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Uni-Select Inc. Reports 2019 First Quarter Financial Results

  • Sales of $420.0 million, up 2.5% organically(1);
  • EBT(1)(2) of $(1.3) million versus $12.1 million in 2018; adjusted EBT(1)(2) and adjusted EBT margin(1)(2) of $7.1 million and 1.7% versus $14.2 million and 3.4% in 2018;
  • EPS of $(0.03) versus $0.25 for 2018; adjusted EPS(1) of $0.12 versus $0.29 for 2018;
  • Free cash flows(1) of $19.2 million versus $6.7 million in 2018, up 185.8%;
  • Performance Improvement Plan: ongoing integration of distribution centres and company-owned stores; and
  • Guidance maintained, adjusted to consider the adoption of IFRS 16 – Leases on January 1, 2019.

 

(1)

Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section for further details.

(2)

With the adoption of IFRS 16 - Leases, the Corporation considers that EBT is the preferred comparative measure to explain its results and performance. Refer to the "Financial results" section for further details.



Unless otherwise indicated in this press release, all amounts are expressed in thousands of US dollars, except tabular amounts, per share amounts and percentages.

 

BOUCHERVILLE, QC, May 2, 2019 /CNW Telbec/ - Uni-Select Inc. (TSX:UNS.TO - News) ("Uni-Select" or "Corporation") today reported its financial results for the first quarter ended March 31, 2019.

"The solid performance of the Canadian Automotive Group and the benefits of the Performance Improvement Plan ("PIP") were offset by the challenges faced in the first quarter from ongoing margin pressure at FinishMaster U.S. and from the uncertainty created by Brexit on The Parts Alliance business," indicated André Courville, former Interim President and CEO.

"With regards to FinishMaster U.S., we initiated the implementation of the PIP by integrating 3 stores in the first quarter. By the end of 2019, we fully expect to have realized an annualized run rate cost savings of $10 million at FinishMaster U.S. mainly from store consolidation, organizational optimization and spending reductions. These various initiatives should lead to improved results in the second half of 2019. In the UK, the uncertainty surrounding Brexit will continue to present some headwinds in upcoming quarters, but we believe that volumes may improve as customers adjust to a new economic reality," concluded Mr. Courville.

"The Strategic Alternatives review is following its course. Included in the process is the implementation of the Performance Improvement Plan, which is on track. All options remain open and we are not in a position to provide any further update at this time. As planned, our interim President and CEO, André Courville is relinquishing his duties to make way for a new, permanent CEO. As announced earlier this week, we are pleased that Brent Windom has been appointed President and CEO of Uni-Select Inc., effective May 1st. Mr. Windom has a profound understanding and unparalleled knowledge of both Uni-Select and our industry. He has demonstrated strong leadership capabilities over the years, while his operational experience and skill set are in perfect alignment with what the organization requires during its transformation. With the addition of Mr. Windom, the Board strongly believes we have a solid leadership team in place to face current challenges and to restore and unlock value for shareholders. André has decided not to stand for re-election to the Board after a 5-year tenure. His dedication and contribution to Uni-Select has been significant and is greatly appreciated. We wish him every success in his new endeavours," stated Michelle Cormier, Chair of the Board of Directors.

Eric Bussières, currently Chief Financial Officer of Uni-Select Inc., is also appointed Executive Vice President and Chief Financial Officer, while Me Louis Juneau, currently Chief Legal Officer and Corporate Secretary, is named Chief Legal and Administration Officer and Corporate Secretary, both effective immediately.

OPERATIONAL OVERVIEW

Network evolution

During the first quarter, Uni-Select opened three greenfields, integrated four company-owned stores as part of the PIP and added one company-owned store through a business acquisition. 

In addition, to optimize its logistical processes, the Corporation has integrated three smaller distribution centres into two larger ones, permitting increased competitiveness and efficiency. These new distribution centres were operational during the first quarter of 2019.

