FIRST QUARTER HIGHLIGHTS (Compared to the First Quarter
of 2022):
- Consolidated sales of $449.5
million, up $39.9 million or
9.7%; Up 15.0% excluding the impact of unfavorable fluctuation of
the British pound and the Canadian dollar against the US dollar;
Organic growth(1) of 10.6% with all three
segments reporting positive organic growth(1);
- EBITDA(1) increased to $40.3 million or 9.0% of sales from $28.2 million or 6.9% of sales; Adjusted
EBITDA(1) was $48.1
million or 10.7% of sales, compared to $45.2 million or 11.0% of sales; and
- Net earnings of $16.7 million
or $0.34 per diluted common share, an
increase of $9.0 million or
$0.17 per diluted common share;
Adjusted net earnings(1) of $23.0
million or $0.46 per diluted
common share, compared to $21.2
million or $0.43 per diluted
common share.
BOUCHERVILLE, QC, May 4, 2023
/CNW/ - Uni-Select Inc. (TSX: UNS) ("Uni-Select" or
"Corporation") today reported its financial results for the
first quarter ended March 31, 2023.
"Uni-Select reported solid first-quarter results with all three
business units achieving organic growth(1), mainly
attributable to price increases. We are particularly pleased with
e-commerce sales in the U.K. and with the performance of our
private brands in Canada. While we
proceed towards the closing of the transaction with LKQ
Corporation, we remain focused on operational performance and on
managing the business profitably," said Brian McManus, Executive Chair and Chief
Executive Officer of Uni-Select.
__________________________
|
(1)
|
This information
represents a non-GAAP or other financial measure. Non-GAAP and
other 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. Refer to "Non-GAAP
and other financial measures" section for reconciliation and
further details.
|
INTERIM CONSOLIDATED FINANCIAL RESULTS
The following table presents selected interim consolidated
information:
|
First Quarters
Ended
March
31,
|
|
(in thousands of US
dollars, except per share amounts, percentages and otherwise
specified)
|
2023
|
2022
|
|
$
|
$
|
%
|
OPERATING
RESULTS
|
|
|
|
Sales
|
449,494
|
409,602
|
9.7
|
EBITDA(1)
|
40,310
|
28,227
|
42.8
|
EBITDA
margin(1)
|
9.0 %
|
6.9 %
|
|
Adjusted
EBITDA(1)
|
48,132
|
45,239
|
6.4
|
Adjusted EBITDA
margin(1)
|
10.7 %
|
11.0 %
|
|
EBT(1)
|
22,465
|
9,777
|
129.8
|
EBT
margin(1)
|
5.0 %
|
2.4 %
|
|
Adjusted
EBT(1)
|
30,952
|
27,873
|
11.0
|
Adjusted EBT margin
(1)
|
6.9 %
|
6.8 %
|
|
Change in estimate
related to inventory obsolescence
|
—
|
10,927
|
|
Stock-based
compensation
|
3,270
|
4,919
|
|
Costs related to the
Arrangement with LKQ Corporation
|
4,552
|
—
|
|
Restructuring and
other charges
|
—
|
1,166
|
|
Net
earnings
|
16,742
|
7,739
|
116.3
|
Adjusted net
earnings(1)
|
23,025
|
21,247
|
8.4
|
Cash flows from
operating activities
|
1,680
|
7,803
|
(78.5)
|
Free cash
flow(1)
|
(4,478)
|
1,915
|
(333.8)
|
COMMON SHARE
DATA
|
|
|
|
Basic net earnings per
common share
|
0.38
|
0.18
|
111.1
|
Diluted net earnings
per common share
|
0.34
|
0.17
|
100.0
|
Basic adjusted net
earnings per common share(1)
|
0.52
|
0.49
|
6.1
|
Diluted adjusted net
earnings per common share(1)
|
0.46
|
0.43
|
7.0
|
Number of common
shares outstanding(2)
|
43,870,538
|
43,511,645
|
|
Weighted average
number of outstanding common shares
|
|
|
|
Basic
|
43,869,921
|
43,446,096
|
|
Diluted
|
52,690,198
|
51,989,941
|
|
|
As at March
31,
|
As at
December 31,
|
|
2023
|
2022
|
|
$
|
$
|
FINANCIAL
POSITION
|
|
|
Long-term debt,
including the current portion
|
270,336
|
258,356
|
Total net
debt(1)
|
246,840
|
234,437
|
Credit
facilities
|
171,770
|
159,808
|
(1)
|
This information
represents a non-GAAP or other financial measure. Non-GAAP and
other 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. Refer to "Non-GAAP
and other financial measures" section for reconciliation and
further details.
