Thank you, Julie. Good morning, everyone, and thank you for joining us for the Uni-Select third quarter conference call.

Presenting this morning are Brent Windom, President and CEO of Uni-Select and President and COO of the Canadian Automotive Group; and Eric Bussieres, Executive President and Chief Financial Officer. Following their comments, we will open the call for questions.

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

All amounts are expressed in U.S. dollars except as otherwise specified.

With that, let me turn the call over to Brent.

Thank you, Louis. Good morning everyone and thank you for joining us.

Our third quarter sales improved significantly through the trough experience in the second quarter nearing the bounce back in the market. As expected, the auto parts businesses rebounded more rapidly than the paint business.

First, I would like to thank our team members for their continued hard work and dedication in these continued and unprecedented challenging times. Without them we could not have achieved these improved results.

I would also like to thank our customers and our supply partners for their unwavering support. Today, I'll provide a brief overview of the market conditions, a summary of our third quarter results by business unit and update on our COVID-19 measures and the continuous improvement plan.

Following my comments, Eric will review our profitability and financial condition and we will provide an outlook based on the visibility as we have it today. So let's turn to Page 4 for the general market conditions please.

It is important to highlight our three businesses are highly correlated to their respective market performance. As a result, our third quarter sales followed the upward trend experienced in the market for most of the quarter.

In the U.S., the CCC reported a mark month over month improvement from April to August with a slight pullback in September, followed by a slightly better October. On an average, the market was down approximately 20% in the months of July, August and September in line with the sales decline that we have seen at FinishMaster for the third quarter.

In Canada, according to the Waze Mobility and EY, the percentage of change in the kilometers driven improved month over month in the trough set in April until August, returning to 2019 run rates in the summer months. However, September and October, we are seeing a slight reverse in the trend.

In the UK, the impact of the pandemic hit that hard initially, but it has been the quickest market to recover. According to the UK Government statistics office, the car road traffic increased sequentially in the past quarter from 83% of normal levels in July to 91% in August and 92% in September.

However, with the recent reconfirming, the trend is back down to 85% of normal levels in October. At this point, we're seeing some pullback in all three markets in October.

TPA and the lesser extent Canada are being impacted by closures and reconcilement measures due to the second wave of COVID-19. The U.S.

refinish market continues to be impacted by the driving patterns and more miles driven with an impact on claims. However, we do not expect the retraction at this junction to be as severe as the second quarter.

Given the market conditions, in our seasonality, we're expecting softer sales in the fourth quarter. Now let's turn to the impact on currency on Page 5.

The appreciation of the U.S. dollar compared to the Canadian dollar and the appreciation of the British pound versus the U.S.

dollar translated in 2.9 million positive impacts on our consolidated sales in the third quarter. Turn to Page 7, please.

Before I review the results of the quarter, I wanted to provide a few comments on our historical seasonality pattern. The table you see on Page 7 is our typical pattern pre-COVID-19.

While the impact of the pandemic has restored this typical pattern, we still expect our fourth quarter sales to be soft for the reason I mentioned earlier. Beyond that, we are currently reviewing the seasonality pattern in light of the permanent changes brought on by the pandemic.

For example, the fact that the UK Ministry of Transport's mandatory testing of vehicles was pushed back will have an impact on the seasonality of TPA's results. We will provide an update as required.

Turning to Page 8 and the key highlights for the third quarter, the overall third quarter results were better than expected, but the magnitude varied by business units. The actions we put in place on the onset of the pandemic clearly mitigated the impact on our results.

Consolidated sales for the third quarter were down 12% to $395 million from $451 million last year, primarily attributable to the slower recovery at FinishMaster as expected, while we had good performances at both CAG and TPA. In fact, organic growth improved significantly from the negative 31.9% in the second quarter to a negative 12% in the third quarter.

Adjusted EBITDA amount of $33 million from $38 million last year while our consolidated sales will now return to a normalized level, we managed to maintain our adjusted EBITDA margin at 8.4%, a testament to the successful execution of our business continuity plan and our continuous productivity improvement initiatives. These actions combined with a focus on our working capital management translated into a strong operating cash flow generation of $62 million, which we use primarily to further reduce our debt by $47 million, a remarkable feed in these times.

In the third quarter, we integrated 30 – 38 company owned stores, primarily at FinishMaster, and we ended the quarter with 393 stores in the network. Please turn to Page 9.

