2014

AutoCanada Inc. announces record fourth quarter and record annual financial results for the period ended December 31, 2012:

A conference call to discuss the results for the year ended December 31, 2012 will be held on March 27, 2013 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time). To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca.

EDMONTON, March 26, 2013 /PRNewswire/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the year ended December 31, 2012 and the three month period ended December 31, 2012.

2012 Fourth Quarter Operating Results

  • Revenue increased 9.8% or $23.4 million
  • Gross profit increased by 14.4% or $6.1 million
  • Same store revenue increased by 7.4%
  • Same store gross profit increased by 11.9%
  • EBITDA was $10.3 million vs. $7.6 million in Q4 of 2011, a 35.5% increase
  • The number of new vehicles retailed increased by 16.9%
  • The number of used vehicles retailed increased by 1.8%
  • Repair orders completed for the quarter were up 2.8%
  • Same store repair orders completed for the quarter were down 0.7%

In commenting on the financial results for the three month period ended December 31, 2012, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The fourth quarter of 2012 was exceptionally strong with over $10 million in EBITDA.  Normally, we experience lower results in the first and fourth quarters of the fiscal year, but strong sales momentum from the third quarter of 2012 seemed to continue well into the fourth quarter.  We are of course very pleased with these results."

2012 Annual Operating Results

  • Revenue increased by 9.4% or $94.6 million to $1.1 billion
  • Gross profit increased by 12.5% or $21.2 million
  • Same store revenue increased by 8.6%
  • Same store gross profit increased by 10.9%
  • EBITDA was $37.9 million vs. $29.1 million in 2011, a 30.2% increase
  • The number of new vehicles retailed increased by 17.0%
  • The number of used vehicles retailed increased by 10.7%
  • Repair orders completed for the year were up 1.4%
  • Same store repair orders completed for the year were up 4.4%

In commenting on the financial results for the year ended December 31, 2012, Mr. Priestner stated that, "The 2012 fiscal year was an excellent year to be an auto dealer in Canada.  With our Company's double-digit growth in the number of new and used vehicles retailed, we achieved record sales and normalized earnings for the Company in 2012.  We are particularly proud of the performance of our dealership teams, head office team and Manufacturer partners, all of whom performed exceptionally well in 2012."  With respect to recent growth opportunities announced, Mr. Priestner further commented, "We are very pleased to have added two new significant brands during the year.  The announcement of GM Canada's approval of our investment in three General Motors dealerships over the past year has increased our ability to grow and contribute to shareholder value.  The award of a Kia open point in our home market in Edmonton also presents a great opportunity for AutoCanada to grow its dealership base with another excellent brand.  With the recent increase in potential acquisition activity, the Company is in a very good position to capitalize on this development over the next year and beyond."  Mr. Priestner further stated.

Fourth Quarter 2012 Highlights

  • For the fourth quarter of 2012, the Company generated normalized earnings of $6.4 million or basic and diluted earnings per share of $0.32.  Normalized pre-tax earnings increased by $2.8 million to $8.9 million in the fourth quarter of 2012 as compared to $6.2 million in the same period in 2011.

  • Same store revenue increased by 7.4% in the fourth quarter of 2012, compared to the same quarter in 2011.  Same store gross profit increased by 11.9% in the fourth quarter of 2012, compared to the same quarter in 2011.

  • Revenue from existing and new dealerships increased 9.8% to $262.1 million in the fourth quarter of 2012 from $238.7 million in the same quarter in 2011.

  • Gross profit from existing and new dealerships increased 14.4% to $48.4 million in the fourth quarter of 2012 from $42.3 million in the same quarter in 2011.

  • EBITDA increased 35.5% to $10.3 million in the fourth quarter of 2012 from $7.6 million in the same quarter in 2011.

  • Free cash flow decreased to $0.9 million in the fourth quarter of 2012 or $0.05 per share as compared to $9.0 million or $0.45 per share in the fourth quarter of 2011.

  • Adjusted free cash flow increased to $9.0 million in the fourth quarter of 2012 or $0.45 per share as compared to $7.4 million or $0.37 per share in 2011.

  • Adjusted return on capital employed increased to 6.6% in the fourth quarter of 2012 as compared to 5.3% in 2011.

