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Press release from CNW Group

AutoCanada Inc. announces an increase in earnings for the quarter ended March 31, 2012 and an increase in its quarterly dividend:

Tuesday, May 08, 2012

AutoCanada Inc. announces an increase in earnings for the quarter ended March 31, 2012 and an increase in its quarterly dividend:23:00 EDT Tuesday, May 08, 2012A conference call to discuss the results for the reporting period ended March 31, 2012 will be held on May 9, 2012 at 10:00 a.m. Eastern time (8:00 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, May 8, 2012 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended March 31, 2012.                                 2012 First Quarter Operating ResultsRevenue increased 17.8% or $37.6 millionGross profit increased by 17.6% or $6.4 millionSame store revenue increased by 20.2%Same store gross profit increased by 18.3%EBITDA was $6.8 million vs. $4.0 million in Q1 of 2011, a 68.2% increasePre-tax net earnings increased by $2.9 million or 107% to $5.6 millionNet earnings increased by $2.1 million or 106% to $4.1 millionThe number of same store new vehicles retailed increased by 15.1%The number of same store used vehicles retailed increased by 23.6%Same store repair orders completed for the quarter were up 5.7%In commenting on the financial results for the three month period ended March 31, 2012, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The first quarter of 2012 was a very strong quarter for the Company with increases in revenue, gross profit and volume sales in all four business streams. The strong sales performance in the first quarter of 2012 resulted in another record first quarter in terms of pre-tax earnings and EBITDA."Commenting on the announcement of an increase in its quarterly dividend, Mr. Priestner stated, "Our continued strong results were a primary factor in our decision to raise the dividend for the fifth consecutive quarter.  Management believes that raising the quarterly dividend to an annual rate of $0.60 per share will provide an attractive yield to investors and will continue to attract investors who seek a combination of both growth opportunity and a regular income stream."First Quarter 2012 HighlightsThe Company generated net earnings of $4.1 million or earnings per share of $0.21 versus earnings per share of $0.10 in the first quarter of 2011.  Pre-tax earnings increased by $2.9 million to $5.6 million in the first quarter of 2012 as compared to $2.0 million in the same period in 2011.Same store revenue increased by 20.2% in the first quarter of 2012, compared to the same quarter in 2011.  Same store gross profit increased by 18.3% in the first quarter of 2012, compared to the same quarter in 2011.Revenue from existing and new dealerships increased 17.8% to $248.4 million in the first quarter of 2012 from $210.8 million in the same quarter in 2011.Gross profit from existing and new dealerships increased 17.6% to $42.8 million in the first quarter of 2012 from $36.4 million in the same quarter in 2011.EBITDA increased 68.2% to $6.8 million in the first quarter of 2012 from $4.0 million in the same quarter in 2011.Free cash flow remained constant at $3.2 million in the first quarter of 2012 or $0.16 per share as compared to the first quarter of 2011, mainly due to income taxes paid in 2012.Adjusted free cash flow increased to $4.2 million in the first quarter of 2012 or $0.21 per share as compared to $3.7 million or $0.18 per share in 2011.Adjusted return on capital employed increased to 4.7% in the first quarter of 2012 as compared to 2.6% in 2011.Return on capital employed on a trailing 12 month basis of 22.4% as compared to 13.3% at March 31, 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 determine whether a dividend shall be paid based on a number of factors.The following table summarizes the dividends declared by the Company in 2012:(In thousands of dollars)               TotalRecord datePayment date     DeclaredPaid       $$February 28, 2012May 31, 2012March 15, 2012June 15, 2012     2,7832,9822,783-         On May 8, 2012, the Board declared a quarterly eligible dividend of $0.15 per common share on AutoCanada's outstanding Class A common shares, payable on June 15, 2012 to shareholders of record at the close of business on May 31, 2012.  The quarterly eligible dividend of $0.15 represents an annual dividend rate of $0.60 per share or a 7% increase in the dividend from the prior quarter.  