- Sales up 42.6% to $415.0 million in Q4 and up 21.0% to $1,448.3 million for 2017 due to the Parts Alliance and other acquisitions combined with organic sales growth in the Canadian and UK operations;
- EBITDA (1) of $25.9 million in Q4 and $110.8 million for 2017; Adjusted EBITDA (1) of $28.0 million up 10.4% in Q4 and of $117.5 million up 9.2% for 2017;
- Network of 447 locations, up 188 in 2017 from 10 business acquisitions and 6 greenfields; and
- Free cash flow (1) of $16.9 million in Q4 and $95.7 million for 2017.
| Unless otherwise indicated in this press release, all amounts are expressed in thousands of US dollars, except per share amounts and percentages.
|
BOUCHERVILLE, QC, Feb. 20, 2018 /CNW Telbec/ - Uni-Select Inc. (TSX: UNS) today reported its financial results for the fourth quarter and the year ended December 31, 2017.
"Our fourth quarter performance was mixed. While our consolidated sales and adjusted EBITDA increased by 42.6% and 10.4% respectively, mainly driven by acquisitions, we continued to work through some challenges at FinishMaster US. This segment was impacted by the residual effect of the product line changeover, severance related to the 20/20 initiative and other elements. Conversely, our Canadian business performed well with continued sales and margin improvement, driven by solid organic sales growth (1) and the contribution of recent acquisitions. Finally, as expected, our newly-acquired UK operations had a seasonally slow quarter, however, delivered robust organic sales growth and also implemented the 20/20 initiative as planned," commented Henry Buckley, President and Chief Executive Officer of Uni-Select.
"We look forward to 2018 with optimism. We hold strong leadership positions in our three geographic markets, which offer significant opportunities for profitable growth and value creation for our shareholders. Our priority for 2018 is to drive organic sales growth, progressively throughout the year, adding select acquisitions while realizing the benefits of our 20/20 initiative and continuing our disciplined approach to expense management, driving improved operating results." added Henry Buckley.
For further information about the Corporation's use of the non-IFRS measures identified in this press release, refer to "Non-IFRS financial measures" section.
| FOURTH QUARTER |
TWELVE-MONTH PERIOD |
|||
| 2017 |
2016 |
2017 |
2016 |
|
| Sales |
414,978 |
290,986 |
1,448,272 |
1,197,319 |
| EBITDA (1) |
25,854 |
24,570 |
110,752 |
106,848 |
| EBITDA margin (1) |
6.2% |
8.4% |
7.6% |
8.9% |
| Adjusted EBITDA (1) |
27,984 |
25,350 |
117,532 |
107,628 |
| Adjusted EBITDA margin (1) |
6.7% |
8.7% |
8.1% |
9.0% |
| Net earnings |
8,721 |
12,695 |
44,616 |
58,265 |
| Adjusted earnings (1) |
11,613 |
13,068 |
55,097 |
58,638 |
| Earnings per share |
0.21 |
0.30 |
1.06 |
1.37 |
| Adjusted earnings per share (1) |
0.27 |
0.31 |
1.30 |
1.38 |
| ______________________________ |
|
| (1) |
Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section for further details. |
FOURTH QUARTER RESULTS
Consolidated sales for the fourth quarter were $415.0 million, a 42.6% increase compared to the same quarter last year, driven by the sales generated from recent business acquisitions, adding sales of $117.6 million or 40.4% of which The Parts Alliance UK segment represents $93.0 million or 32.0%. As well, the Canadian Automotive Group segment delivered an organic sales growth of 1.5% net, or 5.9% excluding the loss of an independent member at the beginning of the year. Consolidated organic sales were also affected by the product line changeover in the US. Without these two impacts, the consolidated organic sales would have been approximately 1.9%.
