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

Presenting this morning are Brian McManus, Executive Chair and CEO of Uni-Select; and Anthony Pagano, 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 02, 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 Brian.

Thank you, Louis. Good morning, everyone, and thank you for joining us for our second quarter results conference call.

I would like to give a warm welcome to the financial committee, many of whom I know from my previous days at Stella-Jones. I am excited to be back in front of you and look forward to renewing and building relationships with you again as we provide quarterly updates on the progress of Uni-Select.

At the end of the driver seat at Uni-Select for just over two months now but I'm pleased by the initial steps we have taken in the short amount of time. I had the pleasure of speaking with many senior management team members across all three business units and at toward our U.S.

operations a few weeks ago within the corporate office as well as branches in D.C. This has started to give me a better feel for the operations and what is required to drive the path forward.

My first order of business is to rebuild the leadership team. We need better strength to be successful.

Having the right person in the right position makes all the difference. You may have noticed that we have made substantial changes to our executive leadership team in the second quarter.

Beside Anthony and I who are new to the table, we recently promoted Emilie Gaudet to the position of President and Chief Operating Officer of the Canadian Automotive Group. I'm delighted to see the talent in our team and pleased to have an internal member of our organization who already knows the importance we've placed on supporting our partners and developing our business to serve our clients take on this role.

We appointed Sally Dowling as Interim President and Chief Operating Officer of TPA following the resignation of Neil Croxson. While a search is underway for permanent leader of this business unit, Sally is uniquely positioned to lead the business in the interim having recently served as CFO of TPA.

Finally, Nathalie Giroux stepped down from her role as Chief People Officer and Vice President of Human Resources for the Canadian Automotive Group in July and we've decided not to replace this dual role. These changes and those to come well-positioned the corporation to focus on operational excellence and to capture future growth opportunities.

Over the near term, in the next 12 months to 18 months, we will focus on aligning our three business with our vision for the future. Each business unit will focus on the execution of select key priorities to successfully set the foundation for future growth.

We believe that fewer but more impactful initiatives will drive a greater bang for our buck. The objective is to drive profitability not just by cost savings but more importantly by how to better serve our customers and members efficiently.

In parallel, we will identify opportunities whenever and wherever possible. We are positioning the business for the long-term and see many opportunities ahead in all three businesses.

While continuing to improve operations remains our top priority, we see potential for consolidation further down the road which we believe will be a component of driving our businesses to the next level. On that note, let me turn to Page 05 for the key highlights of the second quarter.

We are very pleased with our second quarter results which reflects strong market recovery from the worst of the pandemic and sequential improvement in the business. Consolidated sales for the second quarter were up 38% to $416 million from $303 million last year, primarily attributable to organic growth of 29% while backing a strong rebound with all our business segments from the trough of the pandemic set in Q2 last year.

This is coupled with a favorable impact from currency conversion of 9%. While organic sales continue to improve on sequential basis, they remain below of 2019 levels.

In churn, adjusted EBITDA more than doubled to $34 million from a margin of 8.2% compared to $15 million or a margin of 4.9% last year. This performance was largely driven by improved sales, additional rebates, price increases and benefits from cost savings.

These factors were partially offset by higher expenses related to a fully operational business and higher net stock-based compensation due primarily by the large increase in our stock price during the quarter. This in itself represented approximately $3 million.

As a result of higher adjusted EBITDA and lower financial expenses, our adjusted EPS increased from a loss of $0.23 per share to a profit of $0.21 per share. In our improved profitability, we generated solid cash flow from operations in the second quarter which we used to substantially reduce our total net debt.

Finally, in June we amended and restated our credit agreement which preserves our liquidity and flexibility while meaningfully reducing our cost of borrowing. We estimate that had this amended facility been in place at the beginning of the quarter.

Our net finance cost would have been approximately $2 million lower. I will now turn the call over to Anthony to complete the financial review Anthony?

Thank you, Brian. I'll point those on the call to Page 07 of the presentation.

Before I discuss the results from our three segments, I would like to touch upon certain one-time items that negatively impacted EBITDA by approximately $34 million in the second quarter. This first relates to inventory obsolescence.

During the quarter, we changed the estimates used to determine our inventory obsolescence provision at FinishMaster. This resulted in a one-time obsolescence expense of $20.6 million.

The change in estimates mainly results from our in-depth review of the operations, will change to better align our current product portfolio with evolving customer needs. In essence, we've taken a deep-dive into our inventory and have identified those products which we do not believe will fall through over the course of their useful lives.

