Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

October 28, 2005 13:06 ET

Uni-Select Increases its Profits by 26.2% in the Third Quarter of 2005

BOUCHERVILLE, QUEBEC--(CCNMatthews - Oct. 28, 2005) - Uni-Select Inc.(TSX:UNS) announced its financial results for the third quarter of 2005 and for the nine-month period ended September 30, 2005. Net earnings increased by 26.2% to reach $9 214 000 or $0.47 diluted per share compared to $7,302,000 or $0.39 per share in the third quarter of 2004. Net earnings for the nine-month period ended September 30, 2005 were $24,875,000 or $1.27 diluted per share compared to $18,543,000 and $1.00 per share in 2004.

Sales in the third quarter were $296,539,000, an increase of 57.1% compared to sales of $188,791,000 realised in the third quarter of 2004. Sales reached $874,911,000 for the nine-month period ended September 30, 2005, an increase of 56.6% compared to sales of $558,518,000 realised in the same period of 2004.

The contribution of Automotive Group USA to Uni-Select's sales increased almost four-fold in the third quarter of 2005, going from $38,507,000 in the third quarter of 2004 to $150,461,000 in the third quarter of 2005. This increase stems from the acquisition of Middle Atlantic Warehouse Distributor, Inc. ("MAWDI") completed on November 1, 2004. Without this acquisition, quarterly sales of the Group would have decreased as a result of the unfavourable fluctuation of the exchange rate which decreased by 8.5%. Excluding the impact of the exchange rate, organic growth of Automotive Group USA was 3.4% in the third quarter. For the nine-month period ended September 30, 2005, sales for the Group increased by 278.2% to reach $441,460,000 in 2005 ($116,737,000 in 2004). This increase is also attributable to the acquisition of MAWDI. The operating income of Automotive Group USA increased to 6.1% for the quarter compared to 4.8% for the same quarter in 2004. This increase is due both to the realization of synergies resulting from the acquisition of MAWDI and to the improved performance of the existing business entities. Year-to-date, the operating income of the Group improved to 5.7% compared to 4.4% in 2004.

Sales for Automotive Group Canada decreased by 1.6% during the course of the third quarter of 2005, of which 1.0% is organic. Sales in the third quarter reached $128,545,000 compared to $130,649,000 in the same period of 2004. For the nine-month period ended September 30, 2005, Automotive Group Canada's sales were $383,033,000 compared to $387,716,000 in 2004, a decrease of 1.2%. The operating income of Automotive Group Canada in the third quarter was 6.6% compared to 6.8% for the same quarter in 2004. Year-to-date, the operating margin of the Group remains unchanged at 6.4%.

Sales for the Heavy Duty Group decreased by 10.7% for the third quarter of 2005 to reach $17,533,000 compared to $19,635,000 in the corresponding quarter of 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 of an organic nature of 7.4% arising in part from the difficulty in supplying certain products. For the nine-month period ended September 30, 2005, sales for the Group decreased by 6.7% going from $54,065,000 to $50,418,000. The operating income of the Group during the course of the third quarter was 0.6% compared to 6.3% in the same quarter of 2004. Year-to-date, the operating income of the Group was 0.2% compared to 3.4% in 2004.

"The integration of our US operations is progressing well and as expected. In fact, we welcome the turn of events in our U.S. operations. The tireless support of our clients, employees and suppliers has made these encouraging results possible", declared Mr. Jacques Landreville, President and Chief Executive Officer of Uni-Select Inc. "Nevertheless, the Canadian market is more challenging than anticipated after a promising quarter. As we have noted in the past, the Canadian market remains very competitive and we will have to aggressively pursue both our sales efforts as well as control costs and assets."

Finally, the Board of Directors of Uni-Select declared a quarterly dividend of $0.08 per common share payable on to shareholders of record as at January 20, 2006.