|
(2)
|
The outstanding number
of shares corresponds to the issued common shares less the treasury
shares in the Share Trust.
|
FIRST QUARTER RESULTS
Compared to the First Quarter of 2022:
Consolidated sales increased by $39.9 million or 9.7% to $449.5 million. Excluding the impact of
unfavorable fluctuation of the British pound and the Canadian
dollar against the US dollar of $21.6 million or 5.3%, consolidated sales
increased by $61.5 million
or 15.0%, compared to the same quarter in 2022, driven by
organic growth, from all three segments, ranging between 5.1% and
22.1%, as well as acquisitions and a favorable variance in the
number of billing days. Consolidated organic growth of 10.6% was
driven primarily by price increases.
The Corporation generated EBITDA of $40.3 million for the quarter. Excluding
impacts of change in estimate related to inventory obsolescence,
stock-based compensation, costs related to the Arrangement with LKQ
Corporation and restructuring and other charges, adjusted EBITDA
and adjusted EBITDA margin were $48.1 million and 10.7% of sales,
compared to $45.2 million and
11.0% of sales in 2022. The adjusted EBITDA margin was impacted by
costs related to a software implementation project in the Canadian
Automotive Group and the FinishMaster U.S. segments, as well as
timing of insurance costs. This was partially offset by scaling of
payroll and operating expenses.
Net earnings for the quarter increased by $9.0 million to $16.7 million. Excluding impacts of
change in estimate related to inventory obsolescence, stock-based
compensation, costs related to the Arrangement with LKQ
Corporation, restructuring and other charges and amortization of
intangibles assets related to the acquisition of GSF Car Parts,
adjusted net earnings increased by $1.8 million or 8.4% to $23.0 million primarily due to higher
sales.
Segmented First Quarter Results
The FinishMaster U.S. segment reported sales of $184.3 million, an increase of 6.7%, from organic
growth of 5.1% and a favorable variance in the number of billing
days. The increase in organic growth was mainly driven by price
increases. EBITDA was $16.4 million for the quarter compared to
$18.6 million in 2022. Excluding
impacts of stock-based compensation and restructuring and other
charges, adjusted EBITDA and adjusted EBITDA margin decreased by
$1.9 million and 1.7%
respectively to $17.7 million
and 9.6% of sales, from $19.6 million and 11.3% of sales in 2022.
This variance is mainly attributable to unfavorable customer mix,
costs related to a software implementation project, as well as
timing of medical and vehicle insurance costs. These elements were
offset by higher rebates and higher sales, driving scaling
benefits.
The Canadian Automotive Group segment reported sales of
$145.4 million. Excluding the
impact of unfavorable fluctuation of the Canadian dollar against
the US dollar of $9.1 million or
7.0% during the first quarter of 2023, sales increased by
$24.7 million or 19.0%,
compared to the same quarter last year, driven by acquisitions over
the last twelve months representing 9.5%, organic growth of 8.4%,
as well as a favorable variance in the number of billing days. The
increase in organic growth was mainly driven by price increases.
This segment reported EBITDA and EBITDA margin of $15.3 million and 10.5% respectively for the
quarter compared to $5.5 million
and 4.2% in 2022. Excluding impacts of change in estimate related
to inventory obsolescence, stock-based compensation and
restructuring and other charges, adjusted EBITDA and adjusted
EBITDA margin were respectively $15.7 million and 10.8% of sales, compared
to $17.2 million and 13.2% of
sales in 2022. This variance is mainly attributable to costs
related to a software implementation project, while 2022 benefited
from favorable timing of rebates, lower variable compensation and
foreign currency gains. This was partially offset by recent
accretive business acquisitions, lower bad debt expenses and higher
sales driving scaling benefits.
The GSF Car Parts U.K. segment reported sales of $119.8 million. Excluding the impact of
unfavorable fluctuation of the British pound against the US dollar
of $12.5 million or 11.7% during
the first quarter of 2023, sales increased by $25.3 million or 23.6%, driven by organic
growth of 22.1% and a favorable variance in the number of billing
days. The increase in organic growth was mainly driven by
e-commerce sales, price increases, as well as the contribution of
recently opened greenfield stores. This segment reported EBITDA and
EBITDA margin of $16.6 million and 13.8% respectively
for the quarter compared to $9.6 million and 9.0% in 2022.
