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UNS presentation June 2010
- 1. Corporate Presentation to Investors Uni-Select (TSX: UNS) June 2010
- 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 forward-looking statements. Management assumes no obligation to publicly update or revise these forward-looking statements as a result of new information, future events or other changes. 2
- 3. AGENDA • June 16: – Industry update by Richard Roy – Value Creator by Denis Mathieu • June 17: – 6:45 AM : Beck/Arnley presentation by Max Dull ( Nashville Tn) – 8:15AM: Beck/Arnley Warehouse tour – 12:30 PM: Warehouses/Major Accounts presentation by Gary O’Connor ( Pakersburg OH) – 5:15 PM: Corporate stores presentation by Willi Alexander ( Milford , Ma) followed by warehouse tour – 6:15 PM: Consumer Auto Parts store tour ( Whitinsville, Ma) – 8:00 PM : Departure for Montreal 3
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- 5. SALES OF NEWVEHICLES & TOTAL REGISTRATIONS New vehicle sales Total fleet (in thousands) (in thousands) New vehicles sales: 18000 244000 2009: 17000 242000 Still depressed vehicles sales 16000 2010: 240000 Q1 2010 vs Q1 2009: +20% 15000 238000 Total Fleet: 14000 2009: 236000 13000 Total light vehicles decreased by 0.2% 234000 First time scappage rate higher than new 12000 232000 vehicles sales 11000 230000 10000 9000 228000 new vehicules sales 8000 226000 2005 2006 2007 2008 2009 total fleet Source AAIA Factbook 2011 5
- 6. VEHICLES IN OPERATION Years 2009: 14,0 Average age of fleet:10,2 years Domestic cars: 11,9 years 12,0 FNP: 8,9 years 10,0 2010 E: Total Fleet: 10.8 years 8,0 Domestic cars: 12,3 years 6,0 FNP: 9 years 4,0 cars 2,0 light trucks 0,0 2005 2007 2009 Source AAIA Factbook 2011 6 Lang Report April 2010
- 7. FOREIGN NAMEPLATE Foreign Nameplate New vehicles sales (in % of total sales) Increasing population 60 56 Foreign Nameplate: 53 49 50 45 56 % of all new vehicles sold in 2009 40 30 20 10 0 2006 2007 2008 2009 7 Source: Lang Aftermarket insight issue 215
- 8. FOREIGN NAMEPLATE Foreign Nameplate 5-10 year old ( in % of Fleet) 60 51 50 41 40 33 30 30 FNp is poised to enter aftermarket sweet spot 20 10 0 2004 2008 2012* 2016* Lang Aftermarket insight issue 215 April 2010 8
- 9. DEALERS Dealerships' Share of Automotive Aftermarket Sales, 2000-2012 34,0% 33,0% 32,9% 32,5% 32,3% 32,5% 31,9% 31,3% 30,7% 31,0% 30,1% 29,6% 29,5% 28,8% 28,3% 28,1% 28,1% 28,0% 26,5% 25,0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2010: 18100 dealers ( 2800 closed in 2008) Transfer of maintenance to independent service provider Every dealership closing should provide $2M in aftermarket parts & service Dealers are targeting non warranty work Some of the closed dealers are converting to used-car operations 9 Source: AAIA Factbook 2011
- 10. CONSUMER BEHAVIOR By 2012, Americans over 48 years will be the fastest growing age group Increased vehicles sophistication & growing Foreign Nameplate vehicle population Do It For Me (DIFM) segment growing 10
- 11. CONSUMER BEHAVIOR Automotive Aftermarket segmentation $180 000 $160 000 $140 000 $120 000 $100 000 Total DIFM Professional Sales $80 000 Do-It-Yourself (DIY) Sales $60 000 $40 000 $20 000 $0 2002 2007 2008 2009 2010* 2011* 2012* CAGR (2007/2012): DIFM: 2.1% DIY: 1.4% 11 Source: AAIA Factbook 2011
- 12. CONSUMER BEHAVIOR Source: ConsumerReports June 2010 12
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- 14. CONSUMER BEHAVIOR Overall Service Experience Satisfaction Index ( based on 1000 point scale) Volvo dealers Mazda dealers Nissan/Infiniti dealers Mercedes dealers Saturn/SAAB dealers BMW dealers Subaru dealers Kia dealers Chrysler dealers Ford dealers GM dealers Volkwagen dealers Suzuki dealers Honda dealers Toyota dealers Industry Average Acura dealers Independent garage/repair shop: 700 720 740 760 780 800 820 840 860 880 Source: J.D.Power & Associates 2009 14 Canadian Customer Commitment Index study