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 service to customers in the United States. The Uni-Select Network includes over 2,000 independent jobbers and services 3,142 points of sale in Canada and the United States. 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

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS, EXCEPT NET EARNINGS PER SHARE)

THIRD QUARTER 9 MONTHS
2005 2004 2005 2004
(UNAUDITED)
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $ $
SALES 296,539 188,791 874,911 558,518
--------------------------------------------------------------------

Earnings before
the following 17,769 11,956 49,773 31,603

Interest on bank debt 44 106 251 359
Interest on long-term
debt 772 4 2 156 13
Interest on merchant
members' deposits in
guarantee funds 60 69 191 200
Interest income from
cash, cash equivalent
and temporary
investments (138) (97) (202) (403)
Interest income from
merchant members (114) (83) (300) (237)
Amortization (Note 3) 1,852 1,188 6,040 3,639
--------------------------------------------------------------------
2,476 1,187 8,136 3,571
--------------------------------------------------------------------

Earnings before other
revenues, income taxes
and non-controlling
interest 15,293 10,769 41,637 28,032
Income taxes
Current 5,784 3,443 14,115 9,258
Future (483) (168) 504 (305)
--------------------------------------------------------------------
5,301 3,275 14,619 8 953
--------------------------------------------------------------------

Earnings before
non-controlling
interest 9,992 7,494 27,018 19,079
Non-controlling interest 778 192 2 143 536
--------------------------------------------------------------------

Net earnings 9,214 7,302 24,875 18,543
--------------------------------------------------------------------
--------------------------------------------------------------------

Net earnings per share
(Note 5) 0.47 0.40 1.28 1.01
--------------------------------------------------------------------
--------------------------------------------------------------------

Diluted net earnings
per share (Note 5) 0.47 0.39 1.27 1.00
--------------------------------------------------------------------
--------------------------------------------------------------------

--------------------------------------------------------------------
Weighted number of
outstanding
shares 19,531,987 18,374,096 19,497,362 18,367,204
--------------------------------------------------------------------
Number of issued
and outstanding
common shares 19,557,909 18,390,139 19,557,909 18,390,139
--------------------------------------------------------------------


UNI-SELECT INC.
CONSOLIDATED CASH FLOWS

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 AND 2004
(IN THOUSANDS OF DOLLARS)

THIRD QUARTER 9 MONTHS
2005 2004 2005 2004
(UNAUDITED)
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $ $

OPERATING ACTIVITIES
NET EARNINGS 9,214 7,302 24,875 18,543

NON-CASH ITEMS
Amortization 1,852 1,188 6,040 3,639
Future income taxes (483) (168) 504 (305)
Non-controlling interest 778 192 2,143 536
---------------------------------------------------------------------
11,361 8,514 33,562 22 413
Changes in working
capital items (10,329) (1,670) (4,000) (24,967)
---------------------------------------------------------------------
CASH FLOWS FROM
OPERATING ACTIVITIES 1,032 6,844 29,562 (2,554)
---------------------------------------------------------------------
INVESTING ACTIVITIES
Temporary investments - - - 32,359
Business acquisitions
(Note 6) - (2,108) (5,708) (12,382)
Disposal of assets - 470 - 1,212
Advances to joint venture - 1,096 3,596
Advances to merchant
members (1,090) (1,577) (2,674) (5,043)
Cash advance to
merchant members 1,088 480 3,382 1,941
Company shares - - 20 -
Disposal of fixed assets - 15 - 93
Fixed assets (2,692) (877) (7,318) (4,008)
---------------------------------------------------------------------
CASH FLOWS FROM
INVESTING ACTIVITIES (2,694) (2,501) (12 298) 17 768
---------------------------------------------------------------------
FINANCING ACTIVITIES
Bank debt (533) (4,950) (2,337) (6,654)
Due to a joint venture
partner - - (2,500) -
Financing costs (139) - (139) -
Balance of sale
receivable - - - 208
Balance of purchase price - - (4,104) (36)
Long-term debt - - 3,589 -
Reimbursement of
long-term debt (441) (21) (1,107) (95)
Merchant members'
deposits in guarantee
fund 140 1 34 221
Issuance of shares 547 231 1,851 562
Dividends paid (1,562) (1,351) (4,549) (4,830)
---------------------------------------------------------------------
CASH FLOW FROM
FINANCING ACTIVITIES (1,988) (6,090) (9 262) (10,624)
---------------------------------------------------------------------
Increase (decrease)
in cash and cash
equivalents (3,650) (1,747) 8 002 4,590
Cash and cash
equivalents,
beginning of period 21,573 19,974 9,921 13,637
---------------------------------------------------------------------
Cash and cash
equivalents, end
of period 17,923 18,227 17 923 18 227
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash equivalents
include cash and
temporary investments
maturing in less than
three months.
Dividends paid on
common shares 0.080 0.073 0.234 0.263
---------------------------------------------------------------------



