Good morning, ladies and gentlemen, and welcome to Uni-Select Inc.'s 2022 second quarter results conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question- and- answer session. If at any time during the call you require immediate assistance, please press star zero for the operator. Note that today's call is being recorded. Bonjour Mesdames et Messieurs, et bienvenue à la conférence téléphonique sur les résultats du deuxième trimestre 2022 de Uni-Select Inc. En ce moment, toutes les lignes sont en mode d'écoute seulement. Après la présentation, nous procéderons à une séance de questions et réponses. Si à tout moment, vous avez besoin d'une assistance immédiate, veuillez appuyer sur étoile zéro pour obtenir l'opérateur. L'appel d'aujourd'hui est enregistré. Je voudrais maintenant passer la parole à Monsieur Max Rogan, chef de la direction affaires juridiques et secrétaire corporatif. I would like to turn the conference over to Max Rogan, Chief Legal Officer and Corporate Secretary. Please go ahead, sir. Thank you. Good morning, everyone, and thank you for joining us for Uni-Select's 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 two, I would like to remind you about the caution regarding forward-looking statements which applies 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, Max. Good morning, everyone, and thank you for joining us for our second quarter results conference call. Please turn to Slide 4four for the key highlights of the second quarter. We are very pleased with our second quarter results that build on the positive results from our first quarter. We continue to see organic sales growth in all three business units due to market tailwinds and price increases. Costs were also well contained in the quarter and reflect continued discipline of operational excellence and our culture of ownership. As a result of these factors and additional vendor rebates, we reported very strong profitability in the quarter. Consolidated sales for the second quarter were up 6.7% to CAD 444 million from CAD 416 million last year, primarily attributable to organic growth of 10.8%. In turn, Adjusted EBITDA increased 38.5% to CAD 51 million or a margin of 11.5% compared to CAD 37 million or a margin of 8.9% last year, representing an increase of 250 basis points. This performance was largely driven by higher sales, additional vendor rebates in all segments, and benefits from our streamlined cost structure. These factors were partially offset by certain inflationary costs, including fuel and wages, as well as the timing of certain expenses related to network expansion at GSF. As a result of higher Adjusted EBITDA and significantly lower financing expenses, Diluted Adjusted EPS more than doubled to CAD 0.51 per share versus CAD 0.24 per share last year. In addition to our regular financial review, I am pleased to announce that subsequent to quarter end, we announced and closed the acquisition of Maslack Supply, a distributor of automotive and industrial parts and paint located in Northern Ontario. The acquisition of Maslack represents our first significant acquisition as a new leadership team and demonstrates Uni-Select's ability to leverage its solid and improving balance sheet to make sizable investments to grow our business. We are very pleased with this addition to our Canadian network and we intend to remain active in seeking further acquisition opportunities. I will now turn the call over to Anthony to complete the financial review. Anthony. Thank you, Brian. I'll point you to Page six for FinishMaster. Both sales and organic growth reached 8.9% to $186 million in the quarter, driven largely by the effect of price increases. Adjusted EBITDA also strongly improved, totaling $19.8 million or 10.6% of sales, compared to $13.7 million or 8% of sales for the same period last year. This significant improvement was primarily driven by additional vendor rebates, price increases, and higher sales. Our focus at FinishMaster remains on ramping up sales, optimizing our path to market, and further leveraging technology and data analytics to develop our operating model. Turning to Page seven for the Canadian Automotive Group. Sales reached $161 million, up nearly 11% from $145 million last year, mainly attributable to strong organic growth of 13.8%, driven primarily by price increases. Organic growth was complemented by the benefits of acquisitions completed over the past 12 months. This was partially offset by $6 million of translation effects from the decrease in the value of the Canadian dollar versus the U.S. dollar. Adjusted EBITDA reached $26 million or 16.1% of sales, up from $17.9 million or a margin of 12.3% for the same period last year. In addition to the aforementioned factors, this increase reflects additional vendor rebates and the reversal of certain bad debt expenses incurred in prior periods, coupled with disciplined spending on operating expenses. During the second quarter, we completed the acquisition of four stores from one of our members in Ontario. We also signed a strategic agreement