AutoCanada Inc
TSX:ACQ
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
13.9
26.88
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
AutoCanada Inc
You don't have any saved screeners yet
Good
morning,
my
name
is
Anas,
and
I'll
be
your
conference
operator
today.
At
this time,
I'd like
to
welcome
everyone
to
the
AutoCanada
Fourth
Quarter
2021
Earnings
Call.
All
lines
have been
placed
on
mute
to
prevent
any
background
noise.
After
the
speakers'
remarks,
there
will
be
a
question-and-answer
session.
[Operator Instructions]
I
would
like
to
remind
everyone
that
certain
statements
in
this
presentation
and
our
call
are
forward-looking
in
nature
including,
among
other
things,
future
performance
and
the
implementation
of
the
Go
Forward
Plan.
These
include
statements
involving
known
and
unknown
risks
and
uncertainties
and
other
factors
outside
of
management's
control
that
could
cause
actual
results
to
differ
materially
from
those
expressed
in
the
forward-looking
statement.
AutoCanada
does
not
assume
any
responsibility
for
the
accuracy
and
completeness
of
the
forward-looking
statements
and
does
not
undertake
any
obligation
to
publicly
revise
these
forward-looking
statements
to
reflect
subsequent
events
or
circumstances.
For
additional
information
about
possible
risks,
please
refer
to
our
IIF,
which
is
available
on
SEDAR
and on
our
website
within
the
Investor
Documentation
&
Filings
section.
I
will
now
turn
the
call
over
to
Mike
Borys,
Chief
Financial
Officer.
Please
go
ahead,
sir.
Thank
you,
Anas.
Good
morning,
everyone,
and
thank
you
for
joining
us
on
today's
fourth
quarter
results
conference
call.
On today's
call,
I'm
joined
by
Paul
Antony,
our
Executive
Chair;
Peter
Hong,
our
Chief
Strategy
Officer;
and
Casey
Charleson,
our
Vice
President
of
Finance.
We
released
our
Q4
results
after
the
market
closed
yesterday.
Copy
of
our
results
is
available
for
download
on
our
website.
For
today's
call,
we
will
be
discussing
the
current
state
of
the
business,
discussing
the
financial
results
and
providing
an
update
on
both
our
Canadian
and the
US
segments.
With
that,
I'd
like to
turn
it over
to Paul.
Thank you, Mike, and good morning, everyone.
I'm
incredibly
proud
of
what
our
team was
able
to
accomplish
in
2021,
and
I'm
excited
for
2022
based
on
what
we're
seeing
in
the
first
two
months of
the
year.
Our
operations delivered
yet
another
record-setting
quarter
in
Q4,
reflecting
the
ongoing
positive
momentum
across
our
business
and
the
fundamental
strength
and
resiliency
of
our
operating
platform
and
balance
sheet.
We
recorded
our
highest
ever
fourth
quarter
revenue
figure
of
CAD 1.2
billion,
which
drove
adjusted
EBITDA
of
CAD 65.9
million,
an
increase
of
63%
over
the
prior
year.
That's
a
tremendous
performance
from
top
to
bottom.
We're
also
particularly
pleased
with
the
adjusted
EBITDA
margin
improvement
in Q4,
which
was
5.5%
versus
4.6%
last
year.
These
results
continue
the
trend
of
sustainable
improvement
and
the
execution
of
a
complete
business
model
and
strategic
initiatives.
Our
balance
sheet
also
remains
exceptionally
strong,
more
so
than
at
any
point
since
the
current
team
arrived
in
2018,
which
Mike
is
going to
detail
further
in
his
remarks.
We
also
announced
last
night
that
Michael
Rawluk,
President
of
Canadian
Operations
and
Director
is
departing
the
company
for
personal
reasons.
I
want
to thank
Michael
in
his
role
as
President
of Canadian
Operations,
for
his
dedicated
service
and
substantial
contributions to
AutoCanada
since
2018.
He's
been
instrumental
in
stabilizing
our
Canadian
dealership
platform,
strengthening
the
team
of
talented
professionals,
running
the
business
day-to-day
and
successfully
positioning
us
to
enter
our
next
stage
of
growth.
We
wish
him
well
in
his future
endeavors.
The
team
we
put
in
place
over
the last
few
years
is
exceptional
and
we
don't
anticipate
any
impact
on
the
company's
strong
momentum
heading
into
2022.
We've
been
actively
in
dialogue
with
a
number
of
candidates
for
the
role,
and
we
expect to
make
an
announcement
in
the coming
weeks,
given
the
advanced
stage
of
these
discussions.
I'll
now
touch
on
some
operational
highlights
for
the
quarter.
Our
Canadian
operations
continue
to
successfully
execute,
including
record
Q4
2021
earnings.
Same-store
used
vehicle
gross
profit
percentage
increased
to
8.7%
as
compared
to
7.6%
in
the
prior
year.
F&I
gross
profit
per
retail
unit
average
increased
to CAD
3,130,
up
11.1%
or
CAD 313
per
unit.
Our
used
to
new
retail
unit
ratio
also
increased
to
1.45
from
0.93,
and
our
trailing
12-month used
to
new
retail
units
ratio
improved
to
1.43
as
compared
to
0.957.
These
metrics
are
particularly
important
as
they
demonstrate
the
diversity
of
our
business
model
during
a
time
where
new
vehicle
supply
remains
unclear.
We
set
out
to
develop
the
Canadian
platform
several
years
ago
to
deliver
the
type
of
performance
we
saw
in
2021
and I'm
incredibly
proud.
