November 12, 2014

Boyd Group Income Fund Reports Third Quarter Results

Adjusted EBITDA up 58.8% - Announces 2.5% Distribution Increase
Not for distribution to U.S. newswire services or for dissemination in the United States
Winnipeg, Manitoba — November 12, 2014 — Boyd Group Income Fund (TSX: BYD.UN) (“the Fund”, “the Boyd Group” or “Boyd”) today reported its financial results for the three and nine-month periods ended September 30, 2014. The Fund’s third quarter 2014 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 2014 Highlights

• Sales increased by 45.8% to $218.1 million from $149.6 million in 2013, including same-store sales increases of 7.6%.
• Adjusted EBITDA1 increased 58.8% to $16.9 million, or 7.7% of sales, compared with $10.6 million, or 7.1% of sales in 2013.
• Adjusted net earnings1 increased to $6.8 million compared with $4.6 million in 2013.
• Entered the Louisiana market with seven locations from the acquisition of Champ’s Holding Company.
• Added five single-store locations and a further four locations subsequent to the end of the quarter.
• Announced a distribution increase of 2.5% to $0.492 per unit annualized from $0.48 per unit.
• Closed a bought deal financing totalling $112,809,100, thereby positioning for further growth.

“During the third quarter we saw strong organic growth through same-store sales along with additional revenue and earnings from acquisition and new store growth,” said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “This strong financial performance has provided us with the opportunity to deliver value to our unitholders by once again increasing our monthly distribution. The distribution increase will commence November, 2014, for unitholders and shareholders of record on November 30, 2014.”

Financial Results

For the three months ended September 30, 2014

Total sales increased by 45.8% to $218.1 million, compared with sales of $149.6 million for the same period last year. The $68.5 million increase was due largely to the contributions of $52.3 million from acquisitions, same-store sales increases of $11.0 million, excluding foreign exchange, which further increased sales by $6.6 million. Sales were affected by the closure of under-performing facilities which decreased sales by $1.4 million.

Sales in Canada were $19.8 million, a slight decrease of $0.2 million over the third quarter of 2013. This decrease was the result of flat same-store sales during the period, and a $0.2 million decrease from the closure of an underperforming glass facility.

Sales in the U.S. were $198.2 million, an increase of $68.7 million or 53.0%, over the same period in 2013. The increase resulted from contributions of $7.4 million from 18 new single locations and $44.9 million incremental sales from Hansen, Collision Revision, Collex, Netcost, and from less than a full month’s sales from seven Champ’s locations acquired on September 12. Same-store sales experienced increases of $11.0 million, excluding foreign exchange, which increased a further $6.6 million due to the translation at a higher U.S. dollar exchange rate. Sales decreased by $1.2 million due to closures of underperforming repair facilities.

Earnings before interest, income taxes, depreciation, amortization, adjusted for fair value adjustments to financial instruments and acquisition, transaction and process improvement costs (“Adjusted EBITDA”1) increased 58.8% to $16.9 million, or 7.7% of sales, compared with Adjusted EBITDA of $10.6 million, or 7.1% of sales, for the same period a year ago. The increase in Adjusted EBITDA was largely due to same-store sales growth, single location growth, and incremental EBITDA contribution from the glass business, Hansen, Collision Revision, Collex and Champs acquisitions. Changes in U.S. dollar exchange rates in 2014 partially offset by the closure of an underperforming facility increased Adjusted EBITDA by $0.7 million.

Net earnings for the third quarter of 2014 were $8.4 million or $0.220 per unit (fully diluted) compared to a net loss of $2.2 million or $0.172 per unit (fully diluted) for the same period last year. The earnings benefitted from fair value adjustments to financial instruments of $3.7 million offset by $1.7 million in acquisition, transaction and process improvement costs. Excluding the impact of these adjustments as well as the amortization of brand names, adjusted net earnings would have been $6.8 million, or $0.453 per unit. This compares to adjusted net earnings of $4.6 million, or $0.365 per unit for the same period in 2013. The increase in adjusted net earnings is the result of acquisitions as well as new locations and same-store sales growth.

During the quarter, the Fund generated adjusted distributable cash of $12.4 million and declared distributions and dividends of $1.8 million, resulting in a payout ratio based on adjusted distributable cash of 14.8% for the quarter. This compares with adjusted distributable cash of $4.5 million, distributions and dividends of $1.5 million, and a payout ratio of 34.0% a year ago. On a trailing four-quarter basis at September 30, 2014, the Fund’s payout ratio stands at 14.4%.

