Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

May 17, 2006 14:03 ET

Uni-Select Inc. Reports a 4.7% Increase in Net Earnings for the First Quarter of 2006

BOUCHERVILLE, QUEBEC--(CCNMatthews - May 17, 2006) - Uni-Select Inc. (TSX:UNS)recorded an increase in net earnings of 4.7% for the first quarter of 2006 to reach $5,646,000 or $0.29 per share compared to $5,394,000 or $0.28 per share last year. Sales were reported at $262,514,000 in the first quarter of 2006, a 1.1% decrease compared to sales in 2005. The decrease in sales of the Company is primarily due to the fluctuation in exchange rates between Canadian and American currencies.

Automotive Group USA's sales increased by 0.6% in the first quarter to reach $136,025,000 compared to $135,241,000 in the first quarter of 2005. The increase would have been 6.4% had the exchange rate between Canadian and American currencies remained stable. The operating margin of Automotive Group USA from 4.6% to 5.2% during the quarter largely due to the implementation of synergies resulting from action plans put into practice during the course of 2005 and at the beginning of 2006.

Automotive Group Canada's income decreased by 3.6% in the first quarter of 2006 to reach $111,004,000 compared to $115,134,000 $ in the first quarter of 2005. Weather conditions resulting from mild winter temperatures, a weakness in the sale of paint products stemming from anticipated purchases in the month of December 2005 and the changeover of products at Midas franchisees' locations are the dominating factors contributing to the decrease in sales. The operating margin of the Group improved from 5.1% in the first quarter of last year to 5.4% in this quarter, mainly due to the price increase of numerous products.

Heavy Duty Group's sales increased by 2.1% in the first quarter of 2006 to reach $15,485,000 compared to $15,169,000 in 2005. The operating margin of the Heavy Duty Group was negative at (4.3%) in the first quarter of 2006 compared to (2.4%) last year due to a higher sales volume of products at a lower margin and increased energy costs.

Mr. Jacques Landreville, President and Chief Executive Officer of Uni-Select said "We are happy to note that the results from our US operations continue to meet our expectations. The impact of the Canadian/US exchange rate masks the actual increase in activity. Our Canadian operations have, in themselves, suffered temporary conditions and we are confident we will see them resume growth in the near future. Lastly, we have noted some uncertainty affecting the North American demand for automotive replacement parts due to the increase in fuel prices. Our past experience leads us to consider that this is a temporary phenomenon and that consumers will adapt to this situation."

Finally, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.10 per common share payable on July 21, 2006 to the shareholders of record on June 30, 2006.

Uni-Select is Canada's second largest distributor of automotive replacement parts, equipment, tools and accessories and through Uni-Select USA, Inc., the company also provides service to customers in the United States where it is the 8th largest distributor. Its subsidiary, Palmar Inc., sells replacement parts, tools and accessories for heavy-duty vehicles and wheels in Canada. The Uni-Select Network includes over 2,100 independent jobbers and services over 3,100 points of sale in Canada and the United States. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the Toronto Stock Exchange (TSX).



UNI-SELECT INC.
CONSOLIDATED EARNINGS

THREE-MONTH PERIOD ENDED MARCH 31, 2006 AND 2005
(IN THOUSANDS OF DOLLARS, EXCEPT BASIC AND DILUTED EARNINGS PER
SHARE)


THREE MONTHS
2006 2005
UNAUDITED
-----------------------------------------------------------------
-----------------------------------------------------------------
$ $
SALES 262,514 265,544
-----------------------------------------------------------------


Earnings before the following items 12,434 11,787
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Interest on bank indebtedness 132 89
Interest on long-term debt 879 615
Interest on merchant members' deposits
in guarantee funds 77 65
Interest income from cash and cash equivalent (269) (11)
Interest income from merchant members (101) (92)
Amortizations (Note 2) 2,141 2,098
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2,859 2,764
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Earnings before income taxes and
non-controlling interest 9,575 9,023
Income taxes
Current 2,793 3,234
Future 545 (128)
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3,338 3,106
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Earnings before non-controlling interest 6,237 5,917
Non-controlling interest 591 523
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Net earnings 5,646 5,394
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Basic earnings per share (Note 3) 0.29 0.28
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Diluted earnings per share (Note 3) 0.29 0.28
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Weighted average number of outstanding
shares 19,631,778 19,460,907
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Number of issued and outstanding
common shares 19,653,101 19,491,449
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CONSOLIDATED RETAINED EARNINGS
THREE-MONTH PERIOD ENDED MARCH 31,
2006 AND 2005
(IN THOUSANDS OF DOLLARS)