CONSOLIDATED RETAINED EARNINGS
NINE-MONTH PERIOD ENDED MARCH 31, 2005 AND 2004
(IN THOUSANDS OF DOLLARS)

2005 2004
--------------------------------------------
$ $

Balance, beginning
of year 188,159 164,591
Changes in accounting
policies - (955)
--------------------------------------------
188,159 163,636
Net earnings 24,875 18,543
--------------------------------------------
213,034 182,179
Dividends 4,686 4,952
--------------------------------------------
Balance at end of year 208 348 177 227
--------------------------------------------


UNI-SELECT INC.
CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
2005 2004 2004
(IN THOUSAND OF DOLLARS) UNAUDITED UNAUDITED AUDITED
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 17 923 18 227 9 921
Accounts receivable 157 177 111 324 134 584
Income taxes receivable 4 601 4 380 2 941
Inventory 266 419 137 530 261 413
Prepaid expenses 6 302 2 992 3 496
Future income taxes 4 352 1 607 5 488
--------------------------------------------------------------------
456 774 276 060 417 843

Investments and volume
rebates, at cost, 9 122 7 475 8 309
Fixed assets 34 965 27 865 33 585
Deferred financing 1 245 - 1 384
Goodwill 17 970 13 476 18 273
Future income taxes 3 307 1 864 3 056
--------------------------------------------------------------------
523 383 326 740 482 450
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 854 1 837 3 193
Accounts payable 174 769 116 037 135 541
Income taxes payable 2 596 1 450 18 782
Dividends payable 1 565 1 352 1 428
Installments on long-term
debt and merchant members'
deposits in guarantee fund 286 89 477
--------------------------------------------------------------------
180 070 120 765 159 421
Deferred government grants 396 446 421
Long-term debt 63 352 205 63 230
Merchant members' deposits
in guarantee funds 7 594 8 016 7 452
Future income taxes 3 644 3 319 3 935
Non-controlling interest 25 966 6 924 24 125
--------------------------------------------------------------------
281 022 139 675 258 584
--------------------------------------------------------------------
--------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Capital stock (Note 4) 47 452 17 520 45 601
Cumulative translation
adjustments (13 439) (7 682) (9 894)
Retained earnings 208 348 177 227 188 159
--------------------------------------------------------------------
242 361 187 065 223 866
--------------------------------------------------------------------
523 383 326 740 482 450
--------------------------------------------------------------------
--------------------------------------------------------------------


Uni-Select inc
Notes to consolidated financial statements (in thousands of dollars
with the exception of 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 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 implemented 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
corporate structure and reflects the control exercised by
contractual or other financial obligations rather than the sole
impact of voting stock. The application of the AcG 15 did not
affect the consolidated financial statements of the Company.

3. 3. Information on results

For the nine-month periods ended September, 2005 and 2004

2005 2004
---------------------------------------------------------------------
Amortization of fixed assets 5 797 3 639
Amortization on financing costs 243 -
---------------------------------------------------------------------
6 040 3 639
---------------------------------------------------------------------
---------------------------------------------------------------------


4. Capital Stock

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

Nine months ended Twelve months ended
September 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 134,620 common
shares on the exercise
of stock options
(75,166 in 2004) 1 851 980

Issue of 0 common shares
for cash (1,000,365 in 2004) - 27 663
---------------------------------------------------------------------
Balance, end of period:
19,557,909 common shares
(19,423,289 in 2004) 47 452 45 601
---------------------------------------------------------------------


5. Earnings per share

The following table presents basic and diluted earnings per share:

For the three month periods ended September 30, 2005 and 2004

---------------------------------------------------------------------
2005
---------------------------------------------------------------------
Weighted
average
Net number of Earnings
earnings shares per share
---------------------------------------------------------------------
$ $
Basic earnings per share 9 214 19 531 987 0.47

Impact of stock
options exercised 133 465
---------------------------------------------------------------------

---------------------------------------------------------------------
Diluted earnings per share 9 214 19 665 452 0.47
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
2004
---------------------------------------------------------------------
Weighted
average
Net number of Earnings
earnings shares per share
---------------------------------------------------------------------
$ $
Basic earnings per share 7 302 18 374 096 0.40

Impact of stock
options exercised 201 631
---------------------------------------------------------------------

