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Press release from Marketwire

Uni-Select Inc./Third Quarter Ended September 30, 2012: Sales of $463 Million, Adjusted Earnings of $11.5 Million

Thursday, November 08, 2012

Uni-Select Inc./Third Quarter Ended September 30, 2012: Sales of $463 Million, Adjusted Earnings of $11.5 Million11:44 EST Thursday, November 08, 2012BOUCHERVILLE, QUEBEC--(Marketwire - Nov. 8, 2012) - Uni-Select Inc. (TSX:UNS)HighlightsImplementation of the distribution network optimization plan. Restructuring and other costs of $18.5 million, of which $11.4 million will have no impact on cash flows. Status report on deployment of the new integrated Enterprise Resource Planning system, more than 23 warehouses and 139 stores have been converted to date. $65 million inventory reduction and $37 million reduction in total net indebtedness during the same period. Implementation of a new operational structure in all of our activities in order to achieve the strategic objectives of the Corporation with regards to sales and operational efficiency. (Unless otherwise indicated, all amounts are expressed in US dollars)(In thousands of dollars, except per share amounts)3rd QuarterNINE-MONTH PERIOD2012201120122011Sales463,401472,4911,396,9011,343,920Adjusted EBITDA25,46430,75984,67087,202EBITDA24,06229,90478,87783,907Adjusted earnings11,51117,18640,61947,674Net earnings (net loss)(926)16,63325,39144,799Adjusted earnings per share0.530.791.872.20Earnings per share(0.04)0.771.172.07Uni-Select Inc. generated sales of $463.4 million in the third quarter of 2012, compared to $472.5 million for the same period in 2011. Adjusted EBITDA amounted to $25.5 million this quarter compared to $30.8 million in the third quarter 2011. Adjusted earnings stood at $11.5 million in the third quarter compared to $17.2 million for the same quarter in 2011. During the third quarter, a non-recurring charge net of taxes of $12.4 million was recorded against earnings to cover implementation costs of the distribution network consolidation plan and other non-recurring items. Given this charge, the Corporation recorded a net loss in the third quarter 2012 of $0.9 million or $0.04 per share compared to net earnings of $16.6 million or $0.77 per share for the same period in 2011. The 1.9% decrease in sales for the quarter is mainly due to a temporary slowdown in the industry. This slowdown has had a greater impact in areas in the North East of the continent. It should also be noted that the third quarter of 2012 had one less billing day as compared to the same period last year. These negative factors were partially offset by sales derived from the assets in Florida purchased in the fourth quarter 2011. Sales of US operations totaled $330 million in the third quarter while sales of Canadian operations totaled $133 million.The adjusted EBITDA margin stood at 5.5% in the third quarter 2012 compared to 6.5% in the corresponding quarter in 2011. This decrease is mainly attributable to the rapid decline in sales with spending that could not be adjusted at the same rate. In addition, higher IT maintenance and support costs related to the transition to the new ERP system also had an adverse effect on the adjusted EBITDA margin. The optimization plan implemented during the quarter combined with the improved purchasing conditions obtained from our suppliers helped to partially offset the items mentioned above and should contribute to the improvement of our long-term performance.For the nine-month period ended September 30, 2012, sales grew by 3.9% to $1.397 billion compared to $1.344 billion for the same period of the previous year. This increase is primarily attributable to the assets in Florida purchased in the fourth quarter 2011. This increase was partially offset by one less billing day in Canada and a decrease in organic sales of 0.9% combined with the variations in the value of the Canadian dollar relative to the US dollar which had a negative impact of $10.3 million.Sales in the United States totaled $1.002 billion for the nine-month period ended September 30, 2012 compared to $929 million for the same period in 2011. Canadian operations generated sales of $394 million for the nine-month period ended September 30, 2012, compared to $415 million in 2011.For the nine-month period ended September 30, 2012, the adjusted EBITDA margin amounted to 6.1% compared to 6.5% for the corresponding period of 2011. The same factors as those mentioned for the quarter affected the adjusted EBITDA margin for the nine months. However, adverse economic conditions having prevailed only since April, their financial impact was less significant for that period. These items were partially offset by the additional marginal contribution from acquisitions completed in 2011, and their materialized synergies."The many initiatives implemented during the quarter and previous quarters, including the optimization of our distribution network, did not offset the weak demand that prevails currently in our industry." says Richard G. Roy, President and CEO of Uni-Select."We remain confident that the outlook for our business remains positive. However, we expect that our results for the balance of the year will continue to be affected by the slowdown in sales. We will pursue our efforts to provide excellent service to our customers while exercising tight control of our costs to return quickly to our usual levels of profitability. The reorganization of our sales team in the United States combined with the network consolidation plan will result in a significant reduction in our costs both operational and administrative. "says Mr. Roy.Finally, the Board of Directors, of Uni-Select declared a dividend of CDN$0.13 per share payable on January 22, 2013 to shareholders of record on December 30, 2012. This dividend is an eligible dividend for tax purposes.About Uni-Select Founded 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 6,200 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.