Uni-Select Inc. reported sales of $307 million for the first quarter of 2010, compared to sales of $351 million in 2009, with some $38.6 million of the decline being attributed to the strengthening Canadian dollar.
The sale and closure of corporate stores during the previous quarters decreased the sales by $7.6 million. Net earnings were $7.6 million in the first quarter of 2010 or $0.39 per share compared to $8.0 million or $0.41 per share a year prior.
It is notable that the exchange rate variation had an impact of almost $1.0 million on results for the quarter; excluding this item, results for the quarter would have exceeded those of 2009.
Excluding the effects of the foreign exchange variation and the impact from store closures in 2009, Uni- Select recorded close to 1% in organic sales growth. Excluding the effects of the foreign exchange, sales for US operations reached $193.2 million, a 0.9% increase compared to the previous period; Canadian operations recorded a slight decrease of 0.2% at $113.8 million.
The operating margin, adjusted to exclude non-recurring expenses from the development of information technology, went from 5.9% in the first quarter of 2009 to 5.2% for the corresponding period this year. The gains derived from the cost reduction program partially compensated the decrease in margin resulting from pressure on prices and changes in the product lines sold.
“These results, while they include a non-recurring item, are below our expectations. As mentioned when we announced our fourth quarter results for 2009, significant efforts were made in 2009 to reduce excess assets and redistribute funds towards more profitable investments, such as the purchase of the minority shareholders’ stake in Uni-Select USA and the development of an enterprise resource planning system which will be launched during the course of the year. Improvements in store performance, distribution optimisation 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.
“We maintain our focus and efforts in order to pursue our growth through acquisitions in the United States where development opportunities remain due to relative market fragmentation. Lastly, management is confident that, through the deployment of its growth strategy and strict expense and asset controls, it will improve profitability in the short and long run. We are positioning ourselves to fully benefit from existing business opportunities in our market segment” added Roy.
In closing, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.1165 per common share payable on July 20, 2010, to shareholders of record as at June 30, 2010. This dividend is an eligible for tax purposes.