Uni-Select Inc. Reports 2021 Second Quarter Highlights and Financial Results:

• Consolidated sales of $416.4 million, up 37.6% year over year, reflecting a recovery from trough levels of business activity in the second quarter of 2020; consolidated organic growth⁽¹⁾ of 28.5%;
• EBITDA^([1]) of $0.5 million; adjusted EBITDA⁽¹⁾ of $34.1 million or 8.2% of sales, up $19.3 million or 330 basis points versus the second quarter of 2020, reflecting both a recovery in sales and certain efficiency gains;
• Special items of $13.0 million mainly from severance costs resulting from changes to executive leadership and a change in estimates of $20.6 million related to inventory obsolescence in the FinishMaster U.S. segment; and
• EPS of $(0.48); adjusted EPS⁽¹⁾ of $0.21, up $0.44 versus the second quarter of 2020.

Unless otherwise indicated in this press release, all amounts are expressed in thousands of US dollars, except per share amounts and percentages.

BOUCHERVILLE, QC, Aug. 6, 2021 /CNW Telbec/ - Uni-Select Inc. (TSX: UNS) ("Uni-Select" or "Corporation") today reported its financial results for the second quarter ended June 30, 2021.

"We are very pleased with our second quarter results which reflect strong market recovery from the worst of the pandemic and sequential improvement in the business. Revenues increased 38% to $416 million while EBITDA⁽¹⁾ , once adjusted for special items and others, more than doubled to reach $34 million, or a margin of 8.2%," stated Brian McManus, Executive Chair and Chief Executive Officer of Uni-Select.

"This strong profitability combined with active cash management translated into cash flow from operations of $43 million which we used primarily to reduce our total net debt, ending the quarter with an improved leverage ratio of 2.9x. In June, we successfully amended our credit agreement providing us with increased flexibility while meaningfully reducing our cost of borrowing. Had we amended the credit agreement at the beginning of the second quarter, we estimate our net finance costs would have been about $2 million lower.

Our near-term focus is to align the three businesses with our vision for the future while identifying growth opportunities. We expect 2021 to be a good year but remain cautiously optimistic as we progressively recover from the continued uncertainty surrounding the pandemic and manage through the ongoing challenges related to the supply chain. We are positioning the business for the long term and see many opportunities ahead in all three businesses," concluded Mr. McManus.

(1) Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section for further details.

FINANCIAL RESULTS

The following table presents selected consolidated information:

	Second quarters			Six-month periods
(in thousands of US dollars, except per share amounts, percentages and otherwise specified)	2021	2020	%	2021		2020	%
OPERATING RESULTS
Sales	416,412	302,534	37.6	786,531		710,218	10.7
EBITDA(1)	488	(2,674)	118.2	25,244		12,406	103.5
EBITDA margin(1)	0.1%	(0.9%)		3.2%		1.7%
Adjusted EBITDA(1)	34,137	14,841	130.0	62,319		31,627	97.0
Adjusted EBITDA margin(1)	8.2%	4.9%		7.9%		4.5%
EBT	(23,697)	(30,967)	23.5	(23,190)		(39,583)	41.4
EBT margin(1)	(5.7%)	(10.2%)		(2.9%)		(5.6%)
Adjusted EBT(1)	11,081	(12,449)	189.0	16,127		(18,324)	188.0
Adjusted EBT margin (1)	2.7%	(4.1%)		2.1%		(2.6%)
Change in estimates related to inventory obsolescence	20,600	-		20,600		-
Special items	13,049	17,515		16,475		19,221
Net loss	(20,253)	(24,169)	16.2	(20,040)		(30,910)	35.2
Adjusted earnings (loss)(1)	8,789	(9,655)	191.0	12,520		(13,956)	189.7
Free cash flows(1)	41,032	33,330	23.1	34,873		15,131	130.5
COMMON SHARE DATA
Net loss	(0.48)	(0.57)	15.8	(0.47)		(0.73)	35.6
Adjusted earnings (loss)(1)	0.21	(0.23)	191.3	0.30		(0.33)	190.9
				June 30, 2021		Dec. 31, 2020
FINANCIAL POSITION
Total net debt(1)				348,307		370,252

(1)                 Non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section for further details.

