QUARTER HIGHLIGHTS (Compared to the Third Quarter of 2020):
· Consolidated sales of $426.1 million, up 7.8%, driven by organic growth(1) of 3.9% primarily resulting from increased demand and prices as global markets continue to recover from the COVID-19 pandemic;
· EBITDA(1) increased 14.8% to $35.3 million or 8.3% of sales from $30.8 million or 7.8% of sales in 2020, as a result of improvements in gross margin and a reduction in operating costs; Adjusted EBITDA(1) increased 25.1% to $42.3 million or 9.9% of sales;
· Basic EPS of $0.28, up $0.17; Basic adjusted EPS(1) of $0.40, up $0.21 due to disciplined operational performance and lower interest costs as a result of the credit facility amendment completed during the second quarter of 2021; and
· Total net debt to adjusted EBITDA(1) ratio of 2.34x, driven by strong operating results, continued focus on working capital management and capital discipline.
BOUCHERVILLE, QC, Nov. 12, 2021 /CNW/ - Uni-Select Inc. (TSX: UNS) ("Uni-Select" or "Corporation") today reported its financial results for the third quarter ended September 30, 2021.
"We are very pleased with our third–quarter results which reflect ongoing operational improvement and continued sequential recovery in our business. While revenues increased 7.8% to $426.1 million, adjusted earnings(1) more than doubled to $17.2 million, or $0.40 per basic share, driven by significantly higher operational results in all three businesses and materially lower borrowing costs," stated Brian McManus, Executive Chair and Chief Executive Officer of Uni-Select.
"This strong profitability combined with active cash management translated into free cash flows(1) of $37.0 million which we used primarily to reduce our total net debt(1) to $314.9 million, its lowest level since the second quarter of 2017, and we ended the period with a leverage ratio of 2.34x.
Our near-term focus remains to align the three businesses with our vision for the future while identifying growth opportunities. We expect 2021 to be a good year overall but remain cautiously optimistic for the fourth quarter and next year as we manage through the ongoing challenges related to supply chain shortages and labour costs. With our new leadership team firmly in place, we are positioning the business for the long term and see many opportunities ahead in all three businesses," concluded Mr. McManus.
___________________________
(1)
This is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures" section for further details.
INTERIM CONSOLIDATED FINANCIAL RESULTS
During the quarter, the Corporation updated its definition of adjusted EBITDA, adjusted EBT, adjusted earnings and basic adjusted earnings (loss), and is now excluding stock–based compensation. Management believes this new definition better reflects its core operational performance. Accordingly, comparative figures were adjusted to reflect this change, including certain ratios such as total net debt to adjusted EBITDA. (Refer to the "Non-GAAP Financial Measures" section for further details.)
The following table presents selected consolidated information:
Third Quarters
Ended Sept. 30
Nine-month Periods Ended Sept. 30
(in thousands of US dollars, except per share amounts, percentages and otherwise specified)
2021
2020
2021
2020
$
$
%
$
$
%
OPERATING RESULTS
Sales
426,094
395,352
7.8
1,212,625
1,105,570
9.7
EBITDA(1)
35,326
30,780
14.8
60,570
43,186
40.3
EBITDA margin(1)
8.3%
7.8%
5.0%
3.9%
Adjusted EBITDA(1)
42,294
33,799
25.1
109,265
67,367
62.2
Adjusted EBITDA margin(1)
9.9%
8.5%
9.0%
6.1%
EBT(1)
14,682
6,800
115.9
(8,508)
(32,783)
74.0
EBT margin(1)
3.4%
1.7%
(0.7%)
(3.0%)
Adjusted EBT(1)
22,763
10,861
109.6
43,542
(5,522)
888.5
Adjusted EBT margin (1)
5.3%
2.7%
3.6%
(0.5%)
Change in estimates related to inventory obsolescence
-
-
20,600
-
Stock-based compensation
1,554
515
6,206
2,456
Special items
5,414
2,504
21,889
21,725
Net earnings (loss)
11,927
4,454
167.8
(8,113)
(26,456)
69.3
Adjusted earnings (loss)(1)
17,248
7,916
117.9
33,210
(4,604)
821.3
Free cash flows(1)
36,955
61,084
(39.5)
71,828
76,215
(5.8)
COMMON SHARE DATA
Basic earnings (loss) per share
$0.28
$0.11
154.5
$(0.19)
$(0.62)
69.4
Diluted earnings (loss) per share
$0.25
$0.11
127.3
$(0.19)
$(0.62)
69.4
Basic adjusted earnings (loss) per share
$0.40
$0.19
110.5
$0.78
$(0.11)
809.1
Number of shares outstanding (in thousands)
43,793
42,387
43,793
42,387
Weighted average number of outstanding shares
Basic (in thousands)
43,042
42,387
42,608
42,387
Diluted (in thousands)
51,988
42,387
42,608
42,387
As at
Sept. 30, 2021 2021
As at
Dec. 31, 2020
$
$
FINANCIAL POSITION
Total net debt(1)
314,933
370,252
Credit facilities (including revolving and term loans) at nominal value
237,053
318,379
Convertible debentures
78,181
87,728
(1)
This is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures" section for further details.