2012 Highlights

  • For the year ended December 31, 2012, the Company generated normalized earnings of $24.1 million, or basic and fully diluted earnings per share of $1.21.  Normalized pre-tax earnings increased by $8.8 million to $32.6 million for the year ended December 31, 2012 as compared to $23.8 million in 2011.

  • Same store revenue and gross profit increased by 8.6% and 10.9% respectively in the year ended December 31, 2012, compared to the results of the Company for the 2011 year.

  • Revenue from existing and new dealerships increased 9.4% to $1.10 billion in the year ended December 31, 2012 from the $1.01 billion that was generated by the Company in 2011.

  • Gross profit from existing and new dealerships increased by 12.5% to $190.4 million in the year ended December 31, 2012 from the $169.2 million that was generated by the Company in the 2011 year.

  • EBITDA increased 30.2% to $37.9 million for the year ended December 31, 2012 from the $29.1 million that was generated by the Company in the 2011 year.

  • Free cash flow decreased to $18.9 million in the year ended December 31, 2012 or $0.96 per share as compared to $27.1 million or $1.36 per share in 2011.

  • Adjusted free cash flow increased to $31.8 million in the year ended December 31, 2012 or $1.60 per share as compared to $27.7 million or $1.39 per share in 2011.

Dividends

Management reviews the Company's financial results on a monthly basis.  The Board of Directors reviews the financial results on a quarterly basis, or as requested by Management, and determines the level of dividend based on a number of factors.

The following table summarizes the dividends declared by the Company in 2012:

(In thousands of dollars)                  
              Total
  Record date Payment date           Declared Paid
                $ $
  February 28, 2012
May 31, 2012
August 31, 2012
November 30, 2012
March 15, 2012
June 15, 2012
September 17, 2012
December 17, 2012
          2,783
2,982
3,181
3,380
2,783
2,982
3,181
3,380

On February 15, 2013, the Board declared a quarterly eligible dividend of $0.18 per common share on AutoCanada's outstanding common shares, payable on March 15, 2013 to shareholders of record at the close of business on February 28, 2013.  The quarterly eligible dividend of $0.18 represents an annual dividend rate of $0.72 per share or a 5.9% increase in the dividend from the prior quarter.  The next scheduled dividend review will be in May 2013.

Real Estate

On March 26, 2013, the Real Estate Committee, comprised of independent members of the Board of Directors, completed its evaluation of the purchase of dealership real estate owned by subsidiaries of Canada One Auto Group.  Upon determining that the purchase would be accretive to shareholders and would provide significant positive cash flow to the Company, the Company has entered into a letter of intent to purchase 11 of these properties currently being leased by the Company. The closing date is scheduled for 90 days, with the Company having the option to extend a further 90 days.  The Company has sufficient short term liquidity available to fund the non-mortgage financed portion of the transaction.

As previously disclosed; Pat Priestner, CEO, and Tom Orysiuk, President, are shareholders and directors of Canada One Auto Group and as such are not members of the Real Estate Committee.

The purchase price of the 11 properties will be $58,140,000, not including transaction costs and taxes.  Once completed, the Company will achieve annual lease savings of $4,988,000, not including the impact of future increases in lease costs contained in the current lease agreements.  The Committee estimates annual adjusted free cash flow accretion of $0.10 to $0.12 per share and earnings per share accretion of $0.02 to $0.04 per share as a result of the transaction; based on the Company's current cost of capital and assuming no changes in market rates or assumptions.  The purchase of the real estate will have no impact on general repairs and maintenance expense, insurance or property taxes associated with the buildings as the tenant is currently responsible for these expenses under the current lease agreements.

SELECTED ANNUAL FINANCIAL INFORMATION

The following table shows the audited results of the Company for the years ended December 31, 2010, December 31, 2011 and December 31, 2012.  The results of operations for these periods are not necessarily indicative of the results of operations to be expected in any given comparable period.

