November 15, 2013

Boyd Group Income Fund Reports Third Quarter

Not for distribution to U.S. newswire services or for dissemination in the United States

- Record adjusted EBITDA of $10.6 million; Announces 2.6% increase to annual distribution

Winnipeg, Manitoba - November 15, 2013 - Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “the Boyd Group”) today reported its financial results for the three and nine-month periods ended September 30, 2013. The Fund’s complete fiscal 2013 third 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.

Q3 2013 Highlights

• Total sales increased by 37.2% to $149.6 million from $109.1 million in Q3 2012
• Same-store sales increased by 4.4%, excluding the impact of foreign exchange translation
• Adjusted EBITDA1 increased 42.2% to $10.6 million, compared with $7.5 million in Q3 2012
• Acquired Hansen Collision and Glass with 25 locations, to enter new Michigan market
• Initiated a $63.5 million bought deal equity financing, which closed on October 22, 2013, to repay unamortized prepaid rebates and position for enhanced profitability and for further growth
• Added six single-store locations subsequent to the quarter
• Net loss attributable to unitholders of $2.4 million due to $6.4 million of non-cash fair value adjustments resulting primarily from unit price appreciation
• Adjusted net earnings1 increased to $4.4 million, or 2.9% of sales, compared with adjusted net earnings of $3.3 million, or 3.0% of sales, in Q3 2012
• Adjusted distributable cash1 of $4.4 million, compared to $1.9 million in Q3 2012
• Announced a distribution increase of 2.6% to $0.48 annually from $0.468

“During the third quarter, we continued to deliver solid performance while executing on initiatives that position us well for continued growth,” stated Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “The multi-location acquisition of Hansen Collision and Glass, the completion of our bought deal equity financing in conjunction with the signing of an interim paint restructuring arrangement and the continued additions of single locations all demonstrate our capabilities to execute on accretive opportunities to achieve our growth objectives. Our sales and Adjusted EBITDA for the third quarter increased by 37.2% and 42.2%, respectively when compared to the same period last year. This reflects not only the contributions of new locations but also a 4.4% increase in same-store sales. As a result of our continued growth and performance improvement, we are pleased to announce that the Board of Trustees have approved a 2.6% increase in our annual distribution to $0.48 per unit, commencing November, 2013, for unitholders and shareholders of record on November 30, 2013.”

Financial Results

For the three months ended September 30, 2013

Total sales increased by 37.2% to $149.6 million, compared with sales of $109.1 million for the same period last year. The $40.5 million increase was due largely to sales generated from 17 new single locations and multi-location acquisitions, which combined contributed $22.5 million. Same-store sales, excluding foreign exchange and glass sales of the combined Gerber Glass and Glass America business, increased by 4.4% and added $4.5 million of incremental sales. The new combined glass business contributed $10.2 million of incremental sales.

Sales in Canada were $20.1 million, an increase of $2.8 million or 16.2% over the third quarter of 2012. This increase is the result of a $1.8 million or 10.1% increase in same-store sales and an additional $1.0 million generated from one new location.

Sales in the U.S. were $129.6 million, an increase of $37.8 million or 41.1%, over the same period in 2012. The increase resulted primarily from acquisitions, including Glass America and Hansen Collision and Glass, as well as a $2.8 million or 3.3% increase in same-store sales, excluding the impact of foreign exchange and the new combined glass business.

Earnings before interest, income taxes, depreciation, amortization, adjusted for fair value adjustments to financial instruments, gain on sale of software and acquisition and transaction costs (“Adjusted EBITDA”1) increased to $10.6 million, or 7.1% of sales, compared with Adjusted EBITDA of $7.5 million, or 6.8% of sales, for the same period a year ago. The increase in Adjusted EBITDA was primarily the result of EBITDA contributions from acquisitions plus improvements in same-store sales.

The Fund recorded income tax expense in the amount of $1.1 million, compared with $0.7 million for the same period a year ago resulting from increased taxable income from the growth of the business.

The net loss attributable to unitholders was $2.4 million or $0.191 per unit (fully diluted) compared to net earnings of $1.5 million or $0.120 per unit (fully diluted) for the same period last year. The loss was impacted by non-cash expenses for fair value adjustments to financial instruments of $6.4 million which resulted primarily from a 15.1% appreciation in the Fund’s unit price during the quarter, gain on sale of software of $0.3 million, acquisition and transaction costs of $0.6 million and accelerated brand name amortization of $0.1 million. Excluding the impact of these adjustments, adjusted net earnings would have increased to $4.4 million, or $0.346 per unit. This compares to adjusted net earnings of $3.3 million, or $0.261 per unit for the same period in 2012. The increase in the adjusted net earnings for the quarter is the result of the contribution of new acquisitions as well as increases in same-store sales.

During the quarter, the Fund generated adjusted distributable cash of $4.4 million and declared distributions and dividends of $1.5 million, resulting in a payout ratio based on adjusted distributable cash of 34.0% for the quarter. This compares with adjusted distributable cash of $1.9 million, distributions and dividends of $1.5 million, and a payout ratio of 75.9% a year ago. On a trailing four-quarter basis at September 30, 2013, the Fund’s payout ratio stands at 26.7%.