THIRD Quarter Results Compared to the Third Quarter of 2020: Consolidated sales of $426.1 million for the quarter increased by 7.8%, mainly driven by organic growth of 3.9% and favourable Canadian and British currency fluctuations. Consolidated organic growth continued to improve in the quarter reflecting the global market recovery.
The Corporation generated EBITDA of $35.3 million for the quarter, which was impacted by special items of $5.4 million for severance and write–down of property and equipment, as well as by stock–based compensation of $1.6 million mainly due to the Corporation's share price appreciation. Adjusted EBITDA and adjusted EBITDA margin increased by $8.5 million and 1.4% respectively to $42.3 million and 9.9% of sales, from $33.8 million and 8.5% of sales in 2020. This performance was largely driven by additional vendor rebates in all segments, as well as price increases in the Canadian Automotive Group and the FinishMaster U.S. segments. Furthermore, the quarter benefitted from scaling benefits linked to organic growth and a streamlined cost structure. These elements were, in part, offset by a higher level of expenses during the current quarter of 2021, as the third quarter of 2020 benefitted from government assistance programs, lower labour costs due to temporary employee lay-offs, reduction of working hours and the temporary closure of company–operated stores in response to the reduced demand effects of the pandemic. The current quarter of 2021 also had higher short–term incentive expenses, due to operational performance.
Net earnings for the quarter increased by $7.4 million to $11.9 million and adjusted earnings increased by $9.3 million or 117.9% to $17.2 million from $7.9 million in 2020. This performance is primarily attributable to increased sales, better scaling on operating costs as a result of disciplined operational performance, lower interest costs as a result of the credit facility amendment completed during the second quarter of 2021, lower debt levels and a lower effective tax rate.
Segmented Third Quarter Results The FinishMaster U.S. segment reported sales of $174.9 million, organically increasing by 7.0%. This segment reported organic growth for a second consecutive quarter, stimulated by the global market recovery. EBITDA was $14.0 million for the quarter, compared to $6.5 million in 2020. Adjusted EBITDA and adjusted EBITDA margin improved by $7.9 million and 4.2% respectively to $15.9 million and 9.1% of sales, from $8.0 million and 4.9% of sales in 2020. This performance was driven by sales volume, increasing gross margin and improving fixed cost absorption, lower payroll costs, as well as the consolidation of company-operated stores. During the same quarter in 2020, this segment was affected by inventory obsolescence and higher professional fees. Starting in the third quarter of 2020, this segment has reported improved adjusted EBITDA in each quarter over the comparable quarter in the prior year, both in dollar and as a percentage of sales, as a result of measures put in place and a broader market recovery.
The Canadian Automotive Group segment reported sales of $144.5 million, an increase of 5.3% supported by the appreciation of the Canadian dollar and the impact of business acquisitions added to the network over the last twelve months. Organic growth declined by 1.0%, which is explained by exceptional performance during the third quarter of 2020, as pent-up demand was released abruptly due to the easing of lockdown restrictions. This segment reported EBITDA of $16.2 million for the quarter, compared to $19.0 million in 2020. Adjusted EBITDA and adjusted EBITDA margin decreased by $2.2 million and 2.3% respectively to $16.8 million or 11.6% of sales, from $19.0 million or 13.9% of sales in 2020. The variance is mainly related to government payroll subsidies included in the third quarter of 2020, representing $3.3 million or 2.4% of sales. Excluding this element, adjusted EBITDA margin increased by 0.1% and is mainly explained by additional vendor rebates and price increases, which were partially offset by higher short–term payroll incentive expenses in line with the operating performance of the segment, as well as by foreign exchange losses.
