AutoCanada Inc.

Tom Orysiuk - President and Chief Executive Officer Pat Priestner - Executive Chairman Chris Burrows - Vice President and Chief Financial Officer Steve Rose - Chief Operating Officer

Neal Gilmer - Clarus Securities Hilda Maraachlian - Cormark Securities Steve Arthur - RBC Capital Markets Anthony Zicha - Scotiabank Derek Dley - Canaccord Otto Cheung - GMP Securities Mark Petrie - CIBC Chris Murray - AltaCorp Capital

Good morning and thank you for taking the time to attend our conference call for the fourth quarter and our annual results for 2014. I am Tom Orysiuk, the President and Chief Executive Officer of AutoCanada.

On the call with me today is Pat Priestner, Executive Chairman and Chris Burrows, Vice President and Chief Financial Officer, who will be providing a review of our financial performance for the fourth quarter, and Steve Rose, our Chief Operating Officer. After that, we will be opening up the call to your questions.

Now, before we continue with the call, let me remind everyone that certain statements in this presentation may be forward-looking in nature. I would refer you to our more complete disclaimer contained in our most recent Annual Information Form.

In summary, these statements involve known and unknown risks, uncertainties and other factors outside of management’s control that could cause actual results to differ materially from those expressed in the forward-looking statements. AutoCanada does not assume responsibility for the accuracy and for the completeness of the forward-looking statements.

It does not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. For additional information about possible risks, please see the AIF dated March 19, 2015, which is available on the SEDAR website.

We are very pleased with our 2014 annual results and our growth in units retails, revenue, gross profit and net income and are reflective of these 17 stores, which we added to our family of dealerships during the year. The past year was a milestone for AutoCanada as we exceeded $2 billion in revenue and reached $89 million in EBITDA.

During the year, we added four new brands, including Cadillac, BMW, MINI and most recently Kia. We now represent 8 manufacturers and 19 different brands, operate in 8 provinces and employ over 3,400 full-time equivalent dedicated staffs.

We are pleased with the dealerships we have acquired in the past years as we are integrating well into AutoCanada and we believe they will provide long-term value for our stakeholders. Our financial results indicate the size and strength of AutoCanada with fiscal 2014 resulting in a 57% growth in revenues, a 26% increase in basic earnings per share.

Same-store gross profit grew by 7.9% year-over-year. And now we operate 48 dealerships encompassing 56 franchises across the countries.

We managed over 700,000 service repair work orders in our 822 service bays. Also during the year, we ere successful in completing over $1 billion in financing transactions, including a $200 million equity offering, a $150 million debt issuance completed by new facilities of $550 million for floor plan and $200 million with revolving credit.

And with that, I will turn things over to Chris Burrows, who will speak to the financial end of our business.

Thanks, Tom. I will start with a review of our results for the fourth quarter of 2014 and then provide a review of our results for the year ended December 31, 2014.

Generally speaking, the automotive retail sector in Canada improved in the fourth quarter of 2014 over the same period of 2013. Overall, Canadian light vehicle unit sales increased by 8.4% for the 3-month period ended December 31, 2014 as compared to the same period in 2013.

As a group, our same-store new vehicle retail unit sales were up 2.8% quarter-over-quarter. Our key operating results for the fourth quarter of 2014 are highlighted as follows: our same-store revenue increased by 10.9%; same-store gross profit increased by 5.7%; EBITDA increased by 65.5%; our number of new vehicles retailed increased by 80.6%; the number of used vehicles retailed increased by 89.1%; repair orders completed for the quarter were up by 123.1%; and same-store repair orders completed for the quarter were up 12.6%.

EBITDA for the three months period ended December 31, 2014 increased by 55.5% to $24.5 million from $14.8 million when compared to the prior period in 2013. The increase in EBITDA for the quarter can be mainly attributed to improvements in all four business streams.

Revenues from all dealerships for the fourth quarter of 2014 increased by $319.7 million or 95.8% to $653.5 million from $333.8 million when compared to the same period in the prior year. Gross profit from all dealerships for the fourth quarter of 2014 increased by $50.1 million or 80.4% when compared to the same period in 2013.

The increase in gross profit for the quarter was mainly the result of increases from our new vehicle, finance and insurance and parts, service and collision repair revenue streams. During the three months period ended December 31, 2014 operating expenses increased by $41.0 million or 84.7% to $89.5 million from $48.5 million in the same period of the prior year primarily as a result of the increase in salaries and commissions due to an overall increase in retail sales and gross margin.

Operating expenses as a percentage of gross profit increased to 79.6% from 77.7% from the same period of the prior year. During the year we also added lease and other income separately to our income statement as a result of both the combination of General Motors dealership as well as our acquisitions completed during the year.

Certainly these dealerships have lease portfolios which are now consolidated into AutoCanada for the first time in 2014. Previously lease income was not significant and was included in finance and insurance revenues.

The credit risk related to these lease portfolios is not material and we continue to monitor and we will disclose these segments of our operations. We are very pleased with the company’s performance in the fourth quarter of 2014, which proved to be our most profitable fourth quarter in company history.

