Ellen Betty - IR Henry Buckley - President and Chief Executive Officer Eric Bussieres - Chief Financial Officer Steve Arndt - President and Chief Operating Officer, FinishMaster Inc. Gary O'Connor - President and Chief Operating Officer, Automotive Canada Peter Sephton - Chief Executive Officer and President of the Parts Alliance

Leon Aghazarian - National Bank Financial Benoit Poirier - Desjardins Securities Elizabeth Johnston - Laurentian Bank Securities Jonathan Lamers - BMO Capital Markets Michael Glen - Macquarie Securities Group

Good morning, everyone, and thanks for joining us. Presenting this morning are Henry Buckley, President and CEO, and Eric Bussieres, CFO.

Following their comments, we will open the call for questions. Joining us today for your questions are Steve Arndt, President and COO of FinishMaster USA, Gary O'Connor, President and COO of Automotive Canada, Brent Windom, the new President and COO of Automotive Canada, and also joining us as a guest, Peter Sephton, CEO and President of the Parts Alliance.

Please note that all documents referred to in today's conference call, including this webcast presentation, can be found on our website, uniselect.com in the Investor Section. As noted on Slide 2, I would like to remind you that a caution regarding forward-looking statements applies to our presentation and comments.

All amounts are expressed in US dollars except as otherwise specified. With that, let me turn the presentation over to Henry.

Great. Thanks, Ellen.

Good morning, everyone. Thank you for joining us today.

I would like to invite you to look at Slide 3 of the document posted on our website for this call. In the second quarter of 2017, Uni-Select delivered very good overall results and made solid progress on its strategies initiatives.

Total sales reached $340.3 million, up 5.1% from last year, with FinishMaster USA up 6.6%. The Canadian Automotive Group was up 2.8% but up 7.2% normalized for foreign exchange translation.

EBITDA was at $29.5 million, or 8.7%. However, EBITDA adjusted for the cost of The Parts Alliance transaction was $32.5 million or 9.5% of sales.

Net earnings were $13.7 million or $0.33 a share and adjusted for the same adjustment, earnings were $16.6 million or $0.39 a share. Free cash flow came in at $17.9 million in Q2 and we declared a dividend of nine and a quarter cents.

On the 1st June, we announced the acquisition of The Parts Alliance, a UK leader in the distribution of aftermarket parts for a transaction value of approximately $205 million British pounds on a cash free, debt free basis. We expect this transaction to close in August, 2017.

We also appointed Brent Windom to the position of President and Chief Operating Officer of the Canadian Automotive Group and the retirement of Gary O'Connor at the end of the year. Please turn to Slide 4.

Now, turning to FinishMaster USA, sales in the second quarter were up 6.6% driven by business acquisitions with an EBITDA margin of 11.5%. The impact of the product line changeover in the quarter was approximately 8% on sales and excluding that changeover, organic growth in the quarter was near flat at negative 0.6%.

As discussed previously, the product line changeover will continue to impact organic growth for the balance of the year. We estimate an impact of approximately 4.6% in Q3 and 2% in Q4.

Our strategy remains the same as we look to expand geographic coverage and build density in key markets. In the quarter, we opened great deal facility in Nashville, Tennessee.

Our focus on successfully integrating all of our acquisitions continues to deliver results. In the quarter, we integrated seven locations as planned.

We are highly focused on driving organic growth in all our customer segments. In vehicle refinish, we have multiple initiatives focused on the traditional and MSO customer segments.

In addition, we are seeing some strong early signs of success with our new industrial coatings initiative. Turning to Page 5 and the Canadian Automotive Group, we achieved a very strong sales and earnings quarter with organic sales growth of 6.2% and an EBITDA margin of 8.6% of sales.

Organic sales were positive with our independent jobber customers as well as both our Bumper to Bumper and FinishMaster corporate stores. With over 90% of sales being to commercial customers, we have always been and continue to be designed to service this customer segment.

We are very pleased to have Brent Windom rejoin Uni-Select as President and COO of our Canadian Automotive Group. He has over 30 years' experience in the North American aftermarket, both in US and Canada, including 12 years at Uni-Select.

It's also my pleasure personally on behalf of our company to recognize and thank Gary O'Connor for all of his contributing over the past 12 years with Uni-Select and quite frankly, the previous 20 or more years supporting our growth as a key supplier. Gary will stay on for the balance of the year to support Brent, our team, and our customers to ensure a smooth transition.

The Canadian team continues to be focused on building a foundation for the long-term. The rollout of our Bumper to Bumper brand to our independent customers and our corporate stores continues on track.

Our deployment of the corporate store point of sales system, PartsWatch, continues on schedule as well. We also opened a Greenfield Bumper to Bumper store in London, Ontario market, which was not being covered by an existing independent jobber.

We also acquired KC Distributing, an auto parts distributor based in Owen Sound, Ontario. Now, turning to Page 6.