(In thousands of dollars except Operating
Data and gross profit %)
The Company The Company The Company
  (Audited) (Audited) (Audited)
       
  2010 2011 2012
Income Statement Data
Revenue
869,507 1,009,326 1,103,913
  New vehicles 514,676 640,722 683,375
  Used vehicles 202,552 206,030 243,351
  Parts, service &  collision repair 108,558 110,678 114,600
  Finance, insurance & other 43,721 51,896 62,587
Gross profit 150,020 169,161 190,365
  New vehicles 38,164 47,705 57,575
  Used vehicles 16,885 17,381 16,312
  Parts, service & collision repair 55,888 57,480 59,643
  Finance, insurance & other 39,083 46,595 56,835
Gross profit % 17.3% 16.8% 17.2%
Operating expenses 130,237 136,846 149,140
Operating expenses as % of gross profit 86.8% 80.9% 78.3%
Finance costs - floorplan 7,536 8,057 8,832
Finance costs - long term debt 1,076 1,136 984
(Reversal of) Impairment of intangible assets (8,059) (25,543) (222)
Income taxes 4,956 12,509 8,576
Net earnings 14,596 36,784 24,236
EBITDA 1 16,740 29,137 37,885
Cash dividends per share 0.120 0.310 0.620
Basic earnings (loss) per share 0.734 1.850 1.222
Diluted earnings (loss) per share 0.734 1.850 1.222
       
Operating Data
Vehicles (new and used) sold
24,239 27,998 29,780
New retail vehicles sold 12,767 14,499 16,226
New fleet vehicles sold 2,717 4,832 4,096
Used retail vehicles sold 8,755 8,667 9,458
Number of service & collision repair orders completed 309,705 305,298 309,488
Absorption rate 2 86% 88% 86%
# of dealerships 23 24 24
# of same store dealerships 3 21 21 22
# of service bays at period end 339 333 333
Same store revenue growth 3 10.5% 17.3% 8.6%
Same store gross profit growth 3 4.1% 13.9% 10.9%

1  EBITDA has been calculated as described under "NON-GAAP MEASURES".
2  Absorption has been calculated as described under "NON-GAAP MEASURES".
3  Same store revenue growth & same store gross profit growth is calculated using franchised automobile dealerships that we have owned for at least 2 full years.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table shows the unaudited results of the Company for each of the eight most recently completed quarters.  The results of operations for these periods are not necessarily indicative of the results of operations to be expected in any given comparable period.

(In thousands of dollars except Operating
Data and gross profit %)
               
  Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Income Statement Data                
  New vehicles 128,303 196,850 172,688 142,881 147,383 186,649 190,139 159,204
  Used vehicles 44,906 52,054 55,351 53,719 60,453 62,822 62,816 57,260
  Parts, service & collision repair 26,462 28,256 26,980 28,980 26,913 28,847 28,593 30,247
  Finance, insurance & other 11,113 13,577 14,115 13,091 13,648 16,451 17,133 15,355
Revenue 210,784 290,737 269,134 238,671 248,397 294,769 298,681 262,066
                 
  New vehicles 9,724 13,974 12,740 11,267 12,046 14,647 15,461 15,421
  Used vehicles 3,486 4,301 5,020 4,574 4,412 4,237 3,994 3,668
  Parts, service & collision repair 13,278 15,159 14,492 14,551 14,004 15,228 15,078 15,333
  Finance, insurance & other 9,947 12,118 12,647 11,883 12,387 14,878 15,579 13,992
Gross profit 36,435 45,552 44,899 42,275 42,849 48,990 50,112 48,414
                 
Gross profit % 17.3% 15.7% 16.7% 17.7% 17.3% 16.6% 16.8% 18.5%
Operating expenses 31,891 35,127 35,742 34,086 35,381 37,661 38,361 37,737
Operating exp. as % of gross profit 87.5% 77.1% 79.6% 80.7% 82.6% 76.8% 76.6% 78.1%
Finance costs - floorplan 1,685 2,311 2,190 1,871 1,935 2,511 2,645 1,741
Finance costs - long-term debt 283 323 296 234 230 256 267 231
Reversal of impairment of intangibles - - - (25,543) - - - (222)
Income taxes 690 2,029 1,646 8,144 1,441 2,216 2,379 2,540
Net earnings 4 1,995 5,951 5,230 23,608 4,113 6,711 6,807 6,605
EBITDA 1, 4 4,047 9,321 8,216 7,553 6,809 10,208 10,592 10,276
Basic earnings (loss) per share 0.100 0.299 0.263 1.187 0.207 0.338 0.344 0.334
Diluted earnings (loss) per share 0.100 0.299 0.263 1.187 0.207 0.338 0.344 0.334
                 
