Uni-Select Inc. has reported its financial results for the second quarter ended June 30, 2019.
“I am pleased with the strong performance of the Canadian Automotive Group and by the execution of the Performance Improvement Plan at FinishMaster U.S. The Parts Alliance U.K. is operating in a difficult environment and we are actively focusing on our cost structure and margins,” said Brent Windom, president and CEO, Uni-Select Inc. and president and chief operating officer, Canadian Automotive Group.
“We continue to work on our Performance Improvement Plan and Strategic Alternatives Review, and we are pleased with the results obtained by our Canadian operations in the execution of optimization initiatives. With regard to FinishMaster U.S., the execution of the PIP is on track with 11 company-owned stores integrated this quarter and we are now confident to realize more savings than originally anticipated. In the U.K., the operating context is challenging with the uncertainty surrounding Brexit, and we are therefore implementing initiatives to reduce our cost base. We fully expect the combination of these actions to lead to tangible benefits in the second half of the year. As a result, we are reiterating our guidance for 2019,” concluded Windom.
During the six-month period, the corporation reduced its workforce and integrated 19 company-owned stores. In addition, to optimize its logistical processes, Uni-Select says it 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.
Second Quarter Results
Consolidated sales of $456.2 million for the second quarter, when compared to the same quarter last year, were affected by a foreign currency conversion impact amounting to $11 million or 2.4%, as well as by the impact of a different number of billing days of $3.9 million or 0.8%. Consolidated organic growth for the quarter was $5.6 million or 1.2%. The Canadian Automotive Group and the FinishMaster U.S. segments generated organic growth of 5.5% and 0.7% respectively, while The Parts Alliance U.K. segment faced macroeconomic challenges and reported a negative organic growth of 3.2%.
Uni-Select generated adjusted EBT and adjusted EBT margin of $13.9 million and 3%, respectively, compared to $22.3 million and 4.8% in 2018. This variance is mainly attributable to the compression of the gross margin in the FinishMaster U.S. segment, and to a reduced volume of sales in The Parts Alliance U.K. segment, impacting rebates. Furthermore, adjusted EBT margin is affected by the recent opening of greenfields and distribution centers, as well as by higher borrowing costs.
Net earnings and adjusted earnings were respectively $6.3 million and $10.4 million, compared to $17.9 million and $18.4 million in 2018. Adjusted earnings decreased by $8 million compared to the same quarter last year, due to a lower adjusted EBT and a change in the proposed U.S. tax regulations announced in December 2018.
Six-Month Period Results
Consolidated sales of $876.2 million for the six-month period, when compared to the same period last year, were impacted by the conversion effect of the Canadian dollar and the British pound into the U.S. dollar and by a different number of billing days. Consolidated organic growth for the six-month period was $15.9 million or 1.8%. The Canadian Automotive Group and the FinishMaster U.S. segments generated organic growth of 5.1% and 1.9% respectively, while The Parts Alliance U.K. segment faced macroeconomic challenges and reported a negative organic growth of 2.2%.
The corporation generated adjusted EBT and adjusted EBT margin of $21 million and 2.4%, respectively, compared to $36.4 million and 4.1% in 2018. This variance is mainly attributable to the compression of the gross margin in the FinishMaster U.S. segment, and to a reduced volume of sales in The Parts Alliance U.K. segment, impacting volume rebates. Furthermore, the adjusted EBT margin was affected by the opening of greenfields and distribution centers, as well as by higher borrowing costs. They were partially compensated by higher volume rebates from the Canadian Automotive Group segment, overall savings realized from the PIP and reduced short-term and long-term compensation due to the overall performance.
Net earnings and adjusted earnings were $5 million and $15.5 million, respectively, compared to $28.3 million and $30.5 million in 2018. Adjusted earnings decreased by $15 million compared to the same period last year, due to a lower adjusted EBT and a change in the proposed U.S. tax regulations announced in December 2018.
