Earnings call transcript: AutoCanada Q1 2025 sees revenue growth, stock dips

AutoCanada Inc. reported its Q1 2025 financial results, showing a revenue increase of 2.3% year-over-year, although gross profit remained flat compared to the previous year. Despite these results, the company’s stock price experienced a decline, closing at $19, a 1.37% drop from the previous day. According to InvestingPro data, the company maintains a P/E ratio of 12.25 and has demonstrated remarkable revenue growth of over 632% in the last twelve months, suggesting strong underlying business momentum despite recent market reactions. The company has been focusing on cost-saving measures and operational efficiencies, which have contributed to an improvement in its adjusted EBITDA margin by 130 basis points.

Key Takeaways

• Revenue increased by 2.3% year-over-year in Q1 2025.
• Gross profit remained flat compared to Q1 2024.
• Adjusted EBITDA margin improved by 130 basis points.
• Stock price fell by 1.37% following the earnings announcement.
• Access to $218.2 million under a revolving credit facility.

Company Performance

AutoCanada’s Q1 2025 performance showed mixed results, with revenue growth driven by strong performance in the collision business and a focus on OEM certifications. While the flat gross profit and challenges in other areas, such as the U.S. market, tempered this growth, InvestingPro analysis reveals the company maintains a "GOOD" overall financial health score of 2.83, with particularly strong cash flow metrics. InvestingPro subscribers have access to 8 additional key insights about AutoCanada’s financial position and growth prospects. The company has been actively working on optimizing dealership operations and implementing cost-saving measures, which resulted in significant annualized run-rate cost savings.

Financial Highlights

• Revenue: $1.22 billion, up 2.3% year-over-year
• Gross profit: Flat compared to Q1 2024
• Adjusted EBITDA margin: Expanded by 130 basis points
• Operating expenses: Reduced by $12.8 million

Earnings vs. Forecast

AutoCanada’s earnings per share (EPS) forecast was $0.0981, with no upward revisions in the last 90 days. The company faced three downward revisions. The actual EPS and revenue figures were not provided, but the stock’s decline suggests that the results may not have met market expectations.

Market Reaction

Following the earnings announcement, AutoCanada’s stock price fell by 1.37%, closing at $19. This movement positions the stock closer to its 52-week low of $13.75, reflecting investor concerns about the company’s ability to sustain growth amid market challenges and operational restructuring. InvestingPro data indicates the stock has shown significant volatility, though it maintains a strong five-year return profile. For detailed valuation analysis and comprehensive insights, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

AutoCanada remains cautious in its near-term outlook, with plans to complete the divestiture of its U.S. assets by the end of the year. The company is focusing on continuing its cost transformation initiatives and monitoring potential impacts from tariffs and recession risks. Additional cost savings are anticipated in 2026.

Executive Commentary

Paul Anthony, Executive Chairman, emphasized the importance of simplifying the business and executing the cost transformation plan. He noted, "We’re not counting on a linear trajectory this year. Instead, we’re managing risk, preserving cash, and staying laser focused on our transformation plan." This highlights the company’s strategic focus amid uncertain market conditions.

Risks and Challenges

• Potential disruption from U.S. tariffs affecting the Canadian auto market.
• Supply chain uncertainties and their impact on vehicle availability.
• Consumer sentiment shifts potentially affecting sales.
• Challenges in implementing centralized pay plans.
• Uncertainty in the used vehicle market, with reduced inventory days.

Q&A

During the earnings call, analysts inquired about the company’s inventory management strategies and the rationale behind the lower F&I performance. Executives also addressed challenges in implementing centralized pay plans and highlighted the uncertainty surrounding the used vehicle market.

Full transcript - Autocanada Inc (ACQ) Q1 2025:

John, Moderator: Thank you for joining AutoCanada’s conference call to discuss the financial results for the first quarter of twenty twenty five. I’m John, your moderator for today’s call. Before we begin, I’d like to remind everyone that today’s discussion may include forward looking statements, which are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements. I encourage you to review AutoCanada’s filings on SEDAR plus for a discussion of these risks, the first quarter news release, financial statements, and MD and A.