In terms of operating results, new light vehicle sales in the Canadian market were up 6.1% in 2014 when compared to 2013 and surpassed $1.85 million in unit sales. New light vehicle sales in Canada include retail, fleet and daily rentals the proportions of which are not separately disclosed.

The company focuses on retail sales as they are more profitable than fleet and daily rental sales. Of the company’s total same-store unit sales 81.8% are retail unit sales.

The company’s same-store retail sales of new vehicles have increased by 3.4% during this period. As a result of the above however the company is unable to compare its same-store performance with respect to new retail sales in the three new unit retail sales to district.

The company’s record sales and earnings in 2014 are the direct results of the 16 acquisitions and one open point opened during the year and gains in same-store sales and gross profit. Overall sales for the year increased by $805.7 million or 57.2% including an 8.9% or $113.5 million same-store sales increase over the prior year.

Gross profit for the year ended December 31, 2014 increased by 51.7% with an increase in same-store sales gross profit of 7.9%. Our used vehicle sales increased by $194.5 million or 54.6%, with used vehicle sales volume increasing by 51.6% in 2014.

Our used vehicle gross profit increased by $9.2 million or 45.5% over 2013. Our key operating results for the 2014 fiscal year are as follows: same-store revenue increased by 8.9% and same-store gross profit increased by 7.9%.

EBITDA increased by 52.8%, the number of new vehicles retailed increased by 47.9% and the number of new – excuse me the number of used vehicles retailed increased by 51.6%. Repair orders completed for the year were up 65.1% and same-store repair orders completed for the year were up by 5.0%.

EBITDA for the year ended December 31, 2014 increased by 52.8% to $89.4 million from $58.5 million when compared to the results for the company in the prior year. The increase in EBITDA for the year can be mainly attributed to the improvements across all four business streams and the dealerships acquired during the year.

Revenues for the year ended December 31, 2014 increased to $2.2 billion from $1.4 billion in the prior year. This 57.2% year-over-year increase in revenue for the period was mainly driven by increases in same-store sales across all four revenue streams and additional revenues from dealerships acquired during the year and the consolidation of General Motors dealerships.

Gross profits earned from all dealerships increased by 51.7% to $373 million compared to $246 million in 2013 as a result of strong same-store sales gross profit growth in three of our business lines and acquisitions completed during the year. Operating expenses increased by 54.3%, $290.9 million from $188.5 million in 2013 primarily as a result of increases in salaries and commissions, which are mainly variable based on sales volumes due to increases in new and used vehicle sales and finance and insurance product revenues.

Operating expenses as a percentage of gross profit remained relatively stable at 70.8% from 76.6% in 2013. The company is focused on integrating our dealerships we acquired during the year.

Due to the level of acquisitions activity, integration of individual dealerships is proceeding at a slower pace than in the past as the company intends to provide a level of integration assistance that best delivers long-term shareholder value while prudently managing staff expenses. With that, I will turn things back over to Tom and Pat who have commentary on our outlook and expectations for the coming year.

Thanks, Chris. Although management is very pleased with Q4 and fiscal 2014 financial results, as we all know only too well the world particularly in retail refuses to standstill.

And that’s true as we added changes [indiscernible] maybe, it is also true that sometimes change can show you a short term curve. In Q1 of 2015, the company finds itself in such a time of change, which in the very early months provided some challenges.

The economic environment in Canada has purely changed though its degree and extent currently remains indeterminate. The reduction in oil price brings with it mixed blessings for Canada.

On the whole, the change will be positive for Ontario and Quebec, and to a lesser extent DC and Manitoba. The Maritimes as well should be slightly positively impacted.

Saskatchewan and especially Alberta however are negatively impacted with the recent Alberta Treasury Branch financial study showing that 40% of Albertans are deferring major purchases of homes and automobiles. With a large percentage of the company’s revenue and profit coming from western dealerships and Alberta dealerships in particular, this will pose significant challenges.

The extent of the change in the price of oil and consumer confidence however be it positive or negative cannot be fully appreciated as of yet and further there remains much uncertainty as whether the underlying cause being oil prices might return it being seemingly as such a political issue as well as an economic one. Additionally, management had operational challenges at a number of its dealerships unrelated to general economy, including unprecedented weather in the Maritimes, more pronounced seasonality at some of our new stores, anticipated negative results at our recently opened plant and some operational misses at a few of our same-stores, all of which management is aggressively addressing.

The results of which will yield benefit in Q2. Certainly, in the near-term, the overall impact for our company’s financial performance has in the early months of 2015 proved to be negative relative to 2014.

It is not possible to predict the full extent of the Q1 impact as March is historically the beginning of the primary Canadian vehicle sales month and a disproportionate percentage of sales in any month occurred in the last 10 days of the month. But regardless barring any unprecedented significant improvement, although the company shall be profitable Q1 2014 will not equal Q1 2014 results.

Regardless of the nature across the changes, management understands that it is our responsibility to adjust to these changed circumstances and to lead the company to address. And that is what our management team is and will do.

