Uni-Select Inc

TSX:UNS

Earnings Call Transcript

[Operator]

Good morning. My name is Joanne, and I'll be your conference operator today. At this time, I would like to welcome everyone to Uni-Select, Inc. 2020 Fourth Quarter Results Year-end Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Thank you.Mr. Louis Juneau, Chief Legal Officer and Corporate Secretary, you may begin your conference. [Foreign Language]

[Me Louis Juneau]

Good morning, everyone, and thank you for joining us for the Uni-Select's fourth quarter conference call. Presenting this morning are Brent Windom, President and CEO of Uni-Select and President and CEO of the Canadian Automotive Group; and Eric Bussieres, Executive Vice President and 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 2, 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 Brent.

[Brent Windom, President, CEO & Director]

Thank you, Louis, and good morning, everyone, and thank you for joining us. Before we begin, I would like to recognize the efforts of the Uni-Select team, of over 4,800 team members for their continued commitment to drive sustainable improvements for our customers and for our shareholders during these circumstances due to the pandemic. Today, we will discuss the Q4 results and some key highlights from 2020.Let's turn to Page 4, please. As you can observe on the industry graphs, there was a significant dip in Q2 at the start of the pandemic in the initial lockdowns. Then, a substantial recovery in Q3 as the confinement measures were lifted, and a less pronounced dip in Q4 as the second wave of the pandemic hit. The sales of the 3 businesses were highly correlated to their respective markets throughout the year, with the auto parts aftermarket recovering much faster than the refinished market.Let's turn to Page 7, please, for the fourth quarter. Consolidated sales for the fourth quarter were down 11% to $366 million, from $413 million last year, primarily attributable to the slower recovery as expected at FinishMaster, and to a lesser extent, at TPA due to the new governmental lockdown measures put in place as a result of the second wave of COVID-19. These factors were partially offset by the continued improvement of CAGs performance, which reported increased sales versus last year. Organic growth continued its sequential improvement from the trough set in the second quarter and ended slightly better than Q3 at a negative 12% or an impact of $49 million. In turn, the adjusted EBITDA decreased to $24 million compared to $28 million or a margin of 6.5% from a margin of 6.8% last year.The impact from the pandemic was partially offset by the savings realized from the CIP and cost control measures. While our consolidated sales have not returned to normalized levels, we managed our adjusted EBITDA margin in line with last year at 6.5%, a testament to the successful execution of our business continuity plans and our continuous productivity improvement initiatives.Please turn to Page 8 and review FinishMaster, please. At FinishMaster, as stated, we continue to face a slower recovery than the other segments of the aftermarket. Demand continues to improve but remains well under 2019 levels. Sales were down 22% to $155 million. Organic growth continued its sequential improvement in the second quarter and ended Q4 better than Q3 with an impact of $44 million. While our sales are down, we are maintaining our market share. Our sales are in line with the markets in which we operate and mirrors the trend of the third quarter.In the quarter, we integrated 1 store, having completed the heavy lifting earlier this year. In 2020, we integrated a total of 33 company-owned stores ending the year with 147 stores, with minimum impact on our sales or our customer service levels.Adjusted EBITDA decreased by 50% to $8.4 million or a margin of 5.4% versus the same period last year. What is important to highlight is that, although our Q4 is seasonally weaker, we succeeded in generating a higher adjusted EBITDA than Q3, a testament that our actions are beginning to bear fruit. This decrease is primarily due to the lower market demand, resulting in lower fixed cost absorption, lower rebates from the optimization of inventory as well as a result in customer mix as national accounts and MSO continue to gain share. These factors are partially compensated by the savings from our CIP. You'll join me on Page 9, please, for the Canadian Automotive Group. CAG continued to perform well under the