Operating Data
Vehicles (new and used) sold
5,826 8,210 7,649 6,313 6,836 8,154 8,087 6,703
New retail vehicles sold 3,050 4,158 3,886 3,405 3,434 4,400 4,410 3,982
New fleet vehicles sold 796 1,900 1,361 775 969 1,313 1,265 549
Used retail vehicles sold 1,980 2,152 2,402 2,133 2,433 2,441 2,412 2,172
Number of service & collision repair orders completed 72,360 80,851 76,176 75,911 74,439 78,104 78,944 78,001
Absorption rate 2 80% 91% 90% 91% 81% 89% 89% 85%
# of dealerships at period end 23 22 22 24 24 24 24 24
# of same store dealerships 3 22 21 21 21 21 21 22 22
# of service bays at period end 339 322 322 333 333 333 333 333
Same store revenue growth 3 2.7% 19.3% 21.6% 24.8% 20.2% 2.4% 8.0% 7.4%
Same store gross profit growth 3 2.9% 8.2% 22.9% 20.6% 18.3% 7.1% 7.9% 11.9%
                 
Balance Sheet Data                
Cash and cash equivalents 39,337 43,837 49,366 53,641 53,403 51,198 54,255 34,472
Restricted cash - - - - - - - 10,000
Accounts receivable 42,260 51,539 44,172 42,448 51,380 52,042 54,148 47,944
Inventories 134,865 149,481 159,732 136,869 155,778 201,302 193,990 199,226
Revolving floorplan facilities 152,075 172,600 175,291 150,816 178,145 221,174 212,840 203,525

1  EBITDA has been calculated as described under "NON-GAAP MEASURES".
2  Absorption has been calculated as described under "NON-GAAP MEASURES".
3  Same store revenue growth & same store gross profit growth is calculated using franchised automobile dealerships that we have owned for at least 2 full years.
4  The results from operations have been lower in the first and fourth quarters of each year, largely due to consumer purchasing patterns during the holiday season, inclement weather and the reduced number of business days during the holiday season. As a result, our financial performance is generally not as strong during the first and fourth quarters than during the other quarters of each fiscal year. The timing of acquisitions may have also caused substantial fluctuations in operating results from quarter to quarter.

The following table summarizes the results for the year ended December 31, 2012, on a same store basis by revenue source, and compares these results to the same periods in 2011.

Same Store Gross Profit and Gross Profit Percentage
  For the Year Ended
  Gross Profit   Gross Profit %
(In thousands of dollars except %
change and gross profit %)
    Dec. 31,
2012
Dec. 31,
2011
%
Change
  Dec. 31,
2012
Dec. 31,
2011
Change
                   
Revenue Source
New vehicles
    55,573 46,858 18.6%   8.3% 7.6% 0.9%
Used vehicles     15,715 17,271 (9.0)%   6.7% 8.5%       (1.9)%
Finance, insurance and other     54,933 45,938 19.6%   90.6% 89.8% 1.0%
Subtotal     126,221 110,067 14.7%        
Parts, service and collision repair     58,009 56,077 3.4%   52.0% 51.9%       0.7%
Total     184,230 166,144 10.9%   17.2% 16.8% 0.3%

The following table summarizes the results for the three-month period ended December 31, 2012 on a same store basis by revenue source and compares these results to the same period in 2011.

Same Store Gross Profit and Gross Profit Percentage
  For the Three-Month Period Ended
  Gross Profit   Gross Profit %
(In thousands of dollars except %
change and gross profit %)
Dec. 31,
2012
Dec. 31,
2011
%
Change
  Dec. 31,
2012
Dec. 31,
2011
Change
Revenue Source              
New vehicles 14,853 11,064 34.3%   9.6% 7.9% 1.8%
Used vehicles 3,594 4,504 (20.2)%   6.5% 8.5%       (2.0)%
Finance, insurance and other 13,260 11,734 13.0%   91.3% 90.8%         0.4%
Subtotal 31,707 27,302 16.1%        
Parts, service and collision repair 14,907 14,355 3.8%   51.1% 50.5%         0.6%
Total 46,614 41,657 11.9%   18.4% 17.7% 0.7%

About AutoCanada

AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 28 franchised dealerships in six provinces and has over 1,200 employees.  AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Chevrolet, GMC, Buick, Infiniti, Nissan, Hyundai, Subaru, Mitsubishi, and Volkswagen branded vehicles.  In 2012, our dealerships sold approximately 30,000 vehicles and processed approximately 309,000 service and collision repair orders in our 333 service bays during that time.