with a new member operating 20 locations in the Maritimes, the first new member of scale to join the Canadian Automotive Group in over a decade. Turning to Page eight for GSF. Sales at GSF decreased 3.1% to CAD 97 million, compared to CAD 100 million for the same period last year. This decrease was mainly attributable to a negative currency translation effect of CAD 11 million. Organic growth was a solid 9.7%, driven by price increases and the contribution of recently opened stores, with the latter accounting for approximately half of the organic sales growth. Adjusted EBITDA reached CAD 8 million, or a margin of 8.3%, down slightly from CAD 8.4 million or a margin of 8.4% last year. I'd like to point out that last year's Q2 results included approximately CAD 400,000 in governmental occupancy subsidies. In general, margins remain affected by higher operating expenses relating to inflationary fuel and utility costs, as well as payroll costs. These factors were partially offset by higher sales and vendor rebates. In the quarter, GSF opened seven greenfield stores, bringing the year-to-date total to nine new locations. To summarize, we are pleased with the results of our three business units. More importantly, we believe we can continue to improve profitability by focusing on sales growth and operational excellence. Turning to Page 10 for comments relating to our cash flow. We generated CAD 51 million of cash flow from operations in the second quarter, compared to CAD 43 million in the same period last year. This improvement stems primarily from increased profitability and lower borrowing costs, which were partially offset by a lower release of working capital than the prior year. After accounting for net investments in merchant advances as well as capital investments, we generated Free Cash Flow of CAD 43 million in the second quarter, up from CAD 41 million in the same period last year. This is primarily driven by higher cash flow from operations, partially offset by higher CapEx, including the opening of stores at GSF and a higher level of customer investments this year versus last. Turning to our financial position on Page 11. At the end of Q2, total net debt stood at CAD 291 million, which includes CAD 103 million of IFRS 16 lease obligations related to buildings. This represents a decrease of CAD 36 million since the end of the first quarter. Driven by lower debt and higher adjusted EBITDA, our leverage ratio decreased to 1.7x at the end of Q2, down from 2.0x at the end of Q1. This represents the lowest leverage ratio since acquiring GSF five years ago. At the end of the quarter, we had CAD 208 million of available liquidity subject to compliance with financial covenants. Over the past year, we have made material improvements to our balance sheet. Despite this progress, we're not resting on our laurels. Our teams across all business units remain highly focused on driving asset utilization, including working capital, in order to generate stronger returns for our shareholders. I will now turn the call back to Brian for concluding remarks. Brian? Thank you, Anthony. Please turn to Slide 13. While our first half results have been very strong, we caution that the magnitude of improvement observed in the first half of the year will likely not repeat in the second half due to the timing of certain rebates and as we begin to lap certain operational improvements implemented in the back half of 2021. Furthermore, although we do expect to leverage further operational and market opportunities going forward, we still need to contend with ongoing supply chain challenges, labor issues, and inflationary pressures. After one year as CEO of Uni-Select, I am proud of what our teams have accomplished. We have significantly improved our operations and financial results while strengthening our balance sheet. We are pleased about our recent acquisition of Maslack and continue to focus relentlessly on improving our operations while seeking to take advantage of market opportunities, including M&A. My sincere thanks to our entire team for their continued efforts to improve our company and provide value to our customers and members. This concludes our presentation. We are now ready to answer your questions. Operator? Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. If you would like to remove yourself from the question queue, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star one now if you have a question. Your first question will be from David Ocampo at Cormark Securities. Thank you. Good morning, everyone. Good morning, David. Brian, I just wanted to circle back on your commentary on the profit improvement in the back half of the year. When I take a look at Q3, it's normally seasonally the strongest quarter for you guys, but I'm guessing that won't be the case this year. Is it best to kind of evaluate the company on a trailing 12-month basis and then assume normal seasonality into next year? Yeah. Would definitely be the best way to approach that. Okay. David, I think this is Anthony. As you think of last