AutoCanada released its Q2 results and they are extraordinarily poor.
They are replacing the CEO (though weirdly keeping him on as an adviser in the area of relations with the various auto makers and dealership acquisitions).
The CFO is resigning but staying on as an advisor for three months.
They have added some new executives and Board members.
They basically admitted to being incompetent (or close to) in supervising and integrating their dealerships and in over-paying for their recent large U.S. acquisition.
They provided a fairly grim outlook while at the same time suggesting that big improvements in operations and ultimately profits are coming.
Well, hopefully, they have gotten all of the bad news out of the way at once.
I imagine the stock will open sharply down tomorrow. However, they do claim that on an adjusted basis the earnings per share would be 55 cents per share which compares to 57 adjusted in Q2 last year.
This has been an unfortunate investment. I had analysed it based on the facts as I saw them and reported on but the future certainly did not pan out as I had thought it would.
P.S.
Just trying to figure out what is happening at AutoCanada. Three of the eight directors elected on March 21 had resigned, two on June 20 and the third on June 26 though one stayed on to help establish the Special Committee. Brand new director Paul Antony, age 50, was appointed chair on June 20.
I had thought that maybe some directors resigned because they did not like the big U.S. acquisition. And that could be given it was announced March 22, and possibly some directors only learned of it that day. But perhaps more likely is that they clashed with Paul Antony.
Paul Antony is now to be executive chair. Who is now CEO was not clear to me in the press release. But I would say Paul Antony is in charge. Given the rapid changes in the Board and executives in the very few short months that Paul has been on the job, it seems clear that he is a “doer” and probably a real fire brand. Perhaps the leadership of Paul Antony is what the company needed.
All may certainly not be lost in terms of this investment. The company sill owns 54 dealerships. Even with the Q2 loss (mostly a write-off of goodwill), the shares are trading somewhat below book value. And it appears that Paul Antony is not going to fool around in probably “putting the wood” to everyone to get improved profits ASAP.