Uni-Select Inc.
TSX : UNS

Uni-Select Inc.

May 03, 2017 18:24 ET

Uni-Select reports sales and EBITDA growth as well as network expansion in Q1

BOUCHERVILLE, QUÉBEC--(Marketwired - May 3, 2017) -

  • $297.2 million in sales, up 12.6%;
  • $23.2 million in EBITDA(1), up 6.8%;
  • $22.2 million in free cash flows(1), up 14.0%;
  • C$0.0925 per share quarterly dividend declared, up 8.8%; and
  • 17 net stores added into the network.
Unless otherwise indicated in this press release, all amounts are expressed in thousands of US dollars, except per share amounts and percentages.

Uni-Select Inc. (TSX:UNS) today reported its financial results for the first quarter ended March 31, 2017.

"We are pleased with our ongoing initiatives, in particular, our ability to acquire and successfully integrate select companies into our network, benefiting our sales and EBITDA growth. Our Canadian business experienced solid organic sales growth during the quarter in the corporate stores as well as with our independent customers excluding one independent member loss. Total sales of FinishMaster US were impacted, as expected, by the product line changeover." said Henry Buckley, President and Chief Executive Officer of Uni-Select. "Our free cash flows for the quarter increased, and we continue to be focused on optimizing our business. We are highly committed to delivering balanced profitable growth for the long term, by building a solid foundation, implementing organic sales growth initiatives and through the expansion of both networks." added Henry Buckley.

For further information about the Corporation's use of the non-IFRS measures identified in this press release, refer to "Non-IFRS financial measures" and "Reconciliation of non-IFRS measures" sections.

THREE-MONTH PERIOD
2017 2016
Sales 297,200 264,030
EBITDA (1) 23,173 21,703
EBITDA margin (1) 7.8 % 8.2 %
Net earnings 10,998 11,483
Earnings per share (2) 0.26 0.27
(1) Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" and the "Reconciliation of non-IFRS measures" sections for further details.
(2) 2-for-1 stock split of common shares was effected on May 11, 2016 for shareholders of record as at May 6, 2016. To reflect the effect of the stock split, information pertaining to the number of common shares has been retroactively restated.

FIRST QUARTER RESULTS

Consolidated sales for the three-month period were $297.2 million, a 12.6% increase compared to the same quarter last year, driven by the sales generated mainly from recent US business acquisitions, resulting in additional sales of $44.5 million or 16.8%. The organic sales were affected, as expected, by the product line changeover in the FinishMaster US segment while the Canadian Automotive Group was affected by a loss of an independent member. Without these impacts, the organic growth would have been positive.

The Corporation generated an EBITDA of $23.2 million for the three-month period of 2017, compared to $21.7 million in 2016, an increase of 6.8%. The EBITDA margin decrease of 0.4% is attributable to higher stock-based compensation due to a share price appreciation, lower absorption of fixed costs in relation to the organic growth, and a different revenue mix. These factors were offset by optimized buying conditions, accretive business acquisitions, and lower information technology expenses.

Net earnings of $11.0 million decreased by 4.2% compared to the same quarter last year, and were impacted by additional amortization and finance costs related to recent business acquisitions.

Free cash flows increased to $22.2 million compared to $19.4 million in 2016, and are mainly related to improved operating income from accretive business acquisitions.

Segmented Results

FinishMaster US recorded sales of $199.7 million, up 15.2% from the same quarter in 2016, strengthened by the recent business acquisitions representing a growth of 23.7%. The product line changeover impacted sales by approximately 7.7%. EBITDA for this segment reached $23.3 million, up 12.4% from 2016. EBITDA margin decreased by 0.3%, the result of lower fixed costs absorption related to the organic growth as well as evolving revenue mix from growing multi-shop owners. These factors were compensated by improved buying conditions that enrich the gross margin. FinishMaster US pursued the expansion of its network during the three-month period of 2017, enlarging its footprint and reinforcing its position in major markets.