All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If like to ask a question during that time, please press star followed by the number one in your telephone keypad. If you would like to withdraw your question, please press star followed by the number 2. I’d like to remind everyone that this call is being recorded today, Wednesday, 05/14/2025.

Now I’d like to turn the call over to mister Paul Anthony, executive chairman of AutoCanada Inc. Please go ahead, mister Paul Anthony.

Paul Anthony, Executive Chairman, AutoCanada Inc.: Good evening, everyone, and thank you for joining us. Our strategy in 02/2025 is clear. Simplify the business, execute with discipline, achieve our cost transformation, and reduce leverage. The first quarter reflects early progress on that front. We’ve taken deliberate steps over the past several months to streamline our operations, exiting underperforming stores, sharpening our focus on higher margin opportunities, and embedding efficiency through the ACX operating method.

These efforts are already improving cost structure and operational focus. We also reclassified our U. S. Business as a discontinued operation at the end of twenty twenty four. This decision reflects our intent to fully divest those assets and concentrate capital and leadership on our Canadian dealership and collision platform.

Until that process is complete, we expect leverage to remain above our target range, and we paused all acquisitions and share repurchases to preserve flexibility during this transition. Despite some encouraging demand trends early in the year, particularly in new vehicles, there are significant uncertainties ahead. Tariff risk, weakening consumer sentiment, and a broader macro pressure could temper momentum. That’s why we remain cautious in the near term outlook and focus highly on what we can control, which is improving our cost structure, reducing leverage, and divesting or closing any non core or unprofitable operations. With that in context, I’ll turn it over to Sam to walk through the financials.

Sam?

Sam, Financial Executive, AutoCanada Inc.: Thanks, Paul, and good evening, everyone. Our Q1 results reflect the business in transition with underlying operational stability, early cost wins, and a heightened liquidity risk as we move through the restructuring and U. S. Divestiture process this year. Revenue grew 2.3% year over year during Q1, supported by gains in new vehicle sales and collision.

This offset weaker performance in used vehicles and parts and service. Importantly, considering significant restructuring activities in Q1, same store results were stable, excluding the impact of recent Canadian divestitures. Gross profit was flat versus Q1 twenty twenty four, supported by strength in used wholesale and collision offsetting lower retail GPUs. Normalized operating expenses before depreciation declined by 12,800,000.0 reflecting restructuring savings from our cost reduction initiatives. More planned financing costs also improved driven by tighter inventory management and rate tailwinds.

Adjusted EBITDA margin expanded by 130 basis points, benefiting from early improvements in operating leverage due to cost reduction initiatives despite flat gross profit. As noted, The U. S. Business has been reclassified to discontinued operations as we pursue a divestiture. Until that process is complete, leverage will remain above our target range.

Reducing debt remains a priority and any divestiture proceeds will be directed towards debt repayment. As of 03/31/2025, we had access to $218,200,000 under our revolving credit facility. Recent amendments have provided covenant relief, including a temporary increase in our total net funded debt to bank EBITDA ratio to six point zero times until the June. These steps combined with lender support ensure we have sufficient flexibility to complete the transformation and reposition the business for long term value creation. With that, I’ll turn the call back to Paul to discuss the outlook.

Paul?

Paul Anthony, Executive Chairman, AutoCanada Inc.: Thanks, Sam. Looking ahead, we remain focused on execution. While the Canadian auto market showed strength in March and April, we are closely monitoring the impact of new U. S. Tariffs, which could disrupt supply chains and put pressure on both the Canadian economy and affordability.

We’re not counting on a linear trajectory this year. Instead, we’re managing risk, preserving cash, and staying laser focused on our transformation plan. In Q1 alone, we added $48,100,000 in annualized run rate cost savings, bringing the total to $57,100,000 since the launch of the ACX operating method in September. Given the acceleration of the transformation plan during Q1 in response to rising trade uncertainty, we’ve updated our guidance to reflect the timing of future savings and associated restructuring costs. We remain firmly on track to achieve $100,000,000 in cost savings by the end of this year.