Clearly, this is not the position the company expects to be in and it is not one that management is satisfied with being it. As a result, the company is prudently, but aggressively reviewing its operations to ensure that our dealerships are focused on the basics of selling customer servicing and follow-up, in other words, the blocking and tackling of the business, well exceeding the integration of technology and processes in the company’s recent acquisitions to ensure that they are maximizing their opportunities.

At the same time, management is reviewing its expense structure including capital expenditures to implement all efficiencies reasonably if possible to ensure that cost reflects the changing economic culture. Although the company is in the inevitable position of having the high proportion of expenses being variable, there is a time lag between the reduced economic activity and reaping the benefit of a variable cost structure for a number of reasons.

Including the acceptance of lower vehicle sales margins to stimulate sales to achieve manufacturer sales-based performance targets, the industry practice of paying advances and top-ups in income of frontline key sales staff in order to retain key individuals and particular during the slower January and February months and higher than normal per unit advertising cost due to reduced volumes. Inventory carrying costs incurred to support forecasted stronger sales volumes in excess of actual sales volumes.

As well our dealerships are experiencing 2015 margin compression generally and particularly in Alberta. Margins will continue to be compressed in those areas where the economic activity remains slower, especially if those manufacturers of volume-based incentives do not adjust their sales targets.

The decline in the exchange rate of the Canadian dollar to the U.S. dollar should have a limited impact on AutoCanada as all of its vehicle purchases and predominantly all of its automobile parts purchases are denominated in Canadian currency resulting in limited foreign exchange risk, unless manufacturers raise prices of vehicles or parts due to exchange, the likelihood of which we cannot speak to.

As well in early 2015, the company filed for a normal course issuer bid in order to opportunistically repurchase our shares. Share purchases will only be conducted if, based on the company’s share price, management believes it is the best use of its capital at that time to drive long-term shareholder value.

In summary, the company continues to be focused on taking those steps, which best drive long-term shareholder value. And although the challenge was currently being experienced, we will alter the means by which we succeed.

Nothing has altered our focus from this primary goal. Management remains fully confident in this model and can take full advantage of its variable cost structure, process and technology improvements and strong dealer managers should the period of reduced economic activity continue.

Furthermore, the company believes that the west and Alberta in particular shall continue to provide superior long-term shareholder returns. With that, I will turn the call over to Pat.

Hey, thanks a lot, Tom. 2014 was obviously a really good year for us and normally I would be speaking to some of those accomplishments.

But the world has changed a little bit and the challenges we are facing are different and our focus is not on what we did last year, but solely on meeting those challenges and the steps that we need and are taking today. Regarding acquisitions, the company was pleased to recently announce the awarding of the Kia open point in Winnipeg.

During ‘15 and ‘16, the company also plans to open additional open points, including a Nissan dealership in Calgary and a Volkswagen dealership just outside of Edmonton in Sherwood Park. And additionally, we remain confident by the end of May we shall announce three to five more acquisitions.

As for our western base preference, historically the west has proven to provide superior long-term value to investors. Dennis DesRosiers in a review of vehicle sales, which we would ask him to look at between the years of 1989 and 2014 a long, long time, noted that Alberta is one of the best and most stable new vehicle markets in Canada, too fast to consider going forward as well.

Alberta has the fastest growing driving age population in Canada to 3.5%, so that argues well for us. And Albert’s vehicles for driving age population is at 90% compared to 80% through the rest of Canada, so another really favorable reason to be in Alberta.

And in fact well, we have given the opportunity to purchase today the Alberta dealerships that we currently own, we would not hesitate at all to purchase as they have proven through good, some little bit tough times to be simply excellent investments and nothing that has occurred here has caused us to think differently. The company believes as Tom said in the long-term success of our predominantly western platform model and believes that what it considers to be a periodic short-term blip in the western and particularly Alberta economy is completely inefficient reason to alter its view.

And in fact should Alberta opportunities present themselves, as we go through the year at multiples, it make really good sense. The company would not hesitate to take advantage, but what we believe would be clearly in the long-term interest of the company and the shareholders.

As Tom said, there is much to be done in terms of further driving our processes and technologies of our dealerships, which drives the blocking and tackling in everyday part of our business as well as implementing all cost savings as we possibly plan. Looking at our business model, we have an exceptionally talented informatics dealer principle body, lot of long long-term excellent partners.

We have great dealerships, great brands, great locations. We have excellent, excellent manufacture relationships, great finance partners; clear focus on bottom line results by Tom and his team.

We see likely purchasing opportunities at this economic slowdown in Alberta. It should make available to us good multiples.

We believe the long-term superior returns and really even the mid-term being in Western Canada will be great for our shareholders. We have a very strong balance sheet, the liquidity, the ability to generate good cash flow, meet all of our obligations obviously in our dividends.

And the company will meet these short-term challenges and are working hard at it and we continue to make good on delivering long-term shareholder value. Thanks so much for all your continued support.

And let’s open first the call to questions.

Yes, thanks very much. I think maybe what I would like to try to start with is on the outlook side and maybe if you can provide a little bit more color sort of a two-part question with respect to margins, you talk with some detail in your press release with respect to what’s going on in Alberta and the Calgary area?