---------------------------------------------------------------------
Diluted earnings per share 7 302 18 575 727 0.39
---------------------------------------------------------------------
---------------------------------------------------------------------


For the nine-month periods ended September 30, 2005 and 2004

---------------------------------------------------------------------
2005
---------------------------------------------------------------------
Weighted
average
Net number of Earnings
earnings shares per share
---------------------------------------------------------------------
$ $
Basic earnings per share 24 875 19 497 362 1.28

Impact of stock
options exercised 151 140
---------------------------------------------------------------------

---------------------------------------------------------------------
Diluted earnings per share 24 875 19 648 502 1.27
---------------------------------------------------------------------
---------------------------------------------------------------------

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

Basic earnings per share 18 543 18 367 204 1.01

Impact of stock
options exercised 187 130
---------------------------------------------------------------------

---------------------------------------------------------------------
Diluted earnings per share 18 543 18 554 334 1.00
---------------------------------------------------------------------
---------------------------------------------------------------------

6. Business acquisitions

In 2005, the Company acquired the following businesses:

Action Automotive Distributing, Inc.

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 of
the vendor. 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:
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)
---------------------------------------------------------------------
Other assets acquired 2 516 4 358 888 (250) 7 512

Current liabilities (1 453) - (146) - (1 599)
Long-term debt - - (8) - (8)
---------------------------------------------------------------------
Total liabilities assumed (1 453) - (154) - (1 607)
---------------------------------------------------------------------
Net assets acquired 1 063 4 358 734 (250) 5 905
Cash of company acquired - - (139) - (139)
---------------------------------------------------------------------
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
---------------------------------------------------------------------
Balance of purchase
price payable - - 58 - 58
---------------------------------------------------------------------

7. Employee future benefits

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

For the three-month period ended September 30, 2005, the total
expense for the defined contribution plan was of $240 ($221 in 2004)
and of $360 ($334 in 2004) for the defined benefit plans.

For the nine-month period ended September 30, 2005, the total
expense for the defined contribution plan was of $754 ($702 in 2004)
and of $1,195 ($1,009 in 2004) for the defined benefit plans.

8. Segmented information

Nine months ended September 30, 2005 and 2004
(in thousands of dollars)

--------------------------------------------------------------------
Automotive Automotive
Canada USA
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
--------------------------------------------------------------------
SALES 383,033 387,716 441,460 116,737
--------------------------------------------------------------------

Earnings before interest,
amortization, income
taxes and non-controlling
interest 24,380 24,658 25,283 5,117

ASSETS 215,832 216,838 257,849 70,056

Expenses in property,
plant and equipment 3,600 3,606 3,277 301

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


--------------------------------------------------------------------
Heavy Duty Consolidated
2005 2004 2005 2004
$ $ $ $
--------------------------------------------------------------------
SALES 50,418 54,065 874,911 558,518
--------------------------------------------------------------------

Earnings before interest,
amortization, income
taxes and non-controlling
interest 110 1,828 49,773 31,603

ASSETS 49,702 39,846 523,383 326,740

Expenses in property,
plant and equipment 624 475 7,501 4,382

Goodwill - 3,940 173 4,477
--------------------------------------------------------------------


Three months ended September 30, 2005 and 2004
(in thousands of dollars)

--------------------------------------------------------------------
Automotive Automotive
Canada USA
2005 2004 2005 2004
$ $ $ $
--------------------------------------------------------------------
SALES 128,545 130,649 150,461 38,507
--------------------------------------------------------------------

Earnings before interest,
amortization, income
taxes and non-controlling
interest 8,484 8,887 9,178 1,834

ASSETS 215,832 216,838 257,849 70,056

Expenses in property,
plant and equipment 1,644 765 922 16

Goodwill - - - -
--------------------------------------------------------------------


--------------------------------------------------------------------
Heavy Duty Consolidated
2005 2004 2005 2004
$ $ $ $
--------------------------------------------------------------------
SALES 17,533 19,635 296,539 188,791
--------------------------------------------------------------------

Earnings before interest,
amortization, income
taxes and non-controlling
interest 107 1,235 17,769 11,956

ASSETS 49,702 39,846 523,383 326,740

Expenses in property,
plant and equipment 126 64 2,692 845

Goodwill - 4 - 4
--------------------------------------------------------------------

(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 business groups of the Company.




Contact Information

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