SECOND QUARTER RESULTS
Consolidated sales of $416.4 million for the quarter increased by 37.6% compared to the same quarter in 2020, mainly driven by organic growth of 28.5% and by the favourable fluctuations of the British and the Canadian currencies. This performance reflected a recovery from trough levels of business activity in the second quarter of 2020. Organic sales continued to improve sequentially, as all segments reported positive organic growth for the quarter: 62.6% by The Parts Alliance U.K., 28.4% by FinishMaster U.S. and 12.3% by the Canadian Automotive Group.

The Corporation generated EBITDA of $0.5 million for the quarter, which was impacted by a change in estimates of $20.6 million related to inventory obsolescence in the FinishMaster U.S. segment and special items of $13.0 million, mainly for severance related to executive leadership changes. Once adjusted, the EBITDA and the EBITDA margin increased by $19.3 million and 330 basis points respectively to $34.1 million and 8.2%, from $14.8 million and 4.9% in 2020. This performance was the result of improved gross margins, improved fixed cost absorption related to organic sales growth, as well as a streamlined cost structure. The second quarter last year was affected by additional inventory and bad debt reserves of about $7.1 million or 240 basis points.
These elements were partially offset by a higher level of expenses, as the same quarter of 2020 had reduced expenses derived from temporary lay-offs, reduction of working hours and temporary closure of company‑operated stores in response to the effects of the pandemic. Moreover, the current quarter was affected by higher stock‑based compensation due to the recent appreciation of the share price and grants to new executives.

Net loss of $20.3 million was reported for the current quarter compared to $24.2 million in 2020. Adjusted earnings for the current quarter increased by $18.5 million to $8.8 million from an adjusted loss of $9.7 million in 2020, primarily driven by improved operational performance and profitability, while the second quarter of 2020 was impacted by the pandemic.

Segmented Second Quarter Results
The FinishMaster U.S. segment reported sales of $171.3 million, organically increasing by 28.4%, compared to the corresponding quarter last year, a recovery from trough levels of business activity in the quarter of 2020. This segment reported an EBITDA of $(7.7) million for the quarter. Once adjusted for change in estimates related to inventory obsolescence and for special items, EBITDA was $13.2 million or 7.7% of sales, compared to $4.5 million or 3.3% of sales in 2020, an improvement of 440 basis points. The current quarter results benefitted from additional volume of sales, increased gross margin and fixed cost absorption. In addition, this segment took advantage of price increases and a streamlined cost structure as a result of improvement plans. For the third quarter in a row, this segment reported an adjusted EBITDA exceeding the previous quarter, both in dollar and margin, the outcome of measures initiated during the 2020 year.

The Canadian Automotive Group segment reported sales of $145.3 million, an increase of 27.1%, compared to the corresponding quarter of 2020, driven by the appreciation of the Canadian dollar and organic growth of 12.3%, all distribution channels recovering from trough levels of business activity in the second quarter of 2020. This segment reported an EBITDA of $17.2 million for the quarter. Once adjusted for special items, EBITDA was $17.7 million or 12.2% of sales, compared to $12.9 million or 11.3% of sales in 2020, an improvement of 90 basis points, attributable to additional sales volume, savings from the workforce alignment, as well as additional vendor rebates, in part due to timing. Furthermore, the second quarter of 2020 was affected by additional bad debt expenses. Despite the context of COVID‑19, this segment generated, for a fourth consecutive quarter, improved adjusted EBITDA related to the respective comparable quarter, both in dollar and percentage of sales.

