Uni-Select Inc. reported its financial results for the fourth quarter ended December 31, 2022, with sales up 11.7%, adjusted EBITDA up 26.1%, and strong margin growth across all business units.
“Uni-Select generated solid operating results in 2022 driven primarily by organic growth(1). Sales increased by 11.7% in constant currency terms, Adjusted EBITDA(1) improved by 26.1% to exceed $185.0 million and all three business units achieved higher year-over-year adjusted EBITDA margins(1),” said Brian McManus, Executive Chair and Chief Executive Officer of Uni-Select.
“The year also marked an important turning point, as we gradually transitioned to growth, completing strategic acquisitions in Canada and opening select greenfield stores in the U.K. Our ongoing focus on operational excellence and working capital produced strong cash flow, enabling us to significantly reduce debt and enter 2023 in a position of strength to continue executing our strategy. Despite persisting labor and inflation challenges, our teams continue to deliver impactful operational improvements as they increasingly embrace our core values to provide enhanced value to our customers and members,”
“Our key priorities for 2023 remain to improve profitability by focusing on organic growth(1), continue operational improvement and leverage synergies from recent acquisitions. Although we expect to face headwinds from persisting currency translation impacts, we continue to believe our positive momentum will allow us to achieve higher adjusted EBITDA(1) and adjusted EPS(1) compared to 2022. Finally, our solid financial position allows us to actively seek acquisition opportunities to further drive our growth,” he concluded.
UNI-SELECT FOURTH QUARTER HIGHLIGHTS (Compared to the Fourth Quarter of 2021):
- Consolidated sales of $424.8 million, up $24.6 million or 6.2%; Sales increased by 12.7% excluding the impact of unfavorable fluctuation of the British pound and the Canadian dollar against the US dollar; Organic growth(1) of 10.6% with all three segments reporting positive organic growth(1);
- EBITDA(1) increased to $35.2 million or 8.3% of sales from $31.3 million or 7.8% of sales; Adjusted EBITDA(1) was $39.3 million or 9.2% of sales, compared to $37.4 million or 9.4% of sales; and
- Net earnings of $12.1 million or $0.25 per diluted common share, an increase of $3.1 million or $0.05 per diluted common share; Adjusted net earnings(1) of $15.7 million or $0.32 per diluted common share, compared to $15.7 million or $0.32 per diluted common share.
UNI-SELECT FULL YEAR HIGHLIGHTS (Compared to 2021):
- Consolidated sales of $1,731.4 million, up $118.6 million or 7.4%; Sales increased by 11.7% excluding the impact of unfavorable fluctuation of the British pound and the Canadian dollar against the US dollar; Organic growth(1) of 10.7% with all three segments reporting positive organic growth(1);
- EBITDA(1) increased 73.7% to $159.6 million or 9.2% of sales from $91.9 million or 5.7% of sales; Adjusted EBITDA(1) increased 26.1% to $185.0 million or 10.7% of sales, compared to $146.7 million or 9.1% of sales;
- Net earnings of $65.0 million or $1.32 per diluted common share, an increase of $64.1 million or $1.30 per diluted common share; Adjusted net earnings(1) of $86.8 million or $1.74 per diluted common share, an increase of $37.9 million or $0.70 per diluted common share; and
- Total net debt(1) reduction of $74.8 million; Total net debt to adjusted EBITDA ratio(1) down to 1.27x driven by strong operating results and sound working capital management, offsetting capital deployed for acquisitions.