I'll give a quick update on continuous improvement. Recall that we announced expected improvements from the CIP in June.

These newly implemented initiatives are based on a long-term approach to further improve our productivity and efficiency in all segments. While ensuring our customer service levels remain our focus, the plan had an objective of generating $28 million to $30 million in annualized savings by the end of 2020 based on the first quarter run rate, our operating run rate.

In the third quarter, we generated $16 million in annualized cost savings. Combined with a savings realized in second quarter, we generated $30 million in annualized cost savings, since we launched the plan.

Essentially completed on plan, the plan on target and ahead of schedule. Having said this, there remains ongoing initiatives for FinishMaster.

On an on basis, all three business units will continue their journey towards a continuous improvement culture. In fact, the pandemic helped us identify other opportunities to accelerate our transformation.

From those, we are driving a number of initiatives in each of the businesses to improve our overall efficiencies. In conjunction with the businesses, we have formed a continuous improvement team that focuses on identifying and implementing these various initiatives.

Again, I would like to thank our channel, our manufacturer channel partners for their collaboration and support. And certainly our customers and our team members’ success and safety are and remain our primary focus.

Let's turn to Page 10, please for FinishMaster. At FinishMaster, we are experiencing the market recovery in line with what we had telegraphed in the past few months.

Sales were down 24% to $163 million in line with the markets we operate mainly related to the COVID-19. Our organic growth improved from a negative 36.6% in the second quarter to a negative 24.1% in the third quarter, refinish market continues to be softer than other segments of the aftermarket.

Having said this, we believe we are maintaining our market share and fully meeting the expectations of our customers in these challenging times. In the quarter, we integrated a number of stores while minimizing the negative impact on sales.

And we ended the quarter with 148 stores or 30 last company owned stores. We're confident we will continue to serve our customers in the same manner before with this footprint.

The adjusted EBITDA decreased to $7.9 million or a margin of 4.9% and $21.4 million or a margin of 9.9% last year. The decrease is due to the lower fixed cost absorption, rebates, the timing of price increases from paint manufacturers last year, which did not repeat this year, and the shift in customer mix.

It was partially compensated by the savings in the CIP and reduced expenses. In fact, we continue to see the impact from the channel shift as national accounts have grown market share by 100 to 200 basis points according to our internal data.

Our teams will continue – are and continue to review the strategy required to grow our value to our customers in order to remain in our number one market position. Please turn to Page 11 for the Canadian Automotive Group.

At the Canadian Automotive Group, sales returned to 2019 run rate at $137 million, driven by acquisitions and organic growth. Despite the impact of the COVID-19 on lower PBE sells, similar to the U.S.

PBE sales are also lagging versus other segments the aftermarket in Canada. Organic growth improved significantly from a negative 18% in the second quarter to a positive 20 basis points in the third quarter.

In fact, the automotive parts were solid, despite the challenges we are facing with the manufacturer partners on supply chain issues. In the quarter, we integrated three company-owned stores and ended with 74 stores.

The adjusted EBITDA reached $19.1 million or a margin of 13.9%, compared to $12.6 million or a margin of 9.2% for the same period last year. This significant improvement was driven by savings from the productivity improvements from the CIP and government subsidy, partially offset by the benefits received last year, but not repeated this year, including the sale of ProColor banner.

Volume rebates, and one time incentives, excluding the government subsidies and net of additional bad debt expenses, adjusted EBITDA, excuse me, will still have been much better than last year at $16.1 million or a margin of 11.7%. Our team's ability and dedication to manage the business continues to grow and is showing sustained improvements in our profitability.

At the end of the quarter, we completed the acquisition of Pièces d'Auto St-Jean Inc., a leading distributor of automotive parts and paints with two locations in the Province of Quebec. This expands our corporate store footprint on the Montreal South Shore region, and will complement our strong network of independent members.

Recently, we announced the appointment of Doug Coates, SVP, General Manager of the Western Region. Doug is a former CEO of one of Canada's largest privately held automotive distributors.

We also announced the appointment of Jason Best to the newly expanded role of SVP General manager of the Eastern Region. We are confident that these changes will continue to improve our focus and execution in order to pay the way for our continuous success in the Canadian market.

Turning to Page 12 for the Parts Alliance. TPA had a strong recovery in the third quarter, as the actions taken over the last few months have borne positive results for the team.