We could not be more pleased to be adding a new growth pillar to Uni-Select with the impending acquisition of the Parts Alliance. The U.K.

is the fourth largest market in Europe at £4.1 billion. It is a fragmented market with an aging car park, increasing miles driven, and yearly vehicle mandatory inspections.

The Parts Alliance is the number two player in the market and one of only two national players. With a 7% market share in a fragmented market, it provides a significant runway for profitable growth.

Also, just like Uni-Select, they are focused on the commercial customer, resulting in over 95% of their sales. They have a track record of acquiring and successfully integrating acquisitions, coupled with a track record of driving organic growth.

This past quarter was mid singles organic growth for Parts Alliance. They are a people and customer driven culture, which aligns perfectly with Uni-Select.

We expect to close this transaction in August. In addition, we secured the key team members and they are highly engaged and excited to grow together with Uni-Select.

Now, over to you Eric, for the financial review.

Thank you, Henry. Good morning, everyone.

I now invite you to turn to Slide 8. Consolidated sales for the second quarter reached $340 million, an increase of 5.1% against second quarter 2016.

This increase is driven from recent business acquisition as well as strong organic growth in Canada. Although the consolidated organic growth was impacted by the product line change over in the US, excluding this element, the combined organic growth would have been 2.1%.

Sales from FinishMaster USA reached almost $210 million, up 6.6% against prior year second quarter mainly from business acquisitions. The Canadian Automotive segment sales rose to almost $131 million, an increase of 2.8%, despite a foreign exchange translation headwind of approximately $5.7 million.

When normalized with the foreign exchange translation impact, the total growth would have been 7.2%. The strong sales in Canada are partly attributable to sales initiatives and to a lesser extent, the spring maintenance activity that partly shifted from Q1 to Q2.

Also, I would like to take this opportunity to remind everyone that our business is somewhat seasonal and that Q1 and Q4 tends to be our softer quarters and Q2 and Q3 tends to be our strongest. Turning to Slide 9, our second quarter consolidated adjusted EBITDA was $32.5 million compared to $29.7 million last year, an increase of over 9.1% driven by strong contribution from our Canadian operations.

The adjusted EBITDA margin for the quarter was 9.5% compared to 9.2% last year. Please turn now to Slide 10.

Adjusted earnings for the second quarter were $16.6 million or $0.39 a share compared to $0.40 a share for the same period last year. The $0.01 difference is due to an increase in tangible assets amortization and increased financial cost related to the acquisition.

The blended tax rate for Q2 was 31.5% compared to 31.2% for the same quarter last year. The marginal increase is due to a different geographic pretax earnings mix.

During the quarter, we incurred approximately $2.9 million in transaction expense linked to The Parts Alliance acquisition. The total transaction cost, excluding the FX option protection we purchased is estimated to be approximately $9.5 million.

Of that amount, we expect to capitalize approximately $2.5 million linked to their refinancing costs. If the transaction would have closed on July 25, the net option cost would have been approximately $2 million.

Moving to Slide 11, as mentioned previously, sales are up 5.1% compared to the same quarter last year, mainly in relation to recent acquisitions representing [indiscernible] of 10.4%. As expected, organic growth was mainly impacted by the production line changeover at FinishMaster.

Adjusted EBITDA rose by 9.1% from good buying conditions during the quarter. Please turn now to Slide 12.

After six months, our sales are up 8.5% compared to the first six months of last year. Adjusted EBITDA is up 8.1%.

During the first six months of 2017, we acquired six businesses and opened four greenfield stores and integrated 10 locations. Excluding the product line changeover and the customer loss in Canada, consolidated year-to-date organic growth would have been approximately 2.1% while the net of those two elements year-to-date organic growth is negative 4.2%.

Please turn now to Slide 13. For the second quarter, consolidated cash flow from operating activities totaled $22.8 million, down $14.4 million compared to Q2 2016, mainly due to payment of income tax and the purchase of the foreign exchange option in anticipation of the acquisition of Parts Alliance as presented in our financial statements.

During the quarter, our operations generated $7.8 million of net cash. Our free cash flow amounted to $17.9 million, mainly through operations.

As it relates to the evolution of our working capital during the quarter, you will note a certain increase in our accounts receivables this quarter compared to last quarter and this is entirely linked to the strong performance in the sales during the second quarter. By adding certain suppliers to our supply chain financing agreement and benefiting from extended terms, which we managed to improve our overall cash position, the cash cycle collections compared to the first quarter was reduced by two days.

Working capital will remain a focus of ours and we'll continue to seek further optimization opportunity over the coming quarters. Please turn now to Slide 14.

At the end of June, outstanding total net debt stood at $189 million from $199 million at the end of last quarter, a reduction of $10 million, mainly attributable to internally generated cash for a leverage ratio of funded debt to adjusted EBITDA of 1.69 times. In anticipation of our acquisition of Parts Alliance, we completed on July 25 the syndication process of our amended restated credit agreement with a consortium of bank by securing $525 million credit facility and a $100 million term loan.

