AutoCanada Announces Add-On Offering of $100,000,000 Senior Notes to Existing 8.75% Senior Unsecured Notes Due 2025, Extension of Credit Facility for Three Years and Selected Preliminary 2021 First Quarter Results
EDMONTON, AB, April 14, 2021 /CNW/ - AutoCanada Inc. ("AutoCanada" or the "Company") (TSX: ACQ), a leading multi-location North American automobile dealership group, is pleased to announce that it intends to offer (the "Offering") an additional $100 million aggregate principal amount of its existing 8.75% senior unsecured notes due 2025 (the "Notes"). The Notes will be offered and sold to "accredited investors" in certain provinces of Canada on a private placement basis. Scotia Capital Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc. and RBC Dominion Securities Inc. are acting as Joint Bookrunning Managers, HSBC Securities (Canada) Inc. as Lead Manager, and along with ATB Capital Markets Inc., Canaccord Genuity Corp., Cormark Securities Inc., Stifel Nicolaus Canada Inc., Acumen Capital Finance Partners Limited, and National Bank Financial Inc. who are acting as Co-Managers for the Offering. Proceeds of the Offering will be used by the Company to reduce the outstanding balance under its syndicated credit facility and for general corporate purposes, including acquisitions.
In addition, effective April 14, 2021, the Company has amended and extended its existing credit facility for three years to 2024. The amended credit facility increases the revolving facility by $50 million to $225 million and includes a $1,060 million wholesale floorplan financing facility and a $15 million wholesale leasing facility, for total aggregate bank facilities of $1.3 billion.
Mike Borys, Chief Financial Officer of AutoCanada, stated, "The strength of our balance sheet, our financial flexibility, our level of debt and our debt leverage will allow us to move forward confidently on acquisitions. Together with cash generated from strong earnings, as well as the $50 million increase to our revolving facility, the add-on offering will allow us to grow the business as we move forward, while continuing to maintain strong discipline over our balance sheet."
The Company continues to advance and actively assess strategic acquisition opportunities and has developed a robust acquisition pipeline while continuing to employ a disciplined hurdle-return framework to price transactions. The Company is currently engaged with multiple potential targets in connection with potential acquisitions in excess of $100 million in transaction value. We are at varying stages of the acquisition process with these targets, with the potential deals remaining subject to due diligence, the entering into of definitive agreements, OEM approvals and other standard conditions, as applicable. Consistent with our previously stated intentions and strategy, we expect these deals will add diversity by geography and OEM brands. Most of this pipeline is represented by franchise dealerships, most of which are located in Ontario, Canada, and the pipeline includes a mix of OEM brands that we currently operate and brands that we do not yet have. Used vehicle dealerships that would fall under our Used Digital Retail Division platform and collision centres are also included in our pipeline. We expect to finance these potential transactions through a combination of debt and cash from the balance sheet, while ensuring we maintain the Company's strong balance sheet and financial flexibility. The Company anticipates beginning to close on certain of these deals within the second quarter of 2021, while also continuing to develop our acquisition pipeline as we move forward beyond these initial acquisition opportunities, although there can be no assurance that we will complete all of these deals on the terms or on the schedule that we currently anticipate, or at all.
Paul Antony, Executive Chairman of the Company, added, "We are on track for another record quarter as our team's relentless execution on daily actions and measures positions us to sustain top-tier operating performance. The strength of our operating platform and balance sheet has enabled us to continue to develop organically as well as to focus on an acquisition and innovation strategy. Given our strong business position and available market opportunities, we see significant opportunities to grow as an industry consolidator in both the short-term and long-term."