But you also talk about the rest of Canada experiencing some volume and margin challenges. I am wondering if you can give us some sort of indication as to the magnitude of those margin pressures to separately try to understand obviously our exposure to Alberta is quite high, but also did margin pressures you are seeing in the rest of Canada, is it sort of somewhat limited to what you are seeing in the first couple of months of the year and expecting at least those margins to rebound excluding Alberta?

If you could just provide a little bit more on that, please.

Yes. Neal, that’s a good question.

I have a couple of things I think you want to keep in mind is when you look at our overall margins for 2014, new vehicles are running at about 7.5%, use at 5.3%, and parts and services of 50%. I think it’s important to take a look at our same-store margins as well.

If you are talking 2014, our new gross margins were about 9.3% and use of 7.1% and parts of 53%. And these are stores that we have owned and operated put in our processes over the last 2 years.

So, I think there is some opportunity for us on a go forward basis, all things being equal to kind of improve the margins on the 17 stores that we acquired last plus any stores that we acquired in 2013 moving forward. When you have a slowdown like we have in Alberta, there is definitely some margin pressure.

Inventory levels for all dealers are typically running higher than they need to be. Everyone is concentrating are getting sold down to probably the right levels and that put some pressures on the margins on the new and the used vehicle side.

So, you will see some pressure there. Outside of Alberta, there might be some slight pressure on margin, but I don’t think we are seeing anything hugely significant there.

And the Maritimes would be, the weather we have there, we certainly didn’t know we are going to get 2 meters of snow in the February. There is definitely some pressure on the margin.

So, we view that as very short-term.

So, is it safe to view that parts and services remain relatively unchanged pretty much across Canada and it’s more a new and used phenomenon on the margin pressure?

I would think so, yes.

Okay. And then perhaps with respect to the more pronounced seasonality sort of comment in your press release with respect to that, so you are expecting sort of a rebound in Q2 and Q3.

You have always had that sort of seasonality across all of your business you are just suggesting that in particular you noticed a little bit more in Q4 and obviously in the first sort of half of Q1?

Yes, there is – what we have noticed, there is a big difference between the seasonality between the stores that we have owned for over 2 years versus historically the seasonality of the dealerships that we purchased. So, for example, if you are at a store making $3 million, with our model, it would be, roughly you would have some good income and contribution coming in, in Q1, much higher contribution in Q2, Q3 and then Q1 and Q4 would typically look fairly similar.

On some of the acquisitions, historically if they were – if we look at the income that we have based our purchase multiple off of, some of them actually even have losses in January and February. We have been able to reduce these losses in the period for improvements at the store.

So, we are really happy with the integration, but they are going to be a drag on Q1 earnings, because historically they have not produced well in Q1. The underlying business is great and we are making improvements which would all help later on in the year.

Okay, thanks. Maybe my last question and then I will pass the line.

Perhaps you can just give a little bit of color to make sure we understand how the open points work now that you have got a few more of them coming down the road here. I know that you comment in the press release as far as they operated losses for an initial period of time.

Is there any way to sort of quantify sort of the magnitude of those losses? And is it typically sort of a 12-month is when they turnaround and be starting to positive earnings wise?

Each one is a little bit different, it has on the locations it has on the brand, the competition, but I think it would be fair to say generally when you open up a new dealership, you have no service customers, you have no traffic from people who bought there before. So, you have got some fairly heavy advertising expenses.

It wouldn’t be uncommon to have an open point that would incur a loss of $1 million let’s say for example on the first year of operations, maybe breakeven on the second year and then start making contributions once you got your customer base and your process in place. The nice part of an open point, if that dealership long-term run rate is let’s say $1.5 million contribution you are not paying $5 million or $7 million worth of goodwill for us, you are basically getting the dealership not for free that’s for the cost of the operating costs or losses for the first year or two.

Okay. That’s helpful Tom.

Thanks. I will pass the line.

Good morning, guys. Couple of questions here.

The first one very quickly just to clarify when you guys say weaker year-over-year Q1 is that apples-to-apples or because you guys bought dealership, so just wanted to make sure if it’s apple-to-apple?

The reference Hilda is actually full Q1 to full Q1 ‘15 to ‘14, so it is an apples-to-apples.

Okay. I mean and my second question was on the outlook part again, in terms of we discussed some margins, but in terms of the unit vehicle sales also suggesting a finger bit worse than what the new vehicle sales numbers are suggesting, so can you maybe talk about elaborate more on that and help reconcile what’s going on?

Yes. I will use January for example Hilda.

When you take a look at the Alberta retail numbers for example, you are seeing I believe the Polk numbers which I know everybody does not have to access to show about 10.3% decrease in Alberta on retail sales. When you take a look at those numbers that we get in from our manufacturer partners and you take a look at I mean you will see that the mix between cars and trucks and SUVs is relatively unchanged from 2013 and 2014.

