Uni-Select Inc. has reported its financial results for the first quarter ended March 31, 2021.
“We had a strong start to the year, as our adjusted EBITDA and related margin were up a robust 68% and 350 basis points, respectively, essentially driven by the sustainable benefits provided by our continuous improvement initiatives in all of our businesses despite being up against a comparable quarter that was marginally impacted by the early stages of the pandemic. As expected, our sales were down 9% year-over-year, essentially attributable to the slower recovery in our refinish business in the U.S.,” said Brent Windom, president and CEO of Uni-Select Inc.
“In the first quarter, we typically invest in our working capital. This investment was partly mitigated by the active management of our working capital and capital deployment. Given our improved profitability and proactive cash management, we ended the quarter with a total net debt to adjusted EBITDA ratio of 3.8x, from 4.2x in the fourth quarter of 2020, as well as available liquidity of $267 million.
“Looking forward, with the visibility we have today, we expect our 2021 consolidated results to progressively improve over 2020. We also anticipate ramping up capital investments to pre-COVID levels and end the year with a level of total net debt similar to 2020. We are confident in the sustainability of the improvements realized in our business. We are continuing to focus on our sales initiatives and the next phase of our continuous improvements, to further build shareholder value,” concluded Windom.
First Quarter Results
Consolidated sales of $370.1 million for the quarter decreased by 9.2% compared to the same quarter in 2020, mainly impacted by the COVID‑19 pandemic. The corporation is reporting negative consolidated organic growth of 10.2%, predominantly from a slower recovery in the U.S. paint business affecting the FinishMaster U.S. segment and, to a lesser extent, The Parts Alliance U.K. segment. Furthermore, consolidated sales were adversely affected by less billing days in all segments representing 2.2%. These unfavorable variances were partially compensated by the performance of the Canadian segment, which is steadily closing the gap to pre-COVID level, and favorable fluctuations of the British and the Canadian currencies. Overall organic growth reported for the first quarter reflects a similar pattern than what was observed during the second semester of 2020 and mirrors the industry in each segment’s respective market.
Uni-Select generated an EBITDA of $24.8 million for the quarter, which was impacted by special items for restructuring and other charges related to the Continuous Improvement Plan (CIP) of $1.7 million, as well as other charges of $1.7 million for severance and retention bonuses. Once adjusted, the EBITDA and the EBITDA margin increased by $11.4 million and 350 basis points respectively to $28.2 million and 7.6%, from $16.8 million and 4.1% in 2020. This performance was largely driven by benefits derived from improvement plans, optimizing the workforce and the network, which, combined with cost‑control measures put in place to face the pandemic, represents approximately 340 basis points. In addition, this performance is the result of improved gross margins in the Canadian Automotive Group and The Parts Alliance U.K. segments, and a partial reversal of the bad debt provision due to improved collection. The same quarter last year was affected by foreign exchange losses in relation to the depreciation of the Canadian dollar and the British pound, as well as a one‑time charge, together representing approximately $4.5 million or 110 basis points. These elements were partially offset by a lower absorption of fixed costs, a direct effect of the decrease in volume of sales, representing circa 270 basis points.
Net earnings of $0.2 million are reported for the current quarter compared to a net loss of $6.7 million in 2020. Adjusted earnings for the current quarter increased by 186.7% to $3.7 million from an adjusted loss of $4.3 million in 2020, essentially driven by improved operational performance and profitability, reaping the rewards of the CIP and initiatives put in place.
