Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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AutoCanada Inc (AOCIF) reported a 2.3% year-over-year revenue growth in Q1 2025, driven by gains in new vehicle sales and collision services.
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The company achieved a 130 basis point expansion in adjusted EBITDA margin, benefiting from early improvements in operating leverage due to cost reduction initiatives.
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Annualized run rate cost savings reached $48.1 million in Q1, contributing to a total of $57.1 million since the launch of the ACX operating method.
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The collision business performed strongly, with OEM certifications and insurance volumes contributing to its success.
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AutoCanada Inc (AOCIF) has access to $218.2 million under its revolving credit facility, providing financial flexibility during its transformation process.
Negative Points
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Leverage remains above the target range due to the ongoing US business divestiture, and the company has paused acquisitions and share repurchases.
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There are significant uncertainties ahead, including tariff risks, weakening consumer sentiment, and broader macroeconomic pressures.
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Gross profit was flat compared to Q1 2024, with lower retail gross profit units offsetting gains in used wholesale and collision.
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The company faces heightened liquidity risk as it undergoes restructuring and divestiture processes.
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Demand trends are uncertain, with signs of consumer fatigue and potential slowdowns in May, following strong performance in March and April.
Q & A Highlights
Q: Can you elaborate on the ACX operating method and how it contributed to cost savings in Q1? A: (Unidentified_3) We accelerated the implementation of the store archetype, moving some scheduled changes from April and May into March. This allowed us to achieve cost savings faster than anticipated.
Q: What is driving the strong performance in the collision business? A: (Unidentified_5) Our collision business is benefiting from OEM certifications and increased insurance volumes. The industry is moving towards OEM certification, which we have focused on, and it is yielding positive results.
Q: Can you provide an update on the divestiture of US assets? A: (Unidentified_3) The process is active and progressing well, with a target completion by the end of the year. There is significant interest in the market, and we are optimistic about meeting our timeline.
Q: How are you managing leverage, and what impact will the US divestiture have? A: (Unidentified_3) We have stabilized leverage and expect a significant improvement once the US assets are divested. Additionally, ongoing operational improvements will contribute to better leverage metrics.