The Parts Alliance acquisition is expected to close in August, and assuming we would have closed the transaction at the end of the second quarter, the funded debt to adjusted pro forma EBITDA would have been approximately 3.35 times. Following the completion of the acquisition, we expect to have approximately $170 million of credit available to us.

To summarize the quarter, I invite you to turn to Slide 15. Strong performance by the Canadian operations during the quarter and after six months of 2017, the Canadian operations generating EBITDA margins consistent with last year.

The consolidated adjusted EBITDA margins for the quarter was 9.5%, an improvement of 30 basis points compared to the same quarter last year. Our second quarter cash flow from operating activities was sound despite a higher income tax paid and the purchase of the foreign exchange currency option.

Adjusted earnings amounted to $16.6 million or $0.39 a share. Quarterly dividend payments of $0.0925 per share has been declared.

We are in a healthy financial position to complete the acquisition of Parts Alliance and we foresee it continue to foster some interesting growth opportunity. This completes my financial review.

Henry, back to you Henry.

Great. Thanks, Eric.

Okay, Paul, we'd like to please open the call for questions.

A quick question on the Canadian organic growth. I mean that's obviously a very strong number at 6.2%.

You do mention that both the corporate stores as well as the distribution centers contributed to that. Can you just give us a bit more color as to maybe the split there and then some underlying reasons behind that growth?

We don't share segmented by stores and independent jobbers, but quite frankly they're roughly equal all across the board for us in the quarter. We're very pleased with the progress we're making with the corporate stores, both Bumper to Bumper and FinishMaster delivering great results, and equally, we're just as happy with independent jobbers.

They had a very, very good quarter and they seemed to be continuing into July. So we're having a very good second quarter.

We're having a strong July and we've got good momentum and that's where we are.

Appreciate that. I know you don't give amount more segmented information than that, but looking towards the profitability in the quarter as well for Canada specifically, that was a pretty good number, a very strong number at north of 8%.

So I'm just trying to see, is that related primarily to some of the initiatives that you've implemented or is that really because you're pushing more corporate stores out and thus the margin profile is a bit different there? Just trying to understand the sustainability of this margin going forward.

It's fair question. At the end of the day, for us, it's related to volume, right.

We've got a very efficient model in both segments. Our corporate stores both Bumper to Bumper and FinishMaster are producing strong EBITDA results.

Our independent jobber segment, that's something that's historical for us, we've always had a very good foundation there so we're continuing to see that move forward. So it's really, for us it's about volume making sure that we continue to drive the growth.

The EBITDA results will flow [ph] from that.

Okay, and if I just may on one question on the US side. Organic growth, obviously as you mentioned was close to flat slightly negative there.

Can you comment a little bit about the industry as a whole as you're saying on the paint side? Like what is the industry growing at right now and whether or not you are seeing I guess more competition or just trying to get a sense on the market share.

Are you losing some or is the market growing faster?

I think for us overall, the market in the first quarter or second quarter has been softer than we would like quite frankly. I think that's indicative of the environment.

We're clearly the only public company in our segment in terms of public companies publishing but if you look at the manufacturing side of the business, the manufacturers are all - it's coming off a second quarter that was softer than they expected as well. So I think we've got some sort of market softness which is, quite frankly been offset by our growth initiatives.

So there's growth initiatives that we have in both the traditional customer segment for vehicle refinish, the MSO segment for vehicle refinish. So we've got - nothing has changed for us there.

We've got our sort of head down and executing on those fronts. And as we've talked about, we've got the incremental front for us, which is in early stages with the industrial initiatives.

So very, very happy with where that's going. So the backdrop isn't as robust in terms of the sort of economic base but we don't see that sort of lasting longer term.

I think all of our manufacturers are looking for a much better third and fourth quarter. I think that's the outlook from them as sort of a proxy for the state of the industry but we certainly see the same as well.

Okay, and one final one from me before I turn it over, if I may. Just on the transaction expenses for Parts Alliance, you had about $2.9 million charge in the quarter.

I'm just wondering what we should expect going forward, for example, in Q3 and maybe if it spills over into Q4.

It should all be incurred in Q3 for the vast majority, Leon. As I mentioned in my remark, the total estimated transaction cost excluding the option cost is $9.5 million.

Of that $9.5 million you should assume about $2.5 million will be capitalized. These are linked to the financial costs of refinancing and all that.

And then where that closes the transaction on the 25th July, the option that we purchased on June 1st, those options - the net cost linked to those options would have been $2 million.

Okay, so if I understand correctly, in Q3, you'll incur an additional, what $6 million or so in expenses?

Ballpark, yes. We have incurred $3 million to date.

You've got the total costs excluding the options $9.5 million so add the $2 million of the options. At that point that would be $11.5 million.

We've capitalized $2.5 million of that $11.5 million and the rest is all expense, of which $2.9 million has been expensed in Q2.

Okay, thanks. That was very helpful.

I was wondering if you could provide more color on the softness you see on the paint side, whether it's related to the weather or is it related to something else, gentleman?

Morning, Benoit. Steve, do you want to tackle this one?