year, we had really strong performance in the back half, and we're very cognizant that we're comping over that, going forward into the back half of this year. On FinishMaster, I think it's still down, you know, north of 10% versus pre-pandemic levels. Has the market come back in a way, or are you guys just down on a market share basis? If that's the case, what is it gonna take to get back up to that level? It's actually a very good question, and I would point to a combination of both of those, David. We're aware that we've probably slipped a bit over the last couple of years. Our team is working hard on that. I would also say the industry itself is not fully back. Okay, Brian. If you can comment on your private label, how is the growth trending in that market? If you are growing, is it in the kind of current product categories that you guys offer today, or are you guys expanding your catalog of offerings? It's a bit of both, but we are seeing growth in the categories we're currently carrying, and we have recently added a bit more to the depth of our offerings in the private brands. Okay. That's it for me. I'll hand the call over. Excellent. Thanks, David. Thank you. Your next question will be from Luke Hannan at Canaccord. Please go ahead. Thanks. Good morning, everyone. I wanted to start on GSF. I think there was commentary in the press release that margins were impacted because of some fleet replacement delays. Just curious to know if that was resolved, maybe towards the end of the quarter into Q3. Then if possible, quantify how much exactly that may have dragged on margins. I think we've called out about three or four different items that have impacted GSF on the margin side. One is certainly the aging fleet. Another one is going to be substantially higher fuel and energy costs across the U.K. business. You know, it's no surprise to anyone, the whole world is experiencing higher energy costs, but the U.K. in particular. There is a drag related to the new greenfield sites that we opened up. We've had quite a few in the first half of the year, and that naturally will be a little bit of a drag on margin as those ramp up their profitability. The final factor will be, we benefited from about $400,000, GBP 300,000 of governmental subsidies in Q2 of last year, which also impacts your quarter-over-quarter comparison. I wouldn't just point to the factor you mentioned previously. Got it. Following up on that last point of there being higher fuel and energy costs. I'm curious to know, other than finding efficiencies elsewhere in the business, what other levers do you have to pull specifically for those fuel costs? We've seen from some other you know route-based services companies that there's sometimes a fuel surcharge that they implement on their deliveries. Is there something similar that maybe you are doing there or can do there? This is something we looked at very early on. It's not something that's prevalent in the business. I do think that these impacts in the cost to serve tend to get flushed out over time through the selling price that ourselves and our competitors will put into the market. Okay. Appreciate the color. Thank you very much. Thank you. Thank you. Your next question will be from Daryl Young at TD Securities. Please go ahead. Hey, good morning, guys. First question is around the purchasing rebates. Just wondering how much the price impacts that. Is it based on price and volume, or is it just a volume-based rebate? Maybe some clarity there. They're a bit of a mixed bag, Daryl. Some are volume-based, some are price-based. You know, naturally, we would prefer price-based. I do think, you know, what you're seeing here is a bit of timing as we, you know, continue to reconcile some amounts from prior periods and as we begin to scale up our purchasing. If you think of a year ago, the company was very much in balance sheet rationalization mode. You see that pretty clearly in our cash flow, a very large release of working capital in Q2 last year. We've just sort of gone back up to, I guess, normalized and maybe even slightly higher than normalized purchasing levels as we contend with, you know, potential supply chain delays. Got it. Okay. Just curious from the inflation angle, if you were getting a bit of a double benefit, one on the organic side and then also on the volume rebate side. It's vendor by vendor, Daryl. It's tough to make a generalizing statement on it. Gotcha. The next question's on FinishMaster. We've seen some pretty active M&A over the last year and a half, on the collision repair side, on the customer side. Is that gonna have any implications for, A, your margin profile or, B, your strategy in terms of how you serve as we see kinda continued acceleration and consolidation and some bigger players emerging pretty rapidly? Darryl, this is something, you know, I think ourselves and the industry has been contending with for several years now. We continue to drive operational improvements in our business to help offset some of those changes. You know, we continue to do that. We continue