Preliminary Unaudited First Quarter 2021 Operating Results
Selected preliminary unaudited results for the three months ended March 31, 2021 ("Q1 2021") are highlighted below:
- Q1 2021 revenue of approximately $960 to $980 million, representing growth of approximately 36% over the same period in 2020;
- Same store new retail unit sales growth of approximately 30% as compared to the Canadian market increase of 15% for brands represented by AutoCanada, as reported by DesRosiers Automotive Consultants, reflecting an outperformance of the Canadian new retail market by approximately 15 percentage points, and the Company's 9th consecutive quarter of outperformance of the Canadian new retail market;
- Same store used retail unit sales growth of approximately 43%;
- An increase in AutoCanada's same store used-to-new vehicles sold ratio to approximately 1.19 in Q1 2021 from 1.10 in Q1 2020; and
- Net debt of approximately $80 million as at March 31, 2021.
The Company has not yet completed its financial closing process for Q1 2021, and the selected unaudited results provided above are preliminary estimates. Actual results may differ materially from these estimates due to the completion of the Company's financial closing procedures, final adjustments, review by the Company's auditors and other developments that may arise between now and the time the financial results are finalized. These estimates are not a comprehensive statement of the Company's financial results for Q1 2021 and should not be viewed as a substitute for full financial statements prepared in accordance with International Financial Reporting Standards, and these estimates are not necessarily indicative of the results to be achieved for Q1 2021. The Company's unaudited financial statements for Q1 2021 will not be available until after the Offering is completed. The Company is issuing preliminary results in order to enable it to disclose such information in connection with the Offering, and the Company does not intend to provide preliminary results in the future. The preliminary results provided in this press release constitute forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties. Please see the section below entitled "Forward-Looking Statements". The preliminary results have been prepared by, and are the responsibility of, management of the Company. The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, has not reviewed the preliminary results nor have they performed any procedures with respect to the preliminary results. Neither PricewaterhouseCoopers LLP nor any other independent accountants express an opinion or any other form of assurance with respect to the preliminary results.
U.S. Leadership Team Update
AutoCanada also announces that James Douvas has been appointed Vice President of U.S. Operations, to drive accelerated performance and expansion of the Company's U.S. business. James brings over 20 years' experience in retail automotive in the Chicago area, with a track record of transforming underperforming dealerships through significant profit, volume, and customer satisfaction achievements that combine cost control, revenue growth and process improvements.
AutoCanada is a leading North American multi-location automobile dealership group currently operating 66 franchised dealerships, comprised of 27 brands, in eight provinces in Canada as well as a group in Illinois, USA. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Honda and Porsche branded vehicles. Additionally, the Company's Canadian operations segment currently operates one used vehicle dealership supporting the Used Digital Retail Division, and two stand-alone collision centres (within our group of 17 collision centres). In 2020, our dealerships sold approximately 66,000 vehicles and processed over 756,000 service and collision repair orders in our 1,098 service bays generating revenue in excess of $3 billion.
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 of 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", "plan", "seek", "may", "intend", "likely", "will", "believe", "shall" and similar expressions) are not historical facts and are forward-looking. In particular, this press release contains forward-looking statements with respect to, among other things, completion of the Offering, use of net proceeds of the Offering, anticipated benefits of completing the Offering, the nature of the Company's acquisition pipeline, potential acquisitions to be completed by AutoCanada and the financing and timing thereof, and AutoCanada's preliminary operating and financial results for Q1 2021.
The forward-looking statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Readers are cautioned that forward-looking statements are based on current expectations, estimates and projections that, by their nature, involve a number of known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. These known and unknown risks and uncertainties include, but are not limited to: potential changes in the regulatory and legislative environment; political uncertainty and instability in North America and internationally; volatility in interest and tax rates; operating risks inherent in the automotive retail industry; and changes in general economic conditions including the capital and credit markets.
Forward-looking statements 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. In particular, in presenting its forward-looking statements, AutoCanada has made assumptions respecting, among other things: the relative stability of general North American economic conditions; that AutoCanada will successfully complete due diligence, negotiate definitive agreements and satisfy all applicable closing conditions with respect to its potential acquisitions; that AutoCanada will receive the approvals needed to complete its potential acquisitions; and regulatory and legislative conditions. Therefore, any such forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this press release.
AutoCanada cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive.
The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at 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.
SOURCE AutoCanada Inc.