Performance Improvement Plan

In January 2019, the Board of Directors and Management initiated the development of a broad performance improvement and rightsizing plan for the FinishMaster U.S. segment with the objective of realigning its operations to address changing market conditions, including ongoing consolidation by national accounts and pricing pressures. This plan, which is expected to generate additional annualized costs savings of $10.0 million by the end of 2019, through the consolidation of company-owned stores (approximately $5.0 million), optimization (approximately $4.5 million) and spending reductions (approximately $0.5 million). The company-owned stores to be integrated are expected to produce marginal sales erosion since the strategy is to transfer sales activities to nearby locations, optimizing the logistical processes and costs efficiency.

The 25/20 Plan and the FinishMaster U.S. segment performance improvement and rightsizing plan combined together are now referred to as the PIP.

Through this plan, the Corporation expects to generate annualized cost savings of $35.0 million by the end of 2020, of which, $21.4 million has been realized as at March 31, 2019.

The total cash cost of implementing the PIP is expected to be $13.5 million, mainly for severance, consulting fees and moving costs. The Corporation is also expecting to write down certain assets for approximately $4.0 million, mainly for the FinishMaster U.S. segment. During the current quarter of 2019, the Corporation recognized restructuring and other charges totalling $6.5 million, of which, $2.7 million is non-cash for the write-down of assets.

During the quarter, the Corporation reduced its workforce and integrated four company-owned stores. In addition, to optimize its logistical processes, the Corporation has integrated three smaller distribution centres into two larger ones, permitting increased competitiveness and efficiency. These new distribution centres were operational during the first quarter of 2019.

The following table summarizes the annualized impacts as at March 31, 2019:

 


Expected

Realized


By the end
of 2020

As at
2018

During
2019

As at
March 2019

Annualized cost savings

35,000

18,700

2,700

21,400

Restructuring and other charges:





Restructuring charges

8,500

5,055

1,985

7,040

Other charges as incurred

5,000

2,523

1,841

4,364

Write-down of assets

4,000

-

2,679

2,679


17,500

7,578

6,505

14,083

Net capital expenditures(1)

7,000

5,509

(370)

5,139


(1) 

Includes the proceeds from the sale of one building and tenant incentives.

 

Update on Strategic Review Process

In September 2018, the Board announced the formation of a Special Committee of independent members of the Board to oversee a review of strategic alternatives. As was indicated at the outset of this process, we have not determined a definitive schedule. However, we continue to work diligently on this front. 

Given the nature of the process, the Corporation does not intend to provide further updates until such time as the Board approves a definitive transaction or strategic alternative, or otherwise determines that further disclosure is appropriate. There are no guarantees that the review of strategic alternatives will result in a transaction, or if a transaction is undertaken, as to its terms or timing.

FINANCIAL RESULTS

Adoption of IFRS 16 - Leases

On January 1, 2019, the Corporation applied, for the first time, IFRS 16 - Leases using the modified retrospective transition approach and did not restate comparative amounts of the year prior to its adoption as permitted. As a result, the 2019 interim condensed consolidated financial statements present significant variances when compared to 2018. The 2019 interim condensed consolidated statement of earnings includes reduced rent expenses from the elimination of the classification as operating leases, higher finance costs from the interest expense on lease liabilities and higher depreciation of right-of-use assets. Consequently, the Corporation considers that EBT is the preferred comparative measure to explain its results and performance, rather than the EBITDA as previously used.

The following table presents selected consolidated information:

 




FIRST QUARTERS


2019

2018

Sales

420,037

422,094




EBITDA(1)

21,356

27,002

EBITDA margin (1)

5.1%

6.4%

Adjusted EBITDA(1)

28,451

27,620

Adjusted EBITDA margin (1)

6.8%

6.5%




EBT

(1,297)

12,105

EBT margin (1)

(0.3%)

2.9%

Adjusted EBT(1)

7,079

14,168

Adjusted EBT margin (1)

1.7%

3.4%

Special items 

7,095

618




Net earnings (loss)

(1,333)

10,391

Adjusted earnings(1)

5,050

12,116




Earnings (loss) per share

(0.03)

0.25

Adjusted earnings per share(1)

0.12

0.29



(1) 

Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section for further details.