- 15. CONSUMER BEHAVIOR Miles Driven (12 Month Moving Average) vs Gas Prices 252 000 $4,50 $4,00 250 000 $3,50 248 000 $3,00 Millions of Miles 246 000 $2,50 Gas prices stabilized Dollars $2,00 244 000 $1,50 Year end prediction : 242 000 $1,00 increase of 0.3% in 240 000 $0,50 miles driven 238 000 $0,00 May May May May May Aug Aug Aug Aug Aug h h h h h h Nov July Nov July Nov Nov July July Nov July Feb Feb Feb Feb Feb April Feb April April April April Oct Oct Oct Oct Oct Jan Jan Jan Jan Jan Jan Sept Sept Sept Sept Sept Dec Dec Dec Dec Dec Dec June June June June June Marc Marc Marc Marc Marc Marc 2009 2010 2005 2006 2007 2008 Miles Driven Gas Prices Source AAIA industry indicators May 2010 15
- 16. CONSUMER BEHAVIOR Hybrid: – Represent0,67% of current Vehicles in operations – 1.4 Million Vehicles in operations – Maintenance needs: • Same as conventional vehicles • + new parts in the future( invertors, batteries) Cash for Clunkers: – 690,114 new vehicles sales • Total light vehicles in operation: 241 Million 16
- 17. CONSUMER BEHAVIOR Private Brands –Automotive Aftermarket: • Product mainly sold under National brands – Retail professional recommendation is key: • Some Consumers still perceive a lesser quality for private brands • Service provider gives warranty on labor and can not afford to repair twice • eg: Some repairs have high labor cost ( Fuel pumps) 17
- 18. SIZE OF AUTOMOTIVE AFTERMARKET USA 75000 50000 $ Millions DIFM 25000 DIY 0 2007 2008 2009 2010 E 2011E 2012E DIFM 53478 53326 53018 55213 57197 59339 DIY 28073 28020 27566 28269 29134 30076 Source: Factbook AAIA 2011 18 DIY estimated at Warehouse pricing
- 19. TOOLS & EQUIPMENT Tool and Equipment Aftermarket Sales (Billions of Dollars) 2009: first drop in sales in the past 7 years $10,0 $9,55 Forecast: increases in years to $9,5 $9,22 $9,03 $9,04 $8,88 come $9,0 $8,70 $8,38 $8,5 $8,08 $7,83 $8,0 $7,66 $7,5 $7,0 $6,5 $6,0 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* AAIA Factbook 2011 19
- 20. CONCLUSION Growth Rate of the U.S. Motor Vehicle Aftermarket (Percent Change from Previous Year) 0% 6% 5,6% 5,6% 4,5% 5% 3,9% 3,9% 3,8% 4% 3,5% 3,5% 3,4% 3,6% 2,7% 3,1% 3,0% 3% 2,0% 1,8% 2% 0,7% 1% 0% * * * ) ) )* -1% 00 01 02 02 03 04 05 06 07 07 08 09 02 07 10 11 12 12 20 20 20 20 20 20 20 20 20 20 20 20 7- 2- 20 20 20 7- (' 9 (' 0 (' 0 -2% R R R AG AG AG C C -2,4% C -3% The aftermarket is growing Source: AAIA Factbook 2011 20
- 21. AFTERMARKET OUTLOOK FACTS Positive Negative Average age of vehicles Low consumer spending Vehicles made better Miles driven improving Greater competition from OE Dealership closings dealers New vehicle sales declined Shift from DIY to DIFM Challenges: Current U.S. currency fluctuations affecting our American results ERP implementation Health of supplier base 21
- 22. CURRENT FOOTPRINT 22 DC Stores
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- 25. MAX DULL • Vice president & General Manager • Over 30 years in Automotive • Dana • Clevite Engine Parts • Broad industry involvement 25
- 26. GARY O’CONNOR • EXECUTIVE VICE PRESIDENT • 30 YEARS EXPERIENCE IN AUTOMOTIVE • UNI-SELECT CANADA • AFFINIA • DANA BRAKES AND CHASSIS • ECHLIN CANADA • WAGNER CANADA COOPER INDUSTRIES • FRAM 26
- 27. WILLI ALEXANDER • Executive Vice President Corporate Stores • 30 Years experience in Automotive • Parts Depot • Chief Autoparts • Penzoil • AWDA Chairman 27
- 28. SOURCES • AAIA Factbook 2011 • AAIA industry indicators Monthly reports • AAIA News • AAIA SmartBrief • Aftermarket Business • AMN news • BB&T capital market Tony Cristello presentations • Denis Desrosiers Monthly reports • Experian automotive presentations • Lang marketing Monthly and Weekly reports • The Green Sheet 28
- 29. Thank you 29
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- 31. Q1 2010 FINANCIAL HIGHLIGHTS March March 2010 2009 Sales 306,964 350,844 Adjusted EBITDA 15,815 20,709 Adjusted Earnings 8,385 8,994 MAJOR VARIANCES Sales: – Effects of the variation of the CDN dollar had a negative impact of $39M – Organic growth represents 0.6% Adjusted EBITDA: – Pressure on prices and changes in the product offering sold – Additional information systems expenses related to outsourcing of additional support required during ERP implementation 31