Most of the manufacturers including us have had a soft first half of the year and a lot of it is related to the weather. In several of the areas, we didn't get any winter and that's not good.

Most of our shops in those areas were slow but we see very positive signs and we're very optimistic about the second half of the year.

Hate using the excuse to weather like that. Everybody seems to be having to deal with that this year, sadly, but that is what it is.

Okay, perfect. And when we look at the industrial paints, you have some comments about early signs of success.

So could you share with us if you could quantify the incremental contribution on revenues and EBITDA and how would you measure success for industrial paint?

Okay, so I'll answer that two ways. First of all, we're not going to segment industrial out of the paint business, but secondly, we measure every single day inside our business.

So that's something that's a core initiative for us. I think we shared with you we have seven pilot sites.

We have 18 locations that are daily involved in industrial paint sales today but we have consciously decided to walk before we run, and what that means for us is we've got a number of customers who have signed up today, but we're not willing to sort of step up and deliver their business until we are fully prepared to execute on it extremely well. So the last thing you want to do is run around and sell a bunch of customers that we can deliver for them and then fall down at the branch level.

So we're putting the foundation in each one of these branches, making sure they have the right technical support, they have the right inventory on the ground to support the customers as we turn those customers on. So the early signs for us really means we've got a whole host of customers today that are excited about joining the Uni-Select family in terms of sharing business with us.

That's a part we're very enthusiastic about but we're not in any rush. We're going to make sure we do it right, turn them on effectively over the coming months.

So that's something that we're always committed to because we want a long-term sustainable business here and we're happy with that progress. So those are the early signs.

We clearly - you measure it, I want to say daily right now, but certainly - well, I guess we do measure it daily. I don't measure it daily.

Steve measures it daily and we certainly look at it every week. So very happy with the early progress.

Okay, and coming back on the paint, could you comment about the opportunity to kind of implement a paint side in Parts Alliance going forward?

That's something we have on the horizon for us to look at as opportunities. Our first focus and priority right now is to close the transaction, which we're clearly very close to, as you can see by August.

We've spent a lot of time over there with the team members, with Peter who is joining us here today. I think the early signs from that business have been extremely solid.

Very happy to be part of the Uni-Select team. So that's kind of our first priority and making sure that we help accelerate their existing strategies, existing business, and we're going to look out to the horizon to see what makes sense in the refinished business over there.

We think there's something there for us but until we've sort of determined a plan, then we're going to all steady on the course and execute on our existing plans.

Last one for me. Could you, Eric, if you could provide some color about the impact of the Canadian dollar on the debt level and also the potential impact you might see on the pricing of parts and paint?

So in terms of debt level, Benoit, we have a very small amount. I think as end of June, we had less than 30 million borrowed in Canadian dollars.

The balance was mostly - well actually the balance was all in the US dollars. As it relates to the Parts Alliance acquisition, the way you should think about it is we're going to borrow about £70 million directly from the banks and the balance will be borrowed in US dollar equivalent to fund the purchase.

And when you look at the impact on the pricing parts and paint, anything we should expect?

Sorry, Benoit say that again. [Indiscernible]?

With respect when you look at the pricing, any implication we might be expecting going forward given the movement and the currency on the paint side?

No. I'll tell you what, the reality is in Canada, the manufacturers have not pushed for the price increases a year and a half ago, it's not even two years ago.

And if you look at that time, the Canadian US dollar was around $0.80 a dollar. We're back to those levels right now so the reality is that manufacturers have not pushed the prices up when the Canadian dollar further depreciated.

So we don't see why that pricing mechanism would change at this current point in time. And in the US it's I think PPG, Exalta, they're all manufacturing the very, very vast majority, about 90% of it is out of the US.

And the two foreign manufacturers are producing most of it also in the US, so it's a US dollar cost to US dollar operations and revenue.

To be clear, we have not seen price inflation in Canada since December 2015. So these guys did not - they absorbed the exchange rate impact of the last two years.

They're very stable. They want to keep the market stable.

So we're not seeing price inflation there for - we don't expect to see price deflation. In the US, I will add though, that there is price increases that come every single year and now, we're coming into that season.

So we're expecting and it's already been announced, price increases with our major paint manufacturers coming here in sort of August is kind of the start point for that. So we'll see some price inflation coming in the back half of the year.

Okay, perfect. Thanks for the color guys.

Do you think, we could go back to the Canada segment automotive and EBITDA margin? Can you give us a sense of the magnitude of the offset that you had on that margin from the ongoing investments in corporate stores?

No, we don't give that detail of information, Elizabeth as you know. All I can tell you there, there hasn't been a major shift in our investment pattern from Q1 to Q2.

So that would not be the explanation of why the margins went up. As was explained by Henry earlier on, a lot of it is driven out of the volume of the business, and as we disclosed there, some of the compensation aspect were a little bit lower than the prior year.

Just to be clear, our foundation build in terms of rolling out PartsWatch and rolling out the rebranding and launch of Bumper to Bumper is on track. We're kind of rolling that sort of consistently through the year.

