Uni-Select Inc. has reported its financial results for the third quarter ended Sept. 30, 2017.
“We are very pleased to report our third quarter results which include seven weeks of The Parts Alliance (TPA) business in the U.K. acquired in August. TPA results do not represent a full quarter as we are only reporting since its acquisition on Aug. 7, 2017. We are excited by the opportunities ahead. TPA management is driving a number of profitable growth initiatives and has already demonstrated it with their first acquisition in September, adding seven locations to its network,” said Henry Buckley, president and CEO of Uni-Select.
“The Canadian business reported another strong quarter, with organic sales growth of 7.7 percent while improving its EBITDA. FinishMaster US is focusing on initiatives underway to overcome headwinds from the product line changeover, but also from the two hurricanes that impacted important markets, Texas and Florida, during the quarter,” added Buckley. “While consolidated net earnings are below our expectations, the underlying industry fundamentals are positive, and we have both profitable sales growth initiatives and productivity improvement initiatives underway to maximize shareholder value.”
Consolidated sales for the third quarter were $395.8 million, a 24.3 percent increase compared to the same quarter last year, driven by the sales generated from recent business acquisitions, adding sales of $84 million or 26.4 percent of which The Parts Alliance represents $55.7 million or 17.5 percent. In addition, the Canadian Automotive Group delivered a solid performance with an organic growth of 7.7 percent. The consolidated organic sales of negative 2.3 percent were affected by FinishMaster’s product line changeover and the hurricanes. Without these impacts, the consolidated organic sales would have been 2.1 percent.
Net earnings and adjusted earnings were respectively $11.2 million and $15.1 million. Adjusted earnings decreased by 12.6 percent compared to the same quarter last year, and were impacted by additional amortization and finance costs related to recent business acquisitions.
Segmented Results
FinishMaster US recorded sales of $206.5 million, up 2.1 percent from the same quarter in 2016, supported by the recent business acquisitions representing a growth of $23.8 million or 11.8 percent and offsetting the negative organic growth.
Sales for the Canadian Automotive Group were $133.6 million, compared to $116.3 million in 2016, an increase of 14.8 percent, a direct result of the organic growth of 7.7 percent as well as the performance of the recent business acquisitions and the strength of the Canadian dollar. Sales to the independent parts store customers, Bumper to Bumper and FinishMaster corporate stores sales, reported both a positive organic growth, a result of the concerted efforts and initiatives of the management and sales teams, as well as the favorable Canadian economic conditions.
The Parts Alliance UK recorded sales of $55.7 million and EBITDA of $2.3 million. Sales are slightly seasonal for this segment, notably in relation to vacation and holidays, with August being one of the weakest months of year.
Nine-Month Period Results
Consolidated sales for the nine-month period were $1,033.3 million, a 14 percent increase compared to the same period last year, driven by the sales generated from recent business acquisitions, resulting in additional sales of $162 million or 17.9 percent, as well as by the performance of the Canadian Automotive Group that overcame its loss of an independent member and generated positive organic growth. The consolidated organic sales were affected by the product line changeover and the hurricanes in the US. Without these impacts, the consolidated organic growth would have been approximately 1.2 percent.
Uni-Select generated an EBITDA of $84.9 million, while adjusted EBITDA amounted to $89.5 million, representing an increase of 8.8 percent compared to the same period last year. Adjusted EBITDA margin decrease of 0.4 percent is mainly attributable to a different business model at The Parts Alliance UK. Once these operations are excluded, the remaining variance is explained by the organic growth of FinishMaster US and the impact of the hurricanes, which were partially compensated by the performance of the Canadian Automotive Group as well as by lower information technology expenses.
Net earnings and adjusted earnings were respectively $35.9 million and $42.7 million compared to $45.6 million last year. Additional amortization and finance costs related to recent business acquisitions explain the decrease in adjusted earnings.
Segmented Results
FinishMaster US recorded sales of $615.7 million, up 7.6 percent from the same period in 2016, strengthened by the recent business acquisitions representing a growth of $94.7 million or 16.5 percent. The product line changeover and the hurricanes impacted sales by approximately 7.5 percent.
Sales for the Canadian Automotive Group were $361.9 million, compared to $334.2 million in 2016, an increase of 8.3 percent, driven by the organic growth performance of the segment, the recent business acquisitions and the strength of the Canadian dollar. This segment’s organic growth improved quarter after quarter for both sales to the independent customers and corporate stores sales, which overcome the loss of an independent member at the beginning of the year.