to see good opportunities, you know, to drive those efficiencies. But at the same time, we also recognize that we need to focus more on driving our sales as well. A combination of those two things, along with also looking for market opportunities ourselves, in terms of consolidation opportunities, we believe will help offset the impact that you're referring to. Okay. Do you care to share the percentage of your customers that are larger MSOs versus the smaller one-off locations? No, that's not something we'll disclose. Okay. Thanks very much, guys, and congrats on your quarter. I'll turn it over. Thanks, Darryl. Thanks, Daryl. Once again, as a reminder, if you do have a question, please press star followed by one on your touchtone phone. Your next question will be from Benoit Poirier at Desjardins Capital Markets. Please go ahead. Yeah. Good morning, Anthony. Good morning, Brian. Yeah. Morning, Benoit. Yeah. First question, when we look at the GSF in the U.K., you opened up seven greenfield locations and nine year-to-date. Could you talk about the sustainability, how many greenfield locations could you sustain a year? And maybe how do you look at the full potential in the U.K. in terms of opening greenfield locations in the longer term? Hi, Daryl. It's Benoit, it's Anthony speaking. So you're right, we opened 9 year to date. We have a handful left to open for the balance of the year from Q2. Those are substantially complete as of today. Look, our approach here, Benoit, is to use our greenfields to fill in certain white space. We're certainly not going to give a number on where we think that ends or how many we'll do going forward. These are the first openings that the U.K. team has done under the new leadership. We'll be cautious to see those bleed in, deliver, and then consider them for future capital allocation opportunities. Okay, that's great color. We saw also that you've entered into a resale agreement for electric vehicle charging equipment with EV Charge. I'm just wondering, is this a space you're looking to grow? What about the margin profile? How does it compare to the car parts? Yeah. I won't get specifically into the margin profile, Benoit, but I think, you know, as a supplier of automotive parts, it's only natural that we have to start looking at what we will need to supply to our customers and members in terms of electric vehicles as they continue to grow their market share of the vehicle fleet. You know, just us adjusting to the changes in the market. Okay. Now last one, in terms of M&A pipeline, could you maybe provide more color about where do you see the largest opportunities these days and yeah. Won't get into specifics, Benoit, but we're certainly, you know, seeing opportunities in all our business units and, you know, both of small and large. Obviously, we're gonna be patient and deploy the capital where we feel it's best. Okay. Thank you very much, for the time, and congrats again. Thanks, Benoit. Thank you. Your next question will be from Zachary Evershed at National Bank. Please go ahead. Good morning, everyone. Congrats on the quarter. Thanks, Zach. Thanks, Zachary. What are you seeing right now in terms of supply chain reliability, and how is that influencing your inventory positioning right now and in the quarters ahead? I think it's. I'd say it's largely the same, Zach, too slightly improving. You know, certainly freight rates have started to tick down a bit. What I would say is, we've continued to adopt a somewhat conservative approach to inventory management, where we're holding a bit more than we would ideally, and you know, quite a bit more than we would target long term, just to ensure that we're able to absorb any potential shocks to the system. Makes sense. Thanks. On the recent acquisitions, how much integration work is there left to do? It's very recent, so lots. In terms of the work itself, you guys are usually pretty mum on the specifics of improvements, but maybe you could give us some examples of integration work. Are you referring more specifically as it would relate to potential synergies, Zach, or? Yes, please. Yeah. We do see opportunities. We're not gonna attach a specific number to it at this point. Fair enough. In the rising rate environment, does your criteria for M&A target selection shift at all? We're hoping that there'll be potentially less competition for some of those opportunities, but that's hard to say, and I guess we'll see as we move forward. I think everybody will adjust to a rising rate in terms of most likely the pricing that we'd see on those deals. Again, we'll take it one by one as they appear. Good color. Thanks. Just one last one. You're indicating a slowing in improvement in the back half due to the timing of certain vendor rebates and, of course, lapping operational improvements. Will the level of vendor rebates in the back half represent more of a steady state purchase level, or will it remain elevated versus long-term targets? These are always a little bit lumpy, Zachary. Some of them have to do with, you know, specific