So there's not going to be major spikes in one quarter or the other. So we're very, very happy with the progress on that.

And do you expect to be finished with those initiatives by the end of 2017?

Not all. I think we'll get through the majority of it through the end of the year but as we keep opening and adding stores, there will be more that roll into the sort of first quarter.

So I'd expect some in the first quarter of next year because we're going to do it at a pace where we can do it sensibly, digest them, stand them up, and that's exactly what we've done. So we've adjusted the schedule a little bit, absorbed learnings from each one we do, accelerated some, and decelerated others.

So again, happy with the progress but it will roll over into the first quarter.

And can you give us a sense in terms of corporate stores what percentage approximately have had the branding completed at this point?

There's two. Branding is one part of it.

There's probably - Gary, do you have the number on that? We have about 29 of the stores on PartsWatch now.

So 29 out of call it.

So there's 21 branches have completely converted.

So that means IT and branding and everything.

Interior and exterior, 32 exteriors and 11 were completed interior. So it's a combination.

So we're taking them in different stages. If you think about it, the PartsWatch implementation is not necessarily directly aligned with the exteriors and the interiors.

So we're taking them at a sort of measured pace to make sure we don't disrupt any business in the interim. So PartsWatch about 29 down and we've got today's store count in the mid-50s.

So we've still got some room to go and a lot of them are accelerating through the balance of the year.

Okay, great. And just one more if I may on EBITDA margin in Canada again.

You highlighted in the MD Day, the better growth margin as a result of higher margin to install. Is there anything related in that to the loss of the independent member you disclosed in Q1?

No. As our ratio changes a little bit from corporate stores to independent jobbers, we're having store up margins, which are at a higher level than what the independent jobber margins are.

So over time, I think you'll see those creep up, but equally so, so do our headcounts and everything else. So that's a balance.

The independent jobber, I think Eric mentioned it, had we retained that business, which we're not unhappy about, by the way. So as I think I've shared with most of you, we'd be sort of circa 10% growth on organic.

So very significant organic growth. Very happy with the results.

And further to your point on organic growth, are you seeing this across Canada or is there a particular region where you're seeing a strong growth?

No, it's across Canada. We're seeing it across all the regions in Canada across our segments, independent jobbers and both Bumper to Bumper and FinishMaster stores.

We're very happy with the progress.

Okay, great. And just going back to the industrial paint opportunity, you mentioned the seven pilot sites.

Are those pilot sites still working towards selling paint or are they currently selling the industrial paint?

To be clear, these are what we call hubs. So the seven are actually hubs for inventory.

Then we'll have lower levels of inventory in the 18 spokes, total and the remaining spokes of it. So I think we're just beginning.

Steve?

They're not all up and operational really in two markets, the Denver market is where we started and now, we're into the Great Lakes area. And as Henry said before, is we are being very methodical on rolling these out, making sure that the service levels, the inventory, the technology, the support levels are all there before we move on to the next site.

So as the year progresses, we'll be into more of these locations.

We're not in a hurry, by the way. So I mean we're taking this thing very consciously on a very measured pace but we remain probably even more optimistic now in terms of the longer term results because the early times are so good.

But again, one market, two markets, and we're moving on from there. That will likely accelerate was we get farther down the implementation road.

Okay, great. That's all from me.

Thank you.

Henry, on industrial paint, at the stores that have been converted, can you speak to the investments that have been required there in terms of the additional sales staff that have needed to be hired? And are there any - can you tell if there's going to be any investment in IT needed at those stores?

So Jonathan, what we explained to the market was that for the seven hubs that we're putting together, the overall capital investment is about $500,000 combined and no more than that. We are at about eight and we will be adding.

Really, where are we investing if you think about it. There's a little bit of investment on the storefront from a lease hold improvement standpoint.

We're going to invest in resources and we've done that and will continue to do that as we grow the business, and obviously, we need to invest a little bit on inventory to be able to service the customers. And the inventory level is no different really than in the refinish business.

So it's not a business that offered significantly differently from an inventory level perspective.

So we put the inventory in ahead of the sales a little bit. So you'll see a slight spike in the inventory as we load that in.

The lease holds are minimal. It's really, for us, it's about the people.

This whole business is about having the right team and the right people and I couldn't actually be more excited. I've had a chance to meet the team and they're actually chomping at the bit.

We're having to slow them down to be honest. They've got lots of opportunities in their pocket in terms of being able to grow the business, but that's where the investment is, making sure we hire those people.

We're hiring them ahead of the curve right now. So if there was anything that would hit us on the expense side, it's actually the people cost, which we're totally fine with.

Right, and that would be included in the EBITDA margin guidance you provided. But will the existing point of sale system do for the industrial paints?

Absolutely.

There's no further IT investment required for the industrial paints.

We've got a very good IT platform and a very good IT team, quite frankly, that is very innovative and growing that business and helping the business grow.

Okay, great. And on the refinish paint, Henry, you mentioned there will be some price inflation in the second half.

Can you speak to how price inflation was in the first half of the year?

