Henry Buckley - President and Chief Executive Officer Eric Bussières - Chief Financial Officer Steve Arndt - President and Chief Operating Officer, FinishMaster Inc. Gary O’Connor - President and Chief Operating Officer, Automotive Canada

Anthony Zicha - Scotia Bank Sara O’Brien - RBC Capital Markets Benoit Poirier - Desjardins Securities Inc. Leon Aghazarian - National Bank Financial Jonathan Lamers - Bank of Montreal Elizabeth Johnston - Laurentian Bank Securities

Thanks, Ellen. Thank you, everyone, for joining us today.

I’d like to invite you to look at slide three of the document posted on our website for this call. In the third quarter of 2016, Uni-Select delivered very good result.

Total sales reached $319 million, up 15% from last year, with FinishMaster up 25% and Canadian Automotive Group up 2%. EBITDA was up 19% to $31 million, while EBITDA margin rose to 9.7%.

Net earnings increased to $17 million and earnings per share stood at $0.41, up 11% on a year-over-year basis. In the quarter, we announced the renewal of our normal course issuer bid to repurchase up to 2 million shares.

We will also pay a quarterly dividend of CAD0.085 per share to our shareholders. Our current initiatives.

Please turn now to slide four. We’re making very good progress at FinishMaster USA on a number of fronts, with sales growth of 25%.

We have acquired some great businesses and have been highly focused on successfully integrating those teams and businesses. To date, all those acquisitions have now been integrated on to our common operating system and branded FinishMaster.

Although overall organic growth was below our expectations, it was the result of a product line changeover of one paint manufacturer. Excluding this impact, we experienced 3.5% organic growth.

We continue to be focused on both organic and acquisitive growth. We have a strong acquisition pipeline to build out our geographic coverage and build density in key markets.

Sales in Canada were up close to 2%. We experienced further economic headwinds in Q3.

As we know, the Canadian Prairies have experienced an economic slowdown over the past couple of years as it relates to the decline in the oil and gas segment. This quarter, we experienced some slowdown, with some customers in other regions.

We have declines with their end market customers due to local economies. This has impacted our organic results for the quarter.

We have made progress, however, building out our foundation for profitable growth. In the quarter, we launched the FinishMaster brand in Canada and converted the first store to the new brand.

The Bumper to Bumper automotive store brand conversion has been progressing very well with both our independent customers as well as our corporate stores. A key initiative for us has been to build a complementary corporate store network in Canada.

We're making very good progress on multiple fronts as we build the foundation for integration and growth. We had announced earlier our selection of the PartsWatch point-of-sale or JMS, Jabber Management System, which bolts on to our SAP-based platform.

We're pleased to announce that, after the end of the quarter, the first store system implementation was completed successfully. This, combined with our standardized processes, store signage and merchandising initiatives, are building that platform through acquisition synergy capture and future network growth.

Our corporate stores produced positive organic growth, both for the quarter and year-to-date. As we look forward, our acquisition pipeline for both Automotive and FinishMaster Canada is very strong.

Before I conclude my remarks and discuss our priorities and focus going forward, let me now turn the call over to Eric Bussières.

Thank you, Henry. Good morning, everyone.

I now invite you to turn to slide five. Consolidated sales for the third quarter reached $319 million, a 15% increase against the third quarter of 2015.

This increase is mainly driven from the recent business acquisitions and was somewhat impacted by the decrease of 1.3% of our organic sales. As mentioned by Henry, this is certainly below our expectation and partly attributable to the softer current condition in Canada and the product line changeover with one paint manufacturer in FinishMaster USA business.

Sales from FinishMaster USA reached $202 million, up 25% due to acquisitions, net customer recruitment and existing customer growth. The Canadian Automotive segment rose to $116 million, an increase of 2%, mainly from the various business acquisitions.

Turning to slide six, we’re pleased by our EBITDA of $31 million during the quarter compared to $26 million last year, an increase of over 18%. This improvement emanates from our accretive business acquisition, active management of our costs and our ongoing focus on maintaining and improving our business conditions.