The Parts Alliance U.K. segment reported sales of $99.9 million, for an increase of 82.1% compared to the same quarter in 2020, propelled by organic growth of 62.6% and a strong British pound against the US dollar during the current quarter of 2021. This segment reported an EBITDA of $5.6 million for the quarter, and once adjusted for special items, EBITDA was $8.3 million or 8.3% of sales, an increase of $8.0 million or 770 basis points, compared to $0.3 million or 0.6% of sales in 2020. This improvement was driven by additional sales volume, savings from the rightsizing of the workforce, as well as an improved gross margin from price increases, while the second quarter of 2020 was affected by additional bad debt expenses. This segment generated, for a fourth consecutive quarter, improved adjusted EBITDA related to the respective comparable quarter, both in dollar and percentage of sales.

SIX-MONTH PERIOD RESULTS
Consolidated sales of $786.5 million for the period increased by 10.7% compared to the same period in 2020, mainly driven by organic growth of 6.2%, the favourable fluctuations of the British and the Canadian currencies and business acquisitions. This performance offsets the adverse impact of a different number of billing days and the expected erosion from the consolidation of company-operated stores. On a year‑to‑date basis, both the Canadian Automotive Group and The Parts Alliance U.K. segments reported a positive organic growth, while the FinishMaster U.S. segment reported a slightly negative organic growth of 0.3%.

The Corporation generated an EBITDA of $25.2 million for the period, which was impacted by a change in estimates of $20.6 million related to inventory obsolescence in the FinishMaster U.S. segment and special items of $16.5 million, mainly for severance related to changes to executive leadership. Once adjusted, the EBITDA and the EBITDA margin increased by $30.7 million and 340 basis points respectively to $62.3 million and 7.9%, from $31.6 million and 4.5% in 2020. This performance resulted from improved gross margins due to additional volume rebates and price increases, a streamlined cost structure related to the improvement plans, as well as an improved fixed cost absorption related to organic sales growth. The period of 2020 was impacted by additional inventory and bad debt reserves, foreign exchange losses in relation to the depreciation of the Canadian dollar and the British pound and a one-time charge, a total impact of about $12.4 million or 170 basis points. These elements were partially offset by a higher level of expenses, while the same period of 2020 benefitted from actions in response to the effects of the pandemic. Moreover, the current period was affected by higher stock-based compensation related to the recent appreciation of the share price and grants to new executive members.

Net loss of $20.0 million was reported for the current period compared to $30.9 million in 2020. Adjusted earnings for the current period increased by $26.5 million to $12.5 million from an adjusted loss of $14.0 million in 2020, essentially driven by improved operational performance and profitability, reaping the rewards of improvement plans and initiatives put in place, while the period of 2020 was impacted by the pandemic.

Segmented Six-Month Period Results
The FinishMaster U.S. segment reported sales of $329.5 million, a decrease of 1.8%, compared to last year, mainly due to an unfavourable difference in the number of billing days. On a year-to-date basis, this segment reported organic growth close to neutral, the performance of the current period offsetting the corresponding period of 2020, which was fully impacted by the effects of the pandemic during the second quarter. This segment reported an EBITDA of $1.9 million for the period, which, once adjusted for a change in estimates related to inventory obsolescence and special items, grew to $23.3 million or 7.1% of sales, compared to $16.6 million or 4.9% of sales in 2020, an improvement of 220 basis points, despite a similar level of organic sales. This performance was attributable to improvement plans and associated savings from reduced workforce and the consolidation of company-operated stores. In addition, this segment took advantage of price increases, a partial reversal of bad debt provision stemming from improved collection, and a reduction of discretionary expenses. During the period of 2020, this segment was affected by additional inventory obsolescence and bad debt expenses as well as a one‑time charge.

The Canadian Automotive Group segment reported sales of $260.4 million, an increase of 16.7% compared to the corresponding period of 2020, driven by the appreciation of the Canadian dollar and organic growth of 6.6%. This segment reported an EBITDA of $28.9 million for the period, which, once adjusted for special items, was $29.4 million or 11.3% of sales, compared to $15.6 million or 7.0% of sales in 2020, an improvement of 430 basis points. This growth was attributable to additional sales volume, savings from the workforce alignment, as well as additional vendor rebates, in part due to timing. Furthermore, the period of 2021 benefitted from a reduction of discretionary expenses in relation to the pandemic, while the period of 2020 was affected by large foreign exchange losses.

