AutoCanada (ACQ) Q2 2026 earnings summary

Executive summary

• Revenue from continuing operations rose 6% year-over-year to $1.42 billion, driven by growth in new and used vehicle sales and strong finance and insurance performance, despite declines in parts, service, and collision repair.

• Used vehicle volumes and gross profit per unit improved, while new vehicle sales and GPUs remained under pressure due to market softness and internal productivity initiatives.

• The company advanced strategic initiatives, including leadership transition, dealership operational stabilization, U.S. dealership divestitures, and collision business expansion.

• Significant progress was made in divesting U.S. dealerships, with $106 million received and total proceeds expected between $115–$130 million.

• Operating expenses before depreciation declined 2.7% to $152.9 million, reflecting ongoing cost discipline.

Financial highlights

• Gross profit declined 8.1% year-over-year to $207.1 million, with gross margin down 220 basis points to 14.6%.

• Adjusted EBITDA from continuing operations was $52.1 million, down from $64 million last year; margin fell to 3.7% from 4.8%.

• Net income from continuing operations was $12.1 million (down 36.1%), or $0.46 per diluted share.

• Used vehicle revenue increased 13.3% year-over-year, with a 10% rise in retail units and a 2.9% increase in average selling price.

• Finance and insurance gross profit per retail unit increased 2.2% to $3,410.

Outlook and guidance

• The Canadian auto market is expected to remain challenging for the rest of 2026, with continued affordability pressures, high vehicle prices, and elevated financing costs.

• New vehicle sales and GPUs are anticipated to improve in early 2027 as new sales training and operating teams reach full capacity.

• Collision business is expected to see stronger performance in Q3 and Q4, especially with increased hail activity in the prairies.

• Focus remains on improving dealership operations, integrating collision acquisitions, completing U.S. divestitures, and reducing debt.

• Dealership performance expected to normalize by Q3 2026, leveraging a leaner cost structure.