The Parts Alliance U.K. segment reported sales of $106.7 million, an increase of 12.8%, mainly driven by a strong British pound against the US dollar during the current quarter of 2021 and organic growth of 5.6%. Organic growth of the U.K. segment continued to improve during the quarter and sales were in line with 2019. This segment reported EBITDA of $10.8 million for the quarter, compared to $8.7 million in 2020. Adjusted EBITDA and adjusted EBITDA margin increased by $2.2 million and 1.0%, respectively, to $11.0 million and 10.3% of sales, from $8.8 million and 9.3% of sales in 2020. This improvement is attributable to additional sales volume, increasing gross margin due to higher vendor rebates and improved fixed cost absorption, as well as certain payroll savings. Starting in the third quarter of 2020, this segment has reported improved adjusted EBITDA in each quarter over the comparable quarter in the prior year, both in dollar and as a percentage of sales.
NINE-MONTH PERIOD Results Compared to the Nine–Month Period of 2020: Consolidated sales increased by $107.1 million or 9.7% to $1,212.6 million for the period, mainly driven by organic growth of 5.4% as global markets continue to recover from the COVID-19 pandemic, the favourable fluctuations of the British and the Canadian currencies and business acquisitions. This performance offsets the adverse impact of fewer billing days and the expected sales loss from the consolidation of company–operated stores.
The Corporation reported EBITDA of $60.6 million for the period, which was impacted by a change in estimates of $20.6 million related to inventory obsolescence in the FinishMaster U.S. segment, special items of $21.9 million, mainly for severance related to changes to executive leadership, as well as stock–based compensation of $6.2 million primarily as a result of the strong appreciation of the Corporation's share price. Adjusted EBITDA and adjusted EBITDA margin increased by $41.9 million and 2.9% respectively to $109.3 million and 9.0% of sales, from $67.4 million and 6.1% of sales in 2020. This performance resulted from improved gross margins due to additional volume rebates and price increases, a streamlined cost structure, as well as an improved fixed cost absorption related to organic growth. Furthermore, the results of the nine–month period benefitted from lower bad debt expense of about $7.0 million or 0.6% of sales. These elements were partially offset by a higher overall level of expenses in relation to the sales recovery and by higher short-term payroll incentives due to operational performance, while the same period of 2020 benefitted from actions in response to the reduced demand effects of the pandemic. For the same period last year, the Corporation benefitted from governmental assistance programs that were offset by additional obsolescence.
The Corporation reported a net loss of $8.1 million for the current period compared to a net loss of $26.5 million in 2020. Adjusted earnings for the current period increased by $37.8 million to $33.2 million from an adjusted loss of $4.6 million in 2020. This improvement in earnings was driven by increased sales, better scaling on operating costs as a result of disciplined operational performance, as well as lower interest costs as a result of the amendment to the credit facility completed during the second quarter of 2021 and lower debt levels.
Segmented Nine-Month Period Results The FinishMaster U.S. segment reported sales of $504.3 million, an increase of 1.1%, driven by organic growth of 2.1%, or $10.5 million, in part offset by a lower number of billing days. This segment reported EBITDA of $15.9 million for the period, which was impacted by a change in estimates related to inventory obsolescence, special items and stock–based compensation, totalling $23.9 million. Adjusted EBITDA and adjusted EBITDA margin increase by $15.3 million and 3.0% respectively to $39.8 million and 7.9% of sales, from $24.5 million and 4.9% of sales in 2020. This performance is attributable to additional vendor incentives and price increases, cost reduction initiatives, including workforce optimization, company–operated stores consolidation, diligent control of overall discretionary expenses and a partial reversal of bad debt provision due to improved collection. During the nine–month period last year, this segment was affected by additional inventory obsolescence and bad debt expenses.
The Canadian Automotive Group segment reported sales of $404.9 million, an increase of 12.3%, driven by the appreciation of the Canadian dollar and organic growth of 3.8%. This segment reported EBITDA of $45.2 million for the period, which was impacted by special items and stock–based compensation. Adjusted EBITDA and adjusted EBITDA margin increased by $11.9 million and 1.9% respectively to $46.7 million and 11.5% of sales, from $34.8 million and 9.6% of sales in 2020. This performance is mainly attributable to additional vendor rebates and price increases, while the nine–month period of 2020 was affected by large foreign exchange losses. These elements were partially offset by an increase in short–term incentive expenses, due to the operating performance of the segment. Furthermore, the nine–month period of 2020 benefitted from government payroll subsidies, which partially offset additional bad debt expense, representing a net amount of $2.3 million or about 0.6% of sales.