You do see some pretty wide variances from city to city, region to region and branch to branch and we highlighted that in the outlook. And we are just trying to give you guys a bit of a sense of what’s going on in the marketplace is by including that in the outlook.

And year mentioned some challenges in the integration can you elaborate more on that?

I won’t say so much challenges, we have got fairly developed integration team here. We did make the 17 acquisitions.

We are moving along I think as quickly as possible on integrating these dealerships and putting in our key processes. And we are quite pleased with the progress we are making.

When I look for example on our dealerships in Montreal, one we bought in mid-summer, one we bought in December. I think they are all moving very good and we are continuing down the acquisition path as well.

It’s a lot different when you buy dealership in a quarter versus 17 throughout a year, but I would say we are still moving ahead.

And my last question, I will pass the line after that. You talked about the margin pressure outside of Alberta as well, can you just help – talk about what’s closing that and I understand the pressures in Alberta where they are coming from, what’s closing the margin pressure when the sales are strong outside of Alberta?

The marred times I think it’s been real tough there with the 2 meters of snow and that’s definitely putting – put pressure on Q1 on the overall margins that are earned as well as the margin percentage there. And the other one which I have tried to highlight when we are talking with Neal is there is a big difference between the margins that our mature stores have been reaching versus the new stores.

And the new stores we see the margins improving over a period of time. But it takes time to get our processes in place and have those improvements.

Okay. And the progress that is it worst than what you guys were expecting what you would be in the new stores or is it performing in line with your expectation?

I would say by and large in line with our expectation Pat you got something to add to that?

Yes, a little bit, I mean when you look at the Calgary situation, I mean what happened in the last couple of months in Alberta obviously that we didn’t bank on that obviously. So that’s added a little bit of pressure to it, but again it’s very short-term.

Okay, I will pass the line for now. I will come back.

Thank you.

Great, thank you. I just want to talk a little bit more about some of the sales expectations for Q1 and the rest of the year, you quoted a lot of the Polk numbers, which are very useful in the press release.

Those are quite different from the DesRosiers numbers that we see frequently, but just is it reasonable to assume then that for the Calgary markets, those Polk numbers are a good proxy for what you are actually seeing in your dealers? And is it much different those numbers were so what you are seeing in Grand Prairie and Edmonton?

Yes, but the numbers would vary quite a bit by region as I would say on the last call, Steve. And when you take a look at calendar, we have got I believe 2 out of 6 of the Chrysler dealerships.

So, they are aggregated to a certain degree. One of those dealerships we purchased just last year and its numbers are actually up.

So, we are a little bit happy with that. What we are seeing out there is primarily a deterioration of consumer confidence.

Traffic, I would say was moderate, but not disastrous in the market like Calgary. We thought we were going to have a decent January.

When the number started rolling in, in February, I would have to admit that I was a little bit surprised when you talk to some of our dealers, good traffic, just people delaying and deferring the purchase of the vehicle, which is in line with the Alberta Treasury Branch report. My dealers I talk to them, they are saying the same thing that there is a lot of customers in January that they thought they were going to be able to get February and we had a bit of a timing issue there.

We are about 60 days into this or 45 days into really the slowdown.

But yes, so I guess overall that by the Polk numbers are probably as close as we have got as a proxy to what we can expect your sales to be? And then would Edmonton and Grand Prairie down, but not by as much as Calgary?

Are those good assumptions?

Yes, I am not 100% confident of that, because you are looking at such a short period of time. You are looking at one month.

When you talk to not only us, but the 20 dealers that are down at Calgary that’s unrelated to us, we all realize that there is 12 months in the year and we are just looking at the first few months. I think a lot depends on what happens with consumer confidence, what happens geopolitically, what happens to the price of oil, what are the headlines.

So, we get confidence back in the consumers so that they will purchase, make major purchases on a go-forward basis.

I guess maybe another way, is there an opportunity or a reason that you could just disclose what your actual sales were not by dealer obviously, but just in aggregate month-by-month in January across the board we sold X vehicles?

Yes, we could. We haven’t done that in the past.

It’s probably not an area that I want to go to. It’s something that maybe we will talk together as a management team after the call.

I think Steve the challenge would be disclosing that information obviously that’s we could report the sales, but at the end of the day, that’s pretty detailed information that really we would have to discuss with the manufacturers themselves. So, I am not sure that’s an area we are going to be able to go.

Yes. Long-term, I don’t think that’s a very good proxy for profitability.

If you do have a graph in sales, there is much you can do to kind of protect the bottom line on a long-term basis.

Okay. I guess just switching gears a little bit, just trends that you are seeing so far this quarter in used volumes is that similar to new and service volumes as well.

Is that tracking higher or lower?

Service volumes, I mean, remain – service flow rate remains good. We are not seeing a significant impact in that area of our business regardless there is a number of vehicles out there that still have to great service and taken care of.

So, we are not seeing a significant impact in that area of our business. No news depending on the location, depending on the brand, it’s challenged with the consumer confidence in Calgary, Edmonton.

The Maritimes with the 2 meters of snow was not a pretty February there. They are going to have 2 meters of snow in April and May.

I hope not. I think it’s rather unlikely.