This is partly offset by the negative synergies following to sale of the net assets and our ongoing investment in the corporate stores. Our EBITDA margin reached 9.7% for the quarter, an improvement of 30 basis points against last year.

On a year-to-date basis, our adjusted EBITDA stood at 9.1%, a 210 basis point margin improvement over last year. Adjusted EBITDA amounted to $82 million or a 7% increase for the same period last year.

Please turn now to slide seven. Earnings for the third quarter was $17 million or $0.41 a share compared to $0.37 a share for the same period last year on a 11% increase.

The blended tax rate for Q3 was 32% compared to 31% in the previous quarter. The increase is due to the profitability from FinishMaster USA, representing a higher proportion on the overall pre-tax income compared to Q2.

We’re still projecting a net cash tax rate of approximately 14% for the year. Moving to slide eight, the third quarter sales were up 15% compared to the same period last year, thanks in large part to the acquisition which was partly offset by negative organic growth.

Gross margin improved by 230 basis points. Sales and gross margin more than outweighed the increase of operating costs related to our corporate stores initiatives.

For the first nine months of 2016, total sales were up 17% compared to same period last year. EBITDA margin was enhanced by accretive business acquisitions, improvements in our buying conditions and/or stock-based compensation expense.

From a segment perspective, FinishMaster was the biggest contributor in the quarter with an excellent performance of 13% EBITDA despite a lower organic growth than anticipated. For the first nine months of 2016, sales rose 23%, while EBITDA increased by 33%, which implies good cost controls and the accretive nature of the business acquisitions, resulting in an EBITDA margin of 12.5%.

As it relates to the Canadian Automotive product segment, the business, we had an EBITDA margin of 6.5%. Organic growth was under expectation due to lower volume from existing customers in relation to the soft recovering conditions.

Delivery delays on some products and reduced benefits from price increases in 2016 compared to the prior periods last year. Please turn now to slide nine.

For the third quarter, cash flow from operating activities totaled $52 million, a $35 million compared to the third quarter last year. This improvement resulted from the increased [indiscernible] of our vendor financing program, net income tax refund and improved operating income.

Year-to-date, our cash flow from operating activities stand at $82 million compared to $37 million for the same period last year. Please turn now slide ten.

As of September 30, outstanding total net debt stood at – $133 million from $166 million at the end of last quarter, a reduction of $33 million for a leverage ratio of total net debt to EBITDA of 1.31 times. Access to liquidity is robust with $260 million in available credit facility.

At the beginning of 2015, we mentioned that we had negative synergies of approximately $4.2 million, following the disposition of Uni-Select USA and Beck/Arnley Worldparts, mainly attributable to our IT system and the related contractual agreements. I am pleased to report that during 2016, we reduced negative synergies by over $700,000, thanks to the cost avoidance.

In addition, following our recent agreements with various IT providers and internalization of our IT servers, we expect to generate an additional savings ranging from $1.5 million to $2 million per year starting in the second half of 2017. To summarize the quarter, I invite you to turn to slide 11.

Uni-Select had a good third quarter, driven by accretive business acquisitions, strong sales, and improved EBITDA margins. The EBITDA margin reached 9.7%, a 30 basis point improvement from last year comparable EBITDA.

Net earnings rose to $17.3 million or $0.41 per share. This represents an 11% increase from the same period last year.

Quarterly dividend payments of CAD0.085 per share and the renewal of our – in August of our NCIB program. We are in a strong financial position to actively seek and seize growth opportunities.

Our pipeline of opportunities is healthy and in various stages. We’re confident that some of those opportunities will materialize in the coming quarters.

To conclude, we are updating this guidance for 2016 as follows. On an average exchange rate of CAD0.70 to the US dollar for the full year and following the lower organic growth anticipated, we are revisiting marginally ourselves to a range of $1.19 billion to $1.21 billion.

