AutoCanada : Q1 2024 Financial Statements

First Quarter

Financial Results

autocan.ca

2024

Condensed Interim Consolidated Financial Statements (Unaudited)

Three-months ended March 31, 2024

AutoCanada Inc.

Condensed Interim Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(in thousands of Canadian dollars except for share and per share amounts)

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
Revenue (Note 5)	1,420,928	1,539,326
Cost of sales (Note 6)	(1,191,601)	(1,284,344)
Gross profit	229,327	254,982
Operating expenses (Note 7)	(211,664)	(211,601)
Operating profit before other income and expense	17,663	43,381
Lease and other income, net	2,549	3,243
Gain on disposal of assets, net (Note 11)	19,267	5
Impairment of non-financial assets (Note 11 )	(7,200)	-
Operating profit	32,279	46,629
Finance costs (Note 8)	(36,302)	(35,827)
Finance income (Note 8)	728	1,102
Other gains (losses), net	82	(93)
(Loss) income for the period before taxation	(3,213)	11,811
Income tax (recovery) expense (Note 9)	(852)	3,427
Net (loss) income for the period	(2,361)	8,384
Other comprehensive income (loss)
Items that may be reclassified to profit or loss		2,241
Foreign operations currency translation	2,448
Change in fair value of cash flow hedge (Note 18)	(206)	439
Income tax relating to these items	51	(111)
Other comprehensive income for the period	2,293	2,569
Comprehensive (loss) income for the period	(68)	10,953
Net (loss) income for the period attributable to:		7,807
AutoCanada shareholders	(2,407)
Non-controlling interests	46	577
	(2,361)	8,384
Comprehensive (loss) income for the period attributable to:
AutoCanada shareholders	(114)	10,376
Non-controlling interests	46	577
	(68)	10,953
Net (loss) income per share attributable to AutoCanada shareholders:
Basic	(0.10)	0.33
Diluted	(0.10)	0.32
Weighted average shares
Basic (Note 20)	23,583,406	23,503,176
Diluted (Note 20)	23,583,406	24,625,669

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

AutoCanada • 2024 First Quarter Report • Page 2

AutoCanada Inc.

Condensed Interim Consolidated Statements of Financial Position (in thousands of Canadian dollars)

	March 31, 2024	December 31, 2023
	(Unaudited)
	$	$
ASSETS
Current assets
Cash	107,912	103,146
Trade and other receivables (Note 12)	205,074	222,076
Inventories (Note 13)	1,171,378	1,154,311
Current tax recoverable	33,783	22,187
Other current assets (Note 15)	15,216	15,718
Assets held for sale (Note 11)	53,193	22,152
	1,586,556	1,539,590
Property and equipment (Note 14)	372,677	378,269
Right-of-use assets	401,379	405,105
Other long-term assets (Note 15)	15,479	16,708
Deferred income tax	34,080	35,444
Derivative financial instruments (Note 18)	1,440	3,920
Intangible assets	663,096	682,137
Goodwill	98,385	98,266
	3,173,092	3,159,439
LIABILITIES
Current liabilities
Trade and other payables (Note 16)	201,450	238,427
Revolving floorplan facilities (Note 17)	1,231,546	1,174,595
Vehicle repurchase obligations	1,139	1,982
Indebtedness (Note 17)	14,294	744
Lease liabilities	28,215	28,411
Redemption liabilities	22,580	22,580
Other liabilities (Note 18)	12,620	12,325
Liabilities held for sale (Note 11)	1,086	-
	1,512,930	1,479,064
Long-term indebtedness (Note 17)	551,557	562,178
Long-term lease liabilities	467,265	469,013
Long-term redemption liabilities	25,000	25,000
Derivative financial instruments (Note 18)	1,593	2,219
Other long-term liabilities	1,080	1,368
Deferred income tax	51,773	55,768
	2,611,198	2,594,610
EQUITY
Attributable to AutoCanada shareholders	535,150	534,847
Attributable to non-controlling interests	26,744	29,982
	561,894	564,829
	3,173,092	3,159,439

Commitments (Note 14)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Page 3 • AutoCanada • 2024 First Quarter Report

AutoCanada Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited)

(in thousands of Canadian dollars)

