Uni-Select Inc. Reports a 4.7% Increase in Net Earnings for the First Quarter of 200618 May 2006
Uni-Select Inc. (TSX:UNS)recorded an increase in net earnings of 4.7% for the first quarter of 2006 to reach $5,646,000 or $0.29 per share compared to $5,394,000 or $0.28 per share last year. Sales were reported at $262,514,000 in the first quarter of 2006, a 1.1% decrease compared to sales in 2005. The decrease in sales of the Company is primarily due to the fluctuation in exchange rates between Canadian and American currencies.
Automotive Group USA's sales increased by 0.6% in the first quarter to reach $136,025,000 compared to $135,241,000 in the first quarter of 2005. The increase would have been 6.4% had the exchange rate between Canadian and American currencies remained stable. The operating margin of Automotive Group USA from 4.6% to 5.2% during the quarter largely due to the implementation of synergies resulting from action plans put into practice during the course of 2005 and at the beginning of 2006.
Automotive Group Canada's income decreased by 3.6% in the first quarter of 2006 to reach $111,004,000 compared to $115,134,000 $ in the first quarter of 2005. Weather conditions resulting from mild winter temperatures, a weakness in the sale of paint products stemming from anticipated purchases in the month of December 2005 and the changeover of products at Midas franchisees' locations are the dominating factors contributing to the decrease in sales. The operating margin of the Group improved from 5.1% in the first quarter of last year to 5.4% in this quarter, mainly due to the price increase of numerous products.
Heavy Duty Group's sales increased by 2.1% in the first quarter of 2006 to reach $15,485,000 compared to $15,169,000 in 2005. The operating margin of the Heavy Duty Group was negative at (4.3%) in the first quarter of 2006 compared to (2.4%) last year due to a higher sales volume of products at a lower margin and increased energy costs.
Mr. Jacques Landreville, President and Chief Executive Officer of Uni-Select said "We are happy to note that the results from our US operations continue to meet our expectations. The impact of the Canadian/US exchange rate masks the actual increase in activity. Our Canadian operations have, in themselves, suffered temporary conditions and we are confident we will see them resume growth in the near future. Lastly, we have noted some uncertainty affecting the North American demand for automotive replacement parts due to the increase in fuel prices. Our past experience leads us to consider that this is a temporary phenomenon and that consumers will adapt to this situation."
Finally, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.10 per common share payable on July 21, 2006 to the shareholders of record on June 30, 2006.
Uni-Select is Canada's second largest distributor of automotive replacement parts, equipment, tools and accessories and through Uni-Select USA, Inc., the company also provides service to customers in the United States where it is the 8th largest distributor. Its subsidiary, Palmar Inc., sells replacement parts, tools and accessories for heavy-duty vehicles and wheels in Canada. The Uni-Select Network includes over 2,100 independent jobbers and services over 3,100 points of sale in Canada and the United States. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the Toronto Stock Exchange (TSX).
UNI-SELECT INC.CONSOLIDATED EARNINGS
THREE-MONTH PERIOD ENDED MARCH 31, 2006 AND 2005(IN THOUSANDS OF DOLLARS, EXCEPT BASIC AND DILUTED EARNINGS PER SHARE)
THREE MONTHS 2006 2005 UNAUDITED---------------------------------------------------------------------------------------------------------------------------------- $ $SALES 262,514 265,544-----------------------------------------------------------------
Earnings before the following items 12,434 11,787-----------------------------------------------------------------
Interest on bank indebtedness 132 89 Interest on long-term debt 879 615 Interest on merchant members' deposits in guarantee funds 77 65 Interest income from cash and cash equivalent (269) (11) Interest income from merchant members (101) (92) Amortizations (Note 2) 2,141 2,098----------------------------------------------------------------- 2,859 2,764-----------------------------------------------------------------
Earnings before income taxes and non-controlling interest 9,575 9,023Income taxes Current 2,793 3,234 Future 545 (128)----------------------------------------------------------------- 3,338 3,106-----------------------------------------------------------------
Earnings before non-controlling interest 6,237 5,917Non-controlling interest 591 523-----------------------------------------------------------------
Net earnings 5,646 5,394----------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share (Note 3) 0.29 0.28----------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share (Note 3) 0.29 0.28----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of outstanding shares 19,631,778 19,460,907-----------------------------------------------------------------Number of issued and outstanding common shares 19,653,101 19,491,449-----------------------------------------------------------------
CONSOLIDATED RETAINED EARNINGS THREE-MONTH PERIOD ENDED MARCH 31, 2006 AND 2005 (IN THOUSANDS OF DOLLARS)
2006 2005 UNAUDITED---------------------------------------------------------------------------------------------------------------------------------- $ $
