Investor Presentation Q3, 2017
FORWARD-LOOKING STATEMENTS 2 Certain information contained in this presentation looks payout policies; future intentions relating to financial forward in time and deals with other than historical or leverage; and the retail automotive industry. Although the current facts for AutoCanada Inc. (“AutoCanada” or the Company believes that the expectations reflected by the “Company”). The use of any of the words “could”, forward-looking statements presented in this presentation “expect”, “believe”, “will”, “projected”, “estimated” and are reasonable, these statements have been based on similar expressions and statements relating to matters assumptions and factors concerning future events that may that are not historical facts are intended to identify prove to be inaccurate. Actual future results may differ forward-looking information and are based on the materially. The Company’s annual information form for the Company’s current belief or assumptions as to the year ended December 31, 2016 and other documents filed outcome and timing of such future events. In particular, with securities regulatory authorities (accessible through the forward-looking statements in this presentation include, SEDAR website www.sedar.com) describe the risks, material but are not limited to, references to: the Company’s assumptions and other factors that could influence actual general strategic plans and growth strategies; future results and which are incorporated herein by reference. The sales and revenue; future dealership acquisitions and Company disclaims any intention or obligation to update or open point dealerships; the Company’s targets relating revise any forward-looking information, whether as a result of to return on investment and financial ratios; dividend new information, future events or otherwise. 2
3 Multiple Touch Points on the Customer Journey
4 Why Invest in AutoCanada? Auto retail sector performed extremely well in 2016; on track for all-time • record in 2017 Well Performing Sector • Sales of 1.6 million vehicles in first nine months of the year • Advances in technology, styling and safety expected to drive long-term new vehicle sales Annual spending of $143 billion in 2016 up 9.3% compared to 2014 • Key Part of the Economy Greater than any other Canadian retail segment • • Canadian dealer market is fragmented with approximately 3,300 dealerships and 2,000 owners Market Highly Fragmented; Significant proportion of dealers will be retiring in the next few years • creating a “succession planning opportunity” 1 Consolidation Opportunities • Industry shifting from “mom & pop” dealerships to larger dealer groups • Dealership owners are facing increasing facility capital requirements for OEM branding programs Public Ownership Evolving • OEM acceptance of publicly-listed companies is growing in Canada Canada’s only publicly-traded auto retailer (1) Source: PricewaterhouseCooper’s Automotive Trendsetter Report 2012
5 Unparalleled Presence & Brands 58 DEALERSHIPS 11 OEMs 23 BRANDS $2.9B TOTAL REVENUE NEW VEHICLE 40,032 SALES (UNITS) USED VEHICLE 19,561 SALES (UNITS) 999 SERVICE BAYS 863,970 SERVICE ORDERS 5 *Revenue, Sales and Service figures represent 2016 annual totals
6 Dealership Clusters Edmonton • AutoCanada aims to cluster our dealerships in major metropolitan centres • Clusters allow for the sharing of Management resources along with the sharing of best practices Top performing staff are given further • opportunities at other dealerships in the Cluster, promoting growth and development Edmonton and area: 9 dealerships Calgary and area: 9 dealerships Grande Prairie: 5 dealerships Winnipeg: 4 dealerships Montreal: 4 dealerships Ottawa: 3 dealerships Prince George: 3 dealerships
7 Resilient Business Model 2016 2016 • Auto dealerships are resilient in adverse market Revenue Gross Profit conditions • Well-established and accepted dealership model 4.5% has existed for 50+ years in the Canadian 24.3% 24.6% 13.2% marketplace • OEMs committed to dealership success and profitability 9.7% 25.1% • Four business segments provide diversified and 57.2% stable revenue 41.4% Dealerships have a variable cost structure, with • the parts & service business covering most of the fixed costs of the entire dealership • Parts & service business is a counter-cyclical and stable recurring revenue stream
