Uni-Select Inc. reported EBITDA, EBITDA margin and net earnings growth for the third quarter ended September 30, 2014.
Overall sales grew by 0.2% or 1.3% organically. EBITDA grew 3.7%, while net earnings increased by 3.9% in the third quarter as a result of savings derived from the Corporation’s Action Plan. Notwithstanding expenses related to the network optimization, adjusted EBITDA grew by 4.5% this quarter, resulting in an adjusted EBITDA margin of 6.8%.
"I am overall pleased by our third quarter results and the stronger profitability margins we have systematically been recording quarter after quarter since the implementation of our Action Plan. Through our healthier distribution network, we are now able to offer an increasingly more flexible, sustainable and customer-centric solutions," said Richard G. Roy, President and Chief Executive Officer of Uni-Select.
"The Uni-Select team remains committed towards our Action Plan which is mainly completed and will be finalized during the first half of 2015. We now turn to the quarters ahead with the objective of converting aggressive new sales initiatives, higher fill rates and optimal product assortment into a renewed sales momentum across the entire organization," added Roy.
Third quarter results
(All percentage increases and decreases represent year-over-year changes for the third quarter of 2014 compared to the third quarter of 2013, unless otherwise noted.)
Uni-Select recorded an overall sales increase of 0.2% to $465 million in the third quarter of 2014. Organic growth of 1.3% and revenue derived from recent acquisitions were largely offset by the impact of the declining Canadian dollar and sales lost from store closures under the Corporation’s Action Plan. Sales of the US operations reached $340 million, up 1.6% over last year, with an organic growth of 1.3%. Canadian operations reported $126 million in sales in the same period, down 3.5% over 2013 mainly due to the impact of a lower Canadian dollar, partially compensated by a 1.2% organic growth.
EBITDA for the third quarter reached $30 million, compared to $29 million last year, representing a 3.6% increase. Adjusted EBITDA grew by 4.5% while the adjusted EBITDA margin increased to 6.8% compared to 6.5% last year. The increase is mainly attributable to Action Plan related savings of $3.3 million and tight control over expenses. These favorable items were partially offset by unfavorable distribution channel and customer mix.
As indicated above, the Corporation’s results are presented in US dollars. Once converted to Canadian dollars, adjusted earnings per share reached $0.80 for the third quarter, up a strong 9.6% compared to $0.73 in 2013.
Over the course of the third quarter, net debt decreased by $38 million, mainly due to an increase in cash from operations generated by additional earnings and improved working capital.
Subsequently to the end of the third quarter, the Corporation amended the terms of its existing credit facility and extended its maturity to June 30, 2018. The Corporation will benefit from reduced interest rates under the amended terms of the credit facility that reflect current market conditions.
Nine-month results
(All percentage increases and decreases represent year-over-year changes for the nine-month period of 2014 compared to the nine-month period of 2013, unless otherwise noted.)
Uni-Select recorded an overall 0.4% decline in sales for the first nine months of 2014 to $1,357 million. Sales lost from store closures, combined with the declining Canadian dollar more than offset the combined favorable impact of the 2.2% organic growth and additional revenue derived from recent acquisitions.
Sales of the US operations reached $993 million, up 0.4% compared to last year, with a 1.4% organic growth. Canadian operations recorded $364 million in sales in the same period, down 2.5% over 2013. Canadian organic growth reached 4.2%.
EBITDA more than doubled this year to $78 million compared to $37 million last year. 2013 results included $35.2 million in restructuring charges in relation to its Action Plan and expenses related to the development and deployment of the enterprise resource planning system. Adjusted EBITDA grew by 9.0% while the adjusted EBITDA margin after nine months increased to 6.2% from 5.6% last year. Savings derived from the Action Plan accounted for $12.7 million.
Since the beginning of the year, the Corporation generated $104 million in cash from operating activities, of which $57 million were used to reduce indebtedness. As of September 30, 2014, the Corporation’s outstanding net debt stood at $221 million, down 20.3% from December 31, 2013, while its funded debt to EBITDA ratio reached 2.05 times, down notably from 2.75 times last year.
For the nine-month period ended September 30, 2014 adjusted earnings per share converted to Canadian dollars amount to $2.16 compared to $1.79 in 2013, a robust 20.7% increase.
Uni-Select’s Board of Directors declared a dividend of C$0.15 per share payable on January 21, 2015 to shareholders of record on December 31, 2014.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
About the Author