Sales reached $95 million compared to $98 million last year. Organic growth improved significantly from the negative organic growth of 41.7% in the second quarter to a negative 5.3% in the third quarter, a remarkable recovery in a short period of time.

In the quarter, we integrated five company-owned stores and in the quarter with 171 stores. The adjusted EBITDA reached $8.7 million or a margin of 9.2% to $6.5 million or a margin of 6.7% last year.

These results were driven by the savings from the productivity initiatives, from the CIP, reduced spending and governmental subsidies. Excluding the government subsidies and net of additional obsolescence, the adjusted EBITDA will still be much better than the last year at $8.6 million and a margin of 9.1%.

We believe this profitability is sustainable and will be further improved. In fact, our team is acting with great urgency and continues to build talent in the areas of logistics and sales execution in this environment.

With that it completes my first section, I will now turn the call over to Eric to review the financial review.

Thank you, Brent. And good morning, everyone.

In the third quarter, our net finance cost was $8.8 million, compared to $7.9 million last year, mainly due to higher interest rates following the issuance of the convertible debt in December, 2019, and the bank refinancing in May 2012. In addition, our income tax rate was much higher at 34.5% this quarter, compared to 8.5% last year, primarily due to the non-taxable of the gain on the sale of the ProColor program in 2019, as well as the taxable portion of this same game, which was offset by digitization of capital losses previously unrecognized.

Excluding this gain, the 2019 tax rate would have been 26.8%. As a result, we reported net income of $4 million or $0.11 per share versus a profit of $25 million or $0.58 per share last year.

Adjusted earnings for the quarter were $8 million or $0.18 per share versus $11 million or $0.25 per share last year. The decrease in adjusted earnings was mainly attributable to lower adjusted earnings before tax and a different income tax rate.

However, it is important to note that the adjusted earnings improved significantly on a sequential basis and turn positive in the quarter. Now, let me comment on our cash flow on Page 15.

Recall that our third quarter cash flow from operation is typically positive. And we were able to maintain this as an early trend even in the face of COVID-19 where our revenue were impacted by 12% compared to the same period last year.

We generated $62 million of cash flow from operation in third quarter versus $2 million last year and $35 million in the second quarter. This significant improvement was mainly due to our tight working capital management and the timing of vendor financing.

We continue to manage our inventory tightly. In fact, since the beginning of the year, we reduced our inventory level by approximately $140 million, of which approximately $100 million to $110 million should be considered a permanent reduction of going forward.

As a result, we generated $33 million of free cash flow for the quarter compared to $30 million last year. This increase is primarily due to lower capital expenditure in line with our tight cash management plan.

Turning to Page 16. We can observe that we kept our capital deployment to a minimum.

In the third quarter, we continued to invest modestly in CapEx and merchant advances and use our cash mainly to reduce our debt in line with our capital allocation priority. Note that the dividend paid in April was the last one paid as all future dividends have been suspended in order to provide more financial flexibility.

Turning to Page 17. As of September 30, 2020, our outstanding total net debt stood at $397 million, including $97 million of IFRS leases obligation, a decrease of $47 million versus the $444 million and $94 million respectively three months earlier.

We were able to accomplish this in a difficult operating environment due to efficient control over working capital limit and reduce spending. When you exclude IFRS leases obligation, total net debt to adjusted EBITDA stood at 3.2 times versus 3.29 times for the same period last year and 3.6 times in the second quarter.

Turning to Page 18. Furthermore, we maintain sufficient liquidity at the end of the third quarter.

We had $252 million available in our credit facility, $19 million of cash on hand and $17 million of letter of credit for a total of $254 million of available liquidity. We remain in compliance with our bank covenants.

Based on our assumptions and expectation, we believe that our current liquidity and future cash flow in the coming periods will be sufficient to meet our operating, financial and capital needs. Turning to Page 21 for the outlook.

Let me start by saying that yet there’s still related a significant uncertainty going forward from the pandemic, our outlook is based on certain assumptions and visibility as of today. As mentioned a few times on this call, our sales are highly correlated to the markets.

The aftermarket and refinish market for October 2020 showed seasonal and COVID-19 weakness, compared to September, breaking the sequential improvement experience since the beginning of the pandemic. More specifically for FinishMaster, we continue to expect sales recovery on a regional basis with national and MSO sales recovering faster than the independent channel.

