Auto-matic germination In 1968, 1...

Auto-matic germination

In 1968, 12 Quebec businessmen created Uni-Select to purchase, distribute and market automotive replacement parts and accessories as well as garage tools and equipment. Until the mid-1980s the company operated principally in Quebec, Ontario and the Maritimes. Today, primarily between the walls of a series of acquisitions and partnerships, the company's Automotive assemblage (90% of sales) operates 13 distribution centres/warehouses across Canada. These middles service three types of customers.

(1) A network of more than 600 UniSelect affiliated parts wholesale stores (80% of automotive revenues) that each admit $10,000 or more of Uni-Select's stock and that provide Uni-Select with certain financial guarantees. These "member merchants" and the retail installers who purchase from them operate beneath Uni-Select's marketing banners such as Auto Parts Plus, Auto Plus, The Specialist, UniPro and ProColour Auto. Merchant members have the privilege of purchasing direct from suppliers which eliminates Uni-Select warehousing charges; however, the company's administration fiefs still apply.

In addition, merchant members have access to Uni-Select's marketing programs; parts warranties; financial assistance for acquisitions, strange stores openings and retirement; and, technical training courses for mechanics, carcass shops and garage management.

(2) Approximately 100 independent wholesalers also source their results from Uni-Select warehouses (13% of revenues); however, these wholesalers do not have access to Uni-Select's many services available to merchant members.

(3) National chains of installers (7% of revenues) similar as Goodyear and Speedy Muffler

Collectively these Uni-Select customers put up to sale parts to the thousands of garages and installers that service the 16 million motor vehicles operating in Canada.

Uni-Select estimates that its consolidated returns of about $400 million make it the other largest among Canada's dozen automotive warehouse distribution groups-following UAP (about $500 million in revenues) and ahead of third-placed Carquest (about $250 million). Uni-Select is unique in that it operates without corporate-owned wholesalers while its major competitors could have as greatly as 50% of revenues generated from their corporate stores. Approximately 65% of members have granted Uni-Select the right of first refusal in the conclusion that they wish to betray their wholesaling business.

Uni-Select's remaining incomes (10%) are generated from its recently-acquired Heavy toll Group (1995) which sells replacement parts for barters trailers and buses in Ontario, Quebec and the Maritimes. Here, Uni-Select operates almost exclusively from one side corporateowned wholesalers and enjoys higher margins than in the automotive business - at the take away from of higher assets and more employee

Institutional investors allow approximately 50% of the company's universal shares; members and management about 25% and the balance held by means of individual investors.

PROSPECTS FOR coming GROWTH IN SHARE PRICE

Because long-term putting out in share price is driven according to growth in earnings per share, which is driven by way of growth in revenues, this illustrative inquiry of Uni-Select's investment potential begins with the meditation of its historical and schemeed revenues. Revenue, earnings and other data for the circulating fiscal year ending December 31 1997 have been estimated from interim terminates

Historical Revenue Growth

As indicated in the accompanying Stock Selection Guide, Uni-Select grew receiptss at an average annual intermix rate of 10% with putting out during the last half of the period at 12%

So far this year, rewards have been about 18% higher than during the comparable period in 1996 In keeping with these interim comes estimated revenues for fiscal 1997 are schemeed at approximately IS% more than in 1996

About 25% of Uni-Select's general revenues are attributed to acquisitions (mostly for cash) and partnerships with other buying assemblages - during the last 5 years - in the highly fragmented automotive-buying-group business. The remaining reward growth is accounted for from selling existing results in new markets and of the present day products in existing markets ("organic growth") In part, this expansion has resulted from attracting more member merchants to the Uni-Select buying arrange

While there are approximately 3000 automotive wholesalers in Canada, UniSelect recruits greatest in number of its new member merchants (about 25 by year) from those independent wholesalers who commonly purchase products from its warehouses.

Uni-Select has a certain number of 20 business development officers across Canada who are responsible for helping members swell their businesses by attracting more installers to their stores. These officers are also active in recruiting recent independent wholesalers to the Uni-Select cluster About four or five wholesalers resign their membership each year.

Project return Growth

Uni-Select's focus forward a balance between 'organic' shooting and growth through geographic and fruits diversification is indicative of its strategy for what may occur hereafter revenue growth. Further organic vegetation and geographic diversification potential are available for the pair the automotive and heavy excise groups throughout Canada and potentially in the U