The Parts Alliance U.K. segment reported sales of $303.4 million, an increase of 23.3%, mainly from organic growth of 14.6% and a strong British pound against the US dollar during the current period of 2021, exceeding the unfavourable variance in the number of billing days and the expected sales loss resulting from the consolidation of company–operated stores. This segment reported EBITDA of $26.3 million for the period, which was impacted by special items and stock–based compensation. Adjusted EBITDA and adjusted EBITDA margin increased by $15.6 million and 4.1% respectively to $29.5 million and 9.7% of sales, from $13.9 million and 5.6% of sales in 2020. This improvement was driven by additional sales volume, certain payroll savings, as well as improved gross margin from higher vendor rebates and price increases. During the nine–month period of 2020, results were affected by additional reserves for inventory obsolescence and bad debt, which were in part offset by governmental occupancy subsidies, for a net negative impact of about $1.6 million or 0.7% of sales.
PARTIAL REPAYMENT OF TERM LOAN In August 2021, the Corporation voluntarily repaid $35.0 million of the $150.0 million outstanding under the term facilities, without penalty. Following this partial repayment, the aggregate amount available under the credit facility was reduced to $465.0 million.
PARTIAL CONVERSION OF DEBENTURES In August 2021, CAD$15.0 million of the convertible debentures of the Corporation were converted into 1,105,380 common shares at a price of CAD$13.57 per share, which reduced the aggregate principal amount of issued convertible senior subordinated unsecured debentures to CAD$110.0 million.
REBRANDING ACCROSS THE PARTS ALLIANCE U.K. NETWORK The Parts Alliance U.K. segment, which traded locally under thirteen historic brands acquired through The Parts Alliance, has officially rebranded as GSF Car Parts, a brand with an established presence in the U.K. market. This will allow the segment to leverage a single trading name across its 170 company–owned stores for the first time. Operating nationally, as one brand, will enable processes streamlining and will ease the implementation of various improvements across the business more quickly and efficiently.
CONFERENCE CALL Uni-Select will host a conference call to discuss its third-quarter results for 2021 on November 12, 2021, at 8:00 AM Eastern. To join the conference, dial 1 888 390-0549 (or 1 416 764-8682 for international calls).
A recording of the conference call will be available from 11:30 AM Eastern on November 12, 2021, until 11:59 PM Eastern on December 12, 2021. To access the replay, dial 1 888 390-0541 followed by 399374#.
A 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 With over 4,800 employees in Canada, the U.S. and the U.K., Uni-Select is a leader in the distribution of automotive refinish and industrial coatings and related products in North America, as well as a leader in the automotive aftermarket parts business in Canada and in the U.K. Uni-Select is headquartered in Boucherville, Québec, Canada, and its shares are traded on the Toronto Stock Exchange under the symbol UNS.
In Canada, Uni-Select supports over 16,000 automotive repair and collision repair shops and more than 4,000 shops through its automotive repair/installer shop banners and automotive refinish banners. Its national network includes over 1,000 independent customer locations and more than 75 company-operated stores, many of which operate under the Uni-Select BUMPER TO BUMPER®, AUTO PARTS PLUS® and FINISHMASTER® store banner programs.
In the United States, Uni-Select, through its wholly-owned subsidiary FinishMaster, Inc., operates a national network of over 145 automotive refinish company-operated stores under the FINISHMASTER® banner, which supports over 30,000 customers annually.
In the U.K. and Ireland, Uni-Select, through its Parts Alliance group of subsidiaries, is a major distributor of automotive parts supporting over 20,000 customer accounts with a network of over 170 company-operated stores. www.uniselect.com
CAUTION REGARDING FORWARD-LOOKING INFORMATION Certain information made in this press release is forward-looking information within the meaning of Canadian securities laws. All such forward-looking information is made and disclosed in reliance upon the "safe harbour" provisions of applicable Canadian securities laws.
Forward-looking information includes all information regarding Uni-Select's intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information that relates to future events or circumstances and which does not directly and exclusively relate to historical facts. Forward-looking information often, but not always, uses words such as "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan," "predict," "project," "aim," "seek," "strive," "potential," "continue," "target," "may," "might," "could," "should," and similar expressions and variations thereof.
