AutoCanada Bounced Back to the Black in 2009
EDMONTON, Alberta — In the midst of one of the more difficult auto environments in history, AutoCanada Inc. finished the year on a high note.
Specifically, AutoCanada reported net earnings of $1.7 million in the fourth quarter of 2009, compared to a net loss of $67.1 million in the prior-year period. Quarterly revenue was $182.4 million, up 3.6 percent year-over-year.
Used-vehicle revenue was $48.1 million, compared with $47.6 million in the fourth quarter of 2008. New-vehicle revenue was $102.9 million, up from $96.6 million in the prior-year period.
AutoCanada's retail vehicle sales were up 3.4 percent year-over-year, and it saw a 10.5-percent rise in repair orders completed.
More specifically, AutoCanada sold 2,559 new retail vehicles, an increase from 2,376 in the year-ago period. Used retail sales came in at 2,197 units, down from 2,222.
Also, new fleet sales climbed from 526 vehicles to 695 units.
Continuing on, the company reported that same-store revenue was up 1.3 percent, while same-store gross profits dipped 1.1 percent.
Gross profit for the fourth quarter climbed 1.5 percent to $34.1 million.
Quarterly EBITDA was $3.3 million, down 15.4 percent year-over-year.
"We are pleased to see improvements in our sales volumes in the fourth quarter of 2009 when compared to the fourth quarter of 2008," stated Pat Priestner, chairman and chief executive officer of AutoCanada. "We also experienced an increase in our gross profit which is a great accomplishment for our company given the tough market conditions,"
He added: "Although our EBITDA for the quarter was down 15.4 percent, the company experienced some one-time expenses relating to dealership relocations and our conversion to a corporate structure that, had they not been incurred, would have allowed us to exceed our EBITDA for the fourth quarter of 2008."
Moving on to full-year results, AutoCanada's net earnings were $12.6 million, compared with a net loss of $95.2 million for 2008.
The company reported $776.9 million in revenues, down 6 percent year-over-year. Used-vehicle revenue was $209.2 million, compared with $222.3 million for 2008.
New-vehicle revenue was $415.8 million, compared with $451.5 million in the previous year.
AutoCanada's retail vehicles sales for the year fell 2.9 percent, but it completed 8.7 percent more repair orders.
Specifically, new-vehicle retail sales hit 11,117 units, compared with 11,554 in 2008. Used retail sales fell from 9,916 units to 9,733 vehicles.
New fleet sales dipped slightly from 2,244 units to 2,233 units.
Gross profits fell to $142 million, a 3.5-percent dip. Same-store revenue was down 10.5 percent and same-store gross profit declined 7.8 percent.
AutoCanada had EBITDA of $18.4 million, off 24.7 percent.
"Undoubtedly 2009 was one of the most challenging years in retail automotive history in recent memory. Many of these challenges were a direct result of the credit crisis that impacted all sectors of the world economy in 2009," Priestner commented.
He then went on to discuss the bankruptcies and re-emergences of Chrysler and General Motors in the U.S.
"One of our long-term business partners, Chrysler Financial Canada, exited the automotive business, a decision which left us without a floor plan financing provider at all of our dealerships, and the loss of a significant source of financing for our customers when purchasing new and used vehicles," he added.
"Through the efforts of management, and much hard work by our new floor plan lender, we successfully replaced Chrysler Financial Canada with a long-term partner, General Motors Acceptance Corporation of Canada," Priestner continued.
In addition, management replaced its Chrysler Financial Canada term financing with term financing from HSBC.
Continuing on, Priestner shared how AutoCanada switched from an income trust to a corporation at the end of 2009. It also transferred ownership of two managed Nissan stores — Grand Prairie Nissan and Northland Nissan — from CAG (a related party that has 46.8 percent interest in AutoCanada) to AutoCanada, which now has full ownership.
Priestner stated: "By any measure, it was a year of uncertainty and challenge. Despite the turmoil that resulted from the all of the above, management is proud of the fact that its team remained intact, and that notwithstanding the challenges, we generated EBITDA of $18.4 million in 2009."
Looking forward, AutoCanada management expects that its business will continue to be affected by tight credit markets in 2010.
As most can remember, the leasing segment saw great reductions in late 2008, as captive finance companies were no longer able to securitize asset-backed loans, Priestner pointed out.
"The absence of leasing will impact how we do business in the future as consumer lease returns provided significant sales opportunities to dealerships as well as a significant source of nearly new vehicles that could be offered for sale on our used-vehicle lots," he added.
"The credit crisis has also restricted our ability to obtain financing through third parties to facilitate our customers' purchase of vehicles as well as restricted the amount that each customer can finance when purchasing a vehicle," Priestner continued. "From a financial perspective, this has resulted in a significant drop in our finance and insurance income in 2009 and will most likely continue throughout 2010 until credit conditions return to normal."
Examining the state of Chrysler, he also noted: "Although Chrysler's progress remains not certain, we are pleased that in our major markets there has been continued strong demand for the core product offerings from Chrysler Jeep Dodge namely, Dodge Ram and Dodge Caravan, both of which were redesigned in 2009 and are competitive."