 

FIRST QUARTER RESULTS

Consolidated sales of $420.0 million for the first quarter included a foreign currency conversion impact amounting to $12.6 million or 3.0% compared to the same quarter last year. Consolidated organic growth for the quarter was $10.5 million or 2.5%. The Canadian Automotive Group and the FinishMaster U.S. segments generated organic growth of 4.9% and 3.1% respectively, while The Parts Alliance U.K. segment had a softer quarter and reported a negative organic growth of 1.0%.

The Corporation generated an adjusted EBT and adjusted EBT margin of $7.1 million and 1.7%, respectively, compared to $14.2 million and 3.4% in 2018. This variance is mainly attributable to pricing pressure and evolving customer mix in the FinishMaster U.S. segment as well as to a reduced sales volume in The Parts Alliance U.K. segment, impacting buying conditions. Furthermore, the opening of greenfields is affecting the margin until reaching the optimized operational level. These elements were partially compensated by timing of volume rebates from the Canadian Automotive Group segment, by overall savings realized from the PIP and by a superior fixed costs absorption in relation to consolidated organic growth.

The net earnings (loss) and adjusted earnings were respectively $(1.3) million and $5.1 million, compared to $10.4 million and $12.1 million in 2018. Adjusted earnings decreased by $7.1 million compared to the same quarter last year, due to a lower adjusted EBT and a change in the proposed U.S. tax regulations announced in December 2018.

Segmented First Quarter Results

The FinishMaster U.S. segment is reporting organic growth for a fourth consecutive quarter. Sales are up 1.6% from the same quarter in 2018, resulting from organic growth of 3.1%, partially offset by the impact of a different number of billing days. This performance is attributable to the sales team efforts on driving growth by developing business volume and the on-boarding of new customer accounts. EBT was $3.7 million, compared to $15.4 million for the corresponding quarter of 2018. Adjusted EBT was $9.0 million or 4.4% of sales compared to $15.4 million or 7.7% of sales for the same quarter last year, a decrease of 330 basis points attributable to the pressure on the gross margin from the combination of an evolving customer mix and pricing pressure. These elements were partially compensated by an improved absorption of fixed costs related to organic growth and by the benefits from the PIP.

Sales for the Canadian Automotive Group segment were $113.1 million, compared to $110.7 million in 2018, an increase of 2.2%, fuelled by an organic growth of 4.9% and by the contribution of business acquisitions, exceeding the effect of the Canadian dollar on its conversion to the US dollar. The organic growth is partially attributable to timing in sales of paint body and equipment. EBT for this segment was $2.7 million compared to $0.2 million in 2018. The adjusted EBT was $3.5 million or 3.1% of sales, compared to $0.2 million or 0.2% of sales, an impact of 290 basis points strengthened by timing of volume rebates and by the performance of the company-owned stores, stimulated by the optimization initiatives recently implemented.

The Parts Alliance U.K. segment recorded sales of $102.4 million, a decrease of 0.6% compared to the same quarter last year, once adjusted for the effect of the British pound on its conversion to the US dollar. This variance is attributable to a negative organic growth of 1.0%, impacted by lower sales of electrical products as a result of a mild winter in contrast to a hard winter last year, by the loss of a sales contract in the last quarter of 2018 as well as by the uncertainty of the Brexit, offsetting the contribution of business acquisitions. EBT and adjusted EBT for this segment was $2.3 million or 2.3% of sales, compared to $7.3 million or 6.6% of sales for the same quarter last year, a decreased of 430 basis points, mainly due to a lower volume of sales, which impacted the buying conditions and reduced the fixed costs absorption. In addition, the adjusted EBT margin is impacted by the recent investments in greenfields and the opening of a distribution centre. Greenfields are expected to affect the EBT margin until reaching the optimized operational level, which may vary between 12 and 24 months.