The second material one-time item, relates to severance expense of approximately $10 million primarily due to the departure of certain executives in the first-half of 2021. Both these expenses are one-time items and have been excluded from the calculation of adjusted EBITDA.

Turning to Page 08 for a review of FinishMaster. Both sales and organic growth increased by 28% to a $171 million due to recovery in sales from the trough set in the second quarter of last year.

Organic growth continue to sequential improvement of the past year and turned positive for the first time in almost two years. That being said, sales remain below 2019 levels.

Adjusted EBITDA also continued its sequential improvement reaching $13.2 million or a margin of 7.7% compared to $4.5 million or a margin of 3.3% for the same period last year. This significant improvement was primarily driven by additional sales volume, the benefit from cost savings and price increases.

While we're pleased by the improved financial results from FinishMaster, both Brian and I are encouraged by the prospects for future operational improvement in the business. Turning to Page 09 for the Canadian Automotive Group.

Sales reached a $145 million up 27% from a $114 million last year. This group this growth was driven by organic growth as well as favorable currency conversion effects.

Organic growth of 12.3% reflects the recovery from top levels of sales, second to second quarter of last year. Adjusted EBITDA reached $17.7 million or a margin of 12.2% up from $12.9 million our margin of 11.3% for the same period last year.

This improvement was mainly driven by additional sales volume and additional vendor rebates. For the fourth consecutive quarter, CAG reported an improvement in adjusted EBITDA and margin versus the comparable quarter of the previous year.

As maintained the margin of over 10% during this period. Please keep in mind that CAG benefited from over $4 million of government subsidies in the third quarter of last year which will not be repeated in the next quarter or our Q3 2021 results.

Turning to Page 11 for the Parts Alliance. Sales reached a $100 million, an increase of over 80% from the same period last year mainly driven by organic growth and the positive effect of currency conversion.

Organic growth of 62.6% reflects the recovery from the trough levels set in the second quarter last year. While organic growth continues to improve, sales remain below 2019 levels.

We note that we expect the seasonality of the TPA business to change as government mandates have shifted the timing of mandatory motor vehicle inspections to the second-half of the year. Recall that these inspections have historically been a catalyst for automotive aftermarket sales.

Adjusted EBITDA for The Parts Alliance reached $8.3 million or a margin of 8.3% up from $0.3 million or a margin of 0.6% last year. This improvement is driven by additional sales volume, the benefit of cost savings, and price increases.

For the fourth consecutive quarter, TPA has improved its adjusted EBITDA and margin over the corresponding period of last year. Turning to Page 12 for comments relating to our cash flow.

We generated $43 million of cash flow from operations in the second quarter compared to $35 million last year. This improvement was mainly due to our improved profitability and an ongoing focus on working capital and disciplined capital spending.

After accounting for net investments in merchant advances as well as CapEx and intangibles, we generated free cash flow of $41 million in the second quarter versus $33 million for the same period last year. Please note that we have reviewed our definition of free cash flow in the quarter and comparative figures were adjusted accordingly.

You could find the updated definition in the MD&A but in short we have included changes in working capital and investments in intangibles into our definition of free cash flow. This change in definition makes comparisons to the 2020 quarter's a little more challenging.

As 2020 was largely characterized by the partial rightsizing of working capital. That being said, we feel that the modified definition of free cash flow more closely aligned with how we manage the business and the definition expected by the investment community.

Turning to our financial position on Page 13. Given our active cash management and improved profitability, our total net debt decreased in the second quarter.

As at the end of the quarter, our total net debts stood at $348 million including $98 million of IFRS 16 lease obligation. This represents a decrease of $35 million versus $383 million at the end of Q1.

Driven by a higher adjusted EBITDA and lower total debt, our leverage ratio decreased to 2.9x in Q2 2021 from 3.8x at the end of the first quarter of this year. Turning to Page 14.

On June 25th, we amended and restated our credit facility. We reduced the facility from $565 million to $500 million and the facility now includes a $350 million secured long-term revolving credit facility as always two secured term facilities for total principle amounts of a $150 million.

The revolving credit facility can be repaid at any time without penalty and matures on June 30th, 2023. This term facilities also mature on June 30th, 2023, and have quarterly repayment obligations of $5 million.

Any remaining balances are payable on June 30th, 2023. These changes to our credit facility, allow us to preserve liquidity while materially reducing our cost of borrowing.

