Uni-Select Inc. reported continued sales, EBITDA and net earnings growth, along with improved profitability for the second quarter ended June 30, 2014.
Overall sales grew by 0.5% and 2.9% organically. EBITDA and net earnings came in well above last year as the second quarter of 2013 was impacted by restructuring charges of $35.2 million related to the implementation of the company’s Action Plan. Notwithstanding those charges, adjusted EBITDA grew by 6.8% this quarter, resulting in an adjusted EBITDA margin of 6.5%, up 5% over the same period last year. Adjusted earnings also grew 6% over the corresponding period last year.
"While the sales growth recorded in the second quarter was softer than expected, we are pleased with our overall performance and more particularly with our continued ability to lower costs and improve profitability, which are key drivers of our long-term growth plans. The implementation of the Action Plan remains on schedule and continues to yield important benefits that will make Uni-Select an even more competitive and sought-after distributor across North America”, said Richard G. Roy, President and Chief Executive Officer of Uni-Select.
"Looking ahead to the second half of fiscal 2014, our primary focus will be on accelerating organic sales growth while maintaining or improving our momentum across all key performance metrics, including sales programs, supply chain, customer service and banner programs. We will also continue to focus on initiatives that will enable us to remain the partner of choice for independent wholesalers and strengthen our leadership position in the automotive aftermarket product distribution sector," added Roy.
“Also, I am pleased to announce that the Board of Directors approved a change in our organizational structure with the creation of a new position of Chief Operating Officer who will report to me," Roy said. Henry Buckley was named COO effective Sept. 8. Buckley has more than 30 years of experience in industrial distribution in the U.S. and Canada. Most recently he was VP for Specialty Brand Companies and Mergers and Acquisitions at W.W. Grainger Inc.
Buckley will assume responsibility for the management of Uni-Select Canada, Uni-Select USA and FinishMaster with a focus on accelerating sales growth and supply chain optimization.
Second quarter results
(All percentage increases and decreases represent year-over-year changes for the second quarter of 2014 compared to the second quarter of 2013, unless otherwise noted.)
Uni-Select recorded an increase in overall sales of 0.5% to $479 million in the second quarter of 2014, resulting from organic growth of 2.9% and revenue derived from recent acquisitions which offset sales lost from store closures, the impact of the declining Canadian dollar and one less billing day in Canada. Sales of the U.S. operations reached $343 million, up 1.1% over last year, with an organic growth 1.3%. Canadian operations delivered $136 million in sales in the same period, a slight decrease over 2013 mainly due to the impact of a lower Canadian dollar. Canadian organic growth reached 6.8%, resulting from successful sales initiatives and the recruitment of new customers.
EBITDA for the second quarter reached $30 million, compared to negative $7 million last year. Results for the second quarter of 2013 included $35.2 million in restructuring charges and expenses related to the development and deployment of the enterprise resource planning system. Adjusted EBITDA grew by 6.8% while the adjusted EBITDA margin increased by 5% to 6.5% compared to 6.2% last year. The increase was mainly due to Action Plan related savings of $3.8 million. Organic growth improved fixed cost leverage whereas tighter control on expenses also contributed to the increase. These positive items were partially offset by unfavorable distribution channel and customer mix.
Six-month results
(All percentage increases and decreases represent year-over-year changes for the six-month period of 2014 compared to the six- month period of 2013, unless otherwise noted.)
Uni-Select recorded a decrease in overall sales of 0.7% to $892 million for the first six-month period of 2014. Sales lost from store closures, combined with the declining Canadian dollar exceeded the 2.3% organic growth and the impact of recent acquisitions.
Sales of the U.S. operations reached $654 million, down 0.2% compared to last year, with an organic growth 1.1%. Canadian operations delivered $238 million in sales in the same period, a 2.0% decrease over 2013. Canadian organic growth reached 5.8%.
EBITDA reached $48 million, compared to $9 million last year. 2013 results were impacted by the items previously outlined. Adjusted EBITDA grew by 11.8% while the adjusted EBITDA margin increased by 11.5% to 5.8% compared to 5.2% last year. The increase was mainly attributable to the same factors as those mentioned in the quarter. Savings derived from the Action Plan accounted for $9.4 million and were partially offset by higher utilities caused by weather conditions across North America during the first quarter.
Since the beginning of the year, the corporation generated $54 million in cash from operating activities, of which $38 million were used to reduce indebtedness. As of June 30, 2014, the corporation’s outstanding net debt stood at $260 million, down 6.5% from December 31, 2013.
As mentioned above our results are presented in US dollars. Once converted to Canadian dollars, adjusted earnings per share totals $0.84 for the 2014 second quarter, up 15% compared to $0.73 in 2013. For the six-month period ended June 30, adjusted earnings per share converted to Canadian dollars amounts to $1.35 compared to $1.07 in 2013, up 26%.
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