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Press release from Marketwire

Uni-Select Inc./Second Quarter: Sales Increase of 1.7% and Announcement of a Distribution Network Rationalization and Consolidation Plan

Tuesday, August 07, 2012

Uni-Select Inc./Second Quarter: Sales Increase of 1.7% and Announcement of a Distribution Network Rationalization and Consolidation Plan13:11 EDT Tuesday, August 07, 2012BOUCHERVILLE, QUEBEC--(Marketwire - Aug. 7, 2012) - Uni-Select Inc. (TSX:UNS)HighlightsReduction of more than $50 million in inventories since the beginning of the year and a debt reduction of $18 million in the second quarter of 2012; Approval of a plan to rationalize and consolidate the distribution network and to reduce operating costs generating annual savings of $20 million; Continued integration of recent acquisitions, the synergies relating to FinishMaster and the purchased assets in Florida materializing according to plan; The deployment of the new integrated enterprise resource planning system continues, 19 warehouses and 90 stores have been converted to date. New Management structure to enhance the accountability and responsiveness of the leaders to deliver results in keeping with the Corporation's strategic objectives. (Unless otherwise indicated, all amounts are expressed in US dollars.)(In thousands of dollars, except per share amounts)2nd QUARTERSIX-MONTH PERIOD2012201120122011Sales482,772474,645933,500871,429Adjusted EBITDA31,89133,30459,20656,443EBITDA30,19432,30354,81554,003Adjusted earnings16,14719,14129,10830,489Net earnings15,08518,50426,31628,166Adjusted earnings per share0.750.881.351.41Earnings per share0.700.851.221.30Uni-Select Inc. generated sales of $483 million in the second quarter of 2012, compared to $475 million in the same period of 2011. Adjusted EBITDA amounted to $32 million this quarter compared to $33 million in the second quarter 2011. Net earnings stood at $15.1 million or $0.70 per share in the second quarter of 2012 compared to $18.5 million or $0.85 per share for the same quarter of the prior year. The increase in sales stems primarily from the addition of the purchased assets in Florida in the fourth quarter of 2011, which was partly offset by the temporary slowdown due to economic and climatic conditions that prevailed during the quarter in the United States. The effect of variations of the Canadian dollar relative to the US dollar had an unfavorable impact of $6 million on sales for the quarter. Canadian activities, with revenues of $145 million, generated organic sales growth of 0.4% in the second quarter. US activities offset this increase with a decline in organic sales of 2.8% on revenues of $337 million.The adjusted EBITDA margin stood at 6.6% in the second quarter of 2012 compared to 7.0% in the corresponding quarter of 2011. This decrease was mainly due to the pressures on operating margin from the rapid decrease in sales exceeding the rate of decrease in expenses and to an unfavourable change in the distribution channel mix. Higher IT maintenance costs and support costs related to the ERP system transition also had an adverse effect on the adjusted EBITDA margin, while better purchasing conditions obtained on certain product lines have partly offset some of the previously mentioned items.For the six month period ended June 30, 2012, sales grew 7.1% to reach $933 million compared to $871 million for the same period of the prior year. This increase is primarily attributable to the purchased assets in Florida, consolidated organic growth of nearly 1% and an additional billing day in the United States. These items were partly offset by the effect of variations of the Canadian dollar relative to the US dollar which had a negative impact of $8 million on sales.Sales in Canada totaled $261 million for the six month period ended June 30, 2012 compared to $265 million for the same period of 2011. For the six month period ended June 30, sales from the US activities increased from $606 million in 2011 to $672 million in 2012."The earning contributions from the acquisitions completed in 2011 combined with current initiatives to improve our performance were offset by the significant slowdown due to economic and climatic conditions which prevailed in the second quarter." said