context, with sales increasing 2% in the quarter despite the impact of the pandemic and a slow market recovery for its PBE segment as well. Sales reached $125 million, up from $122 million last year, driven by acquisitions and the appreciation of the Canadian currency. Organic growth was flat and in line with Q3. It is important to note that the sales returned to 2019 levels in the second half of 2020, despite the impact of the pandemic, demonstrating the resiliency of our business model. In the quarter, we acquired 2 stores in a strategic market. In 2020, we integrated 4 company-owned stores, acquired 5 stores, ending the year with 76 stores in our network. We also migrated 17 stores to our single point-of-sale system, which will lead to further increasing efficiency.Adjusted EBITDA reached $13.4 million or a margin of 10.7% compared to $9.2 million and a margin of 7.6% same period last year. This significant improvement was driven by the savings from the productivity improvements and the CIP, and to a lesser extent, the favorable timing of vendor rebates and the favorable variance in foreign exchange.CAG ended the year with an adjusted EBITDA of $48 million or a margin of 9.9%, higher than $47 million or a margin of 9.1% last year. Our team's ability and dedication to manage the business continues to grow and is shown in the sustained improvements in our profitability.Turning to Page 10, please, for the parts alliance. TPA had a softer Q4 than expected as government-imposed lockdown measures were put in place in October. Although we remained open in the lockdowns, this was the second one in the U.K. We saw some decline in the improved run rate from the third quarter, but certainly not to the extent experienced in April.Sales reached $87 million compared to $92 million last year, representing an organic growth of negative 6%, in line with the third quarter. The sales variance was mainly due to the impact from the confinement measures as well as the erosion resulting from the integration of company-owned stores. These factors were partially offset by the appreciation of the British pound.In 2020, we integrated 8 company-owned store ending the year with 171 stores in our network. We are very proud of the team's accomplishment to have successfully migrated 36 stores to our single point-of-sale system as well. Adjusted EBITDA reached $6.7 million or a margin of 7.8%, representing the best Q4 margin to date for TPA, from $5.7 million or a margin of 5.7% last year. These results were driven by savings from the productivity initiatives, from the CIP and to a lesser extent, the governmental occupancy subsidies. Excluding the government subsidies of $1 million, the adjusted EBIT would still have been better than last year, $5.7 million or a margin of 6.6%. In the second half of the year, the adjusted EBITDA in absolute dollars and margins were higher than the same quarters in 2020, despite the impact of the pandemic. TPA ended the year with 6.1% adjusted EBITDA margin, higher than 5.6% last year. We believe this profitability is sustainable and will further improve over time.Please turn with me on to Page 11 for the 2020 highlights. 2020 was a challenging year, but we produced better-than-expected results when compared to our expectation at the start of the pandemic. A testament to the resiliency of the business model and our quick and efficient actions to adjust our operations to the new market realities.Consolidated sales for the year decreased 15%. The decrease in each of our business segments were directly correlated with the respective market. Therefore, our market share was maintained all around. While the pandemic negatively impacted our business, it helped us identify further opportunities to accelerate our transformation.During the year, we realized more than $30 million of annualized savings. While CAG and TPA have completed the heavy lifting in regards to the plan, there remains initiatives and opportunities for further improvements of FinishMaster.In 2020, we integrated 45 stores and acquired 5 stores ending the year with 394 stores in our network. Our adjusted EBITDA decreased to 32% to $89 million versus $130 million last year. However, our adjusted EBITDA margin only decreased from 7.5% to 6%. As a successful implementation of our cost control measures and the benefits from our past investments mitigated the impact on our profitability.I would like to now turn the call over to Eric to complete our financial review. Eric?

