Uni-Select says extreme winter helping sales in Canada, causing closures in U.S.
MONTREAL - Automotive parts distributor Uni-Select says the extreme winter weather is driving higher sales in Canada but hampering business in the United States where it has forced an unprecedented number of store closures.
"We had a very strong beginning in Canada due to the cold weather conditions," CEO Richard Roy said Thursday during a conference call about its fourth-quarter results.
But snow and ice south of the border, including the U.S. southeast, caused more than 150 stores and eight distribution centres to close for several days, costing more than $4 million of sales in the first six to eight weeks of 2014.
Collision repairs, repainting and general maintenance will eventually have a positive impact on results, but clients first have to get to stores once the snow stops, he told analysts.
Before the latest winter challenges, Uni-Select (TSX:UNS) beat expectations in the fourth quarter, with profits more than doubling to $10.2 million as growth in sales offset the store closures and the decline in the Canadian dollar.
The Quebec-based company earned 48 cents per share for the period ended Dec. 31, compared with 21 cents a year earlier when net income was $4.5 million.
Excluding one-time items, Uni-Select earned $13.1 million or 62 cents per share in adjusted profits, seven cents better than analyst forecasts. A year earlier, adjusted profits were $5.7 million or 26 cents per share.
Revenues grew by 1.8 per cent to $425.6 million, fuelled by a 5.5 per cent increase in sales.
Sales in the U.S. were $305 million on a 5.1 per cent increase in organic sales, while Canadian operations delivered $121 million in sales on a 6.5 per cent gain.
Uni-Select attributed the increases to its successful sales initiatives, recruitment of new customers and improved service levels.
The increase in sales offset a 2.1 per cent decrease resulting from store closures and the lower value of the loonie.
Despite fierce competition, the company said it expects to gain market share while achieving nearly half of its planned $30 million of cost savings after just seven months of its new restructuring plan.
Its adjusted EBITDA margin doubled to 5.8 per cent in the quarter on organic sales growth and a plan that cut $8.7 million of costs in the quarter from the closure of five corporate stores and one warehouse, along with the sale of six stores. Five more warehouses will be closed this year while a new one is opened.
For the full year, Uni-Select's net income decreased 27.6 per cent to $21.3 million. Excluding one-time costs, it increased to $50.7 million from $45.9 million in 2012.
Revenues decreased 0.5 per cent to $1.8 billion despite a 1.9 per cent increase in organic sales.
U.S. sales were $1.3 billion, while Canadian operations reached $494 million.
The declining Canadian dollar negatively impacted sales by $14.9 million and net earnings by $700,000 for the year, the company said.
Sara O'Brien of RBC Capital Markets said that while the adjusted profits beat estimates, about 10 cents per share was due to a tax recovery.
The analyst said the adjusted margin grew to 5.8 per cent but it was below her forecast of 6.6 per cent.
"We see this quarter as neutral given solid organic growth is offset by EBITDA margin miss," she wrote in a report.
On the Toronto Stock Exchange, Uni-Select's shares closed up 17 cents to $29.18 in Thursday trading.
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