Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

November 07, 2006 16:01 ET

CORRECTION FROM SOURCE: Uni-Select Inc. Increases Profits in the Third Quarter of 2006

In the news release sent out earlier today, an error has occured. Please note that the financial statements remain unchanged. A complete and corrected version follows.

BOUCHERVILLE, QUEBEC--(CCNMatthews - Nov. 7, 2006) - Uni-Select Inc.'s (TSX:UNS) sales for the third quarter of 2006 were $297,101,000, a 0.2% increase over sales of $296,539,000 in the third quarter of 2005. For the first nine months of 2006, sales totalled $854,109,000, a 2.4% decrease compared to sales of $874,911,000 in the corresponding period of 2005. Exchange rates negatively impacted sales by 3.4% in the third quarter and by 3.8% for the first nine months of the year. Without the negative impact of the exchange rates, sales in the third quarter would have increased by 3.6% and by 1.4% during the course of the first nine months of the year.

Net earnings increased by 2% to reach $9,402,000 or $0.48 per share compared to $9,214,000 or $0.47 per share in the third quarter of 2005. Net earnings for the nine-month period ended September 30, 2006 were $25,587,000 or $1.30 per share compared to $24,875,000 and $1.27 per share in 2005. Unfavourable Canadian/US exchange rates reduced net profits by $0.02 per share compared to the third quarter of 2005. The variation for the first nine months of 2006 is $0.05 per share.

Automotive Group USA decreased its sales by 0.3% in the third quarter of 2006, going from $150,461,000 in the third quarter of 2005 to $149,952,000 in the third quarter of 2006. Excluding the negative impact of exchange rates, sales for Automotive Group USA would have increased by 6.5%, essentially as a result of acquisitions. For the first nine months of 2006, revenues for the Group decreased by 2.2% going from $441,460,000 in 2005 to $431,967,000 in 2006. Excluding the negative impact of exchange rates, revenues for the Group would have increased by 5.3%. The operating margin for the Group during the third quarter of the year was 6% and identical to that of the third quarter of 2005. For the year, the operating margin of the Group increased to 5.9% compared to 5.7% in 2005. This progression is attributable to the implementation of various programs in 2005 and at the beginning of 2006.

Automotive Group Canada increased sales by 0.6% during the third quarter of 2006. Sales for the third quarter were $129,365,000 compared to $128,545,000 during the same quarter of 2005. For the first nine months of 2006, the Group's sales were $373,493,000 compared to $383,033,000 in 2005, a decrease of 2.5%. This variation is essentially organic in nature and reflects what we believe to be the effect of fuel price increases and interest rates on the budget of consumers. Furthermore, sales in exhaust and paint products were particularly weakened by the changeover in exhaust product lines for certain national accounts and the closure of certain accounts specializing in collision repair products. During the third quarter, the operating margin of the Group was 7.9%, a strong increase compared to the same quarter of 2005 when the operating margin was 6.6%. Approximately 1.2% of this quarterly increase stems from the additional contribution of Uni-Select Prairies Inc. (formerly known as USI-AGI Prairies Inc.) to our results since June 1, 2006 (previously a joint venture reported at 50%). Year-to-date, the operating margin of Automotive Group Canada increased from 6.4% in 2005 to 7.4% in 2006. Approximately 0.6% of this increase is from the reporting of Uni-Select Prairies Inc. at 100%, while 0.3% is non-recurring in nature and stems from a sales program implemented last year.

Sales for the Heavy Duty Group increased by 1.4% during the third quarter to $17,784,000 compared to $17,533,000 during the same quarter in 2005. This increase is mainly due to the transfer of certain sales from the second quarter to the third quarter. For the first nine months of 2006, the Group's sales decreased by 3.5% from $50,418,000 to $48,649,000. This decrease is mainly due to significant returns in wheels from certain clients. During the third quarter, the operating margin of the Group was (1.9%) compared to 0.6% for the same quarter in 2005. For the year, the operating margin of the Group was (3.7%) and 0.2% in 2005.

