Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

August 04, 2005 12:09 ET

Uni-Select Inc. Increases its Profits by 44.6% in the Second Quarter of 2005

BOUCHERVILLE, QUEBEC--(CCNMatthews - Aug. 4, 2005) - Uni-Select Inc. (TSX:UNS) announces its results for the second quarter of 2005 and for the six-month period ended June 30, 2005. Net profits for the second quarter increased by 44.6% to attain $10,267,000 or $0.52 per share on a diluted basis, compared to $7,099,000 or $0.38 per share (on a diluted basis) for the second quarter of 2004. Therefore, net profits for the first six months of the year reached $15,661,000 or $0.80 per share (on a diluted basis) compared to $11,241,000 or $0.61 per share (on a diluted basis) in 2004.

Sales improved to $312,828,000 for the second quarter of the year, an increase of 61.3% over sales of $193,914,000 realized during the second quarter of 2004. Therefore, during the first six months of 2005, sales amounted to $578,372,000, an increase of 56.4% compared to sales of $369,727,000 during the same period in 2004.

Automotive Group USA increased its income almost four-fold during the second quarter of 2005. Income increased from $39,861,000 during the second quarter of 2004 to $155,758,000 during the second quarter of 2005, an increase of 290.8%. This increase results from the acquisition of Middle Atlantic Warehouse Distributor, Inc. ("MAWDI") completed on November 1, 2004. Without this acquisition, the Group's quarterly income would have diminished as a result of the negative impact of the exchange rate decrease of 8.2%. Excluding the impact of the exchange rate, the organic growth of Automotive Group USA during the second quarter was 2.3%. For the first six-month period of 2005, Automotive Group USA increased its income by 272.0% from $78,230,000 in 2004 to $290,999,000 in 2005. This progression is also attributable to the acquisition of MAWDI. During the second quarter, the operating margin of the Group reached 6.3% compared to 3.8% during the second quarter of 2004. This progression is attributable to the realization of synergies resulting from the acquisition in 2004 and the improvement of performance by the entities comprising Automotive Group USA prior to the acquisition. For the year, the operating margin of the Group increased to 5.5% compared to 4.2% in 2004.

Automotive Group Canada increased its income by 3.0% during the second quarter of 2005. This increase is mainly of an organic nature. Income for the second quarter attained $139,354,000 compared to $135,249,000 during the same quarter in 2004. For the initial six-month period of 2005, the Group's income amounted to $254,488,000 compared to $257,067,000 for 2004, a slight decrease of 1.0%. During the second quarter, the operating margin of the Group remained unchanged compared to the same quarter of 2004, reaching 7.2%. For the year to date, the operating margin of the Group increased from 6.1% in 2004 to 6.2% in 2005.

Sales for the Heavy Duty Group decreased by 5.8% during the second quarter to $17,716,000 compared to $18,804,000 during the same quarter in 2004. This decrease is due in part to the transfer of sales of the automotive parts business acquired by Palmar from Batteries Electriques Gagnon and in part to a decrease in business activities of an organic nature of 3.3%. Merchant members of Automotive Group Canada are beneficiaries of the activities transferred by Palmar. For the first six months of 2005, the Group's income decreased by 4.5% from $34,430,000 to $32,885,000. During the second quarter, the operating margin of the Group is 2.1% compared to 3.9% for the same quarter in 2004. For the year, the operating margin of the Group was nil compared to a rate of 1.7% in 2004.

"We are satisfied of the evolution of our business in the U.S. The integration process is progressing and the results meet our most optimistic scenario," declared Mr. Jacques Landreville, President and Chief Executive Officer of Uni-Select. "We are pleased to notice that our Canadian operations have experienced an increase in income of 3% after a difficult first quarter. The Canadian market remains, however, very competitive and we must aggressively pursue both our sales efforts and control of our costs".

Finally, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.08 per common share payable on October 20, 2005 to shareholders of record as at September 30, 2005.


Uni-Select is Canada's second largest distributor of automotive and heavy-duty replacement parts, equipment, tools and accessories. Through Uni-Select USA, Inc., the company also provides services to customers in the United States where it is the 8th largest distributor. The Uni-Select Network includes over 800 independent jobbers in Canada and almost 2,000 in the United States, whereas the Heavy Duty Group's activities are centered in Eastern Canada. Uni-Select is headquartered in Montreal and is expected to generate revenues in excess of CDN$1.1 billion in 2005. Uni-Select shares (UNS) are traded on the Toronto Stock Exchange (TSX).



