AutoCanada Q2 Earnings Call Highlights

Revenue grew but profitability weakened: Second-quarter continuing-operations revenue rose 6% year over year to CAD 1.4 billion, while gross profit fell 8.1% to CAD 207 million and adjusted EBITDA declined to CAD 52 million from CAD 64 million. Used vehicles and finance-and-insurance were bright spots: Used-vehicle revenue increased 13.3%, and F&I gross profit rose 4%, although aged inventory continued to pressure used-vehicle margins. Management expects more normalized used-vehicle margins in the fourth quarter and into 2027. Debt reduction and portfolio streamlining remain priorities: AutoCanada plans to complete additional dealership divestitures, use expected proceeds of at least CAD 130 million from its U.S. exit program to reduce debt, and move leverage toward its 2-to-3-times target range.

AutoCanada TSE: ACQ reported higher second-quarter revenue but lower profitability as vehicle margins and fixed operations performance remained under pressure in a soft Canadian auto market. Revenue from continuing operations increased 6% year over year to CAD 1.4 billion, while same-store revenue rose 5.5%, Chief Financial Officer Mike Woodward said on the company’s second-quarter 2026 earnings call. Growth in new- and used-vehicle sales and finance-and-insurance operations was partly offset by lower parts-and-service and collision revenue. Gross profit declined 8.1% to CAD 207 million, and gross profit margin fell 220 basis points to 14.6%. Adjusted EBITDA from continuing operations decreased to CAD 52 million from CAD 64 million a year earlier, with the adjusted EBITDA margin narrowing to 3.7% from 4.8%. Net income from continuing operations was CAD 12.1 million, or CAD 0.46 per diluted share, compared with CAD 18.9 million, or CAD 0.72 per diluted share, in the prior-year period.

Used Vehicles and F&I Show Improvement Chief Executive Officer Samuel Cochrane said the Canadian automotive market remained soft during the quarter as consumers faced affordability concerns, elevated financing costs and broader economic pressures. The company expects challenging conditions through the remainder of 2026. Still, Cochrane said AutoCanada made progress in areas it can control, including used-vehicle sales, inventory turnover and finance-and-insurance execution. Used-vehicle revenue increased 13.3%, supported by a 10% increase in retail units and a 2.9% increase in average selling prices, Woodward said. Used-vehicle gross profit improved sequentially, although it remained pressured as the company worked through aged inventory. Cochrane said inventory velocity had improved, with the company generating more revenue while carrying lower used-vehicle inventory. “We’re getting good velocity,” Cochrane said, adding that the company expects to work through some remaining long-dated vehicles during the end of the summer selling season. He said AutoCanada does not expect a substantial improvement in front-end gross profit per unit during the third quarter, but expects more normalized front-end gross profit per unit in the fourth quarter and into 2027.

Finance and insurance remained a relative strength. F&I gross profit increased 4%, while average gross profit per retail unit rose to CAD 3,410 from CAD 3,337 a year earlier, which Woodward attributed to stronger dealership execution and product penetration. New-Vehicle Recovery Efforts Continue New-vehicle sales and gross profit per unit remained under pressure during the quarter, reflecting both industry conditions and the company’s ongoing effort to rebuild sales productivity and knowledge throughout its dealer network. AutoCanada is deploying an in-house sales training program and continuing to build its operating team.