Turning
to
the
supply
chain
and
inventory
outlook,
OEM
production
continues
to
be
a
concern
due
to
the
ongoing
chip
shortage.
While
we'd
like
to
be
surprised,
the
past
year
tells
us
that
we
shouldn't
bank
on
near-term
relief
for
the
chip
shortage,
which
has
us
anticipating
new
vehicle
volume
to
be
lower
than
prior
years
for
at
least
the
first
half
of 2022.
Possibly
exacerbating
the
issue,
we've
seen
reports
that
the
Ukrainian
conflict
could
further
strain
supply
as
both
Russia
and
Ukraine
are
critical
supplier
of
key
microchip
components.
That
being
said,
there
is
good
news.
We have
approximately
two
months'
supply
on the
ground
for
new
vehicles,
given
our
work
with
our
OEM
partners
to
secure
inventory,
another
proof
point
for
the
power
of
the
platform.
We
continue
to work
with
the
OEM
partners
to aggressively
pursue
new
vehicle
allocation
whenever
opportunity
arises.
Production
issues
with
new
vehicles
was
expected
and,
as
such,
we
have
anticipated
that
demand
for
used
vehicles
will
remain
high.
We
continue
to
lean
into
our
strategy
of
increasing
used
vehicle
retail
sales
volume,
and
we've
been
executing
our
winter
buying
program
in
Canada
for
several
months
in
anticipation
of selling
season
to begin
in
March. As
of
last
week,
AutoCanada
had
more
retail
used
inventory
listed
on
its
website
than
the
next
three
top
competitors
in
Canada
combined.
In
addition,
consumer
spending
is
expected
to
rise
as
household
savings
in
Canada
remain
elevated.
The
outlook
from
recent
economic
reports
is
that
consumer
demand
will
continue
throughout
2022.
We
anticipate
the
current
environment
of
high
margins
will
continue
to match
elevated
consumer
demand
unless
OEM
production
increases
more
than
currently
anticipated.
The
lower
supply,
combined
with
the
pent-up
demand,
has
significantly
decreased
the
need
to
sell
new
vehicles
at
anything
less
than full
market
value.
We
will
continue
our
strategy
to
realize
full
margin
potential
on
our
vehicle
sales
by
avoiding
discounting.
In
terms of
our
expectation
for
margins,
we
anticipate
margins
to
continue
with
the
used
retail
vehicle
as
well
due
to
scarcity
of
inventory
on
the market.
Our
strong
inventory
position,
complemented
by
our
best-in-class
F&I
operation,
has
us
confident
that
we're
positioned
to be
the
market
leader
in
used
retail
sales
in
Canada
in
2022. We
expect
faster
turns of our
inventory
to result
in
lower
carrying
cost
of inventory
as
well.
Switching
over
to
the
United
States,
we
continue
to
see
outstanding
performance
in
our
US
operations.
Actions
taken
previously
by
the
new
management
team
with
Jim
Douvas
include
the
strategic
buildup
of
used
vehicle
inventory,
the
creation
of
a dedicated
used-vehicle
team,
[ph]
top-rating
(00:07:37) dealership
management,
expanding
teams
across
all
levels
of
the
business
and
the
execution
of
operational
best
practices
led to
improved
metrics
on
multiple
fronts.
As
a
result,
we
reported
the
fourth
quarter
US
adjusted
EBITDA
of
CAD
10.7
million,
an
improvement
of
CAD 9.5
million
over
the
prior
year.
Gross
profit
increased
to
CAD 39.2
million
and
that's
an
improvement
of CAD
22.6
million,
or
136%,
while
gross
profit
margin
of
19.9%
set
a
fourth
quarter
record
for
US
operations.
US
team
also
increased
used
retail
unit
sales
to
2,166
from
664
in
the
prior
year.
That's an
improvement
of
226%
and
a
new
to
used
ratio
of
1.46
from
0.47.
We
remain
thoroughly
impressed
with
the
progress
we're
seeing
from
the
US
team
and
believe
we're
on
the
right
path
to
margins
more
typical
of
our
US
peers.
Overall,
our
strong
performance
in
the
fourth
quarter
and
in
2021
reflect
the
ongoing
sustainability
of
our
business
model
and
demonstrates
that
we're
successfully
managing
through
these
production
and
inventory
challenges.
We
continue
to
believe
the
OEM
production
capacity
issues
will
normalize
over
the
coming
quarter
and
expect
the
market
to
begin
to
return
to
pre-pandemic
levels
in
late
2022
or
early
2023
as
vehicle
production
begins
to
come
back
and
margins
eventually
normalize
for
both
new
and
used
vehicles
on
a
sustainable
basis.
In
the
meantime,
we're
going
to
continue to
build
out
on
our
positive
momentum
and
focus
on
strategic
growth
initiative
to
drive
industry-leading
performance
regardless
of
changing
market
conditions.
We've
been
building
muscle
into
our
complete
business
model
and
now
we're
focusing
more
resources
on
the
integration
of
our
pipeline
of
acquisition.
Our
employees
in
Canada
and
the
United
States
continue
to
work
tirelessly
and
have once
again
delivered
excellent
performance.
Without
them,
we're
nothing.
Thank
you
so
much.
We're
encouraged
by
the
very
strong
momentum
across
our
business
and
we
remain
well-prepared
to
face
any
challenges
in
our
current
environment.
I'll
come
back
at
the
end
to
speak
more
about
our
outlook
and
strategy
in my
concluding
remarks,
but
for
now,
I'll
turn
it
over
to
Mike.
Thanks,
Paul,
and
good
morning
again
to everyone
on
the
call.