Richard G. Roy, President and CEO of Uni-Select."The outlook for our industry remains positive; the fleet size and average age of vehicles, amongst others, are rising. We intend to capitalize on the benefits through the introduction of initiatives aimed at improving our performance and reducing our operational costs." added Mr. Roy.The Board of Directors approved a distribution network rationalization and consolidation plan which also includes a revision of the operational structure and the reduction of administrative expenses. The Company expects cost savings of approximately $8 million in 2012 and of $20 million annually beginning in 2013. The total cost of implementing the consolidation plan will be approximately $22 million of which approximately $13 million represents an asset write-down. A provision to this effect will be recorded in the third quarter of 2012 in the Corporation's financial statements.Finally, the Board of Directors of Uni-Select declared a dividend of CDN$0.13 per share payable on October 19, 2012 to shareholders of record on September 30, 2012. This dividend is an eligible dividend for tax purposes.About Uni-SelectFounded in 1968, Uni-Select is a major distributor of replacement parts, equipment, tools and accessories for motor vehicles in North America. Leader in the Canadian industry, Uni-Select is the 6th largest distributor in the United States and the leader independent distributor of automotive paint and related products in the country. With 6,600 employees, the Uni-Select network includes over 2,500 independent jobbers and services more than 3,500 points of sale in North America. Uni-Select is headquartered in Boucherville and its shares are traded on the Toronto Stock Exchange (TSX) under the symbol UNS. The information provided in this press release includes some forward-looking information, which includes certain risks and uncertainties, which may cause the final results to be significantly different from those listed or implied within this news release. For additional information with respect to risks and uncertainties, refer to the Annual Report filed by Uni-Select with the Canadian securities commissions. The forward-looking information contained herein is made as of the date of this press release, and Uni-Select does not undertake to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.The following terms do not have any standardized meaning according to the International Financial Reporting Standards (IFRS). As a result, they are therefore unlikely to be comparable to similar measures presented by other corporations."EBITDA": This measurement represents operating income before depreciation, amortization, finance costs, acquisition-related costs, income taxes, gains on disposal of fixed assets and non-controlling interest. This measurement is a widely accepted financial indicator of a corporation's ability to service and incur debt. It should not be considered by an investor as an alternative to operating income or net earnings, as an indicator of operating performance or cash flows, or as a measurement of liquidity, but as additional information. In the Corporation's statement of earnings, EBITDA corresponds to "Earnings before the following items." "Adjusted EBITDA": This measurement corresponds to EBITDA resulting from operational activities, excluding some adjustments. According to management, adjusted EBITDA is more representative of the Corporation's operational performance and more appropriate in providing additional information to investors because it gives an indication of the Corporation's ability to repay its debts. "Adjustments": These are unusual incurred costs that Management regards as not being characteristic or representative of the Corporation's regular operations. They include the following costs: those incurred when disposing of or closing stores, non-capitalizable costs related to the implementation of the enterprise resource planning software and costs related to the reorganization of the distribution network. Excluding these items does not mean that they are not recurrent. Additional InformationThe management report and the unaudited financial statements as well as accompanying notes for the Second Quarter of 2012 are available in the "Investor