Forward-looking information is based on Uni-Select's perception of historic trends, current conditions and expected future developments, as well as other assumptions, both general and specific, that Uni-Select believes are appropriate in the circumstances. Such information is, by its very nature, subject to inherent risks and uncertainties, many of which are beyond the control of Uni Select, and which give rise to the possibility that actual results could differ materially from Uni-Select's expectations expressed in, or implied by, such forward-looking information. Uni-Select cannot guarantee that any forward-looking information will materialize, and we caution readers against relying on any forward-looking information.
These risks and uncertainties include, but are not restricted to: risks associated with the effects and duration of the COVID-19 pandemic; risks associated with the economy; risks associated with Uni-Select's business context, such as growth in the vehicle fleet, products supply and inventory management, distribution by manufacturers directly to consumers, technology, the environment and legal, regulatory compliance and litigation risk; risks associated with operations, such as Uni Select's business model and strategy, the integration of acquired businesses, competition, manufacturer and customer consolidation, computer and financial systems and human resources; risks associated with financial instruments, as well as other risks identified or incorporated by reference in this press release, MD&A for the quarter ended September 30, 2021, in Uni-Select's MD&A for the year ended December 31, 2020, and in other documents that we make public, including our filings with the Canadian Securities Administrators (on SEDAR at www.sedar.com).
Unless otherwise stated, the forward-looking information contained in this press release is made as of the date hereof and Uni Select disclaims any intention or obligation to publicly update or revise any forward–looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. While we believe that our assumptions on which this forward-looking information is based were reasonable as at the date of this MD&A, readers are cautioned not to place undue reliance on this forward-looking information.
Furthermore, readers are reminded that forward-looking information is presented for the sole purpose of assisting investors and others in understanding Uni-Select's expected financial results, as well as our objectives, strategic priorities and business outlook along with our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Further information on the risks that could cause our actual results to differ significantly from our current expectations may be found in the section titled "Risk Management" of Uni-Select's MD&A for the year ended December 31, 2020, which is incorporated by reference herein.
We also caution readers that the above-mentioned risks and the risks disclosed in Uni-Select's MD&A for the year ended December 31, 2020, and other documents and filings are not the only ones that could affect us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material adverse effect on our business activities, operating results, cash flows and financial position.
NON-GAAP FINANCIAL MEASURES
The information included in this Press release contains certain financial measures that are inconsistent with GAAP. Non‑GAAP financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. The Corporation is of the opinion that users of its Press release may analyze its results based on these measurements. The following presents performance measures used by the Corporation which are not defined by GAAP.
Organic growth – This measure consists of quantifying the increase in consolidated sales between two given periods, excluding the impact of acquisitions, the loss of sales from the consolidation of company‑operated 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. Organic growth is based on what management regards as reasonable and may not be comparable to other corporations' organic growth.
EBITDA and adjusted EBITDA – EBITDA represents net earnings (loss) excluding depreciation and amortization, net financing costs and income tax expense (recovery). 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 contains certain adjustments, which may affect the comparability of the Corporation's financial results. These adjustments include, among other things, restructuring and other charges, stock-based compensation expenses as well as change in estimate related to inventory obsolescence.
EBITDA margin and adjusted EBITDA margin – EBITDA margin is a percentage corresponding to the ratio of EBITDA to sales. Adjusted EBITDA margin is a percentage corresponding to the ratio of adjusted EBITDA to sales.
EBT, adjusted EBT, adjusted earnings and adjusted earnings per share – Management uses adjusted earnings before taxes "EBT", adjusted earnings and adjusted earnings per share to assess earnings before taxes, net earnings and net earnings per share from core operating activities, containing 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 facilitate the analysis and provide the best understanding of the Corporation's operational performance. The intent of these measures is to provide additional information.
These adjustments include, among other things, restructuring and other charges, stock-based compensation expenses, change in estimate related to inventory obsolescence as well as amortization of intangible assets related to The Parts Alliance acquisition. The exclusion of these items does not indicate that they are non-recurring.
EBT margin and adjusted EBT margin – EBT margin is a percentage corresponding to the ratio of EBT to sales. Adjusted EBT margin is a percentage corresponding to the ratio of adjusted EBT 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: net acquisitions of property and equipment, net advances to merchant members and incentives granted to customers, as well as net acquisitions and development of intangible assets. 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, repay debt, reinvest in the Corporation and capitalize on various market opportunities that arise.
The free cash flows exclude certain other funds generated and used according to the consolidated 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.
Total net debt – This measure corresponds to the sum of the revolving credit facility, term facilities, lease obligations (including the portion due within a year), net of deferred financing costs and cash.