Excluding impacts of stock-based compensation and restructuring and
other charges, adjusted EBITDA and adjusted EBITDA margin improved
by $6.1 million and 4.0%
respectively to $17.0 million and 14.2% of sales, from
$10.9 million and 10.2% of
sales in 2022. This performance was mainly driven by higher sales
driving scaling benefits and timing of rebates, offsetting
inflationary utility costs, higher marketing costs to promote
e-commerce sales, as well as foreign currency losses due to the
volatility of the British pound.
ARRANGEMENT WITH LKQ CORPORATION
On February 26, 2023, the
Corporation entered into a definitive arrangement agreement with
LKQ Corporation and 9485-4692 Québec Inc., a wholly owned
subsidiary of LKQ Corporation, providing for the acquisition by
9485-4692 Québec Inc. of all of the Corporation's issued and
outstanding shares for CAD$48.00 per
share in cash, representing a total enterprise value of
approximately CAD$2.8 billion. The
transaction will be implemented by way of a plan of arrangement
under the Business Corporations Act (Québec) and is expected to
close in the second half of 2023, subject to customary conditions,
including the receipt of applicable regulatory approvals,
consisting of approval under the Competition Act (Canada) and the Investment Canada Act,
clearance under the U.S. Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and clearance by the U.K. Competition and
Markets Authority. In connection with the transaction, the
Corporation and LKQ Corporation have submitted applications to the
regulatory authorities in Canada,
the United States and the
United Kingdom and LKQ Corporation
has commenced a process to divest GSF Car Parts U.K. as
contemplated in the arrangement agreement.
ABOUT UNI-SELECT
With over 5,200 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 95 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., Uni-Select, through GSF Car Parts, is a major
distributor of automotive parts supporting over 20,000 customer
accounts with a network of over 175 company-operated stores.
CAUTION REGARDING UNI-SELECT FORWARD-LOOKING
INFORMATION
Certain statements made in this press release are
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 and
statements regarding Uni-Select's intentions, plans, expectations,
beliefs, objectives, future performance, and strategy, including
but not limited to the timing and effects of the proposed
arrangement with LKQ Corporation and other information or
statements that relate to future events or circumstances and which
do not directly and exclusively relate to historical facts.
Forward-looking statements often, but not always, use 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, including but not limited to assumptions as to the
ability of Uni-Select and LKQ Corporation to receive, in a timely
manner and on satisfactory terms, the necessary regulatory and
Court approvals; the ability of Uni-Select and LKQ Corporation to
satisfy, in a timely manner, the other conditions to the closing of
the arrangement and the completion of the arrangement on expected
terms; the impact of the arrangement and the dedication of
substantial resources from Uni-Select to pursuing the arrangement
on Uni-Select's ability to maintain its current business
relationships and its current and future operations, financial
condition and prospects. 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 reduced demand for our products,
disruptions of our supplier relationships or of our suppliers'
operations or supplier consolidation, increases in shipping costs,
disruption of our customer relationships, competition in the
industries in which we do business, the COVID-19 pandemic or other
pandemics, reliance on information technology systems, security
breaches, information security malfunctions or integration issues,
the demand for e-commerce and failure to provide adequate
e-commerce solutions, retention of employees, labor costs and
availability, union activities and labor and employment laws,
failure to realize benefits of acquisitions and other strategic
transactions, product liability claims, product recalls, credit
risk, termination or reduction of our vendor financing program,
loss of right to operate at key locations, failure to implement
business initiatives, failure to maintain effective internal
controls, macro-economic conditions such as unemployment,
inflation, changes in tax policies and uncertain credit markets,
operations in foreign jurisdictions, foreign exchange, inability to
service our debt or fulfill financial covenants, litigation,
changes in legislation or government regulation or policies,
compliance with environmental laws and regulations, compliance with
privacy laws, global climate change, changes in accounting
standards, share price fluctuations, environmental, social and
governance activities and reputation and activist investors, the
possibility that the arrangement will not be completed on the terms
and conditions, or on the timing, currently contemplated, and that
it may not be completed at all, due to a failure to obtain or
satisfy, in a timely manner or otherwise, required regulatory and
Court approvals and other conditions to the closing of the
arrangement or for other reasons; the failure to complete the
arrangement which could negatively impact the price of the shares
or otherwise affect the business of Uni-Select; the dedication of
significant resources to pursuing the arrangement and the
restrictions imposed on Uni-Select while the arrangement is
pending; the uncertainty surrounding the arrangement could
adversely affect Uni-Select's retention of customers and suppliers;
the occurrence of a Material Adverse Effect (as defined in the
arrangement agreement with LKQ Corporation) leading to the
termination of the arrangement agreement; as well as other risks
identified or incorporated by reference in our MD&A for the
year ended December 31, 2022, our management proxy
circular dated March 23, 2023 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 statements, 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 the
forward-looking information is based were reasonable as at the date
of this press release, readers are cautioned not to place undue
reliance on the 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 and 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 our MD&A
for the year ended December 31, 2022, which is
incorporated by reference in this cautionary statement.
