AutoCanada (ACQ) Q1 2025 earnings summary

Executive summary

• Executing a $100M Operational Transformation Plan to optimize costs, centralize functions, and focus on core Canadian dealership and collision operations, with Bain & Company engaged for implementation.

• Revenue from continuing operations rose 2.3% year-over-year to $1,240.1 million, driven by new vehicle and collision sales, partially offset by declines in used vehicles, parts, service, and F&I.

• U.S. business reclassified as discontinued operation, with intent to fully divest and concentrate on Canadian dealership and collision platform.

• As of Q1 2025, $57M in annual run-rate cost savings achieved, with a target of $100M by year-end 2025.

• Strategic review led to divestiture of U.S. dealerships and closure of underperforming RightRide stores, with nearly $60M in asset sales and $11M in annual EBITDA savings from closures.

Financial highlights

• Q1 2025 revenue rose 2.3% year-over-year to $1,240.1M, driven by new vehicle and collision growth, partially offset by declines in used, parts & service, and finance & insurance.

• Gross profit increased 0.2% to $198.0 million, with strength in used wholesale and collision.

• Adjusted EBITDA from continuing operations surged 60.3% year-over-year to $43.0M, with margin expanding 130 bps to 3.5%.

• Normalized operating expense before depreciation fell by $12.9M, reflecting early transformation plan savings.

• Floorplan financing expense dropped 39.8% due to lower inventory and interest rates.

Outlook and guidance

• Management remains cautious on near-term recovery, citing uncertainty from U.S. tariffs, inflation, and Canadian economic risks.

• Targeting $100M in annual run-rate operating efficiencies and cost savings by end of 2025.

• Updated guidance reflects timing of future savings and restructuring costs; on track to achieve CAD 100 million in cost savings by year-end.

• April showed strong demand, but May is softening; monitoring for further slowdown.

• Canadian new light vehicle sales expected at 1.84M units in 2025, slightly down from 2024, with tariffs and consumer fatigue posing risks.