CONSOLIDATED FINANCIAL RESULTS
The following table presents selected consolidated information:
| Fourth Quarters EndedDecember 31, | Years EndedDecember 31, | |||||
| (in thousands of US dollars, except per share amounts, percentages and otherwise specified) | 2022 | 2021 | 2022 | 2021 | ||
| $ | $ | % | $ | $ | % | |
| OPERATING RESULTS | ||||||
| Sales | 424,812 | 400,175 | 6.2 | 1,731,420 | 1,612,800 | 7.4 |
| EBITDA(1) | 35,169 | 31,312 | 12.3 | 159,601 | 91,882 | 73.7 |
| EBITDA margin(1) | 8.3 % | 7.8 % | 9.2 % | 5.7 % | ||
| Adjusted EBITDA(1) | 39,264 | 37,430 | 4.9 | 185,024 | 146,695 | 26.1 |
| Adjusted EBITDA margin(1) | 9.2 % | 9.4 % | 10.7 % | 9.1 % | ||
| EBT(1) | 17,618 | 10,311 | 70.9 | 87,414 | 1,803 | 4,748.3 |
| EBT margin(1) | 4.1 % | 2.6 % | 5.0 % | 0.1 % | ||
| Adjusted EBT(1) | 22,356 | 19,206 | 16.4 | 116,329 | 62,748 | 85.4 |
| Adjusted EBT margin (1) | 5.3 % | 4.8 % | 6.7 % | 3.9 % | ||
| Change in estimate related to inventory obsolescence | — | 1,019 | 10,927 | 21,619 | ||
| Stock-based compensation | 4,095 | 5,174 | 13,269 | 11,380 | ||
| Restructuring and other charges | — | (75) | 1,227 | 21,814 | ||
| Net earnings | 12,066 | 9,008 | 33.9 | 65,005 | 895 | 7,163.1 |
| Adjusted net earnings(1) | 15,654 | 15,675 | (0.1) | 86,778 | 48,885 | 77.5 |
| Cash flows from operating activities | 44,885 | 28,462 | 57.7 | 178,068 | 114,069 | 56.1 |
| Free cash flow(1) | 40,354 | 19,624 | 105.6 | 152,494 | 91,452 | 66.7 |
| COMMON SHARE DATA | ||||||
| Basic net earnings per common share | 0.28 | 0.21 | 33.3 | 1.49 | 0.02 | 7,350.0 |
| Diluted net earnings per common share | 0.25 | 0.20 | 25.0 | 1.32 | 0.02 | 6,500.0 |
| Basic adjusted net earnings per common share(1) | 0.36 | 0.36 | — | 1.99 | 1.14 | 74.6 |
| Diluted adjusted net earnings per common share(1) | 0.32 | 0.32 | — | 1.74 | 1.04 | 67.3 |
| Number of common shares outstanding(2) | 43,865,983 | 43,582,380 | 43,865,983 | 43,582,380 | ||
| Weighted average number of outstanding common shares | ||||||
| Basic | 43,807,030 | 43,781,156 | 43,612,399 | 42,903,523 | ||
| Diluted | 52,718,668 | 52,301,924 | 52,616,267 | 43,064,341 | ||
| Diluted adjusted | 52,718,668 | 52,301,924 | 52,616,267 | 51,863,970 | ||
| As at December 31, | ||
| 2022 | 2021 | |
| $ | $ | |
| FINANCIAL POSITION | ||
| Long-term debt, including the current portion | 258,356 | 337,386 |
| Total net debt(1) | 234,437 | 309,230 |
| Credit facilities | 159,808 | 235,384 |
| (1) | This information represents a non-GAAP or other financial measure. Non-GAAP and other financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. Refer to “Non-GAAP and other financial measures” section for reconciliation and further details. |
| (2) | The outstanding number of shares corresponds to the issued common shares less the treasury shares in the Share Trust. |
FOURTH QUARTER RESULTS
Compared to the Fourth Quarter of 2021:
Consolidated sales increased by $24.6 million or 6.2% to $424.8 million. Excluding the impact of unfavorable fluctuation of the British pound and the Canadian dollar against the US dollar of $26.1 million or 6.5%, consolidated sales increased by $50.7 million or 12.7%, compared to the same quarter in 2021, driven by organic growth, from all three segments, ranging between 5.0% and 20.6% for the quarter, as well as by acquisitions, offsetting an unfavorable variance in the number of billing days. Consolidated organic growth of 10.6% was driven primarily by price increases.
Uni-Select generated EBITDA of $35.2 million for the quarter. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin were $39.3 million and 9.2% of sales, compared to $37.4 million and 9.4% of sales in 2021. The adjusted EBITDA margin was impacted by inflationary costs, including fuel and wages, and timing of rebates, offset by price increases, product mix and scaling of payroll and operating expenses.