Okay. And just one final one just on the acquisition guidance, it seemed a pretty firm statement in the press release, the 3 to 5 by May.

That seems different from the press release a month or so ago on the acquisition outlook for the year and a bit more patient approach I thought, is something changed over the past month or so in terms of valuations of these dealers you are looking at or the specific discussions?

No, Steve, it’s Pat. Not at all, we have always been patient buyers, and I think that’s proven to be the right way to do it.

I think we are slightly more patient given what’s going on in Alberta. But a lot of these deals we mentioned in a lot of the calls, you work on them for a long, long time.

And we think that I mean you never know I mean one or two of them to drop off, you never know we can add another one I mean you just don’t know. But when we find the right store in a good market for us, we are going to purchase it.

And we are very confident in what we said today and I think going forward if anything if the slowdown continues we don’t know and we are talking. We only commented on two months January and February which are slow months to start with.

So it’s really not a broad picture in total. We think there will be some opportunities like we are very condiment with our acquisition and where we are going over the next couple of years.

Okay. Thanks a lot.

Hi, good morning. Pat with your experience do you think it could be as bad as 2008, 2009 in Alberta?

It’s not even close. I have been here a long time in Alberta.

I love the Alberta business. Almost every dealer in every region in Canada that has been in Alberta is jealous of Alberta dealers.

And I don’t mean that in a negative way. It’s always the love.

You guys are lucky. And we are blessed that we are in Alberta and yes we are going to go through a slowdown here, how long that lasts, I mean we really don’t know.

But I don’t see anything even close to that. I mean there was no consumer credit available yet, too many factors bankrupt.

This is really more people as the ATB thinks, differing purchases and this isn’t a long-term problem at all. And I have been here for a lot of years and I loved Alberta.

And honestly I am not that worried about it. Am I happy about January and February, no, but we are going to react.

Tom and his team are doing a tremendous job. We got great dealers.

I love being in Alberta. And I don’t see any reason why we change our business model over 2 months or 3 months maybe 4 months, I don’t know how it’s going to play out.

I don’t think that we should change our strategy at all.

Okay. With reference to acquisition pipeline like what are the prospects like Quebec and Ontario?

I think good, again we are being really patient. I think we are working with a couple of the manufacturers we don’t have, I say that every call.

I think we are making some progress there. So we will have to see how long that takes.

I think if we do something and we are going do the odd one for sure in Ontario and Quebec, there is no doubt. But I think over time it’s not going to happen this week or next week.

I think probably more interest in those markets might be a dealer group that may come for sale. And if you look at the lot of U.S.

stuff that’s published on where the dealer body is there as far as succession planning, I think Canada is very similar. I think the hot button in the States right now is the dealer groups that are going to come for sale over the next few years and I think Tom in Canada it will be similar, don’t know when.

But so we are definitely looking there, but it’s got to be the right stores for us. We are not just going to buy and just to buy them.

I mean, we are talking to lots of people, lot of preliminary stuff.

And how big of a dealer group would you be willing to look at?

It depends on so many things. A dealer group that has 10 stores that makes a total of $4 million is probably not worth the management time in a location where we are probably not going to have other stores.

So we look at location first. We look at management in that group.

Is there someone there that can run the group. So I think you got to be flexible.

And I think we are happy with the acquisitions we have done over the last number of years. And we want to just make sure we keep buying good ones.

And do I think the group is going to come for sale for sure when and how many stores in it, it’s hard to tell. Honestly, it’s really hard to tell.

And what about valuation multiples, have they declined?

It’s too early to say that. What I think is going to happen and again this is just my view.

Again I could be wrong on this. I think the multiples aren’t going to go down a whole lot, I certainly don’t think they are going up.

But I think we might be able to buy in the next year or so maybe a couple of stores that wouldn’t hit the market things weren’t a little bit tougher where again the owner of that business or the family might have said we are going to keep this for another 2 years or 3 years and maybe they expedite to sale a little bit these things are a little bit tougher you know. So I think we are more looking at as buying quality stores at really good prices.

And I think we are in a great position over the next year or two to continue to what we have been doing.

And what’s the valuation parameter depending on the OEM brand like what kind of spread is there in terms of EBITDA multiples depending on?

It won’t be fair to the OEMs to publicly comment on that to be fair.

Okay. One last question, with reference to NCIB, did you make any purchases to-date and could you remind us like how many shares can you buy?

There is – no shares have been purchased to-date. And we previously disclosed that we could buy up to 2% of the outstanding common shares actually.

Okay. Thank you very much.

You have been blocked out since the NCIB went into place into effect.

Right, but concerning the stock where it is today would seem kind of attractive now?

We have run the internal analysis and we will make purchases to extent that it makes sense and is accretive.

Okay. Thank you.

Yes. Hi, guys.

Just following up on the questions around acquisitions, where would you guys be comfortable taking your balance sheet excluding floor plan financing in terms of net debt EBITDA?

I think that Derek, we will be comfortable in the range of 2% to 2.5%.

