November 14, 2012

Boyd Group Income Fund Reports Third Quarter Results

- Announces 4.0% Increase in Distributions; Growth Continues -

Winnipeg, Manitoba — November 14, 2012 — 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, 2012. The Fund’s complete fiscal 2012 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.

Highlights

• Added 13 new single locations during the first three quarters of the year and, subsequent to the end of the quarter, one additional single location; for a total of 14 new single locations year to date. Including the acquisitions of Master in January and Pearl in July, added a total of 28 locations since the end of 2011
• Sales increased by 12.1% to $109.1 million from $97.3 million in Q3 2011; 18 new single locations as well as eight Master locations and six Pearl locations contributed $12.7 million in sales
• Same-store sales decreased by 0.8%, excluding the impact of foreign exchange translation
• Gross margin increased to $49.1 million, or 45.0%, compared with $43.5 million, or 44.7%, in Q3 2011
• Adjusted EBITDA1 of $7.5 million, compared with $6.4 million in Q3 2011
• Net earnings were $1.5 million, or $0.120 per unit (diluted), compared with $6.5 million, or $0.220 per unit (diluted), in Q3 2011
• Adjusted net earnings1 increased to $3.3 million or 3.0% of sales for Q3 2012 compared to adjusted net earnings of $2.7 million or 2.8% of sales for the same period in 2011
• Adjusted distributable cash1 of $1.9 million, compared with $5.4 million in Q3 2011, with the decline largely due to increases in use of working capital
• Payout ratio of 75.9%, compared with 22.8% in Q3 2011, impacted by the use of working capital noted above; year-to date payout ratio of 59.1%, compared with 32.0% in 2011
• Fund Trustees approved a 4.0% increase in monthly distributions to $0.039 per unit

“We are pleased to report a 12.1% growth in revenues during the quarter on the back of our continued execution of our growth strategy,” said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “Adjusted EBITDA also grew by 17.1% reflecting the positive contribution of our multi-location acquisitions and single location growth. However, we recorded lower adjusted distributable cash for the quarter, primarily due to changes in working capital, increased cash taxes, and higher maintenance capital expenditures, leading to a 75.9% payout ratio for the quarter and 59.1% year-to date. While market conditions continued to be impacted by mild and dry weather conditions, resulting in an overall modest same-store sales decline for the quarter, we continue to believe in the strength of our operations and the opportunities in our industry. As such, we are also pleased to announce that the Board of Trustees has approved a 4.0% increase in our monthly distributions to $0.039 per unit, or an annualized distribution of $0.468 per unit, beginning with our November 2012 distribution. This reflects our continued confidence in our business and our commitment to being a growth company that offers an attractive payout.”

Financial Results

For the three-months ended September 30, 2012

Sales increased by 12.1% to $109.1 million, compared with sales of $97.3 million for the same period last year. The $11.7-million increase was driven largely by sales from Master Collision, Pearl Auto Body, and 18 other new collision repair locations opened since July 1, 2011.

Sales in Canada were $17.3 million for the three months ended September 30, 2012, reflecting a 4.2% decline from $18.0 million for the same period in 2011. The decline is primarily due to a same-store decrease of 6.5%, or $1.1 million, due to mild winter weather conditions earlier in the year that reduced work-in-process and pent-up market demand, which were then followed by dry spring and summer conditions, further reducing claims from normal levels.

Sales in the U.S. were $91.8 million, an increase of $12.5 million or 15.8%, over the same period in 2011. The increase resulted from $4.8 million of sales from Master, $2.8 million from Pearl, $4.2 million from 15 new locations, $0.4 million from 0.5% same-store sales growth, and $1.2 million from favourable currency translation of same-store sales, offset by $0.9 million in lost sales from the closure of three underperforming locations.

Adjusted earnings before interest, income taxes, depreciation and amortization (“Adjusted EBITDA”1) for the third quarter were $7.5 million, or 6.8% of sales, compared with Adjusted EBITDA of $6.4 million, or 6.6% of sales, for the same period a year ago. The 17.1% increase in Adjusted EBITDA was primarily the result of EBITDA contribution from Master, Pearl, and other new locations and from improved gross margin, but was offset by $0.1 million in foreign currency losses.

The Fund recorded income tax expense in the amount of $0.7 million, in line with the same period a year ago.

Net earnings were $1.5 million, or 1.4% of sales, compared with $6.5 million, or 6.7% of sales, for the same period last year, with the reduction primarily due to fair value adjustments for exchangeable shares and unit options. Excluding the impact of fair value adjustments for exchangeable shares and unit options, acquisition costs, and the put option adjustment, adjusted net earnings increased to $3.3 million, or 3.0% of sales, compared with adjusted earnings of $2.7 million, or 2.8% of sales, for the same period in 2011.

