Uni-Select Announces Management Changes, Updated 2018 Guidance and Review of Strategic Alternatives
Boucherville (Québec), September 18, 2018 – Uni-Select Inc. (“Uni-Select” or the “Corporation”) (TSX: UNS) announces today the departure of Henry Buckley, the President and Chief Executive Officer of the Corporation, effective immediately. Mr. Buckley has also stepped down as a member of the Board of Directors of the Corporation.
André Courville, Chair of the Board, will assume the interim role of President and Chief Executive Officer of the Corporation and therefore has stepped down as Chair and member of all committees but will remain a member of the Board of Directors. As a result, some Board member roles and responsibilities will change: Michelle Cormier has been nominated Chair of the Board and has stepped down from her role as Chair of the Audit Committee. Finally, Richard G. Roy has been nominated as Chair of the Audit Committee.
Uni-Select also announces the appointment of Chris Adams as President and Chief Operating Officer, FinishMaster, Inc., effective immediately, to replace Steven J. Arndt, who is leaving FinishMaster after more than 25 years of service.
Since joining the FinishMaster team recently, Chris has been responsible for all US branches and has led all sales and marketing efforts in the United States. Previously, Chris held senior positions at ABRA Auto Body & Glass LP, a major multi-shop operator in the collision repair industry. Prior to that, he was in senior executive roles at Pep Boys and Enterprise Rent-A-Car.
“We thank Henry for his years of service and loyalty to Uni-Select and wish him well in his future endeavors. In his long career at FinishMaster, Steve has had an undeniable contribution to the success of creating a market leader in the refinish market and we wish him all the best. Finally, we believe Chris is the right leader to drive FinishMaster forward,” commented Mr. Courville.
Chris Adams along with Brent Windom, President and Chief Operating Officer, Canadian Automotive Group, and Peter Sephton, President and Chief Executive Officer, European Automotive Group, will continue to lead the day-to-day operations, reporting to the Interim President and CEO, with the ongoing support of Eric Bussières, Chief Financial Officer.
Uni-Select is revising its previously disclosed guidance as follows: While FinishMaster’s organic sales growth is trending positively, it is no longer expected to reach the level previously indicated for the full year. As a result, FinishMaster’s expected full year 2018 organic sales growth is revised down from 2.0%-4.0% to 0.5%â€‘2.0%. The Canadian Automotive Group’s expected full year 2018 organic sales growth is revised down from 0.0%-2.0% to 0.0-1.5%. The Parts Alliance UK’s expected full year 2018 organic sales growth is revised up from 5.0%-7.0% to 6.0%-8.0%. Consequently, the consolidated organic sales growth guidance is revised down from 2.25%-4.0% to 0.8%-2.6% and the consolidated EBITDA margin is revised down from 7.2%-8.2% to 6.75%-7.25%.
For further information about the Corporation's use of the non-IFRS measures identified in this press release, refer to "NON-IFRS FINANCIAL MEASURES" section.
STRATEGIC ALTERNATIVES REVIEW
Uni-Select also announces the formation of a special committee of independent members of the Board of Directors to oversee a review of strategic alternatives. The special committee has a mandate to work with the Board of Directors and Management to identify, review, analyze and evaluate strategic alternatives. J.P. Morgan Securities LLC and Fasken Martineau DuMoulin LLP have been engaged as financial advisor and legal counsel, respectively, to the Board of Directors and the special committee in connection with this process.
Uni-Select has not set a definitive schedule to complete the review of strategic alternatives. Given the nature of the process, the Corporation does not intend to provide updates until such time as the Board of Directors approves a definitive transaction or strategic alternative, or otherwise determines that further disclosure is appropriate. There are no guarantees that the review of strategic alternatives will result in a transaction, or if a transaction is undertaken, as to its terms or timing.
Uni-Select is a leader in the distribution of automotive refinish and industrial paint and related products in North America, as well as a leader in the automotive aftermarket parts business in Canada and in the UK. Uni-Select is headquartered in Boucherville, Québec, Canada, and its shares are traded on the Toronto Stock Exchange (TSX) under the symbol UNS.
In Canada, Uni-Select supports over 16,000 automotive repair and collision repair shops through a growing national network of more than 1,100 independent customers and over 60 company-owned stores, many of which operate under the Uni-Select BUMPER TO BUMPER®, AUTO PARTS PLUS® AND FINISHMASTER® store banner programs. It also supports over 3,900 shops and stores through its automotive repair/installer shop banners, as well as through its automotive refinish banners.
In the United States, Uni-Select, through its wholly-owned subsidiary FinishMaster, Inc., operates a national network of over 200 automotive refinish company-owned stores under the FINISHMASTER banner which services a network of over 30,000 customers annually, of which it is the primary supplier to over 6,800 collision repair centre customers.