The Parts Alliance U.K. segment reported sales of $196.6 million, for an increase of 29.9% compared to the same period in 2020, driven by organic growth of 20.2% and a strong British pound against the US dollar during the current period of 2021, exceeding the unfavourable variance in the number of billing days and the expected erosion resulting from the consolidation of company‑operated stores. This segment reported an EBITDA of $15.5 million for the period. Once adjusted for special items, EBITDA was $18.2 million or 9.3% of sales, compared to $5.0 million or 3.3% of sales in 2020. The adjusted EBITDA margin increased by 600 basis points compared to the same period in 2020, driven by additional sales volume, savings from the rightsizing of the workforce, as well as an improved gross margin from price increases.

AMENDED CREDIT FACILITY
Effective June 25, 2021, the Corporation amended the existing credit facility, meaningfully reducing borrowing costs while preserving flexibility and liquidity. Under the amendment, the aggregate amount available under the credit facility was reduced from $565 million to $500 million. The agreement now provides a $350 million secured long-term revolving credit facility, as well as two secured term facilities for a total principal amount of $150 million, all of which mature on June 30, 2023. The facilities are secured by a first ranking lien on all of the Corporation's assets.

CONFERENCE CALL
Uni-Select will host a conference call to discuss its second-quarter results for 2021 on August 6, 2021, at 8:00 AM Eastern. To join the conference, dial 1 888 390-0549 (or 1 416 764-8682 for international calls).

A recording of the conference call will be available from 11:30 AM Eastern on August 6, 2021, until 11:59 PM Eastern on September 6, 2021. To access the replay, dial 1 888 390-0541 followed by 249252#.

A webcast of the quarterly results conference call will also be accessible through the "Investors" section of our website at uniselect.com where a replay will also be archived. Listeners should allow ample time to access the webcast and supporting slides.

ABOUT UNI-SELECT
With over 4,800 employees in Canada, the U.S. and the U.K., Uni-Select is a leader in the distribution of automotive refinish and industrial coatings and related products in North America, as well as a leader in the automotive aftermarket parts business in Canada and in the U.K. Uni-Select is headquartered in Boucherville, Québec, Canada, and its shares are traded on the Toronto Stock Exchange (UNS).

In Canada, Uni-Select supports over 16,000 automotive repair and collision repair shops and more than 4,000 shops through its automotive repair/installer shop banners and automotive refinish banners. Its national network includes over 1,000 independent customer locations and more than 75 company-operated stores, many of which operate under the Uni-Select BUMPER TO BUMPER®, AUTO PARTS PLUS® and FINISHMASTER® store banner programs.

In the United States, Uni-Select, through its wholly-owned subsidiary FinishMaster, Inc., operates a national network of over 145 automotive refinish company-operated stores under the FINISHMASTER® banner, which supports over 30,000 customers annually.

In the U.K. and Ireland, Uni-Select, through its Parts Alliance group of subsidiaries, is a major distributor of automotive parts supporting over 20,000 customer accounts with a network of over 170 company-operated stores. www.uniselect.com

CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements made in this press release are forward-looking statements. 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. Forward-looking statements in this press release include statements relating to our expectation as to the expected cost savings resulting from the Continuous Improvement Plan, productivity, efficiency and right-sizing initiatives and the expected timing of those savings and related costs, and our ability to face the ongoing economic uncertainty. 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. In particular, Uni-Select continues to face uncertainty related to the duration and severity of the current COVID-19 pandemic and the related impacts on its business. There is limited visibility on the duration of or future changes to the various government‑imposed restrictions which have recently begun to ease in various degrees in the jurisdictions where we operate. There can be no assurance that any restrictions that have or will be lifted will not be reinstated. The duration and extent of the impact of the COVID-19 pandemic on Uni-Select's business, including its operations and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic, vaccinations and treatments for the virus and the actions taken in various jurisdictions to contain or treat the outbreak. These impacts could in turn, amongst other things, negatively impact Uni-Select's liquidities and/or its ability to remain in compliance with covenants under its indebtedness.