8 O u r F o c u s Strategic Levers ACQUISITION & COST CONTROL OPERATIONAL GROWTH STRATEGY & BALANCE SHEET EXCELLENCE STRENGTH Increase Available System-wide Brands Improvements Enhance Head Office Broaden Geographies Dealership Efficiencies Performance Offer All Price Points Manage Debt & Capital Expenditures Dealer Clusters in Key Markets
9 OPERATIONAL EXCELLENCE • Multi-location model serves a diversified geographic customer and revenue base; cluster strategy enables other scalable benefits Decentralized operations with centralized administration and • Enhance Dealership strategy Performance Dealer Support Services empowers the very best of Dealer • Principals to make key operating decisions within a financial and governance framework Dealership support based on brand team platforms better • positioned to meet the needs of dealers and OEMs Uniform application of best practices: innovative ideas, • benchmarking and data analytics
10 ACQUISITION & GROWTH STRATEGY Ongoing assessment of acquisition and Open Point opportunities • Increase Available to diversify geographic reach and brand portfolio Brands • Building on OEM relationships to broaden reach of existing brands, Broaden Geographies add new ones Offer All Price Points • Focus on immediately accretive acquisitions –15% to 20% pretax annual ROI Dealer Clusters in Key Markets • Dedicated teams for pre-acquisition assessment, post-acquisition integration Integration focus includes continuous improvements in • efficiencies, and deepening IT and analytical capabilities Look for flagship stores in metropolitan markets; dealership • clusters to enhance scale opportunities • Capital is allocated where it has the highest rate of return; priorities include new Open Point locations, dealership relocations and upgrades
11 COST CONTROL & BALANCE SHEET STRENGTH • Aggressively manage our fixed and variable costs System-wide Improvements • Centralized purchasing and shared resources strategy reduce costs for dealerships on everything from payroll to tires Head Office • Business planning process includes expense control and vehicle Efficiencies delivery targets Manage Debt & • Inventory management based on on market information and Capital Expenditures consumer buying patterns Dealer Council provides forum to discuss issues and leverages • successes from across the network Company pursuing national procurement initiatives •
Q3 Update
13 Q3 Financial Highlights Revenue ($MM) Profit ($MM) Adj. EPS +10.8% +12.2% +31.6% Commentary $138.0 $834.6 $0.50 Top line growth across the • business $0.38 New vehicles up 9.4% • Used vehicles up 2.9% $753.2 $122.9 Collision/Repair up 9.7% Fin & Ins up 18.0% • Grew total same store sales 2.9% 2016 2017 2016 2017 2016 2017 Annualized dividend of • SAME STORE Q3 Revenue %Change Gross Profit %Change $0.40/share New vehicles $433.7 4.1 $31.0 6.1 Used vehicles $168.3 (0.1) $11.2 (6.6) Collision/Repair $89.2 (0.2) $46.9 4.9 Finance & Insurance $35.5 13.3 $32.6 14.1
14 Q3 Acquisition: Planète Mazda • First Mazda dealership Fourth Montreal dealership • Expected closing December 1 • 14
15 Sales Platform Mix Asian Import European Import 17% 21% General Motors FCA 21% 36% FOCUS ON IMPROVING BALANCE
16 Leadership Team Chris Burrows Steven J. Landry Chief Financial Officer President & CEO • Leads all aspects of AutoCanada, • Accomplished finance professional providing a vision for future growth and • Oversees Cost Control & Balance Sheet internal development Strength • Experienced Leader in the Automotive • Managing all financial aspects of industry AutoCanada while preparing the Company for further growth • Former CEO of Chrysler Canada and EVP of Chrysler Group Mark Warsaba Erin Oor Chief Operations Officer VP Corporate Development & Admin • Spearheads our acquisition and growth • Promotor of Operational Excellence strategy • Experienced retail automotive • Experienced negotiator and legal professional strategist • Four years as Dealer Principal at St. James • General Counsel for AutoCanada Volkswagen and Audi Winnipeg • Former Partner at Bryan & Company LLP
A Successful Track Record
18 O u r R e c o r d New Brands in Last 4 Years New Locations in Last 4 Years Duncan BC GM Prince Albert SK GM Kelowna BC GM Saskatoon SK FCA, GM Calgary AB FCA (3), Hyundai (2), Mitsubishi, Winnipeg MB Audi, Volkswagen, FCA, GM Volkswagen, Nissan, Infiniti Guelph ON Hyundai, FCA Edmonton AB Kia, Volkswagen, GM (3), FCA Ottawa ON Nissan (2), Infiniti Grande Prairie AB Toronto ON Volkswagen FCA North Battleford SK GM Montreal QC Mercedez-Benz, Smart, BMW (2), MINI (2); Mazda
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