The remaining initiatives are more complex and require careful sequencing to avoid operational disruption, but we’re confident in our path. I want to thank our team for their relentless focus and commitment as we execute an ambitious transformation agenda and our OEM partners for their continued support and collaboration during this pivotal period. Thanks again. And with that, we’ll open the line up for questions.

John, Moderator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two.

If you’re using a speakerphone, please lift the handset before pressing any keys. Your first question comes from the line of Luke Hannon from Canaccord. Your line is now open.

Luke Hannon, Analyst, Canaccord: Thanks. Good evening, everybody. I want to stick with the ACX operating method. Paul, you mentioned you pushed a little bit harder in Q1 just given the nature of tariffs. I know that you provided the four different buckets as far as where you expect to get the $100,000,000 in annualized cost savings.

But then the biggest bucket, I get the store archetype. Where is it specifically that you’re able to push harder versus plan in order to get some of those savings?

Company Representative, AutoCanada Inc.: Yeah. I’m happy to take it or Sam, if you want to. I mean, you know, we we talked about the different the different buckets, inventory pay plans, admin centralization.

Sam, Financial Executive, AutoCanada Inc.: Yeah. Luke, this one’s really simple. Yeah. Luke, this one’s simple. We were just able to do more stores with the archetype faster than we initially anticipated.

Those stores that we had, you know, scheduled for April or or even May got pulled into March. So we were just the dealerships on

Luke Hannon, Analyst, Canaccord: Thanks. Thanks for that. Sorry. I’m not I’m not sure

Maxim Sytchev, Analyst, National Bank Financial: if cut

Luke Hannon, Analyst, Canaccord: off my line. Seems to be a bit choppy, but if you guys can still hear me. Also asked about

David Ocampo, Analyst, Cormark Securities: the collision Yes, okay, perfect.

Luke Hannon, Analyst, Canaccord: So the collision business as well, I mean, all that, when it comes to new and used in F and I parts and service, there’s puts and takes across all of them, but pretty consistently positive across the board was your collision business. So I mean, what’s driving that? And then also, if I think back Paul, think there has always been this persistent shortage of feels like an industry, they’re contending with with higher insurance premiums as well, but then also more used should be better for the business. So can you just frame up the outlook as opposed to the collision business?

Company Representative, AutoCanada Inc.: Yeah. I mean, our collision business has been hitting it on all cylinders right now. Art and his team have done a just a fantastic job of with with OEM certifications, insurance volumes. They’ve just been they’ve they’ve done a great job integrating the business. And so from our perspective, you know, I I think we’ve talked about this before, but we think that the industry is tilting towards OEM certification.

And this is something that Art and the team indexed towards when we first got here and he’s continuing to build that that playbook out across the country. And it’s paying dividends. Sorry. What was the other question, Luke? Used vehicles?

Luke Hannon, Analyst, Canaccord: Well, I it’s more an extension of that question. There’s been based on on the press that we’ve been seeing has been this uptick in in used vehicles or at least interest in used vehicles and used vehicle prices, certainly more so I think in The US than Canada. But, I mean, in practice, that should be better overall for your collision business going forward, I would expect.

Company Representative, AutoCanada Inc.: Yeah. I think I think that’s right. I mean, look. The the truth is we we’ve just been I think frequency is down, but, regardless of frequency of accents being down, there are more more consumers are actually going to OEM certified shops, which bodes well for us. And so I think that’s that’s been that’s been a big player for us and we’ve just we’ve we’re optimizing all the stores that we have.

And as I said, I think Art and and the team have done a fantastic job with that.

Luke Hannon, Analyst, Canaccord: I wanted to shift over to as mentioned in divested North Toronto auction. I know that that was one entity of many that you had within used digital. Know, I think of Haldeman’s, Mark Wilson’s, etcetera. And I know that in the past, you’ve mentioned maybe talking about reducing not just the used inventory that you have on hand, but maybe your overall exposure there. I mean, what should we expect if anything when it comes to perhaps further divestitures for entities within the used digital business or used retail business?