I'll
take
the
next
few
minutes
to
speak
to
our
recent
financing
actions
and
the
continued
discipline
we're
applying
to
managing
our
balance
sheet.
First
off,
I'll
reference
to
recent
successful
financing
of
our CAD
350
million
senior
unsecured
notes
in
January
and
completed
in
February.
Financing
allowed
us
to
redeem
our outstanding
CAD
250-million
senior
unsecured
notes,
which
bore
an
interest
rate
of
8.75%
and
had
another
three
years to
maturity.
Our
new
debentures
provide
us
with
a
seven-year
tenure,
three
year
non-call,
and
a
price
of
5.75%,
in
addition
to
the
cash
interest
savings
we'll
be
realizing
moving
forward, and
stabilize
and
strengthen
our
balance
sheet
position
by
extending
our
tenure
to
seven
years.
We
were
quite
pleased
with
the
positive
investor
reaction
to
our
review
of the
company's
performance
over
the
last
two
years,
and
how
it
compares
and how
we
spoke
to
our
vision
and
direction
in
January
2020
with
the
initial
financing.
We
made
dramatic
inroads
to
not
only
improving
our
adjusted
EBITDA
run
rate,
but
also
driving
positive
free
cash
flow
and
reducing
our
net
debt
position,
and
maintaining
that
discipline
over
our
balance
sheet.
Concurrent
with
the
debenture
financing,
we
renewed
our
credit
facility
agreement
to
maintain
a
three-year
tenure.
We
also
added
another
Tier
1
lender
with
Toronto-Dominion
Bank,
while
keeping
all
of
our
existing
lenders
within
the
syndicate.
Adding
another
lender
simply
allows
its
more
potential
liquidity,
if
required,
to
further
support
our
acquisition
pipeline
and
activate
our
dry
powder,
speaking
of
which,
we
have
dry
powder
well
in excess
of
CAD 500
million.
We
complete
deals
without
having
to
raise
equity
while
staying
within
our
target
range
of
debt
leverage.
As
previously
noted,
we
continue
to
have
excellent
relationships
with
all
of
our
lenders
and
we
see
them
as
our
strategic
partners
in
this
business.
The
transaction
noted
above
were
preceded
by
a
one
notch upgrade to our
corporate
and
senior
unsecured
ratings
by
S&P.
We
moved
from
a
single
B
to
a
B+
rating.
We
continue
to
maintain
an
open
and
constructive
relationship
with
S&P
as
we
work
to
develop
our
business
model.
All
of
these
actions
noted
above
speak
to
and
contribute
to
the
strength
of
our
balance
sheet
and
ensure
that
we
continue
to have
access
to
capital
markets
and
liquidity.
I'll
now
speak
to
our
Normal
Course
Issuer
Bid
or
NCIB
announced
in
mid-December
2021.
As
we
noted
in
our
financials
and
our
MD&A,
as
of
yesterday,
March
2,
the
company
had
repurchased
and
cancelled
542,401
shares
under
our
NCIB
for a
total
cost
of
CAD
20 million.
Under
the
NCIB
approved
by
the TSX, we
are
authorized
to
purchase
for
cancellation
up
to
1,730,321
common
shares.
To-date,
we've
repurchased
and
cancelled
31.3%
of
this
amount.
This
is
about
actively
managing
our
allocation
of
capital.
At
the
time
of
instituting
our
NCIB,
we
believe
and
stated
as
such
that
our
shares
were
undervalued
and
based
on
the
strength
of
our
balance
sheet,
coupled
with
our
long
term
outlook
and
the
cash
flows
the
business
generates
in
the
normal
course,
we
saw
an
opportunity
to
create
value
for
our
shareholders,
while
continuing
to
ensure
we
could
execute
against
our
M&A
pipeline.
The
NCIB, as
filed,
remains
in
place
to
December
22,
2022,
or
such
earlier
date
as
the
company
may
complete
its
purchase
under
the
NCIB.
[ph]
Last item
to
speak,
through the
years is (00:13:22)
our
inclusion
within
the
MD&A
of
our
pro
forma
adjusted
EBITDA
as
at
December
31, 2021.
At
the
time
of
our
financing,
we'd
indicated
that
our
pro
forma
normalized
adjusted
EBITDA at
the
end
of
the
third
quarter
was
CAD
194.4
million
on
a
pre-IFRS
16
basis
or
CAD 242.5
million
inclusive
of IFRS
16
impact.
Updating
for
our
performance
in
Q4,
our
pro
forma
normalized
adjusted EBITDA,
inclusive
of
IFRS
16
impact,
as
presented
in
our
MD&A,
improved
to
CAD
266
million.
On a
pre-IFRS
16
basis,
the
implied
pro
forma
normalized
adjusted
EBITDA
improved
to
CAD 216
million
and in
fact,
the
change
from
our
Q3
pro
forma
metric
is
the
outperformance
of
Q4
2021
as
compared
to
Q4
2020.
This
represents
some
of
our
base
business
operations
normalized,
plus
management's
estimate
of
the
pre-synergies
impact of
12
months
of
acquisitions
completed
in
the
year.
It is
our
view
as
we
think
about
what
we
are
seeing
in
the
first
month
of
2022
and
the current
market
outlook, that
this
represents
the
floor
of
our
expectations
for
2022.
As
we
complete
acquisitions
in
the
year, we
will
continue
to update
the
market
on
our
pro
forma
adjusted
EBITDA
at
that
point
in
time,
so as
to
provide
improved
visibility
to
our
stakeholders
on
the
impacts
of
those
acquisitions.