Balance, beginning of period 220,966 188,159Net earnings 5,646 5,394----------------------------------------------------------------- 226,612 193,553Dividends 1,965 1,433-----------------------------------------------------------------Balance, end of period 224,647 192,120----------------------------------------------------------------------------------------------------------------------------------
UNI-SELECT INC.CONSOLIDATED CASH FLOWS
THREE-MONTH PERIOD ENDED MARCH 31, 2006 AND 2005(IN THOUSANDS OF DOLLARS, EXCEPT DIVIDENDS PAID ON COMMON SHARES)
THREE MONTHS 2006 2005 UNAUDITED-------------------------------------------------------------------------------------------------------------------------------- $ $OPERATING ACTIVITIESNET EARNINGS 5,646 5,394NON-CASH ITEMS Amortizations 2,141 2,098 Future income taxes 545 (128) Non-controlling interest 591 523---------------------------------------------------------------- 8,923 7,887 Changes in working capital items (5,080) (11,437)---------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES 3,843 (3,550)----------------------------------------------------------------INVESTING ACTIVITIES Business acquisitions (395) (1,063) Advances to merchant members (834) (481) Receipts on advances to merchant members 1,970 1,097 Property, plant and equipment (1,349) (1,932)---------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES (608) (2,379)----------------------------------------------------------------FINANCING ACTIVITIES Bank indebtedness (97) 5,578 Balance of purchase price - (4,104) Long-term debt 572 3,387 Repayment of long-term debt (878) (105) Merchant members' deposits in guarantee fund (3) (62) Issuance of shares 666 920 Dividends paid (1,568) (1,428)---------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES (1,308) 4,186---------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 1,927 (1,743) Cash and cash equivalents, beginning of period 19,108 9,921---------------------------------------------------------------- Cash and cash equivalents, end of period 21,035 8,178--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents include cash and temporary investments maturing in less than three months.
Dividends paid on common shares 0.080 0.074----------------------------------------------------------------
UNI-SELECT INC.CONSOLIDATED BALANCE SHEETS
MARCH 31, MARCH 31, DECEMBER 31, (IN THOUSANDS OF DOLLARS) 2006 2005 2005
UNAUDITED UNAUDITED AUDITED-------------------------------------------------------------------------------------------------------------------------------------- $ $ $
ASSETSCURRENT ASSETS Cash and cash equivalents 21,035 8,178 19,108 Temporary investment 4,942 - 4,942 Accounts receivable 146,379 139,856 133,903 Income taxes receivable 6,977 4,895 5,352 Inventory 260,965 267,154 260,156 Prepaid expenses 5,799 5,615 3,885 Future income taxes 2,763 5,506 3,093------------------------------------------------------------------- 448,860 431,204 430,439Investments and volume discounts receivable, at cost 6,827 8,234 7,798Property, plant and equipment 35,588 33,746 36,246Financings costs 1,201 1,311 1,321Goodwill 18,002 18,306 17,996Future income taxes 1,867 3,204 1,876
------------------------------------------------------------------- 512,345 496,005 495,676--------------------------------------------------------------------------------------------------------------------------------------
LIABILITIESCURRENT LIABILITIES Bank indebtedness 1,834 8,771 1,932 Accounts payable 142,989 145,527 132,339 Income taxes payable 785 6,676 - Dividends payable 1,965 1,433 1,568 Instalments on long-term debt and merchant members' deposits in guarantee fund 139 127 373------------------------------------------------------------------- 147,712 162,534 136,212Deferred government grants 392 420 395Long-term debt 64,140 66,999 64,349Merchant members' deposits in guarantee funds 7,533 7,574 7,334Future income taxes 5,042 3,961 4,837Non-controlling interest 27,560 25,448 26,932------------------------------------------------------------------- 252,379 266,936 240,059-------------------------------------------------------------------
SHAREHOLDERS' EQUITY Capital stock (Note 4) 48,722 46,521 48,056 Retained earnings 224,647 192,120 220,966 Cumulative translation adjustments (13,403) (9,572) (13,405)------------------------------------------------------------------- 259,966 229,069 255,617------------------------------------------------------------------- 512,345 496,005 495,676--------------------------------------------------------------------------------------------------------------------------------------
UNI-SELECT INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands of dollars, except per share amounts)
1. Basis of presentation
The accompanying unaudited financial statements are in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all the information required for complete financial statements. They are also consistent with the accounting policies outlined in the Company's audited financial statements for the year ended December 31, 2005, except where stated below. The interim financial statements and related notes should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2005. Where required, the financial statements include amounts based on informed estimates and best judgements of management. The operating results for the interim period reported are not necessarily indicative of results to be expected for the year.
