BOUCHERVILLE, QUEBEC -- (Marketwired) -- 07/11/13 -- Uni-Select Inc. (TSX: UNS), a major distributor of replacement parts, equipment, tools, accessories, paint and related products for motor vehicles in North America, announces that the formal review of strategic alternatives initiated in April 2013 to unlock additional value for its shareholders has been completed enhancing the strategic direction for the Corporation. The Board of Directors considered a full range of strategic alternatives and has concluded that an internal strategic and operational plan (the "Action Plan") centered on the US automotive operations designed to significantly improve profitability is the best way to maximize shareholder value. The Corporation remains committed to the US and Canadian automotive aftermarkets and expects to grow its presence in both the mechanical and collision repair sectors.
Over the past ten years, Uni-Select has markedly expanded completing over 70 acquisitions. It allowed the Corporation to increase its activities, improve its product offering, enhance its geographical presence and strengthen its operations. In this regard, Uni-Select's network needs to be optimized to eliminate some redundancy. The Action Plan is the result of a comprehensive review of Uni-Select's distribution operations. The adopted strategy will allow Uni-Select to improve efficiency and profitability by increasing its focus on markets with growth opportunities and exit areas with less potential. The Action Plan encompasses a major optimization of the U.S. distribution network and includes a number of operational improvements which together are expected to improve profitability.
Highlights of the Action Plan
1. Store Closures -- Closures, divestitures or consolidations involving 48 stores to exit areas with less potential2. Rightsizing of the distribution network -- Optimization of distribution network with focus on select large distribution centres -- Closure of 12 distribution centres -- Opening of two regional distribution centres3. Operational Improvements -- Investment of $8 million in a dozen distribution centres to improve efficiency -- Process improvements focused on increasing fill rates and enhancing pricing strategy -- Headcount reductions -- Expense reductions4. Estimated cost savings of approximately $30 million on an annual run- rate basis -- Approximately $10 million in 2013, an additional $15 million in 2014 and full impact in 20155. Reduction in sales of approximately $70 million, on an annual basis, resulting from store closures and warehouse relocations6. Restructuring charges, write-off of assets and other actions related to the Action Plan will result in an approximate one-time cost of $45 million -- Restructuring charges of approximately $36 million to be recorded in the second quarter of 2013. The balance will be recorded as incurred. -- These charges will result in a cash outlay of $13 million that will be fully offset by a $40 million reduction in inventory.
Implementation of the Action Plan is in progress and completion is expected in late 2014.