(1) "EBITDA", represents operating profit before finance costs, depreciation and amortization, restructuring charges, write-off of assets and others, net gain on disposal of property and equipment, income taxes and net earnings attributable to non-controlling interests. This measure is a financial indicator of a corporation's ability to service and incur debt. It should not be considered by an investor as an alternative to sales or net earnings, as an indicator of operating performance or cash flows, or as a measure of liquidity, but as additional information.(2) "Adjusted EBITDA", used to assess adjusted EBITDA, adjusted earnings and adjusted earnings per share to assess EBITDA from operating activities, excluding certain adjustments which may affect the comparability of the Corporation's financial results. Management is of the view that these measures are more representative of the Corporation's operational performance and more appropriate in providing additional information. (3) "Adjustements", are unusual incurred costs that Management regards as not being characteristic or representative of the Corporation's regular operations. They include, amongst others, the non-capitalizable costs related to the development and implementation of the ERP system, costs related to the closure and disposal of stores, restructuring charges, write-off of assets and others, as well as net gain on disposal of property and equipment. The exclusion of these items does not indicate that they are non-recurring.(4) "Total net indebtedness", consists of bank indebtedness, long-term debt and merchant members' deposits in the guarantee fund (including short-term portions), net of cash.Additional Information The 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 Thursday, November 8, 2012 at 3 PM (EST), Uni-Select will host a conference call to discuss the 2012 Third Quarter financial results. To join the conference, dial 1 866 696-5910 followed by 8567461.UNI-SELECT INC.CONSOLIDATED STATEMENT OF EARNINGS (LOSS)(In thousands of US dollars, except per share amounts, unaudited)Three-month period ended September 30,Nine-month period ended September 30,2012201120122011$$$$Sales463,401472,4911,396,9011,343,920Earnings before the following items:24,06229,90478,87783,907Finance costs, net (Note 5)4,6614,00914,06112,724Depreciation and amortization (Note 6)7,1576,24820,32516,428Restructuring charges, write-off of assets and others (Note 7)18,458-18,4582,976Net gain on the disposal of property and equipment---(1,728)Earnings (Loss) before income taxes(6,214)19,64726,03353,507Income taxes (Note 10)Current(5,297)(127)4,7161,932Deferred93,298(3,982)7,254(5,288)3,1717349,186Net earnings (loss)(926)16,47625,29944,321Attributable to shareholders(926)16,63325,39044,799Attributable to non-controlling interests-(157)(91)(478)(926)16,47625,29944,321Earnings (Loss) per share (in US dollars) (Note 9)Basic(0.04)0.771.172.07Diluted(0.04)0.751.172.05Weighted average number of shares outstanding (in thousands) (Note 9)Basic21,62921,67821,63421,643Diluted21,62922,92521,63522,863The Consolidated Statement of Earnings (Loss) by nature is presented in Note 18.The accompanying notes are an integral part of the Interim Consolidated Financial Statements. UNI-SELECT INC.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(In thousands of US dollars, unaudited)Three-month period ended September 30,Nine-month period ended September 30,2012201120122011$$$$Net earnings (loss)(926)16,47625,29944,321Other comprehensive incomeEffective portion of changes in the fair value of cash flow hedges (net of income taxes of $173 and $496 for the three and nine-month periods ($37 and $196 in 2011))(471)(87)(1,348)(529)Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to earnings (net of income taxes of $168 and $512 for the three and nine-month periods ($254 and $707 in 2011))4566201,3911,860(15)533431,331Unrealized exchange gains (losses) on the translation of financial statements to the presentation currency(8,296)11,395(7,984)9,074Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations11,603(16,192)11,108(10,139)Actuarial loss on defined benefit pension plans (net of income taxes of $806 and $1,336 for the three and nine-month periods)(2,083)-(3,523)-Other comprehensive income (loss)1,209(4,264)(356)266Comprehensive income28312,21224,94344,587Attributable to shareholders28312,36925,03445,065Attributable to non-controlling interests-(157)(91)(478)28312,21224,94344,587The accompanying notes are an integral part of the Interim Consolidated Financial Statements. UNI-SELECT INC.