The Corporation generated an EBITDA and EBITDA margin of $25.9 million and 6.2%, respectively. Once adjusted for net transaction charges related to The Parts Alliance acquisition, EBITDA was $28.0 million (or 6.7% of sales) for the quarter, compared to $25.4 million (or 8.7% of sales) in 2016, an increase of 10.4%. The adjusted EBITDA margin decreased by 200 basis points and was impacted by The Parts Alliance UK segment. Excluding these operations, the variance is explained by a revenue mix impact and lower special buys in the FinishMaster US segment, severance in relation to the 20/20 initiative and ongoing investments required for the corporate store initiative in Canada. These impacts were partially compensated by a reduction of the performance-based compensation and by lower information technology expenses in relation to the internalization of the servers.
Net earnings and adjusted earnings were respectively $8.7 million and $11.6 million. Adjusted earnings decreased by 11.1% compared to the same quarter last year, and were impacted by additional depreciation and amortization as well as finance costs, all related to recent business acquisitions and investments in capital.
Segmented Results
The FinishMaster US segment recorded sales of $199.0 million, up 10.1% from the same quarter in 2016, supported by recent business acquisitions representing a growth of $19.1 million or 10.6% and offsetting the impact of the product line changeover. EBITDA for this segment was $19.6 million, compared to $21.7 million in 2016. The EBITDA margin decrease of 210 basis points is the result of lower special buys in the current quarter, an evolving customer mix as a result of recent business acquisitions that have higher multi-shop owner customers and for which discounts are more significant, unexpected workers' compensation and medical benefits expenses, and severance as part of the 20/20 initiative. The reduction of the performance‑based compensation partially offset these factors. The FinishMaster US segment is working on organic sales growth initiatives coupled with productivity improvement and the 20/20 initiative.
Sales for the Canadian Automotive Group segment were $123.0 million, compared to $110.2 million in 2016, an increase of 11.6%, a result of the recent business acquisitions, the strength of the Canadian dollar and the organic sales growth of 1.5% (or 5.9% excluding the loss of an independent member earlier this year). This performance is a combination of sales growth from independent customers as well as from the BUMPER TO BUMPER auto parts and the FINISHMASTER paint body and equipment stores in Canada. The EBITDA margin improvement of 10 basis points is mainly related to optimized buying conditions from increased volume, a product line changeover incentive and lower information technology expenses. These factors were partially offset by ongoing investments required in relation to the corporate store initiative and severance related to the 20/20 initiative. Once the integration of the corporate stores and the implementation of the new point of sales ("POS") system will be completed, additional synergies and efficiency are expected.
The Parts Alliance UK segment recorded sales of $93.0 million and EBITDA of $3.7 million (or 4.0% of sales). Its company-owned store model generates a higher gross margin than the other segments while requiring a higher level of employee benefits and operating expenses. The EBITDA margin is partially explained by seasonality as December is one of the weakest months of the year, coupled with severance related to the 20/20 initiative. This segment opened 2 greenfield stores during the quarter and generated, on a stand-alone basis, 3.7% organic sales growth during the quarter.
TWELVE-MONTH PERIOD RESULTS
Consolidated sales for the twelve-month period were $1,448.3 million, a 21.0% increase compared to the same period last year, driven by the sales generated from recent business acquisitions, resulting in additional sales of $279.7 million or 23.4%. The Canadian Automotive Group segment generated positive organic sales growth of 3.9% despite the loss of an independent member earlier this year, while the FinishMaster US segment was affected by the product line changeover and the hurricanes. Without these headwinds from both segments, the consolidated organic sales growth would have been approximately 2.4%.
The Corporation generated an EBITDA of $110.8 million, while adjusted EBITDA amounted to $117.5 million, representing an increase of 9.2% compared to the same period last year. Adjusted EBITDA margin decrease of 90 basis points is mainly attributable to a different business model and seasonality in The Parts Alliance UK segment, which includes its two weakest months of the year, August and December. Once these operations are excluded, the remaining variance is explained by a lower absorption of employee benefits and fixed costs, severance, as well as investments in the corporate store initiative in Canada. These elements were partially compensated by optimized buying conditions, a reduction of the performance-based compensation and lower information technology expenses.