I'll now turn
it
over
to
Casey.
Thanks,
Mike.
At
the
consolidated
level,
revenue
came
in
at
CAD
1.2
billion,
an
increase
of
CAD 319.7
million
or
36%.
Gross
profit
came
in
at
CAD 228.5
million,
an
increase
of CAD
75.8
million
or
50%.
Net
income
was CAD
69.4
million,
versus
CAD
24.3
million
in
the
prior
year.
Net
income
for
the
quarter
included
a
recovery
of
non-financial
assets
of
CAD 39.8
million
versus
a
recovery
of
CAD 11.2
million
in
the
prior
year.
Loss
on
redemption
liabilities
of
CAD
14.1
million
versus
a
gain
of
CAD
2.1
million
in
the
prior
year,
and
an
unrealized
fair
value
gain
on
embedded
derivative
of
CAD 24.8
million
included
in
finance
costs.
Adjusted
EBITDA came
in
at
CAD 65.9
million,
which
was
an
increase
of
CAD
25.4
million
or
63%
over
Q4
2020.
In
our
Canadian
operations,
total
retail
vehicles
sold
came
in
at
16,447,
an
increase
of
2,507
units
or
18%.
The
Canadian
operations
generated
revenue
of
CAD 998.8
million,
an
increase
of
28%
versus
prior
year.
Gross
profit
was
CAD 189.3
million,
an
increase
of
39%.
Net
income
was
CAD 62.3
million
versus CAD
25.4
million
in
the
prior
year.
Adjusted EBITDA
was
CAD
55.1
million,
an
increase
of
$15.9
million.
Other key
highlights
include
the
following.
Same-store
gross
profit
increased
by
CAD
39.2
million
or
29%,
and
our
gross
profit
percentage
increase
to
20.2%
from
17.8%.
Same-store
used
and
new
retail
units
ratio
increased
to
1.29
in
the
quarter
from
0.93.
Same-store
F&I
gross
profit
per
retail
unit
increased
to CAD
3,312,
up
18%
or
CAD
509
per
unit.
Same-store
F&I
gross
profit
dollars
increase
CAD 9.4
million
or
24%.
In
our
US
operations,
revenue
was
CAD
197
million,
an
increase
from
Q4
of
2020
of
102%.
Gross
profit
was
CAD 39.2
million,
an
increase
of
136%.
Net
income
was
CAD
7.1
million,
an
increase
of
CAD
8.2
million.
Adjusted EBITDA
was
CAD
10.7
million,
an
increase
of
CAD
9.5
million
from
2020.
New
vehicle
gross
profit
increased
by CAD
11.3
million,
and
new
vehicle
gross
profit
percentage
increased
by
12.8
percentage
points
to
16.8%.
Used
vehicle
revenue
increased
by
321%
and
used
vehicle
gross
profit
increased
by
68%.
The
number of used retail
vehicles
sold
increased
by
226%,
2,166
units.
I'll
now
turn
the
call
back
over
to Paul
to
discuss
our
outlook
and
strategy.
Thanks,
Casey.
Our
strong
performance
this
quarter
reflects
the
fundamental
strength
and
resiliency
of
our
business
model.
Our
operational
playbook
allows
us
to
be
ready
to
execute
on
our
next
leg
of
growth
and
acquisition
strategies.
As
part
of
this
growth,
we
significantly
advanced
our
acquisition
strategy
in
the
fourth
quarter
with
the
recent
Autopoint
transaction
providing
strong
brand
and
geographic
diversification
and
adding
considerable
size,
scale
and
scope
to
AutoCanada's
existing
platform
in
a
growing
market.
In
terms
of
our
ongoing
strategy,
we
remain
well-positioned
to
execute
on
our
acquisition
pipeline
in
the
coming
quarters.
Our
current
transaction
pipeline
with
dealerships
and
collision
centers
represents
over
CAD
100 million
in
annual
revenue
currently
being
evaluated
under
signed
LOIs
and
purchase
agreements.
Beyond
these
deals,
we're
at
varying
stages
of
the
acquisition
process
with
other
targets
that
have not
yet
reached
the
signed
LOI
stage.
As
always,
we
will
remain
disciplined
in
our
approach
to
capital
allocation.
We
continue
to
assess
our
extensive
pipeline
of
acquisition
opportunities
qualitatively
and
quantitatively
with
the
goal
of
diversifying
by
geography
and
brand
in
addition
to
expanding
our
network
of
used
dealerships
and
collision
centers.
In
terms
of
industry
themes
and
where
we
continue
to
see
things
heading,
we
believe
our
business
model
remains
resilient
to
fluctuations
and
the
new
vehicle
sales
cycle,
given
our
diversified
business
mix
and
flexible
cost
structure
in
addition
to
several
growth
vectors.
New
cars
aside,
including
F&I,
parts
and
service,
collision
repair,
near
prime/subprime
and
used-only
retail,
we
believe
that
any
near-term
pressure
with
inventory
constraints
is
likely
a
positive
dynamic
for
the
industry
as
it
creates
additional
pent-up
demand
that
would
be
more
rationally
released
over
a
multi-year
recovery.
All of
that
reinforces
my
continued
belief
that
we remain
in
this
golden
age
for
auto
dealerships
with
larger
platforms
like
AutoCanada
positioned
as
the
primary
beneficiary.
That
momentum,
combined
with
the
continuation
of
the
trends
we
saw
in 2021,
into
early
2022
enhances
our
optimism
for
the
year
ahead.
We
expect
to
see
continued
realization
of
synergies
from
our
acquisition,
which
will
further
drive
2022
adjusted
EBITDA
performance.
