company overview & 2011 third quarter results presentation...1960 1965 1970 1975 1980 1985 1990...

Company Overview

& 2011 Third Quarter

Results PresentationNovember 16, 2011

Senior Management Team

J.J.S. (Jeff) Christie

Vice President, Finance

S.R.E. (Steve) Rose

Executive Vice President, Corporate Services

T.L. (Tom) Orysiuk

President

P.J. (Pat) Priestner

Chief Executive Officer

1 INDUSTRY OVERVIEW

BUSINESS OVERVIEW

FINANCIAL REVIEW

STRATEGY

Presentation Agenda

Certain of the information presented today looks forward in time

and deals with other than historical or current facts for the

AutoCanada Inc. (the “Company”). Such statements are qualified

in their entirety by the inherent risks and uncertainties

surrounding future expectations, including, but not limited to, the

risks associated with: the retail automotive industry; our business;

our acquisition strategy; our dependence on automobile

manufacturers; and our structure. For additional information with

respect to these factors, please refer to the prospectus and other

information filed by the Company with Canadian provincial

securities commissions.

The Company disclaims any intention or obligation to update or

revise any forward-looking statements, whether as a result of

new information, future events or otherwise.

Forward-Looking Statements

Total Canadian Vehicle Sales

1960 – 2011F

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Calendar Year

TrendlineTrendlineTrendlineTrendline

ActualActualActualActual

Source: Scotia Economics - Global Auto Report, November 3, 2011

Annual consumer spending more than any

other Canadian retail segment

Franchised Auto Dealerships Operate

Four Complementary Business Segments

Used vehicle

Finance and

insurance Parts, service and

repair

New vehicle

Well-Established Business

Dealerships provide

manufacturers:

Manufacturers provide

dealerships:

• Sales support • Exclusive sales

territories

• Service support • No-cost consumer sales

incentives

• Brand protection • Brand marketing

Dealership and OEM Business

Models are Different

Dealership Groups: Manufacturers:

• 4 income streams • 1 income stream

• Multiple brands • 1 brand

• Variable cost structure • Fixed cost structure

• Lower capital

requirements

• Higher capital

requirements

Dealerships less vulnerable to cyclical

downturns

• 24 owned dealerships

• Approximately 24,000 new and used vehicles

sold in 2010

• More than 317,000 service and collision

orders completed at 339 service bays in 2010

Our Business

24 Dealerships in 6 Provinces

Alberta

Saskatchewan

ManitobaOntario

Quebec

Newfoundland

Nova Scotia

P.E.I.

GRANDE PRAIRIEGRANDE PRAIRIEGRANDE PRAIRIEGRANDE PRAIRIEGrande Prairie Chrysler Jeep

Dodge RamGrande Prairie HyundaiGrande Prairie MitsubishiGrande Prairie NissanGrande Prairie Subaru

PRINCE GEORGEPRINCE GEORGEPRINCE GEORGEPRINCE GEORGENorthland Chrysler Jeep

Dodge RamNorthland HyundaiNorthland Nissan

MAPLE RIDGEMAPLE RIDGEMAPLE RIDGEMAPLE RIDGEMaple Ridge Chrysler Jeep

Dodge Ram FIATMaple Ridge VolkswagenAbbotsford VolkswagenChilliwack Volkswagen

VICTORIAVICTORIAVICTORIAVICTORIAVictoria Hyundai

EDMONTONEDMONTONEDMONTONEDMONTONCrosstown Chrysler Jeep Dodge

Ram FIATCapital Chrysler Jeep Dodge

Ram FIATSherwood Park Hyundai

KELOWNAKELOWNAKELOWNAKELOWNAOkanagan Chrysler Jeep

Dodge Ram

PONOKAPonoka Chrysler Jeep

Dodge Ram

THOMPSONTHOMPSONTHOMPSONTHOMPSONThompson Chrysler Jeep

Dodge Ram

GTA PLATFORMGTA PLATFORMGTA PLATFORMGTA PLATFORM401 Dixie HyundaiCambridge Hyundai

Newmarket Infiniti/Nissan

DARTMOUTHDARTMOUTHDARTMOUTHDARTMOUTHDartmouth Chrysler Jeep

Dodge Ram

MONCTONMONCTONMONCTONMONCTONMoncton Chrysler Jeep

Dodge Ram

2011 Q3 YTD Revenue 2011 Q3 YTD Revenue 2011 Q3 YTD Revenue 2011 Q3 YTD Revenue ($ ($ ($ ($ millions)millions)millions)millions)

New Vehicle Used Vehicle Parts, Service & Collision Repair FI & Other

New Vehicle Sales

2011 Q3 YTD Gross Profit 2011 Q3 YTD Gross Profit 2011 Q3 YTD Gross Profit 2011 Q3 YTD Gross Profit ($ ($ ($ ($ millions)millions)millions)millions)

$773.7 $126.4

Lowest Profit Margin at 7.2% YTD

Note: Results for the Company for the nine months ended September 30, 2011

• Resale of trade-ins

• Sale of third-party financing, service or

insurance products

• Recurring service and repair business

New Vehicle Sales

Drives high-margin related transactions

Used Vehicle Sales

$773.7 $126.4

Higher Profit Margin at 8.4% YTD

• Service contracts

• Reconditioning opportunities for parts and

service

• Recurring parts and service business

• Financing commissions

Used Vehicle SalesDrives high-margin related transactions

Parts, Service and Collision

Repair

$773.7 $126.4

High Profit Margin at 50.5% YTD

“Absorption Rate”