Overall, it will take more time for the sales of the segments to fully recover. In fact, at this point we expect the refinish and PBE markets to continue to be behind the pre-COVID-19 level for their short, medium term, as lower miles driven and traffic density has significantly impacted the claims.

For CAG, we expect fourth quarter sales to be in line with the same period last year, when normalized for the disposition of the ProColor banner last year. For TPA, we expect the Ministry of Transport required testing will be more than offset by the market challenge with the ongoing shutdown due to the second wave of COVID-19, coupled with the hangover effect from the uncertainty of supply chain impact related to Brexit.

However, we do not expect this dip to be the same level as the one experience of the second quarter, since the Ministry of Transport has no further – not further delayed inspection and installers so far remains open. Overall, we expect the experienced supply chains issue with manufacturers pattern into the first quarter of 2021 to continue to expect the company consolidate sales to be back to more normal levels starting in the back half of 2021 or early 2022.

For modeling purposes, net finance costs in the fourth quarter should be marginally higher with better third quarter, while the Q4 tax rate should be between 20% and 25%. We'll continue to focus on tight cash management in the period of reduced demand.

In fact, we expect to generate neutral to marginally positive cash flow for the operation – from operations in the fourth quarter. We will manage capital investment and working capital prudently.

As it relates to CapEx, advance to merchant members and incentives to customers, we are in the process of relaunching certain initiatives and other will be delayed to 2021. For the full year of 2020, we now expect to invest between $10 million and $12 million in CapEx and approximately $6.5 million to $7.5 million or approximately 45% of what we invested in 2019 for merchant members and incentive to customers.

Taking into account, all of these variable, we expect our total net debt level at the end of the year to be similar to the third quarter. However, it should be noted that we expect the debt level to raise in the first quarter due to seasonality, restocking, and payment of rebates to our members.

In line with this, we expect to use our greater level of cash flow from operation in the first quarter of 2021. We are confident that we have a solid financial plan to address the current crisis and sufficient liquidity to meet our current operating and capital needs.

This completes the financial review of the third quarter. I will now turn the call back to Brent.

Thank you, Eric. In conclusion, we expect the fourth quarter to be a softer given the normal seasonality patterns.

The volatility and market conditions brought on by the onset of the second wave of COVID, as Eric mentioned, and the slower recovery in the paint business in the U.S. But we are – we continue to be confident that our business and our ability to maintaining our market share and our market position.

We are executing a continuous improvement culture for sustainable results and growth and are building the talented leadership team with a high level of focus on execution and urgency. We have a financial flexibility to execute our business plans in each one of the businesses.

We are a resilient industry and we are proving that each and every day. I would like to first thank our team members again, for their commitment to adapt and to execute and for our customers and suppliers and shareholders for their support.

With that, I will turn it over for questions.

Good morning, Brent and good morning, Eric. And congratulations for the strong improvement in the results, especially in the current context.

Thank you.

When we look at your comments in terms of outlook, obviously it seems that cautious outlook about the given the second wave. Gentlemen, where do you see the greatest impact and what kind of weakening as we seen in October in comparison to September?

I would say that right now, our biggest concern and focus certainly is probably the TPA in the UK with their reactions to COVID-19. Certainly, we are having hot spots inside of Canada, but really, I would say TPA at this point.

Okay. That's great.

And great disclosure about the impact of government subsidies, are there any amounts we should expect in Q4 and beyond?

The only amount for now, Benoit, we foresee is subsidies in the UK, as it relates to operating expenses. They have a program to support the companies on the least type expenses.

So it should be in the same type of magnitude that we've disclosed in Q3 or Q4.

Okay. That's great.

And also congratulations about the recent addition with the Doug Coates, could you discuss the opportunity to leverage Doug’s strong background and maybe provide an update on the strategy in the Western Canada and the opportunities ahead for Uni-Select?

Well, I think Doug's long tenure in the automotive aftermarket and run stores and understanding the market will certainly benefit all of our team members as well as our customers. And certainly we feel it's a huge opportunity for us to do that.

He and Jason both are industry guys within the Canadian market for all their lives. So we feel like it really aligns us to be able to leverage their expertise.

And certainly we're very proud that we could have both of those guys leading the Canadian group.

Okay. And with respect to the recovery to pre-crisis level for CAG and TPA in the back half of 2021, the second wave change your expectation about the timing of the recovery for those two regions?