As
we've
said
before,
we
continue
to be
proactive
and
vigilant
as
to
what
the
future
holds
with
any
ongoing
impact
from
the
macroeconomic
environment
related
to COVID.
We
will
continue
to
build
on
our
positive
momentum
and
focus
on
strategic
growth
initiatives
to
drive
industry-leading
performance
and
enhance
shareholder
return
regardless
of
changing
market
conditions.
We're
excited
about
what
the
future
holds
for
AutoCanada
and
remain
poised
to
take
advantage
of
the
disruption
and
consolidation
in
the
industry
and
continue
to
blaze a
new
path
forward
in
the
evolution
of
the
company.
Thanks
so
much
to
our
team
for
the
quarter
and
thank
you
to
you
as
our
customers
for
supporting
us.
Now I'll
turn
it
over
to
the
operator
for
any
questions.
Thank
you,
sir.
Ladies
and
gentlemen,
we
will now
begin
the
question-and-answer
session.
[Operator Instructions]
Your
first
question
comes
from
Michael
Doumet
with
Scotiabank.
Please
go
ahead.
Hi. Hey,
good
morning,
guys.
Hey,
good
morning.
Yeah.
First
question,
Mike,
if
I
heard
you
correctly,
the
CAD
266
million
of
pro
forma
EBITDA,
which
happens
to
be
just
a
tad
above
where
consensus
sits
for
2022.
If
I
heard
you
correctly,
you
said
that
that
would
represent
the
floor
for
EBITDA
expectations
going
forward.
And
I
guess
that
makes
sense
given
the
synergy
opportunity,
there's
RightRide
and
the
exit
rates,
parts
and
service
GPU
were
quite
strong
in
Q4
even
versus
the
rest
of the
year.
So,
yeah,
if
you
can
correct
me
if
I'm
wrong,
if
I
misquoted
you
there,
and
maybe
just
talk
about
some of
the
offsets
and
how
we
should
triangulate
2022
expectations.
I
think that –
that's
exactly
right.
I
mean,
we
put
together
the
pro
forma
EBITDA
to
give
a
little
bit
more
color
and
guidance
to
the
market.
It
is
going to
be
based
on
what
we
did
in
the
prior
year.
It
is going
to
be
based
on
a
pre-synergy
EBITDA
for
the
acquisitions
and
as
you
indicated,
we
would
expect
to
begin
to
realize
[ph]
in (00:22:31)
some
of
those
synergies
in
2022.
We
talked
about
the
current
environment
that
we're
in
as
being
golden
age
of
dealerships.
With
continuing
production
shortfalls
with
OEMs,
microchips
and
so
on,
we
continue
to
expect
elevated
margins
on
new
and
used
margins
and
we're
confident
that,
as
I
mentioned,
that
would
be
the
floor
or
what
we
would
be
expecting
to
see
in
2022.
Again,
we
kind
of
get into
this
whole
discussion
around
sustainability,
and
we think
2022
going
to
be
strong,
that
should
continue
into
2023
until
we
see
microchips
beginning
to
stabilize.
And
our
model
remains
strong.
So
there's
a
whole
bunch
of
components
of
our
business
model
that
we're
continuing
to
improve
even
before
the
pandemic
started. And
I
think
that's
where
we
have
to
differentiate
ourselves
from
other
US
peers,
which
tends
to
be
more
of
a
pandemic
pickup.
We
have
good systemic
improvements
that
we
think
are
sustainable.
So,
long-winded
way
of
saying,
yes,
you
captured
it
right.
Okay.
That's
helpful.
And
look,
I
think
it's
a
good
number.
The
second
question
I
had
was
a
question
around
capital
allocation
and
how
you're
thinking
about
share
repurchases
versus
M&A
at
this
point.
Specifically,
on
the
share
repurchases
can
you,
you
know,
while
maintaining
the
pace
of
the
buyback,
you
know,
maybe
expanding
the
opportunity
there?
And
then
just
on
M&A,
how
to
think
about
M&A
going
forward
and
if
the
focus
is
still
kind
of
on
large
platform
deals
or
it
could
be
from
a
range
of
tuck-in
to
platform
deals?
Just
a
general
question
on
capital
allocation.
Yeah,
I'll
touch
on
the
NCIB, the
share
buybacks
first
and
then I'll turn
it over
to
Paul
on
M&A.
Well,
listen
like
we
had
to –
you
know, if I
go
back to
December
we
were
looking
at
where our
share
price
was.
We
absolutely
believed
the
share
price
was
not
reflective
of
what
we
believe
the
intrinsic
value
of
our
shares
− of
our
company
was
or
what the
share
should
have
been.
We
have
the
NCIB in
place
through
the
end
of –
or
through
December
22,
2022. As
we've
indicated,
we
purchased
CAD 20
million.
There's
still
more
room
on
the NCIB
and
as
a
company,
we'll
continue
to
take
a
look
at
where
the
shares
are
trading
and
take
action
appropriately,
but
the
NCIB
remains
open.
So,
we'll
always
have
our
eye
on
where
the
market
happens to
be
and
if
we
want
to
go
into
it,
we
will.
We're
also
mindful
that CAD
20
million
is
a –
is
not
a
overly
material
amount
when you
think
about
where
our
balance
sheet
happens
to
be
and
how
much
cash
we're
actually
generating
and
we're
also
mindful
of
where
our
acquisition
pipeline
happens
to
be.
So,
everything
is in
balance
as
we're
looking
at.