• Percentage of dealership’s

fixed expenses covered by

gross profit generated by

parts and service segment

• AutoCanada’s Q3 2011

absorption rate = 90%

Repair

• High Margins and Excellent Growth

– Increasingly complex vehicles cost more to

maintain

– Highly specialized equipment and skilled

labour required

– Independent repair shops closing

– Number of vehicles on the road is growing,

creating more demand for available

service bays

Finance and Insurance

$773.7 $126.4

• Economies of scale

• Geographic and brand diversification

• Ability to attract management talent

• Implementation of best practices

• Centralized administrative and strategic

functions

Benefits of Multi-Location

Dealership Model

Strong OEM Relationships

10.810.810.810.8

13.713.713.713.7 13.813.813.813.8 13.413.413.413.4

15.515.515.515.5

12.212.212.212.2

15.215.215.215.2

10101010

12121212

14141414

16161616

18181818

2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2010 Q32010 Q32010 Q32010 Q3YTDYTDYTDYTD

2011 Q32011 Q32011 Q32011 Q3YTDYTDYTDYTD

Units 000’s

New Vehicle Sales

8.58.58.58.5

9.69.69.69.6 9.99.99.99.9 9.79.79.79.7

8.88.88.88.8

6.96.96.96.9 6.56.56.56.5

10101010

12121212

Units 000’s

Used Vehicle Sales

Revenue By Business Operation

100100100100

200200200200

300300300300

400400400400

500500500500

600600600600

700700700700

800800800800

900900900900

$ millions

Gross Profit by Business Operation

20202020

40404040

60606060

80808080

100100100100

120120120120

140140140140

160160160160

$ millions

Adjusted EBITDA

21.021.021.021.0

25.125.125.125.1 24.524.524.524.5

18.418.418.418.416.716.716.716.7

13.313.313.313.3

21.621.621.621.6

10101010

15151515

20202020

25252525

30303030

$ millions

Same Store Growth

2006 2007 2008 2009 2010 Q3

Revenue 4.4% 10.2% (9.9%) (10.5%) 10.5% 15.1%

Gross Profit 10.6% 10.7% 5.9% (7.8%) 4.1% 11.6%

# of Dealerships

Included

9 9 14 19 22 21

Management focusing on same-store growth

Same Store Growth

Keys to same store growth

– Head office administration and support

– Advantages to being part of a dealer

• Cost efficiencies

• Leveraging of best practices

2011 Q3 Results - YTD

Revenue $773.7 14.6%

Gross Profit $126.4 10.9%

EBITDA * $ 21.6 62.6%

EPS $ 0.66 87.8%

Adjusted Free Cash Flow $ 20.3 80.6%

Strong performance in 2011

$ millions (except EPS)

* EBITDA does not include interest on floorplan financing

2011 Q3 Results

Trailing 12 months

Revenue $973.4 12.7%

Gross Profit $162.4 9.7%

EBITDA $ 25.1 52.1%

EPS $ 1.04 * 136.0%

Adjusted EPS $ 0.74 ** 68.2%

Adjusted Free Cash Flow $ 23.0 60.8%

$ millions (except EPS)

* Includes reversal of impairment of intangible assets in Q4 of 2010** Excludes effect of intangible asset impairments and resulting future incometax impact.

Strong Balance Sheet

Current Assets $254.8

Current Liabilities $211.8

Net Working Capital $ 43.0

Corporate Debt $ 20.2

$ millions

New and Used Vehicle Inventory Turned 4.75 Times

in the First Nine Months of 2011

Floorplan debt of $175.3 million included in current liabilities and netted against inventory which is included in current assets

Very liquid inventory

DividendPolicy

Organic Growth

AcquisitionPolicy

SustainableReturns

Contributes toEnhanced Shareholder

Strategy

• OEM resistance to public ownership model

• Modest acquisition growth

• Target quarterly dividends between 70% and 80%

of fully diluted earnings per share

• Quarterly review of dividend takes into account

historical and anticipated future results and

capital requirements

• Dividend rate currently at 67% based on the

internal model used

Dividend Currently at Annualized Rate of $0.48

Per Common Share with Yield in Excess of 9%

Dividend Policy

Strategy

Organic Growth

Strategy

• Focus on continuous improvement

• Leverage dealer group synergies and

economies of scale

• Leverage experience of long time dealers to

mentor new dealers

• OEM resistance to public ownership model

• Trading multiples approximately half of US

public dealer group peers

• Pursuit of accretive acquisitions

• Private purchases permitted if Independent

Board Members determine that acquisition

opportunity does not meet investment criteria

• Build manufacturer relationships

• Create synergies through platforms

• Retain key employees

Acquisition Policy

Strategy

We believe the current strategy will contribute to

enhanced shareholder value, the direct effect being:

• Improved trading liquidity and share price

• Improvement in trading multiples

• Future acquisition opportunities

become more accretive

Conclusion

Strategy

Question and Answer

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