"Our market, in both Canada and the United States, was affected by increased fuel costs at the beginning of the year. Nevertheless, we have noted improved market conditions as fuel costs have decreased during the quarter", said Mr. Jacques Landreville, President and Chief Executive Officer. "Furthermore, the market offers numerous developmental opportunities through acquisitions. We will, therefore, pursue our acquisition and integration activities which are a measure of the value to be gained by our shareholders, employees and suppliers".

Finally, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.10 per common share payable on January 22, 2007 to shareholders of record as at December 31, 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).



CONSOLIDATED EARNINGS
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005
(in thousands of dollars,except earnings per share, unaudited)

3rd QUARTER 9 MONTHS
2006 2005 2006 2005
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
SALES 297,101 296,539 854,109 874,911
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Earnings before the
following
items 18,889 17,611 51,349 49,615
---------------------------------------------------------------------
Interest on bank
indebtedness 331 44 665 251
Interest on long-term
debt 980 772 2,791 2,156
Interest on merchant
members'deposits
in guarantee funds 85 60 241 191
Interest income from cash
and cash equivalent (180) (228) (788) (292)
Interest income from
merchant members (175) (182) (384) (368)
Amortization (Note 2) 2,073 1,852 5,987 6,040
Loss on disposal of
property, plant
and equipment 89 -- 4 --
---------------------------------------------------------------------
3,203 2,318 8,516 7,978
---------------------------------------------------------------------

Earnings before income
taxes and non-controlling
interest 15,686 15,293 42,833 41,637
Income taxes
Current 5,758 5,784 15,177 14,115
Future (220) (483) (87) 504
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5,538 5,301 15,090 14,619
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Earnings before
non-controlling interest 10,148 9,992 27,743 27,018
Non-controlling interest 746 778 2,156 2,143
---------------------------------------------------------------------

Net earnings 9,402 9,214 25,587 24,875
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Basic earnings per share
(Note 3) 0.48 0.47 1.30 1.28
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---------------------------------------------------------------------

Diluted earnings per
share (Note 3) 0.48 0.47 1.30 1.27
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---------------------------------------------------------------------

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Weighted average number
of outstanding shares 19,699,299 19,531,987 19,666,490 19,497,362
---------------------------------------------------------------------
Number of issued and
outstanding common shares 19,699,334 19,557,909 19,699,334 19,557,909
---------------------------------------------------------------------
The accompanying notes are an integral part of the interim consolidated
financial statements.




CONSOLIDATED RETAINED EARNINGS
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005
(in thousands of dollars, unaudited)

9 MONTHS
2006 2005
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $

Balance, beginning of period 220,966 188,159
Net earnings 25,587 24,875
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246,553 213,034

Dividends 5,905 4,686
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Balance, end of period 240,648 208,348
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---------------------------------------------------------------------
The accompanying notes are an integral part of the interim consolidated
financial statements.




CONSOLIDATED CASH FLOWS
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005
(in thousands of dollars, exceptdividends paid on common shares,
unaudited)