Steve, you can do that one. Clearly, we didn't get much in the first half.

We really didn't see anything in the first half and traditionally, this is the time of the year when the paint companies announce where they're at and we're on pace. The price increase is similar to what we experienced last year and we expect it to last for the next few months.

Can you speak to the magnitude of price inflation that you're hearing from the suppliers?

It's similar to last year is I think the best answer for that.

It's similar to last year [indiscernible] quantifying is around low singles. They don't go up 10%.

Their stuff is always sort of low singles.

I think it's been about 2% historically?

You've got to remember there's two things, there's the gross and the net. We get the gross with some customers so they may go out with 4% but you get it with 50% of the business that goes through there.

You may get down to a net number in that zone.

Okay. And on Canada, I understand that there has not been any price inflation since December 2015 but will the fluctuation of the Canadian dollar provide some near term opportunities to capture some additional margin?

Not really, Jonathan. I don't really foresee that.

A I said, the Canadian dollar right now is more or less the same level it was about two years ago, a year and a half ago. So we don't expect any price pickup or price reduction on that side.

Margins should remain pretty stable as it relates to the product itself.

The one thing that's nice about seeing the Canadian go up is that we're at a lower tax rate in Canada on the earnings side. So it's helpful.

Right, and can you speak to the organic sales trends that you've seen in July?

I think we're carrying on a not dissimilar pace. It's not over yet but we'll see how the month end goes.

It's always - part of the way through the month you can get excited then people go on vacation for the last weekend of the month. It's always tough to forecast but we've had good momentum through the quarter and then into July probably had more momentum in the sort of May and June.

April was okay. I think May and June was really god and we're seeing a really good July and we've got a foot on the gas pedal right now in all fronts.

And I would add that I couldn't be happier to have Brent back in the saddle. He's already digging in, already spending time with our customers, and he and Gary are out making sure we're highly customer focused in the field.

So I think that's going to be nothing but positive in terms of continuing the momentum we have.

Okay, and at the Bumper to Bumper stores that have been renovated, has there been a lift in sales that you can speak to?

I think one of the things I'll tell you, the Bumper to Bumper stores are doing really, really well and as we looked across the country, we had some historically they've always done really well. Bumper to Bumper has sort of helped them along the way.

I think there's other ones that we bought some that we would say they were not necessarily performing at a high level. Our work and when I talk about sales initiatives, in Canada for example, we've got a great corporate store, Keane, now both in the East and the West.

So where we had underperforming operations, you go in, you rebrand, you put the new systems in place. Equally, we're also focused on the sales leadership and the product mix in each one of those sites.

So this is very sort of hand to hand combat in each one of these markets. It isn't just sort of a wholesale, put the sign up and life is good again.

It's a combination of all these things. So I think one of the most exciting things is that coupling with the Bumper to Bumper brand, the sort of re-launched sales and leadership team within the corporate store group is actually delivering those results on a day-to-day basis and turning around anything that was sort of less than up to our optimal performance standards.

So I think we're seeing lifts at probably a higher rate and we see good sort of static and single digit growth from some of the others. So we have corporate stores that are up to sort of 7%, 8%, 9%, 10%.

We have others that are 4%, 5% that are a little bit more mature balance between the two.

That's good color. Thank you.

And Henry, you mentioned that Parts Alliance U.K. business that you've seen early signs from that that are extremely positive.

Can you speak about that a little bit more? Has Parts Alliance added any branches over the two months since you announced the acquisition?

Not since, I'll throw that to Peter into some stuff. But I'll tell you, Peter and I spent a lot of time together over the last sort of eight months and I've had the chance to go out and see the business.

Peter and I connected town halls in two major locations with probably a top 200 or so team members in the company, launched the transaction, launched the new initiative. And when you do these things, you're always looking for signs of engagement, how do people feel about it, and I think the overarching feeling is, this is great.

Literally, nothing is going to change and we don't have to change jerseys. We don't have to conform to some other - if they went to one of our other competitors where they're all standard brand.

Those things all sort of disrupt the business. Here in this case, they didn't get sold to another private equity firm.

They got sold to a strategic and I think the feeling overall has been extremely well founded in terms of the future for us. What do you think, Peter?

Yes, just picking up on that point, morale is very high at the moment and that does, I couldn't quantify it, but that does have some positive impact on a sales driven business. So that's a good thing and I see that continuing.

Just on your point on new branches, we have actually opened two branches in the quarter but that's insignificant in the results that we would report. But that's something to come in the future.

I think the overall market is in pretty good shape as well. I think the car park is aging.

Fuel prices are still relatively low so miles driven, exchange rates as well. Sterling means that there's more staycationing [ph] going in the UK, adding to vacation homes in the UK so there's some positive dynamics that drive the business as well.

We secured the team and one sign you always like for is if there's people that don't like the transaction, they go off and go elsewhere. We're not seeing any of that.

You haven't seen any of that.

Okay, thanks. And Eric, one last question if I may.

Would you be able to just explain the FX option transaction you entered?

