Uni-Select Inc. Reports an Increase in Sales of 29% and an Increase in Net Earnings of 32% for the First Quarter of 2009
BOUCHERVILLER, QUEBEC, May 5, 2009 (Marketwire via COMTEX) --
Uni-Select Inc. (TSX:UNS) reports sales of $362,740,000 for the first quarter of 2009, an increase of 28.8% compared to sales of $281,698,000 $ in 2008. The increase in sales for the Company is primarily due to various acquisitions completed in recent quarters and to the increase in the U.S. currency. Net earnings increased to $8,013,000 in the first quarter of 2009 or $0.41 per share compared to $6,061,000 or $0.31 per share last year, an increase of 32.2%.
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1st QUARTER
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(in millions of $ except earnings per share) 2009 2008
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Sales 362.7 281.7
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EBITDA 19.3 14.5
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Net earnings 8.0 6.1
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Earnings per share 0.41 0.31
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Sales for Automotive Group USA reached $232,936,000 in the first quarter compared to $149,919,000 in the first quarter of 2008. The acquisitions completed in recent quarters contributed $56,080,000, to which should be added the favorable impact of the exchange rate variation. The operating margin for the Group declined from 6.1% in the first quarter of 2008 to 5.5%. However, on a comparative basis, excluding the latest acquisitions whose integration is just underway, the margin is 6.3% an improvement of 0.2% over 2008 as a result of continued improvement programs on margins and cost reduction.
Automotive Group Canada reported sales of $117,908,000, comparable to levels reached in the same quarter of 2008. The operating margin of the Group improved from 5.4% in the first quarter of 2008 to 6.7% this quarter. Automotive Group Canada benefited from the integration of synergies resulting from the acquisition of RPDL in 2008 and the continued improvement of operating margins throughout the network.
Sales for the Heavy Duty Group decreased by 8.6% in the first quarter of 2009 to reach $11,896,000 compared to $13,014,000 in 2008. The operating margin for the Heavy Duty Group was (11.6%) in the first quarter of 2009 compared to (8.6%) last year. This decrease in the margin stems essentially from the decrease in sales.
"We are pleased with the impact of the acquisitions and cost reduction programs implemented in recent years. While they have only just begun to contribute, we are already beginning to see the potential in both Canada and the U.S., from recent acquisitions. As is our practice, we will have to ensure that all synergies are achieved before their full value is realized." said Mr. Richard G. Roy, President and Chief Executive Officer of Uni-Select Inc. "During the next quarters, the results of our Canadian and U.S. operations should continue to benefit from the contribution of various acquisitions completed in recent quarters. We will continue to seek out growth opportunities in Canada and the U.S., all the while keeping a firm control on assets. This may result in the sale or closure of stores in Canadian and U.S. areas with low growth potential. Furthermore, the reduction in asset base will also entail the orderly reduction of inventory." added Mr. Roy.
In closing, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.1165 per common share payable on July 21, 2009 to shareholders of record as at June 30, 2009. This dividend is an eligible dividend for tax purposes.
Uni-Select is a Canadian leader in the distribution of automotive replacement parts, equipment, tools and accessories and, through Uni-Select USA, Inc., the Company also provides services to customers in the United States where it is the 7th largest distributor. Its subsidiary, Palmar Inc., sells replacement parts, tools and accessories for heavy-duty vehicles and wheels in Canada. The Uni-Select Network(TM) includes over 2,500 independent jobbers and services 3,500 points of sale in North America. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the TMX.
Certain statements made in this press release contain forward-looking statements which, by their very nature, include risks and uncertainties, such that actual results could differ from those indicated in those forward-looking statements. For additional information with respect to the risks and uncertainties, refer to the Annual Report filed by Uni-Select and available on SEDAR. Unless required to do so pursuant to applicable securities legislation, Uni-Select assumes no obligation as to the updating or revision of the forward-looking statements as a result of new information, future events or other changes.