			Attributable to AutoCanada shareholders
				Share	Cumulative				Non-
	Share	Treasury	Contributed	repurchase	translation	OCI hedge	Retained	Total	controlling	Total
	capital	shares	surplus	(deficit)	adjustment	reserve	earnings	capital	interests	equity
	$	$	$	$	$	$	$	$	$	$
Balance,
January 1, 2024	434,632	(319)	4,117	(51,525)	7,889	155	139,898	534,847	29,982	564,829
Net loss	-	-	-	-	-	-	(2,407)	(2,407)	46	(2,361)
Other comprehensive income (loss)	-	-	-	-	2,448	(155) -	2,293	-	2,293
Dividends paid by subsidiaries to non-
controlling interests	-	-	-	-	-	-	-	-	(4,294)	(4,294)
Non-controlling interests issued	-	-	-	-	-	-	-	-	1,010	1,010
Repurchase of common shares under
the Normal Course Issuer Bid
(Note 20)	(1,449)	-		(494)	-	-	-	(1,943)	-	(1,943)
Settlement of share- based awards		-	346	-	-	-	-	346	-	346
Treasury shares acquired
(Note 20)	-	(554)	-	-	-	-	-	(554)	-	(554)
Deferred tax on share-based
payments	-	-	363	-	-	-	-	363	-	363
Shares settled from treasury
(Note 20)	-	23	(23)	-	-	-	-	-	-	-
Share-based compensation
(Note 19)	-	-	2,205	-	-	-	-	2,205	-	2,205
Balance,
March 31, 2024	433,183	(850)	7,008	(52,019)	10,337	-	137,491	535,150	26,744	561,894

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

AutoCanada • 2024 First Quarter Report • Page 4

AutoCanada Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited)

(in thousands of Canadian dollars)

			Attributable to AutoCanada shareholders
			Contributed	Share	Cumulative				Non-
	Share	Treasury	surplus	repurchase	translation	OCI hedge	Retained	Total	controlling	Total
	capital	shares	(deficit)	(deficit)	adjustment	reserve	earnings	capital	interests	equity
	$	$	$	$	$	$	$	$	$	$
Balance at December 31, 2022
as originally presented	433,693	(672)	(64,743)	-	1,400	(1,187)	89,408	457,899	28,898	486,797
Reclassification of share
repurchase (deficit )	-	-	51,525	(51,525)	-	-	-	-	-	-
Balance,
January 1, 2023	433,693	(672)	(13,218)	(51,525)	1,400	(1,187)	89,408	457,899	28,898	486,797
Net income	-	-	-	-	-	-	7,807	7,807	577	8,384
Other comprehensive income	-	-	-	-	2,241	328	-	2,569	-	2,569
Dividends paid by subsidiaries to
non-controlling interests	-	-	-	-	-	-	-	-	(3,830)	(3,830)
Repayment of Executive Advance	-	-	125	-	-	-	-	125	-	125
Settlement of share-based awards	-	-	(902)	-	-	-	-	(902)	-	(902)
Deferred tax on share-based
payments	-	-	(245)	-	-	-	-	(245)	-	(245)
Shares settled from treasury
(Note 20)	-	351	(351)	-	-	-	-	-	-	-
Share-based compensation
(Note 19)	-	-	1,861	-	-	-	-	1,861	-	1,861
Balance,
March 31, 2023	433,693	(321)	(12,730)	(51,525)	3,641	(859)	97,215	469,114	25,645	494,759

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Page 5 • AutoCanada • 2024 First Quarter Report

AutoCanada Inc.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited)

(in thousands of Canadian dollars)

	Three-month period ended
	March 31, 2024	March 31, 2023
	$	$
Cash provided by (used in):
Operating activities
Net (loss) income for the period	(2,361)	8,384
Adjustments for:
Income tax (recovery) expense (Note 9)	(852)	3,427
Finance costs (Note 8) 1	36,302	35,827
Depreciation of right-of-use assets (Note 7)	8,586	8,104
Depreciation of property and equipment (Note 7)	6,276	5,623
Gain on disposal of assets, net (Note 11)	(19,267)	(5)
Share-based compensation (Note 19)	2,205	1,861
Amortization of intangible assets (Note 7)	126	122
Unrealized fair value changes on foreign exchange forward contracts
(Note 18)	2,373	(467)
Impairment of non-financial assets (Note 11)	7,200	-
Net change in non-cash working capital (Note 23)	20,220	36,616
	60,808	99,492
Income taxes paid	(12,567)	(6,673)
Interest paid 1	(41,686)	(38,563)
Settlement of share-based awards, net	(41)	(902)
	6,514	53,354
Investing activities
Business acquisitions, net of cash acquired (Note 10)	-	(17,669)
Purchases of property and equipment (Note 14)	(11,278)	(25,561)
Additions to intangible assets	(341)	(426)
Adjustments to prior year business acquisitions	(14)	-
Proceeds on sale of property and equipment (Note 11)	41,405	377
	29,772	(43,279)
Financing activities
Proceeds from indebtedness	205,822	129,144
Repayment of indebtedness	(203,214)	(125,356)
Repayment of Executive Advance	-	129
Repurchase of common shares under Normal Course Issuer Bid (Note 20)	(1,944)	-
Shares settled from treasury, net (Note 20)	(531)	351
Payments for purchase of UD LP minority interest (Note 24)	(22,500)	-
Dividends paid to non-controlling interests	(4,294)	(3,830)
Repayment of loans by non-controlling interests	2,236	3,087
Principal portion of lease payments, net	(7,794)	(7,268)
	(32,219)	(3,743)
Effect of exchange rate changes on cash	699	(25)
Net increase in cash	4,766	6,307
Cash at beginning of period	103,146	108,301
Cash at end of period	107,912	114,608

• Certain prior year figures have been reclassified to conform to the current year presentation (Note 27). The accompanying notes are an integral part of these condensed interim consolidated financial statements.