Well, I'll speak and then I'll let Eric comment. I think that's the reason we're staggering into the latter part of 2021 and the early part of 2022.

Because I think, the trend was very, very positive for us in Q3. And so we're being – we’re just trying to be cautious and certainly we're not pessimistic at any shape, form or fashion.

The business is solid in all three, so.

Okay. That's great.

And the last one for me, could you just talk about the price paid and revenue contribution for the two stores that came from the acquisition of Pièces d'auto St-Jean?

Yes, so the price paid is approximately $5 million overall. And the contribution will be – I'm not going to disclose too much details on this one.

Benoit, because it's relatively small. But I think it fits squarely in the strategy of Canada and it will enhance the results of Canada over time.

So we're quite happy with that addition.

Okay. And 5 million it's U.S.

or Canadian, Eric?

Yes, it's all in. It's about in U.S.

dollar equivalent.

Perfect. Okay.

Thank you very much for the time.

Thank you.

Hi, good morning, guys.

Good morning.

Good morning.

Congrats on the excellent quarter.

Thank you.

My first question is just on I was hoping maybe we could dig into FinishMaster a little bit. I appreciate the color that you provided, but just wondering maybe you could speak to what you're seeing with regards to the MSO sales recovering faster than independent channel, and really what’s driving that?

Yes, look, it's an interesting question in a sense that the way we've experienced and where we've seen in the various channel is that the MSOs have rebounded faster. Why is that?

There's a couple of theories out there, but one could be simply that the insurance companies are redirecting traffic to those MSOs, since they have the capacity to accommodate that volume with the overall decrease in the market of activities and some independent I think were slower to get back into the cycle that experienced in Q2. So what's interesting is some of the intended remain open throughout Q2.

They preserve their volume to a certain extent. They were impacted by COVID, obviously, but they stayed open.

Some MSO was actually shut down in Q2, a number of their company-owned operations and have restarted them somewhere in Q2 and sort of back on track, right. So it's that mix that we saw is the evolution in Q2 and further estimate in Q3, where the MSOs clearly have rebounded a little bit faster.

I don't know Brent if there's anything you want to add to that?

No, I would concur. I think, they're just very aggressive as they come back out of the COVID shut down.

It's just a channel shift that I think we will continue to see.

Okay. And in terms of, I guess, going forward, perhaps maybe looking ahead.

Do you think, like this kind of mindset that insurance companies are taking with a preference for MSOs in this environment, do you think that'll continue post-COVID, perhaps if they see better service levels from the MSOs versus the independents?

Look, it's hard to speculate what they will do or not. I mean, there is the MSOs have a value prop, the traditional segment has a slightly different value prop.

So it depends on what the customer is looking for. And ultimately the insurance companies are probably trying to balance the two to two sets of books, right.

And my experience with insurance companies, they don't want to put all their eggs in the same basket. So they do want to have some diversification to service their customers.

And we would expect some of that to continue. Having said that, there is clearly a long-term trend of consolidation in the MSO market and the refinish market, and that trend in our opinion will continue in the foreseeable future.

Okay, great. That's very helpful.

I was also hoping maybe we could, I was curious about the margin and it was very strong this quarter. I'm just curious how we should look at a sustainable margin going forward.

I mean, there was a bit of noise with the cost out and the government support this quarter. And I know you provided some color on what the margin would have been – without the government support, but how should we look at it in the next four quarters?

Well, look, Brent will complement. But if I take it by business, in the Canadian business, in our opinion, it's very sustainable.

It is seasonal in Canada, as you know, to Q2, Q3 historically has always been stronger than Q1 and Q4, partly because of weather-related events. But not withstanding all of that we expect improvements – sustainable improvements in the margins that we've experienced in Canada.

Q3 was a very, very strong quarter, in fact probably one of the strongest in the last five years from my own personal experience. There have been a lot of things done in the past, and that journey started in 2018 and there are some robust processes and procedures that have been put in place.

And as we've optimized our resources, we see the benefits, right. Then we expect that to continue its course in those type of range removing, obviously the subsidies.

On TPA, look, we're quite happy with the rebound. There's real actions that have been taken.

I will say on that basis, we'll be walking before running on the margins, but we're very encouraged by the progress made at TPA throughout the year. And there's good things also being worked on that should make this sustainable.