Company Representative, AutoCanada Inc.: I think yeah. So North Toronto, great great brand. Great. It was a great business. The issue for us is we just didn’t have the strength to, do this cost takeout and, optimize our dealerships the way we had envisioned.

And instead, we’ve we ended up outsourcing a lot of the dealer to dealer sales that we were actually going for. In fact, we just held one last week where all of our dealers transact with all of our stores. So, you know, we might it’s a longer story, but we we if we decide to sell a vehicle and take a loss on it internally, we’d rather take a loss on it with one of our sister stores so they can have the opportunity to then earn profit on that vehicle and earn F and I. And the thought was when we first bought North Toronto that we would use them to facilitate the whole transaction. And I would say that if it were that in a vacuum, we would still be doing that and we would be racing towards that.

But given the opportunity for us with this cost takeout and our bloated structure, it just made sense. We needed to focus and simplify our business. And that’s what we’re doing, we’re just simplifying our business. I would say on Haldeman and Mark Wilson’s, those guys are kicking rear end and taking names, and there’s no interest whatsoever in divesting those stores.

Luke Hannon, Analyst, Canaccord: Okay. Thanks. Last one, and then I’ll I’ll pass the line here just on the topic of divestitures. Mean, what can you share about the interest thus far in The US assets?

Company Representative, AutoCanada Inc.: Sam, I better let you talk because I’ll probably say too much.

Sam, Financial Executive, AutoCanada Inc.: Yeah. Listen, there’s really not much to, you know, discuss there. The it’s an active process. We’re targeting completion by the end of the year as we previously said, and it’s a really constructive market. Like, there’s a lot of interest.

But really, it’s active, it’s going well, and we plan for it to be done by the end of the year. And Luke, I heard my earlier answer might have cut off. So on the cost out, why we’re ahead of schedule on the store arch etype, we were able we had stores that we were scheduled or dealerships we had we were scheduled to do in April and even in May that we pulled forward into March. So that’s why we were ahead of schedule there.

Luke Hannon, Analyst, Canaccord: Got it. Okay. Appreciate it. Thank you very Yeah.

John, Moderator: Your next question comes from the line of David Ocampo from Cormark Securities. Your line is now open.

David Ocampo, Analyst, Cormark Securities: Thanks. Good evening, everyone.

Company Representative, AutoCanada Inc.: Hey, David.

David Ocampo, Analyst, Cormark Securities: Yeah. My line is also choppy, similar to Luke. So if I break up, we can just take things offline. Just, I guess, the first one on new ASPs, average selling prices, they’re up close to 10% on the quarter. Just curious if that was a function of what you guys have available on the lots and and what the OEMs are providing to you guys?

Or or has that been a strategic shift to procuring more expensive vehicles?

Company Representative, AutoCanada Inc.: I would say it’s just it’s it’s not a strategic shift. It’s it’s what we have and and kind of that’s that’s the way things have been going. And so we haven’t necessarily indexed towards selling more in the more expensive vehicles.

David Ocampo, Analyst, Cormark Securities: K. And then, I know you guys don’t like to provide any, guidance as it relates to new GPUs and and where you you guys think it’s going for for 2025, but your US peers tend to kinda do that. So

Sam, Financial Executive, AutoCanada Inc.: and and I don’t know.

David Ocampo, Analyst, Cormark Securities: I I respect that no one has a crystal ball, but maybe you can walk us through what you guys are seeing at least early trends into q two that that may cause GPUs to either stay flat at at current levels, or or do you think they can drop, call it, 10% similar to what the the The US peers are saying?

Sam, Financial Executive, AutoCanada Inc.: Paul, do you want me to grab that one?

