Uni-Select renews its growth ambitions

The shareholders of the distributor of automotive repair products Uni-Select had their best day on the stock market in a year on Friday with the publication of better-than-expected 2021 year-end results among analysts.

Martin Vallieres
The Press

Quarterly and annual revenue up 9%, operating profit up more than 40%, cash flow over $114 million and debt reduced to four-year-old levels.

Clearly, this cocktail of good results sparked a new burst of optimism among Uni-Select’s stock market investors who still doubted the outcome of its recovery plan launched three years ago.

On Friday, shortly after the morning release of its 2021 fiscal year-end quarterly results, Uni-Select shares jumped 22%, or $5, to $27.75 on the Toronto Stock Exchange. It was a new high in stock market value in four years, since February 2018.

At the close of trading, Uni-Select shares were trading at $25.96, still up $3.25 or 14% from Thursday’s close. It is also less than 25 cents per share from the one-year high that was set in mid-December, before the new bearish episode in the stock market.

“We ended the year on a very positive note with revenues up almost 10% in 2021 compared to the previous year, and profitability also higher than in 2020 and before the pandemic, in 2019. commented Brian McManus, Executive Chairman and CEO of Uni-Select, during the analyst conference call.

“In 2021, we generated cash flow of US$114 million which we used for strategic investments in the development of the business, as well as to reduce our net debt to its lowest level since 2017”, underlined Brian McManus .

“With this improvement in our balance sheet, we can continue to invest in operational improvements and capital expenditures across the business,” he continued. We may also begin to seek strategic acquisition opportunities to expand and consolidate our market position in all of our business segments. »

Analysts satisfied

Among the analysts at Desjardins Capital Markets, Benoit Poirier said he was “very satisfied with the solid performance of profit margins in all its business segments in the fourth quarter”, as well as with its “impressive free cash flow generation which opens the door to strategic acquisitions”.

“These results further strengthen my bullish position on the valuation of Uni-Select shares,” said the Desjardins analyst in a note to his client-investors.

At National Bank Financial, analyst Zachary Evershed also considers that “this major overrun of earnings forecasts at Uni-Select lays the foundations for corporate management that is beginning to turn to strategic acquisition opportunities. It also represents the long-awaited shift from recovery to growth in Uni-Select’s business priorities”.

As for the business outlook in 2022?

“We remain cautiously optimistic as we continue to face headwinds from disruptions to our supply chains as well as inflationary pressures and labor availability,” Brian McManus replied to questions. of analysts.

“Based on what we are seeing now, we expect modest revenue improvement in 2022, but continued growth in operating profit and earnings per share. »