Net earnings and adjusted earnings were respectively $44.6 million and $55.1 million compared to $58.3 million and $58.6 million last year. Additional depreciation and amortization as well as finance costs, all related to recent business acquisitions and investments in capital, explained the decrease in earnings and adjusted earnings.
Segmented Results
The FinishMaster US segment recorded sales of $814.6 million, up 8.2% from the same period in 2016, strengthened by the recent business acquisitions, representing a growth of $113.8 million or 15.1%. The product line changeover and the hurricanes impacted sales by approximately 6.1%. EBITDA for this segment was $91.3 million compared to $93.4 million in 2016. EBITDA margin decreased by 120 basis points, resulting from a lower absorption of fixed costs in relation to the organic sales growth and the impact of the hurricanes as well as an evolving customer mix, a result of recent business acquisitions that have a higher percentage of multi-shop owner customers, for which discounting is more significant. Special buys realized during the first semester and a reduction of the performance-based compensation partially compensated these negative elements. Since the beginning of the year, the FinishMaster US segment expanded and enriched its network, enlarging its footprint and reinforcing its position in major markets with 4 business acquisitions and adding 3 greenfield stores.
Sales for the Canadian Automotive Group segment were $484.9 million, compared to $444.5 million in 2016, an increase of 9.1%, equally driven by a solid organic sales growth and recent business acquisitions. This segment's sales performance is related to both its distribution centres and corporate stores, overcoming the loss of an independent member at the beginning of the year, which impacted sales by 4.0%. The EBITDA margin increase of 40 basis points compared to 2016 is mainly derived from improved buying conditions in relation to the sales growth, lower information technology expenses and an improved performance in the paint, body and equipment (PBE) program. These factors were partially offset by a higher performance-based compensation, in line with the results of this segment.
The Parts Alliance UK segment recorded sales of $148.7 million and EBITDA of $6.0 million (or 4.0% of sales) in the 5 months since its acquisition. Sales are slightly seasonal for this segment, notably in relation to vacation and holidays, with August and December being the weakest months of the year. This partially explains the EBITDA margin for the period, coupled with a payroll increase during the summer and severance related to the 20/20 initiative. The Parts Alliance UK is in the process of integrating its acquired stores' operations and of maximizing their contribution.
DIVIDENDS
On February 19, 2018, the Uni-Select Board of Directors declared a quarterly dividend of C$0.0925 per share payable on April 17, 2018 to shareholders of record as at March 31, 2018. This dividend is an eligible dividend for income tax purposes.
OUTLOOK
The information included within this section contains guidance for Uni-Select in 2018:
| Uni-Select |
|
| Consolidated adjusted EBITDA margin |
7.2% - 8.2% |
| Consolidated organic sales growth |
2.25% - 4.0% |
| Consolidated effective tax rate |
22.0% - 24.0% |
| Segment |
Organic Sales Growth |
| FinishMaster US |
2.0% - 4.0% |
| Canadian Automotive Group |
2.5% - 4.0% |
| The Parts Alliance UK |
3.0% - 4.0% |
| The above-mentioned information is related to the 2018 |
|
Other
On December 22, 2017, the United States enacted the "Tax Cuts and Jobs Act", commonly referred to as the US tax reform, which includes a US Federal tax rate reduction. The Corporation is anticipating a favourable impact on its consolidated effective income tax rate, since its FinishMaster US segment income tax rate will decrease from 38.0% in 2017, to approximately 24.5%, including state taxes in 2018.
As well, Uni-Select anticipates investments between $26.0 million and $29.0 million on vehicle fleet, hardware equipment, software and others.
CONFERENCE CALL
Uni-Select will host a conference call to discuss its fourth quarter and twelve-month period results for 2017 on February 20, 2018 at 8:00 AM Eastern. To join the conference, dial 1 866 865-3087 (or 1 647 427-7450 for International calls) followed by 5986639.
A recording of the conference call will be available from 11:00 AM Eastern on February 20, 2018 until 11:59 PM Eastern on February 27, 2018. To access the replay, dial 1 855 859-2056 followed by 5986639.
