Top Stock Uni-Select Sees Auto Parts Sales Doubling in 5 Years

  • Opportunities for growth in both Canada and U.S. markets
  • Company seeks acquisitions for further expansion, Buckley Says

Uni-Select Inc., the top-performing stock on the Canadian index this year, is aiming to double its business in the next five years as the car-parts distributor accelerates its acquisition strategy, Chief Executive Officer Henry Buckley said.

“We have a balance sheet right now that’s clean, we have no debt, we have cash in the bank and an appetite for growth,” Buckley said ahead of an interview Tuesday with Bloomberg TV Canada’s Pamela Ritchie. “If we get some big ones that pop up, we can move that number pretty quick.”

Uni-Select generated $1.78 billion in revenue in 2014. About 60 percent of sales were in the U.S. as of the third quarter through its FinishMaster automotive paint products unit, according to data compiled by Bloomberg. The company hasn’t specifically tailored its strategy to take advantage of the declines in the Canadian dollar this year as currency moves are too unpredictable, Buckley said.

Shares of the Boucherville, Quebec-based Uni-Select have surged 106 percent in 2015 to lead gains in the Canadian benchmark Standard & Poor’s/TSX Composite Index, even as Canadian operations experienced weakness in Alberta due to the slump in oil prices, Buckley said.

“It’s been very soft, but we have a long-term view,” he said. “I’m still optimistic about the Canadian economy. You can’t control the exchange rates, you can’t control the price of oil. We just have to play to it.”

Buckley, 55, joined the company in July 2014 as chief operating officer before assuming the role of CEO in August, replacing Richard Roy. Buckley had previously worked at W.W. Grainger Inc., a Lake Forest, Illinois-based industrial supplier.

Uni-Select has surged this year after selling its U.S. auto-parts distribution unit to an Icahn Enterprises LP unit for about $340 million in a deal completed in June. That was followed by a series of acquisitions, including the purchase of Toronto-based TN Discovery Auto Collision Ltd. on Nov. 16. Terms weren’t disclosed.

Consolidation is ramping up in the Canadian and U.S. parts distribution markets, especially as “mom-and-pop” independent operators shutter with younger generations uninterested in continuing the family business, he said.

The company is “absolutely comfortable” with using debt to finance a deal, with a debt ratio of as much as three times earnings before interest and other items depending on the target, Buckley said.

“There’s so much opportunity in front of us here,” Buckley said.

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