June 1st, we bought an option for an equivalent of £70 million, Canadian dollars to pounds and we bought an option for £138 million from US dollar to pound. Those options are in place until the end of November, which is the date that the deal could ultimately be close.

We know now that the deal is expected to close in August and therefore, those options - in the case, in one case, the option is in the money. In the other case, the option is out of the money and when we're going to close the actual transaction, those options will be collapsed and be borrowing accordingly.

Okay, so this is a collar?

No, it's a straight option. It's a right to buy a currency at a given price up to a certain point.

Okay, but there's two?

I have all the upside. Yes, all we did is slice it into, by the way, of how we structured the financing.

All the upside if the currency move in our direction and I'm protected against the downside if it goes the other way around.

In this case, it was a very good move for us.

Okay, thanks for your comment.

Just to go back to the Canadian margins, the margin compression that we saw in the 1Q period on the year-on-year basis, would you view that more of an anomaly then pertaining to that particular quarter or is that how we should be looking at that then?

Are you talking about Q2 last year?

Q1 I think.

The Q1 was down 200 [indiscernible].

As we said all along in Q1, we were not surprised by the margins. As we said, we're making investments.

As Henry pointed out, there's a question of volume and there's a question of integration of the risk buss that we bought. So if it was on the low end, yes, it was on the low end but as I said, year to date we're back to the margins, very similar margins that year to date we had last year.

And there is seasonality, as you know, in our business.

The first quarter is always a softer quarter for us in volume. Second quarter, third quarter in Canada in particular picks up.

And then you couple that with making the investments in the quarter. So any one quarter can be somewhat different but again, we've always alluded to the fact that with making all these investments, even with the investments, we expect to be at the similar EBITDA rate we were last year.

And we've always suggested once we get through the investments and start adding volume than we expect our EBITDA margins to rise and we've kind of, as we shared that with everybody, we're not giving guidance but our expectations are sort of longer-term 8%. That's where we're heading.

So certainly, that and we're always working for more.

Then just on the organic growth, you talked about - I guess the customer loss there that you identified at 1Q that was similar magnitude impact in the 2Q period?

Absolutely. That's just a customer loss.

We have them. I noted it because it was a little unusual.

We don't lose them very often and this was something that recently conscious so at the end of the day, and I've highlighted that with the investment community over the years, there are going to be some folks like that, that are more competitors than they were customers. So it actually fits with our strategy extremely well and that's why you'll see us open up Greenfields in markets where we're not covered.

So for us, we took that and moved forward in the first quarter and we're carrying on today. And again, 6.2%, that includes the total number.

So we'd be sort of 10% organic growth without that customer.

Clearly, if you're comping at 6.2% or 10X, the customer loss, you're stealing significant amounts of market share from somebody else in the market. Is that a fair statement?

Stealing is such a violent word. I think we're earning and gaining market share in - it is one area.

I think it didn't come from that one spot. In fact, that's not where, I think we got some gains certainly in that particular market but we're equally gaining across the country and we're gaining it in independent jobbers, which we love, and we're doing a really good job.

We're highly focused on servicing those folks. We're gaining it in the corporate stores as I talked about, the performance in terms of our Bumper to Bumper stores we're really pleased with, and then FinishMaster Canada, it's doing a great job.

So we couldn't be happier in all three of those segments. So I think yes, we're gaining share for sure but it isn't kind of isolated to one specific segment or one specific geography in Canada.

And just in terms of FinishMaster, there's been a few news items regarding new private equity, money coming into paint body equipment market. So in terms of what you're seeing on deal flow, have you seen any signs of increased competition no the FinishMaster deals?

That happened fairly recently so not as yet. We cultivate our targets over a very long period of time and there's going to be targets that are going to fit with us extremely well and we're strategic.

So it's a big, big difference between getting acquired by a private equity firm and getting acquired by a strategic. I think we just talked about that with Parts Alliance Parts Alliance had that option as well in terms of going back into private equity.

So there's going to be people that could go either way, but we're head down, focused on our segment and we can't buy everybody. So that's just - that's not what we're after.

So our pipeline right now is still very strong. We're focused on the tuck-ins that make sense to build out our geography and build density in those markets, and so far no impact to us.

The one thing that I'll throw in there is that we have been very rock solid on what we pay for these acquisitions and we don't see that changing. We will not overpay for an acquisition no matter what private equity decides to do in the market.

So that still remains a steadfast principal for us.

Okay, and just overall, there's lots of discussion right now circulating on e-commerce. Can you give some thoughts on your view of the evolution of this trend in terms of your business model over the long-term?

Is it something that you believe could potentially have an impact at some point down the road?

I think anything is possible in the world. Just sit and put your head in the sand and say you're never going to have any impact from ecommerce would be silly.

I think where we are today is that, I've highlighted it for obvious reasons, the constant people talking about Amazon threat, Amazon threat, and it's having an impact on the prices, as you know, in the US automotive segment. But we are - all of our businesses, FinishMaster is probably 99% commercial.

We're 95% in the UK. We're over 90% here in terms of Canada.