We also caution readers that the risks disclosed in our MD&A
for the year ended December 31, 2022, our management
proxy circular dated March 23, 2023 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, operating results, cash flows and financial
condition.
NON-GAAP AND OTHER FINANCIAL MEASURES
The financial information included in the Corporation's
documents contains certain performance measures that are
inconsistent with GAAP ("non-GAAP and other financial measures").
Non-GAAP and other financial measures are mainly derived from the
consolidated financial statements, but do not have any
standardized meaning prescribed by GAAP. The Corporation considers
that users may analyze its results based on these measurements, but
they should not be used in isolation or as a substitute for
financial measures prepared under GAAP.
The Corporation's definitions of non-GAAP and other financial
measures are based on what management regards as reasonable and are
unlikely to be comparable to similar measures presented by other
entities.
NON-GAAP MEASURES
NON-GAAP FINANCIAL
MEASURES
|
NON-GAAP
RATIOS
|
EBITDA
|
EBITDA
margin
|
Adjusted
EBITDA
|
Adjusted EBITDA
margin
|
EBT
|
EBT margin
|
Adjusted EBT
|
Adjusted EBT
margin
|
Adjusted net
earnings
|
Adjusted net earnings
per common share - basic and diluted
|
Free cash
flow
|
Total net debt to
adjusted EBITDA ratio
|
Available
liquidity
|
|
|
|
OTHER FINANCIAL MEASURES
CAPITAL MANAGEMENT
MEASURES
|
SUPPLEMENTARY
FINANCIAL MEASURES
|
Total net
debt
|
Organic
growth
|
|
|
The section below presents definitions of non-GAAP and other
financial measures as required by National Instrument 52-112 and
their reconciliation to the most directly comparable GAAP
measures.
Organic growth
This measure consists of quantifying the increase in 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, 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.
The following tabular information reconciles sales to organic
growth by segment and on a consolidated basis:
|
|
|
|
First Quarters
Ended
March
31,
|
|
FinishMaster
U.S.
|
Canadian
Automotive Group
|
GSF Car Parts
U.K.
|
Total
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
Sales
|
184,268
|
172,756
|
145,385
|
129,764
|
119,841
|
107,082
|
449,494
|
409,602
|
|
|
%
|
|
%
|
|
%
|
|
%
|
Sales
variance
|
11,512
|
6.7
|
15,621
|
12.0
|
12,759
|
11.9
|
39,892
|
9.7
|
Translation effect of
the Canadian dollar and the British pound
|
—
|
—
|
9,087
|
7.0
|
12,533
|
11.7
|
21,620
|
5.3
|
Impact of number of
billing days
|
(2,786)
|
(1.6)
|
(1,419)
|
(1.1)
|
(1,598)
|
(1.5)
|
(5,803)
|
(1.4)
|
Net
acquisitions
|
—
|
—
|
(12,404)
|
(9.5)
|
—
|
—
|
(12,404)
|
(3.0)
|
Organic
growth
|
8,726
|
5.1
|
10,885
|
8.4
|
23,694
|
22.1
|
43,305
|
10.6
|
EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA
margin
EBITDA represents Earnings before net financing costs,
depreciation and amortization and income taxes per the Condensed
Interim Consolidated Financial Statements. EBITDA margin is a
percentage corresponding to the ratio of EBITDA to sales.