When compared to the annual dividend rate at March 31, 2011, the Company has increased the dividend by 200% from an annual rate of $0.20 to the new annualized rate of $0.60 per share. The next scheduled dividend review will be in August of 2012.SELECTED QUARTERLY FINANCIAL INFORMATIONThe 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 %)         Q22010Q32010Q42010Q12011Q22011Q32011Q42011Q12012Income Statement Data          New vehicles144,655141,533113,967128,303196,850172,688142,880147,383  Used vehicles57,18150,92245,41444,90652,05455,35153,71960,453  Parts, service & collision repair27,50126,54028,35126,46228,25626,87128,67326,913  Finance, insurance & other12,44211,06010,15111,11313,57714,10913,04613,648Revenue241,779230,055197,883210,784290,737269,019238,318248,397           New vehicles11,0309,9839,0239,72513,97412,74011,26712,046  Used vehicles4,9064,2213,6593,4864,3025,0204,5734,412  Parts, service & collision repair14,61214,03113,99413,27715,15914,49314,55114,004  Finance, insurance & other11,1079,8439,0509,94712,11712,64111,85312,386Gross profit41,65538,07835,72536,43545,55244,89442,24442,848         Gross profit %17.2%16.6%18.1%17.3%15.7%16.7%17.7%17.2%Operating expenses34,28033,20732,01031,89135,12735,74234,08635,381Operating exp. as % of gross profit82.3%87.2%89.6%87.5%77.1%79.6%80.7%82.6%Finance costs - floorplan2,2302,0421,5941,6852,3112,1901,8711.935Finance costs - long-term debt230278332283323296234230Reversal of impairment of intangibles--(8,059)---(25,543)-Income taxes1,3306922,4186902,0291,6468,1441,441Net earnings 43,6241,9837,5751,9945,9515,23023,6084,113EBITDA 1, 4Basic earnings (loss) per shareDiluted earnings (loss) per share6,1640.1820.1824,0110.1000.1003,4690.3810.3814,0470.1000.1009,3210.2990.2998,2160.2630.2637,5471.1871.1876,8080.2070.207         Operating DataVehicles (new and used) sold6,9946,3505,2195,8268,2107,6496,3136,836New retail vehicles sold3,6143,3583,0083,0504,1583,9073,4053,434New fleet vehicles sold9198313067961,9001,340775969Used retail vehicles sold2,4612,1611,9051,9802,1522,4022,1332,433Number of service & collision repair orders completed80,07277,28577,03772,36080,85176,17675,91174,439Absorption rate 287%85%86%80%91%90%91%81%# of dealerships at period end2323232322222424# of same store dealerships 31919212221212121# of service bays at period end339339339339322322333333Same store revenue growth 319.4%6.7%2.4%2.7%19.3%21.6%24.8%20.2%Same store gross profit growth 37.5%(4.0)%2.9%2.9%8.2%22.9%20.6%18.3%         Balance Sheet Data        Cash and cash equivalents31,88034,32937,54139,33743,83749,36653,64153,403Accounts receivable46,78737,14932,83242,10851,53944,17242,44851,380Inventories177,294137,507118,088134,710149,481159,732136,869155,778Revolving floorplan facilities194,388145,652124,609152,075172,600175,291150,816178,1451     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 three-month period ended March 31, 2012 on a same store basis by revenue source and compares these results to the same period in 2011.Same Store Revenue andVehicles Sold For the Three-Month Period Ended(In thousands of dollars except % change and vehicle data)March 31,2012March 31,2011% Change    Revenue SourceNew vehicles139,748118,45218.0%Used vehicles58,099     43,04735.0%Finance, insurance and other12,98410,48023.9%Subtotal210,831171,97922.6%Parts, service and collision repair25,55424,6223.8%Total236,385196,60120.2%    New vehicles - retail sold3,155     2,74015.1%New vehicles - fleet sold96975827.8%Used vehicles sold2,3051,86523.6%Total6,4295,36319.9%Total vehicles retailed5,4604,60518.6%    The following table summarizes the results for the three months ended March 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 %)Mar. 31,2012Mar. 31,2011%Change Mar. 31,2012Mar. 31,2011%ChangeRevenue Source       New vehicles11,4189,22723.7% 8.2%7.8%0.4%Used vehicles4,1753,42921.8% 7.2%8.0%     (0.8)%Finance, insurance and other11,8929,47125.6% 91.6%90.4%        1.2%Subtotal27,48522,12724.2%    Parts, service and collision repair13,299  12,3357.8% 52.0%50.1%        1.9%Total40,78434,46218.3% 17.3%17.5%(0.3)%        AutoCanada Inc.Condensed Interim Consolidated Statements of Comprehensive Income(Unaudited)(in thousands of Canadian dollars except for share and per share amounts) Three monthperiod endedThree monthperiod ended March 31,2012$March 31,2011$Revenue (Note 6)      248,397       210,784 Cost of sales (Note 7)      (205,548)       (174,349) Gross profit      42,849       36,435 Operating expenses (Note 8)      (35,381)       (31,891) Operating profit before other income      7,468       4,544 Loss on disposal of assets      (27)       (7) Operating profit      7,441       4,537 Finance costs (Note 9)      (2,330)       (2,120) Finance income (Note 9)      443       267 Net comprehensive income for the period before taxation      5,554       2,684 Income tax (Note 10)      1,441       690 Net comprehensive income for the period       4,113       1,994    Earnings per share (Note 18)   Basic       0.207       0.100 Diluted       0.207       0.100    Weighted average shares (Note 18)   Basic       19,880,930       19,880,930 Diluted       19,880,930       19,880,930 The accompanying notes are an integral part of these condensed interim consolidated financial statements.Approved on behalf of the Company: (Signed) "Gordon R. Barefoot", Director    (Signed) "Robin Salmon", DirectorAutoCanada Inc.Condensed Interim Consolidated Statements of Financial Position(Unaudited)(in thousands of Canadian dollars except for share and per share