Sales for the Canadian Automotive Group were $97.5 million, compared to $90.6 million in 2016, an increase of 7.6%, and a direct result of the recent business acquisitions and the conversion effect of the Canadian dollar. The organic growth for the corporate stores was positive, a direct result of the committed leadership team and corporate stores strategy. Excluding the impact of the loss of an independent member, the Canadian Automotive Group organic growth would approximate 3.4%, resulting from a mix of current customer growth and new independent members joining the network. The EBITDA margin decrease of 2.1% compared to 2016 is mainly related to higher stock-based compensation (while the 2016 expenses benefited from a decline in share price), different revenue mix offsetting the contribution from recent business acquisitions and ongoing investments required in relation to the corporate store initiative. These factors were compensated by lower information technology expenses. Once the integration of the corporate stores and the implementation of the new point of sales systems will be completed, additional synergies and efficiency are expected.

DIVIDENDS

On May 3, 2017, the Uni-Select Board of Directors declared a quarterly dividend of C$0.0925 per share payable on July 18, 2017 to shareholders of record on June 30, 2017. This dividend is an eligible dividend for tax purposes.

CONFERENCE CALL

Uni-Select will host a conference call to discuss its first quarter results for 2017 on May 4, 2017 at 8:00 AM Eastern. To join the conference, dial 1 866 696-5910 followed by 9180682.

A recording of the conference call will be available from 10:00 AM Eastern on May 4, 2017 until 11:59 PM Eastern on May 18, 2017. To access the replay, dial 1 800 408-3053 followed by 9180682.

A live webcast of the quarterly results conference call will also be accessible through the "Investors" section of our website at uniselect.com where a replay will also be archived. Listeners should allow ample time to access the webcast and supporting slides.

ABOUT UNI-SELECT

Uni-Select is a leader in the distribution of automotive refinish and industrial paint and related products in North America, as well as a leader in the automotive aftermarket parts business in Canada. In Canada, Uni-Select supports over 16,000 automotive repair and collision repair shops through a growing national network of more than 1,100 independent customers and corporate stores, many of which operate under the Uni-Select BUMPER TO BUMPER®, AUTO PARTS PLUS® AND FINISHMASTER® store banner programs. It also supports over 3,900 shops and stores through its automotive repair/installer shop banners, as well as through its automotive refinish banners. In the United States, Uni-Select, through its wholly-owned subsidiary FinishMaster, Inc., operates a national network of automotive refinish corporate stores under the FINISHMASTER banner which services a network of over 30,000 customers annually, of which it is the primary supplier to over 6,000 collision repair centre customers. Uni-Select is headquartered in Boucherville, Québec, Canada, and its shares are traded on the Toronto Stock Exchange (TSX) under the symbol UNS.

FORWARD-LOOKING INFORMATION

The information provided in this press release may include some forward-looking information, which could include 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.

ADDITIONAL INFORMATION

The Management's Discussion and Analysis (MD&A), condensed consolidated financial statements and related notes for the first quarter of 2017 are available in the "Investors" section on the Corporation's website at uniselect.com as well as on SEDAR at sedar.com. The Corporation's Annual Report may also be found on these websites as well as other information related to Uni-Select, including its Annual Information Form.

RECONCILIATION OF NON-IFRS MEASURES

The information included in this Press release contains certain financial measures that are inconsistent with IFRS. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other entities.

Organic growth - This measure consists of quantifying the increase in pro forma consolidated sales between two given periods, excluding the impact of acquisitions, sales and disposals of stores, exchange-rate fluctuations and when necessary, the variance in the number of billing days. This measure enables Uni-Select to evaluate the intrinsic trend in the sales generated by its operational base in comparison with the rest of the market. Determining the rate of organic growth, based on findings that Management regards as reasonable, may differ from the actual rate of organic growth.