Our focus has always been that commercial segment. So our ecommerce initiatives all are designed around servicing those commercial customers in the way they want to be served both today and tomorrow.

So we've got a host of initiatives in the ecommerce arena that are designed around that. So today, we're as far advanced or more advanced than any of our competitors in that area.

We're not sitting here planning to roll out drone delivery of auto parts and mufflers to our customers across Canada today but we're absolutely wide open and trying to innovate in terms of the things that we do on the ecommerce side to make sure we're not following - we may not be bleeding edge but we're not going to follow.

Is there some areas of the business you might view as more risky in terms of penetration on ecommerce initially?

I think it goes back to the component of retail. Any time you have a retail business and you have people, we call them weekend warriors, that are out there fixing their cars on weekends because they have a choice.

They don't need to fix it the same day. It's not sitting on a hoist.

That's a segment that's going to be more susceptible to the e-commerce penetration market. Our business is highly driven by on hoist.

That's why we have fleets of cars to make sure that we have the product to them in literally minutes, within the hour, depending on where you are in the geographies. We're there frequently multiple times a day and that is the business model.

So I think the automotive segment has more. The paint is going to be even more challenging to penetrate in terms of the e-commerce view, if you will.

Okay and then just last one. In terms of M&A, it sounds, I've listened to you talk.

I guess I get the impression that the new term opportunity is in the UK. Am I thinking about that right and should we anticipate similar transaction multiples to Parts Alliance over there?

We haven't declared the Parts Alliance transaction multiple yet because we don't actually own it yet. So it's not like I can sit here and tell you what they're paying, but I think there the multiples are reasonable, I would say, over there.

I think we're excited about the opportunities at Parts Alliance, but that doesn't mean - we've got a pipeline in both our current businesses. We've got a great pipeline in the US, we've got a great pipeline in Canada.

And we've sort of communicated that on a consistent basis that we're going to make the right decisions in a very disciplined way, making sure we target specific areas and geographies we need to build out in the US. The same goes for Canada and remember, we're not - we'll open up greenfield but we're not going to compete with our members and that's why we don't have a host of greenfields opening up all the time.

So there is a strategy in terms of the pipeline for Canada specific to the members that are deciding to retire, our competitors members that are deciding to retire, and we're building it out that way, not to add capacity to the market. And again, that's a balance that we have in Canada between making sure we support the independent jobber customer member today and making sure that we continue to accelerate growth in the business, and make sure our footprint overall is extended.

So we're actually looking for more jobber customers across Canada. We're happy to acquire good ones that pay reasonable fair multiples as we discussed in Canada.

Sorry, I just want to ask one more question. In terms of the industrial paint initiative, you talked about the inventory, needing the inventory.

Do you have the floor space available in the current store footprint to add the product?

Not any issue, Michael. We have the space and the locations.

We have the space in the DCs and if ever down the road in a few years we need more space in the DCs, well, that will be a good problem to have. But I can tell you that I don't see that real estate need anytime soon just because of the industrial segment.

We've got room.

Got it. Thanks a lot.

Just to come back on the paint side, you were previously talking about the opportunity to convert eventually some body shop when we talk about the product line changeovers but when you look at the impact, would it be fair to say that the conversion has not been high as expected earlier?

Anything under 100% is disappointing to me but probably not realistic. The conversion rate is already settled.

For us it's what we call, the conversion rate sell. Now, we're into win back is that's what we call the program.

So we continuously working on winning those back over time. When you do a product line conversion like this, if the body shop happens to be using that paint, it's sometimes hard to convert them immediately because they're already using that paint and the conversions have been harder and tougher to do.

But equally, we're seeing some win back where they weren't necessarily happy with the replacement service they were getting and we were able to convert those customers. So that's an ongoing initiative for us and I tried to quite frankly help all of you guys figure it out in terms of the impact in the following quarters.

So the balance of the year, 4.6% and then the 2% in the fourth quarter. Then we get into a lapping event and we're strictly focused on organic growth.

Yes, okay. And maybe one question for Eric.

Could you talk a little bit about the working capital implication? We know it's moving on a seasonal basis, but for the full year, what type of number would you be looking at?

We haven't given any directions on that, Benoit. But all I can say is that we do build up inventory in Q1, as you know, for the Canadian business.

There will be a new factor with the Parts Alliance addition to our overall portfolio and we always are focusing on optimizing the inventory and having the right product in the right place. So do I expect a little bit more optimization on inventory over the next foreseeable future?

The answer is yes. But is it going to be material, I would not say that it would be material but there will be some slight improvement to current business.

Okay, perfect. Okay, thank you very much.

Thanks, Paul. Appreciate it.

Thank you everyone. I want to thank you for your continued support.

Just know that we're staying highly focused on executing our initiatives and delivering results. And the initiatives we're talking about are both for building the foundation for the long-term growth of the company as well as delivering on our ongoing results.

So thank you. Know that we're highly focused on those two things and we look forward to speaking to you on our next call for the Q3 update.

Thanks everyone.