August 14, 2013
Boyd Group Income Fund Reports Second Quarter
Winnipeg, Manitoba - August 14, 2013
Not for distribution to U.S. newswire services or for dissemination in the United States
- Record sales and record adjusted EBITDA of $9.2 million -
- 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, 2013. The Fund’s complete fiscal 2013 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. Q2 2013 Highlights
- Total sales increased by 33.0% to $136.9 million from $102.9 million in Q2 2012
- Same-store sales increased by 7.9%, excluding the impact of foreign exchange translation
- Adjusted EBITDA1 increased 35.3% to $9.2 million, compared with $6.8 million in Q2 2012
- Six single locations added during the quarter, including entry into the Ontario market
- Acquired majority ownership in retail auto glass business, Glass America, Inc.
- Net loss of $2.6 million significantly impacted by $5.8 million of non-cash fair value adjustments resulting from unit price appreciation
- Adjusted net earnings1 increased to $3.8 million, or 2.8% of sales, compared with adjusted net earnings of $3.2 million, or 3.1% of sales, in Q2 2012
- Adjusted distributable cash1 of $5.2 million, compared with $3.2 million in Q2 2012
“The second quarter demonstrated both solid performance and our capability to grow on various fronts,” stated Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “The addition of six single locations and the acquisition of Glass America demonstrate our continued commitment to accretive growth. Our sales and Adjusted EBITDA for the second quarter increased by 33% and 35%, respectively, compared to the same period last year. This reflects not only the contributions of new locations but also an 8% growth in same-store sales.”Financial ResultsFor the three months ended June 30, 2013
Total sales increased by 33.0% to $136.9 million, compared with sales of $102.9 million for the same period last year. The increase was attributed in part to acquisitions, including one month of sales from the newly acquired Glass America business. Further, results were strengthened by a strong same-store sales increase of 7.9% company wide, reflecting improved market conditions and market share gain.
Sales in Canada were $19.6 million, an increase of $2.4 million or 14.2% over the second quarter of 2012. This increase is the result of a $2.1 million or 12.5% increase in same-store sales plus an additional $0.3 million generated by the one month of operations from a new location.
Sales in the U.S. were $117.2 million, an increase of $31.5 million or 36.7%, over the same period in 2012. The increase resulted primarily from acquisitions including Glass America as well as a $5.9 million or 7.0% increase in same-store sales.
Earnings before interest, income taxes, depreciation, amortization, fair value adjustments to financial instruments, and acquisition and transaction costs (“Adjusted EBITDA”1) increased to $9.2 million, or 6.7% of sales, compared with Adjusted EBITDA of $6.8 million, or 6.6% of sales, for the same period a year ago. The increase in Adjusted EBITDA was primarily the result of EBITDA contributions from multi-location acquisitions plus improvements in same-store sales.
The Fund recorded income tax expense in the amount of $1.1 million, compared with $0.4 million for the same period a year ago resulting from increased taxable income from the growth of the business.
The net loss was $2.6 million or $0.205 per unit (fully diluted) compared to net earnings of $1.1 million or $0.090 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 $5.8 million, acquisition costs of $0.5 million and accelerated brand name amortization of $0.1 million. Excluding the impact of these adjustments, adjusted net earnings would have increased to $3.8 million, or $0.302 per unit. This compares to adjusted net earnings of $3.2 million, or $0.252 per unit for the same period in 2012. The increase in the adjusted net earnings for the quarter is the result of the growth in sales with stable margins partially offset by higher finance costs and income tax expense.
During the quarter, the Fund generated adjusted distributable cash of $5.2 million and declared distributions and dividends of $1.5 million, resulting in a payout ratio based on adjusted distributable cash of 29.0% for the quarter. This compares with adjusted distributable cash of $3.2 million, distributions and dividends of $1.5 million, and a payout ratio of 46.1% a year ago. On a trailing four-quarter basis at June 30, 2013, the Fund’s payout ratio stands at 29.7%.For the six months ended June 30, 2013
Total sales increased by 27.2% to $267.5 million, compared with sales of $210.3 million for the same period last year. The $57.2 million increase was due largely to sales generated from 24 new single locations and multi-location acquisitions including the first month of operations for the newly acquired Glass America business, which combined contributed $47.7 million. Same store sales increased by 4.7% adding another $9.6 million of incremental sales.
Sales in Canada were $39.0 million, an increase of $2.3 million or 6.2%, over the same period in 2012. The increase was driven by increased same-store sales of $2.0 million or 5.4% plus $0.3 million, representing one month of sales from a new location.
Sales in the U.S. were $228.5 million, an increase of $54.9 million or 31.6% over the same period in 2012. Increased sales resulted primarily from $36.1 million of new sales from multi-location acquisitions including Glass America, $11.2 million of new sales from 23 new single locations and $7.7 million from 4.5% same-store sales growth. Sales also increased by $1.8 million due to the strengthening U.S dollar offset by $1.9 million in lost sales due to the closure of three underperforming facilities in 2012.
Adjusted EBITDA1 totalled $17.3 million, or 6.5% of sales, compared with Adjusted EBITDA of $13.8 million, or 6.5 % of sales, for the same period one year ago. The $3.5 million increase in Adjusted EBITDA was primarily the result of EBITDA contributions from multi-location acquisitions and improved same-store sales levels.
The Fund recorded income tax expense in the amount of $1.5 million, compared with $1.1 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 of $2.5 million or $0.202 per unit (fully diluted) was well below the net earnings of $3.2 million or $0.255 for the same period last year, primarily as a result of higher non-cash expenses for fair value adjustments due to the Fund’s unit price appreciation. Acquisition related costs and accelerated amortization of brand names associated with the re-branding of acquired locations also impacted earnings in both years. Net earnings adjusted for these items or adjusted net earnings increased to $7.4 million, or 2.8% of sales, compared with adjusted earnings of $6.4 million, or 3.1% of sales, for the same period in 2012.
As at June 30, 2013, the Fund had total debt outstanding, net of cash, of $56.1 million, compared to $48.5 million at March 31, 2013 and $47.0 million at December 31, 2012. The increase in debt was due to the assumption of capital leases and use of cash to acquire the Glass America business. Outlook
“We remain confident and are well positioned to continue the execution of our growth strategy for the remainder of 2013 and beyond”, added Mr. Bulbuck. “The addition of ten new single store locations in the first half of this year including an entry into a new market with our Ontario location and the acquisition of Glass America demonstrate our continuing commitment to grow through accretive acquisitions. We will also continue this momentum and maintain our annual target of 6% to 10% growth through single-location additions in existing and adjacent markets. Further, we remain both positive and patient for additional opportunities to grow by acquiring multi-shop operations. Our continued strong financial position and balance sheet, supported by our performance, provides us the flexibility to continue to execute on our growth strategy for the remainder of the year and foreseeable future.”2013 Second Quarter Conference Call & Webcast
Management will hold a conference call on Wednesday, August 14, 2013, at 10:00 a.m. (ET) to review the Fund’s 2013 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 Wednesday, August 21, 2013, at midnight by calling 1-855-859-2056 or 416-849-0833, reference number 22812356.(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 June 30, 2013, which can be accessed via the SEDAR Web site (www.sedar.com). About The Boyd Group Inc.
The Boyd Group Inc. is believed to be the largest operator of collision repair centers in North America. The Company operates locations in five 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
), The Recovery Room and Autocrafters. 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 Authority and S&L 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. 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:
Caution concerning forward-looking statementsStatements 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.