Our dealerships derive their revenue from the following four inter-related business operations: new vehicle sales; used vehicle sales; parts, service and collision repair; and finance and insurance. While new vehicle sales are the most important source of revenue, they generally result in lower gross profits than used vehicle sales, parts, service and collision repair operations and finance and insurance sales. Overall gross profit margins increase as revenues from higher margin operations increase relative to revenues from lower margin operations. We earn fees for arranging financing on new and used vehicle purchases on behalf of third parties.  Under our agreements with our retail financing sources we are required to collect and provide accurate financial information, which if not accurate, may require us to be responsible for the underlying loan provided to the consumer.

Forward Looking Statements

Certain statements contained in this press release are forward-looking statements and information (collectively "forward-looking statements"), within the meaning of the applicable Canadian securities legislation.  We hereby provide cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in these forward-looking statements.  Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "projection", "vision", "goals", "objective", "target", "schedules", "outlook", "anticipate", "expect", "estimate", "could", "should", "expect", "plan", "seek", "may", "intend", "likely", "will", "believe" and similar expressions are not historical facts and are forward-looking and may involve estimates and assumptions and are subject to risks, uncertainties and other factors some of which are beyond our control and difficult to predict.  Accordingly, these factors could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.  Therefore, any such forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document.

The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.  New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

NON-GAAP MEASURES

This press release contains certain financial measures that do not have any standardized meaning prescribed by Canadian GAAP.  Therefore, these financial measures may not be comparable to similar measures presented by other issuers.  Investors are cautioned these measures should not be construed as an alternative to net earnings (loss) or to cash provided by (used in) operating, investing, and financing activities determined in accordance with Canadian GAAP, as indicators of our performance.  We provide these measures to assist investors in determining our ability to generate earnings and cash provided by (used in) operating activities and to provide additional information on how these cash resources are used.  We list and define these "NON-GAAP MEASURES" below:

EBITDA

EBITDA is a measure commonly reported and widely used by investors as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric.  The Company believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization and asset impairment charges which are non-cash in nature and can vary significantly depending upon accounting methods or non-operating factors such as historical cost.  References to "EBITDA" are to earnings before interest expense (other than interest expense on floorplan financing and other interest), income taxes, depreciation, amortization and asset impairment charges.

EBIT

EBIT is a measure used by management in the calculation of Return on capital employed (defined below).  Management's calculation of EBIT is EBITDA (calculated above) less depreciation and amortization.

Normalized Earnings

Normalized earnings are calculated by adding back the after-tax effect of impairment or reversals of impairment of intangible assets and impairments of goodwill.  Adding back these non-cash charges to net earnings allows management to assess the net earnings of the Company from ongoing operations.

Normalized Pre-Tax Earnings

Normalized pre-tax earnings are calculated by adding back the impairment or reversals of impairment of intangible assets and impairments of goodwill.  Adding back these non-cash charges to pre-tax net earnings allows management to assess the pre-tax net earnings of the Company from ongoing operations.

Free Cash Flow

Free cash flow is a measure used by management to evaluate its performance.  While the closest Canadian GAAP measure is cash provided by operating activities, free cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures.  It shall be noted that although we consider this measure to be free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes.  Investors should be cautioned that free cash flow may not actually be available for growth or distribution of the Company.  References to "Free cash flow" are to cash provided by (used in) operating activities (including the net change in non-cash working capital balances) less capital expenditures (not including acquisitions of dealerships and dealership facilities).

Adjusted Free Cash Flow

Adjusted free cash flow is a measure used by management to evaluate its performance.  Adjusted free cash flow is considered relevant because it provides an indication of how much cash generated by operations before changes in non-cash working capital is available after deducting expenditures for non-growth capital assets.  It shall be noted that although we consider this measure to be adjusted free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes.  Investors should be cautioned that adjusted free cash flow may not actually be available for growth or distribution of the Company.  References to "Adjusted free cash flow" are to cash provided by (used in) operating activities (before changes in non-cash working capital balances) less non-growth capital expenditures.

Adjusted Average Capital Employed

Adjusted average capital employed is a measure used by management to determine the amount of capital invested in AutoCanada and is used in the measure of Adjusted Return on Capital Employed (described below).  Adjusted average capital employed is calculated as the average balance of interest bearing debt for the period (including current portion of long term debt, excluding revolving floorplan facilities) and the average balance of shareholders equity for the period, adjusted for impairments of intangible assets, net of deferred tax.  Management does not include future income tax, non-interest bearing debt, or revolving floorplan facilities in the calculation of adjusted average capital employed as it does not consider these items to be capital, but rather debt incurred to finance the operating activities of the Company.

