March 25, 2008
Boyd Group Income Fund Reports 2007 Year End Results
Winnipeg, Manitoba — March 25, 2008
— Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “Boyd Group”) today reported its financial results for the three and twelve-month periods ended December 31, 2007. The Fund’s complete fiscal 2007 financial statements and MD&A will be filed on www.sedar.com
on March 25, 2008.2007 Highlights
- Revenue increased 7.9% to $197.6 million compared to $183.1 million in 2006
- Same store sales growth of 5.7% in the U.S. and 10.8% in Canada
- Net earnings increased to $3.4 million from a net loss of $21.9 million in 2006
- Adjusted distributable cash1 of $6.0 million compared to $2.9 million in 2006
- Repayment of $2.4 million U.S. of Canadian senior term debt
- Commenced operations at two U.S. start-up facilities
- In the fourth quarter, the Trustees of the Fund approved the reinstatement of monthly distributions of $0.015 per unit
- Subsequently, on March 25, 2008 the Trustees of the Fund approved an increase in monthly distributions to $0.01625 per unit
“We continued our strong performance in the fourth quarter of 2007 resulting in increases for the year in revenue, net earnings and cash available for distribution,” said Terry Smith, CEO of Boyd Group. “Our increased revenue reflects continued strong same store sales growth in both the U.S. and Canada.”
“As a result of the considerable progress made in 2007 to improve financial performance, strengthen the Fund’s balance sheet and improve its cash position and financial flexibility, the Trustees of the Fund approved the reinstatement of monthly distributions of $0.015 per unit, commencing in December 2007,” continued Mr. Smith.
Subsequently, on March 25, 2008, the Trustees of the Fund approved an increase in monthly distributions to $0.01625 commencing May 2008, for unitholders of record at the end of April 2008. Mr. Smith went on to say, “this annualized distribution of $0.195 represents a payout ratio estimated to be in the 30% range. We believe that this is a conservative and sustainable level that allows for continued balance sheet improvement. With stable to improving financial performance, we expect that distributions will be gradually increased over time.”
For the three months ended December 31, 2007, revenue increased 2.2% to $47.8 million compared to revenue of $46.8 million in the fourth quarter of 2006, after adjusting for the effect of discontinued operations. The increase in revenue was attributable to same store sales growth and new start-up collision repair centers. Excluding the impact of foreign currency translation attributable to sales generated from the Boyd Group’s U.S. operations, overall same store sales increased $4.4 million or 9.4%, during the fourth quarter of 2007.
For the year ended December 31, 2007 revenue increased 7.9% to $197.6 million from $183.1 million in 2006, after adjusting for discontinued operations. The increase resulted from same store sales growth in both Canada and the U.S. and new sales generated from start-ups in the U.S. During 2007, the Boyd Group’s same store sales, excluding the effects of translating U.S. sales at a lower U.S. dollar exchange rate, increased by $13.5 million or 7.5% when compared to 2006.
Earnings before interest, income taxes, depreciation and amortization (“EBITDA”)2 for the fourth quarter of 2007 totalled $3.3 million, or 6.9% of sales, compared to EBITDA of $2.6 million, or 5.5% of sales, in the fourth quarter of 2006. This increase in EBITDA was primarily the result of higher sales in the fourth quarter of 2007. Included in EBITDA for the fourth quarter was a one-time gain, in the amount of $0.7 million, associated primarily with the early settlement of the Boyd Group’s 2003 convertible debentures. This gain was offset by a non-recurring one-time charge to operating expenses, in the amount of $0.8 million, related to restructuring activities in one of the Company’s markets.
EBITDA for the year ended December 31, 2007 totalled $12.6 million or 6.4% of sales, compared to EBITDA of $10.5 million or 5.7% of sales for 2006. The increase in EBITDA was primarily the result of higher sales and lower operating expenses as a percentage of sales.
Net earnings for the fourth quarter of 2007, after discontinued operations, were $0.8 million or $0.08 per fully diluted unit compared to a net loss of $17.5 million or $1.69 per fully diluted unit during the fourth quarter of 2006. The increase in net earnings was a result of strong sales growth in 2007, in both Canada and the U.S. Losses for the fourth quarter in 2006 were affected by a $17.8 million write down of goodwill in the U.S.
The Fund’s net earnings for the year ended December 31, 2007, were $3.4 million or 1.7% of sales compared to a loss of $21.9 million or 12.0% of sales in 2006. The increase in net earnings were a result of strong sales growth in both Canada and the U.S., combined with reductions in operating costs as a percentage of sales as well as lower depreciation, amortization and income tax expenses. The net loss in 2006 resulted primarily from the write down of goodwill and other intangible assets in the U.S. of $20.2 million and the impacts associated with replacement trading partner agreements partially offset by higher foreign exchange gains.
On a segmented basis, sales in Canada in the fourth quarter of 2007 totalled $18.3 million, an increase of 12.0% compared to the fourth quarter a year ago. Sales in Canada for the year ended December 31, 2007, increased 10.8% to $72.0 million compared to $65.0 million in 2006. Sales increases in Canada for both the fourth quarter and year ended December 31, 2007, resulted solely from same store sales growth with increases reported in all four western provinces.