EBITDA - This measure represents net earnings excluding finance costs, depreciation and amortization and income taxes. This measure is a financial indicator of a corporation's ability to service and incur debt. It should not be considered by an investor as an alternative to sales or net earnings, as an indicator of operating performance or cash flows, or as a measure of liquidity, but as additional information.

EBITDA margin - The EBITDA margin is a percentage corresponding to the ratio of the EBITDA to sales.

Free cash flows - This measure corresponds to the cash flows from operating activities according to the consolidated statements of cash flows adjusted for the following items: changes in working capital items, acquisitions of property and equipment and difference between amounts paid for post-employment benefits and current year expenses. Uni-Select considers the free cash flows to be a good indicator of financial strength and of operating performance because it shows the amount of funds available to manage growth in working capital, pay dividends, repay debt, reinvest in the Corporation and capitalize on various market opportunities that arise. The free cash flows exclude certain variances in working capital items (such as trade and other receivables, inventory and trade and other payables) and other funds generated and used according to the statements of cash flows. Therefore, it should not be considered as an alternative to the consolidated statements of cash flows, or as a measure of liquidity, but as additional information.

Total net debt - This measure consists of long‐term debt, including the portion due within a year, net of cash.

The following table presents a reconciliation of organic growth.

First quarter
2017 2016
FinishMaster US199,702 173,413
Canadian Automotive Group97,498 90,617
Sales297,200 264,030
%
Sales variance33,170 12.6
Conversion effect of the Canadian dollar(2,931)(1.1)
Number of billing days(1,045)(0.5)
Acquisitions and others(44,477)(16.8)
Consolidated organic growth(15,283)(5.8)

The following table presents a reconciliation of EBITDA.

First quarter
2017 2016 %
Net earnings10,998 11,483
Income tax expense5,787 6,889
Depreciation and amortization4,802 2,834
Finance costs, net1,586 497
EBITDA23,173 21,703 6.8
EBITDA margin7.8%8.2%

The following table presents a reconciliation of free cash flows.

First quarter
2017 2016
Cash flows from (used in) operating activities3,183 (7,641)
Changes in working capital20,292 28,560
23,475 20,919
Acquisitions of property and equipment(1,217)(1,599)
Difference between amounts paid for post-employment benefits and current period expenses(106)108
Free cash flows22,152 19,428

UNI-SELECT INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands of US dollars, except per share amounts, unaudited)Quarter ended
March 31,
20172016
Sales297,200264,030
Purchases, net of changes in inventories203,283183,966
Gross margin93,91780,064
Employee benefits48,56539,709
Other operating expenses22,17918,652
Earnings before finance costs, depreciation and amortization and income taxes23,17321,703
Finance costs, net1,586497
Depreciation and amortization4,8022,834
Earnings before income taxes16,78518,372
Income tax expense5,7876,889
Net earnings10,99811,483
Earnings per share (basic and diluted)0.260.27
Weighted average number of common shares outstanding (in thousands)
Basic42,24743,017
Diluted42,41443,242

UNI-SELECT INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of US dollars, unaudited)Quarter ended
March 31,
20172016
Net earnings10,99811,483
Other comprehensive income
Items that will subsequently be reclassified to net earnings:
Unrealized exchange gains on the translation of financial statements to the presentation currency1,86212,303
Items that will not subsequently be reclassified to net earnings:
Actuarial gains of defined benefit pension plans (net of income tax of $16 ($152 in 2016))68396
Total other comprehensive income1,93012,699
Comprehensive income12,92824,182

