AutoCanada's Turnaround: Navigating Losses with U.S. Exit, New Leaders

EDMONTON, AB – May 13, 2026 – AutoCanada Inc. is navigating a significant transitional period, marked by a first-quarter net loss, a major leadership overhaul, and an accelerated exit from the U.S. market, as it grapples with a soft Canadian automotive landscape. The dealership group reported a net loss from continuing operations of $(3.3) million for the quarter ending March 31, 2026, a stark reversal from the $9.7 million net income posted in the same period last year.

The results reflect a challenging economic environment and specific pressures within the company's operations, particularly in the used vehicle market. In response, AutoCanada is executing a multi-pronged strategy focused on stabilizing its core Canadian dealerships, divesting non-core assets to reduce debt, and leaning on the resilient performance of its collision repair business.

"We entered 2026 focused on stabilizing dealership performance, improving operational execution, and strengthening our balance sheet, and we made meaningful progress against those priorities during the quarter," said Samuel Cochrane, who was appointed Chief Executive Officer in mid-February.

Dealerships Hit by Market Headwinds

The primary driver of the quarter's disappointing results was a downturn in dealership performance. Revenue from continuing operations slipped 4.1% to $1.19 billion, while gross profit fell a more significant 14.6% to $169.1 million. This squeezed the company's gross profit margin down to 14.2% from 16.0% a year prior.

A glaring issue was the performance of the used vehicle segment. Gross profit per used retail unit plummeted to a negative $(48), a dramatic swing from the positive $1,421 per unit recorded in Q1 2025. The company attributed this to clearing out aged inventory in a competitive market. New vehicle sales also faced pressure, with units sold dropping nearly 18% to 6,294.

These struggles are set against a backdrop of a cooling Canadian auto market. Industry data points to a continued year-over-year decline in new light vehicle sales, with some analysts reporting a drop of over 4% in the first quarter. Persistent macroeconomic headwinds, including elevated vehicle pricing, higher fuel costs, and general consumer uncertainty, are dampening demand. While the new car market softens, the used car market is stabilizing, with inventory levels rising and prices leveling off after years of volatility, creating a complex environment for dealers like AutoCanada.

Despite the quarterly loss, the company noted early signs of stabilization following its leadership changes. "While industry demand remained soft and profitability was impacted by expected pressure in used vehicle margins, we are encouraged by improving trends in used vehicle sales productivity, used vehicle profit per retail unit, [and] operational efficiencies," Cochrane stated, pointing to sequential improvements seen in March and April.

A Strategic Retreat and Financial Reshuffle

A cornerstone of AutoCanada's strategy to right the ship is the complete divestiture of its U.S. dealership portfolio. The company has made "meaningful progress" on this front, having already received approximately $65.8 million in gross proceeds. It expects total proceeds to reach approximately $130 million, which is at the high end of its initial projections.

The exit is strategic, aimed at shedding an underperforming division that posted a $24.2 million adjusted EBITDA loss in 2024. With the sale of several Illinois dealerships, including Hyundai and Kia of Lincolnwood, only a few locations remain. The proceeds are earmarked for debt reduction, a critical move as the company works to strengthen its balance sheet.

In a concurrent move to secure financial flexibility, AutoCanada successfully amended its syndicated credit agreement in April. The new terms, which extend to November 2028, notably increase the company's maximum permitted Total Net Funded Debt to Bank EBITDA Ratio to 5.00x. This provides crucial covenant headroom as the company navigates its operational turnaround and portfolio changes. The combination of asset sales and a more flexible credit facility is designed to accelerate progress toward its long-term target leverage range of 2.0x to 3.0x.

Collision Business Provides a Resilient Engine

While the dealership segment faces headwinds, AutoCanada's Collision Operations are proving to be a source of stability and growth. The segment delivered a slight gross profit increase of 0.8% to $18.3 million, with its gross profit margin expanding to 46.3% from 45.1% a year ago.

This business is less tied to the cyclical nature of vehicle sales, driven instead by more consistent, insurance-related repair work. Management views the highly fragmented North American collision repair industry, estimated to be a US$50 billion market, as a key consolidation opportunity. AutoCanada's strategy is to pursue "disciplined, accretive growth" through targeted acquisitions, expanding its network of 33 collision centres.

The growth plan focuses on increasing regional density, expanding Original Equipment Manufacturer (OEM) certifications, and strengthening partnerships with insurance providers through Direct Repair Programs (DRPs). This strategy mirrors that of successful competitors and positions the collision segment as a crucial driver of recurring, higher-margin revenue for the company's future.

New Hands on the Wheel

Guiding this complex transition is a renewed leadership team. The appointment of Samuel Cochrane as CEO in February was a clear signal of change. The company further solidified its new executive suite by announcing that Mike Woodward will take over as Chief Financial Officer in July.

Woodward brings over 18 years of senior finance experience from roles in investment banking and as CFO for companies like Lynx Air and Campus Energy. His expertise in financial strategy, corporate development, and operational improvement is expected to be pivotal as AutoCanada executes its plan. These leadership changes, combined with the addition of new regional and functional leaders, are intended to drive a culture of accountability and refocus the organization on fundamental execution as it charts a course through a transitional 2026.