Company Representative, AutoCanada Inc.: I mean, I can I can I can take it? It’s it’s really difficult to say, David. And the reason is I feel like we’re having Groundhog Day for COVID. Who who knows with these tariffs where we’re gonna end up, and what cars are gonna be produced, where they’re gonna be produced, and what inventory we’re gonna have. And I think it’s a function of demand and then supply.

And and on the supply side, you know, everything is kind of in flux right now. And on the demand side, as long as we we don’t hit the rocks with a recession, then then cars probably are gonna be more scarce over the short term and you could see gross profits going up. If there’s a recession and greater supply because tariffs get lifted, you know, the gross profit could go down. I would say that but but our estimation is that we’re we’re we’re not as affected as The US. Canada seems to get served second for vehicles.

And so, as you know, The US market gets served first and then Canada. And so I I think at this point, it seems like we’re we’ll likely have a little bit more stability than The US market.

David Ocampo, Analyst, Cormark Securities: Okay. That sounds good. And then just the last one for me. You you guys called it out in in your MD and A, and it’s all over the the press about the pull forward of demand. I I know it’s hard to kinda piece out how much of the strength in q one was from a pull forward of demand, but when when you do speak to your GMs, like, how how much of that 10% lift in in March was attributable to to the pull forward?

Or was it just, you know, more resilient Canadian economy?

Company Representative, AutoCanada Inc.: I don’t know. I I actually can’t answer that. I don’t know that it was from the pull forward, and I don’t know that it was from the Canadian economy. I think it might have been a bit of both. And I think that that plus our I mean, I’d be I think that plus we’re operating a lot better.

I don’t know is the answer. I don’t think anybody knows.

David Ocampo, Analyst, Cormark Securities: Okay. I could respect that. I’ll hop back in the queue. Thanks a lot, everyone.

Company Representative, AutoCanada Inc.: Thanks.

John, Moderator: Your next question comes from the line of Chris Murray from ATB. Your line is now open.

Chris Murray, Analyst, ATB: Yeah. Thanks, folks. Good evening. Just going back to maybe some commentary around the ACX savings. You did mention that while you’re kind of working on the store archetypes, but you are talking about like it’s going be a little tougher on a go forward basis to get some of these gains.

Just wondering, Sam, you alluded to the fact that you’re just able to get the store archetype to more stores, which has been kind of what’s happened in Q1. What are kind of the issues around the rest of the plan that would be so disruptive? I’m just trying to understand that a little bit.

Company Representative, AutoCanada Inc.: Sam, you might be on mute.

Sam, Financial Executive, AutoCanada Inc.: No. No. You want me to you want me to take this one? So Sure. So, Chris, I I think there’s a couple a couple pieces.

One is the to doing common element. So in in the past, we would have, you know, dealership, and then even within dealerships, we might have different pay plans. Doing the work to get all those pay plans in a centralized way. When you have over 5,000, six thousand staff, it can take quite a while to get that done. It’s not quite as easy as, not that it was easy to do the archetype, but not quite as easy as going in there and saying, here are the productivity metrics that we’re gonna operate on, operate within this framework, is more straightforward.

I think another piece of it, shared services, the services and administration happening at the dealership, kind of going through and building and bringing technology and rigor and people to centralize those processes and keep the service levels high, it just takes, you know, measure twice, cut once type of situation. And then you look towards centralized procurement and looking at sort of procuring things in a more centralized fashion. For example, again, you might have dealerships doing their own janitorial or license plate frames and these things in the past, small individually, but they add up when he times it by 64 in Canada. And then if you add the 29 collision centers as well, you know, start to get advantages of the scale. Approaching those contracts, getting the right cadence, looking at different regions, understanding the differences that are culturally or or whatever happening in in different regions or coast to coast.

It’s just not quite as simple as here are the productivity metrics and and work towards them. So, hopefully, that gives you

John, Moderator: Yeah. No. That’s helpful. Thank you.

Chris Murray, Analyst, ATB: And just a couple of things just on your thoughts around leverage. So right now you’ve got a waiver for a couple of quarters. Is your expectation that you’ll either get the US division sold before this becomes a further issue or is it more of the trailing EBITDA comes up? Like there’s lots of ways to think about the moving parts in terms of leverage and I was wondering how you were thinking about where you’re going in the model.