We are increasing our EBITDA margin for 2016 to a range of 8.5% to 9.25%. Our CapEx outlook for 2016 is modified from $20 million to slightly under $19 million.

This $1 million reduction is purely timing related and will [indiscernible] in 2017. Please note that, starting in 2017, we will no longer provide guidance.

This completes my financial review. Back to you Henry.

Great. Thanks, Eric.

Our game plan has not changed. At FinishMaster, we continue to focus on profitable growth through the combination of organic and acquisitive growth.

This means acquiring and successfully integrating businesses to extend our geographic coverage as well as building density in key markets. At Automotive Canada, we face some economic headwinds.

However, we continue to be focused on growing our business with both independent customers and corporate stores. We’re great progress building on our platform for acquisitions, integration and growth.

We continue to focus on both organic and acquisitive growth to build our Bumper to Bumper and FinishMaster Canada brands. Overall, total 2016 sales growth is expected to range between 13% and 15%.

On that, we would like to open the call for questions. Over to you, Donna.

Hey, good morning, gentlemen.

Good morning, Tony.

Good morning. Henry, do you believe that Uni-Select could achieve positive organic growth in Q4?

And the Automotive segment, is the big challenge Western Canada still? And how much has the weather played, if any?

Yeah. I’m not going to say – we’re not big on making excuses.

I’m just thinking that we’ve got some slowdown with some customers and it’s really across different regions in Canada. So, what we’ve seen over the last couple of years is that the Prairies have been the sort of stumbling block.

That’s still there. We’re hoping that abates a little bit.

It doesn’t seem to be getting worse, but doesn’t seem to be getting any better. But there's been some pockets across Canada where we’re some local economies that have been impacted and some of our customers have seen some slowness.

Having said that, we’ve got some customers that are up double digits. So, it’s not something we can say it’s – the of the Canadian economy is slowing.

We just see pockets of weakness. So, we don’t quite frankly see that the fourth quarter is going to be sort of switching to a very positive trend.

We see probably a little bit more of the same. But we’re pushing hard for our market share growth to continue to sort of that sort of base economic headwind, if you will.

Okay. And you expect that there is likely pent-up demand that could support organic growth in 2017, deferrals – customer deferrals?

I don’t see that. When you think about the automotive side of the business, people get their car repairs – they get it when they need it.

They can’t defer it till next year. There may be some that are discretional in nature, if you will.

And maybe some of that. So, we don’t pay our hosts and that stuff.

We see the economy being sort of blight, if you will, with pockets of weakness. But our job is not to – we can’t do anything about that part.

So, we’re really focused on, how do we solve rate growth within our business. And I think, as you heard, we’re seeing some positive signs on the corporate stores, positive growth in that front.

Yet, we need to deal with some of those pockets of weakness in other areas. We’re still pretty optimistic for 2017.

We’re heads off and we’re looking to grow our business.

And one more question. You mentioned, Henry, the product line changeover, consolidate product offerings to one manufacturer.

You did state that there was an impact, about 3.5% on growth, is that mainly US? And if there was any impact in Canada, could you quantify it?

And what was the strategic rationale behind it and could we see some impact over the next few quarters? Thanks.

I think what we said is the underlying organic growth was 3.5%, excluding the product line changeover. I’ll let Steve comment on the product line changeover.

This was a product line changeover only at one paint manufacturer. We continue to have strong relationship with Axalta and PPG and we have a growing relationship with Akzo Nobel in selected US market and Canada and really believe that the line changeover sits very well with our long-term strategy at FinishMaster USA.

Okay. And will there be some impact in Canada or none?

No. We have a relationship in Canada with various paint manufacturers, in particular.

PPG, a very strong player. Akzo Nobel, a very strong player.

So, there is no impact at all in the Canadian marketplace.

Okay. Well, thank you very much.

Thanks, Tony.

Hi. Good morning.

Is that Stella or is that…?

Yeah. We’ll go with Stella today.

Okay. Just going back to the Canadian organic retraction, just wondered, how confident are you that this is an economic situation and not jobbers going elsewhere for parts?

