AutoCanada Inc. (ACQ) Earnings Call Transcript & Summary

Good morning. My name is Annis, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the AutoCanada Fourth Quarter 2021 Earnings Call. [Operator Instructions]. I would like to remind everyone that certain statements in this presentation and our call are forward-looking in nature, including, among other things, future performance and the implementation of the Go Forward Plan. This includes statements involving known and unknown risks and 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 any responsibility for the accuracy and completeness of the forward-looking statements and 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 refer to our IIF, which is available on SEDAR and our website within the Investor Documentation and filings section. I will now turn the call over to Mike Borys, Chief Financial Officer. Please go ahead, sir.

Thank you, Annis. Good morning, everyone, and thank you for joining us on today's fourth quarter results conference call. For today's call, I'm joined by Paul Antony, our Executive Chair; Peter Hong, our Chief Strategy Officer; and Casey Charleson, our Vice President of Finance. We released our Q4 results after the market closed yesterday. A copy of our results is available for download on our website. For today's call, we will be discussing the current state of the business, discussing the financial results and providing an update on both our Canadian and U.S. segments. With that, I'd like to turn it over to Paul.

Thank you, Mike, and Good morning, everyone. I'm incredibly proud of what our team was able to accomplish in 2021, and I'm excited for 2022 based on what we're seeing in the first 2 months of the year. Our operations delivered yet another record-setting quarter in Q4, reflecting the ongoing positive momentum across our business and the fundamental strength and resiliency of our operating platform and balance sheet. We recorded our highest ever fourth quarter revenue figure of $1.2 billion, which drove adjusted EBITDA of $65.9 million, an increase of 63% over the prior year. That's a tremendous performance from top to bottom. We're also particularly pleased with the adjusted EBITDA margin improvement in Q4, which was 5.5% versus 4.6% last year. These results continue the trend of sustainable improvement and the execution of our complete business model and strategic initiatives. Our balance sheet also remains exceptionally strong, more so than at any point since the current team arrived in 2018, which Mike is going to detail further in his remarks. We also announced last night that Michael Rawluk, President of Canadian Operations and Director is departing the company for personal reasons. I want to thank Michael in his role as President of Canadian Operations, for his dedicated service and substantial contribution to AutoCanada since 2018. He's been instrumental in stabilizing our Canadian dealership platform, strengthening the team of talented professional, running the business day-to-day and successfully positioning us to enter our next stage of growth. We wish him well in his future endeavors. The team we put in place over the last few years is exceptional, and we don't anticipate any impact on the company's strong momentum heading into 2022. We've been actively in dialogue with a number of candidates for the role, and we expect to make an announcement in the coming weeks given the advanced stage of these discussions. I'll now touch on some operational highlights for the quarter. Our Canadian operations continue to successfully execute, including record Q4 2021 earnings. Same-store used vehicle gross profit percentage increased to 8.7% as compared to 7.6% in the prior year. F&I gross profit per retail unit average increased to $3,130 up 11.1% or $313 per unit. Our used to new retail unit ratio also increased to 1.45 from 0.93, and our trailing 12-month used to new retail units ratio improved to 1.43 as compared to 0.957. These metrics are particularly important as they demonstrate the diversity of our business model during a time where new vehicle supply remains unclear. We set out to develop the Canadian platform several years ago to deliver the type of performance we saw in 2021, and I'm incredibly proud. Turning to the supply chain and inventory outlook. OEM production continues to be a concern due to the ongoing chip shortage. While we'd like to be surprised, the past year tells us that we shouldn't bank on near-term relief for the chip shortage, which has us anticipating new