Sam, Financial Executive, AutoCanada Inc.: Yeah, no, good question. So on leverage, you’ll see that we’ve sort of stabilized now. It’s been ticking up a few quarters. We’ve kind of hit a stabilization point. And you’re correct.

You know, with the with the divestiture of The US’s with The US dealerships, that will be a step change improvement in our leverage. But also, if we keep operating, we will at this level and we’re operating better, like Paul alluded to earlier, we’re going to see improvements from the cost out and running the dealerships in the business a bit better. So you’ll see both, but the big step change is definitely a divestment of The US dealerships.

Chris Murray, Analyst, ATB: Okay. One last one for me, just on Floorplan. Floorplan had a pretty big step down in the quarter. If you had to bucket it, how much of that is just lower inventories? Or is there also maybe some incentive payments in there, anything like that?

So any commentary around floor plan and where that setting would be useful?

Sam, Financial Executive, AutoCanada Inc.: Yeah, it’s a bit of both. I would say, you know, sixtyforty, halfhave. It’s not really material to sort of look at splitting it, but our inventory is down. You’ll see on the used side, we’re down to fifty six days at quarter end. So, you know, there’s less flooring costs with less cars and then interest rates have come down.

Looking forward with the uncertainty around tariffs, I think we have less certainty around the interest rate path a few months ago, but we expect to continue to manage right now. And if we get further rate cuts, we’ll obviously take advantage of that.

Chris Murray, Analyst, ATB: Okay. I’ll leave it there. Thanks, folks.

Company Representative, AutoCanada Inc.: Thanks, Chris.

John, Moderator: Your next question comes from the line of Jonathan Masaijan from CIBC. Your line is now open.

Jonathan Masaijan, Analyst, CIBC: Hi. Thank you for taking my question. Given your ability to successfully accelerate your cost saving initiative, is there an opportunity to achieve higher annual run rate cost savings than a hundred million by the end of twenty twenty five?

Company Representative, AutoCanada Inc.: I’ll let Steve take that.

Sam, Financial Executive, AutoCanada Inc.: Yeah. I think I I think, you know, I would say let’s let’s focus on the hundred million. That’s a big task for us, and let’s get there. And we have clear visibility getting there. But, you know, we think about it as continuous improvement.

And things like the shared service and other things that take time, like I was talking about with Chris, you know, we’ll see some of that improvement in 2026 as well. So I don’t want people to think it’s the hundred million and we’re done. We have the continuous improvement mindset, and we plan on bringing that into 2026. So will some savings drip into 2026 above the 100? Maybe, right?

But for now, let’s focus on the $100,000,000 and we’re well on that path.

Jonathan Masaijan, Analyst, CIBC: Okay, thank you. And then one more question. So you mentioned a tariff related surge in March and April, but also emerging signs of consumer fatigue. So how should we look at demand for q two? And specifically, what’s demand looking like right now?

Company Representative, AutoCanada Inc.: I mean, I can share with you that so far April was showing fairly strong, and I think things are softening up a bit in May. I’ve read probably a lot of the same articles that you have in The US that our US peers are experiencing more of a slowdown in May. We haven’t seen quite that yet, but, usually what happens to The US eventually happens to Canada. It’s it’s not quite at that level yet, but things are things are slowing down.

Sam, Financial Executive, AutoCanada Inc.: Okay. Thank you. That’s all. Your

John, Moderator: next question comes from the line of Maxim Sytchev from National Bank Financial. Your line is now open.

Maxim Sytchev, Analyst, National Bank Financial: Hi. Good afternoon, Paul, Sam.

Company Representative, AutoCanada Inc.: Hey, Max.

Maxim Sytchev, Analyst, National Bank Financial: I had a first question around F and I because correct me if I’m wrong, so new vehicle revenue was up fairly nicely. But do you mind maybe talking about the rationale for why F and I declined, sort of any moving parts there? Thank you.

