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

Presenting this morning are Brent Windom, President and CEO of Uni-Select and President and CEO of the Canadian Automotive Group; and Eric Bussieres, Executive Vice President and Chief Financial Officer. Following their comments, we'll 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 for our Q1 results conference call.

Before we begin, I would like to give a special thanks to our team for supporting our customers during these unusual times and going the extra mile to ensure that we've served our customers with the highest standards. We continue to manage with the proper safety protocols to safeguard our team members and our customers and proactively adjust our operations to the evolution of the pandemic.

Let's turn to Page 4 for the market conditions, please. In the U.S., the CCC reported double-digit month-over-month decline in January and February, in line with the pattern in the previous 6 months.

However, in March, reversed the negative trends in actual -- being actually up 8.1% for a total negative 9.5% for the first quarter. I would like to make 2 observations about the data, please.

First, it's important to know that we track our performance with the CCC data and in the markets in which we operate. And from that point of view, we are tracking and maintaining our overall leading market position.

Second, claims counts in March 2021 are actually down 12.7% compared to March 2019, a more comparable month that does not include the impact from COVID. Therefore, the slower recovery in the refinish market is still ongoing.

In Canada, with the limited data we have, we have seen a strong rebound to pre-COVID levels this quarter. However, there remains challenges related to the current lockdown from coast to coast.

In the U.K., the current impacts from the third confinement hit hard in January but recovered quickly. According to the U.K.

government statistics office, car road traffic hit at a low of 29% of normal levels in its worst day in January and has since recovered to over 90%. And we are proud of how the team has continued to manage through the volatility.

Overall, the industry data suggests that the performance of each of our businesses are in line with their respective market. Let's turn to Page 7 for the highlights for the first quarter.

We had a strong start to the year despite being up against the comparable quarter that was marginally impacted by the early stages of the pandemic. In essence, the auto parts business continues to improve in spite of the additional lockdown measures in Canada and U.K.

and a volatile supply chain. However, as expected, the refinish business in the U.S.

is on a slower path to recovery. Consolidated sales for the first quarter were down 9% to $370 million from $408 million last year primarily attributable to a slower recovery of FinishMaster and, to a lesser extent, the reduced number of days of -- number of billing days.

These factors were partially offset by the continued improvements in CAG and the sustained results of TPA. I would also add that we had a positive impact from the currency conversion effect.

Organic growth continued its sequential improvement and ended at a negative 10.2% for the first quarter, up from 12% in the fourth quarter. In turn, the adjusted EBITDA increased 68% to $28 million or a margin of 7.6% compared to $17 million or a margin of 4.1% last year.

The margin improved a solid 350 basis points. The marked improvement was primarily driven by the benefits from our actions in 2020, the ongoing cost control measures in '21 as well as the improved gross margins at CAG and TPA.

To a lesser extent, it was also due to particular items such as the reversal of bad debt in the quarter as well as FX losses and onetime charge totaling $4.5 million last year. These factors were partially offset and partially compensated by the lower absorption of fixed costs.

Finally, in combination with our strong collection efforts, an active inventory management translated into a lower-than-expected seasonal increase in our debt levels. Eric will provide more details on this later.

Turning to Page 8 for FinishMaster, please. At FinishMaster, demand continues to improve but remains in a rebound mode under 2019 levels.

This quarter, severe weather conditions in the U.S. Southwest and Northeast had negative impacts in some of the regions where we operate, adding pressure to the market and recovery and translated into a slower uptick, as discussed before.

Sales were down 22% to $158 million due to the impacts from the pandemic and the challenging environment. Organic growth continued its sequential improvement from the trough set in the second quarter last year and ended Q1 '21 better than Q4 '20 with a negative impact of $38 million.

While our sales are down, our market position continues to remain strong as sales are mostly in line with the markets in which we operate. While our adjusted EBITDA was $10.1 million for the first quarter versus $12.1 million for the same period last year, our margin increased from 6% to 6.4% or 40 basis points.