Information" section on the Corporation's website at: www.uniselect.com as well as on SEDAR's: www.sedar.com. The reader will also find on these websites the Corporation's Annual Report as well as other information related to Uni-Select, including its Annual Information Form. Conference Call Tuesday, August 7, 2012 at 4 PM (EST), Uni-Select will host a conference call to discuss the 2012 Second Quarter financial results. To join the conference, dial 1 866 696-5910 followed by 8567461. UNI-SELECT INC.CONSOLIDATED STATEMENT OF EARNINGS (In thousands of US dollars, except per share amounts, unaudited) Three-month period ended June 30,Six-month period ended June 30,2012201120122011$$$$Sales482,772474,645933,500871,429Earnings before the following items:30,19432,30354,81554,003Finance costs, net (Note 4)4,5744,1879,4008,715Depreciation and amortization (Note 5)7,1095,23113,16810,180Net gain on the disposal of property and equipment---(1,728)Acquisition-related costs (Note 6)---2,976Earnings before income taxes18,51122,88532,24733,860Income taxes (Note 8)Current2461,9438,4572,059Deferred3,1802,599(2,435)3,9563,4264,5426,0226,015Net earnings15,08518,34326,22527,845Attributable to shareholders15,08518,50426,31628,166Attributable to non-controlling interests-(161)(91)(321)15,08518,34326,22527,845Earnings per share (Note 7)Basic0.700.851.221.30Diluted0.690.841.211.30Weighted average number of shares outstanding (in thousands) (Note 7)Basic21,63721,69121,63721,626Diluted22,87722,96322,87622,856The Consolidated Statement of Earnings by nature is presented in Note 16.The accompanying notes are an integral part of the Interim Consolidated Financial Statements. UNI-SELECT INC.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (In thousands of US dollars, unaudited) Three-month period ended June 30,Six-month period ended June 30,2012201120122011$$$$Net earnings15,08518,34326,22527,845Other comprehensive incomeEffective portion of changes in the fair value of cash flow hedges (net of income taxes of $223 and $323 for the three and six-month periods ($178 and $159 in 2011))(606)(390)(877)(442)Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to earnings (net of income taxes of $164 and $344 for the three and six-month periods ($219 and $453 in 2011))4526079351,240(154)21758798Unrealized exchange gains (losses) on the translation of financial statements to the presentation currency4,779553312(2,321)Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations(6,494)196(495)6,053Actuarial loss on defined benefit pension plans (net of income taxes of $687 and $530 for the three and six-month periods)(1,866)-(1,440)-Other comprehensive income(3,735)966(1,565)4,530Comprehensive income11,35019,30924,66032,375Attributable to shareholders11,35019,47024,75132,696Attributable to non-controlling interests-(161)(91)(321)11,35019,30924,66032,375The accompanying notes are an integral part of the Interim Consolidated Financial Statements. UNI-SELECT INC.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(In thousands of US dollars, unaudited)Attributable to shareholdersShare capitalAccumulated other comprehensive income (Note 12)Equity component of convertible debentures and contributed surplusRetained earningsAttributable to non-controlling interests(Note 6)Total equity$$$$$$Balance at December 31, 201039,0994,700375337,7952,623384,592Net earnings---28,166(321)27,845Other comprehensive income-4,530---4,530Comprehensive income-4,530-28,166(321)32,375Contributions by and distributions to shareholdersShare issuances49,980----49,980Issuance of convertible debentures--2,418--2,418Dividends---(5,393)-(5,393)Stock-based compensation expense--39--3949,980-2,457(5,393)-47,044Changes in ownership interests in subsidiaries that do not result in a loss of controlBuy-back of non-controlling interests----(229)(229)Foreign exchange translation adjustment on non-controlling interests----8181Balance at June 30, 201189,0799,2302,832360,5682,154463,863Balance at December 31, 201188,9406,2162,139375,2621,033473,590Net earnings---26,316(91)26,225Other comprehensive income-(125)-(1,440)-(1,565)Comprehensive income-(125)-24,876(91)24,660Contributions by and distributions to shareholdersShare issuances29----29Share redemptions(3)--(10)-(13)Dividends---(5,567)-(5,567)Stock-based