Uni-Select Inc. has reported strong financial results for the first quarter ended March 31, 2016. “I am extremely pleased with our team’s performance in Q1 and the solid start to the year. Both FinishMaster and the Canadian Automotive Group achieved positive organic growth and improved profitability. Our teams continue to be focused on a balanced growth strategy; organic and select acquisitive growth” said Henry Buckley, president and chief executive officer of Uni-Select.” Despite the impact of the declining Canadian dollar and the economic slowdown in the Prairies, we enter the second quarter with solid momentum. We continue to be highly focused on profitable growth and the integration of our acquisitions.”
The 2016 results in dollars vary compared to last year’s figures, since the first quarter of 2015 included three months of operations from the net assets of Uni-Select USA, Inc. and Beck/Arnley Worldparts, Inc., sold on June 1, 2015.
Consolidated sales for the first quarter reached $264.0 million, a 35.9% decrease mainly due to the sale of the net assets in 2015. Excluding sales from the net assets sold, consolidated sales grew 10.8% compared to the same period last year. Additional sales from recent business acquisitions and organic growth exceeded the impact of the declining Canadian dollar, which alone penalized sales by $8.5 million or 3.6%. On an organic basis, consolidated sales grew by 3.2%, fuelled primarily by the recruitment of new customers in the paint and related products segment, combined with the results of the development of a customer-centric strategy in the automotive products segment. The Corporation generated an EBITDA and an adjusted EBITDA of $21.7 million for the first quarter of 2016, compared to a negative EBITDA of $122.3 million and adjusted EBITDA of $19.5 million last year. The EBITDA margin and adjusted EBITDA margin grew to 8.2%, up 3.5 points when compared to the adjusted EBITDA margin of 2015, driven by the sale of net assets bearing a lower margin compared to the remaining operations, as well as by a combination of strategic buying, accretive business acquisitions and lower stock-based compensation expenses in relation to the stock price.
They were partially offset by negative synergies following the sale of net assets, predominantly related to the enterprise resource planning system. Net earnings grew to $11.5 million from a net loss of $82.3 million last year, while adjusted earnings increased by 14.5%. Earnings per share and adjusted earnings per share both reached $0.53 compared to a loss per share of $3.88 and adjusted earnings per share of $0.47 in 2015.
The Corporation’s results are presented in US dollars. Once converted to Canadian dollars, adjusted earnings per share reached C$0.73 for the first quarter of 2016, up 25.9% compared to C$0.58 for the same quarter in 2015. Segmented Results The paint and related products segment recorded sales of $173.4 million, up 17.3% from 2015, or up 4.2% organically, namely as a result of the recruitment of new customers. The segment EBITDA margin reached 12.0%, up 1.1 point from last year. This performance is notably attributable to higher gross profit margin due to strategic buying and accretive business acquisitions partially offset by customer mix. Sales for the automotive products segment reached $90.6 million, from $263.8 million in the prior year. Excluding the impact on sales related to the net assets sold, sales increased by 0.2% compared to 2015; organic growth and sales from recent business acquisitions exceeded the weaker Canadian dollar which had an impact of $8.5 million on sales or 9.4%. Segment organic sales grew 1.5% in the first quarter driven by the customer-centric strategy and were partially offset by the challenging economic conditions in the Prairies. Excluding the impact of the Prairies, organic growth is at 5.3% for the quarter. EBITDA and adjusted EBITDA for the automotive products segment amounted to $4.6 million in the first quarter, compared to a negative EBITDA of $130.1 million and adjusted EBITDA of $6.7 million last year. The adjusted EBITDA margin reached 5.1%, a 2.6-point increase from 2.5% in 2015, a performance attributable to the sale of the net assets, which had a lower EBITDA margin than the ongoing operations, combined with product mix and accretive business acquisitions.
2-FOR-1 STOCK SPLIT
The Board of Directors of the Corporation has approved on April 27, 2016 a 2-for-1 stock split of its Common Shares to increase the number of shares outstanding and enhance affordability to investors. This stock split is subject to obtaining the final approval of the Toronto Stock Exchange (“TSX”). The record date of the stock split will be Friday, May 6, 2016 at 5 p.m., and the payment date will be Wednesday, May 11, 2016, at which time the Corporation’s transfer agent, Computershare Trust Company of Canada (“Computershare”), will promptly send shareholders of record a physical share certificate representing one additional Common Share for each Common Share held at such record date. In addition, Computershare will electronically issue the appropriate number of Common Shares to CDS & Co. for distribution to the non-registered beneficial shareholders resulting in the brokerage account of beneficial owners being automatically updated to reflect the stock split. Shareholders do not need to take any action in order to receive additional shares under this stock split. The TSX has determined to implement due bill trading in connection with the stock split. A due bill is an entitlement attached to listed securities undergoing a material corporate action, such as a stock split. In this instance, anyone purchasing a Common Share of Uni-Select during the period commencing two trading days before the record date (Wednesday, May 4, 2016) and ending on the payment date (Wednesday, May 11, 2016) inclusively (“Due Bill Period”), shall receive a payable right. Any trades that are executed on the TSX during the Due Bill Period will be identified to ensure purchasers of Uni-Select’s Common Shares receive the entitlement. The Common Shares will commence trading on an “ex-distribution” basis on Thursday, May 12, 2016, as of which date purchases Uni-Select’s Common Shares will no longer have an attaching entitlement. The due bill redemption is estimated to be Tuesday, May 17, 2016.