Company Representative, AutoCanada Inc.: Yeah. I think the main thing we’re seeing on F and I is that there’s been more cash buyers and so less opportunity to sell more products per deal. And that’s just a function of, again, people people more people paying cash.

Sam, Financial Executive, AutoCanada Inc.: Yeah. Okay. And to add to that, you know, I forget who who said it, maybe David, ASPs were higher. So if you actually look at new volume, I think there was actually a few left deals. So it’s a little bit of both, There’s just less transactions.

Maxim Sytchev, Analyst, National Bank Financial: Okay. I see. Yeah. Okay. And then in terms of, you know, it’s also been difficult to get sort of a good gauge in terms of what you guys have in inventory.

But Paul, guess on the use side of things, are you happy with where you stand right now? Like if let’s say, it’s all the policy dynamics kind of simmer down a little bit just in terms of the composition, sort of normal price vehicles a bit higher price dynamics. Like, do do you have, I guess, you know, enough to service what whatever’s coming through, or there’s, any obvious kind of white white spaces that need to be addressed? I guess that’s the question.

Company Representative, AutoCanada Inc.: That’s a great question. And in fact, it’s something that we ask ourselves. And so do do we have the right number of used vehicles? I would say that we’re low relative to the time of year. And it was a decision we made based on the uncertainty of the market and just being And so while we’re doing cost out and really, really fine tuning the business, we didn’t wanna have to think about trying to really, really go after the top line growth of the business because we’re really focused on making sure that we didn’t break any any anything at the store level while we were doing cost out.

And so trying to grow top line and do cost out at the same time is a lot of work and there’s a lot of uncertainty. And so I would tell you that do we have the right number of vehicles? I don’t know. And the answer is I don’t know because we don’t know if the price of if there’s a shortage of new cars, then used cars will continue to go up because of tariffs. And, again, that that story is yet to be written.

If, you know, if The US gives us relief on the tariffs, then the price of new cars will likely stabilize and you won’t be able to hold gross as much and you’ll see probably the price of new cars coming down. And so in one case, we could look really, really smart. In the other case, we might look like we missed an opportunity. But I’d rather miss opportunity versus put ourselves and our balance sheet at risk right now.

Chris Murray, Analyst, ATB: Yeah. I know.

Maxim Sytchev, Analyst, National Bank Financial: It goes on a percent there. And I guess your your comment around May sort of slow down. Can you quantify, I guess, what you guys are kind of seeing on the ground and how would we interpret this data point, especially as the last week has been certainly much more positive you know, sentiment wise.

Luke Hannon, Analyst, Canaccord: Yeah, I mean I

Company Representative, AutoCanada Inc.: I was gonna say, when I say it’s slowed down, we saw slowdowns at the beginning of Sam, correct me if I’m wrong, February, the March, and the April. And we were like, what the heck is going on with the beginning of every one of these months? And then by the end of the month, we were lighting it up. And so I don’t know if this is just normal slowdown for what’s been going on in the last several months or this is the beginning of a trend. I’m just I was just highlighting that things are slowing down versus April, and we just we just need to watch.

Maxim Sytchev, Analyst, National Bank Financial: Okay. No. Makes sense. Thank you so much, for your time.

Company Representative, AutoCanada Inc.: Thanks, Max.

John, Moderator: There are no further questions at this time. I will now turn the call over to mister Anthony. Please continue.

Company Representative, AutoCanada Inc.: Yeah. Listen. Really appreciate everybody joining today’s call, and I just wanna say a big shout out to our team. Our staff have been doing double the work with half the people, both from head office and in the dealership. And it’s amazing.

I gotta say, it’s amazing to see what’s happening when everybody’s working together. I’ve never seen this company operate like it has now. And I’m I’m super impressed and I’m super hopeful that we’re gonna have another great quarter talk to you about next next quarter. So thanks, everybody, and we’ll talk to you next quarter.

John, Moderator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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