Uni-Select Inc. sales, EBITDA, net earnings and earnings per share recorded significant increases in the fourth quarter compared to the same period last year.
The company said that this performance demonstrates the effectiveness of its sales initiatives and the soundness of the internal strategic and operational plan (Action Plan), under implementation since the third quarter. Uni-Select also gained additional efficiency in the fourth quarter through its improved service levels and the completion of its ERP software implementation process.
"I am very pleased with the fourth quarter results announced today and delighted by the strong and favourable impact of the Action Plan on our operational margins – which doubled in the fourth quarter. These results illustrate our team’s continued commitment towards our strategic goals and long-term growth targets. Our sales initiatives and our improved service levels, permitted by a more stable ERP system, allowed us to post a strong organic growth. These factors compensated for the lost sales from recent store and warehouse closures realized under the Corporation’s Action Plan," said Richard G. Roy, President and Chief Executive Officer of Uni-Select.
"We will keep our focus on executing the Action Plan to optimize our network and achieve our inventory and cost reduction objectives. We also intend to pursue growth organically and deliver superior fill rates, an approach that should enable us to deliver increased profitability, allowing further growth and debt reduction. We intend to remain the partner of choice for independent wholesalers and continue to strengthen our leadership position in the automotive aftermarket product distribution," added Roy.
Fourth quarter results
(All percentage increases and decreases represent year-over-year changes for the fourth quarter of 2013 compared to the fourth quarter of 2012, unless otherwise noted.)
Uni-Select generated an overall 1.8% sales increase in the fourth quarter to $426 million, fuelled by a 5.5% growth of organic sales. Sales of the US operations reached $305 million, up 5.1% organically. Canadian operations delivered $121 million in sales in the same period, up 6.5% organically. The overall positive organic growth comes from the good performance of our sales initiatives and the recruitment of new customers. The more stable ERP system and the solid internal execution resulted in improved service levels and efficiencies, contributing to the organic growth. The organic sales increase was sufficient to exceed the 2.1% decline in sales resulting from store closures and the n declining Canadian dollar.
The Corporation’s adjusted EBITDA margin doubled in the fourth quarter to 5.8% compared to 2.9% last year. The increase is mainly attributable to healthy organic sales growth and to significant cost savings realized under the Action Plan, including the closure of non-profitable distribution locations. These savings totaled $8.7 million in the fourth quarter resulting in recurring cumulative cost savings of approximately $13 million.
Under the Corporation’s Action Plan, five corporate stores and one warehouse were closed and six stores were sold to customers in the fourth quarter. As a direct result of a strong internal focus on protecting sales volumes while closing corporate stores, sales erosion in the fourth quarter was lower than expected. The Action Plan was expected to bring about $20 million of sales erosion for 2013, well above the actual erosion of $13.1 million. Inventory reductions for 2013 were lower than forecasted at $4.2 million. However, the Corporation remains confident to reach its total inventory reduction objective of $40 million by 2015 as previously announced. Uni-Select benefits from extensive support and strong collaboration from its suppliers as it coordinates inventory movements.
Fiscal year results
(All percentage increases and decreases represent year-over-year changes for the fiscal year 2013 compared to the fiscal year 2012, unless otherwise noted.)
In 2013, sales amounted to $1.8 billion, down 0.5%, while organic sales grew 1.9%. In the US, sales totaled $1.3 billion, with an organic sales growth of 1.7%. Sales from the Canadian operations reached $494 million, including an organic sales growth of 2.3%. Sales for the year were impacted by a decrease of 1.5% related to store closures under the Action Plan and the declining Canadian dollar that were not completely offset by the organic growth recorded in the previous three quarters. Adjusted EBITDA margin for Fiscal 2013 improved to 5.7% in 2013, up from 5.3%.
A softer first quarter, impacted by an unfavorable economic environment and by temporary disruptions in the deployment of the Corporation’s ERP impacted 2013 results. The declining Canadian dollar also negatively impacted sales by $14.9 million and net earnings by $0.7 million for the year.
In 2013, the Corporation generated $76.8 million in cash from operating activities, of which $31.6 million were used to reduce indebtedness. As of December 31, 2013, the Corporation’s outstanding net debt stood at $278 million, down 10% from last year. Since January 1, 2012, Uni-Select reduced its net debt by $74 million or 21%. In 2013, the Corporation also repurchased 287,501 common shares for a cash consideration of $6.4 million.
Uni-Select’s Board of Directors declared a dividend of C$0.13 per share payable on April 22, 2014 to shareholders of record on March 31, 2014.
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