Adjusted EBITDA contains certain adjustments, which may affect
the comparability of the Corporation's financial results. These
adjustments include, among other things, costs related to the
Arrangement with LKQ Corporation, restructuring and other charges,
stock-based compensation expenses as well as change in estimate
related to inventory obsolescence. Adjusted EBITDA margin is a
percentage corresponding to the ratio of adjusted EBITDA
to sales.
The Corporation uses EBITDA and adjusted EBITDA as well as their
corresponding margins to assess its performance and that of its
business segments. Management believes these non-GAAP and other
financial measures, in addition to GAAP measures, provide users
with an enhanced understanding of its operating results and
increase the transparency of its core results as well as of its
segments. Management also believes these measures provide better
comparability of its results from one period to another.
The following tabular information reconciles the EBITDA to
adjusted EBITDA by segment and on a consolidated basis:
|
|
|
|
|
|
|
First Quarters
Ended
March
31,
|
|
FinishMaster
U.S.
|
Canadian
Automotive Group
|
GSF Car Parts
U.K.
|
Corporate Office and
Others
|
Total
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
EBITDA
|
16,398
|
18,582
|
15,256
|
5,458
|
16,554
|
9,638
|
(7,898)
|
(5,451)
|
40,310
|
28,227
|
EBITDA
margin
|
8.9 %
|
10.8 %
|
10.5 %
|
4.2 %
|
13.8 %
|
9.0 %
|
— %
|
— %
|
9.0 %
|
6.9 %
|
Change in estimate
related to inventory obsolescence
|
—
|
—
|
—
|
10,927
|
—
|
—
|
—
|
—
|
—
|
10,927
|
Stock-based
compensation
|
1,283
|
946
|
417
|
1,204
|
417
|
377
|
1,153
|
2,392
|
3,270
|
4,919
|
Costs related to the
Arrangement with LKQ Corporation
|
—
|
—
|
—
|
—
|
—
|
—
|
4,552
|
—
|
4,552
|
—
|
Restructuring and other
charges
|
—
|
79
|
—
|
(439)
|
—
|
913
|
—
|
613
|
—
|
1,166
|
Adjusted
EBITDA
|
17,681
|
19,607
|
15,673
|
17,150
|
16,971
|
10,928
|
(2,193)
|
(2,446)
|
48,132
|
45,239
|
Adjusted EBITDA
margin
|
9.6 %
|
11.3 %
|
10.8 %
|
13.2 %
|
14.2 %
|
10.2 %
|
— %
|
— %
|
10.7 %
|
11.0 %
|
EBT, EBT margin, adjusted EBT and adjusted EBT margin
EBT represents Earnings before income taxes per Interim
Consolidated statement of earnings and for segments EBT represents
Segment income (loss) reported per note 16 in the Condensed Interim
Consolidated Financial Statements. EBT margin is a percentage
corresponding to the ratio of EBT to sales.
Adjusted EBT contains certain adjustments, which may affect the
comparability of the Corporation's financial results. These
adjustments include costs related to the Arrangement with LKQ
Corporation, 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 (now known as GSF Car Parts).
Adjusted EBT margin is a percentage corresponding to the ratio of
adjusted EBT to sales.
The Corporation uses EBT and adjusted EBT as well as their
respective margins to assess its performance and that of its
business segments. Management believes these non-GAAP and other
financial measures, in addition to GAAP measures, provide users
with an enhanced understanding of its operating results and
increase the transparency of its core results as well as of its
segments. Management also believes these measures provide better
comparability of its results from one period to
another.
The following tabular information reconciles the EBT to adjusted
EBT by segment and on a consolidated basis:
|
|
|
|
|
|
|
First Quarters
Ended
March
31,
|
|
FinishMaster
U.S.
|
Canadian Automotive
Group
|
GSF Car Parts
U.K.
