August 10, 2012
Boyd Group Income Fund Reports Second Quarter Results
- Growth from Acquisitions and New Single Locations Continues on Plan -
Winnipeg, Manitoba — August 10, 2012 — Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “the Boyd Group”) today reported its financial results for the three and six-month periods ended June 30, 2012. The Fund’s complete fiscal 2012 second quarter financial statements and MD&A have been filed on SEDAR (www.sedar.com). This news release is not in any way a substitute for reading the Boyd Group’s financial statements including notes to the financial statements and Management’s Discussion & Analysis.
- Added nine new single locations during the first and second quarters and, subsequent to the end of the quarter, two additional single locations; for a total of 11 new single locations year-to-date
- Added an additional six locations with the multi-location acquisition of Pearl Auto Body on July 1, 2012
- Including the acquisition of Master on January 3, 2012, added a total of 25 locations since the end of 2011
- Sales increased by 32.7% to $102.9 million from $77.6 million in Q2 2011; Cars Collision, Master, and fourteen new single locations contributed $25.0 million in new sales
- Same-store sales decreased by 1.3%, excluding the impact of foreign exchange translation
- Gross margin increased to $46.4 million, or 45.1%, compared with $34.7 million, or 44.7%, in Q2 2011
- Adjusted EBITDA1 of $6.8 million, compared with $4.9 million in Q2 2011
- Net earnings were $1.1 million, or $0.090 per unit (diluted), compared with a net loss of $2.4 million, or $0.221 per unit (diluted), in Q2 2011
- Adjusted net earnings1 increased to $3.2 million or 3.1% of sales, for Q2 2012 compared to adjusted net earnings of $2.7 million or 3.4% of sales for the same period in 2011
- Adjusted distributable cash1 of $3.2 million, compared with $2.9 million in Q2 2011
- Payout ratio of 46.1%, compared with 42.5% in Q2 2011
For the three-months ended June 30, 2012
Sales increased by 32.7% to $102.9 million, compared with sales of $77.6 million for the same period last year. The $25.4-million increase was driven largely by sales from Cars Collision, Master Collision, and 14 other new collision repair locations opened since April 1, 2011.
Sales in Canada were $17.2 million for the three months ended June 30, 2012, reflecting a 7.9% decline from $18.7 million for the same period in 2011. The decline is primarily due to a same-store decrease of 10.9%, or $2.0 million, due to mild winter weather conditions that reduced work-in process and pent-up market demand coming into the quarter followed by a dry spring further reducing claims from normal levels.
Sales in the U.S. totalled $85.7 million, an increase of $26.8 million or 45.6%, over the same period in 2011. The increase resulted from $15.6 million of sales from Cars Collision, $5.2 million from Master, $3.2 million from 11 new locations, $0.9 million from 1.7% same-store sales growth, and $2.6 million from favourable currency translation of same-store sales, offset by lost sales from the closure of two locations.
Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”1) for the second quarter were $6.8 million, or 6.6% of sales, compared with Adjusted EBITDA of $4.9 million, or 6.3% of sales, for the same period a year ago. The 39.3% increase in Adjusted EBITDA was the result of EBITDA contribution from Cars Collision, Master and from other new locations, improved gross margin, and favourable currency translation of same-store sales.
The Fund recorded income tax expense in the amount of $0.4 million, compared with $0.2 million for the same period in 2011.
Net earnings were $1.1 million, or 1.1% of sales, compared with a loss of $2.4 million, or 3.1% of sales, for the same period last year. Adjusted net earnings increased to $3.2 million, or 3.1% of sales, compared with adjusted earnings of $2.7 million, or 3.4% of sales, for the same period in 2011. Adjusted net earnings excludes the impact of fair value adjustments for exchangeable shares and unit options, acquisition costs, a put option adjustment as well as the accelerated amortization of True2Form, Cars and Master brands.