Just wondering if you can kind of quantify that. Do you have a view on what's happening market share wise?

So, Gary will comment as he knows our jobbers better than anybody for a very long time.

Well, Sara, obviously, we are always keeping tabs on our customers and what they’re buying. And talking to our manufacturers and looking at what’s going on with our competitors and we really believe that it’s really economic.

We don’t believe we’ve lost market share. Actually, some manufacturers told we’ve got some market share gains in some markets.

So, it’s really the overall economy in the market that’s been really slowing down our business way down.

And as I said, as Henry mentioned also, some of our customers are doing very, very well and others in certain markets are struggling a little more.

Okay. And maybe just with the detrimental margin impact in Canada, how much of that would be volume related versus integration cost or other impacts that might be kind of one-off-ish in terms of investment in the new corporate stores, that kind of thing?

Sara, it’s Eric. I guess we have this on our financial statement, some costs related to the acquisition.

But on top it, there are integration costs that we are experiencing both side of the businesses. The total amounts for Uni-Select, this quarter, was north of $600,000 in terms of conservation costs.

As it relates to the Canadian business, it’s really more a volume mixed situation that we had and a bit of a product mix situation that have an impact on the margins.

So, when you say volume mix and product mix, is it more import parts that are being sold at lower dollar value and/or margin. Can you just give us a bit more clarity on it?

Product mix is more a matter of high margin products versus lower margin products and it’s just a mix. That is what it is.

If I sell more of a lower-end margin product this quarter as opposed to Q3 last quarter, that certainly has an impact. And the other element is the mix of revenue between our warehouse activities, our direct shipment and our store activity.

Okay.

Sara, just on the integration costs, to be very clear, in the US, as I stated, we have the opportunity to have got a very stable platform. We’ve got a system there where we can buy a company and integrate it on to that platform.

And as you’ve heard, we’ve done a number of acquisitions over the last 18 months that have now been integrated and catching necessarily all of the synergies out there in terms of consolidation synergies, but all of the initial synergies of things like back office, putting them on our platform, et cetera, and rebranding, that’s all done. In Canada, we’ve had to build that foundation.

I couldn’t be happier in terms of the progress we’ve made of getting that foundation. That’s not cost us that much money.

But it is an upfront investment to put in the PartsWatch system, to make sure we have the platform to be able to integrate those businesses. So, we’ve got, in Canada, some strand of synergies, if you will, out there for the acquisitions we’ve made until we can bring all of those companies on that platform.

And that platform, as I said, we’ve got that first PartsWatch implementation up just after the end of the quarter. And we couldn’t be happier with the way that stood up.

And we’re going to continue to roll that out in a measured way over the coming weeks and months and quarters. But the reality is, we’re very pleased because we operate this business with a very long-term view, in that we’re doing this work now.

We’ll capture the Canadian synergies as we’re able to integrate them. But we’re very pleased with the progress.

Okay. I guess, just in terms of timeline, though, to capture those synergies going forward, how – in a negative volume environment, can we see EBITDA margin return to its last year level anytime soon or do we have to sort of see this pressure for the next few quarters as you’re making these investments?

I think it’s going to really, quite frankly, depend on a few factors. One is the economic situation.

So, what we’ll see – as we continue to press the growth strategies to drive organic growth, that we contribute to it. We’re also making sure that we’re also very conscious in terms of our costs.

So, like you referred for America, we’re very disciplined in terms of our approach to cost, so we make sure we manage those in both businesses on an ongoing basis. I think, obviously, the backlog, if you will, of some of the stores we’ve bought, to integrate, is going to take us – we’ve got 12 to 18 months to get through.

We’ll make a call in terms of ways to accelerate that integration where it makes sense. We continue to have a pipeline in both businesses, and Canada included, that will add more on to – more acquisitions on to the table over the coming months and quarters.

So, with that, you’re always going to have some bit of a backlog integrate until we can catch up. And that will catch up.

