AutoCanada Inc.

Thank you for joining AutoCanada's conference call to discuss the financial results for the second quarter of 2025. 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 Cedar Plus for a discussion of this risk The fourth quarter news release, financial statements and MD&A. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at that time, please press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star key followed by the number two. I'd like to remind everyone that this conference call is being recorded today. Wednesday, August 13, 2025. Now, I'd like to turn the call over to Mr. Paul Anthony, Executive Chairman of Auto Canada, Inc. Please go ahead, Mr. Anthony.

Good evening, everyone, and thanks for joining us. This quarter marks a significant milestone for Auto Canada, and for me personally, it represents the culmination of the work we began in 2018 when I assumed the role of the Executive Chair shortly after the acquisition of our U.S. operations. At the time, Auto Canada was under severe strain, financially vulnerable, and operationally overextended. The U.S. acquisition was an ambitious move, but one that quickly revealed structural and cultural misalignment with our Canadian core. The company was, quite frankly, at risk prior to us getting here. What followed was a multi-year effort to stabilize, restructure, and ultimately transform the business. That journey hasn't always been linear. It was disrupted by the pandemic and other challenges, but I'm proud to say we've achieved what we set out to do. Today, Auto Canada is a more focused, disciplined, and resilient organization. We've reshaped the business around a scalable Canadian platform, improved our cost structure, and returned to profitable fundamentals. We've already realized $80 million of our original $100 million cost savings target. And with continued momentum, we've now raised that goal to $115 million by year end. These are not hypothetical targets. These are real targets. bankable savings that are materially strengthening our earnings profile. We've also made decisive progress in closing the chapter on the U.S. business. One sale has been closed, and we have a clear path to divesting the remaining dealerships. In total, we expect $115 to $130 million in net proceeds from a group of dealerships that lost more than $20 million in adjusted EBITDA last year. These proceeds will allow us to reduce leverage to well within our long-term target range, leaving the company on strong financial footing. By the end of this year, Auto Canada will have come full circle, returning to its roots as a focused consolidator of Canadian franchise dealerships and condolence centers. That was the job that I came to do, and with the major pieces now in place, the time is right for a leadership transition. Before I pass it over to Sam, I want to briefly touch on our second quarter performance, which represents the operating leverage and financial discipline now embedded in the business. Adjusted EBITDA from continuing operations nearly doubled to $64.4 million, with margins improving 240 basis points to 4.8%. This was driven by a leaner cost base, tighter inventory management, reduced floor plan expenses, and significantly higher used vehicle gross profit per unit. Clear evidence that the ACX operating method is gaining traction. Even as volumes soften, partly due to store archetype transitions, we grew gross profit, cut normalized operating expense by 10%, and meaningfully enhanced our earnings power. There's more work ahead, but AutoCanada is now operating from a position of strength The business is more resilient, the path forward is clearer, and I have every confidence in this team's ability to deliver continued progress. I want to sincerely thank our employees across the country who have worked relentlessly to drive this transformation, and also our OEM partners for their continued support. It has been a privilege to lead this company through such a critical chapter in its history. With that, I'll hand it over to Sam to take you through the quarter in more details.

Thanks, Paul, and good evening, everyone. Our second quarter results reflect continued progress on our transformation plan with improving margin performance, disciplined cost control, and encouraging signs of operational leverage, even as we manage through near-term sales softness amid cost savings activities and ongoing portfolio reshaping. Revenue from continued operations declined 3% year-over-year to $1.34 billion. reflecting lower volumes, particularly in new vehicles and F&I. This was expected as several dealerships undergo archetype transitions, which temporarily impact frontline capacity and sales execution. Our Canadian platform is performing well, with growth in collision, improving performance in used vehicle profitability, and operating expense reductions dropping to the bottom line. Growth profit from continuing operations grew by 2.1%. with margin improving 80 basis points to 16.8%. This was driven by stronger retail and wholesale used vehicle gross profit per unit, collision strength, and benefits from tighter inventory management. Normalized operating expenses declined by 16.9 million, or 10% year-over-year, reflecting the benefit of cost savings realized under the ACX operating method. These efficiencies, along with more stable floor plan costs, contributed to a meaningful improvement in earnings. Adjusted EBITDA from continuing operations increased 92.4% to $64.4 million, and margin expanded 240 basic points to 4.8%. This is a strong signal that our transformation strategy is working and that the cost savings already realized are having a real and measurable impact on profitability. Net income from continuing operations was $18.9 million compared to $3.9 million in Q2 last year. Delivered EPS was $0.72 cents. up from $0.12 per share. Turning to the cash flow, we generated $19.6 million of operating cash flow in the quarter. We also closed the quarter with $62.4 million of cash on hand and approximately $257.4 million of available liquidity under a revolving credit facility. As Paul noted, the U.S. investor is progressing well. Once complete, the expected total proceeds of $115 to $130 million net of working capital will allow us to materially reduce leverage and bring our total net funded debt-to-bank EBITDA ratio within our normal covenant thresholds. We remain highly focused on liquidity and balance sheet strength through the remainder of 2025. While near-term volume softness may persist as we complete dealership transitions and optimize our cost structure, The financial foundation is stronger, and our ability to generate more resilient earnings is improving quarter by quarter. With that, I'll turn the call back to Paul to discuss the outlook. Paul.