During the quarter, the Fund generated adjusted distributable cash of $3.2 million and declared distributions and dividends of $1.5 million, resulting in a payout ratio based on adjusted distributable cash of 46.1% for the quarter. This compares with adjusted distributable cash of $2.9 million and a payout ratio of 42.5% a year ago. The increase in adjusted distributable cash was largely due to higher cash flows from operations. However, payout ratio also increased as a result of higher distributions versus the same period last year.
For the six-months ended June 30, 2012
Sales increased by 32.2% to $210.3 million, compared with sales of $159.1 million for the same period last year. The increase was due largely to $51.1 million in sales generated from 27 Cars locations, 8 Master locations and 14 other new collision repair locations opened since January 1, 2011.
Sales in Canada were $36.7 million for the six months ended June 30, 2011, a decrease of $1.5 million, or 4.0%, over the same period in 2011. The decline was due to a same-store sales decrease of 7.1%, or $2.7 million resulting from the carryover impact of mild winter weather conditions and unfavourable spring weather, as well as a $1.1-million decrease as a result of a location closure. This was offset by sales of $2.3 million from three new locations.
Sales in the U.S. were $173.6 million, an increase of $52.7 million, or 43.6%, over the same period in 2011. The increase resulted from $32.9 million of sales from Cars Collision, $10.3 million from Master, $5.7 million from 11 other new locations, $1.7 million from 1.4% same-store sales growth, $3.0 million from favourable currency translation of same-store sales, offset by lost sales of $0.9 million from the closure of two locations.
Adjusted EBITDA1 for the first six months of 2012 totalled $13.8 million, or 6.5% of sales, compared with Adjusted EBITDA of $10.4 million, or 6.5 % of sales, during the same period a year ago. The $3.4 million increase in Adjusted EBITDA was the result of EBITDA contribution from Cars Collision, Master and from other new locations, as well as favourable currency translation of same-store sales.
The Fund recorded income tax expense in the amount of $1.1 million, compared with $1.0 million in 2011. The Fund has now used all of its unrestricted U.S. operating loss carry-forward amounts, and only has loss carry-forward amounts remaining from acquisitions which are restricted, in that, their utilization is subject to annual maximum allowable limits. As a result, a portion of U.S. earnings are now subject to current taxes.
Net earnings were $3.2 million, or 1.5% of sales, compared with a loss of $1.5 million, or 0.9% of sales, for the same period last year. Adjusted net earnings increased to $6.4 million, or 3.1% of sales, compared with adjusted earnings of $5.2 million, or 3.3% of sales, for the same period in 2011.
As at June 30, 2012, the Fund had total debt outstanding, net of cash, of $30.6 million, compared with $16.9 million at December 31, 2011. The increase in total debt, net of cash, is the result of new debt issued and cash used to fund single-location and multi-location acquisitions during the period.
“At the beginning of the year, we announced a growth strategy that includes 6%-10% growth through new start-up locations or single-location acquisitions, in addition to growth that we may achieve through opportunistic acquisition of multi-location collision operators,” commented Mr. Bulbuck. “Year to date, we have added 11 new single locations, which is already within the range of our full-year goal. We have also completed two multi-location acquisitions, Master Collision in January and Pearl Auto Body in July. Increasing our market coverage helps solidify our leadership in the market, and we will continue to look for similar attractive opportunities. We will continue the integration of our acquisitions in order to benefit from operational synergies while growing organically by continuing to add new and carefully selected single locations. We remain positive on the long-term dynamics of our industry and the merits of our business model, despite uncontrollable weather and market factors. The standardization of our management information systems across all of our U.S. repair center locations is in full swing, and we expect this undertaking to enhance our operational and administrative efficiency. We remain committed to being a growth company that offers an attractive payout, while maintaining the financial flexibility to support our growth strategy and gradually increase distributions to our unitholders over time.”