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 60 corporate 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 and stores 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 210 automotive refinish corporate stores under the FINISHMASTER banner which services a network of over 30,000 customers annually, of which it is the primary supplier to over 6,000 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 close to 200 locations including over 170 corporate 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 2018 financial guidance (including, without limitation, adjusted EBITDA margin and organic sales by business unit) 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 2018 financial results, as well as our objectives, strategic priorities and business outlook for 2018, 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, the United States and the United Kingdom will remain stable;
- The current negotiations for the exit of the United Kingdom from European Union do not result in economic uncertainty;
- Interest rates expected to slightly increase in 2018;
- 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 2018 forward-looking statements also reflect various market assumptions, in particular:
- New-car sales in the three business segments are expected to be similar in 2018 to those of 2017;
- For all 3 operational segments, fuel costs at the pump are not expected to increase significantly beyond current levels; distance travelled and accident rates to remain within those experienced in 2017;
- 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 2018 forward-looking statements are also based on various internal operational and financial assumptions, including, but not limited to:
- Maintaining market share in the 3 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 20/20 initiative;
- The revenue mix between Uni-Select's operations and within its 3 operational segments will not materially change from anticipated levels;
- No introduction of disruptive technologies during the year;
- No significant change in the buying conditions beyond current levels;
- It is important to note that organic sales and EBITDA margin of the business segments are affected by seasonality and are impacting the consolidated results:
- FinishMaster US tends to have weaker first and fourth quarters, with its third quarter being the strongest;
- Canadian Automotive Group tends to have weaker first and fourth quarters than second and third quarters; and
- The Parts Alliance UK tends to have weaker third and fourth quarters than first and second quarters;
- No significant acquisition; and
- Guidance is based on current accounting standards and policies including Uni-Select non-IFRS measures.
The foregoing assumptions, although considered reasonable by Uni-Select on February 20, 2018, 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 2018 financial guidance, are listed below. The realization of our forward-looking statements, including our ability to meet our 2018 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 travelled, 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 fourth quarter and twelve-month period of 2017 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.
Organic growth – This measure consists of quantifying the increase in pro forma consolidated sales between two given periods, excluding the impact of acquisitions, sales and disposals of stores, 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 – This measure 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, adjusted earnings and adjusted earnings per share – Management uses adjusted EBITDA, adjusted earnings and adjusted earnings per share to assess EBITDA, 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 are more representative of the Corporation's operational performance and more appropriate in providing additional information. These adjustments include, among other things, restructuring and other charges as well as net transaction charges, amortization of the premium on foreign currency options and amortization of intangible assets related to The Parts Alliance acquisition. The Management consider The Parts Alliance acquisition as transformational. The exclusion of these items does not indicate that they are non-recurring.
EBITDA margin and adjusted EBITDA margin – The EBITDA margin is a percentage corresponding to the ratio of the EBITDA to sales. The adjusted EBITDA margin is a percentage corresponding to the ratio of adjusted EBITDA 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 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.
The following table presents a reconciliation of organic growth.
| Fourth quarter |
Twelve-month period |
||||
| 2017 |
2016 |
2017 |
2016 |
||
| FinishMaster US |
198,956 |
180,758 |
814,639 |
752,864 |
|
| Canadian Automotive Group |
123,023 |
110,228 |
484,934 |
444,455 |
|
| The Parts Alliance UK |
92,999 |
- |
148,699 |
- |
|
| Sales |
414,978 |
290,986 |
1,448,272 |
1,197,319 |
|
| % |
% |
||||
| Sales variance |
123,992 |
42.6 |
250,953 |
21.0 |
|
| Conversion effect of the Canadian dollar |
(5,707) |
(2.0) |
(8,431) |
(0.7) |
|
| Number of billing days |
(2,963) |
(1.0) |
2,352 |
0.2 |
|
| Acquisitions and others |
(117,564) |
(40.4) |
(279,669) |
(23.4) |
|
| Consolidated organic growth |
(2,242) |
(0.8) |
(34,795) |
(2.9) |
|
The following table presents a reconciliation of EBITDA and adjusted EBITDA.
