non-financial assets, net 36 36 102 Financing and r
Slide 33: Thank You
AUTOCANADA THANK YOU INVESTORS.AUTOCAN.CA