Uni-Select has reported its financial results for the first quarter ended March 31, 2019.
The company has reported sales of $420 million, up 2.5 percent organically. Uni-Select reported EPS of $(3 cents) versus 25 cents for 2018; and adjusted EPS of 12 cents versus 29 cents for 2018.
“The solid performance of the Canadian Automotive Group and the benefits of the Performance Improvement Plan (PIP) were offset by the challenges faced in the first quarter from ongoing margin pressure at FinishMaster U.S. and from the uncertainty created by Brexit on The Parts Alliance business,” said André Courville, former interim president and CEO.
“With regard to FinishMaster U.S., we initiated the implementation of the PIP by integrating 3 stores in the first quarter. By the end of 2019, we fully expect to have realized an annualized run rate cost savings of $10 million at FinishMaster U.S. mainly from store consolidation, organizational optimization and spending reductions. These various initiatives should lead to improved results in the second half of 2019. In the UK, the uncertainty surrounding Brexit will continue to present some headwinds in upcoming quarters, but we believe that volumes may improve as customers adjust to a new economic reality,” concluded Courville.
During the first quarter, Uni-Select opened three greenfields, integrated four company-owned stores as part of the PIP and added one company-owned store through a business acquisition.
In addition, to optimize its logistical processes, the company has integrated three smaller distribution centers into two larger ones, permitting increased competitiveness and efficiency. These new distribution centers were operational during the first quarter of 2019.
Performance Improvement Plan
In January 2019, the board of directors and management initiated the development of a broad performance improvement and rightsizing plan for the FinishMaster U.S. segment with the objective of realigning its operations to address changing market conditions, including ongoing consolidation by national accounts and pricing pressures. This plan, which is expected to generate additional annualized cost-savings of $10 million by the end of 2019, through the consolidation of company-owned stores (approximately $5 million), optimization (approximately $4.5 million) and spending reductions (approximately $0.5 million). The company-owned stores to be integrated are expected to produce marginal sales erosion since the strategy is to transfer sales activities to nearby locations, optimizing the logistical processes and costs efficiency.
Through this plan, the corporation expects to generate annualized cost savings of $35 million by the end of 2020, of which, $21.4 million has been realized as of March 31, 2019.
The total cash cost of implementing the PIP is expected to be $13.5 million, mainly for severance, consulting fees and moving costs. The corporation also is expecting to write down certain assets for approximately $4 million, mainly for the FinishMaster U.S. segment. During the current quarter of 2019, Uni-Select recognized restructuring and other charges totaling $6.5 million, of which, $2.7 million is non-cash for the write-down of assets.
“The Strategic Alternatives review is following its course. Included in the process is the implementation of the Performance Improvement Plan, which is on track. All options remain open and we are not in a position to provide any further update at this time. As planned, our interim President and CEO, André Courville is relinquishing his duties to make way for a new, permanent CEO. As announced earlier this week, we are pleased that Brent Windom has been appointed president and CEO of Uni-Select Inc., effective May 1. Mr. Windom has a profound understanding and unparalleled knowledge of both Uni-Select and our industry. He has demonstrated strong leadership capabilities over the years, while his operational experience and skill set are in perfect alignment with what the organization requires during its transformation. With the addition of Mr. Windom, the board strongly believes we have a solid leadership team in place to face current challenges and to restore and unlock value for shareholders. André has decided not to stand for re-election to the Board after a 5-year tenure. His dedication and contribution to Uni-Select has been significant and is greatly appreciated. We wish him every success in his new endeavors,” said Michelle Cormier, chair of the board of directors.
Eric Bussières, currently CFP of Uni-Select Inc., is also appointed executive vice president and CFO, while Louis Juneau, currently chief legal officer and corporate secretary, is named chief legal and administration officer and corporate secretary, both effective immediately.