2% to 2.5%, okay,

Yes,

That’s great. And have you guys seen – switching gears a little bit, any shift with the new cars sales weakened, are you seeing –would it be fair to assume that you may see a pickup in the parts service and collision business while consumers delay the purchase of new cars but and you would think they still have to repair their cars if they are going to hold on to a little longer?

I think it’s not any change from my experience on this. This is a pretty slow change and again we are so brilliant to this to see how it plays out.

And who knows what the manufacturers might to do for programs as well to get more people in Alberta buying, I don’t know that. So, I don’t think anything really quickly on that, but it was the slowdown on longer term, which I don’t think will happen, but if it was then yes, there will be little bit.

Okay. That’s it for me.

Thanks.

Hi, good morning. Just – my first question just relates to, I guess the cadence of sales in March so far I mean you provided a lot of color for the first two months, can you provide any additional color what you are seeing so far on Western Canada?

The majority of March sales are going to happen over the next 10 days. What typically happens in the dealerships auto is the last week, the last 10 days, you get a significant portion of your sales.

And then as the – we process the deals, it’s actually you might have a bit of feel for it in April. So, the next 10 days are going to be real key.

It’s a little bit weather dependent as well like the fact that we are getting a heavy snow fall last couple of days, but months might defer some sales into the next month. It’s really too early to tell how March is going to be.

Okay, alright. And I guess just going on to the last question with respect to incentives and OEMs maybe trying to help sales on Western Canada, has that historically been the case like given what you guys have seen during the last downturn, have you seen OEMs given – give more support in areas where sales or something?

I don’t think they do them specifically to a market. Normally, they don’t.

Who knows the world is changing all the time. I think they are all very competitive.

They all want to have really good market share and I think they will look at the Canadian market and see, but it’s not something we can count on Otto. But they will certainly be aggressive we know that.

Yes.

Okay. And can you just comment on like when I am comparing your, I guess results in the last downturn, I see like volumes didn’t necessarily drop down as much as just say overall sales volumes and but while margins – the margin decline seem to lag a couple of quarters or maybe even a year out decline to EBITDA margins to the 2% to 2.5% range versus now they have recovered to about 4%, can you just comment on like obviously the differences and why they is this lag of margin impact?

Yes. The – as Pat said I mean we see a massive difference between what we are going through now, which is primarily consumer confidence is what’s impacting us.

What happened in that 2009 was again as Pat mentioned was there was no flooring available for us. Plants were shutdown and not shipping vehicles due to the stress on a couple of OEMs.

And even more importantly and this really impacted the margins was the inability for the consumer to obtain credit to buy a vehicle. So, we had people coming into our dealerships, wanting to buy F&I product, being able to sell them a vehicle with good margin on it and let’s say it was $48,000 vehicle.

We might have only been able to get them financing for $42,000. And that doesn’t leave a lot of room.

Right now credit is good still, it’s completely different situation. We can get advances on a $48,000 vehicle considerably above the $40,000 used to make the sale, it’s completely different situation.

Okay. And just my last question, just relates to your commentary on the integration just being slower than planned, can you provide some additional color, but it – this maybe a difficult question to answer, but given your current state would you say that you are 50% on the way there or 75% or any color on that would be helpful?

I think it varies a fair bit by dealership to dealership. I take a look at the two massive dealerships we acquired in Montreal.

The one we have owned since June, the guy that’s been running it is making fantastic progress. We are seeing the numbers, all moved the right way.

The second dealership, another great operator, however, we have only owned that dealership since December. And it’s really hard to work on the integration plan for that period from December 15 to probably about January 15, so that’s just the timing of the holidays probably slowed us down a bit.

We are full speed in on all the rest of the dealerships. Jeff has moved over to that side of the business, so you might be familiar with end of the call.

And he has got a team of guys. And I really like how we are enhancing our process there to get these changes happening even faster.

Actually maybe just squeeze one last question, with respect to your inventory that you guys have on hand and your floor plan available, are there are any concerns that in Q1 if you have to take more vehicles and even given your inventory levels out in Western Canada maybe higher than usual or will you guys try to obviously be more competitive and push some of these vehicles out and that’s somewhat like what’s impacting what we should expect to impact margins in Q1 and maybe Q2?

Q1 is definitely going to be impacted by higher inventory levels. To give you an example here, minivans there is a major changeover at the plant.

We are ordering months ahead because they won’t be available later on. We have to order them now.

We have to have them on the ground now. Otherwise we won’t have them if we get into the spring market of Q2 and we wont be able to – we won’t be - you can see an actual drop in sales if you don’t have the product.

So a lot of it relates to buildup of the different manufacturers that changes from year-to-year. We have a dedicated team here that reviews the inventory both new and used.

We have got more on the ground in Q1 than same period last year, but it’s for the right reasons.

So, any concerns on the availability of floor plan financing?

No, not at all, we are very happy now on the floor plan financing with our $200 million line, the extra cash that we have in our balance sheet. We have got a very strong balance sheet right now which is very fortunate.

Perfect. Thank you.

That’s all I had.