And both this infrastructure as Brian previously stated, the estimate that our net finance cost for the second quarter would have been approximately $2 million lower, yet the credit facility had been entered into at the beginning of the quarter. We have also been able to improve flexibility as provisions governing permitted acquisitions, permitted embeddedness, dispositions, capital expenditures and EBITDA add-backs have been favorably amended.

In addition, we transition back to a more conventional covenant structure including net debt to EBITDA and EBITDA over interest compared to previous metrics based on liquidity and minimum EBITDA. Turning to Page 15.

We provided our new financial covenants in a table format for your convenience. At the end of the second quarter, we had approximately $247 million of liquidity subject to financial covenants and a total net debt to EBITDA ratio of less than 2.5 times with an EBITDA to interest expense ratio and excess of five times.

We are therefore well in compliance with all of our covenants. I will now turn the call over to Brian for concluding remarks.

Brian?

Thank you, Anthony. I would ask that you please turn to Slide 17.

In summary, we are seeing continuing positive momentum and continue to see sequential improvement in our business. We are also very encouraged by the preliminary opportunities we have observed.

We will not be introducing overall guidance at this time. However, based on what we've seen in the second half of the year, we can confidently say that we expect to finish 2021 with increased adjusted EBITDA and adjusted EPS as compared to 2020.

Having said this, there are two potential headwinds that could impact our results. The 1) is the resurgence of COVID-19 in the fall.

And the 2) is the worsening of global supply chain shortages. While our team has done a great job managing through these so far, it could become increasingly challenging going forward.

Recall that CAG and TPA are more likely to be impacted by the global supply chain shortages than FinishMaster. This concludes our presentation, we are now ready to answer your questions.

Yes, good morning gentlemen and congrats for the very strong start. Brian, you already gave some color with your first impression about Uni-Select.

I was just wondering what are the key elements you are looking at and where do you see the greatest potential for consolidation among the three business units?

Thanks, Benoit. And good morning.

In terms of opportunities, really it applies to all three business units from a standpoint of we see a lot of opportunities and going to be driving all three over the next sort of 12 months to 18 months focusing on operational excellence. In regards to your questions of consolidation, at this point we actually see all three businesses with potential opportunity to consolidate what we view as the fragmented market in all three business unit.

But again, our near-term focus is really going to be on delivering value to our customers and ensuring operational excellence.

Okay, that's great. And Anthony, from a free cash flow standpoint, did very strong and you gave the color on what drove the free cash flow in the quarter.

I was just wondering about the system ability in the coming quarter and where would you expect to end the year in terms of leverage for the entire year?

Okay. Thanks for the question, Benoit.

Look, we're not going to provide any specific guidance or go post around leverage and leverage metrics. What I would say in regards to the quarter is and if you take a quick peek at the cash flow statement there, there is a large cash flow benefit from accounts payable.

That is unlikely to repeat itself in such magnitude. The guidance I will give you here Benoit, we're likely to end the year roughly around the same debt levels we are today.

Plus or minus on that of course but less likely to stay flattish from a net debt perspective.

Okay, that's great. And last one for me.

I was wondering whether this stronger cash position give you enough flexibility to start a more aggressive growth strategy or would you still like to take your time and see better flexibility before becoming more aggressive in terms of growth strategy?

Well, look I think both Brian and I have been in the market. I think we've encouraged by everything that we've seen, particularly as it pertains to focusing on driving operational excellence in the businesses.

So, that's as Brian's mentioned, that's really the near-term priority but certainly you've seen the deleveraging and that does create a certain amount of flexibility. But the focus remains very much on operational excellence here going forward.

That's great. Thank you very much for the time.

I'll get back in the queue.

Thanks, Benoit.

Hi, good morning. And congrats, on the good quarter.

Thank you.

Thank you.

So, my first question is more on the FinishMaster side. Quite a good improvement on the margin side.

I'm just wondering how do you think of that business, is there still room for more improvement or how do you think of that business in a big picture, well?

I would say we again I'll apply it to all businesses but your questions specifically on FinishMaster. We do see continued opportunities to improve upon the business both in terms of efficiencies and also in terms of how we approach the market and deal with our clients.

So, we do see opportunity there for sure.

Okay, that's fair. And secondly, if you could speak about cost pressures or label shortages.

How is that environment, is that manageable or are you thinking that going forward will be some cost pressures and some labor shortages?

It's currently manageable and certainly like most industries we're feeling labor cost pressures. I would say its regional even within the business units themselves but it's something our team has a close eye on and we'll adjust as necessary to ensure that we can continue to drive our business.