In the UK and Ireland, Uni-Select, through its Parts Alliance group of subsidiaries, is a leading distributor of automotive parts supporting over 23,000 customer accounts with a network of close to 200 locations including over 170 company-owned stores.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements made in this press release are forward-looking statements. These statements include, without limitation, statements relating to our evaluation of various strategic alternatives, the selection of a new President and Chief Executive Officer and our management organizational structure, our 2018 revised guidance (including without limitation, EBITDA margin and organic sales growth) and other statements that are not historical facts. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, project, strategy, target and other similar expressions or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, seek, should, strive and will. All such forward-looking statements are made pursuant to the “safe harbour” provisions of applicable Canadian securities laws.
Forward-looking statements are, by their very nature, subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which may cause expressed expectations to be significantly different from those listed or implied within this press release and our business outlook, objectives, plans and strategic priorities may not be achieved. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forwardâ€‘looking statements. The forward-looking information contained herein is made as of the date of this press release, and Uni-Select does not undertake to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. Forwardâ€‘looking statements are presented in this press release for the purpose of assisting investors and others in understanding certain key elements of our current review process which remain subject to change depending on available strategic alternatives as well as our objectives, strategic priorities and revised outlook for 2018. Readers are cautioned that such information may not be appropriate for other purposes.
A number of economic, market, operational and financial assumptions were made by Uni-Select in preparing its forward-looking statements contained in this press release, including, but not limited to:
- Economic conditions in Canada, the United States and the United Kingdom will remain stable;
- The current negotiations for the exit of the United Kingdom from European Union do not result in economic uncertainty;
- Interest rates expected to slightly increase in 2018;
- Canadian dollar and the British pound are expected to remain at, or around, near current levels.
- Further fluctuations may be impacted by the degree of strength of the US dollar, interest rates and changes in commodity prices.
Our forward-looking statements also reflect various market assumptions, in particular:
- New-car sales in the three business segments are expected to be similar in 2018 to those of 2017;
- For all 3 operational segments, fuel costs at the pump are not expected to increase significantly beyond current levels; distance travelled and accident rates to remain within those experienced in 2017;
- No material, operational or competitive consequence resulting from changes in regulations or the insurance market affecting the automotive aftermarket businesses.
Operational and Financial Assumptions:
The forward-looking statements are also based on various internal operational and financial assumptions, including, but not limited to:
- Maintaining market share in the 3 operational segments;
- Uni-Select will be able to realize efficiency gains in its cost structure to support the profitability and cash flow generation expected from its 20/20 initiative;
- The revenue mix between Uni-Select's operations and within its 3 operational segments will not materially change from anticipated levels;
- No introduction of disruptive technologies during the year;
- No significant change in the buying conditions beyond current levels;
- It is important to note that organic sales and EBITDA margins of the business segments are affected by seasonality and are impacting the consolidated results:
- FinishMaster US tends to have softer first and fourth quarters, with its third quarter being the strongest;
- Canadian Automotive Group tends to have softer first and fourth quarters than second and third quarters; and
- The Parts Alliance UK tends to have softer third and fourth quarters than first and second quarters;
- No significant acquisition; and
- Guidance is based on current accounting standards and policies including Uni-Select non-IFRS measures.
The foregoing assumptions, although considered reasonable by Uni-Select on the date of this press release, may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations set forth in this press release.
Important risk factors that could cause our assumptions and estimates to be inaccurate and actual results of events to differ materially from those expressed in, or implied by, our forward-looking statements, including our updated financial guidance are listed below. The realization of our forwardlooking statements, including our ability to meet our 2018 financial guidance, essentially depends on our business performance which, in turn, is subject to many risks. Accordingly, readers are cautioned that any of the following risks could have a material adverse effect on our forward-looking statements. These risks include, but are not limited to economic climate, changes in legislation or government regulations or policies, inflation, distance travelled, growth in vehicle fleet, products supply and inventory management, distribution by the manufacturer directly to consumers, technology, environmental risks, legal and tax risks, risks related to Uni-Select's business model and strategy, integration of acquired business, competition, business and financial systems, human resources, liquidity risk, credit risk, foreign exchange risk and interest rates.
For additional information with respect to risks and uncertainties, refer to the Annual Report filed by Uni-Select with the Canadian securities commissions.
NON-IFRS FINANCIAL MEASURES
The information included in this press release contains certain financial measures that are inconsistent with IFRS. Non IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other entities. The Corporation is of the opinion that users of its press release may analyze its results based on these measurements. The following presents performance measures used by the Corporation which are not defined by IFRS.
Organic growth – This measure consists of quantifying the increase in consolidated sales between two given periods, excluding the impact of acquisitions, sales and disposals of stores, exchange-rate fluctuations and when necessary, the variance in the number of billing days. This measure enables Uni-Select to evaluate the intrinsic trend in the sales generated by its operational base in comparison with the rest of the market. Determining the rate of organic growth, based on findings that Management regards as reasonable, may differ from the actual rate of organic growth.
EBITDA – This measure represents net earnings excluding finance costs, depreciation and amortization and income taxes. This measure is a financial indicator of a corporation's ability to service and incur debt. It should not be considered by an investor as an alternative to sales or net earnings, as an indicator of operating performance or cash flows, or as a measure of liquidity, but as additional information.
EBITDA margin – The EBITDA margin is a percentage corresponding to the ratio of the EBITDA to sales.