2012 Second Quarter Results Conference Call & Webcast
Management will hold a conference call on Friday, August 10, 2012, at 10:00 a.m. (ET) to review the Fund’s 2012 second quarter financial results. You can join the call by dialing 888-231-8191 or 647-427-7450. A live audio webcast of the conference call will be available through www.boydgroup.com. An archived replay of the webcast will be available for 90 days. A taped replay of the conference call will also be available until Friday, August 17, 2012, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 99510276.
(¹)(²) EBITDA, Adjusted EBITDA, distributable cash, adjusted distributable cash and adjusted net earnings are not recognized measures under International Financial Reporting Standards (“IFRS”). Management believes that in addition to revenue, net earnings and cash flows, the supplemental measures of distributable cash, adjusted distributable cash, adjusted net earnings, EBITDA and Adjusted EBITDA are useful as they provide investors with an indication of earnings from operations and cash available for distribution, both before and after debt management, productive capacity maintenance and non-recurring and other adjustments. Investors should be cautioned, however, that EBITDA, Adjusted EBITDA, distributable cash, adjusted distributable cash and adjusted net earnings should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Fund’s performance. Boyd’s method of calculating these measures may differ from other public issuers and, accordingly, may not be comparable to similar measures used by other issuers. For a detailed explanation of how the Fund’s non-GAAP measures are calculated, please refer to the Fund’s MD&A filing for the three and six-month periods ended June 30, 2012, which can be accessed via the SEDAR Web site (www.sedar.com).
About The Boyd Group Inc.
The Boyd Group Inc. is the largest operator of collision repair centres in North America. The Company operates locations in the four Western Canadian provinces under the trade name Boyd Autobody & Glass (http://www.boydautobody.com), as well as in 14 U.S. states under the trade names Gerber Collision & Glass (http://www.gerbercollision.com), True2Form, Master Collision Repair, and Pearl Auto Body. The Company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with approximately 3,000 affiliated service providers throughout the United States. For more information on The Boyd Group Inc. or Boyd Group Income Fund, please visit our website at http://www.boydgroup.com.
About The Boyd Group Income Fund
The Boyd Group Income Fund is an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including a majority interest in The Boyd Group Inc. and its subsidiaries. The Boyd Group Income Fund units trade on the Toronto Stock Exchange (TSX) under the symbol BYD.UN.
For further information, please contact:
President & CEO
Tel: (204) 895-1244
Tel: (416) 815-0700 / 1-800-385-5451 (ext. 242)
Chief Financial Officer
Tel: (204) 895-1244
Caution concerning forward-looking statements
Statements made in this press release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like “may”, “will”, “anticipate”, “estimate”, “expect”, “intend”, or “continue” or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: dependence upon The Boyd Group Inc. and its Subsidiaries; cash distributions not guaranteed; inability to successfully integrate acquisitions; economic downturn; rapid growth; loss of key customers; brand management and reputation; insurance risk; quality of corporate governance; tax position risk; risk of litigation; acquisition risk; credit & refinancing risks; dependence on key personnel; employee relations; decline in number of insurance claims; market environment change; reliance on technology; weather conditions; expansion into new markets; fluctuations in operating results and seasonality; increased government regulation and tax risk; execution on new strategies; operating hazards; energy costs; U.S. health care costs and workers compensation claims; low capture rates; key supplier relationships; capital expenditures; competition; potential undisclosed liabilities associated with acquisitions; foreign currency risk; margin pressure; acquisition and start-up growth and ongoing access to capital; environmental, health and safety risk; interest rates; and the Fund’s success in anticipating and managing the foregoing risks.
We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements, investors and others should refer to the “Risk Factors” section of the Fund’s Annual Information Form, the “Risks and Uncertainties” and other sections of our Management’s Discussion and Analysis of Operating Results and Financial Position and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings.
Boyd Group Services Inc.
1745 Ellice Avenue
Boyd Group Services Inc.
1745 Ellice Avenue
Winnipeg, Manitoba, R3H 1A6