vehicle volumes to be lower than prior years for at least the first half of 2022. Possibly exaggerating the issue, we've seen reports that the Ukrainian conflict could further strain supply as both Russia and Ukraine are a critical supplier of key Microchip components. That being said, there is good news. We have approximately 2 months supply on the ground for new vehicles given our work with our OEM partners to secure inventory, another proof point for the power of the platform. We continue to work with the OEM partners to aggressively pursue new vehicle allocation whenever opportunity arises. Production issues with new vehicles was expected, and as such, we have anticipated that demand for used vehicles will remain high. We continue to lean into our strategy of increasing used vehicle retail sales volume, and we've been executing our winter buying program in Canada for several months in anticipation of selling season to begin in March. As of last week, AutoCanada had more retail used inventory listed on its website than the next 3 top competitors in Canada combined. In addition, consumer spending is expected to rise as household savings in Canada remain elevated. The outlook from recent economic reports is that consumer demand will continue throughout 2022. We anticipate the current environment of higher margins will continue to match elevated consumer demand unless OEM production increases more than currently anticipated. The lower supply, combined with the pent-up demand has significantly decreased the need to sell new vehicles at anything less than full market value. We will continue our strategy to realize full margin potential on our vehicle sales by avoiding discounting. In terms of our expectation for margins, we anticipate margins to continue with used retail vehicles as well due to scarcity of inventory on the market. Our strong inventory position complemented by our best-in-class F&I operation has us confident that we're positioned to be the market leader in used retail sales in Canada in 2022. We expect faster turns of our inventory to result in lower carrying cost of inventory as well. Switching over to the United States. We continue to see outstanding performance in our U.S. operations. Actions taken previously by the new management team, with Jim Douvas include the strategic buildup of used vehicle inventory, the creation of a dedicated used vehicle team, upgrading dealership management, expanding teams across all levels of the business and the execution of operational best practices, led to improved metrics on multiple fronts. As a result, we reported fourth quarter U.S. adjusted EBITDA of $10.7 million, an improvement of $9.5 million over the prior year. Gross profit increased to $39.2 million, and that's an improvement of $22.6 million or 136% while gross profit margin of 19.9% set a fourth quarter record for U.S. operations. U.S. team also increased used retail unit sales to 2,166 from 664 in the prior year. That's an improvement of 226% and a new-to-use ratio of 1.46 from 0.47. We remain thoroughly impressed with the progress we're seeing from the U.S. team and believe we're on the right path to margin is more typical our U.S. peers. Overall, our strong performance in the fourth quarter and in 2021 reflects the ongoing sustainability of our business model and demonstrates that we're successfully managing through these production and inventory challenges. We continue to believe the OEM production capacity issues will normalize over the coming quarter and expect the market to begin to return to pre-pandemic levels in late 2022 or early 2023 as vehicle production begins to come back and margins eventually normalize for both knowing new and used vehicles on a sustainable basis. In the meantime, we're going to continue to build out on our positive momentum and focus on strategic growth initiatives to drive industry-leading performance regardless of changing market conditions. We've been building muscle into our complete business model, and now we're focusing more resources on the integration of our pipeline of acquisitions. Our employees in Canada and the United States continue to work tirelessly and have once again delivered excellent performance. Without them, we're nothing. Thank you so much. We're encouraged by the very strong momentum across our business, and we remain well prepared to face any challenges in our current environment. I'll come back at the end to speak more about our outlook and strategy in my concluding remarks. But for now, I'll turn it over to Mike.