Okay, that's right. And maybe just last one for the U.K.

business and mentioned that -- you've mentioned that you've been out and meeting a lot of businesses. Is the U.K.

business you've good at, that one as well is that somehow any different or is that offers more growth opportunity in terms of consolidation or is it the same across all three segments?

This is same across all three. Unfortunately, the current restrictions due to COVID have limited our ability to get over to the U.K.

but it is on our list to get there as soon as Canadians are welcome to come.

Fair enough, thanks for the color. And once again, congrats on the quarter.

Thank you, yes.

Good morning, everyone. Congrats on the quarter.

Hi Zach, yes.

And it's great to hear that there are still improvements through the end of FinishMaster and in fact all three segments. Could you give us examples of the initiatives you're pursuing under the continuous improvement plan?

Hey, Zach. Look, I think there is a number of them going forward, we won't be referencing any specific client or providing color on any specific initiatives.

Got you, thanks. And then, to clarify your stance on no formal guidance, should we disregard the figures put out there the prior management team?

Look, I think I don’t want to go down the list and say yes and no because that's just a form of providing guidance, right. So, I'll stay mute on that topic.

Understood, thanks. And then to beat a dead horse a bit on the acquisition opportunities.

Could you rank your capital allocation priorities for us and where you get more comfortable returning capital to shareholders?

So, I think there is a few parts to that question, right. Our capital allocation priority first and foremost is the reduction of our debt which we made material progress on here going forward.

As it pertains to returning capital to shareholders, ultimately that's a decision of our board. And so, those that's again I hope that answers the question.

On data, thanks. I'll turn it over.

Thank you.

Good morning, gentlemen.

Hi, Daryl.

First questions on the U.K. and just the competitive environment there.

I think any two of your large competitors there talked about taking market share in the region and then wrapping up and just if you can maybe provide a little bit color on what you're seeing there and whether your growth is market related or taking share as well?

Well, I would start by saying our team is doing an excellent job of holding our position in the market. The growth is certainly just bouncing off of what was a very low-level last year.

And we are also looking at a couple of Greenfield opportunity to their selves for some expansion in some of the areas were missing branches to serve our customers. But overall we're very satisfied with the performance of TPA.

Okay, good. And then, maybe a bit of a nitty gritty question on FinishMaster but do we continue to see the body shop consolidation happen arguably had an accelerating pace.

And I'm just curious about the history of providing patent centers. So, to some of the smaller players pre-pandemic there seem to be some more aggressive patent centers being applied.

Would you expect those to add in the future as this consolidation story continues and the large MSOs continue to negotiate directly with the patent OEMs?

Hey, I'll take that one, it's Anthony. So, from our perspective and we're not going to comment too much on the activities of our competitors but we continue to you see that pretty clearly in our cash flow statement.

We continue to invest in customer incentives where appropriate. We won't provide any guidance on what that's going to look like going forward.

Okay. And then, maybe just one last one around the inventory purchasing rebates.

Is there anything large in the last quarters just as you worked through a bit of a ramp-up and restocking or should we expect any kind of upside from those as the recovery progresses?

Look, I think we're being very thoughtful and very methodical in the way that we're looking at our inventory levels. We want to be cautious and we have a very high focus here on working capital.

So, I think that sort of philosophically the direction. To ask you to answer your question a bit more directly.

The business naturally has ebbs and flows of rebates coming in and out. I wouldn’t call anything specific or material during the quarter.

Okay, good. Thanks guys, that's all from me.

Got good quarter.

Thank you.

Thank you.

Thanks. Brian, I realize it's early days.

Would you be in a position to comment on the whitespace that you see for the three businesses and for FinishMaster in particular?

And I think your first part of your question kind of answered it. It's still early days in getting to understand sort of our position in the different regional markets.

We recognize there is whitespace and definitely opportunity but again the near-term focus is just going to be on getting that operational excellence and ensuring we're providing great value to our customers. And from there we will able to look for great opportunities beyond let's say the next 12 months to 18 months.

Okay, thanks. The press release mentioned supply chain challenges but sales seems -- seemed to have been good.

Have these had a material impact on sale rates or do you expect too going forward?

So well, I think we've done a reasonable job of managing it. It's -- it'll be no news to anyone to hear that there are cost pressures across all industries.

There are rising in food cost particularly for products manufactured in New Orleans where the shipping rates have literally exploded. That being said, I think our teams have been very proactive here in managing this and we're quite pleased by how it's being managed in our various divisions.