Absorption Rate

Absorption rate is an operating measure commonly used in the retail automotive industry as an indicator of the performance of the parts, service and collision repair operations of a franchised automobile dealership. Absorption rate is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, absorption rate may not be comparable to similar measures presented by other issuers that operate in the retail automotive industry.  References to ''absorption rate'' are to the extent to which the gross profits of a franchised automobile dealership from parts, service and collision repair cover the costs of these departments plus the fixed costs of operating the dealership, but does not include expenses pertaining to our head office. For this purpose, fixed operating costs include fixed salaries and benefits, administration costs, occupancy costs, insurance expense, utilities expense and interest expense (other than interest expense relating to floor plan financing) of the dealerships only.

Average Capital Employed

Average capital employed is a measure used by management to determine the amount of capital invested in AutoCanada and is used in the measure of Return on Capital Employed (described below). Average capital employed is calculated as the average balance of interest bearing debt for the period (including current portion of long term debt, excluding revolving floorplan facilities) and the average balance of shareholders equity for the period.  Management does not include future income tax, non-interest bearing debt, or revolving floorplan facilities in the calculation of average capital employed as it does not consider these items to be capital, but rather debt incurred to finance the operating activities of the Company.

Return on Capital Employed

Return on capital employed is a measure used by management to evaluate the profitability of our invested capital.  As a corporation, management of AutoCanada may use this measure to compare potential acquisitions and other capital investments against our internally computed cost of capital to determine whether the investment shall create value for our shareholders.  Management may also use this measure to look at past acquisitions, capital investments and the Company as a whole in order to ensure shareholder value is being achieved by these capital investments.  Return on capital employed is calculated as EBIT (defined above) divided by Average Capital Employed (defined above).

Adjusted Return on Capital Employed

Adjusted return on capital employed is a measure used by management to evaluate the profitability of our invested capital.  As a corporation, management of AutoCanada may use this measure to compare potential acquisitions and other capital investments against our internally computed cost of capital to determine whether the investment shall create value for our shareholders.  Management may also use this measure to look at past acquisitions, capital investments and the Company as a whole in order to ensure shareholder value is being achieved by these capital investments.  Adjusted return on capital employed is calculated as EBIT (defined above) divided by Adjusted Average Capital Employed (defined above).

Cautionary Note Regarding Non-GAAP Measures

EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed are not earnings measures recognized by GAAP and do not have standardized meanings prescribed by GAAP.  Investors are cautioned that these non-GAAP measures should not replace net earnings or loss (as determined in accordance with GAAP) as an indicator of the Company's performance, of its cash flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Company's methods of calculating EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed may differ from the methods used by other issuers. Therefore, the Company's EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate, Average Capital Employed and Return on Capital Employed may not be comparable to similar measures presented by other issuers.

Additional information about AutoCanada Inc. is available at the Company's website at www.autocan.ca and www.sedar.com.

AutoCanada Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended
(in thousands of Canadian dollars except for share and per share amounts)

  December 31,
2012
$
December 31,
2011
$
Revenue (Note 9)       1,103,913       1,009,326
Cost of sales (Note 10)       (913,548)       (840,165)
Gross profit       190,365       169,161
Operating expenses (Note 11)       (149,140)       (136,846)
Operating profit before other income       41,225       32,315
     
Loss on disposal of assets       (95)       (41)
Reversal of impairment of assets (Note 20)       222       25,543 
Income from investment in associate (Note 15)       468       -
     
Operating profit       41,820       57,817
     
Finance costs (Note 13)       (10,583)       (9,848)
Finance income (Note 13)       1,575       1,324
     
Net comprehensive income for the year before taxation       32,812       49,293
     
Income tax (Note 14)       8,576       12,509
     
Net comprehensive income for the year       24,236       36,784
     
Earnings per share     
Basic        1.222       1.850
Diluted        1.222       1.850
     
Weighted average shares     
Basic        19,840,802       19,880,930
Diluted        19,840,802       19,880,930

The accompanying notes are an integral part of these consolidated financial statements.