We
are
going
to
be
smart
about
how
we
manage
the
balance
sheet,
as
well
as how
we
look
at
where
the
shares
happen
to be
trading.
So,
that'll
be
the
NCIB component. I'll
turn
it over
to Paul
to
talk about
the
acquisition
pipeline.
Thanks, Mike.
Look
we
have tons
of opportunity
in
front
of
us.
We're
just
mindful
that,
you know,
it's
the
golden
age
of
the
car
dealer
for
us,
but
it's
also
the
golden
age
of
car
dealer
for
everybody.
And
so
when
we
think
about
acquisitions
and
think
about
being
disciplined,
it's
important
for
us
to
consider
acquisitions
that
are
either
A,
strategic,
or
B,
accretive,
that
we
can
actually
buy
down
the
multiple
by
implying
our
synergies
onto.
And
so,
we've
got
a
lot of
opportunities
in
front
of
us.
We
have
a
lot
of
collision
opportunities
in
front
of
us
and
also
throwing
up
RightRide
stores.
We're
just
being
disciplined
how
we
think
about
things.
That
said
and
to
back
up
Mike,
we
think
our
share
price
is
cheap
and
so
relatively
buying
shares
of
AutoCanada,
where
we
can't
buy
a
dealership,
we
think
that
we
– at
least
we
know
what we
have
versus
buying
a
dealership
and
really
stretching.
You
said
–
you
mentioned
buying
tuck
ins
or
buying
big
dealer
groups.
Listen,
the
next
leg
of
the
journey
for
us,
it's
around
buying
stores
for
sure
and
growing
through
acquisition.
But
part
of
that
is
also
teams.
And
so
we
think
a
lot
about
the
teams
that
we
could
be
assuming
when
we're
buying
dealerships.
And
so,
as
much
as
we're
evaluating
the
dealership,
we're
evaluating
the
people
at
the
dealerships
and
how
well
they
perform
and
how
well
they
would
integrate.
And
so,
for
us,
whether
it be
one
store
or
five
stores
or
nine
stores,
as
Mike
said,
we
have
a
$500
million
war
chest
to
go
up
by.
And
for
us,
we've
–
the
company
has
now
turned
around
and
now
it's
just
about
allocation
of capital.
Got
it.
Makes
sense.
Thanks,
guys.
Okay.
Thank
you.
Thank
you.
Your
next
question
comes
from
Chris
Murray
with
ATB
Capital
Markets.
Please
go
ahead.
Yeah.
Thanks, folks.
Good
morning.
One
of
the
questions
I
get
a
lot
is
about,
you
kind of
alluded
to
the
sustainability
of
margins,
but
the
question
is
really
about
this
isn't
about
as
good
as
it
gets
just
because
you've
got
restricted
supply.
And
can
you
just
maybe
give
us
an
understanding,
maybe
as
you
think
about
how the
business
evolves
as
margins,
maybe
or
if
supply
starts
to
normalize
as
we
go
into
later
this
year
and
into next
year.
No,
Chris.
Like
if
you
listen
to
the
earnings
calls
of
every
one
of
the
consolidators
right
now,
that's
the
same
question
over
and over
again,
and
I
don't
think
anybody's
given
an
answer.
So,
I
mean,
the
sustainability
of
the
margins
has
been
the
number
one
question
that
everybody
asks.
I
would
tell
you
my
belief.
My
belief
is
that
there's
still
more
to go.
Like,
we
really
feel
strongly
that
the numbers
that
we
posted.
I
don't
want to
blow
our
cover
here,
but
we
think
we're
going
to
kill
it
this
year
also.
And
that's
because
we
don't
think
this
is going
to
be
a
normal
year.
We
think
2022 is
going
to
be
impacted
much
like
2021.
I
think
we
said
that
on
the
previous
call.
And
so,
what
you're
asking
or
what
I
think
everybody
is
asking
is
what will
the world
look
like
when
everything
normalizes?
And,
I
mean,
I
have
no
idea.
I
don't
think
anybody
in
this
room
is
qualified.
I
don't
think
anybody
on
the
call
is –
maybe
Siri.
Hey,
Siri.
I
mean,
I
have
no
idea.
Like,
we're
all
kind
of
grasping
at
this – Oh,
my
hey,
Siri
went
on,
so.
We're
all
trying
to
figure
that
out
as
well.
But
again,
what
we've
said
over
and
over
again
is that
we're
going to
continue
to
outperform
the
market
and
as
long
as
we
outperform
the
market,
we
know
that
we're
doing
the
best
we
can.
If
you're
trying
to
fortune
tell
what
the
market
looks
like
when
it
is
normal,
I'd
say let's
talk
in
2024, 2025. Sorry
to
be
evasive.
No,
I
guess
we'll
work
with
that.
Along
those
lines,
could
the
other
kind
of
major
initiative
that
really
haven't had
a
lot
of
discussion
around
was
around
the
digital
initiative
in
the
used
car
expansion.
Any
update
you
can
provide
us
with
how
the
digital
development
is
going
and
I
know
there's
been
some
other
competitors
that have
been
making
some
pretty
aggressive
moves.
But
just
wondering,
how
you
guys
are
feeling
about
your
own
offering
right
now?
Yeah,
like
our
team
is
[ph]
stooled
up (00:30:40)
and
they
are
building
up
the
solution.
I
would
say
that
the
two
acquisitions
that
we
made
really
over
performed
what
our
expectations
were.
And
there's
going to
be
more
announce
here
very
shortly
as
to
how
we've
progressed
further
development.
We've
got
a
full
development
team
building
out
the
solution
and
they're
very,
very
talented.