UNI-SELECT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to shareholders
(In thousands of US dollars, unaudited)Share
capital
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
equity
Balance, December 31, 201597,864 3,588371,997 (36,471)436,978
Net earnings- -11,483 - 11,483
Other comprehensive income- -396 12,303 12,699
Comprehensive income- -11,879 12,303 24,182
Contributions by and distributions to shareholders:
Repurchase and cancellation of shares(1,177)-(11,611)- (12,788)
Issuance of shares593 -- - 593
Dividends- -(2,517)- (2,517)
Stock-based compensation- 276- - 276
(584)276(14,128)- (14,436)
Balance, March 31, 201697,280 3,864369,748 (24,168)446,724
Balance, December 31, 201696,924 4,260401,420 (30,242)472,362
Net earnings- -10,998 - 10,998
Other comprehensive income- -68 1,862 1,930
Comprehensive income- -11,066 1,862 12,928
Contributions by and distributions to shareholders:
Issuance of shares380 -- - 380
Dividends- -(2,715)- (2,715)
Stock-based compensation- 185- - 185
380 185(2,715)- (2,150)
Balance, March 31, 201797,304 4,445409,771 (28,380)483,140

UNI-SELECT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars, unaudited)Quarter ended
March 31,
2017 2016
OPERATING ACTIVITIES
Net earnings10,998 11,483
Non-cash items:
Finance costs, net1,586 497
Depreciation and amortization4,802 2,834
Income tax expense5,787 6,889
Amortization of incentives granted to customers4,601 3,150
Other non-cash items(25)(878)
Changes in working capital items(20,292)(28,560)
Interest paid(1,229)(274)
Income taxes paid(3,045)(2,782)
Cash flows from (used in) operating activities3,183 (7,641)
INVESTING ACTIVITIES
Business acquisitions(66,082)(50,943)
Net balance of purchase price(3,405)(156)
Cash held in escrow(8,477)(848)
Advances to merchant members and incentives granted to customers(7,604)(4,565)
Reimbursement of advances to merchant members270 473
Net acquisitions of property and equipment(1,219)(1,598)
Acquisitions and development of intangible assets(829)(494)
Cash flows used in investing activities(87,346)(58,131)
FINANCING ACTIVITIES
Increase in long-term debt116,494 9,683
Repayment of long-term debt(40,181)(11,629)
Net decrease in merchant members' deposits in the guarantee fund(196)(383)
Repurchase and cancellation of shares- (12,788)
Issuance of shares380 593
Dividends paid(2,726)(2,378)
Cash flows from (used in) financing activities73,771 (16,902)
Effects of fluctuations in exchange rates on cash11 504
Net decrease in cash(10,381)(82,170)
Cash, beginning of period22,325 91,432
Cash, end of period11,944 9,262

UNI-SELECT INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of US dollars, unaudited)March 31, Dec. 31,
2017 2016
ASSETS
Current assets:
Cash11,944 22,325
Cash held in escrow22,969 14,486
Trade and other receivables159,740 146,130
Income taxes receivable13,412 16,751
Inventory341,997 330,808
Prepaid expenses5,367 4,893
Total current assets555,429 535,393
Investments and advances to merchant members32,494 28,651
Property and equipment43,254 41,982
Intangible assets114,035 101,158
Goodwill279,483 243,807
Derivative financial instruments1,011 -
Deferred tax assets22,784 22,743
TOTAL ASSETS1,048,490 973,734
LIABILITIES
Current liabilities:
Trade and other payables285,011 311,367
Balance of purchase price, net39,117 25,303
Provision for restructuring and other charges576 775
Dividends payable2,704 2,673
Current portion of long-term debt and merchant members' deposits in the guarantee fund3,731 3,817
Total current liabilities331,139 343,935
Long-term employee benefit obligations17,941 16,802
Long-term debt207,247 130,572
Merchant members' deposits in the guarantee fund5,188 5,319
Derivative financial instruments- 359
Deferred tax liabilities3,835 4,385
TOTAL LIABILITIES565,350 501,372
EQUITY
Share capital97,304 96,924
Contributed surplus4,445 4,260
Retained earnings409,771 401,420
Accumulated other comprehensive loss(28,380)(30,242)
TOTAL EQUITY483,140 472,362
TOTAL LIABILITIES AND EQUITY1,048,490 973,734

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