I always thought that this business has a good ability to pass on cost inflation through pricing. Does that seem to do something you would agree with?

Yes.

Look, I think we've called that one drivers of the EBITDA margin improvement to be price increases. So, I would certainly agree with that statement Q2 to a limit, right.

And then naturally we have to always monitor ourselves in the competitive environment and see where we stand versus our peers and that's something that we where we keep a watchful eye on as well determine on pricing strategies.

Thanks. And one thing absent from the slides seems to be commentary on the July sales trends.

Is there any color that you can give us on the organic sales into Q3 by business?

Yes. That's specifically not there on purpose, that's something we will no longer be providing going forward.

Okay. Thank you, for your comments.

Alright, thank you.

Hi, thank you for taking my question. And great job on the quarter.

First of all, I was just wondering not specific to Uni-Select but just over all the FinishMaster environment refinished business, erosion. Can you just talk about what you're seeing there, is that just about congestion?

And in terms of cadence, is there -- are there any signs where we're seeing more congestion or an in-the-seat industry trend back towards 2018 model?

We're not there yet, we are seeing the trends starting to kick up but you're right in your question in regards to traffic congestion and obviously the results on the refinished business. But if we look back to 2019, the data we're seeing is still down about 10% to 15%.

So, we're not back to where we were in 2019 but hopefully as if COVID doesn’t resurface, people will be back out and we'll start to see the business pick up again.

Thanks. And then, just a question in terms of the inventory operation.

Is there any I guess is there any industry trend or that would be continue to be an issue where there is so much innovation and it just happens masked in or is this kind of an obvious one-time --. Yes, sure?

I think this falls into the obvious one-time issue.

Okay, great. Thank you for your answers.

Thank you. Thanks.

Yes. Just in terms of prior EBITDA Anthony, you mentioned about the reduction of debt is priority number one.

What would be kind of your targeted level where you would feel more up in more or comfortable range?

I'll answer that as Brian would, lower. So, it -- no but I mean Benoit, we're going to for the time being we're going to direct all of the free cash flow, the majority of the free cash flow towards debt repayment.

And then, as we come down here and as capital allocation opportunities present themselves that we'll certainly contemplate those on the right space on our overall structure. So, I think that giving a direct answer to that is tough.

Okay. And maybe a bit of a tough one here but what would be kind of your consolidated EBITDA margin that would support your talk around operational excellence, let's say in about 18 months.

And when you say the goal is to better serve customers, are there any some specific metrics that we should look that you would like to improve down the road?

Right. I think we certainly would like to see our sales and our market reach improve within every market in terms of what we're going to bring from a standpoint of customer value.

But a little unclear on your question Benoit in regards to the 12 months to 18 months from now, it's just if you could repeat it. I'm sorry?

Well, and probably it's still early days but are there any targeted consolidated EBITDA margin that could support your talks about where you see the potential in terms of operational excellence in let's say 18 months forward?

Benoit, I -- we're not going to provide that guidance here on future EBITDA margin. Yes.

Or like that debt being lower, we want to say higher. Yes.

Well, okay. And maybe very quickly on FinishMaster.

I was wondering whether you could quantify the impact of the price increase or was it part normal course of business. So, not much material in the quarter, Anthony?

It's a normal course of business, Benoit.

Okay. Thank you, again.

Thank you, Benoit.

Thank you, Benoit.

Hey, one quick follow-up. What's your view on the recovery and coalition frequency given the disruption of rush-hour traffic?

Perhaps due to more flexible hybrid work arrangements being a larger factor for longer?

I wouldn’t really have a good answer on that, Zach. I think we really want to.

We're hopeful that we're going to see it move back to 2019 but I think at this point it's hard to really say whether the work-from-home and people not going in to the office as much as going to have what that overall effect will be on the congestion in rush-hour traffic as you point out, then in turn the coalition part of the equation. So, I wouldn’t be able to give you an answer.

All I can tell you is we hope it's going to go back to similar levels, it's my answer.

Got you. And the trend that you're seeing in paint orders thus far encouraging?

Yes, it is. I mean, we can see the growth, you can see it in the financials, the sales are coming up but again that are a comparative year of 2020 is was a low point that we're hopeful that will start to see a track closer to 2019.

I appreciate the color. Alright, thank you.

Thank you.

Thank you, operator. And thank you everyone for listening.

We look forward to updating you on our progress during our next quarterly call. Have a great day.