amounts) March 31,      2012 (Unaudited)$December 31,       2011 (Audited)$ASSETS  Current assets  Cash and cash equivalents      53,403       53,641 Trade and other receivables (Note 11)      51,380       42,448 Inventories (Note 12)      155,778       137,040 Other current assets      1,303       1,120        261,864       234,249 Property and equipment      24,846       25,975 Intangible assets      66,181       66,181 Goodwill      380       380 Other long-term assets      8,036       7,609        361,307       334,394 LIABILITIES  Current liabilities  Trade and other payables (Note 13)      31,924       32,303 Revolving floorplan facilities (Note 14)      178,145       150,816 Current tax payable      9,204       2,046 Current lease obligations (Note 15)      663       1,204 Current indebtedness (Note 14)      2,833       2,859        222,769       189,228 Long-term indebtedness (Note 14)      20,071       20,115 Deferred tax      3,875       12,056        246,715       221,399 EQUITY  Share capital (Note 18)      190,435       190,435 Contributed surplus      4,186       3,918 Accumulated deficit      (80,029)       (81,358)        114,592       112,995        361,307       334,394 The accompanying notes are an integral part of these condensed interim consolidated financial statements.AutoCanada Inc. Condensed Interim Consolidated Statements of Changes in EquityFor the Periods Ended (Unaudited)(in thousands of Canadian dollars) Sharecapital$Contributedsurplus$Totalcapital$Accumulateddeficit$Equity$Balance,  January 1, 2012        190,435       3,918       194,353       (81,358)       112,995 Net comprehensive income      -       -       -       4,113       4,113 Dividends declared on common shares      -       -       -       (2,784)       (2,784) Share based compensation      -       268       268       -       268 Balance, March 31, 2012      190,435       4,186       194,621       (80,029)       114,592        Sharecapital$Contributedsurplus$Totalcapital$Accumulateddeficit$Equity$Balance, January 1, 2011        190,435       3,918       194,353       (111,979)       82,374 Net comprehensive income      -       -       -       1,994       1,994 Dividends declared on common shares      -       -       -       (795)       (795) Balance, March 31, 2011      190,435       3,918       194,353       (110,780)       83,573 The accompanying notes are an integral part of these condensed interim consolidated financial statements.AutoCanada Inc.Condensed Interim Consolidated Statements of Cash FlowsFor the Periods Ended(Unaudited)(in thousands of Canadian dollars)      Three month period endedMarch 31, 2012Three month period endedMarch 31, 2011Cash provided by (used in):    Operating activities    Net comprehensive income before tax        4,113       1,994 Income taxes        1,441       690 Amortization of prepaid rent        113       113 Amortization of property and equipment        1,024       1,080 Share-based compensation        163       - Loss on disposal of assets        27       7 Income taxes paid        (2,372)       - Net change in non-cash working capital        (1,001)       284          3,508       4,168 Investing activities    Purchases of property and equipment        (361)       (930) Prepayments of rent        (540)       (540) Proceeds on sale of property and equipment        33       -          (868)       (1,470) Financing activities    Repayment of long-term indebtedness        (94)       (107) Dividends paid        (2,784)       (795)          (2,878)       (902) Increase (decrease) in cash        (238)       1,796 Cash and cash equivalents at beginning of period        53,641       37,541 Cash and cash equivalents at end of period        53,403       39,337 The accompanying notes are an integral part of these condensed interim consolidated financial statements.ABOUT AUTOCANADAAutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 25 franchised dealerships in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2012, our dealerships sold approximately 28,000 vehicles and processed approximately 300,000 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 MEASURESThis 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:EBITDAEBITDA 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. EBITEBIT 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.Free Cash FlowFree 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 FlowAdjusted 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 EmployedAdjusted 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 RateAbsorption 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 EmployedAverage 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 EmployedReturn 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 EmployedAdjusted 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 MeasuresEBITDA, 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. For further information: Jeff Christie, CAVice-President, Finance Phone:  (780) 732-7164 Email: jchristie@autocan.ca