Karine Vachon - Investor Relations and Communications Manager Richard Roy - President and Chief Executive Officer Denis Mathieu - Executive Vice President, Corporate Services and Chief Financial Officer Henry Buckley - Chief Operating Officer Steve Arndt - President and Chief Operating Officer, FinishMaster Gary O'Connor - President and Chief Operating Officer, Automotive Canada

Leon Aghazarian - National Bank Financial Benoit Poirier - Desjardins Securities Inc. Otto Cheung - GMP Securities Juliane Szeto - RBC Michael Glen - Laurentian Bank Securities Blair Levinsky - Waratah Capital Advisors

Thank you. Welcome to Uni-Select's 2014 fourth quarter and fiscal yearend financial results conference call.

The speakers today will be Richard Roy, President and CEO; and Denis Mathieu, Executive Vice President, Corporate Services and Chief Financial Officer. Also joining me this afternoon are, Henry Buckley, Chief Operating Officer; Steve Arndt, President and COO of FinishMaster; and Gary O'Connor, President and COO, Automotive Canada.

Before we proceed with the presentation, I would like to remind you that certain information discussed during this call may constitute forward-looking information within the meaning of Securities Legislation. Caution should be used in the interpretation of such information.

For more details, please refer to our disclaimer regarding forward-looking information in our most recent Annual Report which will be made available on SEDAR shortly as well as in the press release issued earlier today. I will now turn the call over to Richard Roy, who will provide feedback on last year's achievements and discuss our fiscal 2015 strategy.

Denis Mathieu will then go over some of the financial highlights for the quarter and the full year. After the presentation, we will open up the call to questions.

Richard?

Thank you, Karine, and good afternoon, everyone. Thank you for joining us on such an eventful week for Uni-Select.

Fiscal 2014 and perhaps more importantly the first weeks of the first quarter 2015 were definitively transformational for Uni-Select as we made fundamental structural changes to our business. Not only did we announce Monday the conclusion of an agreement to sell essentially all of the assets of Uni-Select USA and Beck/Arnley Worldparts at a price of approximately $340 million in cash, but we were also able over the past 18 months to measurably improve our profitability and become an overall better performing organization.

I am extremely proud to say today that upon closing of the transaction, Uni-Select will feature a much stronger balance sheet and enhance profitability and an overall better performing portfolio in opportunity-rich markets. Our sales recorded a slight year-over-year decline this year.

It is mainly due to the decrease of the average exchange rate between the U.S. and the Canadian dollars.

This trend alone which further accelerated during the fourth quarter negatively impacted our revenues by nearly $34 million in fiscal 2014. On an organic basis, we delivered a 1.3% growth overall in the fourth quarter, fueled by our various sales initiatives, banner program, enrollment and paint customer recruitment.

This performance was achieved on the heal of a especially tough comp with the 5.5% increase recorded during the fourth quarter of 2013. For the full year, our organic growth reached 1.9%.

If we were to exclude the soon-to-be-divested U.S. auto parts operation consolidated organic growth would have been 6.8% in 2014.

Our U.S. operations experienced a 0.5% growth organically in the quarter and 1.1% for the year.

I am pleased to report that FinishMaster recoded another solid quarter with 9.3% organic growth in 2014 and 9.6% during the fourth quarter. I'm sorry, it's just the reverse.

9.3% for the quarter and 9.6% for the year. Our improved customer onboarding process, new technical training resources, new flexible ordering options and an expanded private label product assortment are attracting several new collision repair centers to Uni-Select.

We are becoming better and better at promoting the attributes that make us so unique. In Canada, we achieved a 3.6% organic growth during the fourth quarter and 4% for the year 2014.

Repair shop conversions to our new banners continued to be very positive, while our jobber development approach continues to bare fruit. Over the past few quarters, Uni-Select's profitability has increased to reach EBITDA and adjusted EBITDA margins that were on track to reach our 7% adjusted EBITDA margin target in 2015.

With Monday's transaction we will be fast-tracking that objective to the mid-7% level. Beyond making operational efficiency gains, the other key component of our long-term growth plan is our ability to grow our sales and take advantage of the sector's projected growth across both sides of the border.

Our focus for fiscal 2015 could not be clearer. We will intensify our sales approach to gain additional organic sales volume, we believe we have great value-added proposition for wholesalers and repair centers as well as for national and regional accounts.