[Eric Bussieres, Executive VP & CFO]

Thank you, Brent. Good morning, everyone.Turning to our financial position on Page 13. As at December 31, 2020, our outstanding total net debt stood at $370 million, including $101 million of IFRS lease obligation, representing a decrease of $79 million versus $449 million and the $101 million, respectively, at the end of 2019. We were able to reduce our debt in a challenging operating environment, largely due to the successful implementation of our cash conversion plan and tight control over spending.While we reduce our total net debt, our leverage ratio increased from 2.5x at the end of 2019 to 4.2x in 2020 as the adjusted EBITDA was severely impacted by COVID-19. However, excluding IFRS leases obligation, total net debt to adjusted EBITDA stood at 3x in 2020 versus 2.7x for the same period last year.Now let me comment on our cash flow on Page 14. We finished the fourth quarter on a strong note, generating $48 million of cash from operations, ending the year at about $133 million in 2020, up about $100 million versus $33 million last year. This significant improvement was mainly due to our proactive cash management. Given the operating context in 2020, we manage our working capital tightly.During the year, we reduced our inventory level by $147 million, of which approximately $110 million should be considered permanent. In addition, we emphasized the collection of receivable, which improve our working capital by about another $57 million year-over-year. These positive cash flow were partly offset by lower operating results and the timing of vendor financing.In turn, we generated $16 million of free cash flow in the fourth quarter, ending the year with $72 million in 2020 compared to $106 million in 2019. This decrease is primarily due to the lower profitability, mainly related to the lower volume rebates associated with the impact of COVID-19, the optimization of inventory as well as higher interest payment on long-term debt. These factors were partly offset by lower capital expenditures in line with our tight cash management plan.Turning to Page 15, please. We manage our capital deployment very prudently in 2020, given the circumstances. In fact, it represented about half of the capital invested in 2019. In essence, we reduced our CapEx by $16 million and our merchant advance by $6 million. We also reduced our dividend by $6 million as we suspended it in the spring 2020 to provide more financial flexibility. We use our excess cash to mainly reduce our debt and make a few tuck-in acquisition in strategic markets in Canada in line with our capital allocation priorities. Turning to Page 16. At the end of 2020, we had approximately $285 million of available liquidity. We managed to improve our liquidity by $83 million since the first quarter and ended 2020 with $50 million more liquidity than in 2019.Turning to Page 17. As at December 2020, we were in compliance with all our bank covenants. Based on our assumptions and expectations, we believe that our current liquidity and future cash flow in coming periods will be sufficient to meet our operating, financial and capital needs.Turning to Page 19 for the outlook. There remain significant uncertainty going forward from the global pandemic, the Brexit overhang in the U.K. and the ongoing structural changes in the refinish market in the U.S. Therefore, our outlook is based on certain assumptions and visibility as of today.Given where we are today, the recovery from the pandemic will take time. At this point, we expect our consolidated 2021 sales to improve over 2020, but not to return to 2019 level before the second half of 2022. Since our sales are highly correlated to the market in which we operate, the impact of the pandemic, on the general economic environment will play a big part in the pace of our recovery.Additionally, we expect to continue to be impacted by some level of supply chain disruption with certain manufacturers in the first half of 2021. As mentioned previously, the refinish market will take longer to recover than the Auto Parts business, as it is not only dependent on miles driven, but also on new car sales and traffic density.In terms of profitability, we expect our consolidated adjusted EBITDA in an absolute dollar and on a margin basis to improve over 2020, but at varying degrees, depending on the business segments. This improvement will be driven by incremental volume, allowing for greater fixed cost absorption, the full benefit from our past continuous improvement initiatives and continued stringent cost control measures.One factor to keep in mind in 2021, that it is unlikely that we will be benefiting from the same level of government subsidies as we did in 2020. More specifically for FinishMaster, we expect sales to improve over 2020, but we do not expect to return to 2019 level as the impact from the pandemic is compound by the ongoing structural changes in the refinish industry.Market recovery is expected on a regional basis with national and MSO sales currently recovering faster than the eminent channel. We also expect to improve our adjusted EBITDA margin versus 2020 as we benefit from past investment, continue to adapt the business to the new market reality and continue to optimize our cost structure in the businesses.For CAG, we expect both sales and adjusted EBITDA margin improvement over 2020. The resilience of the Auto Part aftermarket business, the benefit from our past continuous improvement investment and the improved performance of our company-owned store network are bearing fruits. Our objective continue to be to grow organically and through strategic acquisition to consolidate the market in Canada. We made 2 tuck-in acquisitions in 2020 and expect to do some selective ones in 2021. Similarly, for TPA, we expect both sales and adjusted EBITDA margin improvement over 2020. Having said this, 3, there remains uncertainty for TPA. One of those issues: First, the impact from additional government lockdown due to the pandemic; second, the uncertainty to have supply chain issues related to Brexit; and finally, the seasonality impact from the Ministry of Transport changing mandatory testing schedule. However, our objectives continue to be to grow primarily through greenfield. We put greenfield on hold in 2020 given the context, but we are currently planning to open a few in 2021, depending on the market conditions.For modeling purposes, net finance costs for 2021 should be in line with last year, excluding the loss on the debt distinguishment, while the tax rate should be between 20% and 22%. In terms of cash deployment, we will continue to manage our capital investment and working capital prudently. However, we will ramp up certain investments back to pre-COVID level. For 2021, we expect to invest about $12 million for maintenance CapEx and between $10 million to $16 million for development Capex. We also expect to invest between $14 million to $16 million in customer incentives. However, we will maintain the suspension of the dividend payments until further notice.Turning to Page 20. I would like to conclude on comments relating to specifically to the first quarter of 2021. While the impact of 2019 has temporarily distorted the typical seasonality of our results, Q1 '21 is still expected to be soft. Given that the impact from the pandemic first hit our results in the later part of March 2020, our Q1 '21 sales in all 3 segments are expected to be lower than the same period last year, but at varying degrees. Let me provide you with some perspective compared to January 2020. Our consolidated organic sales from January stood at a negative 12%, with FinishMaster at negative 15%, CAG at negative 7% and TPA at negative 10%. In addition, the total net debt level of Q1 will arise as it does every year due to the typical seasonality, payment of rebates to our member, the timing of some payables and some level of restocking in the businesses.In line with our prior comments, we expect to use a greater level of cash flow from operation in the first half of the year and generate cash flow from operation more so during the second half of the year, with the objective to finish 2021 at a similar total net debt level as of Q4 2020 and combined with an improved leverage ratio.In closing, we are confident that we have a solid financial plan to continue to address our current crisis and sufficient liquidity to meet our current operating and capital needs. This concludes our presentation. We're now ready to answer your questions. Joanne?