CONSOLIDATED EARNINGS
THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
(in thousands of dollars, except earnings per share, unaudited)
3 MONTHS
2009 2008
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$ $
SALES 362,740 281,698
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Earnings before the following items 19,335 14,532
Interest (Note 3) 2,337 1,899
Amortization (Note 3) 3,857 2,696
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6,194 4,595
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Earnings before income taxes and non-controlling
interest 13,141 9,937
Income taxes
Current 7,637 2,802
Future (3,480) 395
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4,157 3,197
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Earnings before non-controlling interest 8,984 6,740
Non-controlling interest 971 679
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Net earnings 8,013 6,061
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Basic earnings and diluted earnings per
share (Note 4) 0.41 0.31
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Weighted average number of outstanding shares 19,697,727 19,736,558
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Number of issued and outstanding shares 19,708,796 19,736,558
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The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED RETAINED EARNINGS
THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
(in thousands of dollars, unaudited)
3 MONTHS
2009 2008
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$ $
Balance, beginning of period 324,241 287,712
Net earnings 8,013 6,061
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332,254 293,773
Dividends 2,295 2,122
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Balance, end of period 329,959 291,651
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CONSOLIDATED COMPREHENSIVE INCOME
THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
(in thousands of dollars, unaudited)
3 MONTHS
2009 2008
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$ $
Net earnings 8,013 6,061
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Other comprehensive income:
Unrealized losses on derivative financial instruments
designated as cash flow hedges, net of income taxes
of $286 ($659 in 2008) (614) (1,414)
Reclassification of realized losses to net earnings
on derivative financial instruments designated as
cash flow hedges, net of income taxes of $219 ($21
in 2008) 470 46
Unrealized losses on translation of bank indebtedness
incurred in 2008 and designated as a hedge of net
investments in self-sustaining foreign subsidiairies (591) -
Unrealized gains on translating financial statements
of self-sustaining foreign operations 6,265 5,830
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Other comprehensive income 5,530 4,462
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Comprehensive income 13,543 10,523
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The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED CASH FLOWS
THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND 2008
(in thousands of dollars, except dividends paid per share, unaudited)
3 MONTHS
2009 2008
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$ $
OPERATING ACTIVITIES
Net earnings 8,013 6,061
Non-cash items
Amortization 3,857 2,696
Amortization of deferred gain on a sale-leaseback
arrangement (67) (54)
Future income taxes (3,480) 395
Non-controlling interest 971 679
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9,294 9,777
Changes in working capital items (24,026) (9,922)
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CASH FLOWS FROM OPERATING ACTIVITIES (14,732) (145)
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INVESTING ACTIVITIES
Business acquisitions (Note 5) (668) (18,397)
Non-controlling interest (37) -
Advances to merchant members (371) (689)
Receipts on advances to merchant members 1,248 565
Fixed assets (3,948) (2,368)
Disposal of fixed assets - 51
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CASH FLOWS FROM INVESTING ACTIVITIES (3,776) (20,838)
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FINANCING ACTIVITIES
Bank indebtedness 12,117 23,995
Balance of purchase price 117 (337)
Financing costs - (414)
Repayment of long-term debt (1,356) (54)
Merchant members' deposits in guarantee fund 61 (6)
Issuance of shares 202 -
Dividends paid (2,118) (2,122)
------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES 9,023 21,062
------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (9,485) 79
Cash and cash equivalents, beginning of period 9,682 599
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Cash and cash equivalents, end of period 197 678
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Dividends paid per share 0.108 0.108
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The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED BALANCE SHEETS MARCH 31, 2009 AND 2008
(in thousands of dollars, unaudited)
MARCH 31 MARCH 31 DECEMBER 31
2009 2008 2008
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Audited
$ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 197 678 9,682
Accounts receivable 194,291 149,810 180,308
Income taxes receivable 4,042 5,182 9,051
Inventory (Note 6) 495,280 356,108 482,340
Prepaid expenses 6,262 5,097 6,742
Future income taxes 10,390 8,812 10,172
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710,462 525,687 698,295
Investments and volume discounts
receivable 8,045 7,412 8,710
Fixed assets 56,195 42,354 54,939
Financing costs 733 848 785
Intangible assets 8,181 303 8,147
Goodwill 101,390 73,450 99,501
Future income taxes 3,632 3,265 3,707
------------------------------------------------------------------------
888,638 653,319 874,084
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LIABILITIES
CURRENT LIABILITIES
Bank indebtedness (Note 7) 12,197 61,058 -
Accounts payable 199,447 128,886 212,581
Dividends payable 2,295 2,122 2,118
Instalments on long-term debt and on
merchant members' deposits in
guarantee fund 148 57 327
Future income taxes 2,148 - 5,676
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216,235 192,123 220,702
Deferred gain on a sale-leaseback
arrangement 2,651 2,377 2,641
Long-term debt 214,614 95,671 209,907
Merchant members' deposits in
guarantee fund 8,027 7,613 7,724
Derivative financial instruments 8,831 2,006 8,620
Future income taxes 5,024 3,972 5,013
Non-controlling interest 49,073 36,583 46,776
------------------------------------------------------------------------
504,455 340,345 501,383
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SHAREHOLDERS' EQUITY
Capital stock 50,040 49,872 49,838
------------------------------------------------------------------------
Contributed surplus 259 - 227
Retained earnings 329,959 291,651 324,241
Accumulated other comprehensive income
(Note 8) 3,925 (28,549) (1,605)
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334,143 263,102 322,863
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384,183 312,974 372,701
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888,638 653,319 874,084
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The accompanying notes are an integral part of the interim consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2009 AND 2008 (in thousands of dollars, except for per share amounts, unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all disclosures required for complete financial statements. They are also consistent with the accounting policies outlined in the audited financial statements of the Company for the year ended December 31, 2008. The interim financial statements and related notes should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2008. When necessary, the financial statements include amounts based on informed estimates and the best judgment of management. The operating results for the interim periods reported are not necessarily indicative of results to be expected for the year.