Thanks, Paul, and Good morning again to everyone on the call. I'll take the next few minutes to speak to our recent financing actions and the continued discipline we're applying to managing our balance sheet. First off, I'll reference the recent successful financing of our $350 million senior unsecured notes in January and completed in February. Financing allowed us to redeem our outstanding $250 million senior unsecured notes, which bore an interest rate of 8.75% and had another 3 years to maturity. Our new debentures provide us with a 7-year tenor, 3-year non-call and are priced at 5.75%. In addition to the cash interest savings, we'll be realized moving forward to stabilize and strengthen our balance sheet position by extending our tenors to 7 years. We were quite pleased with the positive investor reaction to our review of the company's performance over the last 2 years and how it compared -- how we spoke of our vision and direction in January 2020 with the initial financing. We made dramatic inroads to not only improving our adjusted EBITDA run rate, but also in driving positive free cash flow and reducing our net debt position and maintaining that discipline over our balance sheet. Concurrent with the debenture financing, we renewed our credit facility agreement was to maintain a 3-year tenure. We also added another Tier 1 lender with Toronto-Dominion Bank, while keeping all of our existing lenders within the syndicate. Adding another lender simply allows us more potential liquidity required to further support our acquisition pipeline and activate our dry powder. Speaking of which, we have dry powder well in excess of $500 million to complete deals without having to raise equity, while staying within our target range of debt leverage. As previously noted, we continue to have excellent relationships with all of our lenders, and we see them as our strategic partners in this business. The transaction noted above were preceded by a 1 notch upgrade to our corporate and senior unsecured ratings by S&P. We moved from a single B to B+ rating. We continue to maintain an open and constructive relationship with S&P as we work to develop our business model. All of these actions noted above speak to and contribute to the strength of our balance sheet and ensure that we continue to have access to capital markets and liquidity. On our speed to our normal course issuer bid, or NCIB, announced in mid-December 2021. As we noted in our financials and our MD&A as of yesterday, March 2, the company had repurchased and canceled 542,401 shares under our NCIB for a total cost of $20 million. Under the NCIB approved by the TSX, you're authorized to purchase for cancellation up to 1,730,321 common shares. To date, we've repurchased and canceled 31.3% of this amount. This is about actively managing our allocation of capital. At the time of instituting our NCIB, we believe that stated as such that our shares were undervalued and based on the strength of our balance sheet, coupled with our long-term outlook and the cash flow this business generates in the normal course, we saw an opportunity to create value for our shareholders while continuing to ensure we could execute against our M&A pipeline. The NCIB as filed, remains in place to December 22, 2022, for such earlier date as the company may complete its purchases under the NCIB. Last item to speak a few years our inclusion within the MD&A of our pro forma adjusted EBITDA as at December 31, 2021. At the time of our financing, we had indicated that our pro forma normalized adjusted EBITDA at the end of the third quarter was $194.4 million on a pre-IFRS 16 basis or $242.5 million, inclusive of IFRS 16 impact. updating for our performance in Q4, our pro forma normalized adjusted EBITDA, inclusive of IFRS 16 impact as presented in our MD&A, improved to $266 million. On a pre-IFRS 16 basis, the implied pro forma normalized adjusted EBITDA improved to $216 million. In effect, the change from our Q3 pro forma metrics is the outperformance of Q4 of 2021 as compared to Q4 2020. This represents some of our base business operations normalized plus management's estimate of the pre-synergies impact of 12 months of acquisitions completed in the year. It is our view as we think about what we are seeing in the first month of 2022 and the current market outlook. This represents the floor of our expectations for 2022. As we complete acquisitions in the year, we will continue to update the market on our pro forma adjusted EBITDA at that point in time, both to provide improved visibility to our stakeholders on the impact of those acquisitions. I'll now turn it over to Casey.

Thanks, Mike. At the consolidated level, revenue came in at $1.2 billion, an increase of $319.7 million or 36%. Gross profit came in at $228.5 million, an increase of $75.8 million or 50%. Net income was $69.4 million versus $24.3 million in the prior year. Net income for the quarter included a recovery of nonfinancial assets of $39.8 million versus a recovery of $11.2 million in the prior year. Loss on redemption liabilities of $14.1 million versus a gain of $2.1 million in the prior year and an unrealized fair value gain on embedded derivatives of $24.8 million included in finance costs. Adjusted EBITDA came in at $65.9 million, which was an increase of $25.4 million or 63% over Q4 2020. In our Canadian operations, total retail vehicles sold came in at 16,447, an increase of 2,507 units or 18%. The Canadian operations generated revenue of $998.8 million, an increase of 28% versus the prior year. Gross profit was $189.3 million, an increase of 39%. Net income was $62.3 million versus $25.4 million in the prior year. Adjusted EBITDA was $55.1 million, an increase of $15.9 million. Other key highlights include the following: Same-store gross profit increased by $39.2 million or 29%, and our gross profit percentage increased to 20.2% from 17.8%. Same-store used to new retail units ratio increased to 1.29 in the quarter from 0.93. Same-store F&I gross profit per retail unit increased to $3,312, up 18% or $509 per unit. Same-store F&I gross profit dollars increased $9.4 million or 24%. In our U.S. operations, revenue was $197 million, an increase from Q4 2020 of 102%. Gross profit was $39.2 million, an increase of 136%. Net income was $7.1 million, an increase of $8.2 million. Adjusted EBITDA was $10.7 million, an increase of $9.5 million from 2020. New vehicle gross profit increased by $11.3 million and new vehicle gross profit percentage increased by 12.8 percentage points to 16.8%. Used vehicle revenue increased by 321% and used vehicle gross profit increased by 68%. The number of used retail vehicles sold increased by 226% 2,166 units. I'll now turn the call back over to Paul to discuss our outlook and strategy.

