AutoCanada Inc.

Revenue from continuing operations increased 6% year over year to $1.4 billion, with same-store revenue up 5.5%. Gross profit declined 8.1% to $207 million and gross margin fell 220 basis points to 15.6%. Adjusted EBITDA from continuing operations was $52 million versus $64 million last year, with adjusted EBITDA margin at 3.7% versus 4.8%. Net income from continuing operations was $12.1 million, or $0.46 per diluted share, versus $18.9 million, or $0.72 per diluted share, a year ago. For the dealership business, used vehicle revenue increased 13.3%, retail units rose 10%, average selling price increased 2.9%, and finance and insurance gross profit increased 4% with average gross profit per retail unit of $3,410 versus $3,337. Operating expenses before depreciation declined 2.7% to $153 million. On the balance sheet, total net funded debt to bank EBITDA was 3.6x. Management said it expects at least $130 million from the remaining U.S. divestiture program, having already received approximately $106 million, and reiterated that the amended credit facility provides $1.38 billion of bank commitments and matures in November 2028. Forward guidance was qualitative rather than numerical: management expects a challenging market through the rest of 2026, sees 2026 as a transition year for dealerships and a year of disciplined growth for collision, expects no huge improvement in GPUs in Q3, and said normalized front-end GPUs should begin to show in Q4 and into 2027.

Samuel Cochrane described the Canadian auto market as soft, with affordability pressure, higher financing costs and broader economic weakness weighing on demand. He said AutoCanada is making progress in areas it controls, especially used-car volumes, inventory speed, finance and insurance, and collision integration, while new-car productivity work is still underway. His tone was cautious but constructive: he repeatedly said the company is not satisfied with current profitability, but believes it is moving in the right direction and has a clearer path to stronger results.

Mike Woodward emphasized financial discipline, liquidity and leverage reduction. He said revenue from continuing operations was up 6% to $1.4 billion, gross profit was $207 million, adjusted EBITDA was $52 million, and net income from continuing operations was $12.1 million; he also highlighted the 3.6x total net funded debt to bank EBITDA ratio. He noted the April amended credit facility provides $1.38 billion of commitments and added that proceeds from remaining U.S. divestitures will go toward debt reduction, with capital priorities set as liquidity protection, high-return operational investments, selective accretive M&A, and potential share repurchases.

Analysts focused on the U.S. divestiture proceeds, asking whether the target had moved from $115 million-$130 million to above $130 million; management clarified that it now expects at least $130 million, with the difference tied partly to land sales and some goodwill. Questions also probed whether there are more Canadian dealerships to exit; management said there may be one or two that are on the fence, but nothing imminent. On collision, analysts asked for organic growth excluding hail and acquisitions; management said it did not have the exact number, but most centers were growing and hail revenue was the main drag, with a stronger Q3 and Q4 expected. On new vehicles and inventory, management said June and July market share was improving and that Q3 GPUs likely will not improve much, with normalization more likely in Q4 and 2027.