| Fourth quarter |
Twelve-month period |
||||||
| 2017 |
2016 |
% |
2017 |
2016 |
% |
||
| Net earnings |
8,721 |
12,695 |
44,616 |
58,265 |
|||
| Income tax expense |
2,170 |
5,487 |
22,002 |
28,137 |
|||
| Depreciation and amortization |
9,977 |
5,224 |
29,647 |
15,962 |
|||
| Finance costs, net |
4,986 |
1,164 |
14,487 |
4,484 |
|||
| EBITDA |
25,854 |
24,570 |
5.2 |
110,752 |
106,848 |
3.7 |
|
| EBITDA margin |
6.2% |
8.4% |
7.6% |
8.9% |
|||
| Restructuring and other charges |
- |
(746) |
(523) |
(746) |
|||
| Net transaction charges related to The Parts Alliance acquisition |
2,130 |
- |
7,303 |
- |
|||
| Additional liabilities related to the sale of net assets (1) |
- |
1,526 |
- |
1,526 |
|||
| Adjusted EBITDA |
27,984 |
25,350 |
10.4 |
117,532 |
107,628 |
9.2 |
|
| Adjusted EBITDA margin |
6.7% |
8.7% |
8.1% |
9.0% |
|||
| (1) These liabilities are related to additional workers' compensation insurance claims for former employees of Uni-Select USA, Inc. and Beck/Arnley Worldparts, Inc. sold on June 1, 2015, for which the Corporation remains liable after the disposition. |
The following table presents a reconciliation of adjusted earnings and adjusted earnings per share.
| Fourth quarter |
Twelve-month period |
|||||
| 2017 |
2016 |
% |
2017 |
2016 |
% |
|
| Net earnings |
8,721 |
12,695 |
(31.3) |
44,616 |
58,265 |
(23.4) |
| Restructuring and other charges, net of taxes |
- |
(539) |
(378) |
(539) |
||
| Net transaction charges related to The Parts Alliance acquisition, net of taxes |
1,773 |
- |
6,991 |
- |
||
| Additional liabilities related to the sale of net assets, net of taxes |
- |
912 |
- |
912 |
||
| Amortization of the premium on foreign currency options, net of taxes |
- |
- |
2,003 |
- |
||
| Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes |
1,119 |
- |
1,865 |
- |
||
| Adjusted earnings |
11,613 |
13,068 |
(11.1) |
55,097 |
58,638 |
(6.0) |
| Earnings per share |
0.21 |
0.30 |
(30.0) |
1.06 |
1.37 |
(22.6) |
| Restructuring and other charges, net of taxes |
- |
(0.01) |
(0.01) |
(0.01) |
||
| Net transaction charges related to The Parts Alliance acquisition, net of taxes |
0.04 |
- |
0.16 |
- |
||
| Additional liabilities related to the sale of net assets, net of taxes |
- |
0.02 |
- |
0.02 |
||
| Amortization of the premium on foreign currency options, net of taxes |
- |
- |
0.05 |
- |
||
| Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes |
0.02 |
- |
0.04 |
- |
||
| Adjusted earnings per share |
0.27 |
0.31 |
(12.9) |
1.30 |
1.38 |
(5.8) |
The following table presents a reconciliation of free cash flows.