I hope we don't catch up for a while because I want to make sure we get more stores into the group and more acquisitions in and we’ll ramp up that integration process as we go along. So, I think we’ll have a backlog for the next 12 to 18 months.

That doesn't mean we’re having massive strands of synergies out there for years, but I think we’re playing catchup over the next 12 to 18 months.

Okay. Fair enough.

And just one last one on FinishMaster, huge margin improvement there. Just wondering how much of that is insurance claim related and is it likely to stabilize back to the levels we've seen historically or is this a new level for FinishMaster just based on volume growth and integration of synergies?

It’s a mix. Clearly, the revenue increase of FinishMaster or our ongoing negotiations to improve buying conditions and all aspects of the two businesses are elements that contributed.

Anyhow, claims were lower than what we have experience so far. As you may recall, we also had additional claims last year in Q4.

So, I’d like to tell you that it’s perfectly predictable, but that’s not the nature of the beast. So, it’s a question of the margin enhancement I just spoke about for FinishMaster.

And as we stated also, we are very conscientious on how we spend our dollars. And that is true for both sides of the business.

And I think the FinishMaster team did a stellar job in Q3.

Okay. I’ll leave it there.

Thank you.

Thanks, Sara. Or Stella.

Yes, thank you very much. And good morning.

Good morning, Benoit.

Just to come back on the automotive side, when we look at the – one of your biggest peers, thy recently reported their results – they seem to post kind of a low single digit growth in Canada as opposed to a decline on your side. So just want to try to get more color.

You already talk a little bit about some pockets of weakness in different regions, but how would you compare your results versus your peers? Is it kind of a different mix in terms of geographies or is it kind of a…?

I guess, Benoit, if I may, what our competitor has signaled is low-single digit growth. But he hasn’t clarified if this was organic or partly attributable to acquisitions as I recall and I stand to be corrected if I’m wrong.

But I couldn’t gather if this was a mix or if this was through organic. And he made a fairly large acquisition in the Canadian market not too long ago.

So, I suspect that this is a combined number as opposed to organic – pure organic.

That’s certainly what the transcripts say. We looked at it, obviously.

So, they’re a great competitor of ours and we highly respect them. So, everything we hear in the market – and, Gary, maybe you can comment on that – everything we hear in the market is that we’re not losing share at all.

In fact, we’re actually gaining share in a number of markets.

Well, as I’ve mentioned earlier, Benoit, talking to different players in the market, nobody is jumping for joy. I think everybody’s is feeling a bit what we’re feeling.

And it’s really spotty all over the place I think for everybody. So, we don’t see us losing market share.

Just the general economic conditions right now.

Okay. And how would you compare the growth of your independent jobber versus your corporate store on the automotive side?

We’re seeing that our corporate stores have gone from a positive organic growth in the third quarter. So, that was very encouraging, obviously.

And again, we’re starting on this journey, but it’s very positive right now. We’re very encouraged by what’s happening.

Just to be fair to the independents, we’ve got some independents that are really doing well. So, we’ve got some independents that are up.

We love them. And we support the heck out of them.

But equally so, there are tougher markets. When you have as many independent customers as we have across the network, you’re going to have markets that are softer.

So, we’ve got some that are soft. We’ve got some that are rocking and rolling.

So, we’re very pleased with them and we’re pretty excited about having positive organic growth on our stores.

And do you have ceiling, Henry, the independent jobbers that do well are the one that have multiple locations as opposed to a single location?

There’s really no pattern to be honest.

No pattern, okay. Okay.

Okay, that’s pretty good. And just related to stock-based compensation, what is the impact on a year-over-year basis on the cost side?

Benoit, I’ll have to get back to you on that one. I don’t have that exact figure in front of me.

I’ll be happy to take that call or get that to Ellen after the call.

Okay. And just on the paint side, once you exclude the impact of the product offering that changed a little bit, so should we expect the 3.5% kind of – be kind of a sustainable number in Q4?

Is it only a one quarter impact?