UNI-SELECT INC.
CONSOLIDATED EARNINGS

THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS, EXCEPT NET EARNINGS PER SHARE)

UNAUDITED
2ND QUARTER 6 MONTHS
2005 2004 2005 2004
--------------------------------------------------------------------
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$ $ $ $
SALES 312,828 193,914 578,372 369,727
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Earnings before the
following items : 20,217 11,935 32,004 19,647
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Interest on bank
indebtedness 118 113 207 253
Interest on long-term debt 769 4 1,384 9
Interest on merchant
members' deposits in
guarantee funds 66 62 131 131
Interest income from cash,
cash equivalent and
temporary investments (53) (91) (64) (306)
Interest income from
merchant members (94) (75) (186) (154)
Amortization (Note 3) 2,090 1,223 4,188 2,451
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2,896 1,236 5,660 2,384
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Earnings before income
taxes and non-controlling
interest 17,321 10,699 26,344 17,263
Income taxes
Current 5,097 3,481 8,331 5,815
Future 1,115 (42) 987 (137)
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6,212 3,439 9,318 5,678
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Earnings before
non-controlling
interest 11,109 7,260 17,026 11,585
Non-controlling interest 842 161 1,365 344
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Net earnings 10,267 7,099 15,661 11,241
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Basic earnings per
share (Note 5) 0.53 0.39 0.80 0.61
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Diluted earnings per
share (Note 5) 0.52 0.38 0.80 0.61
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Weighted number of
outstanding shares 19,498,411 18,370,271 19,479,763 18,363,721
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Number of issued and
outstanding
common shares 19,519,900 18,372,139 19,519,900 18,372,139
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UNI-SELECT INC.
CONSOLIDATED CASH FLOWS

THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS)

UNAUDITED

2ND QUARTER 6 MONTHS
2005 2004 2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
NET EARNINGS 10,267 7,099 15,661 11,241
NON-CASH ITEMS
Amortization 2,090 1,223 4,188 2,451
Future income taxes 1,115 (42) 987 (137)
Non-controlling
interest 842 161 1,365 344
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14,314 8,441 22,201 13,899
Changes in working
capital items 17,721 14,534 6,284 (23,297)
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CASH FLOWS FROM
OPERATING
ACTIVITIES 32,035 22,975 28,485 (9,398)
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INVESTING ACTIVITIES
Temporary investments - 7,981 - 32,359
Business acquisitions
(Note 6) (4,645) (27) (5,708) (10,274)
Disposal of assets - 740 - 742
Advances to joint venture - (1,211) - 2,500
Advances to
merchant members (1,103) (2,122) (1,584) (3,466)
Cash advance to
merchant members 1,197 716 2,294 1,461
Company Shares 20 - 20 -
Disposal of property,
plant and equipment - 78 - 78
Property, plant
and equipment (2,694) (1,468) (4,626) (3,131)
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CASH FLOWS FROM
INVESTING ACTIVITIES (7,225) 4,687 (9,604) 20,269
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FINANCING ACTIVITIES
Bank indebtedness (7,382) (10,459) (1,804) (1,704)
Balance of purchase price (2,500) - (2,500) -
Balance of sale
price receivable - 167 - 208
Balance of purchase price - - (4,104) (36)
Long-term debt 247 - 3,634 -
Repayment of
long-term debt (561) (27) (666) (74)
Merchant members'
deposits in
guarantee funds (44) 105 (106) 220
Issuance of shares 384 42 1,304 331
Dividends paid (1,559) (2,250) (2,987) (3,479)
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CASH FLOWS FROM
FINANCING ACTIVITIES (11,415) (12,422) (7,229) (4,534)
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Net Increase in cash
and cash equivalents 13,395 15,240 11,652 6,337
Cash and cash
equivalents, beginning
of period 8,178 4,734 9,921 13,637
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Cash and cash equivalents,
end of year 21,573 19,974 21,573 19,974
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Cash and cash equivalents
include cash and temporary
investments maturing less
than three months for
the acquisition date.
Dividends paid on
common shares 0.080 0.123 0.154 0.190
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CONSOLIDATED RETAINED EARNINGS
UNAUDITED
SIX-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS) 2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $

Balance, beginning of year 188,159 164,591
Changes in accounting policies - (955)
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188,159 163,636
Net earnings 15,661 11,241
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203,820 174,877
Dividends 3,121 3,600
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Balance, end of year 200,699 171,277
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UNI-SELECT INC.
CONSOLIDATED BALANCE SHEET

(IN THOUSANDS OF DOLLARS)