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(In thousands of US dollars, unaudited)Attributable to shareholdersShare capitalAccumulated other comprehensive income (Note 14)Equity component of convertible debentures and contributed surplusRetained earningsAttributable to non-controlling interests(Note 8)Total equity$$$$$$Balance, December 31, 201039,0994,700375337,7952,623384,592Net earnings---44,799(478)44,321Other comprehensive income-266---266Comprehensive income-266-44,799(478)44,587Contributions by and distributions to shareholdersShare issuances49,980----49,980Share redemptions(117)--(541)-(658)Issuance of convertible debentures--1,687--1,687Dividends---(7,991)-(7,991)Stock-based compensation expense--59--5949,863-1,746(8,532)-43,077Changes in ownership interests in subsidiaries that do not result in a loss of controlBuy-back of non-controlling interests----(634)(634)Foreign exchange translation adjustment on non-controlling interests----(40)(40)Balance, September 30, 201188,9624,9662,121374,0621,471471,582Balance, December 31, 201188,9406,2162,139375,2621,033473,590Net earnings---25,390(91)25,299Other comprehensive income-3,167-(3,523)-(356)Comprehensive income-3,167-21,867(91)24,943Contributions by and distributions to shareholdersShare issuances29----29Share redemptions(136)--(612)-(748)Dividends---(8,435)-(8,435)Stock-based compensation expense--28--28(107)-28(9,047)-(9,126)Changes in ownership interests in subsidiaries that do not result in a loss of controlBuy-back of non-controlling interests--(98)-(1,053)(1,151)Foreign exchange translation adjustment on non-controlling interests----111111Balance, September 30, 201288,8339,3832,069388,082-488,367The accompanying notes are an integral part of the Interim Consolidated Financial Statements. UNI-SELECT INC.CONSOLIDATED STATEMENT OF CASH FLOWS(In thousands of US dollars, unaudited)Three-month period ended September 30,Nine-month period ended September 30,2012201120122011$$$$OPERATING ACTIVITIESNet earnings (loss)(926)16,47625,29944,321Non-cash itemsDepreciation and amortization (Note 6)7,1576,24820,32516,428Income tax expense (Note 10)(5,288)3,1717349,186Finance costs, net (Note 5)4,6614,00914,06112,724Restructuring charges, write-off of assets and others (Note 7)17,357-17,357-Net gain on the disposal of property and equipment---(1,728)Other non-cash items1,7164322,633381Changes in working capital items26,002(461)18,126(29,296)Interest paid(5,014)(6,168)(15,145)(12,316)Income taxes (paid) recovered(200)799(1,604)(8,959)Cash flows from operating activities45,46524,50681,78630,741INVESTING ACTIVITIESBusiness acquisitions (Note 8)(2,918)(237)(5,247)(223,002)Repurchase of non-controlling interests (Note 8)-(203)(1,053)(432)Proceeds from business disposals423-423157Balances of purchase or sale price(165)335(1,062)454Advances to merchant members(2,324)(1,644)(9,377)(8,251)Receipts on investments and advances to merchant members2,3071774,2561,802Acquisitions of property and equipment (Note 11)(2,112)(3,363)(7,782)(7,936)Disposals of property and equipment (Note 11)4223026425,984Acquisitions and development of intangible assets (Note 12)(4,575)(6,038)(11,648)(21,157)Cash flows from (used in) investing activities(8,942)(10,671)(30,848)(252,381)FINANCING ACTIVITIESNet increase in bank indebtedness12088610055Increase in long-term debt56417,23241,358373,744Repayment of long-term debt(33,585)(29,242)(83,865)(243,216)Merchant members' deposits in the guarantee fund(63)(37)(138)178Issuance of convertible debentures, net of issuance costs---49,741Share issuances, net of issuance costs--2949,361Share redemptions(735)(658)(748)(658)Dividends paid(2,871)(2,604)(8,222)(7,680)Cash flows from financing activities(36,570)(14,423)(51,486)221,525Effects of fluctuations in exchange rates on cash40(22)44(20)Decrease in cash(7)(610)(504)(135)Cash, beginning of period1,1748541,671379Cash, end of period1,1672441,167244The 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)September 30, 2012December 31, 2011$$ASSETSCurrent assetsCash1,1671,671Trade and other receivables209,251198,495Income taxes receivable23,99925,234Inventory513,775579,246Prepaid expenses10,86611,358Total current assets759,058816,004Investments and advances to merchant members27,28222,149Property and equipment (Note 11)48,18643,134Intangible assets (Note 12)154,487156,958Goodwill (Note 12)187,698184,734Deferred tax assets27,43324,242TOTAL ASSETS1,204,1441,247,221LIABILITIESCurrent liabilitiesBank indebtedness614497Trade and other payables and other provisions270,807298,686Dividends payable2,8572,552Current portion of long-term debt and merchant members' deposits in the guarantee fund19,21815,694Total current liabilities293,496317,429Long-term employee benefit obligations33,07327,319Long-term debts296,130337,319Convertible debentures49,54747,225Merchant members' deposits in the guarantee fund7,8867,757Derivative financial instruments2,4472,505Deferred tax liabilities33,19834,077TOTAL LIABILITIES715,777773,631EQUITYShare capital88,83388,940Contributed surplus382452Equity component of the convertible debentures1,6871,687Retained earnings388,082375,262Accumulated other comprehensive income (Note 14)9,3836,216TOTAL SHAREHOLDERS' EQUITY488,367472,557Non-controlling interests-1,033TOTAL EQUITY488,367473,590TOTAL LIABILITIES AND EQUITY1,204,1441,247,221The accompanying notes are an integral part of the Interim Consolidated Financial Statements.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Source:UNI-SELECT INC.www.uni-select.comContact:Karine VachonInvestor Relations and Communications Manager(450) 641-6972investorrelation@uniselect.com