When coupled with an extensive array of branded and private label products, menu-based solutions and a superior customer service, we are convinced that we are a partner of choice in the automotive aftermarket industry. We also intend to pursue our growth through acquisitions and strategic partnerships that enable us to improve our market density as well as our geographic footprint, and expand our profile in the U.S.

paint and Canadian auto parts and paint markets. We are geared with a strong customer-centric approach, a robust distribution network and a solid IT infrastructure.

We are better positioned than ever before to adopt a more systematic and proactive sales approach to increase our market share. We will continue to build on a culture where the competitiveness of our clients and their financial and operational successes are a priority.

This vision begins with the best team. It also stems from strong long-term relationships with our supply partners and robust systems and processes.

I am proud that we have become a more solid and agile business and a more efficient partner to our customers and suppliers. Bottomline, our proactive sales approach, our excellent fill rates and optimal product assortment as well as our focus on acquisitions should continue to fuel a substantial topline growth performance in the quarters ahead.

I would now like to turn the call to our CFO, Denis Mathieu.

Thank you, Richard. Good afternoon, everyone.

Before I take you through some of the key highlights of our financial results, I would like to mention that the French version of the press release issued this morning contain an error in the statement of change in equity for 2013. So please refer to the latest version available on SEDAR.

Sales for the fourth quarter reached $427 million, a 0.4% increase over the fourth quarter last year. EBITDA for the fourth quarter reached $27 million compared to $20 million last year, a 37% increase.

Adjusted EBITDA grew by almost 14% in the quarter to reach $28 million, while our adjusted EBITDA margin increased from 5.8% to 6.5%, marking our 60 consecutive quarter of adjusted EBITDA margin improvement. These improvements were mainly driven by $3 million in savings, realized under the Action Plan and tighter control on expenses.

These positive items were partially offset by an unfavorable distribution channel and customer mix and timing of marketing expenses versus last year. Now, looking at our bottomline, net earnings for the quarter stood at $11 million compared to $10 million last year.

Adjusted earnings for the quarter increased by 1.6% to $13 million, despite a much higher tax burden, representing an adjusted EPS of $0.63 per share compared to $0.62 per share last year. For the 12 months ended December 31, 2014, sales amount to $1,780 million, a slight decreased compared to 2013, which is mainly due to the negative impact of the weaker Canadian dollar and sales loss from planned store closures.

Together, these two items negatively impacted revenue by $71 million. EBITDA for the year reached $105 million compared to $55 million last year, which I'll remind you included $35 million related to the network optimization.

These restructuring charges were reduced by $1.9 million in 2014, due to changes in estimates. Adjusted EBITDA for the year grew by 10% to $111 million, while our adjusted EBITDA margin increased from 5.7% to 6.2% compared to last year.

Net earnings for the year stood at $50 million compared to $21 million last year. Adjusted earnings totaled $55 million or $2.60 per share, a 10% over last year's adjusted earnings per share of $2.37.

Expressed in Canadian currency, adjusted earnings reached CAD2.87 per share versus CAD2.44 per share last year, an increase of 18%. In 2014, we generated $124 million in cash from operating activities compared to $84 million a year ago.

We reduced our debt by $62 million during the year, even after investing or we have invested $19 million net in business acquisition in 2014. It's also worth mention, that all debenture became part of the debt as of December 31, 2014, as we announced at the end of last year, the redemptions on February 1, 2015.

With respect to the transaction announced on Monday, I would like to provide more information on its financial impact. First, the $20 million in after-tax cash outlays, this loss is already included in the estimated $80 million to $100 million of range of after-tax loss.

Also from the selling price of $340 million, after the payment of the portion of the vendor financing program, the transaction cost and taking into account related tax recovery, the corporation will receive a net amount of more than $300 million. Upon closing of the transaction, we expect to reimburse all of our debt.

This will leave us with financial flexibility, enabling us to act quickly to size acquisition opportunity and invest in the organic growth and development of our businesses. Finally, I am happy to report that the Board of Director declared earlier today a quarterly dividend of $0.15 per share payable to shareholders on record on March 31, 2015.

Thank you. And Richard, this concludes my financial review.

Thank you, Denis. As we now move forward on the year ahead, we will continue to put a lot of emphasis on our customer-centric culture as an element of differentiation in the market, and focus on accelerating sales growth across all of our markets.