AutoCanada • 2024 First Quarter Report • Page 6

AutoCanada Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the period ended March 31, 2024

(Unaudited)

(In thousands of Canadian dollars except for share and per share amounts)

• General information
  AutoCanada Inc. ("AutoCanada" or the "Company") is incorporated in Alberta, Canada with common shares listed on the Toronto Stock Exchange ("TSX") under the symbol of "ACQ". The business of AutoCanada, held in its subsidiaries, is the operation of franchised automobile dealerships and related businesses in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, New Brunswick, and in the State of Illinois in the United States. The Company offers a diversified range of automotive products and services, including new vehicles, used vehicles, vehicle leasing, vehicle parts, vehicle maintenance and collision repair services, extended service contracts, vehicle protection products, after-market products and auction services. The Company also arranges financing and insurance for vehicles purchased by its customers through third-party finance and insurance sources. The address of its registered office is 200, 15511 123 Avenue NW, Edmonton, Alberta, Canada, T5V 0C3.

• Basis of presentation
  These condensed interim consolidated financial statements ("Interim Financial Statements") have been prepared in accordance with IFRS Accounting Standards (as issued by the International Accounting Standards Board) applicable to preparation of interim financial statements under IAS 34, Interim Financial Reporting. These Interim Financial Statements do not include all the disclosures normally provided in the annual audited consolidated financial statements ("Annual Financial Statements") and should be read in conjunction with the Annual Financial Statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS Accounting Standards.
  These Interim Financial Statements were approved by the Board of Directors on May 1, 2024.

• Material accounting policy information
  The significant accounting policies used in the preparation of these Interim Financial Statements are the same accounting policies and method of computation as disclosed in the Annual Financial Statements for the year ended December 31, 2023.
  New and amended accounting standards issued
  The Company has adopted amendments to various standards effective January 1, 2024, which did not have a significant impact to these Interim Financial Statements.

• Critical accounting estimates
  Except as otherwise noted, the critical accounting estimates, judgments, and measurement uncertainty used in the preparation of these Interim Financial Statements are the same as disclosed in the Annual Financial Statements for the year ended December 31, 2023.

Page 7 • AutoCanada • 2024 First Quarter Report

5 Revenue

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
New vehicles	580,502	568,596
Used vehicles	573,711	703,499
Parts and service	154,629	150,997
Collision repair	32,601	27,751
Finance, insurance and other	79,485	88,483
Revenue	1,420,928	1,539,326

Prior year comparative amounting to $27,751 was reclassified from parts, service and collision repair to collision repair to conform to current presentation.

6 Cost of sales

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
New vehicles	534,888	521,112
Used vehicles	561,633	673,187
Parts and service	71,371	67,766
Collision repair	18,297	17,106
Finance, insurance and other	5,412	5,173
Cost of sales	1,191,601	1,284,344

Prior year comparative amounting to $17,106 was reclassified from parts, service and collision repair to collision repair to conform to current presentation.

7 Operating expenses

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
Employee costs	127,521	132,089
Administrative costs	66,801	64,265
Expected credit losses on trade and other receivables	891	344
Facility lease costs	1,463	1,054
Depreciation of right-of-use assets	8,586	8,104
Depreciation of property and equipment	6,276	5,623
Amortization of intangible assets	126	122
Operating expenses	211,664	211,601

AutoCanada • 2024 First Quarter Report • Page 8

8 Finance costs and finance income

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
Finance costs
Interest on long-term indebtedness	9,311	9,413
Interest on lease liabilities	8,433	7,823
Loss on extinguishment of debt	-	1,382
Unrealized fair value changes on non-hedging instruments (Note 18)	(372)	460
Amortization of terminated hedges (Note 18)	-	817
	17,372	19,895
Floorplan financing	19,617	15,697
Interest rate swap settlements (Note 18)	(1,556)	(251)
Other finance costs	869	486
	36,302	35,827
Finance income
Interest on net investment in finance lease	15	16
Short-term bank deposits	713	1,086
	728	1,102

• Taxation
  Components of income tax were as follows:

	Three-month period ended
	March 31,	March 31,
	2024	2023
	$	$
Current tax	1,012	3,099
Deferred tax	(1,864)	328
Total income tax expense	(852)	3,427

Income tax expense is recognized based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual statutory tax rate used for the three-month period ended March 31, 2024 was 25.4% (2023 - 25.5%).

Page 9 • AutoCanada • 2024 First Quarter Report