For the nine months ended September 30, 2014

Total sales increased by 44.9%, or $187.4 million, to $604.5 million, compared to the same period last year. The increase was due largely to $106.8 of incremental sales generated from 28 new single locations, 25 Hansen locations, 25 Collision Revision locations, 16 Collex locations and seven Champ’s locations. The glass business, including sales from the acquisition of Netcost, contributed incremental sales of $33.6 over the $33.0 million generated during the same period last year. Same-store sales increased by 7.2% adding another $26.7 million excluding foreign exchange which added $23.6 million due to the translation of same-store sales at a higher U.S. dollar exchange rate. Sales were affected by the closure of under-performing facilities, which decreased sales by $3.3 million.

Sales in Canada were $60.4 million, an increase of $1.3 million over the same period in 2013. The increase was driven by $2.2 million in sales from a new location, offset by a $0.9 million decrease in sales due to the closure of one underperforming glass facility. Same-store sales were flat for the period.

Sales in the U.S. increased 52.0% or $186.1 million to $544.2 million compared with the same period in 2013. Increased sales resulted primarily from $25.0 million generated from 27 new locations, $79.6 million incremental sales from Hansen, Collision Revision, Collex, Champ’s, and $33.6 million incremental sales from the glass business. Sales also benefitted from same-store increases of $26.7 million or 8.5% excluding foreign exchange, and increased another $23.6 million due to the translation of same-store sales at a higher U.S. dollar exchange rate. Sales were affected by the closure of underperforming facilities resulting in a sales decrease of $2.4 million.

Adjusted EBITDA1 totalled $50.0 million, or 8.3% of sales, compared with $28.0 million, or 6.7% of sales, for the same period one year ago. The $22.0 million increase in Adjusted EBITDA was primarily the result of same-store sales increases, and incremental EBITDA contribution from Glass America, Hansen, Collision Revision, Collex, and Champs acquisitions as well as other single location growth.

A net loss of $4.5 million or $0.301 per unit (fully diluted) compared to a net loss of $4.7 million or $0.374 for the same period last year. This net loss position for 2014 was largely the result of fair value adjustments to financial instruments of $21.2 million, along with $4.9 million for acquisition, transaction and process improvement costs. Net earnings adjusted for these items as well as the amortization of brand names increased to $22.6 million, or $1.505 per unit, compared with adjusted earnings of $12.0 million, or $0.959 per unit, for the same period in 2013.

As at September 30, 2014, the Fund had total debt outstanding, net of cash, of $87.1 million, compared to $109.9 million at June 30, 2014 and $70.5 million at September 30, 2013. The decrease in debt was due to higher cash balances from operating cash flow and net proceeds from the bought deal offering after reducing bank debt. Excluding convertible debentures, which the Fund has the ability to settle with units, this net debt reduces from $87.1 million to $5.8 million.

Outlook

“During and subsequent to the third quarter of 2014 we progressed on our growth initiatives by adding nine single-store locations, completing the Champs acquisition, and closing a bought deal offering. The addition of the single-store locations brings us to 15 total additions and on track with our 6-10% target for the year. We will continue our three-pronged growth strategy by focusing on increasing same-store sales, adding single-store locations, and acquiring accretive multi-shop operations.” added Mr. Bulbuck. “In order to achieve this we took prudent steps during the quarter to enhance our financial flexibility by further strengthening our balance sheet by way of a $112.8 million bought deal financing. This positions us with approximately $175-$200 million of ‘dry powder’, or available cash and credit facilities, for growth while remaining conservatively leveraged.”

2014 Third Quarter Conference Call & Webcast

Management will hold a conference call on Wednesday, November 12, 2014, at 10:00 a.m. (ET) to review the Fund’s 2014 third quarter 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 Wednesday, November 19, 2014, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 21457756.

(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, 2014, 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 in terms of number of locations and one of the largest in terms of sales. The Company operates locations in five Canadian provinces under the trade name Boyd Autobody & Glass (http://www.boydautobody.com), as well as in 17 U.S. states under the trade names Gerber Collision & Glass (http://www.gerbercollision.com), Collision Revision, Collex and Champ’s Collision Centers. The Company is also 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 and S&L Glass. The Company also operates two third party administrators that offer first notice of loss, glass and related services. Gerber National Glass Services is 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 and “Netcost Claims Services” which in addition to its referral business, also owns and operates its own call center and offers roadside assistance services. 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) 594-1770
brock.bulbuck@boydgroup.com

Dan Dott
VP & CFO
Tel: (204) 594-1771
dan.dott@boydgroup.com

Craig MacPhail
Investor Relations
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext. 290)
cmacphail@tmxequicom.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: 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.