We
have
high
expectations
and
hope
for
that
division.
Okay.
I'll
leave
it there.
Thanks,
folks.
Thank
you.
Thank
you.
Thank
you.
Your
next
question
comes
from
David
Ocampo
with
Cormark.
Please
go
ahead.
Thank
you,
good
morning,
everyone.
Good morning,
David.
Sticking
with
Chris's
question
about
the
used
vehicle
strategy.
I
was
curious kind
of
what
you're
seeing
in
terms
of
the
M&A
environment.
I
know
you
commented
on
M&A
in
general,
but
are
you
now
leaning
more
towards
greenfield
opportunities
given
that
we
haven't
seen
too
many
announcements
from
you
guys?
Well,
we
were,
we
were
running
down
potentially
buying
an
existing,
initial
offering
that
we
looked
at
but
we
could
overlay
on
our
business
and
we
looked
at
the
whole
build
versus
buy
strategy.
And
we
came
to
the
conclusion
that
for
us,
it
made
more
sense
to
build
out
in
that
way
we
get
a
tailor-made
solution.
I
know you didn't
ask
that
question.
You
said,
are
we
thinking
about
more
greenfield
versus
buying.
Again,
we're
being
opportunistic,
when
there's
an
opportunity
to
go
and
buy
a
high
quality
asset
that
we
think
that
will
blend
in,
we're
happy
to
do
that.
But
at
the
same
time,
we're
also
building
out
our
digital
solution
to
make
sure
that
it's
compatible
with
our
new
car
dealerships.
And
it's a
little
bit
trickier
for
us
because
we
have
new
car
dealers
selling
used
cars
and
we
have
a used-only
solution.
And
so
for
us
to
make
sure
that
everybody
is
working
together,
it's
not
just
as
simple
as
[ph]
bringing
up
a
new
store and (00:32:47)
necessarily
competing
with
ourselves,
want
to do
it
in
such
a
way
that
we're
complementary.
And
so,
we're
open
to
building
our
own,
but
again
to
that
crawl,
walk,
run,
we're
still
in
the
crawl
phase.
And
as I
think
I've
told
you
on our
previous
call,
this
is
more
complex
than
I
actually
thought
about.
But
we're
still going
to
get
there.
It's
just
taking
more
time.
And
frankly,
I
know
when
you
say
that
other
competitors
are
in-market
or
ahead
of
us
or
whatever,
I
actually
think
that
our
used
division
is
probably
selling
as
many
cars,
if
not
more
than
them
right
now.
So,
I
don't necessarily
agree
with
that.
I
think
we're
doing
a
great
job.
No,
that's
very
useful
color.
Just
moving
over
to
the
theme
of
normalization,
but
maybe
drilling
more
specifically
into
one
category.
Your
F&I
GPUs
just continues
to
grind
higher
here.
But
I'm
trying
to
get
a
sense,
do
you
extract
more
GPU
out
of
a
new
car
versus
a
used
car?
So,
when
things
begin
to
normalize
here
and
the
shift
moves
to
new
vehicles
that
we
can
actually
see
this
grind
even
higher.
Look,
I
think
that
we
surprise
ourselves.
Our
F&I
team
deserve
a
major
shout
out.
These
are
a
group
of
professionals
I
have
never
seen
anything
like
it.
And
what
they've
been
able
to accomplish
is
nothing
short
of,
like,
miraculous
when
you
compare
ourselves
and
overlay
us to
any
of
the
other
consolidators
and
anybody
that we
actually
compete
with
in
the
market.
And
frankly,
where
we
end
up,
if
that's
what
you're
trying
to
solve
for,
I
actually
don't
know.
I
don't
know
where
we
ultimately
end
up.
What
I
do
know
is
the
new
F&I
has
more
opportunity
than
the
used
on
a
GPU
basis.
So
we're
extremely
excited
about
the future
and
we
definitely
have
the
right
team
in
place
to
actually
go
and execute
on
that.
Hey,
David, just
as
a
little
bit
more
color,
and
I
guess
we don't
really –
we
don't
break
this
out,
but
generally,
new
and
used
GPUs
not
materially
different,
they're
pretty
close.
Okay.
That's
it
for
me.
Thank
you
so
much,
guys.
Thank
you.
Thank
you.
Your
next
question
comes
from
Luke
Hannan
with
Canaccord.
Please
go
ahead.
Yeah,
thanks.
Good
morning.
I
want
to
drill
in
on
the
parts,
service,
and
collision
repair
because
I
imagine
this
is
something
that
we'll
see
a
snap
back
in
more
dramatic
fashion
in
2022. How
do
you
think
about
your
– how
well-positioned
that
you
are
there,
Paul,
with
the –
I
guess
specifically
[ph]
digging in (00:35:34) on
the
supply
of
technicians
that
you
have
there.
Do
you
have
the
capacity
to be
able
to support
higher
[ph]
than
level
– (00:35:40)
pre-pandemic
levels
of
service
there?
For
sure
we
do.
We
–
so
I
think
we're
seeing
our
parts
and
service
come
back
in
a
meaningful
way
and
that
has to
do
with
miles
driven
as
things
open
up.
We're
definitely
positioned
well
for
that.
Our
collision
repair
business
separately, as
there's
more
vehicles
on
the
road, there's
a
higher
frequency
of
collision
and
accidents.
And
so
I
expect
that
to
absolutely
take
hold
as
well.
And
as
we've
said
before,
we're
in
the
market
to
buy
more
collision
repair
centers
to
support
our
existing
framework
of
dealerships.
Got
it.