[Operator]

[Operator Instructions] Your first question comes from the line of Benoit Poirier from Desjardins Capital Markets.

[Benoit Poirier]

Congratulations for the decent quarter. You provided great color for the 2021 outlook. But I would be curious, which segment do you expect the strongest and the weakest improvement, either on an absolute basis in terms of organic growth or EBITDA? Would you be able to rank where you see the -- where you expect to see the greatest improvement?

[Brent Windom, President, CEO & Director]

Well, I'll let Eric -- Benoit, I would say we continue to expect CAG to perform throughout the year. It's probably the one that -- and certainly, TPA would be in the middle of that, provided there's no more further significant impacts from the lockdowns. Certainly, the one that has the longest pole in the tent for recovery is just the refinish market itself. And so it will be the third as far as the recovery from an organic point of view.

[Benoit Poirier]

Okay. Perfect. And with respect to FinishMaster, could you maybe provide some color about the further cost reduction initiatives that we might see down the road to better adjust the network with the increasing MSO trend?

[Brent Windom, President, CEO & Director]

Well, I think we've taken a lot of actions over the last 18 months in our network and our footprint to sort of optimize a larger branch network. And we're currently in continuous review of that and what needs to be done when working with our customer base.We won't do anything to jeopardize our service levels and our position being the leader in that space. But we're certainly looking at every opportunity we can through automation and every other aspect of whether it's route optimization, everything we can do to further benefit the performance of that model because it's a solid business, just going through transformation as you know.

[Benoit Poirier]

Okay. And last question in terms of free cash flow. Eric, you provided great details about CapEx expectation. I would be curious maybe to have more granularity about the key elements that we should take into account for 2021. Are there any big working cap movement that we should expect and maybe leverage ratio where we might expect the leverage ratio to come down?