2006 2005
UNAUDITED
-----------------------------------------------------------------
-----------------------------------------------------------------
$ $

Balance, beginning of period 220,966 188,159
Net earnings 5,646 5,394
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226,612 193,553
Dividends 1,965 1,433
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Balance, end of period 224,647 192,120
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UNI-SELECT INC.
CONSOLIDATED CASH FLOWS

THREE-MONTH PERIOD ENDED MARCH 31, 2006 AND 2005
(IN THOUSANDS OF DOLLARS, EXCEPT DIVIDENDS PAID ON COMMON SHARES)

THREE MONTHS
2006 2005
UNAUDITED
----------------------------------------------------------------
----------------------------------------------------------------
$ $
OPERATING ACTIVITIES
NET EARNINGS 5,646 5,394
NON-CASH ITEMS
Amortizations 2,141 2,098
Future income taxes 545 (128)
Non-controlling interest 591 523
----------------------------------------------------------------
8,923 7,887
Changes in working capital items (5,080) (11,437)
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CASH FLOWS FROM OPERATING ACTIVITIES 3,843 (3,550)
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INVESTING ACTIVITIES
Business acquisitions (395) (1,063)
Advances to merchant members (834) (481)
Receipts on advances to merchant members 1,970 1,097
Property, plant and equipment (1,349) (1,932)
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CASH FLOWS FROM INVESTING ACTIVITIES (608) (2,379)
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FINANCING ACTIVITIES
Bank indebtedness (97) 5,578
Balance of purchase price - (4,104)
Long-term debt 572 3,387
Repayment of long-term debt (878) (105)
Merchant members' deposits in
guarantee fund (3) (62)
Issuance of shares 666 920
Dividends paid (1,568) (1,428)
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CASH FLOWS FROM FINANCING ACTIVITIES (1,308) 4,186
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Net increase (decrease) in cash and
cash equivalents 1,927 (1,743)
Cash and cash equivalents, beginning
of period 19,108 9,921
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Cash and cash equivalents, end of period 21,035 8,178
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----------------------------------------------------------------

Cash and cash equivalents include cash and
temporary investments maturing in less
than three months.

Dividends paid on common shares 0.080 0.074
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UNI-SELECT INC.
CONSOLIDATED BALANCE SHEETS


MARCH 31, MARCH 31, DECEMBER 31,
(IN THOUSANDS OF DOLLARS) 2006 2005 2005

UNAUDITED UNAUDITED AUDITED
-------------------------------------------------------------------
-------------------------------------------------------------------
$ $ $

ASSETS
CURRENT ASSETS
Cash and cash equivalents 21,035 8,178 19,108
Temporary investment 4,942 - 4,942
Accounts receivable 146,379 139,856 133,903
Income taxes receivable 6,977 4,895 5,352
Inventory 260,965 267,154 260,156
Prepaid expenses 5,799 5,615 3,885
Future income taxes 2,763 5,506 3,093
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448,860 431,204 430,439
Investments and volume
discounts receivable, at cost 6,827 8,234 7,798
Property, plant and equipment 35,588 33,746 36,246
Financings costs 1,201 1,311 1,321
Goodwill 18,002 18,306 17,996
Future income taxes 1,867 3,204 1,876
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512,345 496,005 495,676
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-------------------------------------------------------------------

LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 1,834 8,771 1,932
Accounts payable 142,989 145,527 132,339
Income taxes payable 785 6,676 -
Dividends payable 1,965 1,433 1,568
Instalments on long-term debt
and merchant members'
deposits in guarantee fund 139 127 373
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147,712 162,534 136,212
Deferred government grants 392 420 395
Long-term debt 64,140 66,999 64,349
Merchant members' deposits
in guarantee funds 7,533 7,574 7,334
Future income taxes 5,042 3,961 4,837
Non-controlling interest 27,560 25,448 26,932
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252,379 266,936 240,059
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SHAREHOLDERS' EQUITY
Capital stock (Note 4) 48,722 46,521 48,056
Retained earnings 224,647 192,120 220,966
Cumulative translation
adjustments (13,403) (9,572) (13,405)
-------------------------------------------------------------------
259,966 229,069 255,617
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512,345 496,005 495,676
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UNI-SELECT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars, except per share amounts)

1. Basis of presentation

The accompanying unaudited financial statements are in accordance
with Canadian generally accepted accounting principles for interim
financial statements and do not include all the information required
for complete financial statements. They are also consistent with the
accounting policies outlined in the Company's audited financial
statements for the year ended December 31, 2005, except where stated
below. The interim financial statements and related notes should be
read in conjunction with the Company's audited financial statements
for the year ended December 31, 2005. Where required, the financial
statements include amounts based on informed estimates and best
judgements of management. The operating results for the interim
period reported are not necessarily indicative of results to be
expected for the year.