JUNE 30, 2005 JUNE 30, 2004 DEC. 31, 2004
UNAUDITED UNAUDITED AUDITED
$ $ $
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ASSETS
CURRENT ASSETS
Cash and cash equivalents 21,573 19,974 9,921
Accounts receivable 149,910 111,634 134,584
Income taxes receivable 6,703 6,353 2,941
Inventory 266,015 134,278 261,413
Prepaid expenses 6,328 3,314 3,496
Future income taxes 4,548 1,663 5,488
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455,077 277,216 417,843
Investments and volume
discounts receivable, at cost 9,766 7,124 8,309
Property, plant and equipment 34,645 28,664 33,585
Financing costs 1,245 - 1,384
Goodwill 18,314 13,603 18,273
Future income taxes 3,167 1,726 3,056
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522,214 328,333 482,450
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LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 1,390 7,220 3,193
Accounts payable 165,508 115,743 135,541
Income taxes payable 8,023 1,450 18,782
Dividends payable 1,562 1,350 1,428
Installments on long-term
debt and merchant members'
deposits in guarantee fund 298 89 477
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176,781 125,852 159,421
Deferred government grants 422 476 421
Long-term debt 67,363 227 63,230
Merchant members' deposits
in guarantee funds 7,527 8,105 7,452
Future income taxes 4,046 3,429 3,935
Non-controlling interest 26,616 7,150 24,125
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282,755 145,239 258,584
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SHAREHOLDERS' EQUITY
Capital stock (Note 4) 46,905 17,289 45,601
Cumulative translation
adjustments (8,145) (5,472) (9,894)
Retained earnings 200,699 171,277 188,159
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239,459 183,094 223,866
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522,214 328,333 482,450
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Uni-Select Inc.

Notes to consolidated financial statements (in thousands of dollars with the exception of amount per share)

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 policies outlined in the Company's audited financial statements for the year ended December 31, 2004, 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, 2004. 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. Changes in accounting policies

Consolidation of the entities with variable rights

During the first quarter, the Company adopted the Consolidation of variable interest entities (AcG-15) of which the final version was published on January 30, 2005. This convention requires the consolidation of certain entities to holders of variable rights (VIE). The VIE extends throughout the judicial structure which is not controlled by a participation of voting rights, but rather by contractual rights or other financial interests. The application of the AcG-15 did not affect the consolidated financial statements of the Company.

3. Information on results



For the six-month period ended June, 2005 and 2004

2005 2004
--------------------------------------------------------------------
Amortization of fixed assets 4,029 2,451
Amortization on financing costs 159 -
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4,188 2,451
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4. Capital Stock

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

Six Twelve
months ended months ended
June 30, 2005 December 31, 2004
---------------------------------------------------------------------
(unaudited) (audited)
Issued and fully paid
Balance, beginning of year :
19,423,289 common shares
(18,347,758 in 2004) 45,601 16,958

Issue of 96,611 common shares on
the exercise of stock options
(75,166 in 2004) 1,304 980
Issue of 0 common share for cash
(1,000,365 in 2004) 0 27,663
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Balance, end of period:
19,519,900 common shares
(19,423,289 in 2004) 46,905 45,601

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5. Earnings per share

The following table presents basic and diluted earnings per share:


For the three month period ended June 30, 2005 and 2004


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

Basic earnings per share 10,267 19,498,411 0.53

Impact of stock
options exercised 147,464

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Diluted earnings per share 10,267 19,645,875 0.52
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2004
Weighted
average
Net number of Earnings
earnings shares per share
---------------------------------------------------------------------
$ $

Basic earnings per share 7,099 18,370,271 0.39

Impact of stock
options exercised 180,976

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Diluted earnings per share 7,099 18,551,247 0.38
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For the six-month period ended June 30, 2005 and 2004

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

Basic earnings per share 15,661 19,479,763 0.80


Impact of stock
options exercised 159,823
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Diluted earnings per share 15,661 19,639,586 0.80
---------------------------------------------------------------------


2004
Weighted
average
Net number of Earnings
earnings shares per share
---------------------------------------------------------------------
$ $

Basic earnings per share 11,241 18,363,721 0.61


Impact of stock
options exercised 178,644
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Diluted earnings per share 11,241 18,542,635 0.61
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6. Business acquisitions

In 2005, the Company acquired the following businesses :

- Action Automotive Distributing, Inc. ("ADI")
On February 3, the Company acquired the assets and assumed a
portion of the liability of ADI. This Company operates a store
in the Automotive USA segment.