[Eric Bussieres, Executive VP & CFO]

Yes. So as it relates to how we see the working capital evolving, there is no question that we will be investing in our working capital in Q1 and to a lesser extent in Q2. Not unusual, right, as you know, Benoit, we are in a seasonal business. And Q1 is always the most punitive quarter from a cash flow perspective for Uni-Select.I would say it's slightly more exacerbated this year with the pandemic from the perspective of the recovery and the timing of that recovery. So both -- if you come out of Q4, it's a slower quarter typically in Q4, and therefore, you're going to collect a little bit less cash in Q1. So that's part of the explanation.The other one you have to keep in mind that in Q1, we always face rebates to our members in Canada based on the prior year results, right? And then the third element is just we will be restocking a little bit in Q1. So we will be burning cash, and we had signaled that last quarter. And I think that's still very much what we have in our eyes. So my expectation is that dollar debt level will go up in Q1 and to a lesser extent in Q2. And then we expect the dollar debt level to come back more in line with what we had at the end of 2020. In terms of leverage ratio, I expect an improvement just because the EBITDA should expand compared to 2020, right? So our expectation is that leverage ratio will come down towards the second part of the year.

[Operator]

Your next question comes from the line of Nauman Satti from Laurentian Bank.

[Nauman Waqar Satti, Diversified Analyst]

Congratulations on the decent quarter and good results. Just on the first quarter on the TPA side, your -- on the January, it was down negative 10%, whereas your last quarter, which was down about 5.6%. I'm wondering if the lockdown has had more impact or it's gone more stringent? Or how are you looking at that part?

[Eric Bussieres, Executive VP & CFO]

Yes. There's no question -- go ahead, Brent.

[Brent Windom, President, CEO & Director]

Sorry. There's no question that we've seen the lockdown in Canada have an impact on the momentum that we had on our sell-side in the Canadian group. I think we signaled that we saw it really happening in the fourth quarter on the trend and TPA with the lockdowns. We're certainly hopeful that the changes in the lockdowns and the curfews certainly will -- the business model is resilient. So it will come back. It's a matter of timing in those 2 regards. And then we have seen some improvement in our FinishMaster trends since the first of the year, as you can see.

[Nauman Waqar Satti, Diversified Analyst]

Okay. That's great. And just on for CAG, you had really good improvements there. I'm wondering if the timings of vendor rebates, is -- has that played a major role? Or is that a small part of it?

[Brent Windom, President, CEO & Director]

Well, I think that we certainly saw a significant improvement and a jump in the revenue beginning in the third quarter after we come out of the lockdowns in the second quarter. It sort of stabilized. As I think Eric and I alluded to, we were normalized run rate in the second half of '19 -- versus '19 in this last year. So it's in a solid position. So I think I don't see any real spikes. Canada doesn't have a lot of spikes other than seasonality.

[Nauman Waqar Satti, Diversified Analyst]

Okay. And just lastly, I mean, probably if you could speak on the 3 segments. Are there any changes on the pricing side? Or is that something that's consistent to how historically it has been?

[Brent Windom, President, CEO & Director]

We haven't seen any significant increases in cost from the manufacturers or pricing. The only thing I would tell you is all of us are facing freight costs from China and freighting is becoming a bigger burden for all 3 of the businesses, especially with parts side. I would say predominantly the parts side, not the paint side.So that's the only thing in the supply chain that's been disruptive. It is disruptive, both from receiving the goods and the cost to receive them from historically. But that'll sort of normalize itself over the year.

[Eric Bussieres, Executive VP & CFO]

And another top line, I may add that on the paint side, there's been announcement by certain manufacturers of price increases, which will push through in some start in December, but there's more to come during the quarter. And typically, we are able to push those price increases, right, with the traditional segments, for instance, in the paint. And oftentimes, the inflation in the Auto Parts business is not a bad thing for us in the sense that something that we can push the price up to the market ultimately, right, because it's a pass-through, more or less.

[Operator]

[Operator Instructions] Your next question comes from the line of Daryl Young from TD Securities.

[Daryl Young, Mining Research Associate]

Question on FinishMaster. Just wondering through the pandemic, there's been some smaller players consolidating. And I'm just curious if there's been any shifts in market share, if you feel that you're holding your own through this environment? And yes, just a little bit more color there on the competitive dynamics.

