AutoCanada (ACQ) Q1 2025 earnings summary

Executive summary

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

• Adjusted EBITDA from continuing operations surged 60.3% to $43.0 million, reflecting cost reductions and lower financing expenses.

• The company is executing a $100M Operational Transformation Plan, achieving $57M in annual run-rate cost savings as of Q1 2025, with a target of $100M by year-end.

• U.S. business reclassified as discontinued operation, with all 18 U.S. dealerships actively marketed for sale and store closures generating $11M in annual EBITDA savings.

• Net income from continuing operations increased to $9.7 million, but total net loss widened to $3.2 million due to higher losses from discontinued operations.

Financial highlights

• Q1 2025 revenue rose 2.3% year-over-year to $1,240.1M, with gross profit up 0.2% to $198.0M and gross margin at 16.0%.

• Adjusted EBITDA margin from continuing operations improved to 3.5%, up 130 basis points year-over-year.

• Normalized operating expenses before depreciation declined by $12.9M, reflecting restructuring savings.

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

• Cash increased to $101.5 million from $67.3 million at year-end 2024.

Outlook and guidance

• Management remains cautious on near-term recovery due to U.S. tariffs, inflation, and Canadian economic risks.

• Focus remains on cash preservation, leverage reduction, and executing the transformation plan to achieve $100 million in annual run-rate cost savings by end of 2025.

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

• April showed strong demand, but May is seeing some softening; overall, demand is expected to slow.