- 32. 2010 FINANCIALS IMPACT OFVARIOUS NON-RECURRING ITEMS ON THE 2010 NET EARNINGS Q1 2010 2010 RESULTS Effects of the exchange rate variation between CDN and US currency <$1.0M> <$2.3M> (1) Additional expenses related to the ERP implementation $1.2M before taxes and $5.7M before taxes <$0.8M> <$4.0M> Compensated by: Less non controlling interest expenses vs 2009 $1.0M $3.0M Less income tax expenses due to reorganization $1.0M $4.0M $0.2M $0.7M (1) Based on exchange rate of CDN$1.04 to US$1.00 32
- 33. PART OF OURCULTURE ! 33
- 34. EVA VS STOCKPRICE 34
- 35. STRATEGIC PLAN 2008-2012 Growth Execution Capitalize on growth engines to maximize Improve execution value for capabilities by optimizing shareholders processes and providing necessary tools and training Systems Culture Provide more Foster the entrepreneurial spirit efficient and and allow employees to optimize structured their contribution to the information systems company’s success and reporting tools 35
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- 37. VALUE CREATION CU LT UR E AT UNI-SELECT Entrepreneurial spirit Culture of execution Delegation of authority Reward performance 37
- 38. VALUE CREATION CU LT UR E AT UNI-SELECT Training – Operations • Sales • Margin ROA • Expenses • Assets ROE – Corporate • Capital structure • Interest expenses • Income tax expenses 38
- 39. EXAMPLE NOPAT EBIT Ops Margin OPERATIONS ROA Revenue Assets Turn Spread Leverage ROE Avg. Net Assets 372 730 15% Interest before Interest after taxes taxes Debt cost Debt CORPORATE D/E Equity M/E 10,32% Spread w. ROA Minority Minority Cost of Minority 39
- 40. OW TH VALUE CREATION GR AT UNI-SÉLECT MAAAPs: Acquisitions criteria: Compatible and complimentary with existing network Customer driven, network comprising mainly loyal entrepreneurs Good Know-how by Uni-Select of the target’s business processes Professional management team Compatibility with Uni-Select’s supplier base Accretive day one Multiple paid is less than Uni-Select ROI 15% within 12 months $100 Million / year 40
- 41. OW TH VALUE CREATION GR AT UNI-SÉLECT MAAAPs: Capture 5 types of synergies: – Volume rebates – Distribution network – Marketing programs – Systems – Back office We do not pay for our own synergies 41
- 42. OW TH VALUE CREATION GR AT UNI-SELECT Organic growth: • Develop new distribution channel such as: • E-Fulfillment • Increase customer loyalty: • National accounts • Fleet business • Leverage our warehouses: • Foreign Name Plate • Entry level Auto Extra 42
- 43. EX ÉC UT IO N VALUE CREATION AT UNI-SELECT Keep focus on independent jobbers: Coaching, training & benchmarking Promote drop ship program • Return on investment is unlimited Reduce the asset base: Improve collection rate; DSO Reduce excess inventory • Improve inventory turns Extend payment term with suppliers • Vendor financing program up to 35M$ Risk management program Diversify products sourcing Improve gross margin 43 Leverage our supplier relations
- 44. S VALUE CREATION EM SY ST AT UNI-SELECT Integrated Management System: Benefits: 50% from managing revenues Improve how we manage our prices: Velocity pricing Simpler pricing structure Flexibility to regional demands Increase the visibility of our products: Reduce risk of loosing sales More accurate customer information Maximize use of our distribution network 44
- 45. S VALUE CREATION EM SY ST AT UNI-SÉLECT Integrated Management System Benefits: 50% from reducing costs Improve how we manage information: Central Database Less maintenance issues Business model alignment Implementation of shared services and expand EDI Improve inventory management: More accurate inventory information Implement more rigor in business processes Have better product availability for our customers Investment $45M, $15M yearly savings by 2015 45
- 46. IMPACTS EXAMPLES IMPACT on ROA INITIATIVES IMPROVEMENT in % Inventory reduction 10 M$ 0.16% Reduction on A/R 5 M$ 0.08% Increase of A/P 10 M$ 0.07% 46
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