Risks and uncertainties to which the forward-looking statements are subject also include the risk factors described in the Corporation's Management's Discussion & Analysis for the year ended December 31, 2020, under the heading "Risk Management" available on www.sedar.com as well as on Uni-Select's website at www.uniselect.com. As a result, we cannot guarantee that any forward-looking statement will materialize, and we caution you against relying on any of these forward-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.

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, the erosion of sales from the consolidation of company–operated 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. Organic growth is based on what management regards as reasonable and may not be comparable to other corporations' organic growth.

EBITDA and adjusted EBITDA – EBITDA 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.

Adjusted EBITDA contains certain adjustments, which may affect the comparability of the Corporation's financial results. These adjustments include, among other things, restructuring and other charges as well as change in estimates related to inventory obsolescence.

EBITDA margin and adjusted EBITDA margin – EBITDA margin is a percentage corresponding to the ratio of EBITDA to sales. Adjusted EBITDA margin is a percentage corresponding to the ratio of adjusted EBITDA to sales.

Adjusted EBT, adjusted earnings and adjusted earnings per share – Management uses adjusted EBT, adjusted earnings and adjusted earnings per share to assess EBT, net earnings and net earnings per share from operating activities, containing certain adjustments, net of income taxes for adjusted earnings and adjusted earnings per share, which may affect the comparability of the Corporation's financial results. Management considers that these measures facilitate the analysis and provide the best understanding of the Corporation's operational performance. The intent of these measures is to provide additional information.

These adjustments include, among other things, restructuring and other charges, change in estimates related to inventory obsolescence as well as amortization of intangible assets related to The Parts Alliance acquisition. The exclusion of these items does not indicate that they are non-recurring.

EBT margin and adjusted EBT margin – EBT margin is a percentage corresponding to the ratio of EBT to sales. Adjusted EBT margin is a percentage corresponding to the ratio of adjusted EBT to sales.

Free cash flows – This measure corresponds to the cash flows from operating activities according to the consolidated statements of cash flows adjusted for the following items: net acquisitions of property and equipment, net advances to merchant members and incentives granted to customers, as well as net acquisitions and development of intangible assets. Uni-Select considers the free cash flows to be a good indicator of financial strength and of operating performance because it shows the amount of funds available to manage growth, repay debt, reinvest in the Corporation and capitalize on various market opportunities that arise.

The free cash flows exclude certain other funds generated and used according to the consolidated statements of cash flows. Therefore, it should not be considered as an alternative to the consolidated statements of cash flows, or as a measure of liquidity, but as additional information.

Total net debt – This measure consists of long-term debt, including the portion due within a year, net of cash.

Total net debt to adjusted EBITDA – This ratio corresponds to total net debt divided by adjusted EBITDA.

The following table presents a reconciliation of organic growth.

	Second quarters				Six-month periods
	2021		2020		2021		2020
FinishMaster U.S.	171,261		133,374		329,464		335,573
Canadian Automotive Group	145,267		114,299		260,429		223,240
The Parts Alliance U.K.	99,884		54,861		196,638		151,405
Sales	416,412		302,534		786,531		710,218
			%				%
Sales variance	113,878		37.6		76,313		10.7
Conversion effect of the Canadian dollar and the British pound	(27,273)		(9.0)		(39,512)		(5.6)
Number of billing days	191		0.1		7,808		1.1
Erosion of sales from the consolidation of company–operated stores	401		0.1		1,167		0.2
Acquisitions	(865)		(0.3)		(1,476)		(0.2)
Consolidated organic growth	86,332		28.5		44,300		6.2

 

The following table presents a reconciliation of the EBITDA and the adjusted EBITDA.