DIVIDENDS

On May 2, 2019, the Uni-Select Board of Directors declared a quarterly dividend of C$0.0925 per share payable on July 16, 2019 to shareholders of record as at June 30, 2019. This dividend is an eligible dividend for income tax purposes.

OUTLOOK

The information included within this section contains guidance for Uni-Select in 2019, excluding any potential impact from the review of strategic alternatives.

The Corporation recognizes that certain factors and uncertainties have impacted results for 2018 and will continue to provide a prudent view of 2019 guidance.

 


Uni-Select guidance maintained, adjusted for IFRS 16

Consolidated organic sales growth

1.25% - 3.25%

Consolidated adjusted EBITDA margin

7.5% - 8.5%

Consolidated adjusted EBT margin

2.5% - 3.5%

Tax rate

23.0% - 25.0%


The above-mentioned information is related to the 2019
financial year and may differ from quarter to quarter due
to seasonality.

 

As well, Uni-Select anticipates investments between $25.0 million and $30.0 million in 2019 on right-of-use assets relative for vehicle fleet, hardware equipment, software and others. These figures exclude additions from right-of-use assets for real estate.

For 2019, on a consolidated basis, we anticipate revenues to increase modestly and profitability to decrease, mainly due to the FinishMaster U.S. segment. More specifically, the overall results from the Canadian Automotive Group segment are expected to be more favourable when compared to last year, considering the planned integration of some company-owned stores and distribution centres as well as the contribution of the 18 company-owned stores from the acquisition in November 2018 of Autochoice Parts and Paints Limited. For The Parts Alliance U.K. with the current uncertainty surrounding Brexit, we now expect 2019 to remain somewhat under pressure for the remainder of the year. We will, however, continue to optimize our network and selectively open greenfield company-owned stores to foster our presence in the UK market. As for the FinishMaster U.S. segment, 2019 is expected to remain a challenging year since the benefits related to the PIP should start to materialize in the second part of the year. Our guidance for 2019 takes these factors and uncertainties into consideration.

CONFERENCE CALL

Uni-Select will host a conference call to discuss its first quarter results for 2019 on May 2, 2019, at 8:00 AM Eastern. To join the conference, dial 1 866 865-3087 (or 1 647 427-7450 for International calls).

A recording of the conference call will be available from 11:00 AM Eastern on May 2, 2019, until 11:59 PM Eastern on June 2, 2019. To access the replay, dial 1 855 859-2056 followed by 5476329.

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 and in the UK. Uni-Select is headquartered in Boucherville, Québec, Canada, and its shares are traded on the Toronto Stock Exchange (TSX) under the symbol UNS.

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 over 70 company-owned 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 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 over 200 automotive refinish company-owned stores under the FINISHMASTER banner which services a network of over 30,000 customers annually, of which it is the primary supplier to over 6,800 collision repair centre customers.

In the UK and Ireland, Uni-Select, through its Parts Alliance group of subsidiaries, is a leading distributor of automotive parts supporting over 23,000 customer accounts with a network of over 180 company-owned stores.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain statements made in this press release are forward-looking statements. These statements include, without limitation, statements relating to our 2019 financial guidance (including, without limitation, adjusted EBITDA margin, adjusted EBT margin and consolidated organic growth) and other statements that are not historical facts. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities laws.

