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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.
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
Industry Outlook
4
5
SALES OF NEW VEHICLES & TOTAL REGISTRATIONS
8000
9000
10000
11000
12000
13000
14000
15000
16000
17000
18000
2005 2006 2007 2008 2009226000
228000
230000
232000
234000
236000
238000
240000
242000
244000
new vehicules sales
total fleet
Source AAIA Factbook 2011
New vehicle sales
(in thousands)Total fleet
(in thousands) New vehicles sales:2009:Still depressed vehicles sales
2010:Q1 2010 vs Q1 2009: +20%Total Fleet:
2009:Total light vehicles decreased by 0.2%First time scappage rate higher than new vehicles sales
6
VEHICLES IN OPERATION
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
2005 2007 2009
cars
light trucks
Source AAIA Factbook 2011Lang Report April 2010
Years
2009:Average age of fleet:10,2 yearsDomestic cars: 11,9 yearsFNP: 8,9 years
2010 E: Total Fleet: 10.8 yearsDomestic cars: 12,3 yearsFNP: 9 years
7
FOREIGN NAMEPLATE
Foreign Nameplate New vehicles sales(in % of total sales)
4549
5356
0
10
20
30
40
50
60
2006 2007 2008 2009
Increasing population Foreign Nameplate:
56 % of all new vehicles sold in 2009
Source: Lang Aftermarket insight issue 215
8
FOREIGN NAMEPLATE
Foreign Nameplate5-10 year old
( in % of Fleet)
3033
41
51
0
10
20
30
40
50
60
2004 2008 2012* 2016*
FNp is poised to enter aftermarket sweet spot
Lang Aftermarket insight issue 215 April 2010
9
DEALERS
Dealerships' Share of Automotive Aftermarket Sales, 2000-2012
28,1%
33,0% 32,9%
30,7%31,3%
32,5%
28,8%29,6%
32,3%31,9%
30,1%
28,3% 28,1%
25,0%
26,5%
28,0%
29,5%
31,0%
32,5%
34,0%
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 providerEvery dealership closing should provide $2M
in aftermarket parts & serviceDealers are targeting non warranty workSome of the closed dealers are converting to
used-car operations
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
11
CONSUMER BEHAVIOR
Automotive Aftermarket segmentation
$0
$20 000$40 000
$60 000$80 000
$100 000$120 000
$140 000$160 000
$180 000
2002 2007 2008 2009 2010* 2011* 2012*
Total DIFM Professional SalesDo-It-Yourself (DIY) Sales
CAGR (2007/2012):DIFM: 2.1%DIY: 1.4%
Source: AAIA Factbook 2011
12Source: Consumer Reports June 2010
CONSUMER BEHAVIORCONSUMER BEHAVIOR
13
CONSUMER BEHAVIOR
14
CONSUMER BEHAVIOR
Source: J.D.Power & Associates 2009
Canadian Customer Commitment Index study
Overall Service Experience Satisfaction Index( based on 1000 point scale)
700 720 740 760 780 800 820 840 860 880
Independent garage/repair shop:Acura dealers
Industry AverageToyota dealersHonda dealersSuzuki dealers
Volkwagen dealersGM dealers
Ford dealersChrysler dealers
Kia dealersSubaru dealers
BMW dealersSaturn/SAAB dealers
Mercedes dealersNissan/Infiniti dealers
Mazda dealersVolvo dealers
15
CONSUMER BEHAVIOR
Miles Driven (12 Month Moving Average) vs Gas Prices
238 000
240 000
242 000
244 000
246 000
248 000
250 000
252 000
Dec
2005
J
an Feb
Mar
chAp
rilM
ayJu
ne July
Aug
Sept
Oct
Nov
Dec
2006
J
an Feb
Mar
chAp
rilM
ayJu
ne July
Aug
Sept
Oct
Nov
Dec
2007
J
an Feb
Mar
chAp
rilM
ayJu
ne July
Aug
Sept
Oct
Nov
Dec
2008
J
an Feb
Mar
chAp
rilM
ayJu
ne July
Aug
Sept
Oct
Nov
Dec
2009
J
an Feb
Mar
chAp
rilM
ayJu
ne July
Aug
Sept
Oct
Nov
Dec
2010
J
an Feb
Mar
ch
Mill
ions
of M
iles
$0,00
$0,50
$1,00
$1,50
$2,00
$2,50
$3,00
$3,50
$4,00
$4,50
Dolla
rs
Miles Driven Gas Prices
Gas prices stabilized
Year end prediction : increase of 0.3% in miles driven
Source AAIA industry indicators May 2010
16
CONSUMER BEHAVIOR
Hybrid:– Represent 0,67% 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
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)
18
SIZE OF AUTOMOTIVE AFTERMARKET USA
0
25000
50000
75000
$ Millions DIFMDIY
DIFM 53478 53326 53018 55213 57197 59339DIY 28073 28020 27566 28269 29134 30076
2007 2008 2009 2010 E 2011E 2012E
Source: Factbook AAIA 2011DIY estimated at Warehouse pricing
19
TOOLS & EQUIPMENT
Tool and Equipment Aftermarket Sales(Billions of Dollars)
$9,04
$7,83
$8,88
$7,66
$9,03$8,70
$8,38$8,08
$9,22$9,55
$6,0
$6,5
$7,0
$7,5
$8,0
$8,5
$9,0
$9,5
$10,0
2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011*
2009: first drop in sales in the past 7 years
Forecast: increases in years to come
AAIA Factbook 2011
20
CONCLUSION
Growth Rate of the U.S. Motor Vehicle Aftermarket(Percent Change from Previous Year)
3,9%3,5%
3,0%3,5%
0,7%
-2,4%
3,8%3,4% 3,6%
1,8%
0%
3,9%
5,6%
2,0%
5,6%4,5%
2,7% 3,1%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2000
2001
2002
CAGR('97-0
2)
2002
2003
2004
2005
2006
2007
CAGR('02-0
7)
2007
2008
2009
2010
