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Press release from CNW Group

AutoCanada Inc. reports highest quarterly earnings in Company history and announces an increase in its quarterly dividend

Thursday, November 08, 2012

AutoCanada Inc. reports highest quarterly earnings in Company history and announces an increase in its quarterly dividend19:00 EST Thursday, November 08, 2012A conference call to discuss the results for the reporting period ended September 30, 2012 will be held on November 9, 2012 at 11:00 a.m. Eastern time (9:00 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. A conference call to discuss the results for the reporting period ended September 30, 2012 will be held on November 9, 2012 at 11:00 a.m. Eastern time (9:00 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, Nov. 8, 2012 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended September 30, 2012.2012 Third Quarter Operating Results Revenue increased 11.0% or $29.5 million to $298.7 millionGross profit increased by 11.6% or $5.2 million to $50.1 millionSame store revenue increased by 8.0%Same store gross profit increased by 7.9%EBITDA was $10.6 million vs. $8.2 million in Q3 of 2011, a 29.3% increasePre-tax net earnings increased by $2.3 million or 33.6% to $9.2 millionNet earnings increased by $1.6 million or 30.2% to $6.8 millionThe number of same store new vehicles retailed increased by 10.1%The number of same store used vehicles retailed decreased by 3.2%Same store repair orders completed for the quarter went up by 0.5%In commenting on the financial results for the three month period ended September 30, 2012, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The third quarter of 2012 was the Company's most profitable quarter in its history, an achievement which reflects the continued general good health of the economy, the quality of the products we sell and the effective use of incentives by our Manufacturer partners, and the dedicated hard work of our employees. Our floorplan financing agreement with our new partner, the Bank of Nova Scotia, was implemented in October, and we look forward to working with the Bank of Nova Scotia in the coming years and to the meaningful interest rate savings our new floorplan shall provide. We are likewise very pleased with the performance of the two GM dealerships we recently purchased an interest in, and look forward to a long term relationship with GM Canada who has been a great partner to work with. With respect to new dealership opportunities, we are also pleased to have secured a suitable facility for the Kia open point dealership during the quarter, in which we plan to commence operations in late 2013 or early 2014, and we continue to aggressively seek accretive opportunities with brands that have accepted public ownership."With respect to the announced increase in the dividend to a rate of $0.17 per share or an annual rate of $0.68 per share, Mr. Priestner further stated, "The Board of Directors continues to remain committed to a high dividend, which it shall periodically review within the context of earnings growth, opportunities to re-invest in the business, and sustainability. Management is confident that opportunities for acquisition growth will arise in the mid to long term and believe that when tangible growth opportunities are realized, the incremental earnings growth will naturally lower our payout ratio as we re-invest funds into growth opportunities. Until tangible and significant growth opportunities are realized, we will continue to reward investors by way of a high dividend."Third Quarter 2012 HighlightsThe Company generated net earnings of $6.8 million or earnings per share of $0.344 versus earnings per share of $0.263 in the third quarter of 2011.  Pre-tax earnings increased by $2.3 million to $9.2 million in the third quarter of 2012 as compared to $6.9 million in the same period in 2011.Same store revenue increased by 8.0% in the third quarter of 2012, compared to the same quarter in 2011.  