Forward-looking statements are, by their very nature, subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which may cause expressed expectations to be significantly different from those listed or implied within this press release and our business outlook, objectives, plans and strategic priorities may not be achieved. As a result, we cannot guarantee that any forward-looking statement will materialize, and we caution you against relying on any of these forward‑looking statements. 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. Forward‑looking statements are presented in this press release for the purpose of assisting investors and others in understanding certain key elements of our expected 2019 financial results, as well as our objectives, strategic priorities and business outlook for 2019, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

MATERIAL ASSUMPTIONS

A number of economic, market, operational and financial assumptions were made by Uni-Select in preparing its forward-looking statements contained in this press release, including, but not limited to:

Economic Assumptions:

  • Economic conditions in Canada and the United States remain stable;
  • The current negotiations for the exit of the United Kingdom from European Union do not result in further economic uncertainty (i.e.:no hard Brexit);
  • Interest rates expected to stay neutral or slightly increase in 2019;
  • The Canadian dollar and the British pound are expected to remain at, or around, near current levels. Further fluctuations may be impacted by the degree of strength of the US dollar, interest rates and changes in commodity prices.

Market Assumptions:
Our 2019 forward-looking statements also reflect various market assumptions, in particular:

  • New-car sales in 2019 in the three operational segments will not be materially different from those of 2018;
  • For all three operational segments, fuel costs at the pump are not expected to increase significantly beyond current levels; distance traveled and accident rates to remain within those experienced in 2018;
  • No material, operational or competitive consequence resulting from changes in regulations or the insurance market affecting the automotive aftermarket businesses.

Operational and Financial Assumptions:
The 2019 forward-looking statements are also based on various internal operational and financial assumptions, including, but not limited to:

  • Maintaining market share in the three operational segments;
  • Uni-Select will be able to realize efficiency gains in its cost structure to support the profitability and cash flow generation expected from its PIP (which is measured against the second quarter of 2018 for the Canadian Automotive Group segment and against the third quarter of 2017 for The Parts Alliance U.K. segment. For the most recent $10 million PIP for FinishMaster U.S. we are using the fourth quarter of 2018 as the starting point;
  • The revenue mix between Uni-Select's operations and within its three operational segments will not materially change from anticipated levels;
  • The revenue mix at FinishMaster U.S. will not change significantly from current anticipated levels;
  • No introduction of disruptive technologies during the year;
  • No significant change in the buying conditions beyond what is currently anticipated;
  • It is important to note that sales and EBITDA margins of the operational segments are affected by seasonality and are impacting the consolidated results:
  • No significant acquisition; and
  • Guidance has been adjusted to reflect the implementation of IFRS 16.

The foregoing assumptions, although considered reasonable by Uni-Select on the date of this press release, may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations set forth in this press release.

MATERIAL RISKS

Important risk factors that could cause our assumptions and estimates to be inaccurate and actual results of events to differ materially from those expressed in, or implied by, our forward-looking statements, including our 2019 financial guidance, are listed below. The realization of our forward-looking statements, including our ability to meet our 2019 financial guidance, essentially depends on our business performance which, in turn, is subject to many risks. Accordingly, readers are cautioned that any of the following risks could have a material adverse effect on our forward-looking statements. These risks include, but are not limited to economic climate, changes in legislation or government regulations or policies, inflation, distance traveled, growth in vehicle fleet, products supply and inventory management, distribution by the manufacturer directly to consumers, technology, environmental risks, legal and tax risks, risks related to Uni-Select's business model and strategy, integration of acquired business, competition, business and financial systems, human resources, liquidity risk, credit risk, foreign exchange risk and interest rates.

For additional information with respect to risks and uncertainties, refer to the Annual Report filed by Uni-Select with the Canadian securities commissions.

ADDITIONAL INFORMATION

The Management's Discussion and Analysis (MD&A), consolidated financial statements and related notes for the first quarter of 2019 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.

NON-IFRS FINANCIAL 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. The Corporation is of the opinion that users of its Press release may analyze its results based on these measurements. The following presents performance measures used by the Corporation which are not defined by IFRS.

Organic growth – This measure consists of quantifying the increase in consolidated sales between two given periods, excluding the impact of acquisitions, 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, adjusted EBITDA and proforma adjusted EBITDA – EBITDA 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.