Thanks, Casey. Our strong performance this quarter reflects the fundamental strength and resiliency of our business model. Our operational playbook allows us to be ready to execute on our next leg of growth and acquisition strategies. As part of this growth, we significantly advanced our acquisition strategy in the fourth quarter with the recent AutoPoint transaction, providing strong brand and geographic diversification and adding considerable size, scale and scope to AutoCanada's existing platforms in a growing market. In terms of our ongoing strategy, we remain well positioned to execute on our acquisition pipeline in the coming quarters. Our current transaction pipeline with dealerships and collision centers represents over $100 million in annual revenue currently being evaluated under signed LOIs and purchase agreements. Beyond these deals, we're at varying stages of the acquisition process with other targets that have not yet reached the signed LOI stage. As always, we will remain disciplined in our approach to capital allocation. We continue to assess our extensive pipeline of acquisition opportunities qualitatively and quantitatively with the goal of diversifying by geography and brand in addition to expanding our network of used dealerships and collision centers. In terms of industry themes and where we continue to see things heading, we believe our business model remains resilient to fluctuations in the new vehicle sales cycle given our diversified business mix and flexible cost structure in addition to several growth vectors. New cars aside, including F&I, parts and service, collision repair, near prime subprime and used only retail, we believe that any near-term pressure with inventory constraints is likely a positive dynamic for the industry as it creates additional pent-up demand that would be more rationally released over a multiyear recovery. All of that reinforces my continued belief that we remain in this golden age broader dealerships with larger platforms like AutoCanada positioned as the primary beneficiaries. That momentum, combined with the continuation of the trends we saw in 2021 into early 2022, enhances our optimism for the year ahead. We expect to see continued realization of synergies from our acquisitions, which will further drive 2022 adjusted EBITDA performance. As we've said before, we continue to be proactive and vigilant as to what the future holds with any ongoing impact from the macroeconomic environment related to Covid. We will continue to build on our positive momentum and focus on strategic growth initiatives to drive industry-leading performance and enhance shareholder returns regardless of changing market conditions. We're excited about what the future holds for AutoCanada, and we remain poised to take advantage of the disruption and consolidation in the industry and continue to blaze new path forward in the evolution of the company. Thanks so much to our team for the quarter, and thank you to you as our customers. Thanks for supporting us. Now I'll turn it over to the operator for any questions.

[Operator Instructions] The first question comes from Michael Doumet with Scotiabank.

Yes. First question, Mike, if I heard you correctly, the $266 million of pro forma EBITDA, which happens to be at above where consensus sits for 2022. If I heard you correctly, you said that, that would represent for EBITDA expectations going forward. And I guess that makes sense given the synergy opportunity, there's right ride and the exit rates, parts and service, GP were quite strong in Q4, even versus the rest of the year. So yes, if you can correct me if I'm wrong, if I misquoted you there. And maybe just talk about some of the offsets and how we should triangulate 2022 expectations.