The product line changeover is something we’re working through. So, we’ll work through that through the course of the year anyway.

So, I think that’s – the adjustment happened in sort of one discrete month. So, it will be the balance of the year.

And, yeah, certainly we’ve provided that guidance before as we saw our sales – organic sales growth in that 3% to 4% range. I don’t know if we’re veering off that at all.

In fact, we’d love to see it higher. So, at the end of the day, that’s what kind of what we expect for the balance and the product line changeover will impact us for the balance of the year.

Okay. I see.

But 2017 should be a – we should not see a big impact on that product change?

Well, you’ll see the comparables, right? So, it depends where we end up.

So, the comparable will be impacted in 2017, but we haven’t sort of – through it yet. So, we don’t know where that base quite resides, but we’re pretty happy with the way it’s going.

So, at the end of the day, we’re going to measure both, what we’re doing with and how we’re doing excluding that.

Okay, perfect. And just on the paint side, your strategy of implementing FinishMaster in Canada, building a new location over time, it seems that there is a nice revenue opportunities.

Could you quantify a little bit what would be the CapEx associated to that? What is kind of the timeframe and the revenue opportunities over time?

I think, first of all, we’re trying to do this through select acquisitions and that’s what we’ve demonstrated over the last number of months. And as you say, we have four locations today.

Post quarter, we acquired [indiscernible] Bumper. So, that’s our fourth location.

So, that’s an example of acquisition we will integrate. So, I think the – end of the day, the capital that it takes is the standard integration capital that it would take to buy a corporate Auto Parts store or a FinishMaster store.

So, I think we have lots of opportunity to grow that footprint across Canada. And I think primary driver will still be acquisitions.

We’re not going to roll out greenfields. So, if we get into some markets where we think it makes sense to add a greenfield store – and I would say this is both for FinishMaster USA and for FinishMaster Canada – we’re more than open to greenfielding these events.

So, we’ll look at the that in terms of the acquisition capital related. And that will – very dependent on the size and scale of the organizations we acquire.

Okay, perfect. Thank you very much for the time.

Thanks, Benoit.

Thank you, Benoit.

Hi. Good morning, guys.

Hey, Leon.

I just wanted to follow up on the product line changeover. Can you just give a bit of color as to what that entails exactly and what led to that?

Was it a pricing reason? Was it just for competitive reasons and kind of what that entail going forward?

We’re not going to sort of get into any details on that. Obviously, it has lots to do with individual suppliers.

I think Steve said it very, very well. We’ve got an amazing relationship with Axalta, with PPG, and a growing one with Akzo.

And we’re very, very pleased with how that aligns with our long-term strategy. So, again, we’re running this business on the longer run.

We’re not running it for chasing hoarders, quite frankly. So, we’re very pleased with where we’re going with this strategy.

And I think that says it all, quite frankly.

No. I guess, my question is, like, why does the product line changeover make you more aligned in the long-term?

Was it because there was like – was there a supply issue? Was it a branding thing?

Was it a pricing thing? I’m just trying to understand why you would make that change for the long-term?

Again, just with the long-term strategy of those individual paint manufacturers, ourselves, how our strategy is dovetailed together and – I’m not going to get into any more detail, but we just couldn’t be happier. We’ve got a great relationship with the three we mentioned there.

Our strategy is long-term, are aligned with theirs. We’ve got growth plans that work together to build out markets, whether they be the independent, traditional collision repair center or whether they be an MSO.

So, at some point, we all need to align with the key partner that we believe are going to be the right partners for the long run. And that’s kind of where we are today.

And, again, we’re happy with the situation.

Okay. Well, thanks for that.

On the Canadian side, you mentioned in the release that there was some delivery delays on some products. What kind of happened there and has that been addressed now?

We have our key suppliers who have been struggling with their product offering and their supply – strategic partners. So, we believe for the most part, it’s been fixed.

But it hasn’t affected our build rates and, obviously, our sales have…

You know what, it’s not surprising that it’s related to an ERP implementation. So, that’s not a function of the supplier being a bad supplier.