compensation expense--19--1926-19(5,577)-(5,532)Changes in ownership interests in subsidiaries that do not result in a loss of controlBuy-back of non-controlling interests--(98)-(1,053)(1,151)Foreign exchange translation adjustment on non-controlling interests----111111Balance at June 30, 201288,9666,0912,060394,561-491,678The accompanying notes are an integral part of the Interim Consolidated Financial Statements.UNI-SELECT INC.CONSOLIDATED STATEMENT OF CASH FLOWS(In thousands of US dollars, unaudited)Three-month period ended June 30,Six-month period ended June 30,2012201120122011$$$$OPERATING ACTIVITIESNet earnings15,08518,34326,22527,845Non-cash itemsDepreciation and amortization (Note 5)7,1095,23113,16810,180Income tax expense (Note 8)3,4264,5426,0226,015Finance costs, net (Note 4)4,5744,1879,4008,715Net gain on disposal of property and equipment---(1,728)Other non-cash items271(162)918(51)Changes in working capital items6,14834,759(7,876)(26,517)Interest paid(4,313)(2,989)(10,131)(6,146)Income taxes (paid) recovered715(3,604)(1,404)(12,082)Cash flows from operating activities33,01560,30736,3226,231INVESTING ACTIVITIESBusiness acquisitions (Note 6)(759)-(2,329)(222,765)Repurchase of non-controlling interests (Note 6)(1,053)(229)(1,053)(229)Proceeds from business disposals-157-157Balance of purchase or sale price(533)80(897)117Advances to merchant members(4,373)(3,836)(7,053)(6,607)Receipts on investments and advances to merchant members5036991,9491,609Acquisitions of property and equipment (Note 9)(4,401)(1,413)(5,670)(4,586)Disposals of property and equipment (Note 9)984,2712205,681Acquisitions and development of intangible assets (Note 10)(1,974)(7,951)(7,073)(15,138)Cash flows from investing activities(12,492)(8,222)(21,906)(241,761)FINANCING ACTIVITIESNet increase (decrease) in bank indebtedness(23)(6,658)(20)(7,524)Increase in long-term debt19,56487640,794363,211Repayment of long-term debt(37,827)(42,936)(50,280)(213,975)Merchant members' deposits in the guarantee fund57125(75)227Issuance of convertible debentures, net of issuance costs---49,777Share issuances, net of issuance costs29-2949,361Share redemptions--(13)-Dividends paid(2,735)(2,778)(5,351)(5,074)Cash flows from financing activities(20,935)(51,371)(14,916)236,003Effects of fluctuations in exchange rates on cash(28)-32Increase (Decrease) in cash(440)714(497)475Cash, beginning of period1,6141401,671379Cash, end of period1,1748541,174854The accompanying notes are an integral part of the Interim Consolidated Financial Statements.UNI-SELECT INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION(In thousands of US dollars, unaudited)June 30, 2012December 31, 2011$$ASSETSCurrent assetsCash1,1741,671Trade and other receivables220,379198,495Income taxes receivable18,99825,234Inventory528,196579,246Prepaid expenses10,85311,358Total current assets779,600816,004Investments and advances to merchant members26,26122,149Property and equipment (Note 9)45,69143,134Intangible assets (Note 10)156,395156,958Goodwill (Note 10)185,980184,734Deferred tax assets24,58024,242TOTAL ASSETS1,218,5071,247,221LIABILITIESCurrent liabilitiesBank indebtedness476497Trade and other payables and provisions259,486298,686Dividends payable2,7592,552Instalments on long-term debt and on merchant members' deposits in the guarantee fund17,89715,694Total current liabilities280,618317,429Long-term employee benefit obligations28,54427,319Long-term debts328,545337,319Convertible debentures47,57047,225Merchant members' deposits in the guarantee fund7,6687,757Derivative financial instruments2,4272,505Deferred tax liabilities31,45734,077TOTAL LIABILITIES726,829773,631EQUITYShare capital (Note 11)88,96688,940Contributed surplus373452Equity component of the convertible debentures1,6871,687Retained earnings394,561375,262Accumulated other comprehensive income (Note 12)6,0916,216TOTAL SHAREHOLDERS' EQUITY491,678472,557Non-controlling interests-1,033TOTAL EQUITY491,678473,590TOTAL LIABILITIES AND EQUITY1,218,5071,247,221The accompanying notes are an integral part of the Interim Consolidated Financial Statements.FOR FURTHER INFORMATION PLEASE CONTACT: UNI-SELECT INC.Source:www.uni-select.comORKarine VachonContact:Investor Relations and Communications Manager(450) 641-6972investorrelation@uniselect.com