I think that's exactly right. I mean we put together the pro forma EBITDA to give a little bit more color and guidance to the market. It is going to be based on what we did in the prior year. It is going to be based on the pre-synergy EBITDA for the acquisition. And as you indicated, we would expect to begin to realize on some of those synergies in 2022. We talked about the current environment that we're in as being golden age of dealerships with the continuing production shortfalls with OEMs, Microchips and so on. We continue to expect elevated margins on new and used margins. And we're confident that, as I mentioned, that would be the floor for what we would be expecting to see in 2022. Again, we kind of get into this whole discussion around sustainability. And we think 2022 is going to be strong, that should continue into 2023 until we see Microchips beginning to stabilize. And our model remains strong. So there's a whole bunch of components of our business model that we're continuing to improve even before the pandemic started. And I think that's where we have to differentiate ourselves from other U.S. peers, which tends to be more of an endemic pickup. We have good systemic improvements that we think are sustainable. So long-winded way of saying, yes, you captured it right.

No, that's helpful. And look, I think it's a good number. The second question I had was a question around capital allocation and how you're thinking about share repurchases versus M&A at this point? Specifically on the share repurchases, can you one, maintain the pace of the buyback, maybe expanding the opportunity there? And then just on M&A, how do you think about M&A going forward? And if the focus is still kind of on large platform deals or it could be from a range of tuck-ins the platform deals? Just a general question on capital allocation.

Yes. I'll touch on the NCIB, the share buybacks first and then I'll turn it over to Paul on M&A. So listen, look, we had to -- if I go back to December, we were looking at where our share price was. We absolutely believe that the share price was not reflective of what we believe the intrinsic value of our shares of our company was or what shares should have been. We have the NCIB in place through the end of -- or through December 22, 2022. As we've indicated, we purchased $20 million. There's still more room on the NCIB. And as a company, we'll continue to take a look at where the shares are trading and take action appropriately. But the NCIB remains open. So we'll always have our eye on where the market happens to be and if we want to go into it, we will. We're also mindful that $20 million is a -- is not an overly material amount when you think about where our balance sheet happens again, how much cash we're actually generating. And we're also mindful of where our acquisition pipeline happens to be. But everything is in balance as we're looking at. We are going to be smart about how we manage the balance sheet as well as how we look at where the shares happen to be trading. So that will be the NCIB component. I'll turn it over to Paul to talk about the acquisition pipeline.

Thanks, Mike. Look, we have tons of opportunity in front of us. We're just mindful that it's the golden age of the car dealer for us, but it's also the golden age of car dealer for everybody. And so when we think about acquisitions and think about being disciplined, it's important for us to consider acquisitions that are either a strategic or b accretive, that we can actually -- we can actually buy down the multiple by implying our synergies on to. And so we've got a lot of opportunities in front of us. We have a lot of collision opportunities in front of us and also throwing up right ride stores. We're just being disciplined how we think about things. That said, and to back up Mike, we think our share price is cheap and so relatively buying shares of AutoCanada where we can't buy a dealership. We think that at least we know what we have versus buying a dealership and really stretching. You said -- you mentioned buying tuck-ins or buying big dealer groups. Listen, the next leg of the journey for us, it's around buying stores for sure and growing through acquisition, but part of that is also teams. And so we think a lot about the team that we could be assuming when we're buying dealerships. And so as much as we're evaluating the dealership, we're evaluating the people at the dealerships and how well they perform and how well they would integrate. And so for us, whether it be 1 store or 5 stores or 9 stores, as Mike said, we have a $500 million war chest to go up and buy. And for us, it's we've -- the company has now turned around and now it's just about allocation of capital.

Your next question comes from Chris Murray with ATB Capital Markets.

One of the questions I get a lot is about -- you kind of alluded to the sustainability of margins, but the question is really -- is this about as good as a guess just because you've got restricted supply. And can you just maybe give us an understanding maybe as you think about how the business evolves as margins maybe or supply starts to normalize as we go into later this year and into next year?

