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

BOUCHERVILLE, QUEBEC--(Marketwire - Aug. 7, 2012) - Uni-Select Inc. (TSX:UNS)

Highlights

• Reduction 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.)

Uni-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-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 6^th 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 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

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.