*
2011
*
2012
*CAGR('0
7-12)*
The aftermarket is growing
Source: AAIA Factbook 2011
21
AFTERMARKET OUTLOOK FACTS
PositiveAverage age of vehicles Miles driven improvingDealership closingsNew vehicle sales declinedShift from DIY to DIFM
NegativeLow consumer spendingVehicles made betterGreater competition from OE dealers
Challenges:Current U.S. currency fluctuations affecting our American results ERP implementationHealth of supplier base
22
CURRENT FOOTPRINT
DC Stores
23
UNI-SELECT CUSTOMERS (CANADA)
24
UNI-SELECT CUSTOMERS (USA)
25
MAX DULL
• Vice president & General Manager • Over 30 years in Automotive• Dana• Clevite Engine Parts• Broad industry involvement
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
27
WILLI ALEXANDER
• Executive Vice President Corporate Stores• 30 Years experience in Automotive• Parts Depot• Chief Autoparts• Penzoil• AWDA Chairman
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
29
Thank you
Q1 2010 FINANCIALS
31
MAJOR VARIANCESSales:
– 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
March 2010
March2009
Sales 306,964 350,844
Adjusted EBITDA 15,815 20,709
Adjusted Earnings 8,385 8,994
Q1 2010 FINANCIAL HIGHLIGHTS
32
2010 FINANCIALS
IMPACT OF VARIOUS 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
33
PART OF OUR CULTURE !
3434
EVA VS STOCK PRICE
35
STRATEGIC PLAN 2008-2012
Execution
SystemsCulture
GrowthCapitalize on growth engines to maximize value for shareholders
Improve execution capabilities by optimizing processes and providing necessary tools and training
Foster the entrepreneurial spirit and allow employees to optimize their contribution to the company’s success
Provide more efficient and structured information systems and reporting tools
36
InvolvementInnovationExcellencePartnership
3737
VALUE CREATION AT UNI-SELECT
Entrepreneurial spiritCulture of executionDelegation of authority Reward performance
CULTURE
3838
Training– Operations
• Sales• Margin• Expenses• Assets
– Corporate• Capital structure • Interest expenses• Income tax expenses
VALUE CREATION AT UNI-SELECT
ROA
ROE
CULTURE
39
NOPAT
Ops MarginEBIT
ROA
Revenue
Assets Turn Spread Leverage ROE
Avg. Net Assets372 730
Interest before taxes
Interest after taxes Debt cost
Debt
D/E
Equity
M/E10,32%
Spread w. ROA Minority
Minority Cost of Minority
15%
OPERATIONS
CORPORATE
EXAMPLE
4040
VALUE CREATION AT UNI-SÉLECT
MAAAPs: Acquisitions criteria:
Compatible and complimentary with existing networkCustomer driven, network comprising mainly loyal entrepreneursGood Know-how by Uni-Select of the target’s business processesProfessional management teamCompatibility with Uni-Select’s supplier baseAccretive day oneMultiple paid is less than Uni-Select
GROWTH
ROI 15% within 12 months
$100 Million / year
4141
VALUE CREATION AT UNI-SÉLECT
MAAAPs: Capture 5 types of synergies:
– Volume rebates– Distribution network– Marketing programs– Systems – Back office
We do not pay for our own synergies
GROWTH
4242
VALUE CREATION AT UNI-SELECT
Organic growth:• Develop new distribution channel such as:
• E-Fulfillment
• Increase customer loyalty:• National accounts• Fleet business
• Leverage our warehouses:• Foreign Name Plate• Entry level Auto Extra
GROWTH
4343
Keep focus on independent jobbers:Coaching, training & benchmarkingPromote drop ship program
• Return on investment is unlimited
Reduce the asset base:Improve collection rate; DSOReduce excess inventory
• Improve inventory turnsExtend payment term with suppliers
• Vendor financing program up to 35M$Risk management program
Diversify products sourcingImprove gross marginLeverage our supplier relations
VALUE CREATION AT UNI-SELECT
EXÉCUTION
4444
Integrated Management System:Benefits: 50% from managing revenues
Improve how we manage our prices:Velocity pricingSimpler pricing structureFlexibility to regional demands
Increase the visibility of our products:Reduce risk of loosing sales More accurate customer informationMaximize use of our distribution network
VALUE CREATION AT UNI-SELECTSYSTEMS
4545
Integrated Management SystemBenefits: 50% from reducing costs
Improve how we manage information:Central DatabaseLess maintenance issues Business model alignmentImplementation of shared services and expand EDI
Improve inventory management:More accurate inventory informationImplement more rigor in business processesHave better product availability for our customers
VALUE CREATION AT UNI-SÉLECTSYSTEMS
Investment $45M, $15M yearly savings by 2015
4646
IMPACTS
EXAMPLES
INITIATIVES IMPROVEMENT IMPACT on ROA in %
Inventory reduction 10 M$ 0.16%
Reduction on A/R 5 M$ 0.08%
Increase of A/P 10 M$ 0.07%
47
GOAL ROE: 15%