Adjusted EBITDA excludes certain adjustments, which may affect the comparability of the Corporation's financial results. These adjustments include, among other things, restructuring and other charges, severance and retention bonuses related to Management changes as well as net transaction charges related to The Parts Alliance acquisition.

Proforma adjusted EBITDA subtracts from adjusted EBITDA the rent expenses included in the measurement of lease obligations. It represents adjusted EBITDA pre-adoption of IFRS 16 – Leases.

EBITDA margin, adjusted EBITDA margin and proforma adjusted EBITDA margin – EBITDA margin is a percentage corresponding to the ratio of EBITDA to sales. Adjusted EBITDA margin is a percentage corresponding to the ratio of adjusted EBITDA to sales. Proforma adjusted EBITDA margin is a percentage corresponding to the ratio of proforma adjusted EBITDA to sales.

Adjusted EBT, adjusted earnings and adjusted earnings per share – Management uses adjusted EBT, adjusted earnings and adjusted earnings per share to assess EBT, net earnings and net earnings per share from operating activities, excluding certain adjustments, net of income taxes for adjusted earnings and adjusted earnings per share, which may affect the comparability of the Corporation's financial results. Management considers that these measures facilitate the analysis and provide a better understanding of the Corporation's operational performance, following the adoption of IFRS 16 - Leases. The intent of these measures is to provide additional information.

These adjustments include, among other things, restructuring and other charges, severance and retention bonuses related to Management changes as well as amortization of intangible assets related to The Parts Alliance acquisition. Management considers The Parts Alliance acquisition as transformational. The exclusion of these items does not indicate that they are non-recurring.

EBT margin and adjusted EBT margin – EBT margin is a percentage corresponding to the ratio of EBT to sales. Adjusted EBT margin is a percentage corresponding to the ratio of adjusted EBT 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 period 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 consolidated 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. Starting January 1, 2019, the total net debt includes new lease obligations arising from the adoption of IFRS 16 - Leases, for which the initial amount recorded was $97,003.

Funded debt to adjusted EBITDA – This ratio corresponds to total net debt to adjusted EBITDA. For comparability purposes, new lease obligations arising from the adoption of IFRS 16 - Leases on January 1, 2019, are prorated to reflect the period of earnings reported under IFRS 16 - Leases.

The following table presents a reconciliation of organic growth.

 


First quarters


2019

2018

FinishMaster U.S.

204,510

201,379

Canadian Automotive Group

113,113

110,669

The Parts Alliance U.K.

102,414

110,046

Sales

420,037

422,094



%

Sales variance

(2,057)

(0.5)

Conversion effect of the Canadian dollar and the British pound

12,599

3.0

Number of billing days

3,147

0.7

Acquisitions

(3,173)

(0.7)

Consolidated organic growth

10,516

2.5

 

The following table presents a reconciliation of EBITDA, adjusted EBITDA and proforma adjusted EBITDA.

 


First quarters



2019

2018

%

Net earnings (loss)

(1,333)

10,391


Income tax expense

36

1,714


Depreciation and amortization

15,868

9,934


Finance costs, net

6,785

4,963


EBITDA

21,356

27,002

(20.9)

EBITDA margin

5.1%

6.4%


Special items

7,095

618


Adjusted EBITDA

28,451

27,620

3.0

Adjusted EBITDA margin

6.8%

6.5%


Rent expenses included in the measurement of lease obligations

(6,932)

-


Proforma adjusted EBITDA

21,519

27,620

(22.1)

Proforma adjusted EBITDA margin

5.1%

6.5%


 

The following table presents a reconciliation of EBT and adjusted EBT.

 


First quarters



2019

2018

%

Net earnings (loss)

(1,333)

10,391


Income tax expense

36

1,714


EBT

(1,297)

12,105

(110.7)

EBT margin

(0.3%)

2.9%


Special items

7,095

618


Amortization of intangible assets related to the acquisition of The Parts Alliance

1,281

1,445


Adjusted EBT

7,079

14,168

(50.0)

Adjusted EBT margin

1.7%

3.4%


 

The following table presents a reconciliation of adjusted earnings and adjusted earnings per share.

