On the strength of the good results at the end of 2022, announced on Friday, the distributor of automotive products Uni-Select is reviving its growth ambitions despite the challenges of the economic situation.
“A watershed moment began last year as the business gradually positioned itself for growth, with strategic acquisitions in Canada and the opening of new stores in the UK,” said Brian McManus, President Executive and Chief Executive Officer of Uni-Select, in his comments on the fourth quarter 2022 results.
“Although we expect headwinds [en 2023]we remain convinced that the momentum started will allow us to increase our profits [d’exploitation et net par action] compared to 2022,” continues McManus.
Also, “our solid financial situation allows us to actively seek acquisition opportunities in order to further stimulate our growth”.
In its results for the fourth quarter of 2022, ended December 31, Uni-Select posted revenues of US$424.8 million, up 6.1% year-on-year.
Its operating profit (EBITDA) amounted to 35.1 million US, up 12.1% year-on-year, while net profit reached 12.06 million US, a significant rebound of 33% on a year.
As a bonus to its balance sheet, Uni-Select generated US$40.3 million in free cash flow during its fourth quarter of 2022. This is twice as much as the comparable quarter a year earlier.
On this momentum, Uni-Select ended its 2022 financial year with annual revenues up 7.1%, at 1.73 billion US.
Operating profit, at US$159.6 million, rose 73% year-on-year, which propelled net profit to a considerable rebound to US65 million, well ahead of the anemic US$895,000 that had was counted a year earlier.
Positive market reactions
On the stock market, investors signaled their satisfaction with Uni-Select’s latest results by pushing the value of its shares (UNS) up 7% to $43.50 in early trading on Friday at the Toronto Stock Exchange.
They ended the day up moderately by 3.1%, at $41.86, which is equivalent to a total market value of 1.83 billion for Uni-Select.
According to analyst Benoit Poirier, at Desjardins Capital Markets in Montreal, “Uni-Select announced fourth quarter results that exceeded expectations, with impressive free cash flow generation”.
“These results reinforce my bullish position towards UNS in the stock market. In addition, these results justify remaining on the lookout for strategic acquisitions as the company’s balance sheet position strengthens,” said Mr. Poirier in a note to investors.
“Although Uni-Select’s management did not provide a debt target, I believe that a transaction of around US$300 million would be reasonable while maintaining a healthy balance sheet. »
At National Bank Financial, Montreal analyst Zachary Evershed noted in his note to investors that “with another strong quarter, and continued tight working capital management, I am very optimistic about further business improvements at Uni-Select”.
“In preview for 2023, underlines Mr. Evershed, the management of Uni-Select has more or less the same objectives: to increase profitability despite the continuous pressure of cost inflation by emphasizing organic growth. [NDLR : activités existantes], improving operating efficiency and realizing the synergies of recent acquisitions. »
Among the opinions of analysts identified by the stock market information agency Refinitiv, there are four recommendations to buy and another to “hold” Uni-Select shares, but none to sell.
As for their average target price a year from now, it now sits at $50 per share, up $2 from where it was three months ago.