| Fourth quarter |
Twelve-month period |
||||
| 2017 |
2016 |
2017 |
2016 |
||
| Cash flows from operating activities |
45,471 |
54,538 |
124,005 |
133,701 |
|
| Changes in working capital |
(23,234) |
(28,522) |
(14,583) |
(16,778) |
|
| 22,237 |
26,016 |
109,422 |
116,923 |
||
| Acquisitions of property and equipment |
(5,224) |
(4,790) |
(13,658) |
(9,755) |
|
| Difference between amounts paid for post-employment benefits and current period expenses |
(147) |
(64) |
(104) |
(75) |
|
| Free cash flows |
16,866 |
21,162 |
95,660 |
107,093 |
|
| UNI-SELECT INC. |
|||||
| CONSOLIDATED STATEMENTS OF EARNINGS |
|||||
| (In thousands of US dollars, except per share amounts) |
Quarter ended December 31, |
Year ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
||
| (unaudited) |
(unaudited) |
(audited) |
(audited) |
||
| Sales |
414,978 |
290,986 |
1,448,272 |
1,197,319 |
|
| Purchases, net of changes in inventories |
274,991 |
198,342 |
983,198 |
830,717 |
|
| Gross margin |
139,987 |
92,644 |
465,074 |
366,602 |
|
| Employee benefits |
75,469 |
44,974 |
236,684 |
175,621 |
|
| Other operating expenses |
36,534 |
23,846 |
110,858 |
84,879 |
|
| Restructuring and other charges |
- |
(746) |
(523) |
(746) |
|
| Net transaction charges related to The Parts Alliance acquisition |
2,130 |
- |
7,303 |
- |
|
| Earnings before finance costs, depreciation and amortization and income taxes |
25,854 |
24,570 |
110,752 |
106,848 |
|
| Finance costs, net |
4,986 |
1,164 |
14,487 |
4,484 |
|
| Depreciation and amortization |
9,977 |
5,224 |
29,647 |
15,962 |
|
| Earnings before income taxes |
10,891 |
18,182 |
66,618 |
86,402 |
|
| Income tax expense |
2,170 |
5,487 |
22,002 |
28,137 |
|
| Net earnings |
8,721 |
12,695 |
44,616 |
58,265 |
|
| Earnings per share |
|||||
| Basic |
0.21 |
0.30 |
1.06 |
1.37 |
|
| Diluted |
0.21 |
0.30 |
1.05 |
1.36 |
|
| Weighted average number of common shares outstanding (in thousands) |
|||||
| Basic |
42,274 |
42,219 |
42,261 |
42,435 |
|
| Diluted |
42,420 |
42,472 |
42,430 |
42,693 |
|
| UNI-SELECT INC. |
|||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|||||
| (In thousands of US dollars) |
Quarter ended December 31, |
Year ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
||
| (unaudited) |
(unaudited) |
(audited) |
(audited) |
||
| Net earnings |
8,721 |
12,695 |
44,616 |
58,265 |
|
| Other comprehensive income (loss) |
|||||
| Items that will subsequently be reclassified to net earnings: |
|||||
| Effective portion of changes in the fair value of cash flow hedges (net of income tax of $2 and $24 for the quarter and the year) |
(1) |
- |
(70) |
- |
|
| Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to earnings (net of income tax of $27 and $42 for the quarter and the year) |
84 |
- |
123 |
- |
|
| Unrealized exchange gains (losses) on the translation of financial statements to the presentation currency |
3,907 |
(4,500) |
12,685 |
6,229 |
|
| Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations (net of income tax of $514 and $36 for the quarter and the year) |
(3,172) |
- |
242 |
- |
|
| 818 |
(4,500) |
12,980 |
6,229 |
||
| Items that will not subsequently be reclassified to net earnings: |
|||||
| Remeasurements of long-term employee benefit obligations (net of income tax of $567 and $613 for the quarter and the year ($1,214 and $745 in 2016)) |