 


First quarters



2019

2018

%

Net earnings (loss)

(1,333)

10,391

(112.8)

Special items, net of taxes

5,320

555


Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes

1,063

1,170


Adjusted earnings

5,050

12,116

(58.3)

Earnings (loss) per share

(0.03)

0.25

(112.0)

Special items, net of taxes

0.13

0.01


Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes

0.03

0.03


Adjusted earnings per share

0.12

0.29

(58.6)

 

The following table presents a reconciliation of free cash flows.

 


First quarters


2019

2018

Cash flows used in operating activities

(69,487)

(30,284)

Changes in working capital

95,021

41,135


25,534

10,851

Acquisitions of property and equipment

(6,063)

(3,929)

Difference between amounts paid for post-employment benefits and current period expenses

(265)

(201)

Free cash flows

19,206

6,721


 

UNI-SELECT INC.

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)


(In thousands of US dollars, except per share amounts, unaudited)

Quarters ended

March 31,


2019

2018




Sales

420,037

422,094

Purchases, net of changes in inventories

284,492

279,325

Gross margin

135,545

142,769




Employee benefits

78,615

81,500

Other operating expenses

28,479

33,649

Special items

7,095

618

Earnings before finance costs, depreciation and amortization and income taxes

21,356

27,002




Finance costs, net

6,785

4,963

Depreciation and amortization

15,868

9,934

Earnings (loss) before income taxes

(1,297)

12,105

Income tax expense

36

1,714

Net earnings (loss)

(1,333)

10,391




Earnings (loss) per share (basic and diluted)

(0.03)

0.25




Weighted average number of common shares outstanding (in thousands)



Basic

42,387

42,274

Diluted

42,387

42,355




 

UNI-SELECT INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In thousands of US dollars, unaudited)

Quarters ended

March 31,


2019

2018




Net earnings (loss)

(1,333)

10,391




Other comprehensive income



Items that will subsequently be reclassified to net earnings (loss):



Effective portion of changes in the fair value of cash flow hedges (net of income tax of $162 ($353 in 2018))

(461)

1,027




Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to net earnings (loss) (net of income tax of $28 ($36 in 2018))

(81)

104




Unrealized exchange gains on the translation of financial statements to the presentation currency

5,808

15,544




Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations (no income tax (same in 2018))

2,670

(11,455)


7,936

5,220




Items that will not subsequently be reclassified to net earnings (loss):



Remeasurements of long-term employee benefit obligations (net of income tax of $1,224 ($37 in 2018))

(3,482)

(118)




Total other comprehensive income

4,454

5,102

Comprehensive income

3,121

15,493




 

UNI-SELECT INC.

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, 2017

97,585

5,184

432,470

(17,262)

517,977







Net earnings

-

-

10,391

-

10,391

Other comprehensive income (loss)

-

-

(118)

5,220

5,102

Comprehensive income

-

-

10,273

5,220

15,493







Contributions by and distributions to shareholders:






Dividends

-

-

(3,093)

-

(3,093)

Stock-based compensation

-

482

-

-

482


-

482

(3,093)

-

(2,611)







Balance, March 31, 2018

97,585

5,666

439,650

(12,042)

530,859







Balance, December 31, 2018

100,244

6,005

457,455

(39,822)

523,882

IFRS 16 adjustment

-

-

(4,944)

992

(3,952)

Balance, January 1, 2019

100,244

6,005

452,511

(38,830)

519,930







Net loss

-

-

(1,333)

-

(1,333)

Other comprehensive income (loss)

-

-

(3,482)

7,936

4,454

Comprehensive income (loss)

-

-

(4,815)

7,936

3,121







Contributions by and distributions to shareholders:






Dividends

-

-

(2,946)

-

(2,946)

Stock-based compensation

-

129

-

-

129


-

129

(2,946)

