Mr. Paul Antony reports

AUTOCANADA ANNOUNCES FIRST QUARTER RESULTS

AutoCanada Inc. has released its financial results for the three-month period ended March 31, 2023.

"We are pleased with the steady growth achieved in our first quarter 2023 operating results as compared with the same period last year, which was characterized by record industry profitability driven by light vehicle supply constraints, coupled with very strong consumer demand. In contrast, market dynamics during the first quarter of this year favoured lower-price-point vehicles, with higher interest rates influencing consumer preferences. Despite this challenge, our team held firm new light vehicle market share gains and increased the ratio of used to new retail units, which allowed us to leverage our best-in-class [finance, insurance and other], and parts, service and collision repair operations," said Paul Antony, executive chairman of AutoCanada. "In addition, our acquisitions have made strong contributions to our performance and have surpassed our expectations.

"Looking ahead, I continue to be excited about AutoCanada's future. We are confident in our ability to navigate the ever changing landscape of the automotive industry, thanks to our comprehensive business model, strong balance sheet and the resiliency we've built into our platform. We remain well positioned to drive value for our shareholders and stakeholders through our many growth opportunities."

First quarter key highlights and recent developments

Net income for the period was $8.4-million as compared with $4.3-million in first quarter 2022. Diluted earnings per share were 32 cents, an increase of 22 cents from 10 cents in the prior year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the period was $45.0-million as compared with $62.2-million in Q1 2022. Adjusted EBITDA margin of 2.9 per cent compares with 4.6 per cent in the prior year, a decrease of 1.7 percentage points. This decrease is largely driven by the current economic uncertainty resulting in compressed new and used vehicle gross profit, limited new vehicle inventory availability, and the increase of $12.4-million in floor plan financing costs as a result of higher interest rates.

Gross profit increased by 3.1 per cent to $255.0-million. The decreases in new and used vehicle gross profit, caused by current economic headwinds, were largely offset by the increases of finance, insurance and other (F&I), and parts, service and collision repair (PS&CR) arising from recent acquisitions and increased used vehicle sales volumes.

Gross profit percentage was 16.6 per cent in the quarter as compared with 18.4 per cent in the prior year. This decrease was largely driven by the current macro environment. While used retail vehicle gross profit percentage declined, used retail vehicle1 sales volumes increased by 1,218 units, up 8.7 per cent, to 15,290 units, and contributed to the consolidated used to new retail units ratio moving to 1.74 from 1.55. Higher used vehicle sales volumes also contributed to the strong F&I and PS&CR gross profit performance.

Operating expenses before depreciation1 increased by $16.4-million largely driven by acquisitions. Operating expenses before depreciation as a percentage of gross profit increased by 4.2 percentage points to 77.6 per cent and were largely due to compressed gross profit and higher operating expenses.

Free cash flow on a trailing 12-month (TTM) basis was $180.7-million at Q1 2023 as compared with $93.6-million in Q1 2022 with the increase in free cash flow driven primarily by improvements in working capital.

Financing and investing activities and other recent developments

Acquisitions and other recent developments

The company completed the following transactions in Q1 2023:

• On Feb. 23, 2023, the company acquired 100 per cent of the shares of 5121175 Manitoba Ltd. (DCCHail), a paintless dent repair service provider operating throughout Western Canada.
• On March 31, 2023, the company announced the continuation of Kijiji's role as the company's preferred on-line marketplace partner in Canada, as well as the integration of consumer solutions developed by the company's used digital division on Kijiji, including a solution to offer F&I products to Kijiji users.

Subsequent to March 31, 2023, the company completed the following transactions:

• On April 17, 2023, the company acquired substantially all of the assets of the Premier Chevrolet Cadillac Buick GMC dealership and collision centre located in Windsor, Ont.
• On May 1, 2023, the company acquired 100 per cent of the shares of London Auto Collision Ltd., a collision centre located in London, Ont.

Credit facility amendments:

• On Jan. 30, 2023, Standard & Poor's Ratings Services (S&P) issued a research update, where the issuer credit rating remained unchanged at B plus.
• On Feb. 3, 2023, the company amended and extended its existing credit facility to increase total aggregate bank facilities to $1.61-billion. This included increasing the revolving credit limit to $375-million from $275-million, and the maturity date was extended to April 14, 2026.

First quarter financial information

The attached table summarizes the company's performance for the quarter.

Management's discussion and analysis and financial statements

Information included in this press release is a summary of results. It should be read in conjunction with AutoCanada's interim consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2023, which can be found on the company's website or on SEDAR.

Conference call

A conference call to discuss the results for the three months ended March 31, 2023, will be held on May 4, 2023, at 9 a.m. Mountain Time (11 a.m. Eastern Time). To participate in the conference call, please dial 1-888-664-6392 approximately 10 minutes prior to the call.

This conference call will also be webcast live over the Internet and can be viewed by all interested parties at the AutoCanada website.

About AutoCanada Inc.

AutoCanada is a leading North American multilocation automobile dealership group currently operating 83 franchised dealerships, composed of 28 brands, in eight provinces in Canada, as well as a group in Illinois, United States. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, Fiat, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Acura, Honda and Porsche branded vehicles. In addition, AutoCanada's Canadian operations segment currently operates three used vehicle dealerships and one used vehicle auction business supporting the used digital retail division, 12 RightRide division locations and 11 stand-alone collision centres within its group of 27 collision centres. In 2022, its dealerships sold approximately 100,000 vehicles and processed over 900,000 service and collision repair orders in its 1,367 service bays, generating revenue in excess of $6-billion.

We seek Safe Harbor.