(1,655) |
3,164 |
(1,749) |
1,940 |
|
| Total other comprehensive income (loss) |
(837) |
(1,336) |
11,231 |
8,169 |
|
| Comprehensive income |
7,884 |
11,359 |
55,847 |
66,434 |
|
| UNI-SELECT INC. |
||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
||||||
| Attributable to shareholders |
||||||
| (In thousands of US dollars, audited) |
Share capital |
Contributed surplus |
Retained earnings |
Accumulated other comprehensive income (loss) |
Total equity |
|
| Balance, December 31, 2015 |
97,864 |
3,588 |
371,997 |
(36,471) |
436,978 |
|
| Net earnings |
- |
- |
58,265 |
- |
58,265 |
|
| Other comprehensive income |
- |
- |
1,940 |
6,229 |
8,169 |
|
| Comprehensive income |
- |
- |
60,205 |
6,229 |
66,434 |
|
| Contributions by and distributions to shareholders: |
||||||
| Repurchase and cancellation of common shares |
(2,030) |
- |
(20,013) |
- |
(22,043) |
|
| Issuance of common shares |
1,090 |
- |
- |
- |
1,090 |
|
| Dividends |
- |
- |
(10,769) |
- |
(10,769) |
|
| Stock-based compensation |
- |
672 |
- |
- |
672 |
|
| (940) |
672 |
(30,782) |
- |
(31,050) |
||
| Balance, December 31, 2016 |
96,924 |
4,260 |
401,420 |
(30,242) |
472,362 |
|
| Net earnings |
- |
- |
44,616 |
- |
44,616 |
|
| Other comprehensive income (loss) |
- |
- |
(1,749) |
12,980 |
11,231 |
|
| Comprehensive income |
- |
- |
42,867 |
12,980 |
55,847 |
|
| Contributions by and distributions to shareholders: |
||||||
| Issuance of common shares |
661 |
- |
- |
- |
661 |
|
| Dividends |
- |
- |
(11,817) |
- |
(11,817) |
|
| Stock-based compensation |
- |
924 |
- |
- |
924 |
|
| 661 |
924 |
(11,817) |
- |
(10,232) |
||
| Balance, December 31, 2017 |
97,585 |
5,184 |
432,470 |
(17,262) |
517,977 |
|
| UNI-SELECT INC. |
|||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
| (In thousands of US dollars) |
Quarter ended December 31, |
Year ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
||
| (unaudited) |
(unaudited) |
(audited) |
(audited) |
||
| OPERATING ACTIVITIES |
|||||
| Net earnings |
8,721 |
12,695 |
44,616 |
58,265 |
|
| Non-cash items: |
|||||
| Restructuring and other charges |
- |
(746) |
(523) |
(746) |
|
| Finance costs, net |
4,986 |
1,164 |
14,487 |
4,484 |
|
| Depreciation and amortization |
9,977 |
5,224 |
29,647 |
15,962 |
|
| Income tax expense |
2,170 |
5,487 |
22,002 |
28,137 |
|
| Amortization and reserves related to incentives granted to customers |
4,294 |
3,575 |
16,581 |
12,460 |
|
| Other non-cash items |
(630) |
1,449 |
269 |
1,704 |
|
| Changes in working capital items |
23,234 |
28,522 |
14,583 |
16,778 |
|
| Interest paid |
(5,547) |
(1,066) |
(10,371) |
(3,553) |
|
| Income taxes recovered (paid) |
(1,734) |
(1,766) |
(7,286) |
210 |
|
| Cash flows from operating activities |
45,471 |
54,538 |
124,005 |
133,701 |
|
| INVESTING ACTIVITIES |
|||||
| Business acquisitions |
(7,219) |
(15,555) |
(348,490) |
(161,839) |
|
| Net balance of purchase price |
(1,982) |
(148) |
(7,935) |
(2,173) |
|
| Cash held in escrow |
2,423 |
400 |
(5,108) |
(11,353) |
|
| Premium on foreign currency options |
- |
- |
(6,631) |
- |
|
| Proceeds from disposal of foreign exchange options |
- |
- |
6,174 |
- |
|
| Advances to merchant members and incentives granted to customers |
(7,310) |
(6,426) |
(28,257) |
(22,815) |
|
| Reimbursement of advances to merchant members |