For the nine months ended September 30, 2013

Total sales increased by 30.6% to $417.1 million, compared with sales of $319.4 million for the same period last year. The $97.7 million increase was due largely to sales generated from 25 new single locations and multi-location acquisitions, which combined contributed $67.7 million. The glass business, which generates its strongest sales during the spring and summer months, contributed incremental sales of $15.9 million. Same-store sales increased by 3.9% adding another $11.3 million of incremental sales.

Sales in Canada were $59.1 million, an increase of $5.1 million or 9.4%, over the same period in 2012. The increase was driven by increased same-store sales of $3.7 million or 6.9% plus $1.4 million of sales from one new location.

Sales in the U.S. were $358.1 million, an increase of $92.7 million or 34.9% over the same period in 2012. Increased sales resulted primarily from $49.0 million of incremental sales from multi-location acquisitions, as well as new single locations, which together contributed incremental sales of $17.4 million. The new combined glass business contributed $15.9 million of incremental sales. Same-store sales growth of 3.2%, excluding foreign exchange and the combined glass business, contributed incremental sales of $7.6 million. Sales also increased by $5.2 million due to the strengthening U.S dollar offset by $2.4 million in lost sales due to the closure of three underperforming facilities in 2012.

Adjusted EBITDA1 totalled $28.0 million, or 6.7% of sales, compared with Adjusted EBITDA of $21.2 million, or 6.6% of sales, for the same period one year ago. The $6.8 million increase in Adjusted EBITDA was primarily the result of EBITDA contributions from multi-location acquisitions and improved same-store sales.

The Fund recorded income tax expense in the amount of $2.7 million, compared with $1.8 million for the same period last year. The increase was primarily the result of increased taxable income from the growth in business.

The net loss attributable to unitholders was $4.9 million or $0.393 per unit (fully diluted) compared to earnings of $4.7 million or $0.375 for the same period last year. The loss in the current period resulted primarily from higher non-cash expenses for fair value adjustments due to the Fund’s unit price appreciation from $16.29 at the beginning of the year to $27.58 at September 30, 2013, or nearly 70%. Acquisition related costs, gain on sale of software and accelerated amortization of brand names associated with the re-branding of acquired locations also impacted earnings. Net earnings attributable to unitholders adjusted for these items, or adjusted net earnings, increased to $11.8 million, or 2.8% of sales, compared with adjusted earnings of $9.7 million, or 3.0% of sales, for the same period in 2012.

At September 30, 2013, the Fund had total debt outstanding, net of cash, of $70.4 million, compared to $47.0 million at December 31, 2012 and $32.9 million at September 30, 2012. The increase in debt is primarily due to the issuance of seller notes and use of cash in connection with the acquisition of Hansen Collision and Glass and the assumption of capital leases and use of cash to acquire the Glass America business. In October, the Fund signed an interim paint restructuring arrangement moving away from a pre-purchase rebate system to a higher value post-purchase discount system and completed a bought deal public offering for gross proceeds of $63.5 million. The majority of the net proceeds will be used to repay unamortized prepaid rebates, with the balance to be used for growth and other general corporate purposes.

Outlook

“We have announced 16 new single locations in 2013 and have a number of others in progress and we therefore maintain our target to grow single locations by 6% to 10% annually for the foreseeable future”, commented Bulbuck. We also acquired two multi-shop operators (“MSO’s”) this year and remain both positive and patient for additional opportunities to grow by acquiring MSO’s. We will maintain our position of being disciplined and selective in the identification and assessment of all acquisition opportunities. In addition, the unit offering completed subsequent to the end of the quarter, combined with plans for a new expanded credit facility to take advantage of the borrowing capacity of our balance sheet, will position us well to continue to execute on our growth strategy going forward. We remain confident in the ability of our business model to increase market share by expanding in both the U.S. and Canada through strategic acquisitions alongside, single location growth and organic growth from our existing operations.”

2013 Third Quarter Conference Call & Webcast

Management will hold a conference call on Friday, November 15, 2013, at 10:00 a.m. (ET) to review the Fund’s 2013 third 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, November 22, 2013, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 94452949.

(1) 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 period ended September 30, 2013, 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 non-franchised collision repair centers in North America by number of locations. The Company operates locations in five Canadian provinces under the trade name Boyd Autobody & Glass (http://www.boydautobody.com), as well as in 15 U.S. states under the trade names Gerber Collision & Glass (http://www.gerbercollision.com) and Hansen Collision and Glass. The Company is a major retail auto glass operator in the U.S. with locations across 28 U.S. states under the trade names Gerber Collision & Glass, Glass America, Auto Glass Services, Auto Glass Only, Auto Glass Authority, S&L Glass and Hansen Auto Glass. 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 U.S. under the “Gerber National Glass Services” name. 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 more information on The Boyd Group Inc. or Boyd Group Income Fund, please visit our website at http://www.boydgroup.com.


For further information, please contact:

Brock Bulbuck
President & CEO
Tel: (204) 895-1244
brock.bulbuck@boydgroup.com

Renée Lam
Investor Relations
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext. 258)
rlam@tmxequicom.com

Dan Dott
VP & CFO
Tel: (204) 895-1244
dan.dott@boydgroup.com

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: ability to successfully complete paint supply arrangement restructuring on an accretive basis; dependence upon The Boyd Group Inc. and its Subsidiaries; cash distributions not guaranteed; inability to successfully integrate acquisitions; economic downturn; operational performance; 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; Canadian tax related 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; unitholder liability limitation 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.