negotiations, from quarter to quarter, month to month. I prefer not commenting at this time on whether something in the future is gonna be representative of the steady state. What I would say is Q2 was elevated versus the steady state. Great color. Thanks. I'll turn it over. Thanks, Zach. Thank you. Your next question will be from Sabahat Khan at RBC Capital Markets. Please go ahead. Great. Thanks, and good morning. I guess just following up on the comments around the vendor rebates, is it? When you look to the back half of the year, is it as simple as just the fact that last year was probably when you started to get some of the larger vendor rebates and are lapping against those, or is there a change in rate as you go forward? I do understand you said there are a lot of moving pieces, but just wanna get a big picture view on is it just a comp or is there some underlying rate changes and things like that going forward? It's a little bit of both, Sabahat. Some of these vendor rebates are tiered and depend on our purchase levels. You know, particularly in the later part of the second half of last year, we got a little bit better at reconciling them, so we're able to bring some of them in sooner than we would have historically. It's really a combination of the factors you've mentioned. Okay. Thanks for that. Just want to clarify this comment, I think in the MD&A as well as earlier, about just kind of bad debt expense and the reversal. Was the bad debt expense taken last year and reversed in the quarter? Just trying to understand. Didn't think I followed the commentary. I must have missed it. Yeah. Hoping some clarification. Some of it was taken in the latter part of last year. Some of this was taken in Q1. As we've collected upon those receivables, we've been able to release the provision. Okay. Is that kind of one of the adjustments under the special items, or is that just in the numbers? No, it's just an item that we've called out as one of the factors influencing performance. We don't carve those out as special items. Okay. Perfect. Just I guess as we look to kind of the back half of the year into next year, you know, with the macro situation evolving quite a bit, just big picture, have you seen any change in tone or commentary from kind of customers? I know the U.K. was out with some negative kind of directional macro negative commentary. Just big picture, what are you hearing from kind of particularly more focused on U.S. and the U.K.? I think in general, the tone is. I would call it neutral for lack of a better way to explain it. Clearly, you know, with a lot of talk of recession and things like that, there's nervousness out there. From our standpoint as an industry, with new car sales still being difficult and, you know, people most likely, if we do get into, you know, harder times, will keep their vehicles longer, those macro themes can help us, is what we've historically seen. You know, I would say overall we. I wouldn't say we've seen a change in the overall tone, maybe is the best way to say it, at this particular point in time. As we know, those things can rapidly change. Okay. Just, like, one last quick one. As the balance sheet continues to improve, obviously a good step down this quarter, should we expect the focus just over the medium to long term to still be on kind of growth initiatives before you would think towards any other capital allocation priorities, or how are you thinking about that, at this point in the cycle? Yeah, that would definitely be a fair way to think about it. Thanks so much for the color. Thank you. Your next question is from Daryl Young at TD Securities. Thanks, guys. Just one quick follow-up. On the volume side for the auto parts, is there a way to compare 2019 and see if there's any actual benefit coming through yet from the lack of new car sales and if volumes have. If you've seen any sort of quantifiable benefit from those issues and higher used car prices as well? It'd be very difficult, Daryl. There's so many variables in that and, you know, I think as we discussed in our Q2 report, what we're really seeing driving sales right now is certainly the inflationary effect on prices, so. Yeah. What I would add is, you know, obviously our continued initiative and, you know, one point that we haven't touched on necessarily through this Q&A is, you know, bringing on a new member in the Canadian division is always gonna help drive parts volume and the greenfields in the U.K. would certainly play a role in that as well. So, you know, to Brian's point, there'd be a bunch of factors to disaggregate and comment on if we were to provide any type of figure around volume over the past three years. Got it. Makes sense. Thanks, guys. Thank you. Thank you. At this time, gentlemen, we have no further questions. Please proceed with your closing remarks. Thank you, operator, and thank you, everybody, for listening. We look forward to updating you on our progress during our next quarterly call. Have a great day. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Have a good weekend.