1,349 |
953 |
5,737 |
4,178 |
|
| Acquisitions of property and equipment |
(5,224) |
(4,790) |
(13,658) |
(9,755) |
|
| Proceeds from disposal of property and equipment |
378 |
596 |
824 |
662 |
|
| Acquisitions and development of intangible assets |
(1,785) |
(2,487) |
(4,614) |
(5,250) |
|
| Cash flows used in investing activities |
(19,370) |
(27,457) |
(401,958) |
(208,345) |
|
| FINANCING ACTIVITIES |
|||||
| Increase in long-term debt |
15,613 |
7,204 |
450,860 |
138,965 |
|
| Repayment of long-term debt |
(67,256) |
(29,388) |
(154,090) |
(101,730) |
|
| Net decrease in merchant members' deposits in the guarantee fund |
(19) |
(187) |
(117) |
(379) |
|
| Repurchase and cancellation of common shares |
- |
(362) |
- |
(22,043) |
|
| Issuance of common shares |
- |
- |
661 |
1,090 |
|
| Dividends paid |
(3,120) |
(2,731) |
(11,637) |
(10,533) |
|
| Cash flows from (used in) financing activities |
(54,782) |
(25,464) |
285,677 |
5,370 |
|
| Effects of fluctuations in exchange rates on cash |
(3) |
(274) |
623 |
167 |
|
| Net increase (decrease) in cash |
(28,684) |
1,343 |
8,347 |
(69,107) |
|
| Cash, beginning of period |
59,356 |
20,982 |
22,325 |
91,432 |
|
| Cash, end of period |
30,672 |
22,325 |
30,672 |
22,325 |
|
| UNI-SELECT INC. |
|||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|||
| (In thousands of US dollars, audited) |
December 31, |
||
| 2017 |
2016 |
||
| ASSETS |
|||
| Current assets: |
|||
| Cash |
30,672 |
22,325 |
|
| Cash held in escrow |
8,147 |
14,486 |
|
| Trade and other receivables |
227,167 |
149,268 |
|
| Income taxes receivable |
29,279 |
22,420 |
|
| Inventory |
458,354 |
330,808 |
|
| Prepaid expenses |
10,196 |
4,893 |
|
| Total current assets |
763,815 |
544,200 |
|
| Investments and advances to merchant members |
30,628 |
28,651 |
|
| Property and equipment |
78,644 |
41,982 |
|
| Intangible assets |
231,365 |
101,158 |
|
| Goodwill |
372,119 |
243,807 |
|
| Deferred tax assets |
10,174 |
20,818 |
|
| TOTAL ASSETS |
1,486,745 |
980,616 |
|
| LIABILITIES |
|||
| Current liabilities: |
|||
| Trade and other payables |
436,726 |
314,505 |
|
| Balance of purchase price, net |
15,469 |
25,303 |
|
| Provision for restructuring and other charges |
- |
775 |
|
| Income taxes payable |
16,831 |
5,669 |
|
| Dividends payable |
3,110 |
2,673 |
|
| Current portion of long-term debt and merchant members' deposits in the guarantee fund |
37,098 |
3,817 |
|
| Total current liabilities |
509,234 |
352,742 |
|
| Long-term employee benefit obligations |
20,985 |
16,802 |
|
| Long-term debt |
411,585 |
130,572 |
|
| Merchant members' deposits in the guarantee fund |
5,543 |
5,319 |
|
| Balance of purchase price, net |
2,944 |
- |
|
| Other provisions |
1,331 |
- |
|
| Derivative financial instruments |
1,041 |
359 |
|
| Deferred tax liabilities |
16,105 |
2,460 |
|
| TOTAL LIABILITIES |
968,768 |
508,254 |
|
| EQUITY |
|||
| Share capital |
97,585 |
96,924 |
|
| Contributed surplus |
5,184 |
4,260 |
|
| Retained earnings |
432,470 |
401,420 |
|
| Accumulated other comprehensive loss |
(17,262) |
(30,242) |
|
| TOTAL EQUITY |
517,977 |
472,362 |
|
| TOTAL LIABILITIES AND EQUITY |
1,486,745 |
980,616 |
|
SOURCE Uni-Select Inc.
Eric Bussières, Chief Financial Officer, Tel. 450 641-6958, [email protected]
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