	Second quarters					Six-month periods
	2021		2020		%	2021		2020		%
Net loss	(20,253)		(24,169)			(20,040)		(30,910)
Income tax recovery	(3,444)		(6,798)			(3,150)		(8,673)
Finance costs, net	8,884		12,398			17,762		19,500
Depreciation and amortization	15,301		15,895			30,672		32,489
EBITDA	488		(2,674)		118.2	25,244		12,406		103.5
EBITDA margin	0.1%		(0.9%)			3.2%		1.7%
Change in estimates related to inventory obsolescence	20,600		-			20,600		-
Special items	13,049		17,515			16,475		19,221
Adjusted EBITDA	34,137		14,841		130.0	62,319		31,627		97.0
Adjusted EBITDA margin	8.2%		4.9%			7.9%		4.5%

 

The following table presents a reconciliation of the EBT and the adjusted EBT.

	Second quarters					Six-month periods
	2021		2020		%	2021		2020		%
Net loss	(20,253)		(24,169)			(20,040)		(30,910)
Income tax recovery	(3,444)		(6,798)			(3,150)		(8,673)
EBT	(23,697)		(30,967)		23.5	(23,190)		(39,583)		41.4
EBT margin	(5.7%)		(10.2%)			(2.9%)		(5.6%)
Change in estimates related to inventory obsolescence	20,600		-			20,600		-
Special items	13,049		17,515			16,475		19,221
Amortization of intangible assets related to the acquisition of The Parts Alliance	1,129		1,003			2,242		2,038
Adjusted EBT	11,081		(12,449)		189.0	16,127		(18,324)		188.0
Adjusted EBT margin	2.7%		(4.1%)			2.1%		(2.6%)

 

The following table presents a reconciliation of adjusted earnings (loss) and adjusted earnings (loss) per share.

	Second quarters					Six-month periods
	2021		2020		%	2021		2020		%
Net loss	(20,253)		(24,169)		16.2	(20,040)		(30,910)		35.2
Change in estimates related to inventory obsolescence, net of taxes	16,274		-			16,274		-
Special items, net of taxes	9,830		13,390			12,446		14,661
Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes	944		1,124			1,846		2,293
Net tax impact of changes in rates and reversal of a contingency provision	1,994		-			1,994		-
Adjusted earnings (loss)	8,789		(9,655)		191.0	12,520		(13,956)		189.7
Loss per share	(0.48)		(0.57)		15.8	(0.47)		(0.73)		35.6
Change in estimates related to inventory obsolescence, net of taxes	0.39		-			0.39		-
Special items, net of taxes	0.23		0.31			0.29		0.35
Amortization of intangible assets related to the acquisition of The Parts Alliance, net of taxes	0.02		0.03			0.04		0.05
Net tax impact of changes in rates and reversal of a contingency provision	0.05		-			0.05		-
Adjusted earnings (loss) per share	0.21		(0.23)		191.3	0.30		(0.33)		190.9

 

The following table presents a reconciliation of free cash flows.

The Corporation reviewed its definition of free cash flows to better reflect the amount of funds available to manage growth, repay debt, reinvest in the Corporation and capitalize on various market opportunities that arise. Accordingly, the comparative figures presented below were adjusted.

	Second quarters				Six-month periods
	2021		2020		2021		2020
Cash flows from operating activities	43,282		34,877		42,742		22,198
Advances to merchant members and incentives granted to customers	(2,465)		(877)		(7,152)		(4,322)
Reimbursement of advances to merchant members	3,040		536		3,756		1,392
Acquisitions of property and equipment	(2,166)		(1,248)		(3,386)		(3,806)
Proceeds from disposal of property and equipment	319		289		565		420
Acquisitions and development of intangible assets	(978)		(247)		(1,652)		(751)
Free cash flows	41,032		33,330		34,873		15,131