No, Chris. Like if you listen to the earnings calls of every one of the consolidators right now, that's the same question over and over again, and I don't think anybody has given an answer. So I mean, the sustainability of the margins has been the #1 question that everybody asked. I would tell you my belief, my belief is that there's still more to go, we really feel strongly that the numbers that we posted. I don't want to blow our cover here, but we think we're going to kill it this year also. And that's because we don't think this is going to be a normal year. We think 2022 is going to be impacted much like 2021. I think we said that on the previous call. And so what you're asking or what I think everybody is asking is what will the world look like when everything normalizes. And I mean, I have no idea. I don't think anybody in this room is qualified. I don't think anybody in this call is maybe SIRI. I mean I have no idea, like we're all kind of grasping at this, my case serine went on. So we're all trying to figure that out as well. But again, what we've said over and over again is that we're going to continue to outperform the market. And as long as we outperform the market, we know that we're doing the best we can. If you're trying to fortune tell what the market looks like when it is normal, I'd say let's talk in 2024, 2025. Sorry to be evasive.

No. I guess we'll work with that. Along those lines, to the other kind of major initiatives that really haven't had a lot of the discussion around is around the digital initiative and the used car expansion. Any update you can provide us with how the digital development is going? And I know there's been some other competitors that have been making some pretty aggressive moves, but just wondering how you guys are feeling about your own offering right now.

Yes. Like our team is spooled up and they are building up the solution, I would say that the 2 acquisitions that we made have really overperformed what our expectations were. And there can be more announce very shortly as to how we've progressed as far as the development. We've got a full development team building out the solution, and they're very, very talented. We have high expectations and hope for that division.

Your next question comes from David Ocampo with Cormark.

Sticking with Chris' question about the used vehicle strategy. I was curious kind of what you're seeing in terms of the M&A environment. I know you commented on M&A in general. But are you now leaning more towards greenfield opportunities, given that we haven't seen too many announcements from you guys?

Well, we were running down potentially buying an existing digital offering that we looked at, that we could overlay on our business, and we looked at the whole build versus buy strategy, and we came to the conclusion that for us, it made more sense to build out and that way we get a tailor-made solution. I know you didn't ask that question. You said, are we thinking about more greenfield versus buying? Again, we're being opportunistic when there's an opportunity to go and buy a high-quality asset that we think that will blend in, we're happy to do that. But at the same time, we're also building out our digital solution to make sure that it's compatible with our new car dealerships. And it's a little bit trickier for us because we have new car dealers selling used cars, and we have a used only solution. And so for us to make sure that everybody is working together, it's not just as simple as bring up a new store necessarily competing with ourselves, we want to do it in such a way that we're complementary. And so we're open to building our own. But again, to that crawl run, we're still in the crawl phase. And as I think I've told you on our previous call, this is more complex than I actually thought about. But we're still going to get there. It's just taking more time. And frankly, I know when you say that other competitors are in market or ahead of us or whatever, I actually think that our used division is probably selling as many cars, if not more than them right now. So I don't necessarily agree with that. I think we're doing a great job.

No, that's very useful color. Just moving over to the theme of normalization, but maybe drilling more specifically into one category, your F&I GPU just continues to grind higher here. But I'm trying to get a sense, do you extract more GPU out of a new car versus a used car? So when things begin to normalize here and the shift moves to new vehicles that we could actually see this crime even higher?

Look, I think that we surprised ourselves. Our F&I team deserve a major shoutout. These are a group of professionals. I've never seen anything like it. And what they've been able to accomplish is nothing short of [ miraculous ] when you compare ourselves and overlay up to any of the other consolidated anybody that we can -- we actually compete within the market. And frankly, where we end up, if that's what you're trying to solve for, I actually don't know. I don't know where we ultimately end up. What I do know is the new F&I has more opportunity than the use on a GPU basis. So we're extremely excited about the future, and we definitely have the right team in place to actually go and execute on that.

David, just a little bit more color. And again, we don't really -- we don't break this out but generally new and used GPU is not materially different, but they're pretty close.

Your next question comes from Luke Hannan with Canaccord.