Our Chief Operating Officer, Henry Buckley, along with his entire team will work on reinforcing customer loyalty, recruiting customers and intensifying enrollment to banner programs, leveraging business opportunities in the paint distribution sector and improving our overall product offering. Acquisitions will also be a part of our growth strategy.

Thanks to our talented team, we will continue to prove to independent wholesalers, installers and collision repair operators that we are their partner of choice, and that we can offer them second-to-none support and helping them grow their business. Let me now conclude by thanking all of our shareholders for their continued support.

We are now ready to answer you question. Operator?

My first question is regarding the growth in the U.S., I mean we saw organic growth, it was at 0.4%. Can you provide us with the split between, I guess, what the parts was and what the FinishMaster was?

Well, basically, as I mentioned earlier on the FinishMaster for the quarter it was plus 9.6%. So if you do the difference you can infer what the other one was.

Regarding the Canadian side now, on the 3.6% in Canada, could you just give a little bit more color as to the geographic split on that? I mean did you see the difference, perhaps east versus west or what are you seeing there?

No, we don't really want to start providing information by geography, but I would tell you that we've had pretty good performance all across the country.

And a last one for me would be regarding the inventory levels, now that going forward, with the parts business no longer there, what will be your comfort with the inventory level? What are you looking at in terms of the sweet spot for you?

Well, I think that, and you'll see that once we deconsolidate the U.S. operation after the closing of the transaction, but we're pretty comfortable with the levels that we have right now.

We have invested in a new warehouse here in Canada, National BC to improve service to our customers. FinishMaster will be investing in new warehouse on the East Coast, entering at the end of the second quarter, again to improve service level and reduce delivery times to our customer base.

So we're not really looking at changing too much in terms of the inventory levels actually. The emphasis will be more on service level and fill rate and so on so forth.

Then on the inventory reduction, because we're pretty happy with where we are. Obviously, you will continue to experience the seasonality quarter-to-quarter, but that's about it.

But regarding the parts business that will be deconsolidated as you said, what was the level there?

The pro forma balance sheet, we were going to be close to 40% of the actual total inventory. So we're going to remove $250 million.

You'll be removing $250 million?

No. The remaining part will be $250.

We're going to keep 40% of the total inventory.

And just a quick last one. Regarding the action plan, we saw some cost as well in this quarter.

Are there any more to be expected going forward?

There will be a little bit during the first quarter of the year, because we will be completing the execution of that plan, and it will be pretty much, most of it will be done afterwards.

Would that be a similar level to what we saw in this quarter or above that?

From memory, I believe it's going to be about $1.5 million affecting the P&L in Q1 clearly.

Just to come back on the inventory, you were previously looking to reduce further more of your inventory by $10 million in 2015. So now just based on your comment, did you mean that the inventory reduction would be more driven by the U.S.

auto part business, Richard?

Well, the $10 million we were talking about was driven mainly by the U.S. auto parts business, not by the other three units.

And just for FinishMaster, I would assume that the big chunk is related to the U.S., but is there a small exposure to Canada? And if yes, what is the breakdown of the paint business between Canada and U.S.?

Well, basically all the FinishMaster is in the U.S. As far that the Canadian automotive group, there is some paint business in there, paint and related products, which would be about 20% of the overall in Canada.

It's not part of FinishMaster.

And just for the organic growth rate, you mentioned some very good color about the performance in Q4 once you strip out the U.S. auto part.

I was wondering if you could give us more color, because when looking, let's say, into the last 10 years, we'd be curious to know how much of a drag was the U.S. auto part.

I would assume that it was kind of negative in the low-single digit range, if not part of that?

If you will allow me, I am not going to go into that, what I will tell you though is that the 9.5%, 9.6% that FinishMaster is experimenting is something that we believe is sustainable for the foreseeable future, let's put it that way.

The 5% organic growth rate going forward, is it fair to assume that it's kind of conservative when looking at the FinishMaster performance?

Well, if you look at in the fourth quarter, maybe a prudent man would come to the same conclusion.

And Richard, obviously, since you announced the announcement with Icahn, I am just wondering if had some discussion with suppliers whether there could be some changes in your discount going forward, given the reduced size of your part business.

Well, the answer to that is, no, we haven't had those discussions yet, but if there is any change to be have, we expect to improve them.