Same store gross profit increased by 7.9% in the third quarter of 2012, compared to the same quarter in 2011.Revenue from existing and new dealerships increased 11.0% to $298.7 million in the third quarter of 2012 from $269.1 million in the same quarter in 2011.Gross profit from existing and new dealerships increased 11.6% to $50.1 million in the third quarter of 2012 from $44.9 million in the same quarter in 2011.EBITDA increased 29.3% to $10.6 million in the third quarter of 2012 from $8.2 million in the same quarter in 2011.Free cash flow decreased significantly in the third quarter of 2012 to $0.004 per share as compared to $10.2 million and $0.511 per share in the third quarter of 2011, mainly due a land and building purchase in Q3 2012.Adjusted free cash flow increased to $9.5 million in the third quarter of 2012 or $0.48 per share as compared to $7.8 million or $0.39 per share in 2011.Return on capital employed on a trailing 12 month basis of 22.8% as compared to 19.1% at September 30, 2011.Dividends Management reviews the Company's financial results on a monthly basis. The Board of Directors reviews the financial results periodically to 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 date   Payment date     DeclaredPaid          $$February 28, 2012May 31, 2012August 31, 2012November 30, 2012   March 15, 2012June 15, 2012September 17, 2012December 17, 2012     2,7832,9823,1813,3802,7832,9823,181-On November 8, 2012, the Board declared a quarterly eligible dividend of $0.17 per common share on AutoCanada's outstanding Class A common shares, payable on December 17, 2012 to shareholders of record at the close of business on November 30, 2012.  The quarterly eligible dividend of $0.17 represents an annual dividend rate of $0.68 per share.Eligible dividend designationFor purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) (the "ITA") and any corresponding provincial and territorial tax legislation, all dividends paid by AutoCanada Inc. or any of its subsidiaries in 2010 and thereafter are designated as "eligible dividends" (as defined in 89(1) of the ITA), unless otherwise indicated.  Please consult with your own tax advisor for advice with respect to the income tax consequences to you of AutoCanada Inc. designating dividends as "eligible dividends".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 %)                       Q42010Q12011Q22011Q32011Q42011Q12012Q22012Q32012          Income Statement Data         New vehicles113,967128,304196,850172,688142,880147,383186,649190,139 Used vehicles45,41444,90652,05455,35153,71960,45462,82262,816 Parts, service & collision repair28,35126,53928,37426,98028,67327,02929,00428,593 Finance, insurance & other10,15111,12513,58814,11513,04613,65916,51217,133Revenue197,883210,874290,866269,134238,318248,525294,987298,681                    New vehicles9,0239,72513,97412,74011,26712,04614,64615,461 Used vehicles3,6593,4864,3015,0204,5734,4124,2383,994 Parts, service & collision repair13,99413,27715,15914,49214,55114,00415,22715,078 Finance, insurance & other9,0509,95912,12912,64711,85312,39814,93915,579Gross profit35,72536,43545,56344,89942,24442,86049,05050,112         Gross profit %18.1%17.3%15.7%16.7%17.7%17.2%16.6%16.8%Operating expenses32,01031,89135,12735,74234,08635,38137,66138,361Operating exp. as % of gross profit89.6%87.5%77.1%79.6%80.7%82.6%76.9%76.6%Finance costs - floorplan1,5941,6852,3102,1901,8711.9352,5112,645Finance costs - long-term debt332283323296234230256267Reversal of impairment of intangibles(8,059)---(25,543)---Income taxes2,4186902,0291,6468,1441,4412,2162,379Net earnings 47,5751,9945,9505,23023,6084,1136,7116,807EBITDA 1, 43,4694,0479,3198,2167,5476,80810,21010,592Basic earnings (loss) per share0.3810.1000.2990.2631.1870.2070.3380.344Diluted earnings (loss) per share0.3810.1000.2990.2631.1870.2070.3380.344          Operating Data        Vehicles (new and used) sold5,2195,8268,2107,6496,3136,8368,1548,087New retail vehicles sold3,0083,0504,1583,8863,4053,4344,4004,410New fleet vehicles sold3067961,9001,3617759691,3131,265Used retail vehicles sold1,9051,9802,1522,4022,1332,4332,4412,412Number of service & collision repairorders completed77,03772,36080,85176,17675,91174,43978,10478,944Absorption rate 286%80%91%90%91%81%89%89%# of dealerships at period end2323222224242424# of same store dealerships 32122212121212122# of service bays at period end339339322322333333333333Same store revenue growth 32.4%2.7%19.3%21.6%24.8%20.2%2.4%8.0%Same store gross profit growth 32.9%2.9%8.2%22.9%20.6%18.3%7.1%7.9%         Balance Sheet Data        Cash and cash equivalents37,54139,33743,83749,36653,64153,40351,19854,255Accounts receivable32,83242,10851,53944,17242,44851,38052,04254,148Inventories118,088134,710149,481159,732136,869155,778201,302193,990Revolving floorplan facilities124,609152,075172,600175,291150,816178,145221,174212,840  1 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 and nine month periods ended September 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011. Same Store Revenue