UNI-SELECT INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(In thousands of US dollars, except per share amounts, unaudited)	Quarters ended June 30,				Six-month periods ended June 30,
	2021		2020		2021		2020
Sales	416,412		302,534		786,531		710,218
Purchases, net of changes in inventories	305,354		216,579		558,840		501,486
Gross margin	111,058		85,955		227,691		208,732
Salaries and benefits	69,380		45,153		131,855		117,318
Other operating expenses	28,141		25,961		54,117		59,787
Special items	13,049		17,515		16,475		19,221
Earnings (loss) before finance costs, depreciation and amortization and income taxes	488		(2,674)		25,244		12,406
Depreciation and amortization	15,301		15,895		30,672		32,489
Finance costs, net	8,884		12,398		17,762		19,500
Loss before income taxes	(23,697)		(30,967)		(23,190)		(39,583)
Income tax recovery	(3,444)		(6,798)		(3,150)		(8,673)
Net loss	(20,253)		(24,169)		(20,040)		(30,910)
Loss per share
Basic and diluted	(0.48)		(0.57)		(0.47)		(0.73)
Weighted average number of common shares outstanding (in thousands)
Basic and diluted	42,387		42,387		42,387		42,387

UNI-SELECT INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of US dollars, unaudited)	Quarters ended June 30,				Six-month periods ended June 30,
	2021		2020		2021		2020
Net loss	(20,253)		(24,169)		(20,040)		(30,910)
Other comprehensive income (loss)
Items that will subsequently be reclassified to net loss:
Effective portion of changes in the fair value of cash flow hedges (net of income tax of $1 and $3 respectively for the quarter and six-month period ($54 and $155 in 2020))	(3)		(149)		8		(430)
Net change in the fair value of derivative financial instruments designated as cash flow hedges transferred to net loss (net of income tax of $58 and $118 respectively for the quarter and six-month period ($42 and $52 in 2020))	154		116		316		144
Unrealized exchange gains (losses) on the translation of financial statements to the presentation currency	73		(4,255)		1,131		(11,855)
Unrealized exchange gains (losses) on the translation of debt designated as a hedge of net investments in foreign operations	3,355		6,828		4,780		(2,848)
	3,579		2,540		6,235		(14,989)
Items that will not subsequently be reclassified to net loss:
Remeasurements of long-term employee benefit obligations (net of income tax of $274 and $2,650 respectively for the quarter and six-month period ($2,063 and $2,875 in 2020))	(759)		(5,720)		7,350		(7,974)
Total other comprehensive income (loss)	2,820		(3,180)		13,585		(22,963)
Comprehensive loss	(17,433)		(27,349)		(6,455)		(53,873)

UNI-SELECT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

								Attributable to shareholders
(In thousands of US dollars, unaudited)		Share capital		Contributed surplus		Equity component of the convertible debentures		Retained earnings (loss)		Accumulated other comprehensive loss		Total equity
Balance, December 31, 2019		100,244		6,724		8,232		418,624		(26,830)		506,994
Net loss		-		-		-		(30,910)		-		(30,910)
Other comprehensive loss		-		-		-		(7,974)		(14,989)		(22,963)
Comprehensive loss		-		-		-		(38,884)		(14,989)		(53,873)
Contributions by and distributions to shareholders:
Dividends		-		-		-		(2,923)		-		(2,923)
Stock-based compensation		-		1,199		-		-		-		1,199
		-		1,199		-		(2,923)		-		(1,724)
Balance, June 30, 2020		100,244		7,923		8,232		376,817		(41,819)		451,397
Balance, December 31, 2020		100,244		8,404		8,232		378,196		(21,021)		474,055
Net loss		-		-		-		(20,040)		-		(20,040)
Other comprehensive income		-		-		-		7,350		6,235		13,585
Comprehensive income (loss)		-		-		-		(12,690)		6,235		(6,455)
Contributions by and distributions to shareholders:
Stock-based compensation		-		256		-		-		-		256
Balance, June 30, 2021		100,244		8,660		8,232		365,506		(14,786)		467,856