And just curious, with the amount of intangible you ended with $134 given the write-off you'll be taking with Icahn. Just wondering what will be the intangible amount that will be showed on the balance sheet as of Q1?

Do you want the intangible only or intangible and goodwill?

I'm talking more I believe about the intangible, the $134 million.

So that amount will become to $70 million.

What about the goodwill, Denis.

It's going to go from $192 million to very close to $140 million.

And just on the corporate stores. You mentioned in the previous call that you would be looking to open some corporate stores down the road.

I'm just wondering if you are targeting any specific region among your network.

I will ask Henry Buckley to answer that question.

So today we already have a network of corporate stores that have come about over time through succession of our current independence, so what we see in the marketplace is we have current independence that are looking to retire, that do not have succession plan and that will happen over the course of time, and instead of those stores being remarket to other members, in some cases, we retained those as corporate stores, so geographically I can't tell you exactly where those will. I think you'll see some in different parts of the country over time.

Those will form the basis corporate store group that we're going to build the capability to operate and potentially look to expand over time.

So it's basically a good conversion from independent to corporate stores. And related to that, would it be fair to expect margin to be beneficial given that I would assume margins for corporate stores are higher than with independent jobbers?

That's what we would normally expect. Yes.

And just on the dividend side. Obviously, you were paying a Canadian dollar dividend now with the FX where we are right now.

I know you feel comfortable with dividend, but it is something we should even expect to increase going forward?

I will until my upcoming board meeting in April, which is always when we adjust that, I will wait until they make a decision on that before discussing this.

And may be last question. In terms of potential takeover, I understand that you have no interest to sell the Canadian business neither FinishMaster, but I'm wondering if you have any takeover defense mechanism to protect Q4 from such a takeover.

The best defense is to make sure that we deliver the results and drive the price of the share up. That's by far the best defense.

My first question just relates to the tax rate. And I guess like how much tax assets we'll have post the transaction.

I know in the last call, you guys mentioned the tax rate of 35%, but I just want to confirm that this will be cash taxes or will your cash taxes actually be lower?

At the end of the day, the tax rate is effectively very close to 35%, but it will not be a cash tax rate at least for the next couple of years, because a big portion of the loss that we announced $80 million to $100 million will be tax deductible against any income we're going to generate from FinishMaster. So on an accounting point of view, we're going to have a net tax expense, but it will not be all of cash.

We believe that we will generate a tax recovery on a cash point of view close to $50 million that we will recover over the next couple of years.

And just my next question just relates to the comments around CapEx. I mean, again, in the last call you mentioned about, I believe $13 million to $14 million in CapEx, but on the MD&A, I sort of read it, you guys were expecting $30 million.

And I just want to see what the differential is?

Of course, $30 million was what we were expecting. And until the closing of the other transaction, we keep saying $30 million.

But as we mentioned on the call on Monday that we'll pretty much be half of that as we close it.

So it just wasn't changed right up in the MD&A basically.

That's right. And it will be once we're done with all of the closing.

And just my last question, before I jump back into the queue. I mean, basically we see, I know you can't comment too much on dividends, and what not, but I mean like, can you just remind us of what level of debt you guys would be comfortable with going forward?

And basically, if an acquisition cannot be found, would you guys consider obviously either returning some of the cash to shareholders in the form of dividends and/or being more aggressive on the share buyback.

Well, quite frankly, if we cannot find good acquisition and all of that, obviously we will have to decide what we want to do with that cash for the greater value of our shareholders. As far as the dividend policy is concerned, we're pretty happy with where it is right now.

As far as the level of debt, before I've told you that it's a debt of 2x, 2.5x EBITDA was something that is extremely manageable. So I think you can look at the combination of all of those answers, and it gives you an idea of what's available to us to grow the business.

It's Juliane dialing in for Sara O'Brien at RBC. So my first question is regarding FinishMaster.

Is there any seasonality expected in the business both from revenue and on EBITDA?

Steve, you want to answer that question?

There is always some seasonality in the business based on winter and summer. There is a flattening that goes on throughout the year, but it's not that detectable that you will get one quarter over the other, that's much larger than the other.

And then is there any margin difference between FinishMaster in Canada versus the U.S.?

FinishMaster does not operate in Canada. FinishMaster is strictly in the U.S.

By the way there is less -- I guess, the summary of Steve's answer is there is less seasonality on the paint side that there is on the part side.

