Uni-Select Results Affected by Strong Canadian Dollar, Closure of Corporate Stores

Uni-Select Inc. reported sales of $349 million for the third quarter of 2010, compared to $359 million in 2009. despite organic growth for the quarter.
The company benefitted from organic growth of 1.7% in the quarter, but, the strengthening Canadian dollar on conversion of U.S. sales had the effect of reducing sales by $12.1 million. The sale and closure of non-strategic corporate stores during the course of previous quarters decreased sales by $5 million. All figures in Canadian dollars.
Adjusted earnings from continuing operations reached $14.6 million in the third quarter of 2010 or $0.74 per share compared to $14.1 million or $0.71 per share last year. Notably, the effects of the fluctuation of the US dollar had an unfavourable impact of nearly $0.4 million or $0.02 per share on results for the quarter. Excluding this item, adjusted earnings from continuing operation for the quarter would have been $0.76 per share, 7% more than in 2009.
Year-to-date, sales totalled $1,014 million compared to $1,094 in 2009. Uni-Select sales recorded an organic growth of 1.5%. However, the conversion of the results in Canadian dollars reduced sales by $80 million for the period. Adjusted earnings from continuing operations totalled $38.5 million or $1.95 per share compared to $39.1 million or $1.98 per share recorded for the same period of 2009. Variation in the US dollar had a $2.6 million negative impact on results for the period or more than $0.13 per share. Excluding this item, adjusted earnings per share from continuing operations would have been $2.08 per share for the period, a 5.1% increase over the same period last year.
Results for the previous quarter include a non-recurring loss of $5.1 million for the disposal of the Heavy Duty Group. The loss was recorded under “Loss from discontinued operations” in the income statement.
Sales for the US operations reached $213 million in the third quarter compared to $220 million in the third quarter of 2009. Excluding the effects of foreign exchange variations, US operations benefitted from an increase in organic growth of 3.5% in the third quarter. Year-to-date, sales were $622 million compared to $695 million a year earlier. Excluding the effects of the foreign exchange, organic growth of 2.3% was registered.
The Canadian operations recorded a decrease in organic growth of 1.2%. Sales totalled $136 million, a $3 million decrease compared to the corresponding period in 2009. Year-to-date, sales were $392 million compared to $400 million a year earlier. It is, however, notable that the decrease in Canada in 2010 is exclusively due to the closure of corporate stores during the preceding quarters. Canadian operations recorded a slight increase in organic growth for the period.
“Organic growth in sales is a reflection of the efforts made to improve customer loyalty, the contribution from national accounts and the increase in direct ship sales. We intend to pursue our development efforts which focus on the maximization of sales to independent jobbers and the improvement of operational efficiency for our corporate clientele” said Mr. Richard G. Roy, president and chief executive officer of Uni-Select.
“Further, management is confident that, following the implementation of its growth strategies and cost and asset controls, the company will continue to improve its profitability both in the short and long terms. We continue to be on the look out for opportunities which will allow us to grow in Canada as in the US. Lastly, as anticipated, during the quarter the company proceeded with the conversion of its financial information system to the new enterprise resources planning software. In order to allow for testing on the operational interfaces, we will proceed with the gradual implementation of the operational modules in the beginning of 2011 and this conversion will continue, as foreseen, over the next two years”, added Mr. Roy.
In closing, the Board of Directors of Uni-Select Inc. declared a quarterly dividend (eligible dividend) of $0.1165 per common share payable on January 21, 2011, to shareholders of record as at December 31, 2010.

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