UNI-SELECT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars, unaudited)	Quarters ended June 30,				Six-month periods ended June 30,
	2021		2020		2021		2020
OPERATING ACTIVITIES
Net loss	(20,253)		(24,169)		(20,040)		(30,910)
Non-cash items:
Special items and other	33,649		17,515		37,075		19,221
Depreciation and amortization	15,301		15,895		30,672		32,489
Finance costs, net	8,884		12,398		17,762		19,500
Income tax recovery	(3,444)		(6,798)		(3,150)		(8,673)
Amortization and reserves related to incentives granted to customers	3,921		3,966		8,601		9,735
Other non-cash items	1,071		1,519		1,892		1,799
Changes in working capital items	15,020		21,574		(11,881)		(6,217)
Interest paid	(9,611)		(8,219)		(16,517)		(13,561)
Income taxes recovered (paid)	(1,256)		1,196		(1,672)		(1,185)
Cash flows from operating activities	43,282		34,877		42,742		22,198
INVESTING ACTIVITIES
Business acquisition	-		-		-		(4,482)
Business disposal	-		-		-		258
Net balance of purchase price	-		55		(58)		41
Cash held in escrow	-		747		-		747
Advances to merchant members and incentives granted to customers	(2,465)		(877)		(7,152)		(4,322)
Reimbursement of advances to merchant members	3,040		536		3,756		1,392
Acquisitions of property and equipment	(2,166)		(1,248)		(3,386)		(3,806)
Proceeds from disposal of property and equipment	319		289		565		420
Acquisitions and development of intangible assets	(978)		(247)		(1,652)		(751)
Other provisions paid	(36)		(131)		(252)		(188)
Cash flows used in investing activities	(2,286)		(876)		(8,179)		(10,691)
FINANCING ACTIVITIES
Increase in long-term debt	36,221		507,999		39,014		542,960
Repayment of long-term debt	(80,495)		(524,623)		(95,617)		(542,253)
Net increase (decrease) in merchant members' deposits in the guarantee fund	92		226		(346)		51
Dividends paid	-		(2,786)		-		(5,803)
Cash flows used in financing activities	(44,182)		(19,184)		(56,949)		(5,045)
Effects of fluctuations in exchange rates on cash	125		372		418		(1,230)
Net increase (decrease) in cash	(3,061)		15,189		(21,968)		5,232
Cash, beginning of period	35,472		25,751		54,379		35,708
Cash, end of period	32,411		40,940		32,411		40,940

UNI-SELECT INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of US dollars, unaudited)	June 30,		Dec. 31,
	2021		2020
ASSETS
Current assets:
Cash	32,411		54,379
Cash held in escrow	1,063		1,475
Trade and other receivables	202,446		188,808
Income taxes receivable	2,130		2,025
Inventory	352,221		368,992
Prepaid expenses	10,399		9,520
Total current assets	600,670		625,199
Investments and advances to merchant members	25,524		27,106
Property and equipment	148,091		155,071
Intangible assets	181,289		186,863
Goodwill	343,699		340,328
Deferred tax assets	38,435		40,705
TOTAL ASSETS	1,337,708		1,375,272
LIABILITIES
Current liabilities:
Trade and other payables	334,134		313,600
Balance of purchase price, net	1,394		1,796
Provision for restructuring charges	2,058		3,246
Income taxes payable	3,703		8,359
Current portion of long-term debt and merchant members' deposits in the guarantee fund	27,862		28,406
Derivative financial instruments	2,545		4,579
Total current liabilities	371,696		359,986
Long-term employee benefit obligations	25,623		28,337
Long-term debt	352,929		396,289
Convertible debentures	91,155		87,728
Merchant members' deposits in the guarantee fund	5,862		6,041
Other provisions	1,453		1,395
Deferred tax liabilities	21,134		21,441
TOTAL LIABILITIES	869,852		901,217
TOTAL EQUITY	467,856		474,055
TOTAL LIABILITIES AND EQUITY	1,337,708		1,375,272

 

SOURCE Uni-Select Inc.

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