Total net debt to adjusted EBITDA ratio – This ratio corresponds to total net debt (as defined above) divided by adjusted EBITDa.
The following is a reconciliation of organic growth.
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
$
$
FinishMaster U.S.
174,872
163,490
504,336
499,063
Canadian Automotive Group
144,489
137,240
404,918
360,480
The Parts Alliance U.K.
106,733
94,622
303,371
246,027
Sales
426,094
395,352
1,212,625
1,105,570
%
%
Sales variance
30,742
7.8
107,055
9.7
Translation effect of the Canadian dollar and the British pound
(14,741)
(3.7)
(53,987)
(4.9)
Impact of number of billing days
-
-
7,939
0.7
Erosion of sales from the consolidation of company‑operated stores
-
-
1,175
0.5
Acquisitions
(663)
(0.2)
(2,138)
(0.6)
Consolidated organic growth
15,338
3.9
60,044
5.4
The following is a reconciliation of EBITDA and adjusted EBITDA.
Third Quarters
Ended Sept. 30,
Nine-Month Periods Ended Sept. 30,
2021
2020
2021
2020
$
$
%
$
$
%
Net earnings (loss)
11,927
4,454
(8,113)
(26,456)
Income tax expense (recovery)
2,755
2,346
(395)
(6,327)
Net financing costs
5,867
8,763
23,629
28,263
Depreciation and amortization
14,777
15,217
45,449
47,706
EBITDA
35,326
30,780
14.8
60,570
43,186
40.3
EBITDA margin
8.3%
7.8%
5.0%
3.9%
Change in estimate related to inventory obsolescence
-
-
20,600
-
Stock-based compensation
1,554
515
6,206
2,456
Special items
5,414
2,504
21,889
21,725
Adjusted EBITDA
42,294
33,799
25.1
109,265
67,367
62.2
Adjusted EBITDA margin
9.9%
8.5%
9.0%
6.1%
The following is a reconciliation of EBT and adjusted EBT.
Third Quarters
Ended Sept. 30,
Nine-Month Periods Ended Sept. 30,
2021
2020
2021
2020
$
$
%
$
$
%
Net earnings (loss)
11,927
4,454
(8,113)
(26,456)
Income tax expense (recovery)
2,755
2,346
(395)
(6,327)
EBT
14,682
6,800
115.9
(8,508)
(32,783)
74.0
EBT margin
3.4%
1.7%
(0.7%)
(3.0%)
Change in estimate related to inventory obsolescence
-
-
20,600
-
Stock-based compensation
1,554
515
6,206
2,456
Special items
5,414
2,504
21,889
21,725
Amortization of intangible assets related to the acquisition of The Parts Alliance
1,113
1,042
3,355
3,080
Adjusted EBT
22,763
10,861
109.6
43,542
(5,522)
888.5
Adjusted EBT margin
5.3%
2.7%
3.6%
(0.5%)
The following is a reconciliation of adjusted earnings (loss).
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
%
$
$
%
Net earnings (loss)
11,927
4,454
167.8
(8,113)
(26,456)
69.3
Change in estimate related to inventory obsolescence, net of taxes
(659)
-
15,615
-
Stock-based compensation, net of taxes
1,159
382
4,601
1,818
Special items, net of taxes
3,919
1,911
16,365
16,572
Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes
902
1,169
2,748
3,462
Net tax impact of changes in rates and reversal of a contingency provision
-
-
1,994
-
Adjusted earnings (loss)
17,248
7,916
117.9
33,210
(4,604)
821.3
Earnings (loss) per share
0.28
0.11
154.5
(0.19)
(0.62)
69.4
Change in estimate related to inventory obsolescence, net of taxes
(0.02)
-
0.37
-
Stock-based compensation, net of taxes
0.03
0.01
0.11
0.04
Special items, net of taxes
0.09
0.04
0.38
0.39
Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes
0.02
0.03
0.06
0.08
Net tax impact of changes in rates and reversal of a contingency provision
-
-
0.05
-
Adjusted earnings (loss) per share
0.40
0.19
110.5
0.78
(0.11)
809.1
The following table presents a reconciliation of free cash flows.
In June 2021, the Corporation reviewed its definition of free cash flows to better reflect the amount of funds available to manage growth, repay debt, reinvest in the Corporation and capitalize on various market opportunities that arise. Accordingly, the comparative figures presented below were adjusted.
