Autocanada Inc. · TSX:ACQ
Autocanada — Q2 2021 Earnings Presentation
36 slides from Autocanada's earnings presentation, August 2021
Slide 1: AutoCanada Investor Presentation Q2 2021
AUTOCANADA INVESTOR PRESENTATION Q2 2021 AUGUST 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% 12.7 Segment Brand AB Segment Brand Revenue % % 23.8% (excl. Calgary) MB Hyundai 9% 6.9% Nissan 5% CALGARY SK QC Import 25% Infiniti 1% 8.
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% 16% 11% 29% 36% 63% Go Forward initiatives 34% focused on higher margin 84% segments 16% 48% 37% 21% REVENUE1 GROSS PROFIT1 ~15% of our revenue drives ~60% of gross profit 1 As at TTM Q
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 educate Same Store F&I Gross Profit ($M) dealership network on standardized product portfolio and sales process 54.0 46.3 • Eleven consecut
Slide 12: Service Bay Occupancy & Business Development Centre (BDC)
Service Bay Occupancy & Business Development Centre (BDC) Significant Organic Growth Opportunities • BDC is a call centre dedicated to handle all Same Store Parts, Service & Collision Repair service work appointment bookings across Gross Profit ($M) our Canadian dealerships 56.8 50.4 51.6 49.4 49.7
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 • Drives incremental revenues in high margin business segments (F&I and PS&CR) • Counter-cyclical and protects against recessionary environments • Have sold an ave
Slide 14: RightRide – Fueling Organic Growth
RightRide – Fueling Organic Growth Significant Organic Growth Opportunities • No credit risk retained by AutoCanada • Ability to offer attractive financing products to credit-challenged customers • Geared to today’s economy as well as in a declining economy - Extension of Project 50 • Digital sales
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 $160M of Free Cash Flow TTM Q2 2021
Generated $160M of Free Cash Flow TTM Q2 2021 Improved Net Debt Leverage to 0.1x from 0.7x PROVEN ABILITY TO REDUCE LEVERAGE ($M) Debt EBITDA NET DEBT LEVERAGE Q2 2021 ($M) Floorplan 705.7 Long Term Debt 251.7 Cash on Hand (230.1) Net Debt Plus Floorplan 727.2 Less: Floorplan 705.7 Net Debt 21.6 Adj
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 • Advance and actively assess strategic acquisition Acquisitions are a key part of opportunities and develop a robust acquisition pipeline capital allocation strategy • Employ a discip
Slide 19: Strategic Acquisitions
Strategic Acquisitions Auto Bugatti Inc., Collision ▪ Collision centre specializing in luxury vehicles Montreal, Quebec Autohaus of Peoria ▪ Luxury dealership with franchise rights for Porsche, Audi, U.S. (“Peoria”), Peoria Illinois Mercedes-Benz, and Volkswagen ▪ One of Canada’s largest volume used
Slide 20: Management Team With Proven Track Record Driving Vision & Strategy
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 Joine
Slide 21: Environment, Social & Governance (ESG) Overview
Environment, Social & Governance (ESG) Overview Focus on areas that positively impact our business and society • We are committed to responsible business practices and driving continuous improvement of our operations and our relationships with our employees and the communities in which we live and w
Slide 22: Used Digital Retail Strategy
USED DIGITAL RETAIL STRATEGY
Slide 23: 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 24: 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 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 Used to New ratio • Attract consumers earlier in car buyi
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 dry powder to take adv
Slide 27: Q2 2021 Results
Q2 2021 RESULTS
Slide 28: Q2 2021 Results Overview
Q2 2021 Results Overview Record Second Quarter Results - AEBITDA of $70.5 Million, Outpaces Prior Year by 1,360% • Revenue was highest second quarter revenue reported in Company’s history • Canadian used to new retail unit ratio increased to 1.31 from 0.96 last year; TTM ratio improved to 1.13 at Q2
Slide 29: Q2 2021 Results Continued
Q2 2021 Results Continued Record Setting Second Quarter ($M, unless otherwise noted) Q2 2021 Q2 2020 Change Consolidated Revenue 1,281.1 727.4 76.1% Gross Profit % 17.0% 13.5% 3.5 ppts Adjusted EBITDA 70.5 4.8 1,360.0% Adjusted EBITDA % 5.5% 0.7% 4.8 ppts Adjusted EBITDA Pre-IFRS 16 59.6 -5.4 1,210.
Slide 30: Q2 2021 Performance - TTM vs Q2 2019 TTM
Q2 2021 Performance - TTM vs Q2 2019 TTM TTM Results Compared to 2019 Highlights Improvement Over Last 3 Years TTM TTM ($M, unless otherwise noted) Change Q2 2021 Q2 2019 Consolidated Revenue 4,144.1 3,334.9 +809.2 Adjusted EBITDA Pre-IFRS 16 176.4 48.4 +128.0 Adjusted EBITDA Pre-IFRS 16 % 4.3% 1.5%
Slide 31: Canadian Operations Results - Used & F&I Key Drivers
Q2 2021 Results Continued Canadian Operations Results - Used & F&I Key Drivers • Total gross profit percentage increased to 17.3% as compared to normalized 15.8% in the prior year • Used vehicle gross profit percentage increased to 7.7% as compared to normalized 3.8% in the prior year • For the elev
Slide 32: U.S. Operations Results – Breakout Quarter
Q2 2021 Results Continued U.S. Operations Results – Breakout Quarter, Exceptional Performance • Breakout quarter driven by change in management leadership driving shift in operating and sales culture • Actions taken included the strategic build-up of used vehicle inventory, the creation of a dedicat
Slide 33: Free Cash Flow
Free Cash Flow Strong and Consistent Free Cash Flow Generation Over the Past Eight Quarters • Free cash flow was $67.8 million in Q2 2021 as compared to $52.6 million in the prior year 75 $179.3M $159.9M 67.8 65.8 54.8 52.6 53.4 50 25 19.2 19.4 6.2 0 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 19 Q4 19 3
Slide 34: Appendix
APPENDIX
Slide 35: Supplemental Information
Supplemental Information EBITDA and Adjusted EBITDA $M Q2 2021 Q2 2020 Q2 2019 Net (loss) income 38 (20) (4) Addback: Income taxes 14 (4) 5 Depreciation and amortization 10 10 11 Interest charges 11 10 10 EBITDA 73 (4) 22 Addback: Impairment of non-financial assets, net - 4 13 Financing and risk man
Slide 36: Thank You
AUTOCANADA THANK YOU INVESTORS.AUTOCAN.CA