The improvement is primarily due to the benefits from the improvement plan and cost control measures, the partial reversal of bad debt as well as a onetime charge last year. These factors were partially offset by the lower fixed cost absorption.

For the second quarter in a row, FinishMaster has reported -- is reporting adjusted EBITDA and margins exceeding the previous quarter, which is a testament to the success of the numerous measures put in place in 2020. Our deep dive into our value and operational effectiveness is starting to take shape.

And normalized for seasonality, we expect to see continued progressive improvements during the year. Let's turn to Page 9, please, for the Canadian Group.

CAG continue to perform well under the current context, increasing sales and profitability over the same period as last year. Despite the impact from the additional government-imposed lockdown measures in the first quarter, sales reached $115 million, up 6% from $109 million last year driven by the positive currency conversion effect and acquisitions, partially offset by the lower number of billing days.

Sales have returned at the 2019 levels and, in fact, have surpassed them in the past 3 quarters. And we have experienced upward demand trends despite the impact from the pandemic, demonstrating our robust and resilient business model.

Organic growth was marginally positive for this quarter, in line with the past few quarters. We are seeing a solid performance of our independent members and ongoing improvement in our corporate stores despite the lockdown measures.

In the quarter, we completed the integration of our point-of-sale system for all our corporate stores, except for the ones recently acquired, which will continue to lead to efficiencies. Adjusted EBITDA reached $11.8 million or a margin of 10.2%, up from $2.7 million or a margin of 2.5% for the same period last year.

This marked improvement was mainly driven by the benefits from the improvement plans and cost control measures as well as the improved gross margins. It was also due to the favorable variance in foreign exchange, which lifted the margin.

Note, this is the fourth consecutive quarter where the adjusted EBITDA margin is above 10%. This truly reflects our team's ability and dedication to manage the business, continues to grow and is showing these robust and sustained results.

Going forward, we will continue to execute several initiatives to drive sustainability and improve our customer service. We will focus on profitable growth and make select tuck-in acquisitions.

Let's turn Page 10 for the Parts Alliance. TPA continues to improve its results, increasing sales and profitability over the same period last year.

Despite the impact from the additional government-imposed lockdowns measures in the first quarter, sales reached $97 million, in line with the same period last year as the positive currency conversion was offset by the impact from the pandemic and the lower billing days. Organic growth was a negative 4.5%, slightly improved but generally in line with the second half of 2020.

In the quarter, we continue to migrate our stores to our single point-of-sale system for all the U.K. branches.

Adjusted EBITDA reached $9.9 million or a margin of 10.2%, up from $4.7 million or a margin of 4.8% last year. The margin was up 540 basis points over the last year and represents the highest margin generated by TPA since Q1 2018.

Note, this is the third consecutive quarter that TPA has improved its adjusted EBITDA margin over the corresponding period last year. We believe this profitability can be sustained and improved over time.

Going forward, we will continue to execute our continuous improvement initiatives, and we will focus on profitable growth and make selective greenfields depending on the market conditions. With this, I will now turn it over to Eric to complete our financial review.

Eric?

Thank you, Brent. Good morning, everyone.

Turn to Page 12 for comments relating to our cash flow. Recall that we typically burn cash in the first quarter.

This year, we used only $500,000 of cash from operations versus $13 million for the corresponding period last year. This improvement was mainly due to our improved profitability and continued proactive working capital management as we put strong emphasis on cash collection and inventory management this quarter.

Our improved profitability also fueled our free cash flow, which we doubled from $14 million in Q1 '20 to $27 million in Q1 2021. Turning to our cash on Page 13.

We used our liquidity to fund customer investments for $4 million and invested in capital expenditure for $2 million. We only invested a small amount in the CapEx this quarter as we are still in the process of ramping up our program after a year-long pause.

Turning to our financial position on Page 14. Given our proactive cash management and improved profitability, our total net debt only increased modestly from 3 months ago.

As at March 31, 2021, our outstanding total net debt stood at $383 million, including $98 million of IFRS leases obligation, representing an increase of $13 million versus $370 million and $101 million, respectively, at the end of 2020. Driven by our improved profitability and proactive cash management, our leverage ratio further decreased to 3.8x in Q1 2021 from 4.2x at the end of 2020.