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
$
$
Cash flows from operating activities
42,865
62,074
85,607
84,272
Advances to merchant members and incentives granted to customers
(2,408)
(1,246)
(9,560)
(5,568)
Reimbursement of advances to merchant members
621
1,140
4,377
2,532
Acquisitions of property and equipment
(2,573)
(647)
(5,959)
(4,453)
Proceeds from disposal of property and equipment
304
349
869
769
Acquisitions and development of intangible assets
(1,854)
(586)
(3,506)
(1,337)
Free cash flows
36,955
61,084
71,828
76,215
UNI-SELECT INC. INTERIM CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS)
(In thousands of US dollars, except per share amounts, unaudited)
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
$
$
Sales
426,094
395,352
1,212,625
1,105,570
Purchases, net of changes in inventories
289,144
280,396
847,984
781,882
Gross margin
136,950
114,956
364,641
323,688
Salaries and employee benefits
67,258
56,779
199,113
174,097
Other operating expenses
28,952
24,893
83,069
84,680
Special items
5,414
2,504
21,889
21,725
Earnings before net financing costs, depreciation and amortization and income taxes
35,326
30,780
60,570
43,186
Depreciation and amortization
14,777
15,217
45,449
47,706
Net financing costs
5,867
8,763
23,629
28,263
Earnings (loss) before income taxes
14,682
6,800
(8,508)
(32,783)
Income tax expense (recovery)
2,755
2,346
(395)
(6,327)
Net earnings (loss)
11,927
4,454
(8,113)
(26,456)
Earnings (loss) per share
Basic
$0.28
$0.11
$(0.19)
$(0.62)
Diluted
$0.25
$0.11
$(0.19)
$(0.62)
Weighted average number of common shares outstanding (in thousands)
Basic
43,042
42,387
42,608
42,387
Diluted
51,988
42,387
42,608
42,387
UNI-SELECT INC. INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands of US dollars, unaudited)
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
$
$
Net earnings (loss)
11,927
4,454
(8,113)
(26,456)
Other comprehensive income (loss)
Items that will subsequently be reclassified to net earnings (loss):
Effective portion of changes in the fair value of cash flow hedges (net of income tax of nil and $3 respectively for the quarter and nine-month period ($22 and $177 in 2020))
-
(62)
8
(492)
Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to net earnings (loss) (net of income tax of nil and $118 respectively for the quarter and nine-month period ($49 and $101 in 2020))
11
138
327
282
Unrealized exchange gains (losses) on the translation of financial statements to the presentation currency
(3,885)
8,055
(2,754)
(3,799)
Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations
(3,744)
(257)
1,036
(3,105)
(7,618)
7,874
(1,383)
(7,114)
Items that will not subsequently be reclassified to net earnings (loss):
Remeasurements of long-term employee benefit obligations (net of income tax of $1,219 and $3,869 respectively for the quarter and nine-month period ($509 and $2,366 in 2020))
3,381
1,411
10,731
(6,563)
Total other comprehensive income (loss)
(4,237)
9,285
9,348
(13,677)
Comprehensive income (loss)
7,690
13,739
1,235
(40,133)
UNI-SELECT INC. INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands of US dollars, unaudited)
Share capital
Contributed
surplus
Equity component of the convertible debentures
Retained earnings (loss)
Accumulated other comprehensive loss
Total
equity
$
$
$
$
$
$
Balance as at December 31, 2019
100,244
6,724
8,232
418,624
(26,830)
506,994
Net loss
-
-
-
(26,456)
-
(26,456)
Other comprehensive loss
-
-
-
(6,563)
(7,114)
(13,677)
Comprehensive loss
-
-
-
(33,019)
(7,114)
(40,133)
Contributions by and distributions to shareholders:
Dividends
-
-
-
(2,923)
-
(2,923)
Stock-based compensation
-
1,534
-
-
-
1,534
-
1,534
-
(2,923)
-
(1,389)
Balance as at September 30, 2020
100,244
8,258
8,232
382,682
(33,944)
465,472
Balance as at December 31, 2020
100,244
8,404
8,232
378,196
(21,021)
474,055
Net loss
-
-
-
(8,113)
-
(8,113)
Other comprehensive income (loss)
-
-
-
10,731
(1,383)
9,348
Comprehensive income (loss)
-
-
-
2,618
(1,383)
1,235