I wanted to drill in on the parts, service and collision repair because I imagine this is something that we'll see a snap back in a more dramatic fashion in 2022. How do you think about your -- how well positioned that you are there, Paul, with the, I guess, specifically digging in on the supply of technicians that you have there. Do you have the capacity to be able to support higher than level pre-pandemic levels of service there?

For sure, we do. We -- so I think we're seeing our parts and service come back in a meaningful way, and that has to do with miles driven as things open up, we're definitely positioned well for that. Our collision repair business separately, as there's more vehicles on the road, there's a higher frequency of collision and accidents. And so I expect that to absolutely take hold as well. And as we've said before, we're in the market to buy more collision repair centers to support our existing framework of dealerships.

Got it. And then when we think about also the margin drivers for that business in 2022, I think clearly, scale is a pretty big contributor there. But are there any mix implications that we should be thinking about in 2022 as well? Just taking into consideration that there's -- the car park has aged considerably over the last 2 years and with the higher mix of used vehicles that are now on the road. Like are you expecting anything different internally from a mix perspective than maybe you would have seen pre-pandemic?

I think so. I think that you've hit the nail on the head because there's more used cars out of there, there's likely a higher propensity for service and repair. And so we can expect that the volume should be driven up.

Got it. Last one for me, and then I'll pass the line. I think you had mentioned that there is about 2 months of new car inventory in Canada that you have on the ground as of the date. I'm just curious how that compares to your competitors.

I can't comment. I think that we -- I don't really have the answer to that. I do know 2 months in Canada, we have 1 month on new car volume for the U.S. And I know that we were aggressive like the whole team was aggressively trying to source new vehicle inventory and used vehicle inventory over the winter months. And as we said, we have more volume in use than anybody else, the 3 top consolidators in Canada combined. I would only imagine that we're likely heavier in now as well, but I can't comment on the exact numbers.

Your next question comes from Maggie MacDougall with Stifel.

I wanted to ask a question following on the parts and service commentary. You haven't yet seen the parts and service business fully recover back to pre-pandemic levels, but it does look like it is getting there at least slowly but surely. If it did snap back, would you have any concern about availability of parts, the supply of parts in light of the challenges that are -- we're already in supply chain, but now have gotten worse with the unfortunate Ukrainian situation.

So yes, it's definitely a concern. It's on our radar. It hasn't impacted us yet. But it definitely could potentially impact us in the future. I think it's just a wait and see. Again, we can't be fortune teller. So we'll -- we're hoping for the best, but we also are prepared for the word.

Secondary question on M&A. We talk a lot about acquisitions of dealerships, used car platforms, that type of thing. We have seen tech valuations reset significantly in the general marketplace. And I'm wondering if there is any interest or if you have heard of any transactions occurring, whereby more traditional business like yourselves, hardline retail looks to take advantage of the multiple contraction and buy some interesting software that could plug into your omnichannel strategy?

The answer to that is yes. We've been diligencing a bunch of different opportunities, all up and down software around automotive as well.

Great. And then final question, when I go to your website and then look at what's listed for sale, you've got new used and certified. I understand this is probably more of a lead generation tool on the new side, but it does strike me as though being able to show those categories in addition to the used vehicles could actually be a differentiator in terms of your online used offering. Are you able to describe how you envision that working? Will there be a synergy there? Or is that not necessarily going to be the case?

I can't comment at this point in time. At this point in time, we're not able to mix the certified preowned from the dealership to our used car platform. That's the current state of fair. But as things change and evolve, and I'm sure they will, we'll keep you posted.

There are no further questions at this time. Mr. Antony, you may proceed.

Listen, we -- again, we really appreciate everybody's patience as we work through the pandemic. This has been a journey for this company. We have exciting news to announce over the coming weeks, and we think that we're in a great position to execute on the next several years of what we think are going to be highlights to the automotive industry. So thanks, everybody, for your support from our OEM partners to our customers. So everybody that works within AutoCanada, thank you very much. We appreciate everybody's time.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.