FinishMaster, it's a mix, right. I mean, the fact that I – we lost north of $50 million of revenue this quarter compared to the prior quarter last year, volume has an impact on a distributor margin.

So you got to factor that in your analysis. We believe it's at least a 100 basis point of impact on the EBITDA just the volume aspect, 100 and 120 basis point.

And then you looked at the dynamic of the market, the MSOs, and we're working really hard to right-size the model and service the two key channel, the traditional and MSOs. And we'll report more on that segment as we continue to work on its activity.

And if you look at the roadmap that we set for Canada first then TPA, now FM, we're hopeful that there's good things coming down the road.

Okay, great. That's very helpful.

Sorry, go ahead.

No, I was just going to echo Eric's comments. I think that both TPA and CAG earned the margins are in line with our expectations based on the work we've done.

And quite frankly, we're beginning to do the same kind of work in process inside TPA and FM. And certainly, we're dealing with a bit of a fluctuation due to volume, which is a little bit different than the other two businesses.

Okay, makes sense. And then just last one for me, you guys mentioned that you took a bit of a reserve on some inventory.

I am just wondering if you could expand on that and just speak to what that was about.

Well, look we – with the reduction of entry north of $140 million, so it's a little hard, but compare this a little bit to the river when the water level goes down, you may find some elements that you are not as pleased with, and some of this is linked to that. It's not abnormal when you have a change of pattern and also a bit of change of product that you're selling assortment because of the current kind of context that you'll identify certain lines that may not be as robust as you would like.

So that's part of the journey that we have to take in the last two quarters.

Okay. That's great.

Thank you very much for answering my questions.

Thank you.

Thank you.

Good morning.

Good morning, Jon.

Thanks for all the comments so far. Good morning, Brent.

Do you have the October to date sales for the three divisions for us?

Look, I think, it's very much in line with what we're seeing as market data as Brent highlighted. We – I think Jonathan, at this point, what I can give you – so if I look at FinishMaster from an organic growth perspective in October versus last year, we're down about 24% and CAG automotive in October it's about minus 2% and in TPA it's minus 4%, on a combined basis it's about 13% year-over-year sales decrease in October.

And as we said in our comments, it's a very dynamic environment out there. So it will depend a little bit what happens on a macro level for each countries in terms of how governments are reacting to the COVID situation, but it's really tracking what we see in the markets.

Got it, okay. Do you have any way to frame the impact of the UK lockdown?

I think that started around the beginning of November.

All I can say is that it was – the lockdown so far has not resulted in as much as a decrease of sales that we've experienced in Q2 for sure. It's very different.

As we said, the installer remained open. Look every day is a – it's relatively recent lockdown.

And I think October sales are came up better than we expected. So we'll address this as we experienced what's happening in the field in real-time.

Yes, I think, Jonathan – I think two things Jonathan I would say is – one is that, you know, it's really being geo-targeted from the lockdowns and the restrictions as you know especially like in Canada. And then secondly, I think everybody is learning to deal and live in the new norm.

And it's not the same severity that we saw certainly in Q2.

Thanks. On prior calls, you've provided the percentage of stores that were open.

Would you have the percent of stores that were open at the end of Q3?

To my knowledge all of our owned stores that we have not integrated – so for the integration stores, all stores were open.

Yes.

Okay. Thanks.

And as sales recover and you think about reopening stores to service demand, and I'm thinking longer term maybe post vaccine, can you service that level of demand with the new store base? And like how permanent should we consider that portion of the cost savings from the CIP?

Well, I would say, that's an excellent question. I mean, we're doing right now sensitivity studies and all three businesses were about where our footprint is and where the market is and how do we grow.

We're not going to contract stores for – so we're looking at where the greenfields need to be. In the UK we're looking at where we need to grow in Canada.

That's the reason for the acquisition. And quite frankly, we're beginning to do that work with our firm.

We certainly believe that we can service the 2019 run rate easily with the footprint we have today.

Really? So even if demand were to recover all the way to 2019, you could fully service that with the new footprint.

Okay?

Yes.

And would that include – would that include the labor though?

Well, I think, – no question you would have to increase frequency of delivery and drivers. And so variable rate of labor would certainly have an impact, but from a physical plant and a branch count, that's really what I was speaking to.

Okay. And I'm not sure if you are able to share something like this on this call, but would you be able to frame the portion of labor that's related to deliveries versus ranch staff?

