UNI-SELECT BE A PART OF IT. Uni-Select TSX: UNS August 8, 2013

Transcription

1 UNI-SELECT Uni-Select TSX: UNS August 8, 2013

2 Forward-Looking Statements This presentation may contain forward-looking information concerning Uni-Select s objectives, projections, estimates, expectations or forecasts based on management s best knowledge of current events, including statistics provided by third-party sources, and actions that Uni-Select may take in the future. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements, including competition, consumers purchasing habits, car population trends, general economic conditions and Uni-Select s financing capabilities. Refer to Uni-Select s Annual Report, Management Information Circular, Annual Information Form and other filings on SEDAR for further information on risks and uncertainties that could cause actual results to differ materially from forwardlooking statements. Management assumes no obligation to publicly update or revise these forwardlooking statements as a result of new information, future events or other changes. 2

3 At a Glance FOUNDED IN 1968 INITIAL PUBLIC OFFERING IN 1985 MAJOR DISTRIBUTOR IN NORTH AMERICA (PARTS, EQUIPMENT, TOOLS, ACCESSORIES) LEADER IN THE CANADIAN MARKET RANKED 6 TH IN NORTH AMERICA LEAD DISTRIBUTOR OF PAINT AND RELATED PRODUCTS IN NORTH AMERICA 3

4 At a Glance 5,800 EMPLOYEES INITIAL PUBLIC 56 DISTRIBUTION CENTRES OFFERING: 1985 (TSX: UNS) 408 CORPORATE STORES 3,200 INDEPENDENT DISTRIBUTORS 1,200 UNDER BANNERS 5,000 REPAIR SHOPS USING OUR PROGRAMS 400,000 PARTS IN INVENTORY 4

5 Industry Structure MANUFACTURERS NATIONAL BRANDS UNI-SELECT DISTRIBUTION CENTRES (400,000 sku s available regionally) DIRECT SHIPMENTS STORES AND INDEPENDENT JOBBERS (15,000 sku s) INSTALLERS AND BODY SHOPS (200 sku s) 5

6 North American Aftermarket Leaders In billions of $, unless otherwise noted RANKING COMPANY 2012 RETAIL COMMERCIAL 1. Autozone $8.6 85% 15% 2. Genuine Parts (NAPA) $6.3 35% 65% 3. Advance Auto Parts $6.2 62% 38% 4. O Reilly $6.2 59% 41% 5. General Parts (Carquest) (a) $3.0 15% 85% 6. Uni-Select $1.8 10% 90% 7. Pep Boys (a) (b) $ % 0% 8. Fisher Auto Parts (a) $ % 75% 9. Auto Wares Group (a) $ % 65% 10. Replacement Parts (a) $ % 85% (a) Estimated (b) Merchandise only 6

7 Financial Highlights 2013 Six-Month Period (From January 1 st to June 30, 2013) In millions US$ 922 Sales 898 Adjusted EBITDA Adjusted Earnings * The results from 2012 were restated to take into account the change in accounting policies as per IFRS 11 joint Arrangements and as per the amended IAS 19 Employee benefits. 7

8 Financial Highlights nd Quarter In millions US$ Sales Adjusted EBITDA Adjusted Earnings * The results from 2012 were restated to take into account the change in accounting policies as per IFRS 11 joint Arrangements and as per the amended IAS 19 Employee benefits. 8

9 2nd Quarter Highlights Sales flat year-over-year Positive organic growth in the US of 2.7% Resulting from better execution combined with improved service level permitted by a more stable ERP system environment Negative organic growth of 2.5% in Canada Decrease of 1.6% in sales related to store closures Adjusted EBITDA margin at 6.2% Margin decline mainly attributable to lower gross profits Negative distribution channel mix Unexpected maintenance costs to stabilize the ERP system Decline partly offset by savings derived from the Action Plan Non-profitable locations closed Headcount reductions Delivery expenses reduction 9

10 Optimization Initiatives (August 2012) Highlights Distribution network rationalization and optimization Revision of operational structure Reduction of administrative expenses 24 corporate stores closed 1 distribution centre closed 5 distribution centres converted to hub warehouses Approximately 200 support positions eliminated 10

11 Optimization Plan (August 2012) Financial Executive Summary (in millions of US$) Announced Actual Cost Reduction $ 20.0 $ 19.8 Restructuring charges and write-off of assets $ 22.0 $ 15.6 Inventory Reduction $ 24.0 $ 6.0 Short-term cost reduction materialized but mostly offset by the decrease in sales recorded in the past three quarters. 11

12 Action Plan - Highlights On April 16, 2013, Uni-Select announced: Change in the leadership of US automotive operations Formal review of strategic alternatives centered on US automotive operations On July 11, 2013, Uni-Select announced: Completion of its formal strategic review process Optimization of its distribution network in the U.S. (Action Plan) On July 31, 2013, Uni-Select announced: Appointment of a new President and COO of US automotive operations The adopted strategy will allow Uni-Select to improve efficiency and profitability by increasing its focus on markets with growth opportunities and exit areas with less potential. 12