[Brent Windom, President, CEO & Director]

Yes. I would tell you that we still see a significant activity at the repair side, on the MSO side and with the national accounts. We see them acquiring. As far as in the distribution side, it's a very small movement that's happening right now and has happened through the pandemic.And quite frankly, we've been tracking our market trends by down to the lowest level we can get any data through CCC. And we feel very confident that we haven't lost any market share in any of the markets that we participate in, which is roughly about 30, 32 states that we're in, in the FinishMaster footprint.

[Daryl Young, Mining Research Associate]

And would you say you're seeing more volume directed through the MSOs and through your MSO customers, it would be the ones driving the bulk of your sales in this market?

[Brent Windom, President, CEO & Director]

Absolutely. We've been very clear that as the pandemic sort of subsided a little bit in Q2 as we come out of that in Q3 and Q4 that we've seen the market rebound quicker to the MSO and national accounts than it has been the traditional market. So yes.

[Daryl Young, Mining Research Associate]

Okay. Great. And then on the supply chain disruptions, you've mentioned that a few times in the past, but hasn't really seem to impact margins in any particular quarter. Is there anything different this time around that would be cause for concern or just the general disruption of the COVID environment?

[Brent Windom, President, CEO & Director]

Well, I would say, no disruption on the supply chain on the paint side or the refinish side. Most of that is produced in North America, as you know. And so I would say, though, for us on the parts side, it's been pretty dicey the last 60 days, 90 days, both for TPA and Canada, just to receive the right supply from our manufacturer partners.Certainly, it's temporary. It's all COVID impacted. Plants closing, shifts not being able to work. Freight lines are being distorted as you know. So it's been something that we're managing in a dynamic way. But clearly, it's something that has our -- it's our top attention right now is to make sure we have a product. It has an impact. It is from a margin perspective, it's really certainly a concern of our top line in making sure we have the right products to our customer base in the right time.

[Daryl Young, Mining Research Associate]

Okay. And then just going back to FinishMaster quickly. Is there a target margin you guys are hoping to sort of run rate at when the environment normalizes? Or is it based on the cost-cutting done to date and recovery in sales? Do you have sort of a target margin there?

[Eric Bussieres, Executive VP & CFO]

Well, I think we've said that we believe that the business can certainly be in the 6% to 8% EBITDA range, right? And I would tell you there, if you normalize the volume of FinishMaster in Q4 to sort of 2019 sales volume, the EBITDA margin would expand by at least 230 basis points, right, just because of the volume aspect of it. So part of the margin enhancement at the FinishMaster will be a volume gain, basically.We've done a lot of work on the cost. There's still some opportunities, obviously, and we'll continue to do so like we do in the 2 other businesses. But for now, I think that that's what we have in our radar at this point.

[Operator]

[Operator Instructions] Your next question comes from the line of Jonathan Lamers from BMO Capital Markets.

[Jonathan Lamers, Analyst]

Just circling up on FinishMaster. Do you have the portion of sales that MSOs represented in 2020?

[Eric Bussieres, Executive VP & CFO]

No, not at my finger tip, Jonathan.

[Jonathan Lamers, Analyst]

I guess I'm just curious, I know that they took share in 2020. I would think that the independents were hit harder than the MSOs. Could there actually be an opportunity for some of that mix to reverse or at least remain stable in a scenario where vehicle miles traveled normalized?

[Eric Bussieres, Executive VP & CFO]

Yes. So the way I would answer that is there's 2 factors to keep in mind here, right. One is just the overall traffic volume and incident rates that will likely rebound this somewhat as the economy reopen. And then the question is, who is getting that business. So for now, the insurance companies have redirected that volume more so to the MSOs and national accounts. I suspect as the -- as those companies start to having a higher volume, there will be more opportunities for the traditional segments to rebound. And I would say that's one element.And then the other factor is the consolidation, right? We've seen, even in 2020, consolidation still happens, and we expect this to continue to happen. So I think that's the color I could give you for now.

[Brent Windom, President, CEO & Director]

So Jonathan, just the share mix is pretty much the same as we said in Q4 -- in Q3. It's about 35%, 36% of the business. It hasn't really changed from our mix. It's just that there's less of the traditional side right now.