- Motor Parts Warehouse, Inc. ("MPW")
On March 31, the Company acquired the assets of Motor Parts
Warehouse, Inc. The Company did not assume any of the liabilities
for this transaction. This Company operates two distribution
centers in the Automotive USA segment.

- Triline Auto Parts Inc. ("Triline")
On April 30, the Company acquired the shares of Triline Auto
Parts Inc. This Company operates a store in the Automotive
Canada segment.

- Les Batteries Electriques Gagnon Inc. ("Gagnon")
During the second quarter, following the reevaluation of the
acquisition value, the Company received a reimbursement from
Gagnon related to the January 30, 2004 acquisition. This Company
operates a store in the Heavy Duty segment.

The results of operations are consolidated in the statement of
earnings since the acquisition date.


The purchase prices are allocated as follows :


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ADI MPW TRILINE GAGNON TOTAL
--------------------------------------------------------------------
$ $ $ $ $
Current assets 1,175 4,285 682 - 6,142
Property, plant
and equipment 99 73 11 - 183
Other long-term assets 1,242 - 22 - 1,264
Goodwill - - 173 (250) (77)
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Total assets acquired 2,516 4,358 888 (250) 7,512
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Current liabilities (1,453) - (146) - (1,599)
Long-term debt - - (8) - (8)
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Total
liabilities assumed (1,453) - (154) - (1,607)
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Net assets acquired 1,063 4,358 734 (250) 5,905
Cash of
company acquired - - (139) - (139)
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Net acquisition 1,063 4,358 595 (250) 5,766
Total consideration
paid cash less cash
acquired 1,063 4,358 537 (250) 5,708
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Balance of purchase
price payable - - 58 - 58
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--------------------------------------------------------------------


7. Employee future benefits

As at June 30, 2005, the Company's pension plans are defined benefit and contributions plans.

For the three-month period ended June 30, 2005, the total expense for the defined contribution plan was of $283 ($194 in 2004) and of $418 ($334 in 2004) for the defined benefit plans.

For the six-month period ended June 30, 2005, the total expense for the defined contribution plan was of $513 ($382 in 2004) and of $835 ($668 in 2004) for the defined benefit plans.


8. Segmented information



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UNI-SELECT INC.
Segmented information (1)
--------------------------------------------------------------------
THREE-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS)

Automotive Automotive
Canada USA
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $

SALES 139,354 135,249 155,758 39,861

Earnings before interest,
amortization, income taxes
and non-controlling
interest 9,968 9,691 9,877 1,512

ASSETS 201,002 218,431 282,560 70,056

Expenses in property, plant
and equipment 989 1,203 1,344 219
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Goodwill 173 37 - -
--------------------------------------------------------------------


Heavy Duty Consolidated
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
(Unaudited)
--------------------------------------------------------------------
$ $ $ $

SALES 17,716 18,804 312,828 193,914

Earnings before interest,
amortization, income taxes
and non-controlling
interest 372 732 20,217 11,935

ASSETS 38,652 39,846 522,214 328,333

Expenses in property, plant
and equipment 372 75 2,705 1,497
--------------------------------------------------------------------

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Goodwill - 36 173 73
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UNI-SELECT INC.
Segmented information (1)

SIX-MONTH PERIODS ENDED JUNE 30 2005 AND 2004
(IN THOUSANDS OF DOLLARS)

Automotive Automotive
Canada USA
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
SALES 254,488 257,067 290,999 78,230

Earnings before interest,
amortization, income taxes
and non-controlling interest 15,896 15,771 16,105 3,283

ASSETS 201,002 218,431 282,560 70,056

Expenses in property, plant
and equipment 1,956 2,841 2,355 285
--------------------------------------------------------------------

--------------------------------------------------------------------
Goodwill 173 537 - -
--------------------------------------------------------------------

Heavy Duty Consolidated
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
(Unaudited)
--------------------------------------------------------------------
$ $ $ $
SALES 32,885 34,430 578,372 369,727

Earnings before interest,
amortization, income taxes
and non-controlling interest 3 593 32,004 19,647

ASSETS 38,652 39,846 522,214 328,333

Expenses in property, plant
and equipment 498 411 4,809 3,537
--------------------------------------------------------------------

--------------------------------------------------------------------
Goodwill - 3,936 173 4,473
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(1) The Company applied on a retroactive basis changes in its reportable segments determination The head office expenses which were previously entirely assumed by Automotive Group Canada are now divided amongst the three groups of the Company.

Contact Information

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