And
then
when
we
think
about
also
the
margin
drivers
for
that
business
in
2022,
I
think
clearly
scale
is
a
pretty
big
contributor
there.
But
are
there
any
mix
implications
that
we
should
be
thinking
about
2022
as
well?
Just
taking
into
consideration
that
there's
– the
car
parc
has
aged
considerably
over
the last
two
years
and
with
the
higher
mix
of
used
vehicles
that
are
now
on
the
road,
like
are
you
expecting
anything
different
internally
from
a
mix
perspective
than
maybe
you
would
have
seen
pre-pandemic?
I
think
so.
I
think
that
you've
hit
the
nail
on
the
head.
Because
there's
more
used
cars
out
there,
there's
likely
a
higher
propensity
for
service
and
repair.
And
so
we
can
expect
that
the
volume
should
be
driven
up.
Got
it.
Last
one
for
me,
and
then
I'll
pass
the
line.
I
think
you
had
mentioned
that
there
is
about
two
months
of
new
car
inventory
in
Canada
that
you
have
on
the
ground
as
of
today.
I'm
just
curious
how
that
compares
to
your
competitors.
I
can't
comment,
I
think
that
we –
yeah,
I don't
really
have
the
answer
to
that.
I
do
know
two
months
in
Canada,
we
have
one
month
new
car
volume
for
the
US
and
I
know
that
we
were
aggressive
like
the
whole
team
was
aggressively
trying
to
source
new
vehicle
inventory
and
used
vehicle
inventory
over
the
winter
months.
And
as
we
said,
we
have
more
volume
in
used
than
anybody
else,
the
three
top
consolidators
in
Canada
combined.
I
would
only
imagine
that
we're
likely
have
here
in
new
as
well
but
I
can't
comment
on
that
exact
number.
Okay.
Understood.
I
appreciate
the
color.
Thanks.
Thanks.
Take
care.
Thank
you.
Thank
you.
Your
next
question
comes
from
Maggie
MacDougall
with
Stifel.
Please
go
ahead.
Thank
you.
Wanted
to
ask
a
question
following
on
the
parts
and
service
commentary. You
haven't
yet
seen
the
parts
and
service
business
fully
recover
back
to
pre-pandemic
levels
but
it
does
look
like
it
is
getting
there
at
least
slowly
but
surely.
If
it
did
snap back,
would
you
have
any
concern
about
availability
of
parts
− the
supply
of
parts
in
light
of
the
challenges
that
are
− were
already
in
supply
chain
but
now
have
gotten
worse
with
the
unfortunate
Ukrainian
situation?
So,
yeah,
it's definitely
a
concern.
It's
on
our
radar.
It
hasn't
impacted
us
yet,
but
it
definitely
could
potentially
impact
us
in
the
future.
I
think
it's
just
a
wait
and
see.
Again
Maggie
we
can't
be
fortuneteller,
so
we're
hoping
for
the
best
but
we
also
are
prepared
for
the
worst.
Secondary
question
on
M&A.
We
talk
a
lot
about
acquisition
of
dealerships,
used
car
platforms
that of
type
thing.
We
have
seen
tech
valuations
reset significantly
in the
general marketplace
and
I'm
wondering significantly
in
the
general
marketplace.
And
I'm
wondering
if
there
is
any
interest
or
if
you
have
heard
of
any
transactions
occurring
whereby
more
traditional
business
like
yourselves
hard
line
retail
looks
to
take
advantage
of
the
multiple
contraction
and
buy
some
interesting
software
that
could
plug
into
your
omni-channel
strategy.
The
answer
to
that
is
yes.
We've
been
diligent
seeing
a
bunch
of
different
opportunities
all
up
and
down
software
around
automotive
as
well.
Great,
thanks.
And
then
final
question,
when
I
go
to
your
website
and
I
look
at
what's
listed
for
sale
you've
got,
new,
used
and
certified.
I
understand
this
is
probably
more
of
a
lead
generation
tool
on
the
new
site,
but
it
does
strike
me
as
though
being
able
to
show
those
categories
in
addition
to
the used
vehicles
could
actually
be
a
differentiator
in
terms
of
your
online
used
offering.
Are
you
able
to
describe
how
you
envision
that
working?
Will
there
be
a
synergy
there
or
is
that
not
necessarily
going
to be
the
case?
I
can't
comment
at
this
point
in
time.
At
this
point
in
time,
we're
not
able
to
mix
the
certified
pre-owned
from
the
dealership
to
our
used
car
platform.
That's
the
current
state
of
affairs.
But
no.
as things
and
evolve
and
I'm
sure
they
will.
We'll
keep
you
posted.
Okay,
thanks.
Have
a
good
day.
Thanks, Maggie.
Thank
you.
Thank
you.
There
are
no
further
questions
at
this
time.
Mr.
Antony,
you
may
proceed.
Listen,
we
–
again,
we
really
appreciate
everybody's
patience
as
we
work
through
the
pandemic.
This
has
been
a
journey
for
this
company.
We
have
exciting
news
to
announce
over
the
coming
weeks,
and
we
think
that
we're
in
a
great
position
to
execute
on
the
next
several
years
of
what
we
think
are
going
to be
highlights
to
the
automotive
industry.
So,
thanks
everybody
for
your
support
from
our
OEM
partners
to
our
customers,
to
everybody
that
works
within
AutoCanada.
Thank
you
very
much.
We
appreciate
everybody's
time.
Thank
you.
Ladies
and
gentlemen,
this
concludes
your
conference
call
for
today.
We
thank
you
for
participating
and
ask
that
you
please
disconnect
your
lines.
Have
a
great
day.