And then my final question would be, will the U.S. operations for parts be listed as continuing ops for Q1?

We're looking into that right now.

When you speak about mid-7% type margin for the pro forma entity going forward, is that 7.5%, is there opportunity for improvement embedded in there?

There is always opportunity for improvement, Michael.

So will you pursuing any operational initiatives in Canada or at FinishMaster to take the margins higher?

We always do.

When you are done with the transaction, are you going to actually breakout the profitability at FinishMaster and Canada?

Basically, are you asking me whether we will go to segmented information?

Yes.

We're looking into that right now.

And then, if you look at the free cash flow profile of the business, is it safe to assume on a run rate basis it will be sort of a flat in terms of working capital? Or are there opportunities for enhancement, whether on receivables, payables or inventory?

On pro forma basis, I think it's fair to assume that the net working capital will stay as is, because as Richard mentioned earlier, the improvement that we could have made coming from the inventories is mainly on the U.S. auto parts.

So on a pro forma excluding the transaction, the working capital will stay flat.

But not at the level that's there, I mean we're [multiple speakers] the U.S.A. In terms of getting additional cash out of the working capital, that is not what we believe outside of the disposed operations.

Again, we've invested in a new warehouse and additional product in Canada. We're going to be opening a new warehouse on the East Coast for FinishMaster.

And really the focus will be on customer service and fill rate.

And then just on the timing for the closing, is it expected to be in Q2 or could it be quicker than that?

Well, we said that it would be in the first half of the year, and we'll try to work to do it as soon as we can. But there is some elements that are outside of our controls there.

Following the acquisition of FinishMaster four years ago, are you talked about synergies and cross-selling opportunities? How much do you tend to lose with the current transaction?

Not very much, quite frankly, because we were never -- really we realized all of the synergies that we were looking for in terms of operating cost of FinishMaster. But in terms of selling cross synergies, it was not yet a large amount of business, so there is a very little there.

So once we look at the free cash flow this, which was an $84 million, understand $24 million came from working cap. You mentioned in the past that the free cash flow from the U.S.

total part business was not contributing positively. So can we assume at least $60 million let say of free cash flow kind of is sustainable?

That what sound like a fair assumption, Benoit.

And just wondering now that the business model is evolving a little bit with the opening of corporate store. Just wondering if retail represents a growth avenue in the future for Uni-Select?

Henry, do you want to answer that?

So when you buy a corporate store, a lot of corporate stores will have some element of that, that's not our focus. We are very much focused on the commercial.

We're far focused on our banner programs. And I think when you buy succession planning, you buy a store in a small market, they'll have some element of it, but that certainly wouldn't be our attention to focus on.

Just wanted to get an update on percentage of business now that's private label, pro forma the divestiture and what a reasonable target would be for you guys to hit there? And then second question on acquisitions or deployment of the balance sheet now.

What's a reasonable level of single-company acquisition we should expect from you? And if you want to comment on what you think transaction multiples related to that would be?

I will ask Gary O'Connor to answer your first question on the private label.

On the private label in Canada it's probably around 8%, give or take. That's a little over 10%.

And FinishMaster is also fairly small?

Fairly small. Probably under 5%.

When it comes to the acquisition, obviously we have identified several potential organizations that we would like to talk to. But at the end of the day you never know, when that will happen.

So it's not in our habits to comment on the potential that we have there other to say that anything that would either improve our market density or if that in other instances would improve the footprint would be considered.

Well, just following up on the private label side, then less than 10% in both pieces or both lines of business, what are an objective for the business, assuming that you get a higher margin on that private label side of things?

We will have a specific objective. I mean we're looking at opportunities.

I mean we want to continue work our national brand players. So we're searching for the right opportunity, but there is no specific target.

But it will always be in the low numbers in our [indiscernible].

I'll just add, when we look at the portfolio, so we work with our customers all the time and we look for a good price point and a high quality price point, and we're always looking to expand that array of products. So I think you'll continuously see that.

So I think that the target isn't a specific number, as Gary pointed out, but it is to really meet our customers needs by expanding that portfolio to meet there price point and quality requirements.

Thank you very much. Just a very quick word to thank you very much for your presence this afternoon with us.

As usual, it was a pleasure to talk to you and look forward to rejoin you again on the conference call for the first quarter result at the end of April. Take care everyone.

Thank you for being there.