|
Corporate Office and
Others
|
Total
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
EBT
|
10,925
|
12,918
|
10,730
|
955
|
12,575
|
5,488
|
(11,765)
|
(9,584)
|
22,465
|
9,777
|
EBT
margin
|
5.9 %
|
7.5 %
|
7.4 %
|
0.7 %
|
10.5 %
|
5.1 %
|
— %
|
— %
|
5.0 %
|
2.4 %
|
Change in estimate
related to inventory obsolescence
|
—
|
—
|
—
|
10,927
|
—
|
—
|
—
|
—
|
—
|
10,927
|
Stock-based
compensation
|
1,283
|
946
|
417
|
1,204
|
417
|
377
|
1,153
|
2,392
|
3,270
|
4,919
|
Costs related to the
Arrangement with LKQ Corporation
|
—
|
—
|
—
|
—
|
—
|
—
|
4,552
|
—
|
4,552
|
—
|
Restructuring and other
charges
|
—
|
79
|
—
|
(439)
|
—
|
913
|
—
|
613
|
—
|
1,166
|
Amortization of
intangible assets related to the acquisition of GSF Car
Parts
|
—
|
—
|
—
|
—
|
—
|
—
|
665
|
1,084
|
665
|
1,084
|
Adjusted
EBT
|
12,208
|
13,943
|
11,147
|
12,647
|
12,992
|
6,778
|
(5,395)
|
(5,495)
|
30,952
|
27,873
|
Adjusted EBT
margin
|
6.6 %
|
8.1 %
|
7.7 %
|
9.7 %
|
10.8 %
|
6.3 %
|
— %
|
— %
|
6.9 %
|
6.8 %
|
Adjusted net earnings and adjusted net earnings per common share
(basic and diluted)
Adjusted net earnings and adjusted net earnings per common share
(basic and diluted) contain certain adjustments, which may affect
the comparability of the Corporation's financial results. These
adjustments include, net of income taxes, costs related to the
Arrangement with LKQ Corporation, 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 (now known as GSF
Car Parts).
For diluted adjusted net earnings, adjusted net earnings are
further adjusted for the after-tax interest on the convertible
debentures. The exclusion of these items does not indicate that
they are non-recurring.
The Corporation uses adjusted net earnings and adjusted net
earnings per common share (basic and diluted) to assess its
performance. Management believes these non-GAAP measures, in
addition to GAAP measures, provide users enhanced understanding of
its operating results and increase the transparency of its core
results. Management also believes these measures provide better
comparability of its results from one period to another.
The following is a reconciliation of net earnings, adjusted net
earnings and net earnings considered for diluted adjusted net
earnings per common share:
|
First Quarters
Ended
March
31,
|
|
|
2023
|
2022
|
|
|
$
|
$
|
%
|
Net
earnings
|
16,742
|
7,739
|
116.3
|
Change in estimate
related to inventory obsolescence, net of taxes
|
—
|
8,031
|
|
Stock-based
compensation, net of
taxes
|
2,428
|
3,658
|
|
Costs related to the
Arrangement with LKQ Corporation, net of taxes
|
3,346
|
—
|
|
Restructuring and
other charges, net of taxes
|
—
|
941
|
|
Amortization of
intangible assets related to the acquisition of GSF Car Parts, net
of taxes
|
509
|
878
|
|
Adjusted net
earnings
|
23,025
|
21,247
|
8.4
|
Conversion impact of
convertible debentures, net of taxes
|
1,097
|
1,197
|
|
Net earnings
considered for diluted adjusted net earnings per common
share
|
24,122
|
22,444
|
7.5
|
Basic net earnings
per common share
|
0.38
|
0.18
|
111.1
|
Change in estimate
related to inventory obsolescence, net of taxes
|
—
|
0.19
|
|
Stock-based
compensation, net of
taxes
|
0.05
|
0.08
|
|
Costs related to the
Arrangement with LKQ Corporation, net of taxes
|
0.08
|
—
|
|
Restructuring and
other charges, net of taxes
|
—
|
0.02
|
|
Amortization of
intangible assets related to the acquisition of GSF Car Parts, net
of taxes
|
0.01
|
0.02
|
|
Basic adjusted net
earnings per common share
|
0.52
|
0.49
|
6.1
|
Conversion impact of
convertible debentures, net of taxes
|
(0.06)
|
(0.06)
|
|
Diluted adjusted net
earnings per common share
|
0.46
|
0.43
|
7.0
|
The following table presents a reconciliation of the weighted
average number of common shares outstanding for diluted adjusted
net earnings per common share:
|
First Quarters
Ended
March
31,
|
|
2023
|
2022
|
Weighted average
number of common shares outstanding for basic adjusted net earnings
per common share
|
43,869,921
|
43,446,096
|
Conversion impact of
convertible debentures
|
7,796,610
|
8,106,117
|
Impact of stock
options (1)
|
433,595
|
437,728
|
Impact of dilutive
deferred share units ("DSUs")
|
257,744
|
—
|
Impact of dilutive
restricted share units ("RSUs")
|
332,328
|
—
|
Weighted average
number of common shares outstanding for diluted adjusted net
earnings per common share
|
52,690,198
|
51,989,941
|
(1)
For the first quarter of 2022, options to acquire 60,322
common shares were excluded from the calculation of diluted net
earnings per common share as the strike price of the options was
higher than the average market price of the
shares.
|
Free cash flow
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 acquisitions and development of intangible
assets.