Net earnings for the quarter increased by $3.1 million to $12.1 million. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation, restructuring and other charges, amortization of intangibles assets related to the acquisition of GSF Car Parts and write-off of deferred financing costs, adjusted net earnings were $15.7 million, same as 2021, due to a higher tax rate offsetting operational and financing cost gains.
Uni-Select Segmented Fourth Quarter Results
The FinishMaster U.S. segment reported sales of $173.4 million, an increase of 3.4%, mainly from organic growth of 5.0%, offsetting an unfavorable variance in the number of billing days. The increase in organic growth was mainly driven by price increases. EBITDA was $12.9 million for the quarter compared to $15.4 million in 2021. Excluding impacts of stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin decreased by $1.2 million and 1.0% respectively to $14.4 million and 8.3% of sales, from $15.6 million and 9.3% of sales in 2021. This variance is attributable to higher fuel and energy costs, bad debt expenses as opposed to recovery in 2021, as well as higher performance bonuses and timing of rebates. These elements were offset by price increases and higher sales, driving scaling benefits.
The Canadian Automotive Group segment reported sales of $150.4 million. Excluding the impact of unfavorable fluctuation of the Canadian dollar against the US dollar of $10.7 million or 7.9% during the fourth quarter of 2022, sales increased by $25.1 million or 18.5%, compared to the same quarter last year, driven by organic growth of 10.5% and acquisitions over the last twelve months representing 9.1%, offsetting an unfavorable variance in the number of billing days.
The increase in organic growth was mainly driven by price increases. This segment reported EBITDA and EBITDA margin of $17.2 million and 11.5% respectively for the quarter compared to $14.7 million and 10.8% in 2021. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin were respectively $18.1 million and 12.0% of sales, compared to $16.8 million and 12.4% of sales in 2021. Adjusted EBITDA margin decreased by 0.4% from foreign currency losses due to the depreciation of the Canadian dollar, higher delivery and travel costs, as well as higher performance bonuses. This was partially offset by price increases, favorable product mix and higher sales, driving scaling benefits.
The GSF Car Parts U.K. segment reported sales of $101.0 million. Excluding the impact of unfavorable fluctuation of the British pound against the US dollar of $15.4 million or 16.0% during the fourth quarter of 2022, sales increased by $19.9 million or 20.7%, mainly driven by organic growth of 20.6%. The increase in organic growth was mainly driven by price increases, the contribution of recently opened greenfield stores, as well as e-commerce sales. This segment reported EBITDA and EBITDA margin of $9.8 million and 9.7% respectively for the quarter compared to $6.5 million and 6.8% in 2021. Excluding impacts of stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin improved by $2.8 million and 2.5% respectively to $10.2 million and 10.1% of sales, from $7.4 million and 7.6% of sales in 2021. This performance was mainly driven by higher sales driving scaling benefits, timing of vendor rebates , offsetting inflationary fuel and utility costs, higher repair costs due to fleet replacement delays, as well as higher payroll costs.
UNI-SELECT FULL YEAR RESULTS
Compared to the Year of 2021:
Consolidated sales of $1,731.4 million increased by $118.6 million or 7.4%. Excluding the impact of unfavorable fluctuation of the British pound and the Canadian dollar against the US dollar of $70.0 million or 4.3%, consolidated sales increased by $188.6 million or 11.7%, driven by organic growth with all three segments reporting positive organic growth, ranging between 7.8% and 15.1% for the year. Consolidated organic growth of 10.7% was driven primarily by price increases.
Uni-Select generated EBITDA of $159.6 million for the year. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin increased by $38.3 million and 1.6% respectively to $185.0 million and 10.7% of sales, from $146.7 million and 9.1% of sales in 2021. This increase is the result of price increases, rebates, improved operational performance, scaling of payroll and operating expenses, offset by certain inflationary costs, including fuel and wages, as well as the timing of certain expenses incurred with respect to new store openings in the U.K. and acquisitions in Canada.