Turning to Page 15. At quarter end, we had approximately $267 million of liquidity, which is an ample position considering our requirements.

As at March 31, 2021, we were in compliance with all our bank covenants. Note that in Q2 2021, we are required to have a minimum EBITDA of $20 million, and we are very confident to be able to achieve this.

Turning to Page 17 for the outlook. Our outlook has not changed significantly from what we were expecting 3 months ago.

We expect our consolidated 2021 sales to improve over 2020 but not to return to 2019 level before the second half of 2022. As mentioned previously, the refinish market will take longer to recover than the auto parts business, and it is not only dependent on mile driven but also on new car sales and traffic density.

In terms of profitability, we expect our consolidated adjusted EBITDA in absolute dollar and on a margin basis to improve over 2020 but at varying degrees depending on the business segments. One factor to keep in mind for 2021 is that it is unlikely that we will benefit from the same level of government subsidies as we did in 2020.

Note that we received about $6 million in government subsidies last year, of which $4.2 million was in the third quarter and mostly related to CAG. And about $700,000 was in the second quarter and mostly related to TPA.

For FinishMaster, we expect sales to improve over 2020, but we do not expect to return to 2019 levels as the impact from the pandemic is compound by the original structural changes in the refinish industry. We also expect to improve our adjusted EBITDA margin versus 2020.

Our objective is to continue to tailor our cost to serve for the various channels. For CAG, we expect both sales and adjusted EBITDA margin improvements over 2020.

Our objectives continue to be to grow organically and through strategic acquisitions to consolidate our position in the Canadian market. Similarly, for TPA, we expect both sales and adjusted margins improvement over 2020.

Our objective continues to be to grow primarily through selective greenfield. We are currently planning to open a few in 2021 depending on market conditions.

For modeling purposes, net finance costs for 2021 should be in line with last year, excluding the loss of debt extinguishment, while the tax rate should be between 20% and 22%. In terms of cash deployment, we will continue to manage capital investment and working capital proactively.

However, we will be ramping up certain investment back to near pre-COVID level. For 2021, we expect to invest about $12 million for maintenance CapEx and between $10 million to $16 million for development CapEx.

While CapEx investments remained low in the first quarter, we anticipate a marked ramp-up in the second half of the year. We also expect to invest between $14 million to $16 million in customer incentives.

Considering all these factors, we expect our total net debt level at the end of 2021 to be similar to the level of 2020. However, our leverage ratio should be lowered as our adjusted EBITDA is expected to be higher.

Note that there remains regional uncertainty in some markets to the pandemic and the slower recovery in the refinish market, therefore, our outlook is based on certain assumptions and visibility as of today. Turning to Page 18.

I would like to conclude our comments relating specifically to the second quarter. We expect Q2 2021 to be a marked improvement over the same period last year.

The second quarter is typically the strongest quarter of the year, and the impact from the pandemic hit through to Q2 2020. As a result, organic growth and adjusted EBITDA margin in all 3 business segments are expected to increase year-over-year but at varying degrees.

Note that we will expect the overall performance of TPA to be better than the comparable quarter last year. When compared to Q2 2019, the result will be partly mitigated by the shift of the MOT mandatory testing last year due to the pandemic.

While we do not expect this shift to alter total sales for the year, it will impact the seasonality of the results of TPA. At this time, it is difficult to determine the magnitude of the shift.

In addition, note that the total debt -- net debt level in Q2 2021 will marginally rise from Q1 2021 level but the increased sales -- due to the increased sales that will have an impact on our account receivables and some restocking in the business with its associated payables. In line with this, we expect to use cash flow from operations again in the second quarter and turn cash flow positive during the second half of the year.

In closing, we are confident that we have a solid financial plan to write the last mile to the pandemic and ample liquidity to meet our current operating and capital needs. This concludes our presentation.

We are now ready for answer -- for questions. Operator?

So my first question is more on the gross margin side. There's a slight improvement there.