-

(2,817)







Balance, March 31, 2019

100,244

6,134

444,750

(30,894)

520,234








 

UNI-SELECT INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS






(In thousands of US dollars, unaudited)

Quarters ended

March 31,


2019

2018




OPERATING ACTIVITIES



Net earnings (loss)

(1,333)

10,391

Non-cash items:



Special items

7,095

-

Finance costs, net

6,785

4,963

Depreciation and amortization

15,868

9,934

Income tax expense

36

1,714

Amortization and reserves related to incentives granted to customers

5,334

4,108

Other non-cash items

1,643

(939)

Changes in working capital items

(95,021)

(41,135)

Interest paid

(6,020)

(4,371)

Income taxes paid

(3,874)

(14,949)

Cash flows used in operating activities

(69,487)

(30,284)




INVESTING ACTIVITIES



Business acquisitions

(294)

-

Net balance of purchase price

(956)

(2,696)

Advances to merchant members and incentives granted to customers

(4,383)

(8,930)

Reimbursement of advances to merchant members

1,597

844

Acquisitions of property and equipment

(6,063)

(3,929)

Proceeds from disposal of property and equipment

2,368

300

Acquisitions and development of intangible assets

(228)

(551)

Other provisions paid

(42)

-

Cash flows used in investing activities

(8,001)

(14,962)




FINANCING ACTIVITIES



Increase in long-term debt

95,659

68,521

Repayment of long-term debt

(18,226)

(32,615)

Net increase (decrease) in merchant members' deposits in the guarantee fund

(153)

264

Dividends paid

(2,953)

(3,150)

Cash flows from financing activities

74,327

33,020

Effects of fluctuations in exchange rates on cash

161

564

Net decrease in cash

(3,000)

(11,662)

Cash, beginning of period

8,036

30,672

Cash, end of period

5,036

19,010




 


UNI-SELECT INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION









(In thousands of US dollars, unaudited)

Mar. 31,

Jan. 1,

Dec. 31,


2019

2019

2018

ASSETS




Current assets:




Cash

5,036

8,036

8,036

Cash held in escrow

3,641

3,591

3,591

Trade and other receivables

260,341

248,507

247,732

Income taxes receivable

23,830

16,789

16,789

Inventory

516,142

524,335

524,335

Prepaid expenses

12,247

10,502

10,502

Derivative financial instruments

60

442

442

Total current assets

821,297

812,202

811,427

Investments and advances to merchant members

43,022

46,039

46,039

Property and equipment

189,447

171,584

83,956

Intangible assets

208,412

210,331

210,331

Goodwill

376,351

372,007

372,007

Derivative financial instruments

212

940

940

Deferred tax assets

18,764

17,506

15,870

TOTAL ASSETS

1,657,505

1,630,609

1,540,570

LIABILITIES




Current liabilities:




Trade and other payables

439,719

531,380

532,676

Balance of purchase price, net

3,087

3,580

4,062

Provision for restructuring charges

3,952

2,939

4,173

Income taxes payable

5,987

3,987

3,987

Dividends payable

2,939

2,876

2,876

Current portion of long-term debt and merchant members' deposits in the guarantee fund

28,952

26,768

4,230

Derivative financial instruments

4,641

3,058

3,058

Total current liabilities

489,277

574,588

555,062

Long-term employee benefit obligations

17,726

12,799

12,799

Long-term debt

603,260

497,068

422,603

Merchant members' deposits in the guarantee fund

5,385

5,424

5,424

Balance of purchase price

1,238

1,212

1,212

Other provisions

1,421

1,424

1,424

Deferred tax liabilities

18,964

18,164

18,164

TOTAL LIABILITIES

1,137,271

1,110,679

1,016,688

TOTAL EQUITY

520,234

519,930

523,882

TOTAL LIABILITIES AND EQUITY

1,657,505

1,630,609

1,540,570





 

SOURCE Uni-Select Inc.


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