Uni-Select reports sales, EBITDA growth and network expansion in first quarter

May 4, 2017
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.

Uni-Select Inc. on May 3 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.”

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.

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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.

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.

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