But in your prepared remarks, you have mentioned about volatile supply chain. So I'm just wondering if you could provide some color that if you're seeing any cost pressures, are there any supply chain issues and, just resultantly, if you've increased any of the pricing for all of the 3 businesses or the 3 segments that you have there.

So I would say in the auto parts side is really where we're seeing any challenges on the supply chain, certainly not in the refinish side. But on the auto parts side, certainly, we've seen some cost increase on our freight and delays from our shipments.

And certainly, we've seen some volatility in some of our domestic suppliers, both in the U.K. as well as in Canada.

We continue to manage through those. And certainly, it's a challenge, but as you can see, we've sort of mitigated most of that.

Certainly, from a pricing point of view, we're starting to see price increases and inflations coming from some of our supply partners. And certainly, we've increased our cost or pricing on the -- due to the freight costs that we've seen that's come through on the direct-sourcing product side of our business.

So to some, but nothing significant at this point.

Okay. So you can continue to serve the clients even with this pressure, right?

Yes. Yes.

That's fair.

Okay. That's fair.

And just on the FinishMaster side, I just want to get my head around this. So from what I understand, the lockdowns have been much less in the U.S.

as opposed to Canada, but the contraction in FinishMaster is a lot. I know you mentioned the density in new cars.

But is -- are there any other factors other than that? Because the sale of old cars has been much higher, the lockdowns have been substantially reduced, so is it just about the new car sales that would eventually result in uptick in the business?

Or is there something else that we should look at as well?

Well, I believe that the fundamental thing that's impacting it today is just the driving patterns. I mean we're certainly seeing less density in the major markets resulting in less collisions.

I mean you can see that in the insurance reports as -- and insurers' reports as well. Certainly, that's true in Canada as well for different reasons, but it's just pure demand right now.

Okay. That's fair.

And just last from my end. So in the TPA business, you had mentioned that you transitioned to a single POS system.

I'm just wondering if there is anything left on the cost side. Is there something that you're doing there?

Or that's pretty much done, and now it's about growing the top line there?

Well, we certainly have done most of the heavy lifting, and TPA and CAG is done. But we're certainly on a continuous improvement journey in all 3 businesses.

And we're certainly beginning our -- we've done a lot of work in FM as well. So there's certainly goodness in front of us in all 3 of the businesses that we're going to continue to pursue.

Yes. Congrats for the good quarter.

So now when we look at the margins at Parts Alliance and Canadian Automotive Group, it does improve. It's back on track.

There's been also new appointments combined with an improved balance sheet. I was wondering whether it does open the door for a look at some strategic moves.

And if so, could you maybe provide some color?

I don't think we're in a position at this point, Benoit, to really comment on that. I don't think that -- right now, we're focused on operating the business and continuing to see the improvements that we've seen.

Certainly, as Brian comes on board, he and I will have those discussions at the appropriate time if it's there.

Okay. That's perfect.

Great color. And Brent, when we look at the polar vortex in February, would you be able to quantify what was the impact on the overall business?

Especially when we look in Canada and the U.S., is it something that you have some ideas?

I'm sorry, I missed the first part of that, Benoit. I apologize.

With respect to the polar vortex in February in the U.S. and Western Canada, would you be able to quantify the impact on your overall business at FinishMaster and Canadian Automotive?

Yes, we certainly are experiencing the same kind of impacts when you look at the collision side in Canada. It's -- there's no question that we're -- that our PBE sector has been impacted by the pandemic and is seeing the same slow recovery that we're seeing in the U.S.

It's a few million. Benoit, we assess it's a few million, and this is not -- it's less than 5, but it's not insignificant in terms of margin contribution when it happens.

And it also involved closing stores during -- in some cases, during the weather storms that occurred. And some of our customers were actually shut down for a number of days in certain markets.

Okay. And specifically for FinishMaster, we've seen a strong improvement in margin, but do you see further opportunities to adjust costs and boost the -- some performance improvement plan in 2021, Brent?

Yes, we're certainly working on that right now in the runway in front of us. As we really get more color on that, Benoit, we'll certainly share that.