During the quarter, the Fund generated adjusted distributable cash of $1.9 million and declared distributions and dividends of $1.5 million, resulting in a payout ratio based on adjusted distributable cash of 75.9% for the quarter. This compares with adjusted distributable cash of $5.4 million, distributions and dividends of $1.2 million, and a payout ratio of 22.8% a year ago. The increase in payout ratio is primarily due to a $2.2 million increase in use of working capital, combined with cash tax payments and an increase in sustaining capital expenditures during the quarter, all of which reduced adjusted distributable cash.

For the nine-months ended September 30, 2012

Sales increased by 24.5% to $319.4 million, compared with sales of $256.5 million for the same period last year. The increase was due largely to $64.2 million in sales generated from 27 Cars locations, eight Master locations, six Pearl locations, and 20 other new collision repair locations opened since January 1, 2011.

Sales in Canada were $54.0 million, a decrease of $2.3 million or 4.1%, over the same period in 2011. The decline was due to a same-store sales decrease of 6.9%, or $3.8 million, resulting from mild winter weather conditions followed by continuing mild and dry spring and summer weather conditions, as well as a $1.7-million decrease as a result of a location closure. This was offset by sales of $3.2 million from three new locations.

Sales in the U.S. were $265.4 million, an increase of $65.2 million or 32.6%, over the same period in 2011. The increase resulted from $33.0 million of sales from Cars Collision, $15.2 million from Master, $2.8 million from Pearl, $10.1 million from 17 other new locations, $1.6 million from 0.9% same-store sales growth, $4.4 million from favourable currency translation of same-store sales, offset by lost sales of $1.9 million from the closure of four underperforming locations.

Adjusted EBITDA1 for the first nine months of 2012 totalled $21.2 million, or 6.6% of sales, compared with Adjusted EBITDA of $16.7 million, or 6.5% of sales, during the same period a year ago. The $4.5 million increase in Adjusted EBITDA was largely the result of EBITDA contribution from Cars Collision, Master, Pearl, and from other new locations, as well as improved gross margins and favourable currency translation of same-store sales.

The Fund recorded income tax expense in the amount of $1.8 million, compared with $1.7 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 $4.7 million, or 1.5% of sales, compared with $5.0 million, or 2.0% of sales, for the same period last year. Adjusted net earnings increased to $9.7 million, or 3.0% of sales, compared with adjusted earnings of $7.9 million, or 3.1% of sales, for the same period in 2011.

As at September 30, 2012, the Fund had total debt outstanding, net of cash, of $32.9 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 growth and multi-location acquisitions during the period.

Outlook

“As we get closer to the end of the year, we reiterate the growth strategy we stated three quarters ago,” added Mr. Bulbuck. “Our objective is to achieve and maintain market leadership in North American collision repair industry by growing our business through a combination of new start-up and single-location acquisitions, the opportunistic acquisition of multi-location collision businesses, and same-store sales growth. We defined a goal of 6%-10% growth through single-location additions in 2012 and for the foreseeable future, and year-to-date, we have achieved that target as we have already added 14 new locations. We have identified, acquired, and successfully integrated two multi-collision operators this year, and continue to be alert to opportunities for accelerated growth through the acquisition of additional attractive multi-location collision repair businesses. We will continue to leverage our brand, geographic footprint, and operating efficiencies to increase same-store sales despite uncontrollable weather and market forces. We have successfully completed the rebranding of the True2Form, Cars, and Master acquisitions. In addition, we have completed the standardization of our shop-level management information systems across all U.S. repair centre locations, and we expect this to deliver operational improvements over time. We continue to be positive about long-term market conditions remaining favourable to grow our business. Our commitment to being a growth company with an attractive payout remains strong, as demonstrated by the growth in our distributions over the last three years, while managing our financial position in a way that has enabled us to continue to execute on our growth strategy.”

2012 Third Quarter Results Conference Call & Webcast

Management will hold a conference call on Wednesday, November 14, 2012, at 10:00 a.m. (ET) to review the Fund’s 2012 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 Wednesday, November 21, 2012, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 55004313.

(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 three and nine-month periods ended September 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), 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:
Brock Bulbuck
President & CEO
Tel: (204) 895-1244
brock.bulbuck@boydgroup.com

Salvador Diaz
Investor Relations
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext. 242)
sdiaz@tmxequicom.com

Dan Dott
Chief Financial Officer
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: 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.