Sales in the U.S. in the fourth quarter of 2007 decreased 3.0% to $29.5 million compared to $30.4 million in the fourth quarter of 2006. Sales in the U.S included $1.2 million in new sales from two new collision repair centres opened in 2007. Excluding the impact of foreign currency translation and start-ups, U.S. same store sales increased by $2.4 million or 8.0%, compared to the fourth quarter a year ago.
Sales in the U.S. for the year ended December 31, 2007, increased 6.3% to $125.5 million from $118.0 million in 2006. Sales in the U.S. included new sales of $7.4 million, from three start-ups in Tacoma and Renton, Washington and Scottsdale, Arizona, as well as from two new 2007 start-ups located in Glenview, Illinois and Tempe, Arizona. Excluding the impact of foreign currency translation, U.S. same store sales increased by $6.5 million or 5.7% compared to the year ended December 31, 2006.
The Fund had total debt outstanding at December 31, 2007 of $30.1 million, comprised of: $6.3 million in bank indebtedness, net of cash; $1.2 million U.S. of Canadian senior bank term debt; $12.7 million U.S. of U.S. senior bank term debt; $0.2 million of supplier debt; $0.4 million of vendor loans; $1.9 million of obligations under capital leases; and, $7.4 million in convertible debt. This compares to $41.0 million in total debt outstanding as at December 31, 2006. Positive cash flow for the year was used to repay $2.4 million U.S. of Canadian senior bank debt over the year and to reduce net bank indebtedness. The translation of U.S. debt with a weaker U.S. dollar, relative to the Canadian dollar, also helped reduce the total debt outstanding.Adjusted Distributable Cash
Adjusted distributable cash for the fourth quarter, which includes adjustments for the collection of additional prepaid rebates, proceeds on the sale of equipment and capital lease repayments, increased to $1.1 million from $1.0 million for the same period a year ago. Adjusted distributable cash for the year ended December 31, 2007 increased to $6.0 million from $2.9 million for the year ended December 31, 2006.
Based on increased cash flow and continued improvement in year-over-year performance, the Trustees of the Fund approved the reinstatement of distributions in the fourth quarter of 2007. On November 13, 2007, the Fund declared a distribution to its unitholders and BGHI declared a dividend to its Class A shareholders of $0.015 per Unit and/or Class A share, payable on December 21, 2007 to unitholders and BGHI shareholders of record on November 30, 2007. Declarations in the same amounts have been made monthly for the months of December 2007 as well as January, February and March 2008. On March 25, 2008, the Trustees of the Fund approved an increase in monthly distributions and dividends to $0.01625 commencing May 2008, for unitholders and shareholders of record at the end of April 2008.2007 Year End Results Conference call & Web cast
Management of the Boyd Group Income Fund will host a conference call to discuss the Fund’s 2007 fourth quarter and year end financial results on March 26, 2008 at 10:00 a.m. EDT. The conference call will be webcast live at www.boydgroup.com
and archived for 90 days. A taped replay of the conference call will also be available until Wednesday, April 2nd at midnight by calling 1-877-289-8525 or 416-640-1917, reference number 21262565#.(¹)(²) EBITDA, distributable cash and adjusted distributable cash are not recognized measures under Canadian generally accepted accounting principles (GAAP). Management believes that in addition to revenue, net earnings and cash flows, the supplemental measures of distributable cash, adjusted distributable cash and EBITDA are useful as they provide investors with an indication of earnings from operations and cash available for distribution, both before and after debt service, capital expenditures and income tax. Investors should be cautioned, however, that EBITDA, distributable cash and adjusted distributable cash should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of the Fund’s performance. Boyd’s method of calculating distributable cash and adjusted distributable cash 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 distributable cash and adjusted distributable cash is calculated, please refer to the Fund’s MD&A filing for the year ended December 31, 2007, 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 Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade names Boyd Autobody & Glass and Service Collision Repair, as well as in seven U.S. states principally under the trade name Gerber Collision & Glass. The company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with affiliated serviceIncome Fund, please visit our Web site at 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.For further information, please contact:
Tel: (204) 895-1244
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext.228)
Chief Financial Officer
Tel: (204) 895-1244
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: fluctuations in cash distributions and capital expenditures; dependence on the Fund’s operating subsidiary to pay its interest obligations; loss of services of key senior management personnel; operational and infrastructure risks including possible equipment failure and performance of information technology systems; the ability to complete acquisitions of collision repair facilities and other businesses and to integrate these acquisitions successfully; the ability to identify start-up locations and reach anticipated profitability levels; access to capital; management of credit and refinancing risks; potential discovery of undisclosed liabilities associated with acquisitions; ability to expand into the United States; loss of key customers; impact of government owned insurance; variation in the number of insurance claims; competition from established competitors and new entrants in the businesses in which the Company operates; the management of key supplier relationships; employee relations; fluctuations in the cost of benefit plans; insurance coverage of sufficient scope to satisfy any liability claims; environmental risk; pending and proposed legislative or regulatory developments including the impact of changes in laws, regulations and the enforcement thereof; quality of corporate governance; quality of internal control systems; fluctuations in operating results and seasonality; energy costs; weather conditions; technology risks; interest rate fluctuations and general economic conditions; fluctuations in foreign currencies; and the possible impacts from public health emergencies, international conflicts and other developments including those relating to terrorism; 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. The Fund does not undertake to update any forward-looking statements; such statements speak only as of the date made.