I think, as we've said, we've been really taking a deep dive into that for the last few weeks and months. And certainly, that's our focus right now.

Okay. That's great.

And then -- yes?

And Benoit, I would add, right, as the market recover, the sales will go up. And that will also help the FinishMaster business from an overhead absorption perspective, right?

So I think as the marketing go back and rebound, you'll see a lot of this going to the bottom line.

Okay. And where do you see the margin back once the sales reach the pre-pandemic level, let's say, in the second half of 2022?

What is kind of the targeted the level for FinishMaster?

Well, as you know, we don't give color on margins for a quarter. I think what we've indicated to investment community for FinishMaster, we see EBITDA margin in the range of 6% to 8%.

And then we believe that those ranges are sustainable. And I think it's a matter more of revenue for us at this point.

And as Brent said, there's some initiatives underway to further help the business and the performance, but sales is an important element for us.

Okay. And last one for me.

Just with respect to the dividend, any thoughts about the timing to reinstate the dividend? It's a priority or in terms of timing, any color would be great.

I think for the current time, and it will be ultimately a decision of the Board, Benoit. But I think for the current time, the focus is on deleveraging more with anything else.

And I think that will be -- what will be a trigger point at some point.

Brent, in Canada, the distribution centers really outperformed the corporate-owned stores. Is that dynamic sustainable?

And these distribution center sales, is that sustainable at these levels?

We believe so. I believe that we're seeing marked improvement in all channels of the business, with the exception of, as I said earlier, just the PBE side of our business in Canada.

Substantial improvement in our corporate stores year-over-year as well as we've seen some of the independents have done very well, and we continue to support them.

And Eric, would you have the April organic sales by division to share with us either relative to 2019, ideally, or year-over-year?

No, I don't have that in front of me, but all I can tell you is it's positive vis-à-vis 2020, for sure, a little bit short compared to 2019, as we would expect. But I think you'll see the quarter end growth.

And look, we're happy with April. It's what I would say.

And there seems to be a continuous good positive trend for the remainder of the quarter.

You have that chart showing that the CCC claims counts for the month of March were about 13% below '19, and that was better than -- like you're seeing a nice steady sequential improvement from January, February, March. And like did that continue into April?

Well, look, I think, first, as you know, February was a bit bumpy because of the weather switching in the U.S. And look, as I said, in the 3 businesses compared to April of 2020, obviously, it's in the right direction.

And FinishMaster is mimicking the market, as we said. So it's all about the market performance for us in the coming weeks, months.

But we do believe that we're tracking market. And as the market rebound, we'll get some goodness out of that.

When should the investment community expect Brian McManus to begin joining these quarterly calls?

I -- Brian and I will talk, but I would imagine probably next quarter.

Congrats on the quarter. Can you speak to the size of the acquisition opportunities you're considering in Canada?

And are you willing to pull the trigger on those today? Or are you waiting to reach a certain leverage threshold?

Well, I would say that, as we said, most of these will be viewed as tuck-ins, so they'll be accretive to our existing footprints so that we bring leverage to the model. So the size of those will not be -- they'll be material to the business but not necessarily transformational.

And I think as far as timing, it's hard to always predict when those are going to exactly happen. But we're certainly in process on a number of fronts.

And I think we're certainly managing prudently our cash and our covenants. So we'll make sure we're within both of those.

That's helpful. Last one for me.

Looking to regions that are opening up in the U.S. that are further ahead, are you seeing any evidence of persistent headwinds to congestion or rush-hour traffic patterns that could be due to increased work from home?

Look, I think that, that's the phenomenon we're all trying to figure out how to really dial that in because it's something that I think is going to be here. It's a new reality.

There's no real good benchmarks yet. With everybody's doing a lot of statistical looks, I think we'll be much smarter in that position probably in the months and quarters to come.

But certainly, it's had an impact, [Jonathan], in the short term.

So thank you very much for joining us today, and we look forward to updating you in the quarters to come. And we'll talk to you on our next quarterly call.

Have a good day, and please be safe. Thank you very much.