But not sitting on us.

Not us today. But there are ERP implementation, so it’s a great supplier.

And it’s a significant supplier. And that’s – when they make these platform changes, it can be painful to them, but therefore it’s painful to us.

So fully aligned with supplier and thankfully we’re coming back now in the last sort of week or two. And they’re – the shipments are coming out.

They do impact us. And we can’t avoid that.

Okay. And then, in the past, you’ve been quite helpful with some of the details regarding the Canadian organic growth without the Prairies, could you be able to provide that or maybe provide how much down, like, the Prairies were for Uni-Select?

I think the Prairies are down. The same goes – well, we’ve said all along.

I think that’s the one we’ve highlighted. And what we don’t want to do, to be honest, get into – this region’s up, this one’s off a little bit, this one’s – we’re never getting into the minutiae of the business.

I think the big event was the Prairies over the last couple of years. And now it’s kind of 5% to 7% range.

And there was 7% early on. We think we’re seeing the sort of comparables of 5% now.

And that seems to be stabilizing to four or five at this point. And we’re hopeful that that kind of would hit the floor there.

And with oil and gas prices over time, we hope that will sort of be back up. The rest of Canada, as Gary said and as I’ve said, it’s really been spotty.

There’s no trend I’m going to tell you with. The balance of Canada is economically depressed.

It’s very much spotty. And that’s the same feeling we get from discussions with other suppliers and our competitors.

I don’t think there’s anything you need because there’s nothing – if we thought there was a wholesale trend there to share, we think we’d do that.

And the last question for me would be, just on cash flow usage, obviously, we understand that M&A happens in clusters and it was more quiet in Q3. We see some debt repayments as well that happened in the quarter.

And, obviously, NCIB was also renewed, so just kind of – what’s your kind of priority in terms of cash flow usage and at what point do you think you’d get active on the NCIB?

Leon, this is Eric. So, look, as you mentioned, the predictability of an acquisition is – you need a willing seller, willing buyer at a price that makes sense for both parties.

So, I like to tell you that we can schedule those on a monthly basis, on a quarterly basis, but that’s just not how things work. So [indiscernible] capital deployment will remain on the acquisition.

We, obviously, have a strategy to grow our stores network both in Canada and the US. And we’ll kind of spend on our capital expenditure on that side in order to absorb the acquisition that we’re doing and that we’ve done.

As it relates to NCIB level, look, the dollar figure that we disclosed per se has been place. It will kick in if we feel like it’s adequate and as we’ve done in the past.

[indiscernible]. But I want to make sure everybody understands, our number one priority is to acquire great companies that fit with our business that are accretive and help us grow this business for the long run.

That is the number one sort of use of funds that we see as being the top priority. And we are very happy with the pipelines we have in both businesses.

But I wish I could organize it and schedule these things, so they come out in a very determined preset schedule. But that, as you said, is just not the nature of the game in the coming cluster.

So, that absolutely remains our priority. And we are very happy with the pipeline that we’ve got in front of us.

Great. An just one final housekeeping for me would be, you mentioned that there was some tax refunds that help free cash flow.

Can you quantify that for us please?

Yeah. In terms of swing, year-over-year, Leon, we’re talking about something like $6 million from a swing perspective.

So, last year, we paid. This year, we’ve got a reimbursement.

The change on cash flow impact is about $6 million.

Thanks, guys.

Thanks, Leon.

Good morning.

Hey, Jonathan.

Hi. How are you?

Good.

Eric, just to follow up on the $0.6 million of integration costs you mentioned, would that be more weighted in Canada?

It actually it was more weighted in the US. If you look at our M&A, we also disclosed that we closed five locations during the quarter.

So, there have been some integration cost related to all the activities. But, no, there was some spend on both sides of the border.

Okay. Do you have any further locations to be consolidated from the recent acquisitions?

Yeah. Over time, there will be, Jonathan.