Contributions by and distributions to shareholders:
Conversion of convertible debentures into common shares
12,202
-
(988)
-
-
11,214
Issuance of common shares
2,993
-
-
-
-
2,993
Transfer upon exercise of stock options
612
(612)
-
-
-
-
Stock-based compensation
-
256
-
-
-
256
15,807
(356)
(988)
-
-
14,463
Balance as at September 30, 2021
116,051
8,048
7,244
380,814
(22,404)
489,753
UNI-SELECT INC. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars, unaudited)
Third Quarters
Ended Sept. 30,
Nine-Month Periods
Ended Sept. 30,
2021
2020
2021
2020
$
$
$
$
OPERATING ACTIVITIES
Net earnings (loss)
11,927
4,454
(8,113)
(26,456)
Adjustment for:
Special items and others
5,414
2,504
42,489
21,725
Depreciation and amortization
14,777
15,217
45,449
47,706
Net financing costs
5,867
8,763
23,629
28,263
Income tax expense (recovery)
2,755
2,346
(395)
(6,327)
Amortization and reserves related to incentives granted to customers
3,894
4,426
12,495
14,161
Other items
(4,851)
275
(2,959)
2,074
Changes in working capital items
8,879
29,392
(3,002)
23,175
Interest paid
(4,693)
(5,148)
(21,210)
(18,709)
Income taxes paid
(1,104)
(155)
(2,776)
(1,340)
Cash flows from operating activities
42,865
62,074
85,607
84,272
INVESTING ACTIVITIES
Business acquisition
(1,501)
(193)
(1,501)
(4,675)
Business disposal
-
-
-
258
Net balance of purchase price
(555)
(41)
(613)
-
Cash held in escrow
(214)
-
(214)
747
Proceeds from sale of investment
396
-
396
-
Advances to merchant members and incentives granted to customers
(2,408)
(1,246)
(9,560)
(5,568)
Reimbursement of advances to merchant members
621
1,140
4,377
2,532
Acquisitions of property and equipment
(2,573)
(647)
(5,959)
(4,453)
Proceeds from disposal of property and equipment
304
349
869
769
Acquisitions and development of intangible assets
(1,854)
(586)
(3,506)
(1,337)
Other provisions paid
(330)
(143)
(582)
(331)
Cash flows used in investing activities
(8,114)
(1,367)
(16,293)
(12,058)
FINANCING ACTIVITIES
Increase in long-term debt
38,454
162
77,468
543,122
Repayment of long-term debt
(84,718)
(84,164)
(180,335)
(626,417)
Net increase (decrease) in merchant members' deposits in the guarantee fund
(216)
162
(562)
213
Issuance of common shares
2,993
-
2,993
-
Dividends paid
-
-
-
(5,803)
Cash flows used in financing activities
(43,487)
(83,840)
(100,436)
(88,885)
Effects of fluctuations in exchange rates on cash
(453)
795
(35)
(435)
Net decrease in cash
(9,189)
(22,338)
(31,157)
(17,106)
Cash, beginning of period
32,411
40,940
54,379
35,708
Cash, end of period
23,222
18,602
23,222
18,602
UNI-SELECT INC. INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of US dollars, unaudited)
As at
Sept. 30,
As at
Dec. 31,
2021
2020
ASSETS
$
$
Current assets:
Cash
23,222
54,379
Cash held in escrow
1,242
1,475
Trade and other receivables
206,060
188,808
Income taxes receivable
1,656
2,025
Inventory
338,957
368,992
Prepaid expenses
7,176
9,520
Derivative financial instruments
159
-
Total current assets
578,472
625,199
Investments and advances to merchant members
21,261
27,106
Property and equipment
143,640
155,071
Intangible assets
175,227
186,863
Goodwill
339,606
340,328
Deferred tax assets
38,268
40,705
TOTAL ASSETS
1,296,474
1,375,272
LIABILITIES
Current liabilities:
Trade and other payables
336,990
313,600
Balance of purchase price, net
1,016
1,796
Provision for restructuring charges
1,942
3,246
Income taxes payable
4,607
8,359
Current portion of long-term debt and merchant members' deposits in the guarantee fund
27,077
28,406
Derivative financial instruments
-
4,579
Total current liabilities
371,632
359,986
Long-term employee benefit obligations
16,451
28,337
Long-term debt
311,155
396,289
Convertible debentures
78,181
87,728
Merchant members' deposits in the guarantee fund
5,474
6,041
Other provisions
1,080
1,395
Deferred tax liabilities
22,748
21,441
TOTAL LIABILITIES
806,721
901,217
TOTAL SHAREHOLDERS' EQUITY
489,753
474,055
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
1,296,474
1,375,272
SOURCE: Uni-Select Inc.