and Vehicles Sold For the Three Months Ended For the Nine Months Ended (In thousands of dollars except % change and vehicle data)September 30, 2012September 30, 2011% Change September 30, 2012September 30, 2011% Change        Revenue Source       New vehicles185,963172,6887.7% 511,856485,4765.4%Used vehicles60,40255,3519.1% 180,511149,63820.6%Finance & insurance and other16,49914,11416.9% 45,88138,21020.1%Subtotal262,864242,153  738,248673,324 Parts, service & collision repair27,82626,9783.1% 82,41379,5603.6%Total290,690269,1318.0% 820,661752,8849.0%        New vehicles - retail sold4,2783,88610.1% 11,86610,8129.7%New vehicles - fleet sold12651,361(7.1)% 3,5473,961(10.5)%Used vehicles sold2,3262,402(3.2)% 7,0636,4459.6%Total7,8697,6492.9% 22,47621,2185.9%Total vehicles retailed6,6046,2885.0% 18,92917,2579.7%        The following table summarizes the results for the three and nine month periods ended September 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011. Same Store Gross Profit and Gross Profit Percentage For the Three Months EndedFor the Nine months Ended Gross Profit Gross Profit % Gross Profit Gross Profit % (In thousands of dollars except % change and gross profit %)September 30, 2012September 30, 2011% ChangeSeptember 30, 2012September 30, 2011% ChangeSeptember 30, 2012September 30, 2011% ChangeSeptember 30, 2012September 30, 2011% Change             Revenue Source                         New vehicles14,95312,72717.5%8.0%7.4%0.7%40,72035,79413.8%8.0%7.4%0.6%             Used vehicles3,8065,019(24.2)%6.3%9.1%(2.8)%12,12112,767(5.1)%6.7%8.5%(1.8)%             Finance &insurance and other15,02412,64618.8%91.1%89.6%1.5%41,67334,20421.8%90.8%89.5%1.3%             Subtotal33,78330,392    94,61482,765                 Parts, service &collision repair14,64514,5070.9%52.6%53.8%(1.1)%43,10241,7223.3%52.3%52.4%(0.1)%             Total48,42844,8997.9%16.7%16.7%0.0%137,616124,48710.5%16.8%16.5%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 month period endedThree month period endedNine month period endedNine month period ended September 30,2012$September 30,2011$September 30,2012$September 30,2011$Revenue (Note 6)      298,681       269,134       842,193       770,874      Cost of sales (Note 7)      (248,569)       (224,235)       (700,172)       (643,965)      Gross profit      50,112       44,899       142,021       126,909      Operating expenses (Note 8)      (38,361)       (35,742)       (111,402)       (102,760)      Operating profit before other income      11,751       9,157       30,619       24,149 (Loss) Gain on disposal of assets      (1)       1       (61)       29 Income from investment in associate (Note 11)      130       -       213       - Operating profit      11,880       9,158       30,771       24,178 Finance costs (Note 9)      (3,136)       (2,651)       (8,410)       (7,564) Finance income (Note 9)      442       369       1,303       925      Net comprehensive income for the period      before taxation      9,186       6,876       23,664       17,539 Income tax (Note 10)      2,379       1,646       6,036       4,365      Net comprehensive income for the period       6,807       5,230       17,628       13,174           Earnings per share     Basic       0.344       0.263       0.884       0.663 Diluted       0.344       0.263       0.884       0.663           Weighted average shares     Basic       19,804,014       19,880,930       19,853,694       19,880,930 Diluted       19,804,014       19,880,930       19,853,694       19,880,930  The accompanying notes are an integral part of these condensed interim consolidated financial statements.Approved on behalf of the Company:(Signed) "Gordon R. Barefoot", Director    (Signed) "Robin Salmon", DirectorAutoCanada Inc.Condensed Interim Consolidated Statements of Financial Position(Unaudited)(in thousands of Canadian dollars except for share and per share amounts)    September 30,      2012  (Unaudited)$December 31,       2011(Audited)$ASSETS  Current assets  Cash and cash equivalents      54,255       53,641 Trade and other receivables (Note 12)      54,148       42,448 Inventories (Note 13)      193,990       137,016 Other current assets      1,794       1,120        304,187       234,225 Property and equipment      37,125       25,975 Investment in associate (Note 11)      4,367       - Intangible assets      66,181       66,181 Goodwill      380       380 Other long-term assets      7,810       7,609        420,050       334,370 LIABILITIES  Current liabilities  Trade and other payables (Note 15)      35,665       32,279 Revolving floorplan facilities (Note 11)      212,840       150,816 Current tax payable      4,600       2,046 Current lease obligations (Note 17)      1,783       1,204 Current indebtedness (Note 16)      5,973       2,859        260,861       189,204 Long-term indebtedness (Note 16)      26,039       20,115 Deferred tax      11,897       12,056        298,797       221,375 EQUITY      121,253       112,995        420,050       334,370    The accompanying notes are an integral part of these condensed interim consolidated financial statements.                     