Approved on behalf of the Company:

(Signed) "Gordon R. Barefoot", Director                      (Signed) "Robin Salmon", Director

AutoCanada Inc.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

  December 31,
      2012
$
December 31,
      2011
$
ASSETS    
Current assets    
Cash and cash equivalents (Note 16)       34,472       53,641
Restricted cash (Note 16)       10,000       -
Trade and other receivables (Note 17)       47,944       42,448
Inventories (Note 18)       199,226       137,016
Other current assets       1,102       1,120
        292,744       234,225
Property and equipment (Note 19)       38,513       25,975
Intangible assets (Note 20)       66,403       66,181
Goodwill       380       380
Other long-term assets (Note 22)       7,699       7,609
Investment in associate (Note 15)       4,730       -
        410,469       334,370
LIABILITIES    
Current liabilities    
Trade and other payables (Note 23)       35,697       32,279
Revolving floorplan facilities (Note 24)       203,525       150,816
Current tax payable (Note 14)       3,719       2,046
Current lease obligations (Note 25)       1,282       1,204
Current indebtedness (Note 24)       3,000       2,859
        247,223       189,204
Long-term indebtedness (Note 24)       23,937       20,115
Deferred tax (Note 14)       14,809       12,056
        285,969       221,375
EQUITY       124,500       112,995
        410,469       334,370

The accompanying notes are an integral part of these consolidated financial statements.

AutoCanada Inc.
Consolidated Statements of Changes in Equity
For the Years Ended
(in thousands of Canadian dollars)

  Share
capital
$
Treasury
shares
Contributed
surplus
$
Total
capital
$
Accumulated
deficit
$
Equity
$
Balance,  January 1, 2012        190,435       -        3,918       194,353       (81,358)       112,995
Net comprehensive income       -        -        -        -        24,236       24,236
Dividends declared on common shares
(Note 28)
      -        -        -        -        (12,301)       (12,301)
Common shares repurchased (Note 28)       -        (935)       -        (935)       -        (935)
Share-based compensation       -        -        505       505       -        505
Balance, December 31, 2012       190,435       (935)       4,423       193,923       (69,423)       124,500
             
             
  Share
capital
$
Treasury
Shares
Contributed
surplus
$
Total
capital
$
Accumulated
deficit
$
Equity
$
Balance, January 1, 2011        190,435       -        3,918       194,353       (111,979)       82,374
Net comprehensive income       -        -        -        -        36,784       36,784
Dividends declared on common shares
(Note 28)
      -        -        -        -        (6,163)       (6,163)
Balance, December 31, 2011       190,435       -        3,918       194,353       (81,358)       112,995

The accompanying notes are an integral part of these consolidated financial statements.

AutoCanada Inc.
Consolidated Statements of Cash Flows
For the Years Ended
(in thousands of Canadian dollars)

  December 31,
2012
$
December 31,
2011
$
Cash provided by (used in)    
Operating activities    
Net comprehensive income       24,436       36,784
Income taxes (Note 14)       8,576       12,509
Amortization of prepaid rent       452       452
Amortization of property and equipment (Note 11)       4,311       4,251
Loss on disposal of assets       95       41
Reversal of impairment of assets (Note 20) (222)       (25,543)
Share-based payments       739       302
Income from investment in associate (Note 15)       (468)       - 
Income taxes paid       (4,255)       - 
Net change in non-cash working capital (Note 31)       (12,932)       1,231
        21,072       30,027
     
Investing activities    
Addition to restricted cash (Note 16)       (10,000)       - 
Business acquisitions       -        (1,753)
Investment in associate (Note 15)       (4,262)       - 
Purchases of property and equipment       (16,069)       (2,954)
Disposal (purchase) of other assets       (58)       11
Proceeds on sale of property and equipment       32       68
Proceeds on divestiture of dealership (Note 22)       -        1,464
Prepayments of rent       (540)       (2,160)
        (30,897)       (5,324)
     
Financing activities    
Proceeds from long-term debt (Note 24)       6,218       - 
Repayment of long term indebtedness       (2,349)       (2,440)
Common shares repurchased (Note 28)       (912)       - 
Dividends paid (Note 28)       (12,301)       (6,163)
        (9,344)       (8,603)
     
Increase (decrease) in cash       (19,169)       16,100
     
Cash and cash equivalents at beginning of year       53,641       37,541
Cash and cash equivalents at end of year       34,472       53,641

The accompanying notes are an integral part of these consolidated financial statements.

 

 

SOURCE AutoCanada Inc.



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