Automotive service parts distributor Uni-Select has declared a year end sales increase of 13% for 2009, but a drop in net earnings due to discontinued operations and other factors.
For the period ended December 31, 2009, Uni-Select’s sales were $1.4 billion, an increase of $162.3 million or 13% compared to 2008.
Although net earnings reached $38.6 million or $1.96 per share, a decrease of 16% compared to net earnings of $45.9 million or $2.33 per share recorded in 2008, the 2009 year-end results take into account the loss from discontinued operations in the amount of $4.8 million and non-recurring expenses of $4.3 million incurred during the course of the period.
Excluding the impact from these two items, net earnings would have been $47.7 million or $2.42 per share, for an increase of 1.0%.
Unless indicated otherwise, all figures are in Canadian dollars.
Automotive Group USA
Sales for Automotive Group USA increased by 23.1% in 2009 to reach $884.2 million, compared to $718.1 million in 2008.
Acquisitions completed during the course of recent quarters contributed $144.7 million to the increase in sales for the period. Excluding the impact from foreign exchange rate fluctuations, sales for Automotive Group USA would have increased by 17.2%. The operating margin of Automotive Group USA, adjusted to account for non-recurring items, was 5.3% compared to 6.6% in 2008.
This decrease is essentially due to pricing pressures and a change in the mix of products sold, combined with inventory losses which were more significant than those of the preceding period.
Automotive Group Canada
Automotive Group Canada recorded a slight decrease in sales in 2009 to total $525.7 million compared to $529.4 million during the course of the previous period. Organic sales grew 2%, but were offset by the effect from the disposition of 14 corporate stores in 2009.
The Group’s operating margin, adjusted to account for non-recurring items, increased from 8.6% in 2008 to 9.3% in 2009.
“While these results include various non-recurring items, including the disposal of the Heavy Duty division and costs related to the closure and sale of corporate stores, they are, nevertheless, below expectations. Significant efforts were made in 2009 to reduce our excess asset base and to redistribute funds towards more profitable investments, such as the repurchase of the minority shareholders of Uni-Select USA and the development of an integrated management system which will be gradually launched during the course of the year. Improvement in store performance, distribution optimization and the use of technology in asset management are at the heart of our 2010 initiatives” said Richard G. Roy, president and chief executive officer of Uni-Select.
“The results of the US operations are not indicative of the coming quarters and combined with the positive performance of the Canadian operations, we are confident that 2010 will return to a level of profitability that our shareholders have become accustomed to,” added Roy.
Financial highlights of the fourth quarter
During the quarter ended December 31, 2009, sales totalled $315.6 million, a decrease of 10.6% over the same period in 2008. The decrease in sales is mainly attributable to the rise in the Canadian dollar against its US counterpart and to the effect of the disposition and closure of corporate stores. Net earnings were $7.2 million or $0.37 per share compared to $14.8 million or $0.75 per share in 2008.
Fourth quarter results took into account non-recurring expenses in the amount of $3.3 million incurred during the quarter and a partial reversal of a loss from discontinued operations recorded in the third quarter to the tune of $1.9 million. Excluding the impact of these two items, net earnings would have been $8.6 million or $0.44 per share, a decrease of 43.4% over to the same period of the previous year.
This decrease stems mainl y from the US operations which suffered inventory losses in 2009 higher than those in the preceding year. The special rebates in both Canada and the USA in the fourth quarter of 2008 added to this variation.
Sales for Automotive Group USA reached $189.6 million during the course of the quarter, compared to $227.8 million during the course of the same period in 2008. This decrease stems mainly from the rise of the Canadian dollar vis-à-vis its US counterpart and from the effect of corporate store closures. The adjusted operating margin of Automotive Group USA was 0.8% compared to 6.2% in 2008. This decrease results from inventory losses being more significant this year and special rebates recorded in the fourth quarter of 2008.
Excluding the effect on sales from the disposition of corporate stores, Automotive Group Canada would have recorded organic sales growth of 4.7%. Sales totalled $126.1 million in the fourth quarter compared to $125.1 million in the fourth quarter of the preceding year. The adjusted operating margin of the Group was 11.9% in 2008 compared to 10.5% in 2009. This decrease stems essentially from special rebates recorded in the fourth quarter of 2008 relating mainly to currency fluctuations.
In closing, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.1165 per common share payable on April 21, 2010, to shareholders of record as at March 31, 2010.