13 Action Plan Highlights Store Closures Closures, divestitures or consolidations involving 48 stores to exit areas with less potential 11 stores closed in Q stores to be closed in Q stores to be sold by end of Q4 13

14 Action Plan Highlights Rightsizing of the distribution network Optimization of the network with focus on select large distribution centres 1 DC closed in Q DC to be closed in Q DCs to be closed in the next 18 months 1 DC to be opened in Q DC to be opened in the next 18 months 14

15 Network Model DC Model Daily overnight stock orders from all DCs... 9 RDCs & 12 LDCs All lines kept in RDCs (essential and non-essential) Essential lines only in LDCs LDCs providing same day availability of must have items in urban markets. 15

16 Network Model - Deployment Strategy Improvements to our modeling tools will provide much more accuracy when modeling DCs for coverage We are improving our modeling and specific line definition to better manage specific categories Focus on inventory levels based on forecasted sales by line by DC will be emphasized We are still working on best First To Market coverage using VIO data and best experience to deploy late model coverage items 16

17 Action Plan Highlights Operational Improvements $16 million investment in 2 new DCs and 12 DCs to improve efficiency Process improvements focused on increasing fill rates and improving gross margins Headcount reductions Expense reductions 17

18 Action Plan Financial Executive Summary (in millions of US$) Total Cost Reduction $ 10.0 $ 15.0 $ 5.0 $ 30.0 Restructuring charges and write-off of assets $ 40.0 $ 5.0 $ - $ Recorded As incurred Inventory Reduction $ 8.0 $ 22.0 $ 10.0 $ 40.0 Capex $ 7.0 $ 9.0 $ - $ Results in cash outlay of $13 million 18

19 Strategic Plan OUR VISION: Be the preferred distributor in the automotive aftermarket and create value for customers, employees, suppliers and shareholders. ENHANCE CUSTOMER SERVICE By supporting our independent jobbers, installers and body shops with successful banner programs and efficient technological programs. INCREASE SALES By diversifying our distribution channels, capitalizing on sales to major accounts, encouraging cross-selling in our two distribution sectors and recruiting new clients. OPTIMIZE OPERATIONS By increasing efficiency in the distribution network, product procurement and inventory use. IMPROVE OUR OPERATING MARGIN By offering products designed to meet the needs of the market, making the best possible use of our systems and reducing our costs. ENGAGE OUR PEOPLE By recognizing talent and initiative and providing employees with the best training tools 19

20 2013 Focus ACTION PLAN IMPLEMENTATION - MARGIN IMPROVEMENT INITIAL PUBLIC - COST CONTROL OFFERING: 1985 (TSX: UNS) ORGANIC SALES GROWTH DEBT REDUCTION FINALIZE ERP DEPLOYMENT 20

21 ERP Deployment Completion 2013 We completed 5 Waves (6 warehouses per wave) DC Stores Paused for Refinements and Performance Improvements Wave 6.0 September 1 st Florida both Stores and DC s Wave 6.1 December 1 st Moorestown Tonawanda Remaining Stores 21

22 UNI-SELECT Aftermarket Industry Data 22

23 Size of the Aftermarket in North America in $ billions F 2014F 2015F At warehouse distributor price, excluding labor and tires Source: AAIA Digital Automotive Aftermarket Factbook 2013 and AIA 2012 Outlook Study 23

24 U.S. New Vehicle Registration in percentage Domestic Import Source: AAIA Digital Automotive Aftermarket Factbook 2013 and Auto Sales Markets Data Center WallStreet Journal 24

25 North American Aftermarket Segmentation in percentage DIFM DIY F 2014F 2015F At warehouse distributor price, excluding labor and tires Source: AAIA Digital Automotive Aftermarket Factbook 2013 and AIA 2012 Outlook Study 25

26 Average Age of Vehicles in North America in years Source: AAIA Digital Automotive Aftermarket Factbook 2013 and R.L. Polk & Co. 26

27 Dealership Share of Aftermarket in the U.S. (Total) in years F 2014F 2015F Source: AAIA Digital Automotive Aftermarket Factbook

28 Gasoline Price In $ per gallon Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Nominal Price Real Price Source: 28

29 Length of Time US Consumers Keep Cars Source: R.L. Polk & Co. 29

30 Number of vehicles sold In thousands 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Sweet spot: Vehicles from 5 to 13 years Sources: Research and Innovative Technology Administration, Bureau of Transportation Statistics; Automotive Aftermarket Industry Association; LMC. 30

31 Estimated US PBE Jobbers Revenue & Market Share In millions of US$ $500 $400 $300 $200 REVENUES Reg/Local PBE Jobbers 52% MARKET SHARE UNS 17% ORLY 4% NAPA 3% LKQ 5% $100 $- $20-$40 $3-$5 NCS 8% S-W Stores 11% 31