Hey, good morning. Just a couple of follow-ups, obviously you walked through in some detail the challenges you are facing with regards to reducing OpEx in line with revenue decline, but how long do you expect this negative leverage will be in place or at least until you can get the expense line down sort of more in line with revenues?

That’s a good question Mark, and it varies quite a bit by category of the expenses. On the inventory side, I think we can do some work there.

And it will be gradual progress over 30 days, 60 days, 90 days. It will also be dependent on what happens with consumer confidence, I think little bit over that 30 day to 60 day to 90 day mark.

I am not expecting a massive turnaround there. The other big expense that we have out of the $280 million we stand is personnel costs.

We do a fairly decent job of managing that. It’s something that we are going to take a look at.

But we need people to sell vehicles. And we are getting into Q2 which is going to be the busy period of the year Q2 and Q3.

Our service side is good. We are just going to ship away each different category.

It’s probably about a 3 month process.

Okay. And then just on the F&I business, can you just talk a little bit about your expectations for that segment in 2015 and would there be a pressure on the margin line, aside from just the pressure on the dollar line as a result of lower vehicle unit sales?

I think we should be okay on the margin side, particularly for existing dealerships where I think we have got some room to grow is on the acquisition side. I think we have got some work there that over the next year or probably 18 months, we can grow that F&I income.

I know a couple of the stores that we have purchased, we are seeing that growth and it tends to take about 6 months after we have the acquisition. And we are quite happy about the progress we are making there as well.

And again I appreciate that. We are looking at a relatively limited sample size in terms of the two smallest months of the year, but would you say that generally as you look across the geographies of your network, the disconnect between retail sales and total industry sales would be similar across the country as it is in Alberta.

So, Alberta is sort of flat in January, but Polk saying down 9% or 10%, would that sort of gap be consistent? I mean, I imagine there is variety, but if you could just comment on that, that would be very helpful?

Yes, it’s been a few weeks since I have looked at the January Polk report, but that’s not my recollection. And Chris you look at it with me that was – it seemed to be more isolated to certain markets within Alberta.

Yes, definitely, the most significant difference between total and retail was Alberta for sure.

Okay. Thanks very much.

Thanks. Good morning, guys.

I know we have focused a lot on the Alberta market and I guess to range beyond on that. Can you just give us some color on how you have seen kind of the early days of some of the other markets, particularly BC, Quebec and Ontario?

Sure. I would say, BC has been relatively strong.

Quebec, I think, I am not seeing any big changes there. I don’t know if you are, Chris and the Maritimes with the snow issue that they have had, I would say, it’s slow there.

Again, that’s probably just pent-up demand that’s going to come on later on is – that’s what we feel will happen there.

Okay. So, I mean, one of the things when we look at some of the at least the forecast, BC is doing really well.

Do you think there is a possibility that I don’t think that will cover everything that you are going to lose in Alberta, but you are still seeing some strength there, is that a comment?

Yes, I would think so.

Okay, good. And then just as we think about this moving forward, your expectation is for the sales in the Maritimes is more deferral and you will pick it up as you said once the snow melts is a fair thought as well?

Yes, I would agree.

Okay. It’s not just loss sales.

Okay, good. Just looking at the margins in the finance area in Q4, when I look at year-over-year margins are down, but when I look at same-store on a percentage basis, they are actually up.

Is that the kind of thing that you are talking about in terms of the stores that you have just recently acquired, they are having challenges and what are some of the specific issues in that that maybe led to sort of that delta?

Well, there is a pretty big difference when you take a look at our overall margins buy new used parts and service versus what we do on a same-store basis. You are typically looking at least 200 basis points difference in favor of the same-stores.

And with F&I, lot of it’s just getting a good process in place, so that’s just actually corrective sales. We will be doing a lot of work with the acquisitions on that and it’s really trying to spread out the customer’s appointments that you can do a proper presentation with them.

I fully explained the products, just value-added product. It’s just basic stuff.

Okay. So, I mean, the question I have got, just thinking about this is, I mean, is your pace of acquisitions and I guess I am thinking if you are still talking about 3 to 5 by the end of May.

I mean, do you have the capacity to integrate these stores at an appropriate rate or maybe it’s slowing down the acquisition pace maybe something to think about?

No, I don’t think so. I think last year was a bit of a one-off doing that many at one time and then the middle of the – you are starting to integrate a lot of those stores as Tom said, then the Alberta kind of hits with it.

So, I mean, that’s sort of a little bit of a double whammy, but no, I don’t see, I don’t think so. I don’t think so.

I think we have got a great team here and we are very confident moving forward, but one of the things we do look for as I mentioned earlier on acquisitions is the management of those stores themselves though. If we didn’t have good management in the stores we are looking to acquire, then yes, we would slow it down, but we don’t see that as an issue at all at this point, so…

Okay, great. Thanks guys.

Find on the acquisitions real time.

Okay.

Okay, great. I would like to thank everybody for participating in the call.

Chris and I and Pat will be around for the balance of the day if someone wants to get a hold of us just e-mail us and we will do our best to get back to you. I look forward to talking to you in May when we release Q1.

Thank you.