2. CHANGES IN ACCOUNTING POLICIES
Goodwill and intangible assets
On January 1, 2009, in accordance with the applicable transitional provisions, the Company adopted the new recommendations of the CICA Handbook included in Section 3064, "Goodwill and intangible assets". This Section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets, after the initial recognition. The adoption of these recommendations did not have significant impact on the consolidated financial statements.
Credit risk and fair value of financial assets and financial liabilities
On January 1, 2009, the Company adopted the recommendations of EIC-173 of the CICA Handbook, Credit risk and fair value of financial assets and financial liabilities. This abstract notes that the credit risk specific to the entity and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivatives.
The adoption of these recommendations was applied retrospectively without restatement of consolidated financial statements of prior periods. On January 1, 2009, taking into account credit risk in the evaluation of derivative financial instruments did not have significant effect on consolidated results.
3. INFORMATION INCLUDED IN THE CONSOLIDATED EARNINGS
3 MONTHS
Other financial liabilities 2009 2008
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$ $
Interest on bank indebtedness 368 826
Interest on long-term debt 2,044 1,114
Interest on merchant members' deposits
in guarantee fund 67 84
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2,479 2,024
Held-for-trading financial assets
Interest income on cash and cash equivalents (4) (10)
Loans and receivables
Interest income from merchant members (138) (115)
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(142) (125)
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2,337 1,899
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Amortization
------------------------------------------------------------------------
Amortization of fixed assets 3,630 2,592
Amortization of other assets 227 104
------------------------------------------------------------------------
3,857 2,696
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4. EARNINGS PER SHARE
Weighted average number of shares for the calculation of basic earnings per share is 19,697,727 for the three-month period ended March 31, 2009 (19,736,558 in 2008). Impact of stock options exercised is 17,296 shares for the three-month period ended March 31, 2009 (23,138 in 2008) which total a weighted average number of shares of 19,715,023 for the three-month period ended March 31, 2009 (19,759,696 in 2008) for calculation of diluted earnings per share.
5. BUSINESS ACQUISITIONS
In 2009, the Company acquired the assets of two companies in the Automotive USA segment.
In addition, the Company increased its interest by 1.92% in its joint venture, Uni-Select Pacific Inc. Following this transaction, the Company's interest in the joint venture increased from 69.23% to 71.15%. This transaction was carried out at the carrying amount as stated in the shareholders' agreement.
The operating results are consolidated in the statement of earnings since the acquisition date.
The preliminary purchase price is allocated as follows:
Total
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$
Current assets 685
Fixed assets 153
Goodwill 147
Current liabilities (278)
Long-term liabilities (13)
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694
Cash of companies acquired 1
Total consideration paid less cash acquired 668
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Balance of purchase price payable 25
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6. INVENTORY
Cost of inventory recognized as an expense for the three-month period ended March 31, 2009 is $254,100 ($201,388 in 2008).
7. CREDIT FACILITY
The Company has a credit facility in the amount of $325,000. This credit facility is composed of a $235,000 revolving credit expiring in October 2011. The credit facility also includes a $90,000 operating credit maturing in October 2009 which is also used for the issuance of letters of guarantee and is renewable annually in October. As at March 31, 2009, the issued letters of guarantee totalled $8,910 ($6,515 as at December 31, 2008). This facility can be drawn either in canadian dollars or U.S. dollars.
The interest rates vary according to the type of loan and the financial ratios achieved by the Company and are set each quarter. As at March 31, 2009, interest rates vary between 1.4% and 3.75% (1.4% and 3.75% as at December 31, 2008).