3rd QUARTER 9 MONTHS
2006 2005 2006 2005
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 9,402 9,214 25,587 24,875
Non-cash items
Amortization 2,073 1,852 5,987 6,040
Future income taxes (220) (483) (87) 504
Loss on disposal of property,
plant and equipment 89 -- 4 --
Non-controlling interest 746 778 2,156 2,143
---------------------------------------------------------------------
12,090 11,361 33,647 33,562
Changes in working capital
items 2,032 (10,329) 12,893 (4,000)
---------------------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES 14,122 1,032 46,540 29,562
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INVESTING ACTIVITIES
Temporary investment -- -- 4,942 --
Business acquisitions (Note 5) (4,971) -- (61,349) (5,708)
Advances to merchant members (979) (1,090) (4,136) (2,674)
Receipts on advances to
merchant members 1,807 1,088 6,113 3,382
Company shares -- -- -- 20
Property, plant and equipment (1,766) (2,692) (4,796) (7,318)
Disposal of property, plant
and equipment 26 -- 262 --
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CASH FLOWS FROM INVESTING
ACTIVITIES (5,883) (2,694) (58,964) (12,298)
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FINANCING ACTIVITIES
Bank indebtedness (13,286) (533) (1,016) (2,337)
Due to a joint venturer -- -- -- (2,500)
Balance of purchase price -- -- -- (4,104)
Financing costs -- (139) -- (139)
Long-term debt 616 -- 1,516 3,589
Repayment of long-term debt (813) (441) (2,389) (1,107)
Merchant members' deposits in
guarantee fund (67) 140 (134) 34
Issuance of shares 10 547 1,288 1,851
Dividends paid (1,970) (1,562) (5,503) (4,549)
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CASH FLOWS FROM FINANCING
ACTIVITIES (15,510) (1,988) (6,238) (9,262)
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Net increase (decrease) in
cash and cash equivalents (7,271) (3,650) (18,662) 8,002
Cash and cash equivalents,
beginning of period 7,717 21,573 19,108 9,921
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Cash and cash equivalents,
end of period 446 17,923 446 17,923
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Cash and cash equivalents include cash and temporary investments
maturing in less than three months.

Dividends paid on common
shares 0.100 0.080 0.280 0.234
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The accompanying notes are an integral part of the interim consolidated
financial statements.





SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
2006 2005 2005
(unaudited) (unaudited) (audited)
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $

ASSETS

CURRENT ASSETS
Cash and cash equivalents 446 17,923 19,108
Temporary investment - - 4,942
Accounts receivable 147,767 157,177 133,903
Income taxes receivable 1,839 4,601 5,352
Inventory 300,385 266,419 260,156
Prepaid expenses 5,230 6,302 3,885
Future income taxes 2,768 4,352 3,093
---------------------------------------------------------------------
458,435 456,774 430,439
Investments and volume
discounts receivable, at cost 7,250 9,122 7,798
Property, plant and equipment 38,137 34,965 36,246
Financing costs 965 1,245 1,321
Goodwill 36,044 17,970 17,996
Future income taxes 2,094 3,307 1,876
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542,925 523,383 495,676
---------------------------------------------------------------------
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LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 2,588 854 1,932
Accounts payable 163,629 174,769 132,339
Income taxes payable - 2,596 -
Dividends payable 1,970 1,565 1,568
Instalments on long-term debt
and on merchant members'
deposits in guarantee fund 166 286 373
---------------------------------------------------------------------
168,353 180,070 136,212
Deferred government grants 368 396 395
Long-term debt 60,838 63,352 64,349
Merchant members' deposits in
guarantee funds 8,266 7,594 7,334
Future income taxes 4,773 3,644 4,837
Non-controlling interest 27,933 25,966 26,932
---------------------------------------------------------------------
270,531 281,022 240,059
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SHAREHOLDERS' EQUITY
Capital stock (Note 4) 49,334 47,452 48,056
Retained earnings 240,648 208,348 220,966
Cumulative translation
adjustments (17,598) (13,439) (13,405)
---------------------------------------------------------------------
272,394 242,361 255,617
---------------------------------------------------------------------
542,925 523,383 495,676
---------------------------------------------------------------------
---------------------------------------------------------------------
The accompanying notes are an integral part of the interim consolidated
financial statements.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2006 AND 2005
(in thousands of dollars, except for per share amounts, unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated 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. 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. When necessary, the financial statements include amounts based on informed estimates and management's best judgements. The operating results for the interim periods reported are not necessarily indicative of results to be expected for the year.

Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.




2. INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF EARNINGS


3rd QUARTER 9 MONTHS
2006 2005 2006 2005
--------------------------------------------------------------------
Amortization of property, plant
and equipment 1,973 1,768 5,667 5,797
Amortization of financing costs 100 84 320 243
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2,073 1,852 5,987 6,040
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--------------------------------------------------------------------


3. EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted
earnings per share:


3rd QUARTER
-----------------------------------------------------------------------
2006 2005
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Weighted Earnings Net Weighted Earnings
average per earnings average per
Net number of share number of share
earnings share share
-----------------------------------------------------------------------
-----------------------------------------------------------------------
$ $ $ $
Basic earnings
per share 9,402 19,699,299 0.48 9,214 19,531,987 0.47
Impact of
stock
options
exercised 89,152 133,465
-----------------------------------------------------------------------
Diluted
earnings
per
share 9,402 19,788,451 0.48 9,214 19,665,452 0.47
-----------------------------------------------------------------------


9 MONTHS
-----------------------------------------------------------------------
2006 2005
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Weighted Earnings Net Weighted Earnings
average per earnings average per
Net number of share number of share
earnings share share
-----------------------------------------------------------------------
-----------------------------------------------------------------------
$ $ $ $
Basic
earnings
per
share 25,587 19,666,490 1.30 24,875 19,497,362 1.28
Impact of
stock
options
exercised 66,678 151,140
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Diluted
earnings
per
share 25,587 19,733,168 1.30 24,875 19,648,502 1.27
-----------------------------------------------------------------------



4. CAPITAL STOCK

Authorized
Unlimited number of shares
Preferred shares, issuable in series
Common shares


SEPTEMBER 30, 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 1,303 common shares
for cash (1,717 in 2005) 40 50
Issue of 98,315 common shares
on the exercise of stock
options (174,710 in 2005) 1,248 2,405
-------------------------------------------------------------------
Balance, end of period:
19,699,334 common shares
(19,599,716 in 2005) 49,344 48,056
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5. BUSINESS ACQUISITIONS

Uni-Select Prairies Inc. (USI-AGI):
On May 31, 2006, the Company acquired the shares held by its partners in the USI-AGI joint venture and now owns 100% of the shares. This company operates distribution centres and stores in the Automotive Canada segment.

Auto Craft Automotive Products, LLC (Auto Craft):
On June 1, 2006, the Company acquired the assets and assumed a portion of the liabilities of Auto Craft. This company operates distribution centres and stores in the Automotive USA segment.

Furthermore, the Company acquired 100% of the issued shares of a company expanding in the Automotive Canada segment. It also acquired the assets and assumed a portion of the liabilities of seven companies operating in the Automotive USA segment and 50% of the issued shares of a company operating in the Automotive Canada segment.

The operating results are consolidated in the statement of earnings since the respective acquisition dates.

The preliminary purchase prices are allocated as follows:




USI-AGI Auto Craft Other Total
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Current assets 28,978 15,252 13,223 57,453
Property, plant and
equipement 1,166 773 1,642 3,581
Other long-term assets 318 -- 31 349
Goodwill 11,351 4,403 2,505 18,259
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Total assets acquired 41,813 20,428 17,401 79,642
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Current liabilities (9,801) (133) (4,777) (14,711)
Long-term liabilities (1,049) -- (3) (1,052)
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Total liabilities assumed (10,850) (133) (4,780) (15,763)
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Net assets acquired 30,963 20,295 12,621 63,879
Cash of company acquired (2,047) -- (16) (2,063)
--------------------------------------------------------------------
Net acquisition 28,916 20,295 12,605 61,816
Total consideration paid
cash less cash
acquired 28,916 20,295 12,138 61,349
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Balance of purchase price
payable -- -- 467 467
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--------------------------------------------------------------------



6. EMPLOYEE FUTURE BENEFITS

As at September 30, 2006, the Company's pension plans are defined benefit and defined contributions plans.

For the three-month period ended September 30, 2006, the total expense for the defined contribution pension plans was of $330 ($240 in 2005) and of $545 ($360 in 2005) for the defined benefit pension plans.

For the nine-month period ended September 30, 2006, the total expense for the defined contribution pension plans was of $959 ($754 in 2005) and of $1,567 ($1,195 in 2005) for the defined benefit pension plans.

