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Executive Summary

AutoCanda Inc. owns and operates car dealerships, service, and collision centers across Canada and Illinois. The business trades on the TSX under the symbol $ACQ. The business is headquartered in Edmonton, Alberta and was founded in 2006.

AutoCanada has a relatively stable underlying business that can be scaled for a long time with acquisitions of a fragmented market. There has been a lot of churn within the sector due to macroeconomic fears and a prolonged supply chain constraining OEM production of new vehicles since 2020. The stock price is beaten down, sales volumes should normalize over the next few years and the company is going to the buy back a lot of the shares outstanding.

This report will outline in detail:

• the business model

• the business quality

• management quality

• capital allocation

• a view on valuation

• risks of the business

• investment thesis risks

By The Numbers

*Note: all figures in Canadian dollars, unless otherwise stated.

• Market cap: 691 m $

• Enterprise Value: 2.44 b $

• Gross Margin (5 year avg): 16%

• Operating Margin (5 year avg): 2.5%

• EPS: 5.6$

• P/E (5 year avg earnings): 20

• P/E (LTM earnings): 5.2

What They Do

ACQ owns and operates franchised 62 new car dealerships in 8 provinces in Canada and 18 in 1 US state (Illinois). They have 25 brands in their Canadian operations and 16 in the US.