Net earnings for the year increased by $64.1 million to $65.0 million. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation, restructuring and other charges, amortization of intangibles assets related to the acquisition of GSF Car Parts, write-off of deferred financing costs and net tax impact of change in rates and reversal of a contingency provision, adjusted net earnings for the current period increased by $37.9 million to $86.8 million from $48.9 million in 2021. This increase is primarily attributable to price increases as well as improved overall operational performance, including reduced depreciation, amortization and net financing costs, net of income tax expense.
Uni-Select Segmented Year Results
The FinishMaster U.S. segment reported sales of $721.7 million, an increase of 7.4%, mainly from organic growth of 7.8%, or $52.3 million, offsetting an unfavorable variance in the number of billing days. Organic growth was mainly driven by price increases. EBITDA was $69.7 million for the period, compared to $31.3 million in 2021. Excluding impacts of a change in estimate related to inventory obsolescence, stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin improved by $18.5 million and 2.0% respectively to $73.9 million and 10.2% of sales, from $55.4 million and 8.2% of sales in 2021. This performance was driven by additional rebates, price increases and higher sales, scaling benefits, offsetting higher fuel and energy costs, as well as higher performance bonuses, while 2021 benefited from bad debt recovery.
The Canadian Automotive Group segment reported sales of $601.4 million, an increase of 11.2%. Excluding the impact of unfavorable fluctuation of the Canadian dollar against the US dollar of $22.8 million or 4.2% during the year of 2022, sales increased by $83.3 million or 15.4%, compared to the same period last year, largely driven by organic growth of 11.0% and acquisitions over the last twelve months representing 4.7%. The increase in organic growth was mainly driven by price increases. This segment reported EBITDA and EBITDA margin of $69.2 million and 11.5% respectively for the period compared to $59.9 million and 11.1% in 2021. Excluding impacts of change in estimate related to inventory obsolescence, stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin improved by $18.8 million and 2.0% respectively to $82.3 million and 13.7% of sales, from $63.5 million and 11.7% of sales in 2021. This increase is mainly attributable to price increases, favorable product mix, and higher sales, scaling benefits, offset by foreign currency losses due to the depreciation of the Canadian dollar during the period, higher delivery and travel costs, as well as transaction costs related to recent acquisitions.
The GSF Car Parts U.K. segment reported sales of $408.3 million, an increase of 2.1%. Excluding the impact of the unfavorable fluctuation of the British pound against the US dollar of $47.1 million or 11.8% during the year of 2022, sales increased by $55.7 million or 13.9%, mainly driven by organic growth of 15.1%, offsetting an unfavorable variance in the number of billing days. The increase in organic growth was mainly driven by price increases, the contribution of recently opened greenfield stores and e-commerce sales. This segment reported EBITDA and EBITDA margin of $36.3 million and 8.9% respectively for the period compared to $32.8 million and 8.2% in 2021. Excluding impacts of stock-based compensation and restructuring and other charges, adjusted EBITDA and adjusted EBITDA margin increased by $1.9 million and 0.3% respectively to $38.7 million and 9.5% of sales, from $36.8 million and 9.2% of sales in 2021. This performance was driven by higher sales, scaling benefits and rebates, partially offset by inflationary fuel and utility costs, higher repair costs due to fleet replacement delays, as well as higher payroll costs. 2021 also benefited from governmental occupancy subsidies of $0.8 million, which were not repeated in 2022.
CONFERENCE CALL
Uni-Select scheduled a conference call to discuss its results for the fourth quarter of 2022 on February 17, 2023, at 8:00 AM Eastern Time. To join the conference, dial 1 888 390-0549 (or 1 416 764-8682 for international calls).
A recording of the Uni-Select conference call will be available from 11:30 AM Eastern Time on February 17, 2023, until 11:59 PM Eastern Time on March 17, 2023. To access the replay, dial 1 888 390-0541 followed by 678035#.
A webcast of the quarterly results conference call will also be accessible through the “Investors” section of the Uni-Select website at uniselect.com where a replay will also be archived. Listeners should allow ample time to access the webcast and supporting slides.
| ______________________________ | |
| (1) | This information represents a non-GAAP or other financial measure. Non-GAAP and other financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. Refer to “Non-GAAP and other financial measures” section for reconciliation and further details. |
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