No, for competitive reasons we would not Jonathan.

Yes, that's fine. On the acquisitions, encouraging to see small acquisition in Canada this quarter.

Are you able to comment on the pipeline going forward? And how you are thinking about managing cash in this environment?

Well we're certainly being prudent with our cash. But we're talking to all of our members, we're talking to them, we're trying to understand the market and what the opportunities are and we'll address those as they come up.

This was something we've been working on for some time, as you can imagine. But we're certainly optimistic about the future, especially for Canada from that regard.

Okay. And maybe just on FinishMaster brand, I realize it's very early days in terms of your assessment there.

Are you able to expand a little bit on when you might be able to share with us more about your next wave of initiatives?

Well, I would say we've got some – we've got some real work going on right now. I would think certainly by first quarter we'll be able to give more color about what we're doing.

And certainly we've been pretty transparent about our CIP in the past few months. And we'll continue to be not just on the LCM, but on all three businesses, but certainly LCM.

Okay. Thanks for your comments.

Thank you Jonathan.

Thank you Jonathan.

Good morning, everyone. Congrats on the quarter.

Good morning Zachary.

Thank you.

So the question I had on the CIP was just answered. So just a quick one on the permanent inventory reduction, which looks quite impressive.

Do you expect that there's going to be any issues with managing fill rates, any sacrifices that had to be made on breadth of scope? Or will you be able to maintain the same service levels just on a much reduced inventory platform?

So I'll take the first pass at that. Certainly none of the reductions of the inventories were really designed and put any jeopardy to our fill rates.

We just adjusted to demand cycles and it allowed us as you know to really de-stock inside of FM. But I would say that certainly we're investing back in inventory strategically and we're working with our supply partners because they are having supply impacts right now, as you know.

And that's global, that's just not in Canada, that's in UK, that's here. Certainly isn't in the PB sector as it is in the automotive.

So clearly what we believe the levels are today, we can sustain it. I think we've messaged it about a $100 million that is permanent and that's really where we're going to stay.

Yes, I want to make clear that the reduction of inventory was not done to the sacrifice of the fill rates quite okay, quite in the opposite. And the reason why there might be some fill rates issues is more with their supply and manufacturers that had to shut down during the COVID, and had a hard time to restart production line and be as efficient and productive as they were pre-COVID, just time to ramp up their production lines.

And that's certainly what we would experience more so in auto parts business and to a lesser extent in the FINISHMASTER business.

That's really helpful. Thanks guys.

I'll turn it over.

Thank you.

Hi guys, thank you for taking my question. So my question is more about the covenants that you outlined in the pre-release which was very helpful.

It looks like obviously your 2020 covenants are fairly easy to meet, given what you did today and you said about October. But can you, kind of just talk about the 2021 puts and takes and what you think – what you're thinking there?

And if there's any thoughts around if COVID shuts things down what might happen there?

So well, in the investor presentation you do have the covenants clearly stated from 2021 all the way to 2023. So I would refer you to that page, really this Page 19 of the investor deck.

And you have the ratios and the financial covenants. I think the important thing is we have a financial covenant lite structure in place to allow us to weather the storm of COVID throughout 2021 and including 2020.

And the first leverage test applied in Q4 2021. And it's based on a trailing 12 months of EBITDA and same type of methodology for interest coverage ratios.

Look, as it relates to COVID, I think, if I would have that answer, I guess I would be happily retired, right? The reality is we have to manage the business with a lot of uncertainty and we've done that.

And I think we've demonstrated that in Q2 and Q3 and we'll continue to do so.

Okay. And any thoughts on put and takes of meeting those 2021 covenant?

Well, I don't foresee any issues of being compliant to our covenant at this point. As I said Q1 2021 and all the way through Q3 inclusively we have very minimal requirements to meet.

Just take the minimum liquidity requirement is $35 million, we had $452 million of liquidity this quarter. So $252 million of liquidity.

So I think we have plenty of liquidity in front of us. And the EBITDA is a trailing 12 months total EBITDA requirements that we need to achieve.

So I don't foresee any issues there.

Great. Thank you.

Thank you very much, Julie. I like to thank each of you for being with us today.

We're very encouraged with our Q3 results. We look forward to speaking and updating you guys on our next quarterly call.

Till then be safe and have a good day. Thank you very much.

Thank you.