7. GUARANTEES

The Company has made a commitment to financial institutions to repurchase inventories from some of its customers at a rate of 60% to 75% of the value of cost of the inventories for a maximum amount of $66,023 ($61,007 as at December 31, 2005). In the event of proceedings, the inventories would be liquidated in the normal course of the Company's business. These agreements are for an undetermined period of time. In management's opinion, the likelihood of major payments being made and losses being absorbed is low.

As at September 30, 2006, the Company was contingently liable for letters of credit issued in the aggregate amount of $169.

8. SEGMENTED INFORMATION



3rd QUARTER
------------------------------------------------------------------------
Automotive Canada Automotive USA
2006 2005 2006 2005
$ $ $ $
------------------------------------------------------------------------
SALES 129,365 128,545 149,952 150,461
------------------------------------------------------------------------
Earnings before interest,
amortization, loss on
disposal of property,
plant and equipment,
income taxes and
non-controlling interest 10,187 8,484 9,035 9,020
Assets 221,640 215,832 274,094 257,849
Acquisition of property,
plant and equipment 1,515 1,644 1,451 922
Acquisition (disposal) of goodwill 2,814 -- 200 --
------------------------------------------------------------------------

3rd QUARTER
------------------------------------------------------------------------
Heavy Duty Consolidated
2006 2005 2006 2005
$ $ $ $
------------------------------------------------------------------------
SALES 17,784 17,533 297,101 296,539
------------------------------------------------------------------------
Earnings before interest,
amortization, loss
on disposal of property,
plant and equipment,
income taxes and
non-controlling interest (333) 107 18,889 17,611
Assets 47,191 49,702 542,925 523,383
Acquisition of property,
plant and equipment 65 126 3,031 2,692
Acquisition (disposal) of goodwill (2,890) -- 124 --
------------------------------------------------------------------------
------------------------------------------------------------------------


9 MONTHS
------------------------------------------------------------------------
Automotive Canada Automotive USA
2006 2005 2006 2005
$ $ $ $
------------------------------------------------------------------------
SALES 373,493 383,033 431,967 441,460
------------------------------------------------------------------------
Earnings before interest,
amortization, loss on
disposal of property,
plant and equipment,
income taxes and
non-controlling interest 27,560 24,380 25,592 25,125
Assets 221,640 215,832 274,094 257,849
Acquisition of property,
plant and equipment 3,818 3,600 4,388 3,277
Acquisition (disposal)
of goodwill 16,240 173 4,909 --
------------------------------------------------------------------------

9 MONTHS
------------------------------------------------------------------------
Heavy Duty Consolidated
2006 2005 2006 2005
$ $ $ $
------------------------------------------------------------------------
SALES 48,649 50,418 854,109 874,911
------------------------------------------------------------------------
Earnings before interest,
amortization, loss on
disposal of property, plant
and equipment, income taxes
and non-controlling interest (1,803) 110 51,349 49,615
Assets 47,191 49,702 542,925 523,383
Acquisition of property,
plant and equipment 171 624 8,377 7,501
Acquisition (disposal) of goodwill (2,890) -- 18,259 173
------------------------------------------------------------------------


The Automotive USA segment includes property, plant and equipment for an amount of $16,142 ($14,668 as at December 31, 2005) and goodwill for an amount of $10,910 ($6,211 as at December 31, 2005).

On September 1, 2006, assets representing $4,041, including goodwill of $2,890, were transferred from the Heavy Duty segment to the Automotive Canada segment.

9. SUBSEQUENT EVENT

On November 1, 2006, the Company acquired the assets of Asher Management Group Ltd. and Gator Inc., two companies operating stores in the Automotive USA segment.



Contact Information

  • UNI-SELECT INC.
    Jacques Landreville
    President and Chief Executive Officer
    450-641-2440
    or
    UNI-SELECT INC.
    Richard G. Roy
    Vice President, Administration and Chief Financial Officer
    450-641-2440
    www.uni-select.com