Certain comparative figures have been reclassified to conform with
the current year's presentation.


2. Information on results

For the three-month periods ended March 31, 2006 and 2005

2006 2005
--------------------------------------------------------------------
Amortization of property, plant and equipment 2,020 2,020
--------------------------------------------------------------------
Amortization on financing costs 121 78
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2,141 2,098
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3. Earnings per share

The following table presents basic and diluted earnings per share:

For the three-month periods ended March 31, 2006 and 2005


2006 2005
----------------------------------------------------------------------
Weighted Earnings Net Weighted Earnings
average per earnings average per
number of share number of share
Net share share
earnings
----------------------------------------------------------------------
----------------------------------------------------------------------
$ $ $ $

Basic earnings
per share 5,646 19,631,778 0.29 5,394 19,460,907 0.28

Impact of stock
options
exercised 86,632 172,079
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Diluted earnings
per share 5,646 19,718,410 0.29 5,394 19,632,986 0.28
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----------------------------------------------------------------------


4. Capital Stock

Authorized
Unlimited number of shares

Preferred shares, issuable in series
Common shares

Three months ended Twelve months ended
March 31, 2006 December 31, 2005
----------------------------------------------------------------------
(unaudited) (audited

Issued and fully paid
Balance, beginning of
year: 19,599,716 common
shares (19,423,289 in 2005) 48,056 45,601

Issue of 52,711 common shares
on the exercise of stock options
(174,710 in 2005) 646 2,405

Issue of 674 common shares for cash
(1,717 in 2005) 20 50
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Balance, end of period: 19,653,101
common shares (19,599,716 in 2005) 48,722 48,056
--------------------------------------------------------------------
--------------------------------------------------------------------


5. Business acquisitions

On January 31st, the Company acquired the assets of South Austin
Auto Supply, Inc., a company operating in the Automotive USA segment
for a price of $395. The Company did not assume any liabilities
under this transaction.


6. Employee future benefits

As at March 31, 2006, the Company's pension plans are defined
benefit and contributions plans.

For the three-month period ended March 31, 2006, the total expense
for the defined contribution pension plan was of $298 ($231 in 2005)
and of $505 ($418 in 2005) for the defined benefit pension plans.


7. Segmented information

For the three-month period ended March 31, 2006 and 2005
(in thousands of dollars)

----------------------------------------------------------------------
Automotive Automotive Heavy
Canada USA Duty Consolidated
2006 2005 2006 2005 2006 2005 2006 2005
$ $ $ $ $ $ $ $
----------------------------------------------------------------------
----------------------------------------------------------------------
SALES 111,004 115,134 136,025 135,241 15,485 15,169 262,514 265,544
----------------------------------------------------------------------

Earnings
before
interest,
amorti-
zation,
income
taxes
and
non-
control-
ling
interest 6,045 5,928 7,057 6,228 (668) (369) 12,434 11,787

ASSETS 210,160 195,300 261,208 262,053 40,977 38,652 512,345 496,005

Acquisi-
tion of
property,
plant
and
equipment 624 967 690 1,011 58 126 1,372 2,104

----------------------------------------------------------------------


8. Subsequent Events

On February 23, 2006, the Company exerciced its option to purchase
the shares held by its partner in the USA-AGI Prairies Inc joint
venture, a company operating in the Automotive industry in Canada.
Following the exercice, the Company will own 100% of the
outstanding shares of USI-AGI Prairies Inc. on May 31, 2006. The
preliminary amount of the transaction should be $30,265.

On April 1, 2006, the Company acquired 100% of the outstanding
shares of 1057487 Ontario Inc., a company operating in the
Automotive industry in Canada for an estimated purchase price of
$3,540.

On May 1, 2006, the Company proceded with the acquisition of
certain assets of the Earl Bristo Company for an estimated purchase
price of $1,480.

On May 16, 2006, the Company entered into an agreement to purchase
the assets of Auto Craft Automotive Products, LLC for an estimated
purchase price of $18,800.


Contact Information

  • Uni-Select Inc.
    Jacques Landreville
    President and Chief Executive Officer
    or
    Uni-Select Inc.
    Richard G. Roy
    Vice President, Administration and Chief Financial Officer
    (450) 641-2440
    www.uni-select.com