Management believes this non-GAAP cash flow measure to be an
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. Management considers this measure,
in addition to GAAP measures, to provide investors a perspective on
its ability to generate liquidity, after making capital investments
required to support business operations and long-term value
creation.
The following table reconciles cash flows from operating
activities to free cash flow:
|
First Quarters
Ended
March
31,
|
|
2023
|
2022
|
|
$
|
$
|
Cash flows from
operating activities
|
1,680
|
7,803
|
Advances to merchant
members and incentives granted to customers
|
(3,547)
|
(2,564)
|
Reimbursement of
advances to merchant members and liquidation proceeds of incentives
granted to customers returned
|
914
|
1,208
|
Acquisitions of
property and equipment
|
(2,985)
|
(3,672)
|
Proceeds from disposal
of property and equipment
|
838
|
430
|
Acquisitions and
development of intangible assets
|
(1,378)
|
(1,290)
|
Free cash
flow
|
(4,478)
|
1,915
|
Available liquidity
This measure, representing cash plus amounts available under the
credit facilities in respect of financial covenants, less amounts
used under the credit facilities and letters of credit issued, is
considered useful by the Corporation to evaluate its ability to
meet its short-term liquidity needs as well as to support its
growth. Available liquidity is subject to compliance with various
covenants contained in the credit facilities agreement.
The following table reconciles the available liquidity:
|
As at March 31, 2023
|
As at December 31, 2022
|
|
|
|
$
|
|
|
$
|
|
Amounts
available
|
Amounts
used
|
Net amounts
|
Amounts
available
|
Amounts
used
|
Net amounts
|
Revolving credit
facility (1)
|
400,000
|
(162,941)
|
237,059
|
400,000
|
(159,808)
|
240,192
|
Uncommitted demand
revolving line of credit (1)
|
15,000
|
(8,829)
|
6,171
|
15,000
|
—
|
15,000
|
Sterling business
overdraft facility (1)
|
7,421
|
—
|
7,421
|
7,246
|
—
|
7,246
|
|
422,421
|
(171,770)
|
250,651
|
422,246
|
(159,808)
|
262,438
|
Letters of credit
issued (1)
|
|
|
(4,970)
|
|
|
(4,970)
|
Cash
|
|
|
23,496
|
|
|
23,919
|
Available
liquidity
|
|
|
269,177
|
|
|
281,387
|
(1) Refer to Note 13
to the Condensed Interim Consolidated Financial Statements for
further details.
|
Total net debt and total net debt to adjusted EBITDA
ratio
Total net debt represents the sum of the credit facilities,
lease obligations (including the portion due within a year), net of
deferred financing costs and cash. Total net debt excludes
convertible debentures since they are convertible into common
shares of the Corporation. Refer to Note 13 to the Condensed
Interim Consolidated Financial Statements for further details.
Total net debt to adjusted EBITDA ratio represents total net
debt divided by the trailing last four quarters' adjusted EBITDA.
This ratio is used by management to evaluate the Corporation's
financial leverage, capital structure and financing strategies.
The following table presents a reconciliation of the components
and the calculation of Total net debt to adjusted EBITDA ratio:
|
As at March 31,
|
As at
December 31,
|
|
2023
|
2022
|
|
$
|
$
|
Long-term debt,
including the current portion (1)
|
270,336
|
258,356
|
Cash
|
(23,496)
|
(23,919)
|
Total net
debt
|
246,840
|
234,437
|
|
|
|
Adjusted EBITDA -
trailing last four quarters (2)
|
187,917
|
185,024
|
Total net debt to
adjusted EBITDA ratio
|
1.31x
|
1.27x
|
(1)
|
Refer to Note 13
to the Condensed Interim Consolidated Financial Statements for
further details.
|
(2)
|
Refer to the "Selected
quarterly consolidated financial information" section of the
Interim Management Discussion and Analysis for more information on
the results of each of the last eight quarters.
|
SOURCE Uni-Select Inc.