AutoCanada Inc. Condensed Interim Consolidated Statements of Changes in EquityFor the Periods Ended (Unaudited)(in thousands of Canadian dollars)        Share capital$Treasury shares$Contributed surplus$Total capital$Accumulated deficit$Equity$Balance,  January 1, 2012        190,435       -       3,918       194,353       (81,358)       112,995 Net comprehensive income      -       -       -       -       17,628       17,628 Dividends declared on common shares      -       -       -       -       (8,935)       (8,935) Common shares repurchased (Note 20)      -       (910)       -       (910)       -       (910) Share-based compensation      -       -       475       475       -       475 Balance, September 30, 2012      190,435       (910)       4,393       193,918       (72,665)       121,253                Share capital$Treasury shares$Contributed surplus$Total capital$Accumulated deficit$Equity$Balance, January 1, 2011        190,435       -       3,918       194,353       (111,979)       82,374 Net comprehensive income      -       -       -       -       13,174       13,174 Dividends declared on common shares      -       -       -       -       (3,777)       (3,777) Balance, September 30, 2011      190,435       -       3,918       194,353       (102,582)       91,771        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 ended September 30, 2012Three month period ended September 30, 2011Nine month period ended September 30, 2012Nine month period ended September 30, 2011Cash flows from operating activities:      Net comprehensive income        6,807       5,230       17,628       13,174 Income taxes (Note 10)        2,379       1,646       6,036       4,365 Amortization of prepaid rent        113       113       339       339 Amortization of property and equipment (Note 8)        1,139       1,044       3,189       3,141 Gain (Loss) on disposal of assets        1       (1)       61       (29) Share-based compensation        205       -       565       - Income from investment in associate (Note 11)        (130)       -       (213)       - Income taxes paid        (485)       -       (3,584)       - Net change in non-cash working capital        (794)       2,818       (4,704)       (681)          9,235       10,850       19,317       20,309 Cash flows from investing activities:      Business acquisitions (Note 11)        -       -       (4,154)       - Purchases of property and equipment (Note 14)        (9,161)       (694)       (13,150)       (2,236) Disposal of other assets        -       2       -       7 Prepayments of rent (Note 21)        -       (540)       (540)       (1,620) Proceeds on sale of property and equipment        -       -       28       - Proceeds on divestiture of subsidiary        -       -       -       1,464          (9,161)       (1,232)       (17,816)       (2,385) Cash flows from financing activities:      Proceeds from long-term debt (Note 16)        6,250       -       9,250       - Repayment of long-term indebtedness        (98)       (2,102)       (292)       (2,322) Common shares repurchased (Note 20)        -       -       (910)       - Dividends paid        (3,169)       (1,987)       (8,935)       (3,777)          2,983       (4,089)       (887)       (6,099) Increase in cash        3,057       5,529       614       11,825 Cash and cash equivalents at beginning of period        51,198       43,837       53,641       37,541        Cash and cash equivalents at end of period        54,255       49,366       54,255       49,366        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 24 wholly owned franchised dealerships and 2 dealership investments in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2011, 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.SOURCE: AutoCanada Inc.For further information: Jeff Christie, CA Vice-President, FinancePhone:  (780) 732-7164   Email: jchristie@autocan.ca