[Jonathan Lamers, Analyst]

Okay. And on the greenfield opportunity for the U.K. that you're looking to later into 2021, can you expand a little bit on that? Is that a continuation of the same strategy that TPA was taking prior to COVID? And just kind of frame how big the opportunity might be?

[Brent Windom, President, CEO & Director]

Yes. I think we -- I think we've always said that it will be somewhere around -- there's probably 15 to 25 locations that we would like to expand to strategically over time. And I think all we're doing is picking that pace back up. And as Eric alluded to, depending on the conditions that we're in, we have a line of sight for locations and prioritizations of where we'd like to grow into. So the team is working on those contingent based on the market rebounding.

[Jonathan Lamers, Analyst]

And just a technical question. Eric, would you happen to have the monthly breakout of organic sales for Q1 of 2020?

[Eric Bussieres, Executive VP & CFO]

So on a consolidated basis, in Q1 2020, organic growth was negative 2%. I don't have it by month here. That was for the quarter. CAG was negative 4.9%. TPA was negative 4.5%, right? Sorry, I said on consolidated -- FM was negative 2%, and consolidated was negative 2.9%. From a month-to-month pattern, I don't have that in front of me, but something that we generally give.

[Operator]

Your next question comes from the line of Zachary Evershed from National Bank Financial.

[Zachary Evershed, Analyst]

Congrats on the quarter. I was hoping that you could drill down on the timing of the price hikes and pass-throughs and how much friction there might be on margins due to a lag before you're able to push that through?

[Brent Windom, President, CEO & Director]

Oh sorry. Could you repeat your question?

[Zachary Evershed, Analyst]

Would you be able to drill down for us on the timing of the price hikes and pass throughs? And whether there might be any friction there due to a lag between implementation at the manufacturers and you guys being able to push through the pricing?

[Eric Bussieres, Executive VP & CFO]

No, we haven't reserved a lot of delay from that perspective, right? When the manufacturer announced a price increase on a given date, price goes up, and anything else that is bought thereafter by the customer is subject to that price increase. The question is how much of that price increase is contractually protected by the customer or not. So that depends.I'll tell you that on the automotive side, most of our ability to push price increases is pretty good across the Board. In the paint business, some of the national accounts or some of the MSOs may have some price protection. So on the traditional side, we are able to push those price increases. But in terms of timing of price increase, it's pretty immediate. There's no big delay as it relates to that.

[Zachary Evershed, Analyst]

That's helpful. And then on that topic of the MSOs, obviously, repair consolidation is going to remain a headwind and you're looking at route optimization, automation, and of course, the return of volumes will also help margins. Is there anything else that you're looking at to help FM margins improve to the top end of that 6% to 8% range?

[Eric Bussieres, Executive VP & CFO]

We're also looking -- and Brent can emphasize on some other initiatives, but we are looking at our logistics per se, how we buy product, how we distribute the product within our branches. There might be some additional opportunities there, but these are very much stream of initiatives that are ongoing. So there are -- there's a lot of activities happening in the 3 businesses to further optimize and protect what we've done in 2020.

[Zachary Evershed, Analyst]

And the last one for me. Obviously, the strategic review ended ages ago. But with the big shakeup in the pandemic, are you still open to options that might narrow the focus of the business?

[Eric Bussieres, Executive VP & CFO]

Well, I mean, in the right time, right context, I think everything is possible, right? But we're not in a strategic review mode at this point. And I think we're pretty much looking at optimizing the businesses. And I think we've done a significant stride in the last 12, 18 months from that regard. Brent, I don't know if you want to add or comment further?

[Brent Windom, President, CEO & Director]

No. At this point, we're operating the businesses and looking at making sure we protect our assets and come out of this with not only keeping our market share, but in a position to grow it and optimize our cost to serve.

[Operator]

There are no further questions at this time. Mr. Brent Windom, please continue.

[Brent Windom, President, CEO & Director]

So thank you very much for joining us, and we look forward to speaking to you next quarter. Stay safe, be healthy, and thank you for being here today.

[Operator]

This concludes today's conference call. You may now disconnect.