Certain comparative figures have been reclassified to conform with the current year's presentation.
2. Information on results
For the three-month periods ended March 31, 2006 and 2005
2006 2005-------------------------------------------------------------------- Amortization of property, plant and equipment 2,020 2,020-------------------------------------------------------------------- Amortization on financing costs 121 78-------------------------------------------------------------------- 2,141 2,098----------------------------------------------------------------------------------------------------------------------------------------
3. Earnings per share
The following table presents basic and diluted earnings per share:
For the three-month periods ended March 31, 2006 and 2005
2006 2005---------------------------------------------------------------------- Weighted Earnings Net Weighted Earnings average per earnings average per number of share number of share Net share share earnings-------------------------------------------------------------------------------------------------------------------------------------------- $ $ $ $
Basic earnings per share 5,646 19,631,778 0.29 5,394 19,460,907 0.28
Impact of stock options exercised 86,632 172,079----------------------------------------------------------------------
Diluted earnings per share 5,646 19,718,410 0.29 5,394 19,632,986 0.28----------------------------------------------------------------------
----------------------------------------------------------------------
4. Capital Stock
Authorized Unlimited number of shares
Preferred shares, issuable in series Common shares
Three months ended Twelve months ended March 31, 2006 December 31, 2005---------------------------------------------------------------------- (unaudited) (audited
Issued and fully paid Balance, beginning of year: 19,599,716 common shares (19,423,289 in 2005) 48,056 45,601
Issue of 52,711 common shares on the exercise of stock options (174,710 in 2005) 646 2,405
Issue of 674 common shares for cash (1,717 in 2005) 20 50--------------------------------------------------------------------
Balance, end of period: 19,653,101 common shares (19,599,716 in 2005) 48,722 48,056----------------------------------------------------------------------------------------------------------------------------------------
5. Business acquisitions
On January 31st, the Company acquired the assets of South Austin Auto Supply, Inc., a company operating in the Automotive USA segment for a price of $395. The Company did not assume any liabilities under this transaction.
6. Employee future benefits
As at March 31, 2006, the Company's pension plans are defined benefit and contributions plans.
For the three-month period ended March 31, 2006, the total expense for the defined contribution pension plan was of $298 ($231 in 2005) and of $505 ($418 in 2005) for the defined benefit pension plans.
7. Segmented information
For the three-month period ended March 31, 2006 and 2005(in thousands of dollars)
---------------------------------------------------------------------- Automotive Automotive Heavy Canada USA Duty Consolidated 2006 2005 2006 2005 2006 2005 2006 2005 $ $ $ $ $ $ $ $--------------------------------------------------------------------------------------------------------------------------------------------SALES 111,004 115,134 136,025 135,241 15,485 15,169 262,514 265,544----------------------------------------------------------------------
Earnings before interest, amorti- zation, income taxes and non- control- ling interest 6,045 5,928 7,057 6,228 (668) (369) 12,434 11,787
ASSETS 210,160 195,300 261,208 262,053 40,977 38,652 512,345 496,005
Acquisi- tion of property, plant and equipment 624 967 690 1,011 58 126 1,372 2,104
----------------------------------------------------------------------
8. Subsequent Events
On February 23, 2006, the Company exerciced its option to purchase the shares held by its partner in the USA-AGI Prairies Inc joint venture, a company operating in the Automotive industry in Canada. Following the exercice, the Company will own 100% of the outstanding shares of USI-AGI Prairies Inc. on May 31, 2006. The preliminary amount of the transaction should be $30,265.
On April 1, 2006, the Company acquired 100% of the outstanding shares of 1057487 Ontario Inc., a company operating in the Automotive industry in Canada for an estimated purchase price of $3,540.
On May 1, 2006, the Company proceded with the acquisition of certain assets of the Earl Bristo Company for an estimated purchase price of $1,480.
On May 16, 2006, the Company entered into an agreement to purchase the assets of Auto Craft Automotive Products, LLC for an estimated purchase price of $18,800.
Contacts:Uni-Select Inc.Jacques LandrevillePresident and Chief Executive Officer
Uni-Select Inc.Richard G. RoyVice President, Administration and Chief Financial Officer(450) 641-2440www.uni-select.com
SOURCE: Uni-Select Inc.
Source: marketwire
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