8. ACCUMULATED OTHER COMPREHENSIVE INCOME
MARCH 31, 2009 DECEMBER 31, 2008
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$ $
Balance, beginning of period (1,605) (33,011)
Other comprehensive income for
the period 5,530 31,406
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Balance, end of period 3,925 (1,605)
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9. EMPLOYEE FUTURE BENEFITS
As at March 31, 2009, the Company's pension plans are defined benefit and contribution plans.
For the three-month period ended March 31, 2009, the total expense for the defined contribution pension plans was $323 ($257 in 2008) and $663 ($601 in 2008) for the defined benefit pension plans.
10. GUARANTEES
As per inventory repurchase agreements, the Company has made a commitment to financial institutions to repurchase inventories from some of its customers at a rate of 60% to 75% of the value of inventories for a maximum amount of $61,304 ($65,525 as at December 31, 2008). In the event of proceedings, the inventories would be liquidated in the normal course of the Company's operations. These agreements are for an undetermined period of time. In management's opinion, the likelihood of major payments being made and losses being absorbed is low, since the value of the assets held in guarantee is significantly higher than the Company's commitments.
11. FINANCIAL INSTRUMENTS
Derivative financial instruments
The Company entered into agreements to swap variable interest rates (Note 7) for a nominal amount of US$ 160,000 for fixed rates.
Maturity
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Nominal amount Rate 2009 2010 2011 2012 2013
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US$ US$ US$ US$ US$ US$
10,000 0.62% 10,000
30,000 0.73% 30,000
60,000 3.94% 20,000 20,000 20,000
30,000 3.50% 10,000 10,000 10,000
30,000 3.35% 10,000 10,000 10,000
The fair value of the interest rate swaps is calculated using quotes for similar instruments on the balance sheet date obtained by the Company's financial institution and represents an amount payable by the Company of $8,831 ($8,620 as at December 31, 2008).
12. SEGMENTED INFORMATION
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3 MONTHS
------------------------------------------------------------------------
Automotive USA Automotive Canada
2009 2008 2009 2008
$ $ $ $
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Sales 232,936 149,919 117,908 118,765
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Earnings before interest,
amortization, income taxes and
non-controlling interest 12,799 9,177 7,910 6,468
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Assets 610,132 369,622 248,830 254,065
Acquisition of fixed assets 1,878 1,489 2,180 1,316
Acquisition of goodwill - 93 147 7,096
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3 MONTHS
------------------------------------------------------------------------
Heavy Duty Canada Consolidated
2009 2008 2009 2008
$ $ $ $
------------------------------------------------------------------------
Sales 11,896 13,014 362,740 281,698
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Earnings before interest,
amortization, income taxes and
non-controlling interest (1,374) (1,113) 19,335 14,532
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Assets 29,676 29,632 888,638 653,319
Acquisition of fixed assets 43 21 4,101 2,826
Acquisition of goodwill - - 147 7,189
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The Automotive USA segment includes fixed assets for an amount of $28,328
($17,513 as at March 31, 2008) and goodwill for an amount of $61,623
($36,205 as at March 31, 2008).
13. FUTURE ACCOUNTING STANDARDS
International Financial Reporting Standards
The Canadian Accounting Standards Board confirmed that the use of International Financial Reporting Standards ("IFRS") established by the International Accounting Standards Board will be required for fiscal years beginning January 1st, 2011 for publicly accountable profit-oriented enterprises. IFRS will replace Canada's current GAAP for those enterprises.
In 2009, the Company will complete the detailed analysis and continue the training of the employees involved in the project as per the plan established in 2008.
Business combinations
In January 2009, the CICA issued Section 1582, Business Combinations, which supersedes the like-named Section 1581. This Section applies prospectively to business combinations for which the date of acquisition is in fiscal years beginning on or after January 1, 2011. The Section establishes standards for the recognition of a business combination. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.
Consolidated financial statements
In January 2009, the CICA issued Section 1601, Consolidated Financial Statements, which supersedes the like-named Section 1600. This Section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Section establishes standards for the preparation of consolidated financial statements. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.
Non-controlling interests
In January 2009, the CICA issued Section 1602, Non-controlling Interests, which supersedes Section 1600, Consolidated financial statements. This Section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Section establishes standards for the accounting of non-controlling interests in a subsidiary in the consolidated financial statements subsequent to a business combination. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.
SOURCE: Uni-Select Inc.
Uni-Select Inc. M. Richard G. Roy President and Chief Executive Officer 450-641-2440 450-449-4908 (FAX) Uni-Select Inc. M. Denis Mathieu Vice President and Chief Financial Officer 450-641-2440 450-449-4908 (FAX) www.uni-select.com
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