I think as we mentioned, on the FinishMaster side, when we made acquisition, typically, site closure of acquisition happens within 12 to 18 months from the date of purchase. So, we’re executing that plan as per the acquisition we’ve done in the last few quarters.

Yeah. We don’t disclose the locations for obvious reasons.

Everything we’ve done so far makes total sense and it’s been premeditated in a sense. We know that going in what makes sense in terms of building out that network.

In particular, in density plays, when we go to market, we know which ones that are – in a lot of cases, we’re closing our own. It won’t necessarily be the target location.

We keep their location if it’s the right fit for us and we close ours. And we just designed the network so it’s efficient and effective for our customers.

Okay, thanks. And, Eric, just a housekeeping item.

The savings in the ERP synergy that you mentioned, are those figures you provided relative to the $4.3 million negative…

That is correct, Jonathan. That’s correct, yes.

And one last question, I noticed you mentioned that in Canada there was a mix shift between the direct shipping sales. I think in the past you said direct shipping is about half of Uni-Select Canada sales or has there been any shift there?

It’s a little bit under half of Uni-Select traditional warehouse, last direct shipment activity. Yeah, the mix is a little bit different from last – the quarter of Q3 last year.

But then again, that depends. Right?

There’s so many factors that affects direct shipment versus warehouse shipment. But that has an impact indirectly on margins for us because we don’t make the margins on direct versus warehouse shipment.

And as I said also, the stores activity were quite robust in the quarter. So, that counterweighs what happened at the DC level.

You’ll get a bit of product mix happen. So, if you’re selling commodity oil on a disproportionate level than you sell some of our technical products that are at higher margins, that will have an impact on any given quarter too.

So, that will vary. There is no predictability there.

We’d love to sell all of it.

But I guess the underlying point is I couldn’t say that there’s a trend either way on direct versus warehouse activities.

Okay. Thanks for your comments.

Thank you.

Hi. Good morning.

Good morning, Elizabeth.

Just want to circle back briefly on the automotive segment. I know we talked already about the margin there.

You also indicated that margin was lower due to additional investments in relation to the corporate store initiatives, which I know we’ve talked about already. Is that really related to the FinishMaster in Canada or is that – does it also include some rebranding of the corporate stores?

It’s a bit both, Elizabeth. There is activity on both side on the FinishMaster kind of deployment and also on the Bumper to Bumper deployment.

And as we said, we expect to continue to make those investments in the foreseeable future. As we are converting the stores to Bumper to Bumper, we’re converting certain of those stores to FinishMaster Canada.

Remember, we’ll do it – but the Bumper to Bumper conversion impacts not just our corporate stores, it’s also our independents. So, as we convert independents, we help them with things like signage.

And we’re happy to do that as we build this truly national brand. That’s something that’s fully part of our capital and part of our branding strategy for the overall business.

So, we have Bumper to Bumper in independents. We have Bumper to Bumper in corporate stores.

And the integration costs, they hit the overall investment line. But we also are investing in things like the PartsWatch, which we told was point of sale or jobber management.

That’s a couple of million dollar investment. That’s not an SAP platform.

So, those are the things that we’re investing in as well as the cost of integrating the businesses.

But in terms of the item, would you say that most of it’s coming from the rebranding?

When we say investment in corporate stores, it includes the fact that we have to staff the infrastructure properly in order to poise ourselves for the growth that is coming. So it’s not just one element that we’re investing in.

You’re investing into the overall establishment and that’s been the bulk of the cost of investment that we’ve been going.

Okay, understood. That’s it for me.

Thank you.

Thank you.

Thanks, Elizabeth.

Great. Thanks, Donna.

So, thanks. We’re very, very – again, very, very pleased with the progress we're making on a number of fronts in the organization.

So, thank you very much for the call today. We really enjoyed the dialogue.

And I’d like to just let you know that the year-end result conference call is now scheduled for February 9. And we’ll try and use the same format where we have this Web presentation to help you and be as transparent as we can in the future.

So, look forward to talking to everybody on February 9 or before. Thanks, everyone.