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News   July 28, 2016   by Steve Pawlett

Uni-Select Reports Second Quarter Financial Results For 2016


 

 

Uni-Select Inc. has reported its financial results for the second quarter ended June 30, 2016.

“We made good progress in Q2 on the earnings and acquisition fronts. The organic growth for the quarter was less than anticipated, but the outlook remains positive for the balance of the year.” said Henry Buckley, president and chief executive officer of Uni-Select. “Our teams are doing a terrific job utilizing our standardized processes to successfully integrate our acquisitions and drive sustainable growth to achieve our goals. We welcome all our new team members to the Uni-Select family.”

 

Second Quarter Results

(All percentage increases and decreases represent year-over-year changes for the second quarter of 2016 compared to the second quarter of 2015, unless otherwise noted.)

Consolidated sales for the second quarter were $323.8 million, a 20.7% decrease, mainly due to the sale of the net assets in 2015. Excluding sales from the net assets sold, consolidated sales grew 14.6% compared to the same period last year. Additional sales from recent business acquisitions combined with the effect of an additional billing day in Canada, and organic growth exceeded the impact of the declining Canadian dollar on its conversion to US dollar, which alone penalized sales by $5.7 million or 2.0%.

On an organic basis, consolidated sales grew by 0.1%, supported by the net customer recruitment and

existing customer growth in the Paint and related products segment, which was offset by the Automotive products segment performance, mainly explained by the ongoing economic conditions prevailing in the Prairies.

The Corporation generated an EBITDA and an adjusted EBITDA of $29.7 million for the second quarter of

2016, compared to an EBITDA of $19.0 million and adjusted EBITDA of $31.1 million last year. The EBITDA margin and adjusted EBITDA margin grew to 9.2%, up 160 points when compared to the adjusted EBITDA margin of 2015. Adjusted EBITDA margin enhancement was driven by the sale of net assets bearing a lower margin compared to the ongoing operations, as well as by a combination of accretive business acquisitions and ongoing buying conditions improvement in the Paint and related products segment. These factors were partially offset by negative synergies following the sale of net assets, acquisition and integration related costs as well as stock-based compensation expenses.

Net earnings were $16.8 million compared to $12.4 million and to adjusted earnings of $20.0 million last

year. Earnings per share and adjusted earnings per share were $0.40 compared to $0.29 and $0.47

respectively in 2015.

 

Segmented Results

The Paint and related products segment recorded sales of $196.5 million, up 26.5% from 2015, or up 2.1% organically, primarily from existing customer growth coupled with new customer recruitment. The segment EBITDA margin and adjusted EBITDA margin were 12.4%, down 20 points from last year’s adjusted EBITDA margin. Accretive business acquisitions and improved buying conditions were mainly offset by acquisition and integration costs related to the recent business acquisitions that are temporarily affecting EBITDA until integrations and synergies are completed.

 

Sales for the Automotive products segment were $127.3 million, from $252.9 million in the prior year.

Excluding the impact on sales related to the net assets sold, sales increased by 0.2% compared to 2015.

Organic growth and sales from recent business acquisitions combined with the effect of an additional

billing day exceeded the weaker Canadian dollar which had an impact, on conversion to US dollar, of

$5.7 million on sales or 4.5%. Segment organic sales decreased by 2.3% in the second quarter due to

performance mainly from the difficult economic conditions prevailing in the oil and gas industry in the

Prairies. EBITDA and adjusted EBITDA for the Automotive products segment amounted to $8.9 million in

the second quarter, compared to EBITDA of $4.0 million and adjusted EBITDA of $14.0 million last year. The adjusted EBITDA margin reached 7.0%, a 140 points increase from 5.6% in 2015, attributable to the weaker performance from the operations that were sold on June 1, 2015 and to accretive business acquisitions.

 

Six-Month Period Results

(All percentage increases and decreases represent year-over-year changes for the second quarter of 2016 compared to the second quarter of 2015, unless otherwise noted.)

Consolidated sales for the six-month period were $587.8 million, a 28.3% decrease, mainly due to the sale of the net assets in 2015. Excluding sales from the net assets sold, consolidated sales grew 12.9% compared to the same period last year. Sales from recent business acquisitions combined with organic growth, and the effect of an additional billing day exceeded the impact of the declining Canadian dollar on its conversion to US dollar, which alone penalized sales by $14.3 million or 2.7%.

On an organic basis, consolidated sales grew by 1.5%, supported by the net customer recruitment and

existing customer growth in the Paint and related products segment, which was offset by the Automotive products segment performance mainly explained by the ongoing difficult economic conditions prevailing in the Prairies.

The Corporation generated an EBITDA and an adjusted EBITDA of $51.4 million for the six-month period of 2016, compared to a negative EBITDA of $103.2 million and adjusted EBITDA of $50.5 million last year. The EBITDA margin and adjusted EBITDA margin grew to 8.8%, up 260 points when compared to the adjusted EBITDA margin of 2015. That enhancement was driven by the sale of net assets bearing a lower margin compared to the ongoing operations, as well as accretive business acquisitions, improved buying conditions in the Paint and related products segment and lower stock-based compensation expenses in relation to the stock price. These factors were partially offset by negative synergies following the sale of net assets, predominantly related to the enterprise resource planning system and by acquisition and integration costs.

Net earnings grew to $28.3 million from a net loss of $69.9 million last year, while adjusted earnings

decreased by 5.7%. Earnings per share and adjusted earnings per share both were $0.66 compared to a loss per share of $1.64 and adjusted earnings per share of $0.70 in 2015.

 

Segmented Results

The Paint and related products segment recorded sales of $369.9 million, up 22.0% from 2015, or up 3.1% organically, namely as a result of the existing customer growth and net customer recruitment. The segment EBITDA margin reached 12.2%, up 40 points from last year. This performance is notably attributable to improved buying conditions and accretive business acquisitions, partially offset by acquisition and integration costs related to the recent business acquisitions that are temporarily affecting EBITDA until integrations and synergies are completed.

Sales for the Automotive products segment were $217.9 million, from $516.8 million in the prior year.

Excluding the impact on sales related to the net assets sold, sales increased by 0.2% compared to 2015.

Sales from recent business acquisitions combined with the effect of an additional billing day exceeded the weaker Canadian dollar which had an impact, on its conversion to US dollar, of $14.3 million on sales or 6.6%. Segment organic sales decreased by 0.7% in the six-month period due to performance mainly

explained by the ongoing difficult economic conditions prevailing in the oil and gas industry in the Prairies.

EBITDA and adjusted EBITDA for the Automotive products segment amounted to $13.5 million for the six-month period, compared to a negative EBITDA of $126.1 million and adjusted EBITDA of $20.7 million last year. The adjusted EBITDA margin reached 6.2%, a 220 points increase from 4.0% in 2015, a performance attributable to the weaker performance from the operations sold on June 1, 2015 and to accretive business acquisitions.


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